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IRS Should Make Portability Elections Easier, AICPA Says

By Alistair M. Nevius, J.D.

Please note: This item is from our archives and was published in 2015. It is provided for historical reference. The content may be out of date and links may no longer function.

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Editor: Sally P. Schreiber, J.D.

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In a March 19 letter to IRS Commissioner John Koskinen and other IRS officials, Troy Lewis, chair of the AICPA Tax Executive Committee, requested that the IRS provide relief to surviving spouses who want to elect portability of the deceased spouse’s unused estate tax exemption (DSUE) amount.

Sec. 2010(c) allows the surviving spouse of a decedent who dies after Dec. 31, 2010, to elect to use any amount of the deceased spouse’s estate tax exemption that was unused by the deceased spouse. This is commonly referred to as the portability election. The election must be made on a timely filed Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, and must be made by the executor of the deceased spouse’s estate.

Because executors of estates that otherwise are not required to file Form 706 may have been unaware of the requirement to file the form to make the portability election, the IRS allowed estates of decedents who died after Dec. 31, 2010, and before July 1, 2011, a six-month extension of time to make the election (Notice 2012-21) and then allowed estates of decedents dying after Dec. 31, 2010, and before Jan. 1, 2014, to file for portability by Dec. 31, 2014 (Rev. Proc. 2014-18). However, the AICPA is concerned that executors and practitioners continue to be unaware of this requirement. Therefore, the AICPA recommended to the IRS that any estate not otherwise required to file Form 706 be given until 15 months after the spouse’s death to file Form 706 and Form 4768, Application for Extension of Time to File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes.

For those estates that are filing Form 706 just to make the portability election, the AICPA is also recommending that the IRS develop a short Form 706-EZ that would be used only to make the portability election and to detail the calculation of the DSUE amount.

Finally, the AICPA recommended that, if the executor chooses not to file Form 706 (because the estate is not otherwise required to), that the surviving spouse should have the option to file Form 706 to make the portability election.