Provisions in 2010 tax law (Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010) allow the estate of a decedent who is survived by a spouse to make a portability election, thereby permitting the surviving spouse to apply the decedent’s unused exclusion—referred to as the deceased spousal unused exclusion (DSUE) amount—to the surviving spouse’s own transfers during life and at death. The portability election is available to estates of decedents dying after 2010. The American Taxpayer Relief Act of 2012, Pub. L. No. 112-rev 1, made portability permanent.
Under section 2010(c)(5)(A), a portability election is effective only if made on a Form 706 that is filed within the time prescribe by law (including extension) for filing such return. Because the due date for election portability for estates required to file an estate tax return under section 6018(a) is prescribed by statute (see sections 2010(c)(5)(A), 6075(a), and 6018(a)), the Commissioner does not have the discretionary authority under Reg. sec. 301.9100-3 to grant additional time for making the election. However, if an executor is not required by section 6018(a) to file an estate tax return and the executor files or may file an estate tax return to elect portability, the due date for electing portability is prescribed by Reg. section 20.2010-2T(a), and not by statute. Therefore, in such cases, the Commissioner has the discretionary authority under Reg. sec. 301.9100-3 to grant an extension of time to make the election.
Rev. Proc. 2014-18
Rev. Proc. 2014-18 [PDF 27 KB] provides limited circumstances in which a simplified method for estates to obtain an automatic extension of time to make a portability election, provided the conditions sets forth in section 3 and 4 of Rev. Proc. 2014-18 are met. The late election relief provided by Rev. Proc. 2014-18 is limited to estates for which the decedent died after December 31, 2010, and on or before December 31, 2013, the estate is not required to file an estate tax return, and the estate did not file an estate tax return within the time prescribed by Reg. section 20.2010-2T(a)(1). Estates meeting the conditions of Rev. Proc. 2014-18 must use it rather than requesting a private letter ruling under Reg. sec. 301.9100-3.
Taxpayers that are not eligible for relief under Rev. Proc. 2014-18 may request an extension of time to make the portability election by requesting a private letter ruling under Reg. sec. 301.9100-3 pursuant to the procedures set forth in Rev. Proc. 2014-1, 2014-1 I.R.B. 1.
For additional information on the section 2010 regulations, read TaxNewsFlash-United States [PDF 46 KB] (June 15, 2012).