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CPAs advocate beneficiary rule changes

Georgia residents who have been named as an executor under a will may be able to count on more understandable tax reporting rules if the American Institute of Certified Public Accountants gets its way. In late January, the AICPA mailed individual letters to both the U.S. Treasury Department and the IRS petitioning for increased consistency in basis reporting rules for beneficiaries receiving assets from decedents' estates.

The bulk of the recommendations centered on IRS Form 8971, or Information Regarding Beneficiaries Acquiring Property from a Decedent. This draft form applies to taxpayers who have to file a Form 706, or US Estate (and Generation-Skipping Transfer) Tax Return, and it lets them know how to report a property's final value for estate tax calculations. The AICPA made a total of eight recommendations for Form 8971, including a stipulation that would render the form unnecessary in cases where Form 706 was filed for the sole purpose of portability election.

The AICPA also requested an expansion of existing guidance relating to the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015. Among other things, it recommended that trusts should be regarded as beneficiaries, that executors who act in good faith and with reasonable cause should be provided penalty relief and that the IRS clarify how long executors are obligated to continue their duties.

Estate tax law is fluid. As it evolves, people may need to modify their estate plans to keep up. Those who want to provide for their children, spouses and other loved ones after they pass away may have to create unique structures and arrangements to protect what they leave behind. Many of these individuals can benefit from seeking the advice and counsel of an estate planning attorney.

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