Estate receives 120 days to elect portability

Plain-English summary

An estate missed the deadline to file Form 706 and elect portability of the deceased spouse's unused estate and gift tax exclusion amount. The estate represented that the decedent's gross estate was below the basic exclusion amount and that the decedent had made no taxable lifetime gifts, so an estate tax return was not otherwise required. The IRS concluded that the estate met the standards for discretionary relief. It granted 120 days from the ruling date to file a complete Form 706 and make the portability election. The relief would be void if the estate was later found to have been required to file a return under section 6018(a).

Ruling snapshot

• Question: Could an estate not otherwise required to file Form 706 receive additional time to elect portability of the decedent's unused exclusion amount?
• Outcome: approved
• Key authorities: IRC §§ 2010(c)(5), 6018(a); Treas. Reg. §§ 20.2010-2(a), 301.9100-3

Full text (IRS public release)

Internal Revenue Service                             Department of the Treasury
                                                     Washington, DC 20224

Number: 201735018                                    Third Party Communication: None
Release Date: 9/1/2017                               Date of Communication: Not Applicable
Index Number: 9100.35-00, 2010.04-00
                                                     Person To Contact:
----------------------------                         ------------------------, ID No. --------------
-------------------------                            Telephone Number:
 -------------------------------------------         ----------------------
                                                     Refer Reply To:
                                                     CC:PSI:4
                                                     PLR-139250-16
                                                     Date:
         Re: ----------------------------------      May 22, 2017


Legend
Decedent          =        --------------------
Spouse            =        -----------------------
Date 1            =        -----------------------
Date 2            =        -------------------


Dear --------------:

This letter responds to your personal representative’s letter of November 28, 2016,
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.

The facts and representations submitted are as follows. Decedent died on Date 1, survived
by Spouse. 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’s DSUE amount to Spouse, Decedent’s estate was required to file
Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, on or
before the date that is nine months after Decedent’s date of death or the last day of the
period covered by an extension. Decedent’s Form 706 was due on Date 2. The estate
discovered its failure to elect portability after the due date for making the election.

Decedent’s estate represents that the value of Decedent’s gross estate is less than the
basic exclusion amount in the year of the Decedent’s death, and Decedent did not make

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any taxable gifts during life. Decedent’s estate requests an extension of time pursuant to
§ 301.9100-3 to elect portability of Decedent’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.

PLR-139250-16                                 3



Section 2010(c)(6) provides that the Secretary shall prescribe regulations as may be
necessary or appropriate to implement § 2010(c).

Section 20.2010-2 (a) of the Estate Tax Regulations 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 § 20.2010-2(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).

Section 20.2010-2(a)(1) further provides that an extension of time to elect portability may
be available, under the procedures applicable under §§ 301.9100-1 and 301.9100-3, for
estates not required to file an estate tax return under § 6018(a).

Section 20.2010-2(a)(2) provides that 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 § 20.2010-2(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 a
taxpayer who is abroad), under all subtitles of the Code, except subtitles E, G, H, and I.

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.

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

PLR-139250-16                                 4



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.

Decedent’s estate represents that, based on the value of the gross estate and taking into
account any taxable gifts, Decedent’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’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,
Stop 82, Cincinnati, OH 45999. For purposes of electing portability, a Form 706 filed by
Decedent’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’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’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. See § 20.2010-2(a)(1).

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.

PLR-139250-16                                 5


In accordance with the Power of Attorney on file with this office, a copy of this letter is being
sent to your authorized representative.

                                       Sincerely,

                                       Associate Chief Counsel
                                       (Passthroughs & Special Industries)

                                     Leslie H. Finlow
                                  By _____________________________
                                     Leslie H. Finlow
                                     Senior Technician Reviewer, Branch 4
                                     Office of Associate Chief Counsel
                                     (Passthroughs & Special Industries)


Enclosures (2)
      Copy of this letter
      Copy for § 6110 purposes



cc: