Portability Elections: IRS Updates Simplified Method for Extensions.

• Author: Josephs, Stuart R.

Rev. Proc. 2022-32. effective July 8, supersedes Rev. Proc. 2017-34 discussed in the August 2017 issue of California CPA, Page 31. Rev. Proc. 2022-32 provides an even more favorable, simplified method for certain taxpayers to obtain an extension of time to make a portability election under IRC 2010(c)(5)(A).

For gift and estate tax purposes, this election allows a decedent's unused exclusion (deceased spousal unused exclusion or DSUE) 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 Rev. Proc. 2022-32 submissions.

Rev. Proc 2022-32'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 dale 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. 2022-32, Sec. 4.01's requirements.

This simplified method is not available to a decedent's estate if its executor timely filed, or was required to file, an estate tax return. The executor of an estate, not within Rev. Proc. 2022-32'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. 2022-32, 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 fifth annual anniversary of the decedent's death. Note: Under Rev. Proc. 2017-34, this deadline was 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. 2022-32 TO ELECT PORTABILITY UNDER SEC...