706,709,1041,1040?

[KATHERINE]

Hi dear friends,

Just get confused on something.  A person passed away in 2020, a few of her rental properties didnot transfer to her kids untill2021.    I am doing 2020 now: I prepared 1041, 1040 and 706 (to show the step up basis).   Should I do 709 as well in 2021 along with 1041?    if I dont do 709, how can i show IRS the step basis transferred to beneficiaries?

Sorry to bother with these basics, but cannot find any answer except here.

Thank you so much!

 

Kate

 

[Gail in Virginia]

A 709 is for gift tax returns.  Once the person is deceased, they can't make gifts- the property would transfer by inheritance. The basis  would have been reported on the 706 the previous year, even if it did not transfer until this year.  Not may area of expertise, so if someone knows different I am willing to learn something new. 

[DANRVAN]

7 hours ago, KATHERINE said:

and 706 (to show the step up basis). 

That is optional but not necessary if form 706 is otherwise not required.

You just need documentation of how fmv was arrived at.

 

1 hour ago, Gail in Virginia said:

A 709 is for gift tax returns

Correct, there is no need for a 709 either.

[KATHERINE]

 

So, I will file 706 . 1041. 1040 for 2020; future years (2021 and forward), will only 1041 till all assets transferred to beneficiaries by the exactor. 

 

Thank you all friends here.    Really appreciated.