Evans Estate Law Resources

We previously reported that Notice 2020-23 defers until July 15, 2020, the filing certain tax returns and making tax payments, as well as the time for completing certain “time-sensitive actions,” that would otherwise be required on or after April 1, 2020, and before July 15.

The “time-sensitive actions” covered by the notice include the actions listed in Rev. Proc. 2018-58, 2018-50 I.R.B. 990 (12/10/2018), which in Section 9 described a number of actions relating to estates and trusts, summarized below.

Most of the actions are elections that must be made on income, estate, or gift tax returns, or actions that must be taken within a certain period of time after filing a return.

One action that is included in Rev. Proc. 2018-58 that is unrelated to the filing of a return is the time within which to make a qualified disclaimer. (See #12 and #21, below.) So if the nine month period within which a qualified disclaimer must be made falls on or after April 1, 2020, and before July 15, 2020, the disclaimant now has until July 15 to make the disclaimer.

The complete list of actions in Rev. Proc. 2018-58 (and therefore incorporated into Notice 2020-23) is as follows:

1. The election under IRC section 643(g) to treat certain payments of estimated tax paid by a trustee as paid by the beneficiary.
2. An election to treat a qualified revocable trust as part of the decedent’s estate under IRC 645.
3. The election by an estate or complex trust to treat any amount properly paid or credited to a beneficiary within the first 65 days following the close of the taxable year as an amount that was properly paid or credited on the last day of such taxable year under IRC § 663(b).
4. The annual return (Form 5227) required of all charitable remainder trusts described under section 664, all pooled income funds described under section 642(c)(5), and all other trusts that meet the definition of a split-interest trust under section 4947(a)(2), as well as the Schedule K-1 a charitable remainder trust must give beneficiaries.
5. The claim for state death tax credit that the executor of a decedent’s estate must file within four years of filing a federal estate tax return (Form 706). (Only applicable to estates of decedents dying after December 31, 2004.)
6. The claim for credit for foreign death taxes that the executor of a decedent’s estate must file within four years of filing a federal estate tax return (Form 706).
7. The notice that an executor of a decedent’s estate must give to the IRS within 30 days of receiving refund of any state or foreign death tax previously claimed as a credit against federal estate tax. (Only applicable to state death taxes for estates of decedents dying after December 31, 2004.)
8. If an executor of a decedent’s estate elects on Form 706 to exclude a portion of the value of land that is subject to a qualified conservation easement, agreements relating to development rights must be implemented within two years after the decedent’s death.
9. The executor of a decedent’s estate may elect an alternate valuation on a late filed Form 706 if the Form 706 is not filed later than one year after the due date.
10. A qualified heir, with respect to specially valued property, is provided a two-year grace period immediately following the date of the decedent’s death in which the failure by the qualified heir to begin using the property in a qualified use will not be considered a cessation of qualified use and therefore will not trigger additional estate tax.
11. The executor of a decedent’s estate has 90 days after notification of incomplete information/signatures to provide the information/signatures to the IRS regarding an election on Form 706 with respect to specially valued property.
12. For purposes of section 2046, a taxpayer may make a qualified disclaimer no later than nine months after the later of the date of the transfer creating the interest, or the date the taxpayer attains age 21.
13. If the executor of a decedent’s estate elects to take a deduction for state and foreign death tax imposed upon a transfer for charitable or other uses, the executor must file a written notification to that effect with the IRS before expiration of the period of limitations on assessments (generally three years). (Only applicable to state death taxes for estates of decedents dying after December 31, 2004.)
14. A party in interest must commence a judicial proceeding to change an interest into a qualified interest no later than the 90th day after the estate tax return (Form 706) is required to be filed or, if no return is required, the last date for filing the income tax return for the first taxable year of the trust.
15. A qualified domestic trust (QDOT) election must be made on Form 706, Schedule M, and the property must be transferred to the trust before the date on which the return is made. Any reformation to determine if a trust is a QDOT requires that the judicial proceeding be commenced on or before the due date for filing the return.
16. The trustee of a QDOT must file a claim for refund of excess tax no later than one year after the date of final determination of the decedent’s estate tax liability.
17. A qualified heir, with respect to qualified family owned business, has a two-year grace period immediately following the date of the decedent’s death in which the failure by the qualified heir to begin using the property in a qualified use will not be considered a cessation of qualified use and therefore will not trigger additional estate tax. (The section 2057 election is not available to estates of decedents dying after December 31, 2004).
18. The executor of a decedent’s estate has 90 days after notification of incomplete information/signatures to provide the information/signatures to the IRS regarding an election on Form 706 with respect to specially valued property.
19. The executor of a decedent’s estate may deduct estate, inheritance, legacy, or succession taxes actually paid to any state or the District of Columbia from the decedent’s gross estate and, with certain exceptions, the deduction is only allowed if the taxes are actually paid and the deduction claimed within four years of filing Form 706.
20. The IRS will treat certain transfers as made for full and adequate consideration in money or money’s worth where husband and wife enter into a written agreement relative to their marital and property rights and divorce actually occurs within the 3-year period beginning on the date one year before such agreement is entered into.
21. A taxpayer may make a qualified disclaimer no later than nine months after the later of the date of the transfer creating the interest, or the date the taxpayer attains age 21.
22. A return with respect to the tax imposed by Subtitle B, Chapter 13 (generation-skipping tax), must be filed for direct skips, on or before the date on which an estate or gift tax return is required to be filed with respect to such transfer, and for all other cases, on or before the 15th day of the fourth month after the close of the taxable year of the person required to make such return in which such transfer occurs.
23. With respect to the tax imposed by section 2801 on any covered gift or covered bequest, the tax will be paid by the U.S. recipient of such covered gift or covered bequest.
24. If the trustee of a foreign trust elects to be considered an electing foreign trust, so that the foreign trust is treated as a domestic trust solely for purposes of the section 2801 tax, the trustee must file a timely Form 708 annually either to report and pay the section 2801 tax on all covered gifts and covered bequests received by the trust during the calendar year, or to certify that the electing foreign trust did not receive any covered gifts or covered bequests during the calendar year.
25. The basis reporting required of executors by section 6035 (Form 8971), which must be filed with the IRS and furnished to each person acquiring any interest in property included in the decedent’s gross estate for Federal estate tax purposes no later than the earlier of the date which is 30 days after the date on which the federal estate tax return was required to be filed (including extensions, if any) or the date which is 30 days after the date such return is filed.

[4/29/2020 Update: The IRS has provided additional guidance on the application of Notice 2020-23 in the form of questions and answers in “COVID-19 Relief for Estate and Gift.”]