On the later of March 31, 2016 or 30 days after the filing of an estate tax return (form 706), for 706s filed after July 31, 2015, the filer is also required to file form 8971 with the IRS and to furnish persons receiving assets from the decedent with Schedule A to that form containing information on the value per the 706 of assets which that beneficiary received or will receive.
The recipient beneficiary will be subject to penalties if he or she fails to adhere to a duty to treat the items received consistently with their 706 values for the beneficiary’s income tax purposes. The filer is subject to penalties for failure to timely and/or completely file the 8971, and for failure to file a supplementary 8971 either based on assets discovered after the filing or based on changes to the 706 values that have been finalized on audit or through a court proceeding.
This filing requirement only applies for 706s which are required to be filed based on the size of the estate. This filing requirement is not required for 706s that are only filed to elect portability.