Inheritance valuation timeline
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Robocop2020
Level 3

Inheritance valuation timeline

Quick question, after a person has passed away, my understanding is there needs to be independent certified appraisal on the fair value of the property left subject to inheritance . My question is within what time frame such appraisal needs to be done. Searching on the forums, it says as soon as possible. Could such appraisal be done let say within 6 months from the time of death? In addition, just to confirm, such valuation should be based on the date of death, correct? Thank you in advance

5 Replies
Anonymous
Not applicable

Inheritance valuation timeline

see this article:     

https://legalbeagle.com/12720988-why-does-a-probate-require-an-appraisal-on-the-decedents-property-u...

 

note that this is an income tax forum so answers to questions you have should come from a pro knowledgeable in estate matters.  also, state laws vary. some states have an inheritance or estate tax others do not.  if a state return is due it might be sooner or later than 9 months. 

 

as you can see by the article, not everything needs a formal independent appraisal, but if they are needed they should be done in a timely manner so any taxes due can be properly and timely determined. 

 

 

For decedents who died in 2020, Form
706 must be filed by the executor of the
estate of every U.S. citizen or resident:
a. Whose gross estate, plus
adjusted taxable gifts and specific
exemption, is more than
$11,580,000; or
b. Whose executor elects to transfer
the DSUE amount to the surviving
spouse, regardless of the size of the
decedent's gross estate. See the
instructions for Part 6—Portability of
Deceased Spousal Unused
Exclusion, later, and sections
2010(c)(4) and (c)(5).
To determine whether you must file a
return for the estate under (a) above,
add:
1. The adjusted taxable gifts (as
defined in section 2503) made by the
decedent after December 31, 1976;
2. The total specific exemption
allowed under section 2521 (as in effect
before its repeal by the Tax Reform Act
of 1976) for gifts made by the decedent
after September 8, 1976; and
3. The decedent's gross estate
valued as of the date of death.

 

You must file Form 706 to report estate
and/or GST tax within 9 months after the
date of the decedent's death.

a 6 month extension can be filed 

Paying the Tax
The estate and GST taxes are due
within 9 months of the date of the
decedent's death. You may request an
extension of time for payment by filing
Form 4768. You may also elect under
section 6166 to pay in installments or
under section 6163 to postpone the part
of the tax attributable to a reversionary
or remainder interest. These elections
are made by checking “Yes” on lines 3
and 4 (respectively) of Part 3—Elections
by the Executor and attaching the
required statements.
If the tax paid with the return is
different from the balance due as
figured on the return, explain the
difference in an attached statement. If
you have made prior payments to the
IRS, attach a statement to Form 706
including these facts.

 

 

Robocop2020
Level 3

Inheritance valuation timeline

Thanks for this response and the 9 months info; I will look into this..

 

so, let say person died oct 2020, appraisal is done more or less within 9 months, or sometime in 2021, let say by May 2021. this is that followed by determination of whom gets what, % ect.

 

At what point or time the 706 needs to be filed, for tax year 2020 (when the person died)  or 2021 (when the appraisal is done, determined the heirs, whom gets what, ect)  

tax year 2020 - to be filed in 2021

tax year 2021 - to be filed in 2022

Critter-3
Level 15

Inheritance valuation timeline

Either seek local professional guidance or start reading ...   https://www.irs.gov/instructions/i706

Don't forget to check your state's regulations. 

 

Also if the estate has more than $600 of income then a form 1041 will also need to be  filed. 

 

When To File

 

You must file Form 706 to report estate and/or GST tax within 9 months after the date of the decedent's death. If you are unable to file Form 706 by the due date, you may receive an extension of time to file. Use Form 4768, Application for Extension of Time To File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes, to apply for an automatic 6-month extension of time to file.

Portability election.

 

An executor can only elect to transfer the DSUE amount to the surviving spouse if the Form 706 is filed timely; that is, within 9 months of the decedent's date of death or, if you have received an extension of time to file, before the 6-month extension period ends.

Extension to elect portability.

 

Executors who did not have a filing requirement under section 6018(a) but failed to timely file Form 706 to make the portability election may be eligible for an extension under Rev. Proc. 2017-34, 2017-26 I.R.B. 1282. Executors filing to elect portability may now file Form 706 on or before the second anniversary of the decedent’s death.

An executor wishing to elect portability under this extension must state at the top of the Form 706 being filed that the return is "Filed Pursuant to Rev. Proc. 2017-34 to Elect Portability under 2010(c)(5)(A)." For more information on this extension, see Rev. Proc. 2017-34.

Note.

 

Any estate that is filing an estate tax return only to elect portability and did not file timely or within the extension provided in Rev. Proc. 2017-34 may seek relief under Regulations section 301.9100-3 to make the portability election.

tagteam
Level 15

Inheritance valuation timeline


@Robocop2020 wrote:

At what point or time the 706 needs to be filed, for tax year 2020 (when the person died)  or 2021 (when the appraisal is done, determined the heirs, whom gets what, ect)  


From what you wrote in your other posts, it appears as if a Form 706 will not have to be filed.

 

See https://www.irs.gov/instructions/i706#idm139646240244592

 

For decedents who died in 2020, Form 706 must be filed by the executor of the estate of every U.S. citizen or resident:

a. Whose gross estate, plus adjusted taxable gifts and specific exemption, is more than $11,580,000; or

b. Whose executor elects to transfer the DSUE amount to the surviving spouse, regardless of the size of the decedent's gross estate.

 

Also, based upon your previous questions, you really do need to seek professional guidance.

Carl
Level 15

Inheritance valuation timeline

Basically, the valuation by a certified appraiser is always best. But not necessary in all cases. Just tell the appraiser you need the valuation to reflect it's value on the date the original owner passed. If within the last year, it won't be that much different if there's any difference at all.

Just don't use the tax bill as justification for property value. That only determines and sets tax value and is typically 30% or more lower than it's actual fair market sale value.

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