Deadline near to make (very) late portability elections

Your Guide to State, Local, Federal, Estate + International Taxation

portability elections, estate planning, tax, IRSEarlier this summer, the IRS issued Rev. Proc. 2017-34 which granted a permanent automatic extension for the time to file an estate tax return in order to elect portability of the decedent’s unused exclusion amount (DSUE). It also created an additional temporary opportunity to make very late portability elections for decedents who died after December 31, 2010, but you must act before January 2, 2018.

Surviving spouses (including same-sex married couples) may make retroactive portability elections for any spouse who passed away in 2011 or later. In situations where the then-surviving spouse has also passed and has an estate tax due, an opportunity exists to retroactively claim portability, and then file an amended estate tax return for the second spouse who died. Acting in this short window of relief may not only result in an estate tax savings at a surviving spouse’s death, but may even result in a refund of estate taxes already paid!

In order to utilize the simplified late extension, the executor merely needs to file a not-otherwise-required-to-be-filed Form 706 estate tax return by the later of January 2, 2018, or the second anniversary of the decedent’s date of death. There is no user fee for submissions for relief under this procedure. The executor must state at the top that the return is “FILED PURSUANT TO REV. PROC. 2017-34 TO ELECT PORTABILITY UNDER § 2010(c)(5)(A).” Note that estates that are required under Sec. 6018(a) to file an estate tax return are not eligible for this relief.

This is an extremely taxpayer friendly ruling that can have substantial tax saving benefits for those who act quickly. If this applies to you (or someone you know) it is important to contact an estate tax professional in order to file an estate tax return before the deadline. Henry+Horne has a team of professionals who specialize in Estate, Gift, + Trust tax preparation and planning that can help you with this.

Stacy Redmond