[Federal Register Volume 81, Number 232 (Friday, December 2, 2016)]
[Rules and Regulations]
[Pages 86953-86955]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-28906]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 9797]
RIN 1545-BM98


Consistent Basis Reporting Between Estate and Person Acquiring 
Property From Decedent

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations and removal of temporary regulations.

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SUMMARY: This document contains final regulations that provide 
transition rules providing that executors and other persons required to 
file or furnish a statement under section 6035(a)(1) or (2) regarding 
the value of property included in a decedent's gross estate for federal 
estate tax purposes before June 30, 2016, need not have done so until 
June 30, 2016. These final regulations are applicable to executors and 
other persons who file federal estate tax returns required by section 
6018(a) or (b) after July 31, 2015.

DATES: Effective Date. These regulations are effective on December 2, 
2016.
    Applicability Dates: For date of applicability, see Sec.  1.6035-
2(b).

FOR FURTHER INFORMATION CONTACT: Theresa Melchiorre (202) 317-6859 (not 
a toll-free number).

SUPPLEMENTARY INFORMATION: 

Background

    Section 6018(a) requires executors to file federal estate tax 
returns with

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respect to (1) certain estates of citizens or residents of the United 
States and (2) certain estates of nonresidents that are not citizens of 
the United States. If an executor is unable to make a complete federal 
estate tax return as to any property that is a part of a decedent's 
gross estate, section 6018(b) requires every person or beneficiary 
holding such property, upon notice from the Secretary, to make a 
federal estate tax return as to such part of the gross estate.
    On July 31, 2015, the President of the United States signed into 
law H.R. 3236, The Surface Transportation and Veterans Health Care 
Choice Improvement Act of 2015, Public Law 114-41, 129 Stat. 443 (Act). 
Section 2004 of the Act added new section 6035.
    Section 6035 imposes reporting requirements with regard to the 
value of property included in a decedent's gross estate for federal 
estate tax purposes. Section 6035(a)(1) provides that the executor of 
any estate required to file a return under section 6018(a) must file 
with the Secretary and furnish to the person acquiring any interest in 
property included in the decedent's gross estate, a statement 
identifying the value of each interest in such property as reported on 
such return and such other information with respect to such interest as 
the Secretary may prescribe.
    Section 6035(a)(2) provides that each other person required to file 
a return under section 6018(b) must file with the Secretary and furnish 
to each person who holds a legal or beneficial interest in the property 
to which such return relates, a statement identifying the same 
information described in section 6035(a)(1).
    Section 6035(a)(3)(A) provides that each statement required to be 
filed or furnished under section 6035(a)(1) or (2) is to be filed or 
furnished at such time as the Secretary may prescribe, but in no case 
at a time later than the earlier of (i) the date that is 30 days after 
the date on which the return under section 6018 was required to be 
filed (including extensions actually granted, if any) or (ii) the date 
which is 30 days after the date such return is filed.
    On August 21, 2015, the Treasury Department and the IRS issued 
Notice 2015-57, 2015-36 IRB 294. That notice delayed until February 29, 
2016, the due date for any statements required by section 6035.
    On February 11, 2016, the Treasury Department and the IRS issued 
Notice 2016-19, 2016-09 IRB 362. That notice provided that executors or 
other persons required to file or furnish a statement under section 
6035(a)(1) or (2) before March 31, 2016, need not have done so until 
March 31, 2016.
    On March 4, 2016, the Treasury Department and the IRS published 
temporary regulations (TD 9757) in the Federal Register (81 FR 11431-
01) providing transition relief under Sec.  1.6035-2T. The temporary 
regulations extended the due date for statements required by section 
6035 to March 31, 2016, as provided in Notice 2016-19.
    Also on March 4, 2016, the Treasury Department and the IRS 
published in the Federal Register (81 FR 11486-01) proposed regulations 
(REG-127923-15). The text of TD 9757 served as the text of the proposed 
regulations regarding the transition relief provided under Sec.  
1.6035-2T.
    On March 23, 2016, the Treasury Department and the IRS issued 
Notice 2016-27, 2016-15 IRB 576. That notice provided that executors or 
other persons required to file or furnish a statement under section 
6035(a)(1) or (2) before June 30, 2016, need not have done so until 
June 30, 2016.
    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 
numerous written comments. Both at the hearing and in written comments, 
commenters commented favorably on the transition relief providing 
extensions of time to file and furnish the statements required by 
section 6035(a)(1) or (2) that the Treasury Department and the IRS had 
granted in TD 9757 and the notices (including Notice 2016-27 issued 
after TD 9757 was published in the Federal Register).

Explanation of Provisions

    These final regulations reiterate the statement in Notice 2016-27 
and provide that executors or other persons required to file or furnish 
a statement under section 6035(a)(1) or (2) before June 30, 2016, need 
not have done so until June 30, 2016. These final regulations are 
issued within 18 months of the date of the enactment of the statutory 
provisions to which the final regulations relate and, as authorized by 
section 7805(b)(2), are applicable to executors and other persons who 
file a return required by section 6018(a) or (b) after July 31, 2015.

Statement of Availability of IRS Documents

    IRS Revenue Procedures, Revenue Rulings, notices, and other 
guidance cited in this preamble are published in the Internal Revenue 
Bulletin (or Cumulative Bulletin) and are available from the 
Superintendent of Documents, U.S. Government Printing Office, 
Washington, DC 20402, or by visiting the IRS Web site at http://www.irs.gov.

Special Analyses

    Certain IRS regulations, including this one, are exempt from the 
requirements of Executive Order 12866, as supplemented and reaffirmed 
by Executive Order 13563. Therefore, a regulatory impact assessment is 
not required.
    In addition, section 553(b) of the Administrative Procedure Act (5 
U.S.C. chapter 5) did not apply to TD 9757 because TD 9757 was excepted 
from the notice and comment requirements of section 553(b) and (c) of 
the Administrative Procedure Act under the interpretative rule and good 
cause exceptions provided by section 553(b)(3)(A) and (B). The Act 
included an immediate effective date, thus making the first required 
statements due 30 days after enactment. It was necessary to provide 
more time to provide the statements required by section 6035(a), to 
allow the Treasury Department and the IRS sufficient time to issue both 
substantive and procedural guidance on how to comply with the section 
6035(a) requirement, and to provide executors and other affected 
persons the opportunity to review this guidance before preparing the 
required statements. TD 9757 reiterated the relief in Notice 2016-19 
and, because of the immediate need to provide relief, notice and public 
comment pursuant to 5 U.S.C. 553(b) and (c) was impracticable, 
unnecessary, and contrary to the public interest. Public comment, 
however, was received on TD 9757 and all the notices, including Notice 
2016-27, at the public hearing held on June 27, 2016, and in written 
comments submitted on the proposed regulations that cross-referenced 
and included the text of TD 9757.
    It has been certified that the collection of information in these 
final regulations will not have a significant economic impact on a 
substantial number of small entities. This certification is based on 
the fact that this rule primarily affects individuals (or their 
estates) and trusts, which are not small entities as defined by the 
Regulatory Flexibility Act (5 U.S.C. 601). Although it is anticipated 
that there may be an incremental economic impact on executors that are 
small entities, including entities that provide tax and legal services 
that assist individuals in preparing tax returns, any impact would not 
be significant and would not affect a substantial number of small 
entities. Therefore, a Regulatory Flexibility Analysis under the 
Regulatory Flexibility Act (5 U.S.C. chapter 6) is not required.

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    Pursuant to section 7805(f) of the Code, TD 9757 and notice of the 
proposed rulemaking that cross-referenced and included the text of TD 
9757 was submitted to the Chief Counsel for Advocacy of the Small 
Business Administration for comment on its impact on small business. No 
comments were received.

Drafting Information

    The principal author of these final regulations is Theresa 
Melchiorre, Office of the Associate Chief Counsel (Passthroughs and 
Special Industries). Other personnel from the Treasury Department and 
the IRS participated in their development.

List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

Amendments to the Regulations

    Accordingly, 26 CFR part 1 is amended as follows:

PART 1--INCOME TAXES

0
Paragraph 1. The authority citation for part 1 is amended by adding an 
entry in numerical order to read in part as follows:

    Authority: 26 U.S.C. 7805 * * *
* * * * *
    Section 1.6035-2 also issued under 26 U.S.C. 6035(b).
* * * * *


Sec.  1.6035-2T  [Removed]

0
Par. 2. Section 1.6035-2T is removed.

0
Par. 3. Section 1.6035-2 is revised to read as follows:


Sec.  1.6035-2  Transitional relief.

    (a) Statements due before June 30, 2016. Executors and other 
persons required to file or furnish a statement under section 
6035(a)(1) or (2) after July 31, 2015 and before June 30, 2016, need 
not have done so until June 30, 2016.
    (b) Applicability Date. This section is applicable to executors and 
other persons who file a return required by section 6018(a) or (b) 
after July 31, 2015.

John Dalrymple,
Deputy Commissioner for Services and Enforcement.
    Approved: November 16, 2016.
Mark J. Mazur,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2016-28906 Filed 12-1-16; 8:45 am]
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