After the passing of a loved one, local, state, or federal courts often request an appraisal of the decedent’s property. The inheritors and executors often face a long list of required forms and filings, which can become overwhelming. First, ensure the estate is being handled by a good attorney and CPA. Our team provides services including inventory and documentation of appraisal property and appraisal services, if required.
Form 1041 for Estate Income
Under current estate tax laws, taxpayers with an estate in excess of $600 in annual gross income must file Form 1041 U.S. Income Tax Return for Estates and Trusts. This return is due on the same tax deadline as the individual 1040, April 15th.1
Form 760 for Taxes on Estate Assets
The Estate Tax is a tax on the taxpayer’s right to transfer property at their death. It requires an accounting and inventory of everything the taxpayer owns. Form 706 United States Estate (and Generation-Skipping Transfer) Tax Return is where the final value of an estate is reported and taxed if the estate is larger than the filing threshold, which is $12,920,000 in 2023.2
For all non-cash assets, this requires an IRS Qualified Appraisal to determine the Fair Market Value of the assets at a given valuation date, either date of passing or the alternate date of 6-months later.
This threshold was drastically increased with implementation of the Tax Cuts and Jobs Act of 2017. However, with the sunsetting of the law in 2025, the filing threshold will be cut in half, adjusted for inflation.
IRS Qualified Appraisal by an IRS Qualified Appraiser
As referenced above, the estate appraisal must be an IRS Qualified Appraisal completed by an IRS Qualified Appraiser. This value is not the acquisition price of the assets or the appraised insurance value. Rather, the IRS definition of Fair Market Value is the price at which a willing buyer and willing seller could complete the sales transaction in an open market, no compulsion to buy or sell, and both having all relevant facts, with adequate exposure time on the market.
This definition removes outliers such as low liquidation sale values or high outlier sales. The value is identical to the value that would be concluded if the property were donated to charity.
Clients donating to charity tend to want higher values while those having to pay taxes on an estate want lower values. Fair Market Value is a happy and consistent medium.
Probity Appraisal Group Can Help
Our team travels onsite to capture estate inventory including photographs, dimensions, and other property information for local and state estate filings. We can provide an IRS Qualified Appraisal by our team of IRS Qualified Appraisers to substantiate the value of the estate for estate tax filing purposes.
Please call our office to learn more about our services and visit our website to learn more about our team.
(540) 322-3884
