IRS grants extra time to allocate GST exemption to a trust transfer

Plain-English summary

A donor made two transfers to an irrevocable trust with generation-skipping
transfer tax potential. The donor's attorney told the accounting firm that the
donor intended to allocate enough GST exemption to produce a zero inclusion
ratio. The gift tax return elected out of automatic allocation and allocated
exemption to the property transfer, but inadvertently omitted the allocation
for a cash transfer. The IRS found that the regulatory standards for relief
were satisfied and granted 120 days to allocate GST exemption to the cash
transfer on an amended Form 709.

Ruling snapshot

• Question: May the donor receive extra time to allocate GST exemption to a trust transfer that was accidentally omitted from the gift tax return?
• Outcome: Approved
• Key authorities: IRC §§ 2631, 2632, and 2642(g); Treas. Reg. § 26.2642-7

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224

Number: 202630010
Release Date: 7/24/2026
Index Number: 2642.07-00

Third Party Communication: None
Date of Communication: Not Applicable

Person To Contact:
---------------, ID No. -----------------
Telephone Number:
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Refer Reply To:
CC:PT&E:B04
PLR-119793-25

Date:
April 23, 2026

In Re:---------------------------

LEGEND

Donor = --------------------------- -------------------------
Spouse = --------------------
Trust = ----------------------------------------------------------
Attorney = -------------------
Accounting Firm = ------------------------
x = -----------
Property = -----------------------------------------------------------------------
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Date = -------------------------
Year = -------

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

This letter responds to your authorized representative's letter dated November 4, 2025,
requesting an extension of time under § 2642(g) of the Internal Revenue Code and
§ 26.2642-7 of the Generation-Skipping Transfer (GST) Tax Regulations to allocate
GST exemption to a transfer to a trust.

The facts and representations submitted are as follows:

On Date in Year, Donor established an irrevocable trust (Trust) and in the same year
made transfers of $x and certain property (Property) to Trust. Donor and Spouse are
married. Trust has GST potential.

Donor retained Attorney to advise Donor on tax and estate planning matters related to
the creation and funding of Trust as well as the allocation of GST exemption related to

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2

transfers to Trust. Donor engaged Accounting Firm to prepare his Form 709, United
States Gift (and Generation-Skipping Transfer) Tax Return, for Year. In written
correspondence prior to the filing of Donor’s Form 709, Attorney advised Accounting
Firm of Donor’s intent to allocate GST exemption to Trust in order to achieve a zero-
inclusion ratio in Trust for GST tax purposes. Accounting Firm prepared Donor's Year
Form 709 and on the return elected under § 2632(c)(5) that the automatic allocation of
GST exemption not apply to both Year transfers to Trust ($x and Property). On
Schedule D and the attached notice of allocation, Donor allocated his available GST
exemption to the transfer of Property to Trust, but inadvertently failed to allocate GST
exemption to the transfer of $x to Trust.

Accordingly, contrary to Donor’s intent, GST exemption was not allocated to the Year
transfer of $x to Trust.

It is represented that Donor had sufficient GST exemption to allocate to the Year
transfer of $x to Trust.

RULING REQUESTED

You have requested an extension of time to allocate GST exemption to the Year
transfer of $x to Trust.

LAW AND ANALYSIS

Section 2601 imposes a tax on every generation-skipping transfer. A generation-
skipping transfer is defined under § 2611(a) as (1) a taxable distribution, (2) a taxable
termination, and (3) a direct skip.

Section 2602 provides that the amount of the tax imposed by § 2601 is the taxable
amount multiplied by the applicable rate.

Section 2631(a) provides that, for purposes of determining the inclusion ratio, every
individual shall be allowed a GST exemption which may be allocated by such individual
(or his executor) to any property with respect to which such individual is the transferor.

Section 2631(b) provides that any allocation under § 2631(a), once made, shall be
irrevocable.

Section 2632(a)(1) provides that an individual's GST exemption may be allocated at any
time on or before the date prescribed for filing the estate tax return for such individual's
estate (determined with regard to extensions), regardless of whether such return is
required to be filed. Section 2632(a)(2) provides that the manner in which allocations
are to be made shall be prescribed by forms or regulations issued by the Secretary.

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Section 2632(c)(1) provides that if any individual makes an indirect skip during such
individual's lifetime, any unused portion of such individual's GST exemption shall be
allocated to the property transferred to the extent necessary to make the inclusion ratio
for such property zero. If the amount of the indirect skip exceeds such unused portion,
the entire unused portion shall be allocated to the property transferred.

Section 2632(c)(3)(A) provides that for purposes of this subsection, the term “indirect
skip” means any transfer of property (other than a direct skip) subject to the tax imposed
by chapter 12 made to a GST trust.

Section 2632(c)(5)(A)(i) provides that an individual may elect to have the automatic
allocation rules not apply to (I) an indirect skip, or (II) any or all transfers made by such
individual to a particular trust.

Section 2642(b)(1)(A) provides that, except as provided in § 2642(f), if the allocation of
the GST exemption to any transfers of property is made on a gift tax return filed on or
before the date prescribed by § 6075(b) for such transfer or is deemed to be made
under § 2632(b)(1) or (c)(1), the value of such property for purposes of § 2642(a) shall
be its value as finally determined for purposes of chapter 12 (within the meaning of
§ 2001(f)(2)), or, in the case of an allocation deemed to have been made at the close of
an estate tax inclusion period, its value at the time of the close of the estate tax
inclusion period.

Section 2642(g)(1)(A) provides that the Secretary shall by regulation prescribe such
circumstances and procedures under which extensions of time will be granted to make
an allocation of GST exemption described in § 2642(b)(1) or (2), and an election under
§ 2632(b)(3) or (c)(5). Such regulations shall include procedures for requesting
comparable relief with respect to transfers made before the date of the enactment of
§ 2642(g).

Section 2642(g)(1)(B) provides that in determining whether to grant relief under this
paragraph, the Secretary shall take into account all relevant circumstances, including
evidence of intent contained in the trust instrument or instrument of transfer and such
other factors as the Secretary deems relevant. For purposes of determining whether to
grant relief under this paragraph, the time for making the allocation (or election) shall be
treated as if not expressly prescribed by statute.

Section 26.2642-7 of the Generation-Skipping Transfer Tax Regulations sets forth the
procedures for requesting an extension of time to make an allocation of GST exemption
described in § 2642(b)(1) or (2), and an election under § 2632(b)(3) or (c)(5), and the
standards used to determine whether relief may be granted.

Section 26.2642-7(d)(1) provides that requests for relief will be granted when and to the
extent that the transferor or the executor of the transferor’s estate provides evidence
establishing to the satisfaction of the Internal Revenue Service that the transferor or the

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executor of the transferor’s estate acted reasonably and in good faith, and that the grant
of relief will not prejudice the interests of the government.

Section 26.2642-7(d)(2) provides a nonexclusive list of factors that will be considered in
determining whether the transferor or the executor of the transferor’s estate acted
reasonably and in good faith for purposes of § 26.2642-7, including: (i) the intent of the
transferor to timely allocate GST exemption to a transfer or to timely make an election
under § 2632(b)(3) or (c)(5); (ii) intervening events beyond the control of the transferor
that caused the failure to allocate GST exemption to a transfer or to make an election
under § 2632(b)(3) or (c)(5); (iii) lack of awareness, despite the exercise of reasonable
diligence, by the transferor or the executor of the transferor’s estate, taking into account
the experience of the transferor or the executor of the transferor’s estate and the
complexity of the GST tax issue, as the cause of the failure to allocate GST exemption
to a transfer or to make an election under § 2632(b)(3) or (c)(5); (iv) consistency by the
transferor with regard to the allocation of the transferor’s GST exemption to one or more
trusts or skip persons; and (v) reasonable reliance by the transferor or the executor of
the transferor’s estate on the advice of a qualified tax professional.

Section 26.2642-7(d)(3) provides a nonexclusive list of factors that will be considered to
determine whether the interests of the government would be prejudiced for purposes of
§ 26.2642-7, including: (i) an attempt to benefit from hindsight; (ii) the timing of the
request for relief, including any delay by the transferor or the executor of the transferor’s
estate in the filing of the request for relief that was intended to deprive the Internal
Revenue Service of a sufficient period of time in which to challenge any element of the
transfer that is the subject of the request for relief; (iii) the occurrence and effect of an
intervening taxable termination or taxable distribution between the time for making a
timely allocation of GST exemption or a timely election described in § 2632(b)(3) or
(c)(5) and the time at which the request for relief was filed; and (iv) certain
circumstances involving the expiration of a period of limitations on the assessment or
collection of transfer taxes.

Based on the facts submitted and the representations made, we conclude that the
requirements of § 26.2642-7 have been satisfied. Therefore, Donor is granted an
extension of time of 120 days from the date of this letter to allocate Donor’s GST
exemption to the Year transfer of $x to Trust.

The allocation of GST exemption should be made on an amended Form 709 for Year.
The Form 709 should be filed with the Internal Revenue Service at the following
address: Internal Revenue Service Center, ATTN: E&G, Stop 824G, 7940 Kentucky
Drive, Florence, KY 41042-2915.

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

PLR-119793-25
5

Except as expressly provided herein, we neither express nor imply any opinion
concerning the tax consequences of any aspect of any transaction or item discussed or
referenced in this letter.

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.

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.

Sincerely,

Associate Chief Counsel
(Passthroughs, Trusts, and Estates)

Melissa C. Liquerman
By: ______________________________
Melissa C. Liquerman
Senior Counsel, Branch 4
Office of the Associate Chief Counsel
(Passthroughs, Trusts, and Estates)

Enclosure:
  Copy for § 6110 purposes

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