Election to Opt Out of Estate Tax Due on November 15

Large estates of decedents who died in 2011 have an option: Use the new estate tax rules, which include a $5 million exemption and stepped-up basis for heirs, or pay no tax regardless of the size of the estate but use a modified carryover basis for heirs. The decision is up to the executor of the estate. The IRS has announced that the election is due by November 15, 2011.

The election is made by filing new Form 8939, Allocation of Increase in Basis for Property Acquired from a Decedent. The form and instructions are expected to be released in the early fall.

The IRS has also provided extensive guidance with respect to the election in Rev. Proc. 2011-14.

Source: IR-2011-83, 8/5/11