Page 313 - Small Business IRS Training Guides

• The increase in the exclusion amount applies to transfers (whether by gift or at death) from January 1, 2018,
through December 31, 2025.

• Portability of a spouse’s unused exclusion amount to a surviving spouse was unaffected by TCJA.

Audit Considerations

During income tax examinations, consider referrals to Estate and Gift Tax for the following issues:

• Large transfers of property where the transfer appears to be for less than full and adequate consideration, or

promissory notes are given for the transfer. Promissory notes given in exchange for large transfers of property
between related parties are of particular interest.

• A deceased taxpayer had, in the years before death, large adjusted gross income, large asset and/or business

holdings, and/or large, unexplained decreases in asset and/or business holdings. Keep in mind the applicable
year’s exclusion amount, as described above, in New Tax Provision.

• The form to make a referral is available on the Estate and Gift Tax page on MySBSE.

Income tax issues arising from estate and gift tax are:

• The basis of gifted property in the hands of the donee generally tracks from the transferor/donor. See IRC § 1015.

• The basis of property acquired from a decedent is generally a stepped-up basis (the fair market value of the
property at the date of the decedent’s death). See IRC §§ 1014 and 6035.

 If the taxpayer is disposing of property acquired from a decedent, inquire whether a Schedule A of
Form 8971, Information Regarding Beneficiaries Acquiring Property From a Decedent, was received

from the estate. The form will contain basis information for the property in the hands of the beneficiary.

73233-102 11061-4 Tax Cuts and Jobs Act