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Tuesday, February 21, 2012

IRS Extends Date to Elect Portability for Qualifying Estates of Married Decedents Dying in First Half of 2011

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On February 17, the IRS issued Notice 2012-21, which extends by six months the deadline to make a portability election for a qualified estate whose executor did not timely file either Form 4768, Application for Extension of Time To File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes, or Form 706, United State Estate (and Generation-Skipping Transfer) Tax Return, within nine months of the date of death.

The portability election, made by filing a completed Form 706 (see IRS News Release IR-2011-97 (9/29/11), passes along a decedent’s unused estate and gift tax exclusion amount to a surviving spouse. An extension for filing Form 706 is available to estates of married individuals with assets of $5 million or less, but only if the decedent died in the first six months of 2011, and the executor files Form 4768 requesting an extension of time to File Form 706 no later than 15 months after the decedent's date of death.

The extra time is available to an estate even if the estate did not request an automatic six-month filing extension on Form 4768 prior to the regular nine-month filing deadline. As a result, these estates will now have until 15 months after the date of death, rather than the usual nine months, to make the election by filing an estate tax return on Form 706. Thus, the first estate tax returns for estates eligible to make the portability election (because the date of death is after December 31, 2010) are now due on Monday, April 2, 2012.

Affected estates should submit both a properly-prepared Form 4768 and Form 706 to the IRS no later than 15 months after the decedent’s date of death.

Notice 2012-21 is available at http://op.bna.com/dt.nsf/r?Open=sdoe-8rklqw. IRS news release IR-2012-24 is at http://op.bna.com/dt.nsf/r?Open=sdoe-8rkltd.

Robert G. Herman
Manager, EGT/IRS Procedure
Bloomberg BNA
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