Estate tax filers catch a break with IRS extension

The Internal Revenue Service is extending the filing deadline of a form needed to help determine the taxes on estates of people who died in 2010, the agency said in a statement last week. The IRS said Form 8939 won't be due on April 18. It will issue more guidance at a future date and set the new deadline at “a reasonable period of time” after that, according to a statement. “It's good news,” said Robert Romanoff, a partner at law firm Levenfeld Pearlstein in Chicago. “The real question is when it's really going to be due.” The estate tax disappeared in 2010 due to a phase-out approved in 2001 during the presidency of George W. Bush. Under the tax-cut compromise enacted by Congress in December, the tax was reinstated at a top rate of 35 percent with a $5 million threshold for individuals. Under a substitute system in the bill, heirs can choose to pay capital gains taxes of between 15 percent and 28 percent on inherited assets they sell. The form is required for heirs who decide to opt out of the estate tax for 2010, said Romanoff, who has a family that is choosing that route because the estate is worth about $30 million. The extension is a help to executors of estates choosing to pay capital gains because determining the cost basis of property, including stock held for decades, or a family business, may require extensive research to determine the original purchase price, said Richard Behrendt, a senior estate planner at Robert W. Baird & Co. in Milwaukee. --Bloomberg News--