PORTABILITY…SIMPLIFIED

The IRS recently published Rev. Proc. 2017-34 to simplify the method for certain taxpayers to obtain an extension of time to make a “portability” election.

Under the Federal estate and gift tax regime, a portability election allows the surviving spouse to apply the decedent’s “deceased spouse’s unused exclusion” (DSUE) amount to the surviving spouse’s own transfers during life and at death.

Before this revenue procedure, the only way to file a late portability election was to submit a ruling request, which is expensive and time-consuming. Please note that this previous procedure continues to be necessary if the filing threshold for an estate tax return has been met based on the total value of the gross estate and adjusted taxable gifts. If so, the extension of time to elect portability is not available under Rev. Proc. 2017-34.

If the filing threshold has not been met, this simplified method for requesting an extension of time to make a “portability” election is available. To make the election, a complete and properly prepared Form 706 must be filed on or before the later of January 2, 2018, or by the second annual anniversary of the decedent’s date of death. The top of the Form 706 must indicate the return is “FILED PURSUANT TO REV. PROC. 2017-34 TO ELECT PORTABILITY UNDER § 2010(c)(5)(A).” No user fee is required. https://www.irs.gov/pub/irs-drop/rp-17-34.pdf

Our firm focuses almost exclusively on estate and gift tax related issues. Should you have any questions on the procedure above, or any other estate or trust related inquiries, our firm is happy to assist in any way.

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