In estate planning, the concept of “portability” of a deceased spouse’s unused exclusion (DSUE) amount is relatively new. For decedents dying after December 31, 2010, if a first-to-die spouse has not fully used the estate tax exclusion, the DSUE amount can be transferred to the surviving spouse. This was originally passed as a two-year temporary provision until it was made permanent in the American Taxpayer Relief Act of 2012. Estate tax returns are usually required to be filed within 9 months of death to make the deceased spousal unused exclusion election. The IRS released Revenue Procedure 2014-18, providing an automatic extension for certain estates of decedents dying in 2011, 2012 and 2013 to elect portability. The extension applies to estates that would otherwise not have had a filing requirement, and allows the estates to file a return to elect portability until December 31, 2014. It includes the estates of same-sex decedents who were not eligible to elect portability until after the Windsor decision (United States v. Windsor recognized same-sex marriages for purposes of determining marital status of taxpayers under the Internal Revenue Code, the IRS has issued Revenue Procedure 2014-18 to grant limited relief for late elections).

This revenue procedure applies only if the taxpayer is the executor of the estate of a decedent who:

  • Has a surviving spouse;
  • Died after December 31, 2010, and on or before December 31, 2013; and
  • Was a citizen or resident of the United States on the date of death.
  • The taxpayer is not required to file an estate tax return under § 6018(a) (as determined based on the value of the gross estate and adjusted taxable gifts, without regard to § 20.2010-2T(a)(1));
  • The taxpayer did not file an estate tax return within the time prescribed by § 20.2010-2T(a)(1) for filing an estate tax return required to elect portability
  • The person filing the Form 706 on behalf of the decedent’s estate must state at the top of the Form 706 that the return is “FILED PURSUANT TO REV. PROC. 2014-18 TO ELECT PORTABILITY UNDER § 2010(c)(5)(A).”

We strongly suggest you contact your Linkenheimer CPA for more information on how this might effect you.

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