Inherited Business (6–12 Months): Review Missed Opportunities

Some valuable elections may be expiring or requiring amended filings. Review what's been done so far and assess whether you can still make beneficial elections.

Your first full-year return is approaching. Depending on when in the year the death occurred, you may be preparing the business's first tax return under your ownership. This return establishes your baseline for accounting method, depreciation schedules, and entity classification.

Basis documentation is essential now. Under IRC Section 1014, you received a stepped-up basis in the inherited business assets. But the IRS can challenge your basis if you lack documentation. Your CPA should prepare a formal basis schedule supported by an appraisal or the values reported on Form 706.

The estate may still be open. Form 706 could have been filed on extension, and estate administration often takes 12-18 months. Distributions from the estate to you may still be occurring, each with its own tax treatment.

The pitfall: At this stage, people assume the urgent work is done. But failing to document stepped-up basis now means scrambling for evidence years later if you sell the business or its assets.