Jun 26, 2017

Posted in Blog - "Altman Speaks"

Added Flexibility to Make Portability Election

The IRS, effective June 9, 2017, in Rev Proc 2017-34, gave taxpayers additional time to make a portability election on a Federal estate tax return (Form 706).  Portability is the ability of the surviving spouse to inherit the deceased spouse’s unused Federal estate tax exemption, but only if an election is made on a timely filed Form 706.  This became available for any person who died after 12/31/2010.  As a result of Rev Proc 2017-34, taxpayers may now file a Form 706 (only for a portability election) up to 2 years after the deceased spouse’s date of death.  Moreover, for any taxpayer who did not previously elect portability on a timely filed Form 706 (since 2011) those taxpayers, no matter how long ago their spouse died, may file a Form 706, only to elect portability, up to January 2, 2018 for estates already more than 2 years past DOD.

Apparently the IRS got tired of the flood of PLR requests for extensions under the previous rules (i.e., Reg 301.9100-3), and said “fine, you can have more time” – up to a point.  If an estate is past the 2 years (after January 2, 2018), a PLR under 301.9100-3 is still available, but this Rev Proc provides a simplified procedure for estates that aren’t too old, and without the fees and costs of a PLR.  There are still some requirements – the return has to be filed solely to claim the DSUE of an estate that wasn’t otherwise required to file, and if it’s later found that a Form 706 really was required, the DSUE claim is void as not being timely. And the executor has to include at the top of the return, “FILED PURSUANT TO REV. PROC 2017-34 TO ELECT PORTABILITY UNDER § 2010(c)(5)(A).”

Please contact us if you would like to explore making a late portability election for your spouse (if he or she died after 12/31/2011).  It will be more cost effective to make the late election prior to January 2, 2018.

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