Does an Estate Tax Portability Filing Trigger the New Section 6035 Basis Reporting Requirements?

October 2, 2015Articles Estate Planning Blog

As we reported last month, the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 imposes basis reporting requirements on executors for certain estates filing federal estate tax returns after July 31, 2015. Although new Code Section 6035 requires compliance with this requirement within 30 days after the earlier of the date the return was filed or required to be filed, Notice 2015-57 delays the due date for compliance until February 29, 2016.

One very important open question under the new law is whether an executor that files a federal estate tax return solely for the purpose of electing portability must make the filing and provide the notice to beneficiaries required by the new law. Section 6035(a) states that it applies to an executor of any estate required to file a return under section 6018(a). Treasury Regulations § 20.2010-2(a)(1) states that an estate that elects portability will be considered, for purposes of subtitles B (Estate and Gift Taxes) and F (Procedure and Administration) of the code, to be required to file a return under section 6018(a). Although this may appear to make it clear that a portability filing triggers the section 6035 filing and reporting requirement, at least one commentator disagrees.

The delayed compliance date of February 29, 2016, is intended to give the Treasury and Service time to issue guidance implementing the section 6035 reporting requirement. Until then, advisers would be wise to keep track of all federal estate tax returns filed after July 31, 2015, (regardless of the reason for filing) and promptly review all formal guidance issued on this topic so that no deadlines are missed.