When the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 was passed in December 2010 it required that an election be made by an executor if they wanted to follow the prior tax Act and not be taxed on the estate for a person that died in 2010 (and receive a limited step up in basis) and file Form 8939 to allocate the increase in basis of property acquired from a decedent. This election and form were to be filed by the due date of the decedents final income tax return (April 18, 2011).
However, the IRS still has the form in draft only form, and there is no additional guidance on how to make the election and file the form. The Treasury Department and the Internal Revenue Service made and announcement at the end of March that Form 8939 is not do on April 18, 2011 and should not be filed with the final Form 1040 of persons that died in 2010. New guidance and the final Form will be issued at a later date. The final form 1040 is still due on April 18, 2011 and an extension to file the return should be filed if the executor cannot file the return on time. This is not an extension of time to pay and the tax due should still be paid by the due date.