Inherited Business (1–6 Months): Key Elections & Structuring

You still have time to make important tax elections like Section 754 adjustments (for partnerships/LLCs) and entity classification choices. Don't delay on these time-sensitive decisions.

Estate tax return coordination is active. Form 706 is due nine months after death, with a six-month extension available. If the estate is above the filing threshold, the executor is currently making decisions about valuation methods, including whether to use the alternate valuation date under IRC Section 2032, which values assets six months after death instead of at the date of death.

The Section 754 election is still available. Since the partnership return for the year of death has not yet been filed, you can still request that the partnership make this election. This is your most valuable near-term tax decision for partnership interests.

Prior-year returns may still need filing. If the decedent had unfiled returns, the statute of limitations has not started running. Your CPA should file any missing returns to start the clock and limit IRS exposure.

The tradeoff: You have more time than someone within 30 days, but less margin for error. Each week narrows the available options, so prioritize the highest-value elections first.