2020 IRPF: How to make the estate report

We are in the period of preparation and filing of the Individual Income Tax Return (DIRPF) and many taxpayers find themselves with doubts. When it comes to providing information about someone who has passed away, the tax return may seem more complex. To help those who need to file an estate report, we have compiled the following summary.

What is an estate?

It is the set of assets, rights, and earnings left by the deceased taxpayer, which must be reported by the heirs or by whoever is indicated as the Inventory Manager. Such report is prepared through the Federal Revenue's Income Tax Return Program, currently ruled by RFB Normative Instruction 1924/2020.

We may emphasized that the report should only be filed if the deceased leaves assets, rights, or income. For the deceased taxpayer who is not under the rule, the CPF is cancelled through the Death Certificate.

How is the report?

Until the sharing of the deceased's assets actually occurs, none of the heirs (who succeeds in all or part of the inheritance, whether by force of law or under a will), sharecropper (surviving spouse who holds the right to half of the deceased's assets, under the law terms of the) or legatee (beneficiary who is enrolled in the deceased's will) is obliged to declare assets in his individual statements.

Therefore, while the inventory process is in progress, the estate IRPF information should be reported to the Federal Revenue. However, each phase of the process will require a specific report. Therefore, there are three types of reports related to the estate:

1) Initial Estate Report: related to the same calendar year of the death.

2) Intermediate Estate Report: related to the calendar years following the death, until the conclusion of the inventory.

3) Final Estate Report: related to the calendar year of the conclusion of the inventory. It covers income received in the period from January 1 to the final and unappealable judicial decision date on the sharing, oversharing or adjudication of the inventory assets.

After the Final Estate report, the deceased tax obligation is closed, and each heir will report the assets individually received in the sharing in the following calendar years.

Note: If the deceased failed to file any DIRPF in the last 5 years before his death, the inventor shall comply with this pending issue. In addition, if any error is noticed in the provision of information, the inventor may also make corrections. The same applies to income tax collections that were no longer carried out, and the estate should cover such amounts.

What is the deadline to file the Report?

The deadline to file the Estate Report follows the same as the Annual Adjustment Report, filed by the other individual taxpayers. Thus, the Inventory Manager must transmit the report file by June 30, 2020.

Transmission of the Assets to the Heirs

The transfer of assets may occur:

a) at the same amount reported by the deceased; or

b) at an amount greater than that the deceased reported, limited to the amount considered in the calculation basis of tax on transfer of assets causa mortis and donations.

In the second case, the capital gain due to the estate is realized so that each situation shall be carefully analyzed to do not generate charges that will fall on the heirs, in the last analysis. However, in the case of real estate, the transfer at an amount greater than that reported by the deceased may mean an excellent opportunity for tax savings, considering that the benefits of capital gain reducers established by legislation may be applied.