Tax basis of assets inherited from estate of decedent, who died in 2010.

1. Congress in 2010 revived the estate tax retroactively for 2010 with a $5,000,000 exemption and a 35% rate.
2. For estates of $5,000,000 or less, Congress restored the use of a stepped-up basis (allowing heirs to use the basis at the date of death or the alternative valuation date six months later) to inherited assets.
3. For estates over $5,000,000 estates can elect to pay no estate tax, but heirs get a limited basis step up of $1,300,000. Surviving spouses are allowed to increase their basis by an extra $3,000,000. Executors are responsible for reporting the amounts to heirs and the IRS on form 8939.
4. The IRS has not finalized form 8939. Heirs who sold property inherited from a 2010 estate may may have to file for an extension until IRS issues form 8939.