TD 9991 - new Consistent Basis Reporting

[rollerskate]

Question about the new 2024 TD 9991 - Consistent Basis Reporting

Dear @Carl or others,

I inherited a single family rental property in the year 2000. As executor, I filed an Estate Tax Return which listed the rental property at $95,000 – the county tax valuation for that year. 

The property was sold in 2024, so I’m trying to figure out the cost basis. Would it be the $95,000 tax-value listed on the Estate Tax Return? Or can I use the FMV of approx $120,000?

I came up with the FMV $120,000 figure by adding about 30% to the tax value, and by looking back at State Farm’s insurance coverage in year 2000. 

My head spins when I try to read the tax code:

Pub 551 says the basis of property inherited from a decedent is generally the FMV of the property at the date of the individual's death ($120,000 in this case)

But Sec. 1014(f) states a recipient's basis in property acquired from a decedent must be consistent with the value of the property as finally determined for federal estate tax purposes ($95,000 in this case)

Confusingly, the recent TD 9991 Consistent Basis Reporting regulation seems to say that the Consistent Basis Requirement does not apply to property on an Estate Tax Return filed before July 31, 2015 – meaning I could use the higher $120,000 FMV number as the cost basis?

Any help is appreciated.

[rollerskate]

Sorry I meant TC 9991

apologies to @Carl and others

[Carl]

For starters the basis for property tax is not used on any income tax return unless all other alternatives to determining/establishing a cost basis have been exhausted without success.
You, as the last owner of the property prior to selling it just need to establish "your" cost basis. Your cost basis is the FMV of the property on the date of passing of the prior owner of the property. It does not matter if they passed years before you actually obtained ownership rights to it from the deceased owner's estate.  It's the FMV of the property on their date of passing.

[M-MTax]

@rollerskate 

You can read the Reg here: https://www.law.cornell.edu/cfr/text/26/1.1014-10

Note that it applies if the decedent's Federal estate tax return is filed after September 17, 2024. 

Regardless, you most likely need a value more accurate than merely tacking on 30% to the assessment for property tax purposes by the county assessor and the insured value. The IRS is not obligated to accept anything less than the opinion of fair market value by a licensed real estate appraiser. Failing that, a CMA by a local licensed real estate broker (as of the year 2000 date) would be better than what you currently are using for FMV.

[rollerskate]

@M-MTax and @Carl

Thanks for your replies, very helpful. 

I will get a Retrospective Appraisal!