Estate exclusion portability election Regs. issued.

• Author: Nevius, Alistair M.

The IRS issued temporary and proposed regulations on how to elect to use a deceased spouse's unused exclusion from estate taxes, also known as the portability election (T.D. 9593; REG-141832-11). The rules apply to married spouses where the death of the first spouse to die occurs on or after Jan. 1, 2011, and are therefore retroactive.

A lifetime exclusion amount ($5.12 million for 2012) is allowed in the calculation of the gift and estate tax for each individual. Beginning in 2011, spouses can use the unused amount of their deceased spouse's lifetime exclusion amount if the deceased spouse's estate elects this treatment on an estate tax return.

Under the regulations, to elect portability, the estate of the first deceased spouse must file an estate tax return by the due date of that return (nine months after death plus any extension), even if the estate would not otherwise be required to file a return under Sec. 6018(a). To make the election, the estate must file a timely "complete and properly-prepared return" (Temp. Regs. Sec. 20.2010-2T(a) (2)). To make this requirement easier for estates that are not required to file a return under Sec. 6018(a), the regulations permit the executor to estimate the gross value of the estate based on a good faith determination of the value of the estate's assets.

To opt out of the election, if an estate tax return is required to be filed under Sec. 6018(a), the executor must make an affirmative statement on the estate tax return signifying the decision to have the portability election not apply. If no estate return is required under...