The IRS has extended the deadline for certain estates to make a portability election for the estate tax exclusion.

More Time Granted for Portability of Estate Tax Exclusion

  • 2/29/2012

More Time Granted for Portability of Estate Tax Exclusion

The IRS has extended the deadline for certain estates to make a portability election that would allow the surviving spouse to use the unused estate and gift tax exclusions of the spouse that was first to die. The portability election generally is available if the first spouse dies in 2011 or 2012; the latest extension applies to estates of decedents who died in the first six months of 2011.

CCH Take Away: The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (2010 Tax Relief Act) provided a portability election for married couples. The IRS did not come out with guidance (Notice 2011-82) on portability until the end of September 2011. With estate tax returns due nine months after death, this provided little time for estates to comply with the election requirements.


The 2010 Tax Relief Act provides a $5 million estate tax exclusion for 2011 (indexed for inflation beginning in 2012). If the first spouse of a married couple died in 2011 with a taxable estate worth less than $5 million, the estate would have an unused estate tax exclusion, which it could elect to transfer to the surviving spouse.

To make the election that would allow the surviving spouse to use the unused exclusion of the deceased spouse, the estate of the deceased spouse must timely file (including extensions) Form 706, the estate tax return. The Form 706 must include a computation of the unused exclusion amount. The portability election can only be made by filing Form 706.

Estates can obtain a six-month extension of time to file the estate tax return (giving them a total of 15 months), by submitting Form 4768, Application for Extension of Time To File a Return and/or Pay U.S. Estate Tax. Form 4768 must be filed within nine months after death to obtain the additional six-month extension.

Notice 2011-82

Notice 2011-82 described the election requirements. It explained that the estate will be deemed to elect portability by timely filing a complete and properly prepared Form 706. Notice 2011-82 also explained that a timely filed Form 706 will be deemed to contain the computation of the unused exclusion until the IRS revises Form 706 to expressly provide this computation.

Notice 2011-82 indicated that an estate could avoid making the election by not filing Form 706. However, an estate that had to file Form 706 was instructed to follow the directions on Form 706 if it did not want to make an election.

Notice 2012-21

The IRS explained that many estates under $5 million would not have known to file Form 706 to make the portability election. Furthermore, estates might not have had time to file Form 706 or to request an extension by filing Form 4768 within nine months of death. This would be especially true for estates of decedents dying early in 2011, the IRS noted.

The IRS decided to provide an automatic six-month extension for estates to file both Form 4768 and Form 706. The extension is available to a qualifying estate, where:

  • The decedent is survived by a spouse;
  • The decedent died during the period from January 1, 2011, to June 30, 2011; and
  • The gross estate’s fair market value did not exceed $5 million.

Additional considerations

The IRS also instructed that if a qualifying estate filed Form 706 more than nine months but less than 15 months after the date of death, the executor could file Form 4768 to request an extension. The IRS advised that it could not grant additional extensions beyond six months, unless the executor was abroad.

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