Non-appointed executor receives more time to elect portability

Plain-English summary

A surviving spouse with possession of the estate property acted as the estate's non-appointed executor. The estate was below the estate-tax filing threshold and did not file Form 706 because the spouse was unaware of the need to elect portability of the deceased spouse's unused exclusion amount. The IRS found that the estate satisfied the good-faith requirements in Treas. Reg. § 301.9100-3 and granted 120 days to file a complete Form 706. The relief would be void if the estate was later found to have been required to file an estate-tax return.

Ruling snapshot

• Question: May the non-appointed executor receive more time to elect portability?
• Outcome: Approved, with a 120-day extension subject to the estate not being required to file
• Key authorities: IRC §§ 2010(c)(5), 6018, and 6075; Treas. Reg. §§ 20.2010-2T and 301.9100-3

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 201633026 Third Party Communication: None
Release Date: 8/12/2016 Date of Communication: Not Applicable
Index Number: 2010.04-00, 9100.00-00
Person To Contact:
-------------------------- -------------------------------, ID No. -----------
------------------- -----------------
-------------------------------- Telephone Number:
----------------------
In Re: ------------------------------------ Refer Reply To:
CC:PSI:B04
PLR-138388-15
Date:
May 4, 2016

Legend:

Decedent = ------------------------
Spouse = --------------------------
Date 1 = ----------------------
Date 2 = ---------------------------

Dear ----------------:

   This letter responds to the letter from your authorized representative dated

November 23, 2015, requesting an extension of time pursuant to § 301.9100-3 of the
Procedure and Administration Regulations to make the election under § 2010(c)(5)(A) of
the Internal Revenue Code (Code) to allow Decedent's surviving spouse (Spouse) to
take into account Decedent's “deceased spousal unused exclusion” (DSUE) amount.

  The facts submitted and the representations made are as follows. Decedent died

on Date 1, survived by Spouse. Date 1 is a date after the effective date of the
amendment to § 2010(c), which provides for portability of a DSUE amount to a surviving
spouse. To obtain the benefit of portability of Decedent's DSUE amount to Spouse,
Decedent's estate was required to file Form 706, United States Estate (and Generation-
Skipping Transfer) Tax Return, on or before the date that is nine months after
Decedent's date of death or the last day of the period covered by an extension.
Decedent's Form 706 was due on Date 2, but the estate did not file a timely Form 706 to
make the portability election. The estate discovered its failure to elect portability after
the due date for making the election.

    Spouse has actual possession of the property in Decedent’s estate and

represents that he is a non-appointed executor of Decedent’s estate within the meaning
of § 20.2010-2T(a)(6)(ii) of the Estate Tax Regulations (as in effect on the date of
Decedent’s death). Spouse further represents that the value of Decedent's gross estate
is less than the basic exclusion amount in the year of Decedent's death including
taxable gifts made during her lifetime. Spouse requests an extension of time pursuant
PLR-138388-15 2

to § 301.9100-3 to elect portability of Decedent's DSUE amount pursuant to
§ 2010(c)(5)(A).

LAW AND ANALYSIS

 Section 2001(a) imposes a tax on the transfer of the taxable estate of every

decedent who is a citizen or resident of the United States.

  Section 2010(a) provides that a credit of the applicable credit amount shall be

allowed to the estate of every decedent against the tax imposed by § 2001.

   Section 2010(c)(1) provides that the applicable credit amount is the amount of

the tentative tax that would be determined under § 2001(c) if the amount with respect to
which such tentative tax is to be computed were equal to the applicable exclusion
amount.

  On December 17, 2010, Congress amended § 2010(c), effective for estates of

decedents dying and gifts made after December 31, 2010, to allow portability of a
decedent’s unused applicable exclusion amount between spouses. Tax Relief,
Unemployment Insurance Reauthorization, and Job Creation Act of 2010, Pub. L.
No. 111-312, § 303, 124 Stat. 3296, 3302 (2010).

  Section 2010(c)(2) provides that the applicable exclusion amount is the sum of

the basic exclusion amount, and, in the case of a surviving spouse, the DSUE amount.

  Section 2010(c)(3) generally provides that the basic exclusion amount is

$5,000,000, to be adjusted for inflation annually after calendar year 2011.

    Section 2010(c)(4) defines the DSUE amount to mean the lesser of (A) the basic

exclusion amount, or (B) the excess of -- (i) the applicable exclusion amount of the last
deceased spouse of the surviving spouse, over (ii) the amount with respect to which the
tentative tax is determined under § 2001(b)(1) on the estate of such deceased spouse.

    Section 2010(c)(5)(A) provides that a DSUE amount may not be taken into

account by a surviving spouse under § 2010(c)(2) unless the executor of the estate of
the deceased spouse files an estate tax return on which such amount is computed and
makes an election on such return that such amount may be so taken into account. The
election, once made, shall be irrevocable. No election may be made if such return is
filed after the time prescribed by law (including extensions) for filing such return.

  Section 2010(c)(6) provides that the Secretary shall prescribe regulations as may

be necessary or appropriate to implement § 2010(c).
PLR-138388-15 3

    Section 20.2010-2T(a) provides that to allow a decedent’s surviving spouse to

take into account that decedent’s DSUE amount, the executor of the decedent’s estate
must elect portability of the DSUE amount on a timely filed Form 706. Under § 20.2010-
2T(a)(1), the due date of an estate tax return required to elect portability is nine months
after the decedent’s date of death or the last day of the period covered by an extension
(if an extension of time for filing has been granted). Under § 20.2010-2T(a)(2), the
portability election is made by timely filing a complete and properly prepared estate tax
return, unless the executor satisfies the requirements for the election not to apply in
§ 20.2010-2T(a)(3)(i).

   Section 301.9100-1(c) provides that the Commissioner may grant a reasonable

extension of time under the rules set forth in §§ 301.9100-2 and 301.9100-3 to make a
regulatory election, or a statutory election (but no more than six months except in the
case of taxpayer who is abroad), under all subtitles of the Code, except subtitles E, G,
H, and I.

   Section 301.9100-1(b) provides that the term “statutory election” means an

election whose due date is prescribed by statute. The term “regulatory election” means
an election whose due date is prescribed by a regulation published in the Federal
Register, or a revenue ruling, revenue procedure, notice, or announcement published in
the Internal Revenue Bulletin.

   Section 301.9100-3 provides the standards the Commissioner will use to

determine whether to grant an extension of time to make an election whose due date is
prescribed by a regulation (and not expressly provided by statute).

   A request for relief under § 301.9100-3 will be granted when the taxpayer

provides evidence to establish to the satisfaction of the Commissioner that the taxpayer
acted reasonably and in good faith, and that granting relief will not prejudice the
interests of the government.

   Section 301.9100-3(b)(1)(iii) provides that the taxpayer is deemed to have acted

reasonably and in good faith if the taxpayer failed to make an election because, after
exercising reasonable diligence (taking into account the taxpayer's experience and the
complexity of the return or issue), the taxpayer was unaware of the necessity for the
election.

   The due date for the portability election is prescribed by statute in the case of an

estate required to file an estate tax return under § 6018(a). See §§ 2010(c)(5)(A),
6075(a), and 6018(a). In the case of an estate that is not required to file an estate tax
return under § 6018(a), the due date is prescribed by regulation. See § 20.2010-
2T(a)(1). See also § 20.2010-2(a)(1) and Rev. Proc. 2014-18, 2014-7 IRB 513, § 2.03.
PLR-138388-15 4

Accordingly, in the latter case, a taxpayer may seek an extension of time to elect
portability under the provisions of § 301.9100-3.

   Section 6018(a)(1) requires the filing of an estate tax return in all cases where

the gross estate exceeds the basic exclusion amount in effect under § 2010(c) for the
calendar year which includes the date of death. For purposes of this determination,
under § 6018(a)(3), the basic exclusion amount is reduced, but not below zero, by the
sum of -- (A) the amount of the adjusted taxable gifts (within the meaning of § 2001(b))
made by the decedent after December 31, 1976, plus, (B) the aggregate amount
allowed as a specific exemption under § 2521 (as in effect before its repeal by the Tax
Reform Act of 1976) with respect to gifts made by the decedent after
September 8, 1976.

   Spouse represents that, based on the value of the gross estate and taking into

account any taxable gifts, Decedent’s estate is not required to file an estate tax return
under § 6018(a). Under these facts, the Commissioner has discretionary authority
under § 301.9100-3 to grant to Decedent’s estate an extension of time to elect
portability.

    Based on the facts submitted and the representations made, we conclude that

the requirements of § 301.9100-3 have been satisfied. Accordingly, we grant an
extension of time of 120 days from the date of this letter in which to elect portability
under § 2010(c)(5). The election should be made by filing a complete and properly
prepared Form 706 and a copy of this letter, within 120 days from the date of this letter,
to the Cincinnati Service Center, at the following address: Internal Revenue Service,
Cincinnati Service Center, Stop 82, Cincinnati, OH 45999. For purposes of electing
portability, a Form 706 filed by Decedent’s estate within 120 days from the date of this
letter will be considered to be timely filed.

  The rulings contained in this letter are based upon information and

representations submitted by the taxpayer and accompanied by a penalty of perjury
statement executed by an appropriate party. While this office has not verified any of the
material submitted in support of the request for rulings, it is subject to verification on
examination.

   If it is later determined that, based on the value of the gross estate and taking

into account any taxable gifts, Decedent’s estate is required to file an estate tax return
pursuant to § 6018(a), the Commissioner is without authority under § 301.9100-3 to
grant to Decedent’s estate an extension of time to elect portability and the grant of the
extension referred to in this letter is deemed null and void.
PLR-138388-15 5

  This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3)

provides that it may not be used or cited as precedent.

  In accordance with the Power of Attorney on file with the office, we have sent a

copy of this letter to your authorized representative.

                                  Sincerely,


                                  Karlene M. Lesho
                                  Karlene M. Lesho
                                  Senior Technician Reviewer, Branch 4
                                  Office of the Associate Chief Cousel
                                  (Passthroughs & Special Industries)

Enclosure:
Copy of this letter for § 6110 purposes