Form 8971 Instructions: Deadlines, Schedule A, and Penalties

Form 8971 is the information return an estate’s executor files with the IRS to report the value of inherited property, with a separate Schedule A delivered to each beneficiary showing what they received and what it was valued at. The instructions for Form 8971 come down to four moving parts: confirming the estate has to file at all, meeting a short 30-day deadline tied to Form 706, preparing one Schedule A per beneficiary with the estate tax values that will become their basis, and getting each Schedule A into the right beneficiary’s hands with proof of delivery.

Who Has to File

The obligation falls on any executor (or other person) required to file Form 706 or Form 706-NA, and it applies even when the estate owes no estate tax after deductions and credits.¹ Multiple executors for the same estate can each have a filing duty.

If the estate is small enough that no Form 706 is required, Form 8971 is not required either. For decedents dying in 2026, the basic exclusion is $15,000,000.² A Form 706 filed solely to elect portability of a deceased spouse’s unused exclusion, where the estate’s value is below the filing threshold, also doesn’t trigger a Form 8971 obligation.¹

The 30-Day Deadline

Form 8971 is due the earlier of 30 days after Form 706 is due (including extensions) or 30 days after Form 706 is actually filed.¹ Filing Form 706 early starts the clock immediately. An executor who uses the full extension period has 30 days from the extended due date.

If property is distributed to a beneficiary after the initial Form 8971 is already in, a supplemental Form 8971 and updated Schedule A are due on or before January 31 of the year following the beneficiary’s acquisition.¹

What Property You Report, and What You Skip

Only non-exempt property goes on Schedule A. The IRS treats several categories as “excepted property” because the consistent basis rule doesn’t reach them:¹

Cash and cash equivalents in U.S. dollars, including demand deposits, CDs, money market fund shares, and cash collateral held by a third party.
Lump-sum life insurance proceeds on the decedent’s life, paid in U.S. dollars.
Federal, state, and local tax refunds payable in U.S. dollars.
Any note forgiven in full upon the decedent’s death.
Household and personal effects not requiring a formal appraisal under estate tax regulations.
Property the estate sold in a taxable transaction before distribution, because the estate already recognized gain or loss on it.
Income in respect of a decedent, such as retirement account distributions and Section 72 annuity contracts, whose basis isn’t derived from estate tax value.

Coins or bills with numismatic value don’t qualify for the cash exemption. They must be reported.

Filling Out Part I and Part II

Part I captures the identifying information: the decedent’s name, Social Security number, and date of death; the estate’s EIN; the executor’s name, address, and Taxpayer Identification Number. If the estate elected the alternate valuation date under Section 2032, that date goes on Line 9. The executor signs and certifies the return.

Part II is a roster of every beneficiary who received reportable property. For each one, enter the name, TIN or Social Security number, mailing address, the date their Schedule A was furnished, and the total estate tax value of the property they received. The section also tracks how many Schedules A are attached.¹

Completing Schedule A

Prepare one Schedule A for each beneficiary who received non-exempt property.³ Each schedule lists only the assets that beneficiary actually received. The columns call for:¹

Column A, a sequential item number for each property.
Columns B–D, a description that matches exactly how the property was described on Form 706, including the Form 706 schedule and item number. For securities, include CUSIP numbers. For real estate, include the legal description.
Column E, a description of the beneficiary’s interest if it is less than full ownership — for example, a 50% tenancy-in-common or a life estate.
Column F, “Y” if the asset actually contributed to the estate’s tax liability, “N” if it was offset by a deduction such as the marital or charitable deduction.
Column G, the valuation date, which is normally the date of death unless the estate elected the alternate valuation date.
Column H, the estate tax value — the fair market value used on the estate tax return, reported at full value before any reduction for debt, even if Form 706 reported a net figure.

Column F is the place executors get into trouble. The consistent basis rule only restricts basis for property whose inclusion in the gross estate actually increased the estate tax. Property that passed tax-free under a marital or charitable deduction should be marked “N,” because the beneficiary’s basis in that asset isn’t capped by the reported value.⁴

Delivering Schedule A to the Beneficiary

Filing Form 8971 with the IRS is only half the obligation. Each beneficiary must separately receive their own Schedule A. Delivery can be in person, by email, by U.S. mail to the beneficiary’s last known address, or by private delivery service. Do not send a beneficiary a copy of the main Form 8971; they receive only their Schedule A.¹

Part II asks the executor to certify the date each Schedule A was provided. The IRS instructions recommend retaining proof of mailing, proof of delivery, an acknowledgment of receipt, or similar documentation.¹ Certified mail or a delivery receipt gives the estate a paper trail if a beneficiary later claims the information never arrived.

How to Submit Form 8971

Estates with 10 or more Schedules A must file electronically. Paper filers send the completed Form 8971, with all Schedules A attached, to the IRS address listed in the current instructions and the IRS “Where to File” update for Form 8971.⁵

When You Have to File a Supplemental

The first Form 8971 isn’t always the last. A supplemental return and updated Schedules A are required when:

A beneficiary later receives non-exempt property that wasn’t on the original Schedule A. The supplement is due by January 31 of the year following the acquisition.
An amended Form 706, an IRS audit, or any other development changes the final value of property, or any previously reported information turns out to be incorrect or incomplete. The supplement is due within 30 days of the new information becoming available.
A trust that received estate property later distributes it to its own beneficiaries. The trustee furnishes a Schedule A to those beneficiaries.

On both the supplemental Form 8971 and each supplemental Schedule A, check the “Supplemental Filing” box and report only the information that changed.¹

Penalties for Late or Incorrect Filings

Two penalty regimes run in parallel: Section 6721 for failing to file correct Forms 8971 with the IRS, and Section 6722 for failing to furnish correct Schedules A to beneficiaries. Both use the same tiered amounts, which are indexed for inflation. For returns due in 2026:⁶

$60 per return or statement if corrected within 30 days of the deadline, subject to annual caps that vary by filer size.
$130 per return or statement if corrected after 30 days but by August 1, with higher caps.
$340 per return or statement if not corrected by August 1.
$680 per return or statement for intentional disregard, with no annual cap, or 10% of the total amount required to be reported correctly, whichever is greater.⁷

Penalties may be waived if the executor shows the failure was due to reasonable cause and not willful neglect. The exception requires genuine justification, not an explanation for a simple oversight.

Why Getting This Right Matters to the Beneficiary

Under Section 1014(f), a beneficiary’s initial basis in inherited property generally cannot exceed the value reported on the estate tax return.⁴ A beneficiary who claims a higher basis on a later sale faces a 20% accuracy-related penalty on any resulting underpayment.⁸

The cap only applies to property whose inclusion in the gross estate actually increased the estate tax. Assets that passed entirely under a marital or charitable deduction generated no estate tax, so the basis cap doesn’t restrict them.⁴ That is what makes the “Y” or “N” in Column F consequential: it tells the beneficiary whether the consistent basis rule limits their basis in that specific asset.

If a beneficiary never receives a Schedule A, or if Form 8971 is never filed, the beneficiary’s initial basis is treated as zero until the information is properly reported.⁹ That outcome is reason enough to meet the deadline, prepare each Schedule A carefully, and keep proof that every beneficiary received theirs.

1
Internal Revenue Service. Instructions for Form 8971 and Schedule A
2
Internal Revenue Service. What’s New — Estate and Gift Tax
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Internal Revenue Service. About Form 8971, Information Regarding Beneficiaries Acquiring Property from a Decedent
4
Office of the Law Revision Counsel. 26 US Code 1014 – Basis of Property Acquired From a Decedent
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Internal Revenue Service. Update to Where to File Address for Form 8971
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Internal Revenue Service. 20.1.7 Information Return Penalties
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Office of the Law Revision Counsel. 26 USC 6721 – Failure to File Correct Information Returns
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Office of the Law Revision Counsel. 26 US Code 6662 – Imposition of Accuracy-Related Penalty
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eCFR. 26 CFR 1.6662-9 – Inconsistent Estate Basis Reporting