# Bulletin No. 2024–40

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URL: https://www.frixlaw.com/law-library/documents/agency%3Airs%3A203258a490b9f1f9

## Record

- **Collection:** Agency decision
- **Document type:** Agency decision

## Text

HIGHLIGHTS
OF THIS ISSUE




Bulletin No. 2024–40
September 30, 2024

These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.

ADMINISTRATIVE, INCOME TAX
Notice 2024-66 provides relief from the addition to tax under
§ 6655 for underpayment of estimated income tax by a corporation to the extent the amount of any underpayment is
attributable to the corporation’s corporate alternative minimum tax (CAMT) liability under § 55. The notice also incorporates the relief provided in Notice 2024-33, 2024-18 I.R.B.
959, and Notice 2024-47, 2024-27 I.R.B. 1, and obsoletes
those notices.

regulations provide guidance regarding when this initial basis
may not exceed the final value of the property as determined
for purposes of the estate tax imposed on the decedent’s
estate, or if not finally determined, the value reported on a
statement furnished to the person acquiring the property
(the consistent basis requirement). In addition, these final
regulations provide guidance on the basis reporting requirements that facilitate taxpayers’ compliance with the consistent basis requirement. These reporting requirements are
applicable to executors and others required to file an estate
tax return, as well as to trustees who distribute property they
acquired from a decedent.

ESTATE TAX

INCOME TAX

REG-119683-22, page 716.

REG-106851-21, page 684.

Notice 2024-66, page 682.

The proposed regulations would modify regulations applicable to qualified domestic trusts (QDOTs) under section 2056A
of the Internal Revenue Code (Code). The proposed regulations would remove references to temporary regulations that
have been finalized and replace references to obsolete official IRS titles, offices, office addresses, and an outdated publication with current references. The proposed regulations
would also update the procedure for filing required security
instruments and correct outdated information related to when
the value of assets passing to a QDOT is finally determined
for Federal estate tax purposes. The proposed regulations
primarily would affect the estates of decedents passing property to or for the benefit of a noncitizen spouse in a QDOT
pursuant to section 2056A of the Code.

ESTATE TAX, INCOME TAX
T.D. 9991, page 646.

Generally, the initial basis of property in the hands of a person
acquiring the property from a decedent is the fair market of
the property at the date of the decedent’s death. These final

Finding Lists begin on page ii.

This document contains proposed regulations regarding the
exclusion from gross income of certain Tribal general welfare benefits. The proposed regulations address the requirements that would apply to determine whether the benefits
that an Indian Tribal government program provides qualify
as Tribal general welfare benefits. These proposed regulations would affect Indian Tribal governments, agencies or
instrumentalities of such governments, Federally-recognized
Tribes, members of such Tribes, such members’ spouses
and dependents, and other Tribal program participants. This
document also requests comments on certain provisions and
provides a notice of a public hearing on the proposed regulations that will be in addition to Tribal consultation on the
proposed regulations.

REG-116787-23, page 709.

These proposed regulations would amend the definition of
“coverage month,” and amend certain other rules, in existing
income tax regulations regarding the computation of an individual taxpayer’s premium tax credit (PTC). The proposed
coverage month amendment generally would provide that,
in computing a PTC, a month may be a coverage month for

an individual if the amount of the premium paid, including
by advance payments of the PTC (APTC), for the month for
the individual’s coverage is sufficient to avoid termination
of the individual’s coverage for that month. The proposed
regulations also would amend the rule in the existing regulations relating to the amount of enrollment premiums a taxpayer considers in computing the taxpayer’s monthly PTC if
a portion of the monthly enrollment premium for a coverage
month is unpaid. In addition, the proposed regulations would
clarify a rule in the existing regulations relating to when an

individual is considered to be ineligible for coverage under a
state’s Basic Health Program (BHP).

Rev. Rul. 2024-20, page 646.

Fringe benefits aircraft valuation formula. For purposes of
section 1.61-21(g) of the Income Tax Regulations, relating to
the rule for valuing non-commercial flights on employer-provided aircraft, the Standard Industry Fare Level (SIFL) centsper-mile rates and terminal charge in effect for the second
half of 2024 are set forth.

The IRS Mission
Provide America’s taxpayers top-quality service by helping
them understand and meet their tax responsibilities and
enforce the law with integrity and fairness to all.

Introduction
The Internal Revenue Bulletin is the authoritative instrument
of the Commissioner of Internal Revenue for announcing official rulings and procedures of the Internal Revenue Service
and for publishing Treasury Decisions, Executive Orders, Tax
Conventions, legislation, court decisions, and other items of
general interest. It is published weekly.
It is the policy of the Service to publish in the Bulletin all substantive rulings necessary to promote a uniform application
of the tax laws, including all rulings that supersede, revoke,
modify, or amend any of those previously published in the
Bulletin. All published rulings apply retroactively unless otherwise indicated. Procedures relating solely to matters of internal management are not published; however, statements of
internal practices and procedures that affect the rights and
duties of taxpayers are published.
Revenue rulings represent the conclusions of the Service
on the application of the law to the pivotal facts stated in
the revenue ruling. In those based on positions taken in rulings to taxpayers or technical advice to Service field offices,
identifying details and information of a confidential nature are
deleted to prevent unwarranted invasions of privacy and to
comply with statutory requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned

against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—1986 Code.
This part includes rulings and decisions based on provisions
of the Internal Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B,
Legislation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative
Rulings. Bank Secrecy Act Administrative Rulings are issued
by the Department of the Treasury’s Office of the Assistant
Secretary (Enforcement).
Part IV.—Items of General Interest.
This part includes notices of proposed rulemakings, disbarment and suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.

The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.

September 30, 2024 

Bulletin No. 2024–40

Part I
Section 61. Gross Income
Defined

For purposes of the taxation of fringe
benefits under section 61 of the Internal Revenue Code, section 1.61-21(g)

of the Income Tax Regulations provides a rule for valuing noncommercial
flights on employer-provided aircraft.
Section 1.61-21(g)(5) provides an aircraft valuation formula to determine
the value of such flights. The value of a
flight is determined under the base aircraft valuation formula (also known as
the Standard Industry Fare Level formula or SIFL) by multiplying the SIFL
cents-per-mile rates applicable for the

Period During Which the Flight Is Taken
7/1/24 - 12/31/24

Terminal Charge
$54.30

26 CFR 1.61-21: Taxation of Fringe Benefits

Rev. Rul. 2024-20

DRAFTING INFORMATION

ACTION: Final rule.

The principal author of this revenue ruling is Kathleen Edmondson of the Office
of Associate Chief Counsel (Employee
Benefits, Exempt Organizations and
Employment Taxes). For further information regarding this revenue ruling, contact
Ms. Edmondson at (202) 317-6798 (not a
toll-free number).

SUMMARY: This document contains
final regulations that provide guidance on
the statutory requirement that a recipient’s
basis in certain property acquired from a
decedent be consistent with the value of
the property as finally determined for Federal estate tax purposes. In addition, the
final regulations provide guidance on the
statutory requirements that executors and
other persons provide basis information
to the IRS and to the recipients of certain
property. The final regulations regarding
the statutory consistent basis requirement
affect recipients of property acquired from
a decedent if the inclusion of the value of
the property in the decedent’s gross estate
increases the Federal estate tax liability.
The final regulations regarding the statutory basis reporting requirements affect
executors and other persons required to
file an estate tax return based on the value
of the decedent’s gross estate and the
amount of decedent’s lifetime adjusted
taxable gifts, as well as trustees making
in-kind distributions of property initially
acquired from a decedent that was subject
to the statutory basis reporting requirements.

T.D. 9991
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Parts 1 and 301
Consistent Basis Reporting
Between Estate and Person
Acquiring Property from
Decedent
AGENCY: Internal Revenue Service
(IRS), Treasury.

September 30, 2024

646

period during which the flight was
taken by the appropriate aircraft multiple provided in section 1.61-21(g)(7)
and then adding the applicable terminal
charge. The SIFL cents-per-mile rates
in the formula and the terminal charge
are calculated by the Department of
Transportation (DOT) and are reviewed
semi-annually.
The following chart sets forth the terminal charge and SIFL mileage rates:

SIFL Mileage Rates
Up to 500 miles
= $.2971 per mile
501-1500 miles
= $.2265 per mile
Over 1500 miles
= $.2178 per mile

DATES: Effective date: These regulations
are effective on September 17, 2024.
Applicability dates: For dates of applicability, see §§1.1014-1(d), 1.1014-10(f),
1.6035-1(j), and 1.6662-9(c).
FOR FURTHER INFORMATION
CONTACT:
Concerning
section
1014(f), Donna Douglas at 202-3176859; concerning section 6035, Karen
Wozniak at 202-317-6844 (not toll-free
numbers).
SUPPLEMENTARY INFORMATION:
Background
This document contains amendments
to the Income Tax Regulations (26 CFR
part 1) under sections 1014(f) and 6035
of the Internal Revenue Code (Code)
relating to the statutory consistent basis
requirement and basis reporting requirements, and amendments to the Procedure and Administration Regulations
(26 CFR part 301) under sections 6721
and 6722 of the Code relating to the
applicable penalties for failure to comply with the statutory basis reporting
requirements.

Bulletin No. 2024–40

1. General Statutory Background and
Enactment of the 2015 Act
Section 2004 of the Surface Transportation and Veterans Health Care Choice
Improvement Act of 2015 (2015 Act),
Public Law 114-41, 129 Stat. 443, 454
(July 31, 2015), enacted sections 1014(f),
6035, 6662(b)(8), 6662(k), 6724(d)(1)
(D), and 6724(d)(2)(II) of the Code to
require consistency between a recipient’s
basis in certain property acquired from a
decedent and the value of the property as
finally determined for Federal estate tax
purposes. Section 1014(f) sets forth the
consistent basis requirement, while the
procedural rules in sections 6035, 6662,
and 6724 set forth the applicable reporting
requirements, penalties, and definitions.
On March 23, 2018, section 104 of Division U of the Consolidated Appropriations
Act, 2018, Public Law 115-141, 132 Stat.
348, 1170, made a technical correction
to the definition of the term inconsistent
estate basis under section 6662(k) of the
Code, retroactive to the original date of
enactment of the 2015 Act. The technical
correction modified the definition to take
into account, for purposes of the accuracy-related penalty imposed under section
6662 of the Code, that the basis of property determined under section 1014(f)
is only the initial basis of such property.
Thus, nothing in section 1014(f) prevents
post-death basis adjustments pursuant to
other sections of the Code.
2. Existing Regulatory and Administrative
Guidance under Sections 1014(f) & 6035
On March 4, 2016, the Department
of the Treasury (Treasury Department)
and the IRS published in the Federal
Register (81 FR 11486) a notice of proposed rulemaking and notice of proposed
rulemaking by cross-reference to temporary regulations (REG-127923-15).
The proposed regulations would provide
guidance on the consistent basis requirement under section 1014(f) applicable
to recipients of certain property from a
decedent and the reporting requirements
under section 6035 applicable to executors and other persons required to file an

estate tax return. Section 1.6035-2 of the
proposed regulations (proposed §1.60352) cross-references temporary regulations
under §1.6035-2T (TD 9757), published
in the Federal Register (81 FR 11431)
on the same day, which provide transitional relief on the due date for filing the
information return required by section
6035 (Information Return) and furnishing the statement(s) required by section
6035 (Statement(s)). Specifically, the
temporary regulations extended the due
date for filing and furnishing the required
Information Return and Statement(s) to
March 31, 2016.1
On March 23, 2016, in response to
requests from the public for an additional
extension of time for filing and furnishing
the required Information Return and Statement(s), the Treasury Department and the
IRS issued Notice 2016-27, 2016-15 IRB
576, extending the due date for both to
June 30, 2016. On December 2, 2016, the
Treasury Department and the IRS published in the Federal Register (81 FR
86953) final regulations (TD 9797) confirming the extension until June 30, 2016,
to file and furnish the required Information Return and Statement(s).
3. Public Hearing and Comments
On June 27, 2016, the Treasury Department and the IRS held a public hearing on
the proposed regulations. In addition to
the comments received at the hearing, the
Treasury Department and the IRS received
approximately thirty written comments
on the proposed regulations. The written
comments are available for public inspection at https://www.regulations.gov or
upon request.
After consideration of all of the comments, the Treasury Department and the
IRS are adopting the proposed regulations with certain revisions. These revisions substantially reduce the burden on
both the IRS and taxpayers and increase
administrability of the proposed rules.
The revisions include (1) removing the
zero basis rule for unreported property;
(2) adopting a suggested interpretation of
the term acquiring for purposes of section 6035(a)(1) and thereby modifying the

reporting requirements applicable in the
case of property not acquired by a beneficiary before the estate tax return due date;
(3) eliminating the subsequent transfer
reporting requirement for all beneficiaries other than trustees; and (4) excepting
additional types of property interests from
the consistent basis requirements and
the reporting requirements under section
6035. In addition, a number of requested
technical changes have been made to
the proposed regulations. Besides the
changes made in response to comments,
non-substantive revisions have been made
to clarify the language and improve the
organization of the proposed regulations.
The public comments and revisions are
discussed in the Summary of Comments
and Explanation of Revisions section of
this preamble.
Summary of Comments and
Explanation of Revisions
1. Section 1014(f) – Consistent Basis
Requirement
A. Proposed §1.1014-10(a)(1):
Consistent basis requirement – In
general.
Section 1014(f)(1) provides that the
basis of certain property acquired from
a decedent cannot exceed that property’s
final value for purposes of the Federal
estate tax imposed on the estate of the
decedent, or, if the final value has not
been determined, the value reported on a
required Statement. This statutory rule is
referred to as the consistent basis requirement. Section 1.1014-10 of the proposed regulations (proposed §1.1014-10)
includes proposed rules that would implement the consistent basis requirement.
Proposed §1.1014-10(a)(1) provides
that a taxpayer’s initial basis in certain
property acquired from a decedent may
not exceed the property’s final value for
estate tax purposes within the meaning
of proposed §1.1014-10(c). Proposed
§1.1014-10(a)(1) additionally provides
that the consistent basis requirement
applies whenever the taxpayer reports a
taxable event to the IRS with respect to

1
Prior extensions of the due dates to file and furnish the required Information Return and Statement(s) were set forth in Notice 2015-57, 2015-36 IRB 24, and Notice 2016-19, 2016-09 IRB
362.

Bulletin No. 2024–40

647

September 30, 2024

the property and continues to apply until
the entire property is sold, exchanged,
or otherwise disposed of in one or more
transactions that result in the recognition
of gain or loss for Federal income tax purposes, regardless of whether the owner on
the date of the sale, exchange, or disposition is the same taxpayer who acquired the
property from the decedent or as a result
of the decedent’s death.
The final regulations retain the rule in
proposed §1.1014-10(a)(1) incorporating the consistent basis requirement as
it applies if a final value has been determined. However, proposed §1.1014-10(a)
(1) is revised in the final regulations to
incorporate the consistent basis requirement as it applies if no final value has
been determined (previously addressed
in proposed §1.1014-10(c)(2)). Proposed
§1.1014-10(a)(1) additionally is revised
in the final regulations to explain that the
property subject to the consistent basis
requirement is referred to as consistent
basis property, which now is described in
§1.1014-10(c)(1) of the final regulations.
A commenter inquired whether the
judicial doctrine of the duty of consistency
continues to apply if the consistent basis
requirement applies to property. For a discussion of the judicial doctrine of the duty
of consistency, see Van Alen v. Commissioner, T.C. Memo, 2013-235 (Oct. 2013)
and Janis v. Commissioner, 461 F.3d 1080
(9th Cir. 2006). The final regulations do
not limit the arguments that may be applicable under case law, including the judicial doctrine of the duty of consistency in
appropriate cases.
With regard to the rule describing the
duration of the consistent basis requirement in proposed §1.1014-10(a)(1), several comments were received. Commenters asserted, and the Treasury Department
and the IRS agree, that the consistent basis
requirement should not continue to apply
to property that is sold at a price that is
equal to its basis because this sale is a recognition event even though no gain or loss
is recognized. Other commenters asserted,
and the Treasury Department and the IRS
agree, that the consistent basis requirement should not continue to apply to property once that property is included in the
gross estate of another decedent. Finally,
commenters questioned whether substituted property obtained in an exchange

September 30, 2024

under section 1031 of the Code (that is, a
like-kind exchange) is subject to the consistent basis requirement.
Accordingly, the rule in proposed
§1.1014-10(a)(1) describing the duration
of the consistent basis requirement, which
is moved to §1.1014-10(a)(3) of the final
regulations, is revised to clarify that the
consistent basis requirement applies until
the entire property is sold, exchanged,
or otherwise disposed of in a recognition transaction for income tax purposes
(whether or not any amount of gain or loss
is actually recognized) or the property
becomes includible in another decedent’s
gross estate. Under this rule, because a
like-kind exchange is not a recognition
event for income tax purposes, substituted
property obtained in such a transaction
is subject to the consistent basis requirement until the owner’s basis in every portion of the substituted property no longer
is related, in whole or in part, to the final
value of the property that was acquired
from the decedent.
B. Proposed §1.1014-10(a)(2):
Subsequent basis adjustments.
Proposed §1.1014-10(a)(2) provides
that the final value of consistent basis
property is the taxpayer’s initial basis in
the property. Proposed §1.1014-10(a)(2)
further confirms that, in computing the
taxpayer’s basis in property acquired from
the decedent or as a result of the decedent’s death, the taxpayer’s initial basis in
that property may be adjusted due to the
operation of other Code provisions that
govern basis without violating the consistent basis requirement. Proposed §1.101410(a)(2) also gives examples of such
adjustments, such as gain recognized by
the decedent’s estate or trust upon distribution of the property, post-death capital
improvements and depreciation, and postdeath adjustments to the basis of an interest in a partnership or an S corporation (as
defined in section 1361(a)(1) of the Code).
Proposed §1.1014-10(a)(2) states that the
existence of recourse or non-recourse debt
secured by property at the time of the
decedent’s death does not affect the property’s basis, whether the gross value of
the property and the outstanding debt are
reported separately on the estate tax return
or the net value of the property is reported.

648

Therefore, the proposed regulations state
that post-death payments on recourse or
non-recourse debt secured by property do
not result in an adjustment to the property’s basis.
Section 1.1014-10(a)(2) of the final
regulations maintains the rule identifying
the initial basis of consistent basis property if a final value has been determined,
as well as the rule and examples regarding acceptable adjustments to initial basis.
However, proposed §1.1014-10(a)(2) is
revised in the final regulations by identifying the initial basis of consistent basis
property during the period before the final
value of such property is determined and
by moving the rule regarding recourse and
non-recourse debt secured by property to
§1.1014-10(b)(3)(i) of the final regulations.
The rule regarding recourse and
non-recourse debt secured by property
is addressed separately in the final regulations in order to address more specifically, in response to comments, the effect
of recourse and non-recourse debt on the
initial basis of consistent basis property. A
commenter requested that the final regulations clarify that, if the decedent’s estate
includes property subject to non-recourse
debt and the executor reports the value of
the property on the decedent’s estate tax
return as the value of the property less the
debt (the net value or equity of redemption
value), then the final value of the property
is nevertheless the gross value of the property undiminished by the debt. The Treasury Department and the IRS adopt this
suggestion in §1.1014-10(b)(3)(i) of the
final regulations, which provides that the
final value or, if applicable, the reported
value, of property subject to recourse or
non-recourse debt is determined based
on the gross value of that property undiminished by debt, regardless of whether
the estate tax return reports the net value
(equity of redemption value) of the property or separately reports the gross value
of the property and claims an estate tax
deduction for the outstanding debt.
Another commenter requested that the
final regulations clarify whether the existence of recourse or non-recourse debt
on partnership property reduces the final
value of a partnership interest includible
in the decedent’s gross estate. The existence of recourse or non-recourse debt on

Bulletin No. 2024–40

partnership property relates to the value
of the partnership and the gross value of
a decedent’s partnership interest, determinations of which are outside the scope of
these final regulations. Accordingly, this
request is not adopted. However, the Treasury Department and the IRS note that,
with respect to a deceased partner having
a loan secured by a partnership interest,
the same rule in §1.1014-10(b)(3)(i) of
the final regulations will apply so that the
final value of the partnership interest is
the gross value of the partnership interest
undiminished by the debt, regardless of
whether the estate tax return reports the
net value (equity of redemption value)
of the partnership interest or separately
reports the gross value of the partnership
interest and claims an estate tax deduction
for the outstanding debt.
C. Proposed §1.1014-10(b)(1): Property
subject to consistency requirement – In
general.
Section 1014(f)(2) provides that the
consistent basis requirement applies only
to property whose inclusion in the decedent’s gross estate increased the estate
tax liability. Based on this rule, proposed
§1.1014-10(b)(1) provides that the property subject to the consistent basis requirement is any property includible in the
decedent’s gross estate under section 2031
of the Code, any property subject to tax
under section 2106 of the Code, and any
other property the basis of which is determined in whole or in part by reference to
the basis of such property (for example,
as the result of a like-kind exchange or an
involuntary conversion) that generates an
estate tax liability in excess of allowable
credits, except for the credit for prepayment of estate tax.
This rule is maintained in §1.101410(c)(1)(i) of the final regulations with
certain modifications in response to
comments. First, the final regulations,
in §1.1014-10(c)(1)(i)(A), include the
preliminary criterion for the applicability of the consistent basis requirement in
section 1014(f)(1) that only property to
which section 1014(a) applies is consistent basis property. Second, the Treasury
Department and the IRS have corrected
the final regulations to reflect that section 2103 of the Code, not section 2106,

Bulletin No. 2024–40

defines the gross estate for purposes of the
estate tax on the estate of a nonresident
non-citizen. The correction is found in the
definition of the term included property in
§1.1014-10(d)(4) of the final regulations,
which term is referenced in §1.1014-10(c)
(1)(i)(B) of the final regulations. Finally,
the Treasury Department and the IRS
have corrected the final regulations in
§§1.1014-10(c)(1)(i)(C) and 1.1014-10(d)
(5) to remove the reference to the prepayment of estate tax as a credit, because an
estate tax prepayment is not an identified
credit but instead is a payment of estate
tax.
Commenters inquired whether the
allowable credits referenced in proposed
§1.1014-10(b)(1) include credits provided
under treaties. One commenter inquired
whether, in order to treat the prorated
unified credit under section 2102(b)(3) of
the Code as an allowable credit, the executor is required to attach a Form 8833,
Treaty-Based Return Position Disclosure
Under Section 6114 or 7701(b), to the
nonresident non-citizen decedent’s Form
706-NA, United States Estate (and Generation-Skipping Transfer) Tax Return,
Estate of nonresident not a citizen of the
United States. In response to these comments, §1.1014-10(d)(5) of the final regulations defines the term allowable credits
to include both credits against the estate
tax allowable by any section of the Code
and credits against the estate tax allowable by any treaty obligation of the United
States, provided that the estate qualifies for
the credit and complies with all applicable
rules for claiming the credit, including filing all necessary forms or statements.
With regard to the applicability date of
the consistent basis requirement to property, commenters requested clarification
on whether the filing after July 31, 2015,
of an estate tax return supplementing an
estate tax return filed on or before that
date would subject any of the assets in
the decedent’s gross estate to the consistent basis requirement. Other commenters
requested clarification on whether the filing on or before July 31, 2015, of an estate
tax return that was due after July 31, 2015,
would subject any of the assets in the
decedent’s gross estate to the consistent
basis requirement. In response to these
comments, §1.1014-10(c)(1)(ii) of the
final regulations clarifies that neither the

649

supplementing of an estate tax return after
July 31, 2015, nor a due date of an estate
tax return after July 31, 2015, causes property to be subject to the consistent basis
requirement if an estate tax return was
filed on or before July 31, 2015.
D. Proposed §1.1014-10(b)(2):
Exclusions.
Proposed §1.1014-10(b)(2) provides
that property that qualifies for an estate
tax charitable or marital deduction under
section 2055, 2056, or 2056A of the Code
does not generate a tax liability under
chapter 11 of the Code (chapter 11) and
therefore is excluded from the property
subject to the consistent basis requirement. Proposed §1.1014-10(b)(2) further
provides that tangible personal property
for which an appraisal is not required
under §20.2031-6(b) of the Estate Tax
Regulations (26 CFR part 20) is deemed
not to generate a tax liability under chapter 11 and therefore also is excluded from
the property subject to the consistent basis
requirement.
With regard to the exclusion for property qualifying for an estate tax charitable
or marital deduction under section 2055,
2056, or 2056A, multiple commenters
sought clarification on whether property qualifying for only a partial marital
or charitable deduction is subject to the
consistent basis requirement. In the case
of property qualifying for only a partial
marital or charitable deduction, the property increases the estate tax liability to the
extent that it does not qualify for a marital
or charitable deduction and, therefore, the
property is subject to the consistent basis
requirement. In such a case, applying the
consistent basis requirement only to the
partial interest not qualifying for a deduction is impractical and incompatible with
the uniform basis rules under §1.1014-4
of the Income Tax Regulations. Accordingly, §1.1014-10(c)(2)(xi) of the final
regulations identifies only wholly deductible property, under any of sections 2055,
2056, 2056A, 2106(a)(2) and (3), as property not subject to the consistent basis
requirement. Partially deductible property
(property that qualifies for only a partial
marital or charitable deduction) is outside the scope of this rule and, therefore,
is consistent basis property subject to the

September 30, 2024

consistent basis requirement. Some examples of property qualifying for only a partial marital or charitable deduction, and,
therefore, not excepted from the consistent basis requirement, are: (1) a charitable
remainder trust, a charitable lead trust, or
a pooled income fund; (2) a trust subject
only to a partial QTIP election under section 2056(b)(7); and (3) property divided
between the decedent’s surviving spouse
and a charity if the sum of the deductions
for the two interests given to those recipients is less than the value of the property
included in the value of the gross estate.
With regard to the exclusion for tangible personal property, §1.1014-10(c)(2)
(ix) of the final regulations retains as an
exception to the consistent basis requirement tangible personal property for
which an appraisal is not required under
§20.2031-6(b). However, in response to
a comment, these items are described in
the final regulations as household and personal effects, rather than as tangible personal property, to conform more closely
with §20.2031-6(b).
Multiple commenters advocated for
additional exclusions from the consistent basis requirement either because
certain property is not subject to the consistent basis requirement under the plain
language of the statute or because certain property, in the commenters’ views,
should be excepted from the consistent
basis requirement by the exercise of regulatory authority. In response, §1.101410(c)(2) of the final regulations provides
a list of property that is identified as property excepted from or not subject to the
consistent basis requirement. A particular
property may be described in more than
one item on that list.
One commenter suggested that the final
regulations confirm that the consistent
basis requirement applies only to property to which section 1014(a)(1) through
(3) applies, as only such property has a
basis that is adjusted to the property’s
Federal estate tax value as a result of the
decedent’s death. Specifically, the commenter requested that the final regulations
provide that, if the basis of property is
not determined under section 1014(a)(1)
through (3), then the property is not subject to the consistent basis requirement.
Under such a provision, the commenter
concluded that the following property

September 30, 2024

would be excluded from the consistent
basis requirement: (1) property subject to
a conservation easement resulting from
the section 2031(c) election (the subject of
section 1014(a)(4)); (2) income in respect
of a decedent (IRD) (the subject of section 1014(c)); (3) DISC stock (the subject
of section 1014(d)); (4) pre-death gifts of
appreciated property (the subject of section 1014(e)); (5) stock in a passive foreign
investment company (PFIC) by reason
of section 1291(e)(1); and (6) annuities
subject to section 72 (the subject of section 1014(b)(9)(A)). Section 1014(f)(1)
applies the consistent basis requirement
to all property to which section 1014(a)
applies. The Treasury Department and the
IRS agree that section 1014(b)(9)(A), (c),
and (e) describes property not subject to
section 1014(a), and therefore property
that does not acquire a new basis based in
any way on the Federal estate tax value of
that property. Stock of a PFIC subject to
section 1296(i) also is property not subject
to section 1014(a), but only if the basis of
such stock is its adjusted basis in the hands
of the decedent immediately before the
decedent’s death. Accordingly, §1.101410(c)(2)(x) of the final regulations clarifies that such interests are not subject to
the consistent basis requirement.
However, the adjustments to the basis
of property to be made pursuant to section
1014(a)(4) and (d) and otherwise under
section 1291(e)(1), do not make section
1014(a), and therefore section 1014(f),
inapplicable to the property described
in those sections. In each of these cases,
the property’s Federal estate tax value is
a factor used in determining the property’s basis under these sections. Thus, the
consistent basis requirement applies to the
property described in these sections, even
though the basis of the property may differ from the Federal estate tax value of the
property.
Several commenters requested confirmation that certain property is not subject to the consistent basis requirement
because the value of that property is not
included in the decedent’s gross estate for
Federal estate tax purposes. For instance,
a commenter requested confirmation that
the consistent basis requirement does
not apply to property the basis of which
is adjusted in a manner similar to section 1014(a) on the occurrence of a tax-

650

able termination that occurs on a person’s
death pursuant to section 2654(a)(2).
Such property generally becomes subject
to the generation-skipping transfer tax
on the death of a trust beneficiary and, as
long as the property is not includible in
a person’s gross estate for Federal estate
tax purposes, it is not property to which
section 1014(a) applies. Other commenters requested confirmation that the consistent basis requirement does not apply to
a surviving spouse’s interest in community property to which section 1014(b)(6)
applies because, although this property is
deemed to have been acquired from the
decedent and thus is subject to section
1014(a), such property is not includible in
the decedent’s gross estate for estate tax
purposes. The Treasury Department and
the IRS agree with the commenters that,
in both cases, the property is not subject to
the consistent basis requirement because
it is not property includible in the gross
estate. Accordingly, §1.1014-10(c)(2)(xii)
and (xiii) of the final regulations clarify
that such interests are not subject to the
consistent basis requirement.
Finally, in addition, §1.1014-10(c)(2)
of the final regulations excepts certain
types of property whose basis generally
does not differ from the property’s face
value, such as United States dollars and
certain equivalents.
E. Proposed §1.1014-10(b)(3):
Application.
Proposed §1.1014-10(b)(3) provides
that, if an estate tax liability is payable
after the application of all available
credits (other than a credit for a prepayment of estate tax), the consistent basis
requirement applies to the entire gross
estate (other than property excluded by
proposed §1.1014-10(b)(2)) because all
such property contributes to the estate
tax liability and therefore is treated as
generating an estate tax liability. Proposed §1.1014-10(b)(3) clarifies that if,
after the application of all such available
credits, no tax under chapter 11 is payable, the entire gross estate is excluded
from the application of the consistency
requirement. The final regulations in
§1.1014-10(c)(1)(ii) adopt the substance
of this proposed rule with minor language changes.

Bulletin No. 2024–40

F. Proposed §1.1014-10(c)(1): Final
value – Finality of estate tax value.
Proposed §1.1014-10(c)(1) provides
that the final value of property reported
on an estate tax return is its value as
finally determined for purposes of the
estate tax. Proposed §1.1014-10(c)(1)
further provides that the finally determined value is (i) the value reported on
a return filed with the IRS pursuant to
section 6018 of the Code once the period
of limitations for assessment of the estate
tax has expired without that value having been timely adjusted or contested by
the IRS, (ii) if the preceding rule in (i)
does not apply, the value determined or
specified by the IRS once the periods of
limitations for assessment and for claim
for refund or credit of the estate tax have
expired without that value having been
timely contested, (iii) if the preceding
rules in (i) and (ii) do not apply, the value
determined in an agreement, once that
agreement is final and binding on all parties, or (iv) if the preceding rules in (i),
(ii), or (iii) do not apply, the value determined by a court, once the court’s determination is final.
The rules in proposed §1.1014-10(c)
(1) are adopted in redesignated §1.101410(b)(1) of the final regulations, with
certain clarifications and other changes.
First, §1.1014-10(b)(1)(ii) of the final
regulations omits the reference to the
period of limitations on credit or refund,
which makes the rules defining the “final
value” of consistent basis property in the
final regulations more consistent with the
rules defining a final determination for gift
tax purposes. This is appropriate because
both regulatory definitions are based on
similar statutory language. Second, the
final regulations in §1.1014-10(d)(1) add
a definition of the term contested to clarify that an executor cannot contest the
IRS’s determination of value with only a
“protective” statement generally contesting the IRS’s determination of value. The
challenge must be specific to a particular
item of property, rather than a general
objection that would provide no meaningful information respecting the value of the
property at issue. Thus, the challenge must
put at issue the value of property by providing to the IRS a written statement that
identifies the specific property, states that

Bulletin No. 2024–40

the executor does not accept as correct
the value determined or specified by the
IRS, and provides the executor’s claimed
value for the property as determined in
accordance with the requirements of section 2031, the regulations thereunder, and
other applicable guidance. In cases in
which the value of property is contested,
the final value will be determined either
by agreement between the executor and
the IRS, as described in §1.1014-10(b)(1)
(iii) of the final regulations, or by litigation, as described in §1.1014-10(b)(1)(iv)
of the final regulations.
G. Proposed §1.1014-10(c)(2): No
finality of estate tax value.
Proposed §1.1014-10(c)(2) of the proposed regulations provides that, prior to
the determination of the final value of
property subject to the consistent basis
requirement, the recipient of that property
may not claim an initial basis in excess of
the value reported on the required Statement. Proposed §1.1014-10(c)(2) further
provides that, if the final value of the property subsequently is determined (under
proposed §1.1014-10(c)(1)) and that value
differs from the value reported on the
required Statement, then the taxpayer may
not rely on the required Statement initially
furnished for the value of the property and
the taxpayer may have a deficiency and
underpayment resulting from this difference. The Treasury Department and the
IRS received several comments on these
proposed rules.
One commenter opined that the proposed regulations unfairly hold a beneficiary responsible for not using the final
value to determine initial basis if the beneficiary sells property before its final value
is determined. The commenter asserted
that, in any event, if the final value of
property is determined after its sale, any
accuracy-related penalty imposed under
section 6662 should be waived if the beneficiary acted in good faith. Similarly, commenters requested confirmation that no
income tax deficiency would result if the
final value of the property is determined
after the expiration of the period of limitations on assessment applicable to the
beneficiary’s income tax return.
If a beneficiary uses the value reported
on the required Statement to calculate gain

651

or loss on the sale of property, the beneficiary is using the value reported on the
estate tax return. This may or may not be
the final value of the consistent basis property as determined under section 1014(f)
(3). Nevertheless, section 1014(f)(1)(A)
provides specifically that, in the case of
property the final value of which has been
determined, the beneficiary’s initial basis
is limited to that final value. It would be
inconsistent with the language of the statute to fail to provide that an income tax
deficiency and underpayment may result
if a value exceeding the final value is used
to determine initial basis.
Accordingly, the final regulations, in
redesignated §1.1014-10(b)(2), maintain the rules in proposed §1.1014-10(c)
(2), and add several clarifying provisions. Section 1.1014-10(b)(2)(i) of
the final regulations clarifies that the
reported value is the value reported on
the Statement required under §1.6035-1
or, if supplemented, on the most recent
supplement to that Statement. That section further clarifies that the value from
any Statement that reports either a value
from an estate tax return filed after the
expiration of the period of limitations
on assessment applicable to that return,
or a value for property not reported on
the estate tax return, is not a reported
value. In effect, before a final value is
determined, the value reported on the
estate tax return controls. This rule recognizes that section 1014(f)(3) requires
an assessment process to determine the
final value of property. The IRS cannot
assess tax on property reported only
on the required Information Return or
required Statement(s) because these
constitute only information returns and
payee statements as defined in section
6724(d)(1)(D) and (d)(2)(II), respectively. Section 1.1014-10(b)(2)(ii) of the
final regulations clarifies that an income
tax deficiency can result if the final value
of property is determined before the
expiration of the period of limitations on
assessment for an income tax return that
reports a taxable event with regard to the
property. Section 1.1014-10(b)(2)(ii) of
the final regulations also includes a reference to section 6664 and the regulations
thereunder for rules relating to waivers of
penalties for certain failures due to reasonable cause.

September 30, 2024

H. Proposed §1.1014-10(c)(3): Afterdiscovered or omitted property.
Proposed §1.1014-10(c)(3) provides
basis rules for property that is discovered
after the filing of the estate tax return or
otherwise is omitted from the estate tax
return. Proposed §1.1014-10(c)(3)(i)(A)
provides that, if the executor reports the
after-discovered or omitted (unreported)
property on an estate tax return filed before
the expiration of the period of limitations
on assessment of the estate tax, the final
value of the property is determined under
proposed §1.1014-10(c)(1) or (2). Alternatively, proposed §1.1014-10(c)(3)(i)(B)
provides that, if the unreported property
is not reported before the period of limitations on assessment expires, the final
value of that property is zero. Finally, to
address situations in which no estate tax
return was filed, proposed §1.1014-10(c)
(3)(ii) provides that the final value of all
property includible in the gross estate subject to the consistent basis requirement
is zero until the final value is determined
under proposed §1.1014-10(c)(1) or (2).
Because the application of proposed
§1.1014-10(c)(3)(i)(B) or §1.1014-10(c)
(3)(ii) results in the beneficiary having an
initial basis of zero in unreported property,
these proposed provisions are collectively
referred to as the zero basis rule.
Comments received on the zero basis
rule generally fall into two categories:
those relating to the statutory interpretation of section 1014(f) and the authority
to impose the zero basis rule; and those
relating to the practical effects of the zero
basis rule. With respect to the former,
many commenters contended that section 1014(f), by its terms, applies only to
property that is reported on an estate tax
return. Therefore, the commenters concluded that the basis of unreported property, as determined under section 1014(a),
is not limited by the consistent basis
requirement in section 1014(f). Commenters further contended that section 1014(f)
(4) limits the regulatory authority of the
Treasury Department and the IRS to providing exceptions to the application of
the consistent basis requirement, and that
expanding the consistent basis requirement to address unreported property
is beyond the scope of this regulatory
authority. Some commenters contended

September 30, 2024

that the Code does not support a regulatory interpretation that denies at least a
carryover basis for an inherited asset.
Commenters commenting on the practical effects of the zero basis rule contended that the rule is onerous, unduly
harsh, and unfair. Commenters noted that
a beneficiary receiving unreported property in many cases will not be the executor
or other person having the responsibility
to report the property and the beneficiary
may have no ability to compel the executor to report the property on the return.
Yet, under the zero basis rule, the beneficiary receiving unreported property will
have an increased tax burden due to the
denial of basis, whether determined under
section 1014(a) (fair market value on the
decedent’s date of death) or, in the alternative, a carry-over basis of the decedent’s
adjusted basis in the property. Commenters noted that unreported property is more
likely to arise by inadvertent omission
from the estate tax return or as a result of
being undiscovered, rather than willful
omission. Therefore, except in the case of
willful omission by a beneficiary who is
the executor or other person responsible
to report the property, commenters contended that the zero basis rule is unduly
harsh and unfair because it creates a 100
percent taxable gain on the sale of the
property by the beneficiary.
The Treasury Department and the IRS
do not agree that providing a zero basis
rule for unreported property is beyond its
regulatory authority for implementing the
congressional mandate of section 1014(f).
See section 7805(a) and, more specifically,
section 1014(f)(3)(B) (referencing the
ability of the IRS to specify the value of
property not reported on a return required
by section 6018). However, the Treasury
Department and the IRS recognize that
such a rule primarily impacts the recipients of unreported property, who may
have had no knowledge of or involvement
in the failure to report the property for
Federal estate tax purposes, but, nevertheless, have an increased tax burden under
the rule.
The Treasury Department and the IRS
additionally recognize that, under applicable State law, an executor is personally
accountable to discharge its fiduciary duty
to seek out and collect every asset and to
acquire possession of the property of the

652

decedent. See 31 Am. Jur. 2d Executors
and Administrators § 369 (2018); Eger v.
Eger, 314 N.E.2d 394 (Ohio App. 1974);
Matter of Deutsch, 114 A.D.2d 413, 493
N.Y.S 884 (2d Dep’t 1985). Further, the
Treasury Department and the IRS recognize that, in the absence of a zero basis rule
for unreported property, existing Federal
tax enforcement mechanisms under subtitle F of the Code, including criminal liability, serve to deter willful nonreporting
of property on the estate tax return. See,
e.g., section 6651(a)(3) of the Code for a
potential addition to tax; sections 6662(a),
(g), and (h), 6663, 6721, and 6722 of the
Code for potential accuracy-related, fraud,
and other penalties; section 6501(c)(1)
and (2), and (e)(2) of the Code for potential exceptions to the general three-year
period of limitations on assessment; and
sections 7203, 7206, and 7207 of the Code
for potential criminal liability and penalties.
In view of these considerations, the
final regulations do not include the zero
basis rule. Instead, §1.1014-10(c)(1)(i) of
the final regulations clarifies that the consistent basis requirement applies only to
included property, a term that is defined
in §1.1014-10(d)(4) of the final regulations to refer to property, the value of
which is included in the value of the decedent’s gross estate, as defined in section
2031 or 2103. Section 1.1014-10(d)(4)
of the final regulations explains that this
refers to property whose value is reported
on an estate tax return or otherwise is
included in the total value of the gross
estate so that a final value is or will be
determined for that property under chapter 11. Consequently, the basis of property acquired or passed from a decedent
that is not reported on an estate tax return
and not otherwise included in the gross
estate generally is determined under section 1014(a), without regard to the rules
of section 1014(f). The rule identifying
property subject to the consistent basis
requirement in §1.1014-10(c)(1)(i) of the
final regulations, together with the definition of the term included property in
§1.1014-10(d)(4) of the final regulations,
is sufficient to clarify the scope of the
consistent basis requirement, and therefore these final regulations do not include
a specific rule on the basis of unreported
property.

Bulletin No. 2024–40

I. Proposed §1.1014-10(d): Executor.
Proposed §1.1014-10(d) provides that,
for purposes of proposed §1.1014-10, the
term executor has the same meaning as
in section 2203 of the Code and includes
any other person required under section 6018(b) to file a return. In response
to comments or as needed for clarity, proposed §1.1014-10(d) is expanded in the
final regulations to define several additional terms for purposes of §1.1014-10,
including the terms contested, estate tax
liability, included property, allowable
credits, and United States dollars.
J. Proposed §1.1014-10(e): Examples.
Proposed §1.1014-10(e) provides four
examples to illustrate the application of
proposed §1.1014-10. In general, the
examples illustrate rules applicable to the
final value of property, subsequent basis
adjustments, and reliance on a required
Statement. In particular, one example
illustrates the application of the zero basis
rule on the final value of unreported property.
Section 1.1014-10(e) is revised in the
final regulations by reordering the examples and adding headings to provide clarity. Because the zero basis rule from proposed §1.1014-10(c)(3) is not included
in the final regulations, §1.1014-10(e)
is further revised in the final regulations
by removing the example illustrating the
zero basis rule. Finally, §1.1014-10(e) is
revised in the final regulations by adding
examples to illustrate rules regarding the
duration of the consistent basis requirement, the meaning of included property
that is subject to the consistent basis
requirement, and the treatment of partially
deductible property that is subject to the
consistent basis requirement.
K. Applicability date.
Proposed §1.1014-10(f) provides that,
upon publication of the Treasury Decision
adopting these rules as final in the Federal
Register, §1.1014-10(f) of the final regulations will apply to property acquired from
a decedent or by reason of the death of a
decedent whose estate tax return is filed
after July 31, 2015. The final regulations
revise the applicability date of §1.1014-

Bulletin No. 2024–40

10(f) of the proposed regulation consistent with section 7805(b)(1). Accordingly,
§1.1014-10(f) of the final regulations does
not reference the July 31, 2015, effective date of section 1014(f), and provides
instead that §1.1014-10 of the final regulations applies to property described in
§1.1014-10(c)(1) of the final regulations
that is acquired from a decedent or by
reason of the death of a decedent if the
decedent’s estate tax return is filed after
the date of publication of these final regulations in the Federal Register.
L. Comments requesting new process for
beneficiary to challenge value.
Several commenters expressed concern that beneficiaries have no input in
the determination of final value even if
they believe the estate tax return reports
an incorrect or understated value. These
commenters posited that binding a beneficiary’s initial basis to the final value
may deprive the beneficiary of due process. Consequently, they requested a
procedure through which a beneficiary
may challenge the determination of final
value. Some commenters suggested that
the procedure allow the beneficiary an
opportunity to provide evidence of a different date-of-death value at the time of
examination by the IRS of the beneficiary’s income tax return (on which a taxable event with respect to the property is
reported).
The Treasury Department and the IRS
considered and briefly responded to a
request to create a new process for challenging the value reported by the executor
in part 16 of the Summary of Comments
on Notice 2015-57 and Explanation of
Provisions section of the preamble of the
proposed regulations. In the proposed regulations, the Treasury Department and the
IRS declined to create a new Federal process for challenging the value reported by
the executor. Administrability and other
concerns weigh against creating a new
Federal process for challenging the value
reported by the executor. Specifically, this
would leave the IRS in the same position
it held prior to the enactment of section
1014(f). During that time, the IRS was
forced to litigate valuation issues with a
beneficiary, often years after relevant market information had ceased to be available,

653

and/or after having previously litigated
the same valuation issue with the estate.
In addition, regarding the suggestion to
create a procedure to allow the beneficiary
to provide evidence of value at the time of
examination by the IRS of the beneficiary’s income tax return, such a procedure
would be contrary to the statutory rule in
section 1014(f)(1) limiting the basis of
property within its scope to the property’s
final value for Federal estate tax purposes
or, otherwise, to the value reported on a
required Statement.
In response to the commenters’ concerns, however, the Treasury Department
and the IRS are considering issuing guidance in the future that grants a beneficiary
of property subject to the consistent basis
requirement the opportunity to provide
certain credible evidence of value. Out of
administrability concerns, the Treasury
Department and the IRS further anticipate
such an opportunity might be available
only during some limited period of time
and only if the credible evidence of value
indicates that the reported value represents
a substantial understatement of value.
2. Section 6035 – Required Information
Return(s) and Statement(s)
Section 1.6035-1 of the proposed regulations (proposed §1.6035-1) includes
proposed rules that would address the
statutory basis reporting requirements
under section 6035 applicable to executors and other persons required to file an
estate tax return. As noted in part 3 of the
Background section of this preamble, the
Treasury Department and the IRS made
amendments to the proposed rules that
substantially reduce burden and increase
administrability for both taxpayers and
the IRS. In particular, the final regulations
(1) adopt a suggested interpretation of
the term acquiring in section 6035(a)(1),
thereby modifying the reporting requirements applicable in the case of property
not acquired by a beneficiary before the
estate tax return due date, (2) eliminate the
subsequent transfer reporting requirement
for all beneficiaries other than trustees,
and (3) except additional types of property
interests from the reporting requirements
under section 6035. These and other
amendments to proposed §1.6035-1 are
laid out in a reorganized final regulation.

September 30, 2024

A. Overview of reporting requirements.
The final regulations under section
6035 add an overview paragraph in
§1.6035-1(a) to clarify the relationship
between the reporting requirements under
section 6035 and the consistent basis
requirement applicable to certain beneficiaries under section 1014(f).
B. Applicability of section 6035 reporting
requirements.
In order to provide greater clarity,
the final regulations set forth in separate
paragraphs the provisions governing the
applicability of the section 6035 reporting
requirements and the rule for the identification of the persons included as executors who are subject to them.
i. General rules regarding applicability of
section 6035 reporting requirements.
Section 1.6035-1(b)(1) sets forth the
rule in section 6035(a)(1) and proposed
§1.6035-1(a)(2) that only executors of an
estate who are required to file an estate
tax return (referred to as a required estate
tax return) under section 6018 are subject to the reporting requirements under
section 6035. In addition, §1.6035-1(b)
(1) sets forth the rule that the reporting
requirements apply only in the case of
a required estate tax return that is filed
after July 31, 2015, and sets forth the
rule in proposed §1.6035-1(a)(2) that
the reporting requirements do not apply
if no estate tax return is required to be
filed under section 6018 even if the executor files an estate tax return for other
purposes, including without limitation
to make a generation-skipping transfer
tax exemption allocation or election, a
portability election, or a protective filing to avoid a penalty if an asset value is
later determined to cause a return to be
required or otherwise.
Section 1.6035-1(b)(1) of the final
regulations also clarifies that whether an
estate tax return is a required estate tax
return depends on the date of death value
of property includible in the decedent’s
gross estate, the amount of adjusted taxable gifts, and the applicable filing threshold under section 6018(a), so that an election made under section 2032 or 2032A

September 30, 2024

of the Code to determine the value of
property includible in the gross estate in
accordance with either of those respective
provisions is not relevant to the determination of whether a return is a required
estate tax return. See section 6018(a) and
§20.6018-1(a).
Some commenters inquired whether
the reporting requirements apply in the
event estate tax returns are filed before
August 1, 2015, if either the due date for
the return is after July 31, 2015, or the
executor files a supplement to the return
after July 31, 2015. Section 1.6035-1(b)
(1) of the final regulations provides that
the reporting requirements do not apply
if a required estate tax return is filed on
or before July 31, 2015, even if the due
date of the return is after July 31, 2015,
or if one or more supplements to that
return are filed with the IRS after July
31, 2015.
ii. Executors subject to the section 6035
reporting requirements.
Section 1.6035-1(b)(2) of the final
regulations defines the term executor
consistent with the definition of that
term in proposed §1.6035-1(g)(1), but
includes further explanation in response
to comments. One commenter noted the
possibility that more than one person
may be considered an executor for purposes of section 2203(a) and §20.2203-1
and asked for clarification of the filing
requirements in that situation. The commenter posited a scenario in which an
executor who is appointed, qualified,
and acting on behalf of the estate (an
appointed executor) files an estate tax
return, but is unable to make a complete
return as to a trust the value of which is
includible in the gross estate of the decedent. In that case, the trustee of that trust,
upon notice from the IRS, is required
to file a return reporting the trust property and the value thereof. See section
6018(b) and §20.6018-2. In response, the
final regulations provide that each person
required to file a return is subject to the
section 6035 reporting requirements, but
only with regard to the property reported
or required to be reported on the estate
tax return required to be filed by that
person. The commenter also suggested
clarifying the application of the section

654

6035 reporting requirements if no executor is appointed but multiple persons
are in actual or constructive possession
of property of the decedent. Under the
final regulations, each person in actual
or constructive possession of property of
the decedent is an executor and is subject to the section 6035 reporting requirements, but only with regard to the property reported or required to be reported
on the estate tax return required to be
filed by that executor. Finally, the commenter suggested clarifying the application of the reporting requirements in the
case of successor or co-executors. While
all co-executors are responsible for the
reporting, it is sufficient for only one of
the co-executors to file the Information
Return and to furnish the Statement(s).
Commenters questioned who is
required to comply with the reporting
requirements if a qualified revocable trust
makes a section 645 election and there is
a probate estate. Under section 645, the
trustee of a qualified revocable trust and
an appointed executor (if any) may elect
to treat the trust as part of the estate for
income tax purposes. The section 645
election relates only to the income tax liability of a qualified revocable trust. Therefore, the section 645 election, by itself,
does not affect whether the trustee of a
qualified revocable trust is an executor
within the meaning of §1.6035-1(b)(2).
The expanded definition of the term executor in §1.6035-1(b)(2) of the final regulations adequately clarifies who is subject to
the reporting requirements.
C. Required Information Return and
Statements.
Section 1.6035-1(c) of the final regulations incorporates modifications to the
rules applicable to an executor’s duty
to file the required Information Return
(defined in §1.6035-1(c)(1) of the final
regulations) and furnish each required
Statement (defined in §1.6035-1(c)(2) of
the final regulations) and the due dates
for the satisfaction of those duties. The
modifications reflect the adoption of
comments relating to an executor’s duty
to furnish Statements to beneficiaries
who have not acquired property before
the due date (or earlier filing date) of the
estate tax return.

Bulletin No. 2024–40

i. Furnishing Statements to beneficiaries
reporting property the beneficiaries have
not yet acquired.
Section 6035(a)(1) requires the executor to furnish Statements to each person
acquiring any interest in property included
in the decedent’s gross estate for Federal
estate tax purposes. Section 1.6035-1(c)
(2) of the final regulations defines Statement consistent with proposed §1.60351(g)(3) and requires an executor to furnish a Statement to each beneficiary who
acquires certain property. Section 1.60351(c)(2) of the final regulations clarifies
that the value the executor reports on that
Statement is the value of the property as
reported on the estate tax return required
to be filed with the IRS.
Proposed §1.6035-1(d)(1), relying on
the language of section 6035(a)(3)(A),
requires that Statements be provided to all
beneficiaries on or before the earlier of the
date that is 30 days after the due date of
the estate tax return or the date that is 30
days after the date the estate tax return is
filed with the IRS. If, by this due date, the
executor has not determined what property will be used to satisfy the interest
of each beneficiary, proposed §1.60351(c)(3) requires executors to report on
the Statement for each beneficiary all of
the property that the executor could use
to satisfy that beneficiary’s interest. Proposed §1.6035-1(c)(3) further provides
that, once the exact distribution has been
determined, the executor may, but is not
required to, file and furnish a supplemental Information Return and Statement.
The Treasury Department and the IRS
received numerous comments objecting to this proposed rule. Commenters
noted, and the Treasury Department and
the IRS agree, that proposed §1.60351(c)(3) would result in duplicate reporting because a single item of property (or
interest in the property) would be reported
on the Statement of several beneficiaries,
even though some of these beneficiaries
will never receive an interest or a partial interest in that property. According
to commenters, this duplicate reporting
may confuse beneficiaries by leading
them to expect to receive all of the property reported on the Statements furnished
to them. In addition, commenters have
contended that this duplicate reporting is

Bulletin No. 2024–40

burdensome and may violate a decedent’s
or beneficiary’s right to privacy, possibly
resulting in conflicts and litigation among
beneficiaries with competing interests in
the estate.
Commenters offered various suggestions for revising the rule for property
not acquired before the due date of the
required reporting under section 6035.
One commenter suggested that, in lieu
of the rule requiring an executor to identify specific property the beneficiary may
receive from the estate, the final regulations should permit executors to furnish
Statements indicating that a beneficiary is
to receive either (1) a certain percentage
of the estate’s property or (2) property valued at a certain dollar amount. Under this
suggested alternative, the executor then
would be required to file a supplemental
Information Return and furnish a supplemental Statement within 30 days after the
executor distributes the property to the
beneficiary.
Most commenters requested that the
IRS extend the time for furnishing Statements to beneficiaries to allow executors more time to distribute property or
to determine which property will go to
which beneficiary. One commenter suggested that the proper interpretation of
the language in section 6035(a)(1) requiring an executor to furnish a Statement
“to each person acquiring any interest in
property included in the decedent’s gross
estate for Federal estate tax purposes” is
that it does not include beneficiaries until
they have received an interest in particular
property. The commenter supported this
recommendation by pointing out that the
meaning of the word “acquiring” in the
Code generally means already received.
The commenter identified sixty-four other
sections of the Code in which the word
“acquiring” appears and noted that, in
only two of those sections, does “acquiring” refer to an event that has not yet
occurred. The commenter also pointed to
the description of earlier legislative proposals using identical language in which
the descriptions refer to the beneficiary
“receiving” the property or the “recipients” of an interest. The commenter reasoned that section 6035(a) requires the
reporting of the value (as reported on the
estate tax return) to the beneficiary acquiring that property, which assumes that the

655

property has already been identified by
having been received by the beneficiary.
In addition, the commenter suggested, in
effect, that this interpretation of the statutory language would not violate the statute’s prohibition of any delay in reporting
to a recipient beyond the determination of
that value because reporting triggered by
the beneficiary’s receipt of the property
would still provide the required valuation notice to the recipient as soon as the
recipient would have reason to use that
information. The commenter also noted
that section 6035(b) authorizes the Secretary to prescribe regulations as necessary
to carry out section 6035, and stated the
commenter’s belief that this authority is
sufficient to allow the creation of a due
date for Statements based on the date
property is acquired by a beneficiary.
The commenter suggested two alternatives for the due date for furnishing Statements reporting the value of property that
has not been acquired or received by the
beneficiary by the due date of the Information Return: 30 days after distribution of
the property to the beneficiary or January
31 of the year following the year of distribution of the property to the beneficiary.
The commenter acknowledged that the
first alternative appears to be consistent
with the 30-day concepts found in section
6035(a)(3) (due on or before 30 days after
the estate tax return due date or 30 days
after the estate tax return is filed, if filed
before the due date, and, in the case of an
adjustment, 30 days after the adjustment
is made), but the potential of multiple due
dates during a single year would be burdensome on both taxpayers and the IRS.
The commenter suggested that a due date
of January 31 of the year following distribution would minimize those burdens
while nevertheless ensuring that every
beneficiary acquiring property from the
decedent would have the information necessary for filing a timely income tax return
reporting a sale or other relevant event
regarding this property.
One commenter requested that, if the
final regulations create a due date for
furnishing Statements that is based on
the date property is acquired by a beneficiary, then executors nevertheless have
the option of furnishing all required Statements with the Information Return. Under
this suggestion, if an executor determines

September 30, 2024

that it would be less burdensome, an executor would have the option to furnish a
Statement to a beneficiary even if the beneficiary has not yet acquired the property.
The Treasury Department and the IRS
are sympathetic to the various concerns
raised by the commenters. Many estates
subject to the section 6035 reporting
requirements are complex and will require
a period of time well beyond the estate
tax return filing due date to determine the
appropriate distributions of property to
beneficiaries. In light of these concerns,
the final regulations adopt a suggested
interpretation of the term acquiring in section 6035(a)(1) that modifies, and reduces
the burden of, the reporting requirements
applicable in the case of property not
acquired by a beneficiary before the estate
tax return due date (or earlier filing date).
With regard to property the beneficiaries
acquire after the estate tax return due date,
the Treasury Department and the IRS
agree with the commenters that a due date
for furnishing Statements to such beneficiaries that is after the acquisition of property would have several benefits. It would
eliminate the potential confusion and lack
of privacy that could result from giving
each beneficiary a Statement showing all
of the property that could be used to satisfy
their respective bequests. It also would be
consistent with the understanding of the
Treasury Department and the IRS of the
intent of section 6035 to provide accurate,
timely, and useful information to beneficiaries and the IRS. After consideration of
the comments, the Treasury Department
and the IRS conclude that it is appropriate to interpret the term acquiring consistent with its most common meaning and
consistent with the discretionary authority granted in section 6035(b) to provide
a due date, which is after the acquisition
of property, for furnishing Statements to
beneficiaries who acquire property after
the due date (or earlier filing date) of the
decedent’s estate tax return.
With regard to what the due date for
Statements with regard to this property
should be, the Treasury Department and
the IRS conclude that a due date of January 31 of the year following acquisition by
the beneficiary of this property is the most
administrable and least burdensome alternative. This alternative is the most administrable and least burdensome because a

September 30, 2024

January 31 due date would allow an executor to file the supplemental Information
Return on an annual basis with copies
of all Statements furnished to beneficiaries acquiring property in any given year,
rather than having to file multiple supplemental Information Returns each year on
a Statement-by-Statement basis as each
Statement is furnished to a beneficiary
within 30 days of acquisition.
Accordingly, §1.6035-1(c)(3) of the
final regulations provides that the due
date for furnishing a Statement to a beneficiary who acquired property on or before
the due date or earlier filing of the estate
tax return is 30 days after the due date or
earlier filing of the estate tax return. The
due date for furnishing a Statement to a
beneficiary who acquires property at a
later date is January 31 of the calendar
year following the year of acquisition.
Section 1.6035-1(c)(4) of the final regulations provides that a beneficiary acquires
property when title vests in the beneficiary
or when the beneficiary otherwise has sufficient control over or connection with
the property that the beneficiary is able
to take action related to the property for
which basis is relevant for Federal income
tax purposes. Depending upon the particular property and how it was titled at the
decedent’s death, this could occur at the
moment of death, or upon distribution by
the executor or a trustee.
The Treasury Department and the IRS
further agree that providing executors the
option of furnishing all Statements within
30 days of filing the estate tax return,
regardless of whether all assets by then
have been acquired by the beneficiaries,
may reduce the burden associated with
these reporting requirements and is reasonable if an executor has cause to believe
that a beneficiary will acquire certain
property. However, in the event that a different beneficiary acquires that property,
requiring supplemental reporting ensures
that beneficiaries receive the information they need to satisfy the consistent
basis requirement of section 1014(f) and
otherwise. Accordingly, §1.6035-1(c)
(5) of the final regulations provides an
option to furnish Statement(s) prior to the
acquisition of property by a beneficiary.
Under this rule, an executor may satisfy
the requirement to furnish a Statement
to a beneficiary acquiring property from

656

the decedent or by reason of the death of
the decedent by furnishing the Statement
prior to the beneficiary’s acquisition of
the property, but only if the executor has
reason to believe that the beneficiary in
fact will acquire the property. The Statement must identify the property the beneficiary is expected to acquire as well as
the value of that property and other information prescribed by the Statement and
the instructions. A Statement described in
this paragraph also must include information with respect to property that has been
acquired by that beneficiary as required
under §1.6035‑1(c)(2) of the final regulations. Also, under the rule in §1.6035‑1(c)
(5) executors are required to update the
beneficiary information on a supplemental Information Return and Statement
if, after satisfying the requirements for
this optional reporting, the property is
acquired by a different beneficiary.
ii. Explanation of provisions regarding
the required Information Return and
Statement(s).
In light of the due date set forth in the
final regulations for the furnishing of Statements with regard to property acquired by
a beneficiary after the due date or earlier
filing of the estate tax return, §1.6035-1(c)
of the final regulations makes coordinating changes in the description of the Information Return and the due dates of that
return and of any required supplements to
the Information Return.
In particular, §1.6035-1(c)(1) of the
final regulations defines Information
Return consistent with proposed §1.60351(g)(2), with one exception, and requires
an executor to file the Information Return
by the due date set forth in §1.60351(c)(3) of the final regulations. The one
change is that the required attachments
to the Information Return include only
a copy of each Statement reporting the
value of property acquired by a beneficiary on or before the due date or earlier
filing of the Federal estate tax return, and
a copy of each Statement (if any) reporting the value of property that has not by
then been acquired by a beneficiary as
described in §1.6035-1(c)(5) of the final
regulations (the option to furnish Statement(s) prior to the acquisition of property by a beneficiary). The Information

Bulletin No. 2024–40

Return must be timely filed even if there
are no Statements (as described in the preceding sentence) required to be attached
to that return.
As discussed in part 2.C.i. of this Summary of Comments and Explanation of
Revisions, a Statement reporting the value
of property acquired by a beneficiary subsequent to the due date or earlier filing
date of the estate tax return must be furnished to the beneficiary on or before January 31 of the calendar year following the
date of that acquisition. Under §1.60351(c)(3)(ii) of the final regulations, a copy
of each Statement due by that January 31,
along with a copy of each Statement (if
any) provided to beneficiaries in advance
of their receipt of property as permitted
under §1.6035-1(c)(5) of the final regulations, must be attached to a supplemental Information Return filed with the IRS
on or before that same January 31. Section 1.6035-1(c)(3)(iii) of the final regulations confirms the transition rule in proposed §1.6035-1(d)(2), with an updated
reference to §1.6035-2 of the final regulations. Finally, §1.6035-1(c)(6) of the final
regulations includes an example illustrating the application of §1.6035-1(c) of the
final regulations.
Several commenters requested that a
six-month extension of time (distinct from
the automatic six-month extension of time
for filing the estate tax return) be permitted for filing and furnishing the Information Return and Statements in order to
allow the executor sufficient time to accurately determine which assets will be used
to satisfy the interests of the various beneficiaries. The due date set forth in the final
regulations for furnishing Statements to
beneficiaries with regard to property they
acquire after the estate tax return due date
adequately addresses the concern identified by the commenters. Therefore, this
suggestion is not adopted.
D. Duty to supplement.
i. Duty to supplement and changes
requiring supplemental reporting.
Section 1.6035-1(d)(1) of the final regulations sets forth the rules in proposed
§1.6035-1(e)(1) that impose a supplemental reporting obligation (both to the IRS
and to the beneficiary) on an executor if

Bulletin No. 2024–40

a change to the information required to
be reported on the Information Return or
Statement (or supplement to either) causes
the information as reported to be incorrect
or incomplete. Several examples of adjustments requiring supplemental reporting
are identified in proposed §1.6035-1(e)
(2), and several comments were received
with regard to these examples. In response
to these comments, some of the examples
listed in §1.6035-1(d)(2) of the final regulations differ from those proposed, and the
final regulations clarify some of the other
examples of adjustments.
Section 1.6035-1(d)(2)(i) of the final
regulations sets forth the rule in proposed
§1.6035-1(e)(2) imposing a duty to supplement upon the executor’s receipt,
discovery, or acquisition of information
that changes the beneficiary to whom the
property is to be distributed (pursuant to
a death, disclaimer, bankruptcy, or otherwise). However, the rule is clarified in the
final regulations to provide more detail
in response to comments. Commenters
asked how an executor is to comply with
the reporting requirements under section 6035 if all of the required beneficiary
information is not available to the executor, for instance, if the beneficiary cannot
be located or the beneficiary is a trust not
as yet established. The final regulations
describe the requirements in these circumstances and include the requirement
to supplement the required reporting to
update the beneficiary information when
it becomes available to an executor. See
§1.6035-1(d) and (g) of the final regulations. Accordingly, §1.6035-1(d)(2)(i) of
the final regulations includes, as a change
requiring supplemental reporting, the discovery of any information that corrects or
completes other beneficiary information
originally reported.
In response to comments, §1.60351(d)(2)(ii) of the final regulations clarifies the rule in proposed §1.6035-1(e)(2)
providing that a change in the value of
property pursuant to an examination or
litigation is a change requiring supplemental reporting. One commenter asked
for clarification as to whether supplemental reporting is required if, during examination or litigation, a settlement with the
IRS increases the estate tax liability but
the increase is not related to a particular
property. Another commenter requested

657

confirmation that only an adjustment in
value that represents the final value for
Federal estate tax purposes gives rise to
a duty to supplement. With respect to the
first comment, the Treasury Department
and the IRS observe that a settlement of
estate tax liability typically is related to
an adjustment to the value of particular,
identified property includible in the gross
estate, a claimed deduction or credit, gift
tax paid within three years before death,
adjusted taxable gifts, or gift tax paid and/
or payable. If a settlement does not change
the value of particular, identified property,
the settlement does not impact the final
value of the estate’s property and is not a
change requiring supplemental reporting
with respect to that specific property. With
respect to the second comment, an adjustment representing the final value for estate
tax purposes undoubtedly gives rise to the
statutory duty to supplement. In addition,
an adjustment to value on a supplemental estate tax return becomes the reported
value for purposes of section 6035(a)(1)
and §1.1014-10(b)(2) of the final regulations. Therefore, reporting a different
value on a supplemental estate tax return
also comes within the scope of an executor’s duty to supplement. In response to
these comments, §1.6035-1(d)(2)(ii) of
the final regulations clarifies that both a
final determination of value of property
for Federal estate tax purposes that differs
from the value identified on a Statement
or supplement to a Statement and an executor’s reporting of a change in value on a
supplemental estate tax return give rise to
a duty to supplement.
Commenters objected to the rule in
proposed §1.6035-1(e)(2) providing that
the discovery of unreported property is a
change requiring supplemental reporting;
they suggested that this is an impermissible broadening of the estate tax filing
requirement. In response, the final regulations instead provide that it is only the
supplementing of an estate tax return, to
report the value of previously unreported
property, that triggers a duty to supplement the reporting under section 6035,
and not the mere discovery of unreported
property. Consistent with the definition
of included property in §§1.1014-10(d)
(4) and 1.6035-1(e)(1) of the final regulations, §1.6035‑1(d)(2)(iii) of the final
regulations sets forth the rule that prop-

September 30, 2024

erty that is included in a decedent’s gross
estate, either by the filing of an estate tax
return, a supplemental estate tax return, or
pursuant to an examination by the IRS or
otherwise, will give rise to a duty to supplement if the fair market value of that
property was not previously reported on
the estate tax return or is changed.
The rule in proposed §1.6035-1(e)(2)
relating to a change in the property to be
acquired by a beneficiary is updated in
the final regulations to conform with the
reporting requirements in the final regulations for property not acquired by a
beneficiary before the due date or earlier
filing date of the estate tax return. Section 1.6035-1(d)(2)(iv) of the final regulations provides that a change requiring
supplemental reporting includes an executor’s disposition of property in a transaction in which the basis of new property received by the estate is determined
in whole or in part by reference to the
final value of property acquired from the
decedent or as a result of the death of the
decedent (for example, as the result of a
like-kind exchange or involuntary conversion). However, §1.6035-1(d)(2)(iv) of
the final regulations also imposes a duty
to supplement if an executor furnishes a
Statement to a beneficiary prior to the beneficiary’s acquisition of property pursuant
to the optional reporting afforded under
§1.6035-1(c)(5) of the final regulations
and the beneficiary ultimately acquires
property different than that identified on
that Statement.
ii. Changes not requiring supplemental
reporting.
Section 1.6035-1(d)(3)(i) of the final
regulations adopts the rule in proposed
§1.6035-1(e)(3)(i)(A) excluding from the
duty to supplement changes to correct an
inconsequential error or omission. However, the rule in proposed §1.6035-1(e)
(3)(i)(B) excluding from the duty to supplement a change in the distribution of
property from that previously reported is
omitted from the final regulations because
it relates only to the proposed reporting
requirements for property not acquired by
a beneficiary before the estate tax return
due date. The reporting requirements for
such property have been modified in the
final regulations.

September 30, 2024

Section §1.6035-1(d)(3)(ii) of the
final regulations provides an exception
to the duty to supplement for a change in
value as the result of an event described
in section 2032A(c)(1) that triggers an
additional estate tax liability with regard
to property for which a special use election was made, including a beneficiary’s
election to increase the beneficiary’s basis
in that property under section 1016(c) in
response to that event. Although such an
election by a beneficiary does result in a
change in value under the rule in §1.101410(b)(3)(ii), the qualified heir is in a better
position than the executor to know this
information, so no supplemental reporting
is required of the executor. A commenter
requested an example illustrating the
adjustment to basis if there is a disposition
of property subject to section 2032A under
section 2032A(c)(1). Because an example
would serve the purpose of illustrating the
workings of section 1016(c), rather than
the reporting requirements under section
6035, the Treasury Department and the
IRS decline to include such an example in
these regulations under section 6035.
Section 1.6035-1(d)(3)(iii) of the final
regulations adopts the suggestion of a
commenter by excepting from the duty
to supplement any post-death or other
adjustment to the basis of property made
pursuant to sections of the Code other
than section 1014(f). The executor generally is required to provide only supplemental Statements that show a change
in the identification, value, or recipient
of property as reported on the estate tax
return. Therefore, section 6035 does not
require the reporting of adjustments in
basis attributable to the operation of Code
sections other than section 1014(f). That
commenter also suggested that the final
regulations provide a uniform method for
reporting post-death adjustments to the
beneficiary if the executor chooses to do
so. The Treasury Department and the IRS
understand that an executor may choose to
furnish a beneficiary information regarding changes to basis that occur pursuant to
Code sections other than section 1014(f).
If the executor does so, and if the executor
chooses to use the Statement to provide
that information, that information must
be shown separately from the information
required to be reported on the beneficiary’s Statement.

658

Finally, §1.6035-1(d)(3)(iv) of the
final regulations provides an exception
to the duty to supplement for any other
change that is identified as requiring no
supplemental reporting under this section
in guidance published in the future in the
Federal Register or in the Internal Revenue Bulletin.
iii. Due date of supplemental reporting.
The rules in proposed §1.6035-1(e)(4)
(i) relating to the due date for supplemental reporting are updated in the final regulations to align with the modified reporting requirements in the final regulations.
Section 1.6035-1(d)(4) of the final regulations provides that supplemental reporting
is due on or before 30 days after the date
on which information becomes available
to the executor from which the executor
can conclude that a change to the earlier
reporting is required to be supplemented
in accordance with these final regulations.
Section 1.6035-1(d)(4) of the final regulations clarifies that, for changes occurring
as a result of supplementing the estate tax
return, the date on which that information
becomes available to the executor is the
filing date of the supplement to that return
and, for changes occurring as a result of a
determination of final value, that date is
the date a value becomes the final value
under §1.1014-10(b)(1) of the final regulations. In the case of property not
acquired by a beneficiary before the due
date or earlier filing date of the estate tax
return, §1.6035-1(d)(4) of the final regulations provides that, for property for which
a Statement has not been provided to the
beneficiary pursuant to the option to furnish Statements prior to the acquisition of
property by a beneficiary in §1.6035-1(c)
(5) of the final regulations, the due date
of any required supplemental reporting
may be delayed until the due date for supplemental reporting for subsequently-acquired property in §1.6035-1(c)(3)(ii) of
the final regulations.
iv. Duration of duty to supplement.
Commenters inquired whether the
executor’s duty to file supplemental Information Returns and furnish supplemental
Statements is limited in time. In response,
§1.6035-1(d)(5) of the final regulations is

Bulletin No. 2024–40

added to provide, in effect, that the duty
to supplement is limited to changes that
occur on or before the later of a beneficiary’s acquisition of the property or the
determination of the final value of the
property under §1.1014-10(b)(1) of the
final regulations.
v. Illustration of duty to supplement.
Section 1.6035-1(d)(6) was added to
the final regulations to provide examples
to illustrate the application of the rules
regarding the duty to supplement as provided in §1.6035-1(d) of the final regulations.
E. Property for which reporting is
required.
Proposed §1.6035-1(b)(1) provides in
part that the property to which the section 6035 reporting requirements apply
is all property reported or required to be
reported on an estate tax return required
under section 6018. The reporting requirements also apply to any other property the
basis of which is determined in whole or in
part by reference to the property described
in the preceding sentence (for example,
as the result of a like-kind exchange or an
involuntary conversion).
As discussed in part 1.H of this Summary of Comments and Explanation of
Revisions, the final regulations do not
include the proposed zero basis rule for
unreported property to which numerous
commenters objected. Therefore, the final
regulations narrow the scope of property
for which reporting is required as compared to the rule in proposed §1.6035-1(b)
(1) that would have subjected all property
reported or required to be reported on an
estate tax return under section 6018. Section 1.6035-1(e)(1) of the final regulations
provides that only property whose value is
included in the value of a decedent’s gross
estate for Federal estate tax purposes (and
any other property the basis of which is
determined, in whole or in part, by reference to the basis of such included property) is subject to the section 6035 reporting requirements. Section 1.6035-1(e)(1)
of the final regulations defines the term
included property consistently with the
definition of that term in §1.1014-10(d)(4)
of the final regulations to mean property

Bulletin No. 2024–40

the value of which is included in the value
of the decedent’s gross estate as defined in
section 2031 or 2103. Section 1.6035-1(e)
(1) of the final regulations further clarifies
that included property does not include
property whose value is not reported on
an estate tax return and whose value is
not otherwise included in the value of the
decedent’s gross estate as finally determined for Federal estate tax purposes.
Some commenters suggested that property subject to reporting should be limited
to property to which the consistent basis
requirement of section 1014(f) applies.
While both sections 6035 and 1014(f)
apply with respect to property includible in a decedent’s gross estate only if an
executor is required to file an estate tax
return under section 6018, section 1014(f)
(2) limits the application of the consistent basis requirement to property whose
inclusion in the gross estate increases the
estate tax liability for the estate. Section
6035 includes no similar limitation and,
therefore, applies to a broader universe
of property than section 1014(f), and it
applies whether or not any estate tax must
be paid. Therefore, this comment is not
adopted.
Another commenter sought clarification as to whether property for which a
marital or charitable deduction is claimed
is property for which reporting is required.
Property that qualifies, in whole or in
part, for a marital or charitable deduction for which a deduction is claimed is
included property as that term is defined
in §1.6035-1(e)(1) of the final regulations.
Accordingly, as §1.6035-1(e)(1) of the
final regulations also clarifies, such property is subject to reporting. Consequently,
the executor is required to file an Information Return and to furnish Statements
if the value of the estate is sufficient to
require the filing of an estate tax return,
even if no estate tax is due as a result of a
charitable and/or marital deduction.
Some commenters had questions about
the application of the reporting requirements to community property. Proposed
§1.6035-1(b)(1) provides that the reporting requirements are limited to only the
decedent’s one-half interest in community
property. Commenters asked for confirmation that the reporting requirements do
not apply to the surviving spouse’s onehalf interest in community property that is

659

subject to section 1014(b)(6). Under section 1014(b)(6), the spouse’s interest also
is deemed to have been acquired from the
decedent and thus is subject to the basis
adjustment under section 1014(a). However, section 1014(a) and section 6035 are
different. The spouse’s interest is not includible in the decedent’s gross estate and
thus is not required to be reported on the
estate tax return. Accordingly, §1.60351(e)(1) of the final regulations sets forth
the rule that the reporting requirements do
not apply to the surviving spouse’s interest in community property.
Some commenters asked whether there
is a reporting requirement if the executor
makes a non pro rata division and distribution of community property authorized
by applicable State law. See, for example, West’s Ann. Cal. Prob. Code sections
100(b) and 101(b). Under applicable State
law, an executor may distribute the surviving spouse’s interest in community
property (property belonging to the surviving spouse, in which the decedent has
no interest includible under section 2033)
to a beneficiary other than the surviving
spouse to satisfy a bequest. In lieu of the
surviving spouse’s interest in the community property, the executor may distribute
to the surviving spouse all or any part of
decedent’s interest in other property includible in the gross estate. The executor’s
distribution does not convert property
included in the gross estate into property
not included in the estate and, therefore,
does not eliminate the applicability of
the reporting requirements with regard to
the property distributed to the surviving
spouse. Accordingly, §1.6035-1(e)(1) of
the final regulations identifies, as property
subject to reporting, property included in
the decedent’s gross estate that is distributed to a decedent’s surviving spouse in
lieu of the surviving spouse’s interest in
community property pursuant to State law.
Section 1.6035-1(e)(2) of the final regulations adds two examples to illustrate
property subject to reporting under section
6035.
F. Excepted property requiring only
limited reporting.
The proposed regulations under
§1.6035-1(b)(1) list four types of property
proposed to be excepted from the report-

September 30, 2024

ing requirements: (i) cash (other than
a coin collection or other bills or coins
with numismatic value); (ii) income in
respect of a decedent (as defined in section
691); (iii) tangible personal property for
which an appraisal is not required under
§ 20.2031-6(b); and (iv) property sold,
exchanged, or otherwise disposed of (and
therefore not distributed to a beneficiary)
by the estate in a transaction in which capital gain or loss is recognized.
Many commenters suggested additions
or modifications to this list of exceptions.
In response, the list in proposed §1.60351(b)(1) is expanded in redesignated
§1.6035-1(f)(2) of the final regulations. A
particular property included in the decedent’s gross estate may qualify under
more than one of these exceptions. In
addition, §1.6035-1(f)(1) of the final regulations explains the reporting requirements applicable to property described in
§1.6035-1(f)(2) of the final regulations,
referred to as excepted property, and
§1.6035-1(f)(4) of the final regulations
provides examples of excepted property
and illustrates the reporting requirements
applicable to this property. A discussion
of the comments and responses to the
comments follows.
i. Limited reporting of excepted property.
Some commenters noted that it is
unclear whether an executor is subject to
any reporting requirements under section
6035 if all distributions from the estate are
of property excepted from the reporting
requirements by proposed §1.6035-1(b)
(1). For example, commenters questioned
whether an executor is subject to any
reporting requirements under section 6035
if the executor has liquidated (or will liquidate) the estate so that all distributions will
be made in cash. In response, §1.6035-1(f)
(1) of the final regulations clarifies that
included property is subject to more limited reporting if the property is excepted
property (as identified in §1.6035-1(f)(2)
(i) through (xiv) of the final regulations).
Specifically, the requirement to file an
Information Return with the IRS pursuant
to §1.6035-1(c)(1) of the final regulations
remains the same even if all property is
excepted property. However, in the case of
excepted property, an executor is required
only to disclose on the Information Return

September 30, 2024

that some or all of the property included
in the decedent’s gross estate is excepted
from the full reporting requirements pursuant to §1.6035-1(f)(2) of the final regulations; an executor is not required to identify the excepted property or to provide a
Statement to a beneficiary with regard to
excepted property.
ii. Exceptions for cash and other
property.
Proposed 1.6035-1(b)(1)(i) excepts
cash (other than a coin collection or
other bills or coins with numismatic
value) from the reporting requirements
under section 6035. To provide more
precision and clarity, §1.6035-1(f)(2)
(i) of the final regulations replaces the
exclusion for cash with an exclusion
for United States dollars. United States
dollars are defined in §1.6035-1(f)(3) of
the final regulations as the official currency of the United States. For purposes
of section 6035, the term United States
dollars includes physical bills and coins
if the value of each bill or coin is equivalent to the face amount of that bill or
coin. This definition does not include
other physical United States bills or
coins with numismatic value because
these bills or coins typically do not have
a value equal to their face value.
Many commenters requested that the
exception for cash in the proposed regulations be expanded to include cash equivalents. In response to these comments,
§1.6035-1(f)(2) of the final regulations
expands the list of excepted property to
include property the value of which is
equal to its face value and that either is
expressed in United States dollars or will
be paid in United States dollars. This
excepted property includes: (1) United
States dollar-denominated demand deposits; (2) Cash collateral denominated in
United States dollars held by a third party
to secure a liability (such as a deposit of
purchase money or a security deposit);
(3) Life insurance proceeds on the life
of the decedent payable in a lump sum
in United States dollars; and (4) Federal,
State, and local tax refunds and other
refunds payable in United States dollars.
Certificates of deposit are excepted property because their Federal estate tax value
generally equals their face value plus

660

interest accrued to the date of death. Similarly, shares in money market funds are
excepted property under the final regulations.
A commenter suggested that notes
having a Federal estate tax value equal to
the outstanding principal balance of the
note should be considered a cash equivalent. Another commenter suggested that
such notes should be excepted because
the disposition of such property will
never be a recognition event. The Treasury Department and the IRS decline to
adopt these suggestions because notes
have basis and the face value of the note
may not always equal the final value of
the note for Federal estate tax purposes.
See §20.2031-4. However, if a note is forgiven in full by the decedent at death, the
underlying indebtedness is discharged
and no property having basis remains for
distribution to a beneficiary. Accordingly,
excepted property also includes notes
that are forgiven in full by the decedent
at death, whether or not denominated in
United States dollars.
In further response to the aforementioned comments as well as additional
comments received regarding property
qualifying for limited reporting under the
cash exception, the Treasury Department
and the IRS note that the following items
do not fall within the list of excepted property in §1.6035-1(f)(2) of the final regulations: (1) currency other than in United
States dollars; (2) any payments not made
in United States dollars; (3) life insurance
policies not paid in United States dollars,
and life insurance policies payable to a
beneficiary in United States dollars annually or at some other interval for a period
of time after the decedent’s death; (4)
notes (other than an installment obligation
subject to section 453) that the decedent
did not forgive in full upon the decedent’s
death, whether or not expressed in United
States dollars; (5) U.S. Savings bonds;
and (6) accounts receivable (unless such
property consists entirely of the right to
receive an item of income in respect of a
decedent as defined in section 691 (IRD)).
This property generally has basis, its value
generally may not equal its face value and,
accordingly, this property is not excepted
from the reporting requirements in the
final regulations. For the same reasons,
digital assets as defined in section 6045(g)

Bulletin No. 2024–40

(3)(D), including virtual currency2 or
cryptocurrency, do not fall within the list
of excepted property set forth in §1.60351(f)(2) of the final regulations. Consistent
with all of the above, the list of excepted
property is expanded and clarified in
§1.6035-1(f)(2) of the final regulations.
With respect to future modifications to
property qualifying as excepted property,
§1.6035-1(f)(2)(xiv) of the final regulations provides that excepted property will
include any other property that is identified as excepted property in published
guidance in the Federal Register or in the
Internal Revenue Bulletin.
The Treasury Department and the IRS
note that certain beneficiaries in receipt
of included property may have a basis in
that property different from the value of
that property as expressed in United States
dollars, and therefore may have to convert
the final value of that property into a currency other than United States dollars in
order to determine their initial basis in
that property. Such a beneficiary includes
a qualified business unit (within the meaning of section 989) of a person that has a
functional currency other than the United
States dollar. See sections 985 through
989 for rules regarding the functional currency of a qualified business unit.
iii. Exception for household and personal
effects.
Proposed 1.6035-1(b)(1)(iii) excepts
from the reporting requirements tangible
personal property for which an appraisal is
not required under §20.2031-6(b). Section
20.2031-6(b) requires an appraisal if the
decedent’s household and personal effects
include articles having marked artistic or
intrinsic value with a total value in excess
of $3,000. In response to a comment, these
items are described in the final regulations
as household and personal effects, rather
than as tangible personal property, to conform more closely with §20.2031-6(b).
Commenters asked whether the $3,000
threshold applies to each article or to the
collective value of all the tangible personal
property includible in the gross estate.
In addition, one commenter asked how

to allocate the final value of articles of
household and personal effects appraised
as a single set or group if the estate distributes parts of that set or group among
different beneficiaries (for example, the
gross estate includes a 24-piece silver flatware set with a final value of $4,000, and
the set is divided between two beneficiaries). The commenter suggested that the
executor be given the authority to use any
reasonable method to allocate the final
value (and thus the basis) of the parts of
the set or group among the beneficiaries.
Finally, commenters noted that the $3,000
threshold amount found in §20.2031-6(b)
has remained static since 1958 and asked
that it be increased.
The Treasury Department and the IRS
understand the need for clarity on how to
apply the exception in the proposed regulations for tangible personal property.
However, addressing this issue in the
final regulations necessarily would impact
determinations of whether an appraisal is
required under §20.2031-6(b) and how to
allocate the value of estate property among
beneficiaries. These issues, including any
change to the threshold amount under
§20.2031-6(b), are more appropriately
addressed in guidance under section 2031
related to the valuation of household and
personal effects. Accordingly, §1.60351(f)(2)(ix) of the final regulations preserves the exception and does not address
the commenters’ questions.
iv. Exceptions for property whose basis is
unrelated to the Federal estate tax value
of the property.
Because section 1014(a) does not apply
to the right to income in respect of a decedent as defined in section 691 (IRD), the
Federal estate tax value of IRD does not
affect its basis in the hands of the beneficiary acquiring that property. Accordingly,
proposed §1.6035-1(b)(1)(ii) excepts IRD
from the reporting requirements. The
Treasury Department and the IRS deem
it appropriate in the final regulations to
more generally except from full section
6035 reporting requirements property
having a basis that is determined without

reference to the property’s Federal estate
tax value, including IRD. A beneficiary
receiving such property has no need to
receive a Statement providing the Federal
estate tax value of such property. Several
types of IRD are listed separately in the
regulations. These assets, such as individual retirement accounts (IRAs), may have
an IRD component and a non-IRD component of basis. The following paragraphs
discuss comments relating to reporting
exceptions or suggested exceptions for
property having a basis that is determined
without reference to the property’s Federal estate tax value.
Multiple commenters sought clarification on whether certain IRD property having a basis component is excepted from
the full section 6035 reporting requirements, particularly in the case of certain
retirement plans, annuities, installment
obligations, and interests in passthrough
entities holding an item of IRD.
With regard to annuity contracts subject to section 72 and installment obligations subject to section 453, commenters
suggested that the final regulations clarify
that, despite having a basis component,
such property be excepted because no
basis adjustment occurs with respect to
such property at the decedent’s death. The
Treasury Department and the IRS agree
and, accordingly, such property is identified in §1.6035-1(f)(2)(xi) of the final regulations as examples of property having a
basis that is determined without reference
to the property’s Federal estate tax value.
For the same reason, §1.6035-1(f)(2)(xi)
of the final regulations also includes, as an
example of such excepted property, any
amounts received under an annuity contract, such as a lump sum payment paid
to terminate an annuity contract or a death
benefit paid under an annuity contract.
Multiple commenters sought clarification as to whether IRAs and other retirement plans and deferred compensation
plans come within the IRD exception in
the proposed regulations. Commenters
noted that, in certain scenarios, a decedent will have basis in such an account or
plan, in addition to IRD. One commenter
asserted that the reporting typically

Virtual currency is defined for Federal income tax purposes as a digital representation of value that functions as a medium of exchange, a unit of account, or a store of value other than
the United States dollar or a foreign currency. See Notice 2014-21, 2014-16 I.R.B. 938; Rev. Rul. 2019-24, 2019-44 I.R.B. 1004. Some digital assets are referred to as virtual currency or
cryptocurrency.
2

Bulletin No. 2024–40

661

September 30, 2024

required for these accounts or plans outside of the section 6035 reporting requirements is sufficient and suggested adding
an exception to the final regulations so
that the section 6035 reporting requirements will not apply to property in or distributions from retirement plans (whether
or not tax-deferred). Such property, when
acquired from a decedent, generally has a
basis that is determined without reference
to the property’s Federal estate tax value.
Therefore, distributions from retirement
plans and deferred compensation plans,
including individual retirement arrangements as defined in sections 408 and
408A, are included as examples of property coming within the exception from
full reporting in §1.6035-1(f)(2)(xi) of the
final regulations.
In other instances in which property
consists only in part of a right to receive
IRD, such as an interest in a passthrough
entity that holds an interest constituting
IRD, commenters sought clarification on
the scope of the IRD exception to section
6035 reporting. In most cases, the basis
of such property is determined under
section 1014(a), even though the basis
under section 1014(a) may be adjusted
to account for the items of IRD. Because
the Federal estate tax value of such property is relevant to the determination of
the recipient’s basis in the property, such
property does not come within the exception for property having a basis determined without reference to the property’s
Federal estate tax value in §1.6035-1(f)
(2)(xi) of the final regulations. That
exception is limited to property that consists entirely of IRD.
Finally, in response to other requests
for clarification, appreciated property
described in section 1014(e) that is
acquired by a decedent within 1 year of
death, for which basis is not adjusted
under section 1014(a), also is included as
an example of property coming within the
exception from full reporting in §1.60351(f)(2)(xi) of the final regulations.
v. Exceptions for property sold,
exchanged, or disposed of prior to
distribution.
Proposed §1.6035-1(b)(1)(iv) excepts
property sold, exchanged, or otherwise
disposed of (and therefore not distrib-

September 30, 2024

uted to a beneficiary) by the estate in a
transaction in which capital gain or loss
is recognized. Commenters asserted
that this exception as proposed suggests
that the reporting requirements would
continue to apply to property sold,
exchanged, or otherwise disposed of by
the estate if no gain or loss is recognized
because the sales price equals the estate’s
basis in the property. Commenters suggested, and the Treasury Department and
the IRS agree, that the reporting requirements should not apply to property disposed of in a recognition transaction
for the estate for income tax purposes,
whether or not gain or loss is recognized,
because the basis of this property is no
longer related to the property’s Federal
estate tax value. The Treasury Department and the IRS also agree with commenters that, for purposes of the reporting required under section 6035, it is
irrelevant whether any gain or loss the
estate recognizes is capital or ordinary.
The final regulations under §1.6035-1(f)
(2)(x) include these clarifying changes.
In addition, in response to requests for
additional clarification, §1.6035-1(f)
(2)(x)(A) through (E) of the final regulations include examples of excepted
property pursuant to this rule as follows:
(1) property distributed in satisfaction of
a pecuniary bequest on which the estate
recognizes any gain or loss pursuant to
§1.661(a)-2(f); (2) property for which an
election under section 643(e)(3) has been
made for the estate to recognize any gain
or loss; (3) interests in business entities
that are redeemed for United States dollars prior to distribution to a beneficiary;
(4) property disposed of in a transaction
described in section 267(a) and (b)(13),
which disallows a loss from the sale or
exchange of property, directly or indirectly, between the executor and the beneficiary of the estate, except in a sale or
exchange in satisfaction of a pecuniary
bequest; and (5) property subject to the
mark to market accounting method at the
time of distribution from the estate or
from the decedent’s revocable trust.
Similarly, §1.6035-1(f)(2)(xii) of the
final regulations excepts bonds to the
extent that they are redeemed by the issuer
for United States dollars prior to being distributed to a beneficiary so that any gain or
loss is recognized by the estate.

662

vi. Exception for property included in the
gross estate of a beneficiary.
A commenter suggested that an exception to the reporting requirements should
apply if the beneficiary of property
acquired from a decedent dies shortly
after that decedent and that property then
is included in the deceased beneficiary’s
gross estate. In this case, the deceased beneficiary does not need a Statement identifying the value of that property because
the basis of that property will be determined as of the beneficiary’s date of death,
thus independently of the determination of
the final value of that property in the decedent’s estate. Accordingly, §1.6035-1(f)
(2)(xiii) of the final regulations identifies
property included in the gross estate of a
beneficiary who died before the due date
of the Information Return as excepted
property subject to only limited reporting.
vii. Publicly traded securities.
Two commenters suggested that publicly traded securities should be excepted
from the reporting requirements, both to
reduce burden and because §1.6045A1(b)(8) already requires basis reporting
for certain publicly traded securities. This
suggestion is not adopted in the final regulations because, while §1.6045A-1(b)(8)
requires basis reporting between brokers
if certain securities are transferred, it does
not always require reporting to the IRS
and the beneficiary. It would be burdensome for both taxpayers and the IRS to
distinguish between those covered securities and others, including shares held
in certificate form, for purposes of complying with these reporting requirements.
Further, the information to be transferred
between brokers might not always be
the final value of the security for Federal
estate tax purposes. Additional detailed
information regarding the reporting of
securities requested by commenters may
be provided in forms and instructions.
viii. Other.
One commenter requested a reporting exception for property transferred to
a charity or nonresident who is not a citizen of the U.S. (nonresident noncitizen)
based on the assumption that charities and

Bulletin No. 2024–40

nonresident noncitizens have no need for
basis information. Basis information for
such property is relevant in certain circumstances, such as for the computation
of the excise tax on a private foundation, and, therefore, this suggestion is not
adopted.
G. Identification of beneficiaries.
The proposed regulations under
§1.6035-1(c)(1) describe the reporting
requirements as they apply to different
beneficiaries, including a beneficiary
who is also an executor, a beneficiary of
a life estate, a beneficiary of a remainder
interest and a beneficiary of a contingent interest. Proposed §1.6035-1(c)(2)
describes the reporting requirements as
they apply to a beneficiary that is a trust,
estate, or other entity. Proposed §1.60351(c)(3) describes the reporting requirements a

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Airs%3A203258a490b9f1f9. Public record. Not legal advice.