2024-44: Final regulations issued for basis reporting for inherited assets

Final regulations governing the requirement for estates and beneficiaries to consistently report basis were issued on September 17, 2024, by the IRS. (TD 9991)

The most consequential change made by the IRS from the proposed regulations is the elimination of the “zero basis rule” created by the proposed regulations. Under that rule, if the estate failed to report the basis of property that was required to be reported before the statute of limitations expired for assessments, then the unreported property transferred from the estate to the beneficiary was deemed to have a basis of zero.

The elimination of the zero-basis rule is great news for estate beneficiaries. It means those assets will no longer be inherited with zero basis, and instead will follow traditional inherited basis rules.

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2024-44: Final regulations issued for basis reporting for inherited assets