December 12, 1980

The federal Crude Oil Windfall Profit Tax Act of 1980 (P.L. 96-223) contained a provision (Sec. 401(d)) permitting executors of certain estates to elect to have the basis of property received from the estate determined for federal income tax purposes according to the decedent's basis, rather than according to the value for estate tax purposes (market value at date of death or alternate valuation date.) The executor's election of decedent's carryover basis had to be made by July 31, 1980.

Your bank, as executor, has elected the decedent's carry­over basis in two estates. You inquire as to the basis of the property in the hands of the beneficiaries of these estates for Massachusetts income tax purposes.

The rules for adjustments to basis of property for Massachusetts purposes contained in General Laws Chapter 62, Section 7 were repealed by Chapter 409 of the Acts of 1979, resulting in the use of basis as determined under the Internal Revenue Code for sales of property in taxable years beginning on or after January 1, 1980.

For Massachusetts income tax purposes, federal tax law is determined according to the Internal Revenue Code as amended on November 6, 1978 and in effect for the taxable year. (G.L. c. 62, s. 1(c)). Section 401(d) of the Windfall Profit Tax was enacted in 1980 and did not amend the Internal Revenue Code.

Based on the foregoing, for purposes of determining gain or loss under Massachusetts General Laws Chapter 62 the basis of property acquired from a decedent is the value of the property at the date of death, or at the alternate valuation date if so elected for federal estate tax purposes, whether or not the executor elected the decedent's carryover basis for federal income tax purposes.

Very truly yours,

/s/L. Joyce Hampers

L. Joyce Hampers
Commissioner of Revenue

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LR 80-85