Decedent 1 died on Date 1, survived by Decedent 2. Decedent 2 died on
Date 2. A personal representative was appointed to handle Decedent 2's
estate. In order for Decedent 2 to benefit from portability of Decedent
1's deceased spouse unused exclusion (DSUE) amount, Decedent 1's
estate needed to file a Form 706 within nine months of her death. Decedent
1's estate failed to timely file the Form 706 before the due date
to elect portability. Decedent 1's estate represents that the gross
estate does not exceed the basic exclusion amount. Decedent 1's estate
requests an extension of time to elect portability of Decedent 1's
Under Sec. 6018(a)(1), an estate tax return must be filed when the decedent's
gross estate exceeds the basic exclusion amount in effect for the calendar
year that includes the date of death. Here, Decedent 1's estate was
not required to file an estate tax return. For the purposes of the DSUE,
Section 2010(c)(5)(A) requires the executor of the estate to timely file
an estate tax return and elect portability. Under Sec. 301.9100-3, the
Commissioner may grant a reasonable extension of time to elect portability
if the taxpayer acted reasonably and in good faith and that the relief
requested will not prejudice the interests of the government. The Commissioner
determined that the requirements of Sec. 301.9100-3 were satisfied and
granted Decedent 1's estate an extension of time to elect portability.
PLR 201706012 Decedent Given Extension to Elect Portability
Dear * * *:
This letter responds to your personal representative's letter of June
21, 2016, and subsequent correspondence requesting an extension of time
pursuant to § 301.9100-3 of the Procedure and Administration Regulations
to make the election under § 2010(c)(5)(A) of the Internal Revenue
Code (Code) (portability election) to allow a decedent's surviving
spouse to take into account that decedent's "deceased spousal
unused exclusion" (DSUE) amount.
Decedent 1 died on Date 1, survived by Decedent 2. Decedent 2 died on
Date 2 and appointed Personal Representative in charge of the estate.
Date 1 is a date after the effective date of the amendment to § 2010(c),
which provides for portability of a DSUE amount to a surviving spouse.
To obtain the benefit of portability of Decedent 1's DSUE amount to
Decedent 2, Decedent 1's estate was required to file Form 706, United
States Estate (and Generation-Skipping Transfer) Tax Return, on or before
the date that is 9 months after Decedent 1's date of death or the
last day of the period covered by an extension. Decedent 1's Form
706 was due on Date 3, but the estate did not file a Form 706 to make
the portability election. The estate discovered its failure to elect portability
after the due date for making the election.
Personal Representative, as executor of Decedent 1's and Decedent
2's estate, represents that the value of Decedent 1's gross estate
is less than the basic exclusion amount in the year of the Decedent 1's
death and that during her lifetime, Decedent 1 made no taxable gifts.
As executor, Personal Representative requests an extension of time pursuant
to § 301.9100-3 to elect portability of Decedent 1's DSUE amount
pursuant to § 2010(c)(5)(A).
LAW AND ANALYSIS
Section 2001(a) imposes a tax on the transfer of the taxable estate of
every decedent who is a citizen or resident of the United States.
Section 2010(a) provides that a credit of the applicable credit amount
shall be allowed to the estate of every decedent against the tax imposed
by § 2001.
Section 2010(c)(1) provides that the applicable credit amount is the amount
of the tentative tax that would be determined under § 2001(c) if
the amount with respect to which such tentative tax is to be computed
were equal to the applicable exclusion amount.
On December 17, 2010, Congress amended § 2010(c), effective for estates
of decedents dying and gifts made after December 31, 2010, to allow portability
of a decedent's unused applicable exclusion amount between spouses.
Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act
of 2010, Pub. L. No. 111-312, § 303,124 Stat. 3296, 3302 (2010).
Section 2010(c)(2) provides that the applicable exclusion amount is the
sum of the basic exclusion amount, and, in the case of a surviving spouse,
the DSUE amount.
Section 2010(c)(3) generally provides that the basic exclusion amount
is $5,000,000, to be adjusted for inflation annually after calendar year 2011.
Section 2010(c)(4) defines the DSUE amount to mean the lesser of (A) the
basic exclusion amount, or (B) the excess of -- (i) the applicable exclusion
amount of the last deceased spouse of the surviving spouse, over (ii)
the amount with respect to which the tentative tax is determined under
§ 2001(b)(1) on the estate of such deceased spouse.
Section 2010(c)(5)(A) provides that a DSUE amount may not be taken into
account by a surviving spouse under § 2010(c)(2) unless the executor
of the estate of the deceased spouse files an estate tax return on which
such amount is computed and makes an election on such return that such
amount may be so taken into account. The election, once made, shall be
irrevocable. No election may be made if such return is filed after the
time prescribed by law (including extensions) for filing such return.
Section 2010(c)(6) provides that the Secretary shall prescribe regulations
as may be necessary or appropriate to implement § 2010(c).
Section 20.2010-2T(a) of the Estate Tax Regulations (as in effect on Date
1) provides that to allow a decedent's surviving spouse to take into
account that decedent's DSUE amount, the executor of the decedent's
estate must elect portability of the DSUE amount on a timely-filed Form
706. Under § 20.2010-2T(a)(1), the due date of an estate tax return
required to elect portability is nine months after the decedent's
date of death or the last day of the period covered by an extension (if
an extension of time for filing has been granted). Under § 20.2010-2T(a)(2),
the portability election is made by timely filing a complete and properly
prepared estate tax return, unless the executor satisfies the requirements
for the election not to apply in § 20.2010-2T(a)(3)(i).
Section 301.9100-1(c) provides that the Commissioner may grant a reasonable
extension of time under the rules set forth in§§ 301.9100-2
and 301.9100-3 to make a regulatory election, or a statutory election
(but no more than six months except in the case of taxpayer who is abroad),
under all subtitles of the Code, except subtitles E, G, H, and I.
Section 301.9100-1(b) provides that the term "statutory election"
means an election whose due date is prescribed by statute. The term "regulatory
election" means an election whose due date is prescribed by a regulation
published in the Federal Register, or a revenue ruling, revenue procedure,
notice, or announcement published in the Internal Revenue Bulletin.
Section 301.9100-3 provides the standards the Commissioner will use to
determine whether to grant an extension of time to make an election whose
due date is prescribed by a regulation (and not expressly provided by statute).
A request for relief under § 301.9100-3 will be granted when the
taxpayer provides evidence to establish to the satisfaction of the Commissioner
that the taxpayer acted reasonably and in good faith, and that granting
relief will not prejudice the interests of the government.
Section 301.9100-3(b)(1)(iii) provides that a taxpayer is deemed to have
acted reasonably and in good faith if the taxpayer failed to make the
election because, after exercising reasonable diligence (taking into account
the taxpayer's experience and the complexity of the return or issue),
the taxpayer was unaware of the necessity for the election.
The due date for the portability election is prescribed by statute in
the case of an estate required to file an estate tax return under§
6018(a). See §§ 2010(c)(5)(A), 6075(a), and 6018(a). In the
case of an estate that is not required to file an estate tax return under
§ 6018(a), the due date is prescribed by regulation. See § 20.2010-2T(a)(1).
See also § 20.2010-2(a)(1) and Rev. Proc. 2014-18, 2014-7 IRB 513,
§ 2.03. Accordingly, in the latter case, a taxpayer may seek an extension
of time to elect portability under the provisions of § 301.9100-3.
Section 6018(a)(1) requires the filing of an estate tax return in all
cases where the gross estate exceeds the basic exclusion amount in effect
under § 2010(c) for the calendar year which includes the date of
death. For purposes of this determination, under § 6018(a)(3), the
basic exclusion amount is reduced, but not below zero, by the sum of --
(A) the amount of the adjusted taxable gifts (within the meaning of §
2001(b)) made by the decedent after December 31, 1976, plus, (B) the aggregate
amount allowed as a specific exemption under § 2521 (as in effect
before its repeal by the Tax Reform Act of 1976) with respect to gifts
made by the decedent after September 8, 1976.
As executor, Personal Representative represents that, based on the value
of the gross estate and taking into account any taxable gifts, Decedent
1's estate is not required to file an estate tax return under §
6018(a). Under these facts, the Commissioner has discretionary authority
under § 301.9100-3 to grant to Decedent 1's estate an extension
of time to elect portability.
Based on the facts submitted and the representations made, we conclude
that the requirements of § 301.9100-3 have been satisfied. Accordingly,
we grant an extension of time of 120 days from the date of this letter
in which to elect portability under § 2010(c)(5). The election should
be made by filing a complete and properly-prepared Form 706 and a copy
of this letter, within 120 days from the date of this letter, to the Cincinnati
Service Center, at the following address: Internal Revenue Service, Cincinnati
Service Center, M/S 343G, Cincinnati, OH 45999. For purposes of electing
portability, a Form 706 filed by Decedent 1's estate within 120 days
from the date of this letter will be considered to be timely filed.
The rulings contained in this letter are based upon information and representations
submitted by the taxpayer and accompanied by a penalty of perjury statement
executed by an appropriate party. While this office has not verified any
of the material submitted in support of the request for rulings, it is
subject to verification on examination.
If it is later determined that, based on the value of the gross estate
and taking into account any taxable gifts, Decedent 1's estate is
required to file an estate tax return pursuant to § 6018(a), the
Commissioner is without authority under§ 301.9100-3 to grant to Decedent
1's estate an extension of time to elect portability and the grant
of the extension referred to in this letter is deemed null and void.
This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3)
provides that it may not be used or cited as precedent.
In accordance with the Power of Attorney on file with this office, a copy
of this letter is being sent to your authorized representative.
Associate Chief Counsel
(Passthroughs & Special Industries)
By: Melissa Liquerman
Branch Chief, Branch 4
(Passthroughs & Special Industries)
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