The IRS has issued guidance on how estates of decedents dying in 2010 may elect to carryover basis treatment in lieu of the federal estate. The election, enacted by the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act, generally must be made on Form 8939, Allocation of Increase in Basis for Property Acquired From a Decedent on or before November 15, 2011.


Congress made some significant changes to the federal estate tax in the 2010 Tax Relief Act. First, the new law reinstated the federal estate tax for decedents dying in 2010. Previous legislation had repealed the estate tax for 2010.  However, Congress gave the estates of decedents dying in 2010 the choice to either apply the reinstated federal estate tax or elect carryover basis treatment. Congress instructed the IRS to develop guidance and a form to help estates make this election.

Form 8939

In response, the IRS developed Form 8939. The election (known as the Code Sec. 1022 Election) must be made on Form 8939 and generally must be made on or before November 15, 2011. The IRS cautioned that no extensions of time to file Form 8939 will be granted and the agency will not accept Form 8939 or an amended Form 8939 filed after November 15, 2011 except in the event of conflicted filings or under limited provisions for filing relief.

Limited filing relief

The IRS provided four types of limited filing relief. An amended Form 8939 may be filed after its due date for the sole purpose of allocating Spousal Property Basis Increase. If an executor timely filed Form 8939, the executor may file an amended Form 8939 under Reg. §301.9100-2(b) on or before May 15, 2012, for any purpose except to make or revoke a Section 1022 Election. That election may be amended or revoked only on a subsequent Form 8939 filed on or before November 15, 2011. An executor may apply for relief to supplement a timely filed Form 8939 under Reg. §301.9100-3. Additionally, an executor may apply for relief under Reg. §301.9100-3 in the form of an extension of the time in which to file Form 8939.

Safe harbor procedures

The IRS also provided optional safe harbor procedures for determining a recipient’s basis in property acquired from a decedent who died in 2010 if the decedent’s executor elects to have the carryover basis rules apply. The IRS will not challenge the taxpayer’s reliance on the safe harbor procedures if the executor makes the election, follows the procedures and does not take a contrary return position.

If you have any questions about the Code Sec. 1022 Election or federal taxation of decedents’ estates, please contact our office.

IR-2011-83, Notice 2011-66, Rev. Proc. 2011-41