Form 8971--Information Regarding Beneficiaries Acquiring Property from a Decedent

Instructions for Form 8971
and Schedule A

Department of the Treasury
Internal Revenue Service

(January 2016)

Information Regarding Beneficiaries Acquiring Property From a Decedent

General Instructions

The filing requirement for Form 8971
does not apply to an executor of an estate
that is not required to file an estate tax
return because the gross estate plus
adjusted taxable gifts is less than the
basic exclusion amount, but who does so
for the sole purpose of making an
allocation or election respecting the
generation-skipping transfer tax. See the
Instructions for Form 706, Form 706-NA,
or Form 706-A for more information on the
filing requirement for those forms.

Purpose of Form

When To File

Section references are to the Internal
Revenue Code unless otherwise noted.

Future Developments

For the latest information about
developments related to Form 8971 and
its instructions, such as legislation
enacted after they were published, go to
www.irs.gov/form8971.

The Surface Transportation and Veterans
Health Care Choice Improvement Act of
2015 requires executors of an estate and
other persons who are required to file
Form 706, United States Estate (and
Generation-Skipping Transfer) Tax
Return; Form 706-NA, United States
Estate (and Generation-Skipping Transfer)
Tax Return Estate of nonresident not a
citizen of the United States; or Form
706-A, United States Additional Estate
Tax Return; to report the final estate tax
value of property distributed or to be
distributed from the estate, if the estate tax
return is filed after July 2015. Form 8971,
along with a copy of every Schedule A, is
used to report values to the IRS. One
Schedule A is provided to each
beneficiary receiving property from an
estate.
Provide each beneficiary only
with a copy of that beneficiary’s
CAUTION
own Schedule A. Do not provide
a copy of the Form 8971 with or without
attached Schedule(s) A to any beneficiary.

!

Certain property received by a
beneficiary may be subject to a
consistency requirement, meaning that the
beneficiary cannot use a value higher than
the value reported on Schedule A as the
beneficiary’s initial basis in the property.

Who Must File

An executor of an estate or other
person(s) required to file Form 706 or
Form 706-NA under sections 6018(a) and
6018(b) or a qualified heir required to file
Form 706-A under section 2032A, if the
return is filed after July 2015, and whether
or not that form is filed timely, is required
to file Form 8971 with attached
Schedule(s) A with the IRS and to provide
each beneficiary listed on the Form 8971
with that beneficiary’s Schedule A.
Jan 28, 2016

Form 8971 (including all attached
Schedule(s) A) must be filed with the IRS
and only the Schedule A is to be provided
to the beneficiary listed on that
Schedule A, no later than the earlier of:
The date that is 30 days after the date
on which Form 706, Form 706-NA, or
Form 706-A is required to be filed
(including extensions) with the IRS; or
The date that is 30 days after the date
Form 706, Form 706-NA, or Form 706-A is
filed with the IRS.
If the first Form 706, Form 706-NA, or
Form 706-A is filed both after the form’s
due date (including extensions) and after
July 2015, the Form 8971 and
Schedule(s) A are due 30 days after the
filing date.
Form 8971 is a separate filing
requirement from the estate’s Form 706,
706-NA, or 706-A, and should not be
attached to the respective estate tax
return. The 8971 and attached
Schedule(s) A must be filed with the IRS,
separate from any and all other tax returns
filed by the estate.
Note. Notice 2015-57, 2015-36 I.R.B.
294, available at www.irs.gov/irb/
2015-36_IRB/ar12.html, made February
29, 2016, the due date for:
All Forms 8971 (including the attached
Schedule(s) A) required to be filed with the
IRS after July 31, 2015, and before
February 29, 2016; and
All Schedules A required to be
provided to beneficiaries after July 31,
2015, and before February 29, 2016.

Cat. No. 68440S

Where To File

File Form 8971 (including all Schedule(s)
A) at the following address.
Department of the Treasury
Internal Revenue Service Center
Mail Stop #824G
Cincinnati, OH 45999
A beneficiary can be provided
Schedule A:
In person to an individual beneficiary, to
the trustee(s) of a beneficiary trust, or to
the executor(s) of a beneficiary estate;
By email;
By U.S. mail to the beneficiary’s last
known address; or
By private delivery service to the
beneficiary’s last known address (see
below).
The executor of the estate (or other
person required to file) must certify on
Form 8971, Part II, Column D, the date on
which Schedule A was provided to each
beneficiary and should keep proof of
mailing, proof of delivery,
acknowledgment of receipt, or other
information relevant for the estate’s
records. In cases where a trust or another
estate is a beneficiary and has multiple
trustees or executors, providing
Schedule A to one trustee or executor is
enough to meet the requirement.
Private delivery services. Certain
private delivery services designated by the
IRS may be used to meet the “timely
mailing as timely filing” rule for tax returns.
These private delivery services include
only the following.
Federal Express (FedEx): FedEx
Priority Overnight, FedEx Standard
Overnight, FedEx 2Day, FedEx
International Priority, FedEx International
First, FedEx First Overnight, FedEx
International Next Flight Out, and FedEx
International Economy.
United Parcel Service (UPS): UPS Next
Day Air, UPS Next Day Air Saver, UPS
2nd Day Air, UPS 2nd Day Air A.M., UPS
Worldwide Express Plus, UPS Worldwide
Express, and UPS Next Day Air Early AM.
The private delivery service can tell you
how to get written proof of the mailing
date.

Supplemental Forms 8971
and Schedules A

The value of the property to be reported
on the initial Form 8971 and the attached
Schedules A is the fair market value of the
asset as reported on the estate tax return.
However, the final value for purposes of
the federal estate tax may differ from that
reported on the estate tax return. A value
is considered “final” when:
The value of the property shown on an
estate tax return filed with the IRS is not
contested by the IRS before the period of
assessment expires;
The value of the property is specified by
the IRS and is not timely contested by the
estate (or other person required to file
under section 6018(b)); or
The value of the property is determined
by a court or pursuant to a settlement
agreement with the IRS, including the
resolution of a claim for abatement or
refund.
If information reported on Form 8971
and the Schedule(s) A filed with the IRS or
provided to a beneficiary differs from the
final value (as the result of the resolution
of a valuation dispute or otherwise), the
executor or other person required to make
this filing must file a supplemental Form
8971 and affected Schedule(s) A with the
IRS and provide an updated supplemental
Schedule A to each affected beneficiary
no later than 30 days after the adjustment.
See Where To File, earlier. On both the
supplemental Form 8971 and each
supplemental Schedule A, the
“Supplemental Filing” box should be
checked and only the information that has
changed should be reported.
If the executor or other person required
to file Form 8971 has been notified that a
Form 706, Form 706-NA, or Form 706-A
related to the Form 8971 and Schedule(s)
A has been selected for examination, a
copy of the supplemental Form 8971 with
attached supplemental Schedule(s) A
should be provided to the office
conducting the examination.

Rounding Off to Whole
Dollars

The value of property should be reported
in U.S. dollars and rounded to
whole-dollar amounts. To round, drop
amounts under 50 cents and increase
amounts from 50 to 99 cents to the next
dollar. For example, $1.39 becomes $1
and $2.55 becomes $3. If you add two or
more amounts to figure an item's value,
include the cents when adding the
amounts and round off only the total.

Penalties
Failure to file correct Forms 8971 by
the due date (section 6721). If the

executor of an estate or other person
required to file Form 8971 fails to file a
correct Form 8971 and/or Schedule A with
the IRS by the due date and reasonable
cause is not shown, a penalty may be
imposed. The penalty applies if there is a
failure to file timely, a failure to include all
information required to be shown on the
form or schedule, a failure to include
correct information on the form or
schedule, or a failure to file a correct
supplemental Form 8971 and/or
Schedule A by the due date. A complete
Form 8971 includes all Schedule(s) A.
Only one penalty will apply for all
failures relating to a single filing of a single
Form 8971 and the Schedule(s) A
required to be filed along with it. Each
filing of a Form 8971 with Schedule(s) A is
a separate filing, regardless as to whether
the filing is of the initial Form 8971 and
Schedule(s) A or a supplemental Form
8971 and Schedule(s) A.
The amount of the penalty depends on
when the correct Form 8971 with
Schedule(s) A is filed.
The penalty is as follows.
$50 per Form 8971 (including all
Schedule(s) A) if it is filed within 30 days
after the due date. The maximum penalty
is $532,000 per year (or $186,000 if the
taxpayer qualifies for lower maximum
penalties, as described below).
$260 per Form 8971 (including all
Schedule(s) A) if it is filed more than 30
days after the due date or if it is not filed.
The maximum penalty is $3,193,000 per
year ($1,064,000 if the taxpayer qualifies
for lower maximum penalties, as
described below).
All penalty amounts shown are subject
to adjustment for inflation.

a TIN, a beneficiary's surname, and the
value of the asset the beneficiary is
receiving from the estate.

Lower maximum penalties. You qualify
for lower maximum penalties if your
average annual gross receipts for the 3
most recent tax years (or for the period
you were in existence, if shorter) ending
before the calendar year in which the
information returns were due are $5 million
or less.

Lower maximum penalties. You qualify
for lower maximum penalties if your
average annual gross receipts for the 3
most recent tax years (or for the period
you were in existence, if shorter) ending
before the calendar year in which the
information returns were due are $5 million
or less.

Intentional disregard of filing require­
ments. If any failure to file a correct Form
8971 or Schedule A is due to intentional
disregard of the requirements to file a
correct Form 8971 and Schedule(s) A, the
minimum penalty is at least $530 per Form
8971 and the Schedule(s) A required to be
filed with it, with no maximum penalty.

Intentional disregard of filing require­
ments. If any failure to provide a correct
Schedule A is due to intentional disregard
of the requirements to provide correct
Schedules A, the penalty is at least $530
per Schedule A with no maximum penalty.

Inconsequential error or omission. An
inconsequential error or omission is not
considered a failure to include correct
information. An inconsequential error or
omission does not prevent or hinder the
IRS from processing the Form 8971 and
the Schedule(s) A required to be filed
along with it. Errors and omissions that are
never inconsequential are those related to
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Note. A TIN is a Social Security Number
(SSN), an Employer Identification Number
(EIN), an Individual Taxpayer Identification
Number (ITIN), or any other number used
by the IRS in the administration of tax
laws.
Failure to furnish correct Schedules A
to beneficiaries by the due date (sec­
tion 6722). If the executor of an estate or
other person required to file Form 8971
fails to provide a correct Schedule A to a
beneficiary and does not show reasonable
cause, a penalty may be imposed. The
penalty applies if there is a failure to
provide the Schedule A by the due date, a
failure to include all information required to
be shown on the schedule, a failure to
include correct information on the
schedule, or a failure to provide a correct
supplemental Schedule A by the due date.
The penalty applies for each Schedule A
required to be provided.
The amount of the penalty depends on
when a correct Schedule A is provided.
The penalty is as follows.
$50 per Schedule A if it is provided
within 30 days after the due date. The
maximum penalty is $532,000 per year (or
$186,000 if the taxpayer qualifies for lower
maximum penalties, as described below).
$260 per Schedule A if it is provided
more than 30 days after the due date or if
it is not provided. The maximum penalty is
$3,193,000 per year ($1,064,000 if the
taxpayer qualifies for lower maximum
penalties, as described below).
All penalty amounts shown are subject
to adjustment for inflation.

Inconsequential error or omission. An
inconsequential error or omission is not
considered a failure to include correct
information. An inconsequential error or
omission cannot reasonably be expected
to prevent or hinder the beneficiary from
timely receiving correct information and
using the information to report basis on the
beneficiary’s own return. Errors and
omissions that are never inconsequential
are those related to (a) the value of the

asset the beneficiary is receiving from the
estate, and (b) a significant item in a
beneficiary's address.
Reasonable cause exception to the
penalties for failing to file Forms 8971
and Schedules A and for failing to pro­
vide Schedules A to beneficiaries. The
penalties for failing to file correct Form
8971 and Schedules A with the IRS and
for failing to provide correct Schedules A
to beneficiaries will not apply to any failure
that is shown to be due to reasonable
cause and not to willful neglect. In general,
it must be shown that the failure was due
to an event beyond the taxpayer’s control
or due to significant mitigating factors. It
must also be shown that the executor or
other person required to file acted in a
responsible manner and took steps to
avoid the failure.

Penalties for Inconsistent
Filing

Beneficiaries who report basis in property
that is inconsistent with the amount on the
Schedule A may be liable for a 20%
accuracy-related penalty under section
6662.

Obtaining Forms and
Publications To File or Use

You can access the IRS website 24 hours
a day, 7 days a week, at IRS.gov to:
Download forms, instructions, and
publications;
Order IRS products;
Research tax questions;
Search publications by topic or
keyword; and
Sign up to receive local and national tax
news by email.

Specific Instructions

Complete Form 8971 and each attached
Schedule A in its entirety. A form or
schedule filed with the IRS without entries
in each field will not be processed. A form
with an answer of “unknown” will not be
considered a complete return.

Part I — Decedent and
Executor Information
Line 3. Enter the SSN of the decedent. If
the decedent did not have an SSN, the
executor (or other person required to file
Form 706) should obtain one for the
decedent by filing Form SS-5, Application
for a Social Security Card. You can get
Form SS-5 online at
www.socialsecurity.gov or by calling the
SSA at 1-800-772-1213.
Line 4. If there is more than one executor,
enter the name of one executor and see
the instructions for line 8.

Line 6. Provide only the TIN of the
executor listed on line 4 and see the
instructions for line 8.
Line 7. Provide only the address of the
executor listed on line 4. Use Form 8822,
Change of Address, to report a change of
the executor’s address. Also, see the
instructions for line 8.
Line 8. On an attached statement,
provide the name, address, telephone
number, and TIN of each executor (if any)
other than the one named on line 4.
Line 9. If the executor made an election
on the estate tax return to use alternate
valuation under section 2032, provide the
alternate valuation date.

Part II — Beneficiary
Information

A beneficiary is an individual, trust, or
other estate who has acquired (or is
expected to acquire) property from the
estate. If the executor is also a beneficiary
who has acquired (or is expected to
acquire) property from the estate, the
executor is a beneficiary for purposes of
the Form 8971 and Schedule A.

Column A. Enter the name of each
individual, trust, or other estate that
acquired (or is expected to acquire)
property from the estate. Retain a copy of
the Form 8971 (including all attached
Schedule(s) A) for the estate’s records.
Column B. Enter the TIN of each
beneficiary listed. Entering “none,”
“unknown,” or similar language, or
otherwise failing to enter a TIN, will cause
the form to be considered incomplete and
may subject the estate to penalties.
Column D. For each beneficiary, enter
the date on which the executor gave
Schedule A to the beneficiary. See Where
To File, earlier.
Return preparer. Permission to discuss
the Form 8971 is limited to the information
reported on (or required to be reported on)
the Form 8971 and attached Schedule(s)
A and does not authorize the return
preparer to represent the estate before the
IRS or to enter into any agreements with
the IRS respecting the Form 8971 and
attached Schedule(s) A.
Complete and attach Form 2848,
Power of Attorney and Declaration of
Representative, if the executor would like
the return preparer to represent the estate
before the IRS with respect to the Form
8971 and Schedule(s) A or any other
matter related to the estate. Completing
Form 2848 may authorize the person
designated on that form to sign
agreements, consents, waivers, or other
documents.
Anyone who is paid to prepare the
Form 8971 and/or any Schedule A must
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sign the form as a paid preparer and give
a copy of the completed Form 8971 and/or
Schedule(s) A to the executor required to
file Form 706, Form 706-NA, or Form
706-A.
Note. A paid preparer may sign original or
amended returns by rubber stamp,
mechanical device, or computer software
program.

Signature and Verification

All executors shown on Form 8971 and
listed on any attached statement are
responsible for the reporting requirements
related to Form 8971 and Schedule(s) A.
However, it is enough for only one of the
executors to sign Form 8971.
Form 8971 is signed under penalties of
perjury and all executors are responsible
for the information included on Form 8971
and Schedule(s) A as filed with the IRS
and Schedules A provided to
beneficiaries. All executors are also liable
for all applicable penalties.

Schedule A — Information
Regarding Beneficiaries
Acquiring Property From a
Decedent

Executors of estates filing Form 8971 are
required to complete a Schedule A for
each beneficiary that acquired (or is
expected to acquire) property from the
estate. You will need a copy of the Form
706, Form 706-NA, or Form 706-A filed by
the estate of the decedent to complete this
schedule. All property acquired (or
expected to be acquired) by a beneficiary
must be listed on that beneficiary’s
Schedule A. If the executor has not
determined which beneficiary is to receive
an item of property as of the due date of
the Form 8971 and Schedule(s) A, the
executor must list all items of property that
could be used, in whole or in part, to fund
the beneficiary’s distribution on that
beneficiary’s Schedule A. (This means
that the same property may be reflected
on more than one Schedule A.) A
supplemental Form 8971 and
corresponding Schedule(s) A should be
filed once the distribution to each such
beneficiary has been made.
Use and duplicate page A-2
(Schedule A—Continuation Sheet) if
additional space is needed to list the
property acquired (or expected to be
acquired) by a beneficiary. Attach a copy
of each completed Schedule A to Form
8971 and submit to the IRS. Provide a
copy of each Schedule A only to the
beneficiary named on that Schedule A. Do
not provide a copy of the Form 8971 to a
beneficiary. See the instructions under
Where To File, earlier.

Column A. Number the items received by
the beneficiary. Continue this numbering
on page A-2 of the
Schedule A—Continuation Sheet (if
necessary).
Column B. Use the same description in
column B that the executor used for the
property on the Form 706, Form 706-NA,
or Form 706-A. Include in column B the
schedule and item number where the
property was reported on Form 706, Form
706-NA, or Form 706-A, as applicable.
For more information on details to be
included by asset type or schedule, see
the Instructions for Form 706, Form
706-NA, or Form 706-A. If the beneficiary
acquired (or is expected to acquire) a joint
interest, a fractional interest, or any other
interest in property which is less than
100%, indicate the interest in the property
the beneficiary will acquire.
Column C. An entry (Y or N) is required
in this column for each asset. Indicate “Y”
if the property contributed to the amount of
the federal estate tax payable by the
estate.
Generally, any property that qualifies
for a marital deduction under section 2056
or 2056A or a charitable deduction under
section 2055 will not generate estate tax
and “N” should be indicated.
Column D. Generally, the valuation date
of property will be the decedent’s date of
death. If the estate elected to use an
alternate valuation date, list the value of
the property on the alternate valuation
date. See section 2032 for additional
guidance.
Column E. List the value reported on
Form 706, Form 706-NA, or Form 706-A. If

the value reported on a Schedule A that
has already been filed with the IRS or
provided to a beneficiary changes (as a
result of the resolution of a valuation issue
or otherwise), you must file a
supplemental Form 8971 and associated
Schedule(s) A with the IRS and provide an
updated Schedule A to each affected
beneficiary no later than 30 days after the
adjustment.
Privacy Act and Paperwork Reduction
Act Notice. We ask for the information on
this form to carry out the Internal Revenue
laws of the United States. You are
required to give us the information. We
need it to ensure that you are complying
with these laws and to allow us to figure
and collect the right amount of tax.
Sections 6035 and 6109, and the
regulations require you to provide this
information.
You are not required to provide the
information requested on a form that is
subject to the Paperwork Reduction Act
unless the form displays a valid OMB
control number. Books or records relating
to a form or its instructions must be
retained as long as their contents may
become material in the administration of
any Internal Revenue law. Generally, tax
returns and return information are
confidential, as required by section 6103.
However, section 6103 allows or requires
the Internal Revenue Service to disclose
information from this form in certain
circumstances. For example, we may
disclose information to the Department of
Justice for civil or criminal litigation, and to
cities, states, the District of Columbia, and
U.S. commonwealths or possessions for
use in administering their tax laws. We

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may also disclose this information to other
countries under a tax treaty, to federal and
state agencies to enforce federal non-tax
criminal laws, or to federal law
enforcement and intelligence agencies to
combat terrorism. Failure to provide this
information, or providing false information,
may subject you to penalties.
The time needed to complete and file
this form and related schedules will vary
depending on individual circumstances.
The estimated average time is:
Recordkeeping . . . . . . . .
Learning about the law or the
form . . . . . . . . . . . . . . .
Preparing, copying,
assembling, and sending the
form to the IRS . . . . . . . .

3hr., 49 min.
42 min.

47 min.

If you have comments concerning the
accuracy of these time estimates or
suggestions for making this form simpler,
we would be happy to hear from you. You
can send us comments from www.irs.gov/
formspubs/. Click on “More Information”
and then on “Give us feedback.” You can
also send your comments to the Internal
Revenue Service, Tax Forms and
Publications Division, 1111 Constitution
Ave. NW, IR-6526, Washington, DC
20224. Do not send the tax form to this
address. Instead, see Where To File,
earlier.