Portability Election Final Regulations

Post Date: 7/10/15
Last Updated: 7/10/15


Cross References
- T.D. 9725
- IRC §2001, §2010, and §2505

Beginning January 1, 2011, estates of decedents survived by a spouse may elect to pass any of the decedent’s unused estate tax exclusion to the surviving spouse. The surviving spouse can apply the deceased spousal unused exclusion (DSUE) amount received from the estate of his or her last deceased spouse against any tax liability arising from subsequent lifetime gifts and transfers at death. The DSUE amount is the lesser of:
- The basic exclusion amount in effect on the date of death of the decedent whose DSUE is being computed, or
- The decedent’s applicable exclusion amount less the amount used for the taxable estate of the decedent.

To make the portability election, the executor must file an estate tax return (Form 706) within nine months of the decedent’s date of death, unless an extension of time for filing has been granted. Estates are granted an automatic 6-month filing extension by filing Form 4768, Application for Extension of Time to File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes. This rule applies regardless of the size of the gross estate and regardless of whether the predeceased spouse otherwise is required to file an estate tax return. If the executor does not wish to make the portability election, an affirmative statement must be made on the estate tax return signifying the decision to have the portability election not apply. If no estate tax return is required and the executor does not file a return to make the portability election, not filing a timely return will be considered an affirmative statement signifying the decision not to make a portability election.

Special rule for estates under the basic exclusion amount. There is a special rule for estates valued under the basic exclusion amount. Executors of estates not otherwise required to file Form 706 (because the value of the gross estate is below the filing requirement) do not have to report the actual value of certain property qualifying for the marital or charitable deduction, but may estimate the value of those assets and include it in the total value of the gross estate based on a good faith determination of the value of the estate’s assets.

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