Simplified Method to Extend Time for Portability Election

Cross References

Rev. Proc. 2022-32 The IRS has issued new procedures for certain taxpayers to obtain an extension of time to make a “portability” election. For purposes of the federal estate and gift tax, a portability election allows a decedent’s unused exclusion amount (DSUE amount) to become available to the surviving spouse’s subsequent transfers during life or at death. This simplified method is to be used in lieu of the letter ruling process. No user fee is required for submissions filed under this new procedure.

The simplified method is available to the executor of the decedent’s estate if: 1) The decedent: a) Was survived by a spouse, b) Died after December 31, 2010, and c) Was a citizen or resident of the U.S. on the date of death, 2) The executor is not required to file an estate tax return based on the value of the gross estate and adjusted taxable gifts and without regard to the need to file for portability purposes, 3) The executor did not file an estate tax return within the time required for filing an estate tax return, and 4) The executor satisfies all requirements of Revenue Procedure 2022-32 This simplified method cannot be used if an executor already timely filed an estate tax return, either to elect portability, or to opt out of portability. Likewise, this simplified method cannot be used if the estate is required to file an estate tax return due to the value of the gross estate. If the estate does not qualify for relief under Revenue Procedure 2022‑32, the executor of the estate may still file for an extension under the normal letter ruling procedures described in Revenue Procedure 2022-1 (or any successor revenue procedure).

To obtain relief for a late portability election under this simplified method, the executor must do the following: 1) File a complete and properly prepared Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, on or before the fifth annual anniversary of the decedent’s date of death. 2) Write on the top of the Form 706: “This return is filed pursuant to Rev. Proc. 2022-32 to elect portability under §2010(c)(5)(A).”

Simplified Method to Extend Time for Portability Election continued

If it is later determined that, based on the value of the gross estate and taking into account any taxable gifts, that the executor was required to file an estate tax return, the grant of an extension of time under Revenue Procedure 2022-32 is deemed null and void. If relief is granted under Revenue Procedure 2022-32, the DSUE amount of that decedent is available to the decedent’s surviving spouse or the estate of the surviving spouse for application to the surviving spouse’s transfers made on or after the decedent’s date of death. However, if the increase in the surviving spouse’s applicable exclusion amount attributable to the addition of the decedent’s DSUE amount results in an overpayment of gift or estate tax by the surviving spouse or his or her estate, no claim for credit or refund may be made if the statute of limitations under IRC section 6511(a) for claiming such credit or refund has expired. Thus, the extension of time for making a portability election under this revenue procedure does not extend the period of time for making a claim for credit or refund. See examples in Revenue Procedure 2022-32 for purposes of filing a protective claim for credit or refund of tax when the statute of limitation is about to expire.