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AICPA’s Comments on Notice 2011-66

Published: September 14th, 2011

By: Matthew J. Ahearn

On September 7, the AICPA Carryover Basis Task Force sent comments to the IRS on Notice 2011-66 making suggestions and requesting additional guidance on several issues, some of which are summarized below.

They suggest a “policy of restraint” in auditing taxpayers having carryover basis issues for tax years after 3 years from the filing of the Form 8939.  The current lilmitations period rules would not foreclose the IRS from challenging a taxpayer’s basis that was adjusted under section 1022, which means that taxpayers will not have certainty in the tax consequences of transactions involving such property.  Moreover, taxpayers may not have the documentation needed to support their basis in such property.  Such documentation would be maintained by the executor.

They request guidance on whether the 754 election to adjust the basis of partnership assets is available if the section 1022 election is made, and if such election is available, they request an extension of 12 months from the extended due date of the partnership return to revoke a 754 election.

They request guidance under section 1022(g) concerning whether or not a partner’s share of partnership liabilities in excess of the basis in his or her partnership interest is disregarded.

They urgently requested guidance on alternative minimum tax (AMT) issues.  Specifically, they request guidance on whether basis must be allocated for both regular and AMT purposes and how carryovers and unrealized losses for AMT purposes should be treated.

Additional information concerning 2010 tax issues can be found at the AICPA’s trusts and estate webpage.