Taxpayers should be pleased with the IRS’s issued guidance permitting certain estates to make a late portability election if they did not make a timely election
What is a Portability Election
A portability election allows a decedentâ€™s unused exclusion amount (deceased spousal unused exclusion amount, or DSUE amount) for estate and gift tax purposes to be available for the surviving spouseâ€™s subsequent transfers during life or at death.
Relief For Taxpayers
To provide relief for taxpayers and reduce the burden on the IRS, Rev. Proc. 2017-34 provides a simplified method to obtain an extension of time to elect portability that is available to estates of decedents that do not have a filing requirement under Sec. 6018(a) for a period the last day of which is the later of Jan. 2, 2018, or the second anniversary of the decedentâ€™s date of death. (Estates that have a Sec. 6018(a) requirement to file an estate tax return are not eligible for this relief.) There is no user fee for submissions for relief under this procedure.
A taxpayer seeking relief after the second anniversary of a decedentâ€™s death may do so by requesting a letter ruling under Regs. Sec. 301.9100-3 and Rev. Proc. 2017-1 (or any successor).
How To Qualify
To qualify for the simplified late election, the executor must file a complete and properly prepared Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, on or before the later of Jan. 2, 2018, or the second annual anniversary of the decedentâ€™s date of death. The executor must state at the top that the return is â€œFILED PURSUANT TO REV. PROC. 2017-34 TO ELECT PORTABILITY UNDER Â§ 2010(c)(5)(A).â€