IRS issues final portability rules for estate tax exemptions

No short-form option is provided; regulatory time extension is allowed only for estates valued below the filing threshold.
By Sally P. Schreiber, J.D.

The IRS issued final rules governing the requirements for electing portability of a deceased spousal unused exclusion (DSUE) amount to the surviving spouse and the rules for the surviving spouse's use of the DSUE amount. The final rules, which apply to estates of decedents dying on or after June 12, 2015, adopt with a few clarifying changes temporary regulations issued three years earlier (T.D. 9593). (The temporary regulations still apply to estates of decedents dying on or after Jan. 1, 2011, and before June 12, 2015.)

In the final regulations, at the request of commenters, the IRS clarified that a regulatory extension of the time to elect portability will be granted only to an estate with a gross estate value below the Sec. 6018 threshold amount for filing an estate tax return and that is thus not otherwise required to file an estate tax return. The final regulation also includes two clarifications of what is a "complete and properly prepared" estate tax return for purposes of the portability election.

The IRS rejected a suggestion that it provide a short-form estate tax return for taxpayers who file a return only to elect portability and are not otherwise required to file an estate tax return. It cited problems with accuracy in other types of abbreviated returns and the administrative problems with creating and maintaining alternate forms as reasons for its decision.

In addition, the final regulations include changes that clarify certain rules about the application of the portability rules to qualified domestic trusts, the availability of a DSUE amount to a surviving spouse who becomes a citizen of the United States, and the impact of credits in Secs. 2012 through 2015 on computing the DSUE amount.

  • T.D. 9725

By Sally P. Schreiber, J.D., a JofA senior editor.

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