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IRS Simplifies Method, Extends Time to Make a Portability Election


6/22/17
 
Synopsis
 
Revenue Procedure 2017-34 provides a simplified process for certain taxpayers to obtain an extension of time to make a portability election pertaining to a deceased spousal unused exclusion (DSUE) amount. The procedure applies to estates that are not required to file an estate tax return because the value of the gross estate and adjusted taxable gifts are under the filing threshold. The simplified method replaces the letter ruling process and no user fee is required for submissions filed in accordance with the revenue procedure. The guidance is effective June 9, 2017.
 
Background
 
The previous simplified method for requesting a time extension for portability elections expired in 2014.  Following this, the IRS issued several letter rulings granting the extension of time in making a portability election for estates that were not required to file an estate tax return.  According to the IRS, the “considerable number of ruling requests for an extension of time to elect portability received since December 31, 2014 indicates a need for continuing relief for the estates of decedents having no filing requirement.”
 
To qualify for the simplified process, the taxpayer must be an executor of the estate of a decedent who:
 
  1. Was survived by a spouse
  2. Died after December 31, 2010
  3. Was a citizen or resident of the United States on the date of death
 
In addition, the estate must not be required to, and must not have filed, an estate tax return. 
 
How to File
 
For a simplified portability election, the executor must file a complete and properly-prepared Form 706 on or before the later of January 2, 2018 or the second annual anniversary of the decedent’s date of death. The top of the Form 706 must contain the phrase: “FILED PURSUANT TO REV. PROC. 2017-34 TO ELECT PORTABILITY UNDER §2010(c)(5)(A).”
 
If relief is granted under this Revenue Procedure, the DSUE amount of the decedent is available to the surviving spouse. 
 
What Does CohnReznick Think?
 
This new Revenue Procedure will be beneficial to individuals who did not know that a return was required to elect portability. It will also benefit taxpayers who are reconsidering filing due to a change in the value of the assets of the surviving spouse. 
 
Contact
 
For more information , please contact Jay Scheidlinger, Director, at Jay.Scheidlinger@CohnReznick.com or at 646-254-7445 or Steve Dane, Partner, at Steve.Dane@CohnReznick.com or at 959-200-7103.
 
 
Any advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues. Nor is it sufficient to avoid tax-related penalties. This has been prepared for information purposes and general guidance only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. 
 
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