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By Trisha J. English, Esq.
Winstead PC, Houston, TX
The Internal Revenue Service has simplified the process for many
estates seeking an extension of time to make a portability election
of a decedent's unused exclusion amount.
Recall that decedents' estates may make a portability election
with regard to the deceased spousal unused exclusion amount ("DSUE
amount") if the decedent passed away after December 31, 2010, and
was survived by a spouse. The election allows the surviving spouse
to apply the DSUE amount to the surviving spouse's own transfers
during life and at death. In order to make the election, a Form
706, United States Estate (and Generation-Skipping Transfer)
Tax Return, must be timely filed on behalf of the decedent's
estate and include a computation of the DSUE amount.
Generally, the due date of an estate tax return (whether or not
it elects portability) is within nine months of the decedent's date
of death, unless an extension has been granted. If an estate had
missed the deadline for seeking an extension of time to file the
estate tax return for the sole purpose of electing portability, the
estate would have had to request a private letter ruling granting
an extension pursuant to Regs. §301.9100-3. Relief under Regs.
§301.9100-3 is usually granted if the taxpayer acted reasonably and
in good faith, however, the process of preparing and requesting a
private letter ruling can be both time consuming and costly.
Revenue Procedure 2014-18, 2014-7 I.R.B. 513, which became
effective January 27, provides an automatic extension of time to
file an estate tax return to elect portability for estates that
meet the following criteria:
1. The taxpayer is the executor of the estate of a decedent
2. The estate was not otherwise required to file an estate
tax return (based on the value of the decedent's gross estate and
adjusted taxable gifts made by the decedent during the decedent's
3. The estate tax return was not timely filed.
4. An estate tax return is filed on or before December 31,
5. The estate tax return states at the top of the form
that the return is "FILED PURSUANT TO REV. PROC. 2014-18 TO ELECT
PORTABILITY UNDER §2010(c)(5)(A)."
This revenue procedure will be particularly helpful to executors
of estates that may have missed the filing deadline because the
value of the decedent's gross estate was below the threshold
requirement for filing an estate tax return. Additionally, this
revenue procedure will assist executors of estates of married
same-sex couples whose legal status may not have been recognized at
the time the estate tax return had been due.
(See Rev. Rul. 2013-17, issued following the decision
in United States v. Windsor, 570 U.S. __, 133 S. Ct. 2675
(2013), and recognizing same sex spouses lawfully married under
state law for federal tax purposes prospectively as of September
The revenue procedure warns, however, that there is no change to
the filing deadline for a claim for credit or refund of an
overpayment of tax. Generally, a request for a credit or refund
must be filed within three years from the date of filing the tax
return, or two years from the date the tax was paid, whichever is
later. Thus, surviving spouses (or the executors of the
estates of surviving spouses) that are seeking (or who may seek) a
credit or refund due to a late portability election need to be
mindful of these deadlines and, if need be, file a protective claim
if it is anticipated that a portability election will be made.
Finally, for those estates that have pending requests for
private letter rulings (dated prior to January 27) seeking an
extension of time to file an estate tax return to elect
portability, as long as the estate meets the criteria outlined
above, the executor may rely on the revenue procedure, withdraw the
letter ruling request, and receive a refund of the user fee. If the
executor does not withdraw the letter ruling request, the IRS will
issue the letter ruling.
For more information, in the Tax Management Portfolios, see
Peebles, 844 T.M., Estate Tax Credits and Computations,
and in Tax Practice Series, see ¶6300, Credits, Deferred Tax
Payments, and Tax Liabilities.
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