Form 8606 year of death
I can’t seem to find confirmation of value to be used for decedent’s IRA in year of death. Is anyone comfortable answering or pointing me in the direction of where I can find this info.. Section 408 is somewhat ambiguous. It states that….”the value of the contract, income on the contract, and investment in the contract shall be computed as of the close of the calendar year in which the taxable year begins.” For a deceased taxpayer I think that the close of the calendar year is not logical but rather the date of death should be used.
Thanks
Jimim
Permalink Submitted by Alan Spross on Fri, 2011-03-11 21:01
jim,
You are absolutely correct, but for some reason the IRS has not clarified this question in any formal manner. The 8606 Inst should be modified to clarify this.
The DOD is the final date for which a decedent’s final return can reflect income and deductions. Likewise, the IRA beneficiary inherits any basis remaining at the DOD, and any distributions taken after that date are reported under the beneficiary’s SSN. It makes no sense to think that distributions a beneficiary takes would retroactively change the basis % for the decedent, but that would be the result if the decedent had to use the 12/31 value instead of the DOD value.