Portability Elections: IRS Provides Simplified Method to Obtain Extensions.

• Author: Josephs, Stuart R.
• Position: FedTax

Rev. Proc. 2017-34 (IRB 2017-26, June 26, 2017), effective June 9, provides a simplified method for certain taxpayers to obtain an extension of time to make a portability election under IRC Sec. 2010(c)(5)(A).

For gift and estate tax purposes, this election allows a decedent's unused exclusion amount (deceased spousal unused exclusion amount, or DSUE amount) to be available for the surviving spouse's subsequent transfers during life or at death. This simplified method is to be used in lieu of the letter ruling process. No user fee is required for submissions under Rev. Proc. 2017-34.

Note: For IRS guidance on portability and QTIP elections, see the December 2016 issue of California CPA, Page 23.

Rev. Proc. 2017-34's Scope

The simplified method is available to the executor [either appointed or, if none, a non-appointed executor under Regs. Sec. 20.2010-2(a)(6)(ii)] of a decedent's estate if:

1. The decedent died after 2010, was survived by a spouse and was a U.S. citizen or resident on the date of death;

2. The executor is not required to file an estate tax return, based on the value of the gross estate and adjusted taxable gifts--without regard to the need to file for portability purposes;

3. The executor did not file an estate tax return within nine months after the decedent's death or by the extended due date; and

4. The executor satisfies Rev. Proc. 2017-34, Sec. 4.01's requirements.

This simplified method is not available to a decedent's estate if its executor timely filed an estate tax return.

The executor of an estate, not within Rev. Proc. 2017-34's scope only because the executor does not satisfy Sec. 4.01's requirements, may request an extension to elect portability by requesting a letter ruling and paying the user fee.

Rev. Proc. 2017-34, Sec. 4.01 Requirements for Relief

1. A person permitted to make the election on behalf of a decedent's estate--i.e., an executor described in Regs. Sec. 20.2010-2(a)(6)--must file a complete and properly prepared Form 706, "U.S. Estate (and Generation-Skipping Transfer) Tax Return" by the later of Jan. 2, 2018; or the second annual anniversary of the decedent's death.

   This Form 706 will be considered complete and properly prepared if it is prepared in accordance with Regs. Sec. 20.2010-2(a)(7).

2. The executor filing the Form 706 must state at the top of this form that it is "FILED PURSUANT TO REV PROC. 2017-34 TO ELECT PORTABILITY UNDER SEC. 2010(c)(5)(A)."

   Extent of Relief

   Satisfaction of Sec...