On August 7, 2011, the Internal Revenue Service issued Notice 2011-661 and Revenue Procedure 2011-41,2 both effective August 29, 2011, providing guidance on handling the determination of income tax basis for property owned (and passing from) decedents dying in 2010.3 The Tax Relief Act of 20104 authorized an election for deaths in 2010 relative to income tax basis determination.5 The executor of the estate can choose (for property acquired from or passing from and owned by a decedent) to – (1) apply the estate tax rate and applicable credit amount for 2011 with a new basis at death (stepped up or down as the case may be), or (2) elect to apply the rules applicable to deaths in 2010 (no federal estate tax) and use the modified carryover basis rules applicable to deaths in 2010.6 These two authorities address the election option and provide additional and more detailed guidance beyond what was provided in the statute.



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