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Portability elections for estate taxes

On Behalf of | Mar 14, 2012 | Estate Planning |

Last month, the IRS issued Notice 2012-21 which grants certain estates an extension of time to file documents necessary to make the portability election.

The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 included a provision allowing the estate of a married person dying after December 31, 2010, to make an election permitting the surviving spouse to use the decedent’s unused applicable exclusion amount (the “deceased spousal unused exclusion amount”). Such an election has been referred to as the “portability election.”

The portability election is made on IRS Form 706, timely filed within 9 months of the date of death. The IRS Regulations grant estates an automatic six-month extension as long as IRS Form 4768 (Application for Extension of Time to File a Return and/or Pay U.S. Estate…Taxes) is filed within the nine months of the date of death. IRS Notice 2012-21 grants qualifying estates an extension of six months to file Form 4768, so that the extension request may be filed up to fifteen months from the date of death. A qualifying estate is one in which (1) the decedent is survived by a spouse, (2) the date of death was after December 31, 2010 and before July 1, 2011, and (3) the fair market value of the decedent’s gross estate is not greater than $5,000,000.

It should be noted that the IRS Form 706 estate tax return still must be filed within fifteen months of the decedent’s date of death. IRS Notice 2012-21 extends only the time for filing IRS Form 4768.

Find IRS Notice 2012-21 here: http://www.irs.gov/irb/2012-10_IRB/ar08.html


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