At long last, the IRS has issued guidance on a special election for estates of individuals who died in 2010. (IRS Notice 2011-66)
If an executor chooses, no federal estate tax applies, but heirs must generally carry over the decedent’s basis (subject to limited step-up-in-basis exceptions).
Taxpayers can make the election by filing Form 8939, Allocation of Increase in Basis for Property Acquired From a Decedent, before Nov. 16, 2011. One catch: The final version of Form 8939 hasn’t been released yet.