Instructions For Form 8939 - Allocation Of Increase In Basis For Property Acquired From A Decedent - 2010 Page 6

ADVERTISEMENT

Qualified terminable interest
Carryover Worksheet in the Instructions
sections 4.05 and 4.06(4) of Rev. Proc.
property (QTIP). For purposes of the
to Schedule D (Form 1040).
2011-41.
Spousal Property Basis Increase, QTIP is
Existing income tax rules will apply to
Spousal Property Basis
property that passes from the decedent
determine the decedent’s share of a
Increase
and in which the surviving spouse has a
capital loss carryforward under section
qualifying income interest for life. The
Spousal Property Basis Increase is
1212(b) if the decedent’s final Form 1040
surviving spouse has a qualifying income
$3,000,000.
is filed jointly with the decedent’s
interest for life if both of the two following
surviving spouse. For rules about a
Generally, the executor can allocate
conditions are met.
capital loss carryforward arising from
Spousal Property Basis Increase only to
community property, see sections 4.05
1. The surviving spouse is entitled to
qualified spousal property that was both
and 4.06(4) of Rev. Proc. 2011-41.
all the income from the property, payable
acquired from and owned by the
annually or at more frequent intervals, or
Net operating loss (NOL). The NOL
decedent.
has a usufruct interest for life in the
carryovers under section 172 included in
Qualified spousal property. Qualified
property.
Carryovers/Unrealized Losses Increase
spousal property means:
are the losses that would (but for the
2. No person has a power to appoint
Outright transfer property; and
decedent’s death) carry forward to tax
any part of the property to any person
Qualified terminable interest property.
years after the decedent’s last tax year.
other than the surviving spouse.
Outright transfer property. For
Item 2, above, shall not apply to a power
An NOL arising in the decedent’s
purposes of the Spousal Property Basis
!
exercisable only at or after the death of
final tax year must be carried back
Increase, outright transfer property means
the surviving spouse. To the extent
and used in the applicable 2-year,
CAUTION
any interest in property acquired from the
3-year, 5-year, or 10-year carryback
provided in regulations, an annuity shall
decedent by the decedent’s surviving
period unless the carryback period is
be treated in a manner similar to an
spouse. Outright transfer property does
waived on the decedent’s final income tax
income interest in property (regardless of
not include an interest passing to the
return by attaching a statement showing
whether the property from which the
surviving spouse that, on the lapse of
that the carryback period is waived. See
annuity is payable can be separately
time, on the occurrence of an event or
Waiving the Carryback Period in
identified).
contingency, or on the failure of an event
Publication 536.
or contingency to occur, will terminate or
Special Rules. For purposes of the
Existing income tax rules will apply to
fail:
Spousal Property Basis Increase, the
determine the decedent’s share of the
1. If both:
following rules apply.
NOL carryovers under section 172 if the
a. An interest in such property passes
The term “property” includes an interest
decedent’s final Form 1040 is filed jointly
or has passed (for less than adequate
in property.
with the decedent’s surviving spouse. For
and full consideration in money or
rules about NOL carryovers arising from
A specific portion of property is treated
money’s worth) from the decedent to any
community property, see sections 4.05
as separate property. For this purpose,
person other than such surviving spouse
and 4.06(4) of Rev. Proc. 2011-41.
“specific portion” only includes a portion
(or the estate of such spouse); and
determined on a fractional or percentage
Unrealized Losses
b. By reason of such passing such
basis.
person (or his heirs or assigns) may
The amount of unrealized losses included
possess or enjoy any part of such
in the Carryovers/Unrealized Losses
The executor also can allocate
property after such termination or failure
Increase is the amount that would have
Spousal Property Basis Increase to the
of the interest so passing to the surviving
been allowable as a deduction under
following.
spouse; or
section 165 if the property acquired from
1. Property held by a testamentary
the decedent had been sold at FMV
2. If such interest is to be acquired for
charitable remainder trust (CRT) as
immediately before the death of the
the surviving spouse, pursuant to
defined in section 664 (subject to the
decedent. The amount of losses that
directions of the decedent, by his
limitation of section 1022(d)), if the
would have been allowable as a
executor or by the trustee of a trust.
surviving spouse is the sole
deduction under section 165 is limited to
For purposes of the exception described
non-charitable beneficiary of the CRT and
losses incurred in a trade or business and
in the preceding sentence, an interest
the CRT would have qualified for the
losses incurred in any transaction entered
shall not be considered as an interest
marital deduction under section
into for profit, though not connected with a
which will terminate or fail merely
2056(b)(8) if the decedent’s executor had
trade or business.
because it is the ownership of a bond,
not made the Section 1022 Election.
Certain limitations on the allowance of
note, or similar contractual obligation, the
2. Property that is sold before being
losses may apply. For example, no
discharge of which would not have the
distributed. However, this allocation can
deduction is allowable for a loss
effect of an annuity for life or for a term.
be made only to the extent that the
sustained on any registration-required
For purposes of whether property is
executor:
obligation not in registered form. For more
outright transfer property, an interest
a. Certifies on Form 8939 that the net
information, see section 165(j) and
passing to the surviving spouse shall not
proceeds from the sale of that property
Regulations section 1.165-12.
be considered as an interest which will
will be distributed to or for the benefit of
Figure the unrealized losses that can
terminate or fail on the death of such
the decedent’s surviving spouse in a
be included in the General Basis Increase
spouse if both of the following two
manner that would qualify property as
without regard to the limitation in section
conditions are met.
qualified spousal property, and
165(f) on the allowance of losses from the
The spouse’s death will cause a
b. Attaches to Form 8939 each
sale or exchange of capital assets. The
termination or failure of such interest only
document providing a bequest or devise
amount of any loss that would have been
if it occurs within a period not exceeding 6
to the surviving spouse.
allowable under section 165 if the
months after the decedent’s death, or
property acquired from the decedent had
only if it occurs as a result of a common
For more information, see Rev. Proc.
been sold at FMV immediately before the
disaster resulting in the death of the
2011-41, section 4.02(3).
decedent’s death is determined without
decedent and the surviving spouse, or
the dollar limitations on capital losses
For detailed information on how to
only if it occurs in the case of either such
under section 1211.
report the property described in item 2,
event.
see the specific instructions for Schedule
For rules about unrealized losses
Such termination or failure does not in
A, line 4, column (e)(i) and (e)(ii).
arising from community property, see
fact occur.
-5-

ADVERTISEMENT

00 votes

Related Articles

Related forms

Related Categories

Parent category: Financial