I Need to File an Estate Return with the I.R.S.

An estate bequeathing inheritances of shares in privately-held companies (or of the company itself) must be reported at their fair market value (by the estate, who is responsible for the tax liability). Such inheritances may consist of shares in operating companies or family limited partnerships (often holding companies of real estate and/or marketable securities).

The giftor must report the amount of tax payable by attaching a Qualified Appraisal of the gift to the tax return. Gift returns are some of the most frequent and expensive targets for challenge by the Internal Revenue Service.  Such challenges are time-consuming, expensive, aggravating.

The Pension Protection Act (2006) imposes severe penalties on both the taxpayer and the appraiser for the misreporting of estate taxes.

You may expect your tax reporting experience will be painless only if the appraisal meets the following conditions:

  1. Credible: An appraisal that is robust, detailed and independent stands the best chance of being received as credible minimizes the risk of a challenge by the IRS;
  2. Qualified: A “qualified appraisal” is prepared by a “qualified appraiser” according to professional valuation standards, such as the Uniform Standards of Professional Appraisal Practice, (USPAP).
  3. Timely: an appraisal that is delivered quickly gives you the opportunity to review its contents thoroughly and allows you to move on to other priorities.

Clients and their financial and legal advisors rely upon Arpeggio Advisors in order to ensure their ability to promptly and properly file their estate tax returns.

Would you like more information? Contact us for a free consultation or if you'd like more literature to review.

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