PLR 202552010

Estate Granted Extension to Salvage Portability Election

In a move offering relief to a tardy estate, the IRS has granted a 120-day extension to file Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, for the specific purpose of making a portability election under Section 2010(c)(5)(A). Section 2010(c)(5)(A) governs the requirements for making a portability election, which allows the estate of a deceased spouse to transfer its unused estate tax exclusion—the Deceased Spousal Unused Exclusion (DSUE)—to the surviving spouse. The estate initially missed the deadline because the value of the gross estate fell below the threshold requiring the filing of an estate tax return under Section 6018(a).

The Filing Trap: Why the Deadline Was Missed

The estate initially missed the deadline because the value of the gross estate fell below the threshold requiring the filing of an estate tax return under Section 6018(a). Section 6018(a) mandates that an estate tax return be filed if the gross estate exceeds a certain threshold. However, to pass the Deceased Spousal Unused Exclusion (DSUE) to the surviving spouse, Section 2010(c)(5)(A) dictates that a return must be filed, regardless of whether it's required under Section 6018(a). Section 2010(c)(5)(A) governs the requirements for making a portability election, which allows the estate of a deceased spouse to transfer its unused estate tax exclusion to the surviving spouse. Since the estate did not file a timely return, it needed regulatory relief. Treasury Regulation Section 301.9100-3 allows the IRS to grant extensions for regulatory elections—not statutory ones—if the taxpayer acted reasonably and in good faith, and if granting relief would not prejudice the interests of the government.

The 120-Day Window and Crucial Caveats

Treasury Regulation Section 301.9100-3 allows the IRS to grant extensions for regulatory elections—not statutory ones—if the taxpayer acted reasonably and in good faith, and if granting relief would not prejudice the interests of the government. The IRS concluded the estate acted in good faith. Therefore, the estate received a 120-day extension from the date of the letter ruling to file Form 706 and elect portability as defined under Section 2010(c)(5)(A), which governs the requirements for making a portability election, allowing the estate of a deceased spouse to transfer its unused estate tax exclusion to the surviving spouse. To properly elect portability, the estate must file a complete and properly prepared Form 706, including a copy of the PLR, with the designated IRS Service Center.

However, the IRS placed a significant caveat on this relief: If it is later determined that the estate was required to file an estate tax return under Section 6018(a) due to the value of the gross estate and any taxable gifts, then the granted extension is null and void. This "void" clause underscores that Section 301.9100-3 does not grant the IRS authority to extend the time to elect portability if a return was legally required in the first place. The ruling explicitly states that the IRS offers no opinion on the Deceased Spousal Unused Exclusion (DSUE) amount to be taken into account by the surviving spouse. Any claimed DSUE amount will be subject to verification upon audit of relevant federal gift or estate tax returns, as governed by Section 20.2010-3(c)(1) and (d) of the Treasury Regulations. As with all PLRs, the IRS emphasized that this ruling is directed only to the taxpayer requesting it and, under Section 6110(k)(3), cannot be used or cited as precedent.