Portability election extended for some estates


Some executors who missed a deadline to apply a decedent’s unused estate and gift tax exclusion amount to a surviving spouse received an extension Friday.

The IRS announced the extension in Notice 2012-21. It applies to estates of decedents dying in the first six months after provisions for “portability” of the deceased spouse’s unused exclusion amount took effect on Jan. 1, 2011, under Sec. 2010(c), as enacted by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, P.L. 111-312.

The Tax Relief Act raised the estate and gift exclusion amount to $5 million for decedents dying in 2011, indexed for inflation in subsequent years. Even estates valued at less than that amount, however, must file Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, to make the portability election. The form is normally due within nine months after the decedent’s date of death. An automatic six-month filing extension is available, normally by filing Form 4768, Application for Extension of Time to File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes, before the due date for Form 706.

In Friday’s notice, the IRS said that “many executors of estates of decedents who died in the first half of 2011 that were not otherwise required to file Form 706 because of the value of the gross estate may have been unaware of the requirement.” In discussions with the IRS, the AICPA expressed its concerns and requested the IRS consider relief for situations in which the estate might not have made the portability election because it did not otherwise have to file Form 706.

Under the extension announced Friday, estates of decedents dying after Dec. 31, 2010, and before July 1, 2011, who are survived by a spouse and whose gross estate does not exceed $5 million have until 15 months after the date of death to file Forms 4768 and 706.

Paul Bonner ( pbonner@aicpa.org ) is a JofA senior editor.

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