Request to enlarge an already-made QTIP election is denied because the election is irrevocable

Plain-English summary

When someone dies, property left to a surviving spouse can escape estate tax through the marital deduction, and a "QTIP" election under Section 2056(b)(7) lets an executor treat certain trust property as qualifying for that deduction. Here, a decedent's trust split into a Marital Trust and a Family Trust. On the federal estate tax return (Form 706), the executor made a valid QTIP election only for the Marital Trust. On the separate state return, the executor also claimed QTIP treatment for part of the Family Trust, but the state denied that portion and assessed tax, because state law requires the state QTIP election to match the federal one exactly. To fix the mismatch, the estate asked the IRS for Section 301.9100-3 relief to add the Family Trust portion to the original federal QTIP election. The IRS denied the request. A QTIP election, once made on the estate tax return, is irrevocable, and the regulations bar a later election covering additional property. Because the estate was not asking for more time to make an election but instead trying to change an election already made, the 9100 relief rules simply did not apply.

Ruling snapshot

• Question: May an estate use Section 301.9100-3 relief to enlarge an already-made QTIP election by adding a portion of the Family Trust?
• Outcome: denied (a QTIP election is irrevocable; no later election for additional property is permitted, so 9100 relief does not apply)
• Key authorities: IRC § 2056(b)(7); Treas. Reg. § 20.2056(b)-7(b)(4); Treas. Reg. §§ 301.9100-1, -3

Full text (IRS public release)

 Internal Revenue Service                                       Department of the Treasury
                                                                Washington, DC 20224

 Number: 202504002                                              Third Party Communication: None
 Release Date: 1/24/2025                                        Date of Communication: Not Applicable
 Index Number: 9100.00-00, 2056.00-00,
               2056.07-00                                       Person To Contact:
                                                                -------------------------- ID No. -----------------
 --------------------------------                               -----------------------------------------------------
 ------------------                                             Telephone Number:
 -----------------------------                                  --------------------
                                                                Refer Reply To:
 ----------------------------                                   CC:PSI:B04
                                                                PLR-108093-24
 -----------------------------------------------------          Date:
                                                                October 16, 2024




Legend

 Decedent                       =   --------------------------------------------------------
 Spouse                         =   ------------------------------------------------
 Date 1                         =   -------------------------
 Date 2                         =   -------------------------
 Trust                          =   ----------------------------------------------
 Attorney 1                     =   ------------------
 Attorney 2                     =   ------------------------
 State                          =   ----------------
 a                              =   -------------
 b                              =   -------------
 Citation 1                     =   ----------------------------------------------------
 Citation 2                     =   -------------------------------------------------------------------------------
                                    ----------

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

       This letter responds to your personal representative’s letter of April 10, 2024, and
subsequent correspondence, requesting an extension of time pursuant to § 301.9100-3
of the Procedure and Administration Regulations to make a qualified terminable interest
property (QTIP) election under § 2056(b)(7) of the Internal Revenue Code with respect
to a portion of Family Trust.

        The facts and representations submitted are as follows.

      Decedent died on Date 1, a resident of State. Decedent was survived by his
spouse, Spouse. Prior to his death, Decedent executed Trust, a revocable trust, with a
pour-over will. Article VIII, Paragraph A of Trust provides, in relevant part, that if
Spouse survives Decedent, after the payment of certain expenses and specific
PLR-108093-24                                 2

bequests, the trustee is to divide the remaining trust assets into two separate trusts, a
Marital Trust and a Family Trust.

      Article VIII, Paragraph A(1) provides, in relevant part, that the Marital Trust is
determined as a fraction of the decedent’s remaining trust assets of which (i) the
numerator is the smallest amount which, if allowed as a federal estate tax marital
deduction, would result in the least possible federal estate tax payable by reason of
Decedent’s death, and (ii) the denominator is the federal estate tax value of Decedent’s
remaining trust assets.

       Article VIII, Paragraph A(2) provides, in relevant part, that the Family Trust is to
consist of the remaining assets not allocated to the Marital Trust.

        Article VIII, Paragraph A(4) provides, in relevant part, that Decedent intends that
the amount allocated to the Marital Trust is to qualify for the marital deduction for federal
estate tax purposes and that the executor is authorized to treat such property as QTIP
for federal estate tax purposes. However, the personal representatives may elect not to
treat part or all of the property allocated to the Marital Trust as QTIP for federal and/or
state estate tax marital deduction purposes, notwithstanding the above stated
intentions. In deciding whether or not to make the election under § 2056(b)(7) to have
the property set apart in Marital Trust treated as QTIP for federal and/or state estate tax
purposes, the personal representatives may consider spouse’s life expectancy,
estimated estate taxes at spouse’s death, assets available to pay Decedent’s estate
taxes, and any other relevant factor.

       Spouse served as the executor of the estate. Spouse engaged Attorney 1 and
Attorney 2 to provide advice with respect to the legal and tax aspects of the estate
administration and to prepare any necessary tax returns. Attorney 1 and Attorney 2
prepared Form 706, United States Estate (and Generation-Skipping Transfer) Tax
Return, for the estate, and executor timely filed Form 706. On Schedule M of Form 706,
the estate reported Marital Trust, with a value of $a, as QTIP.

       The executor also filed a State estate tax return for Decedent’s estate that was
prepared by Attorney 1 and Attorney 2. The estate reported Marital Trust, with a value
of $a, and a fractional portion of Family Trust, with a value of $b, as QTIP on the State
estate tax return. On Date 2, the State revenue authority denied the $b deduction taken
on the State estate tax return because the deduction was not permitted under State law.
Under State law, where an executor or administrator of a decedent’s estate makes an
election under § 2056(b)(7) with respect to any QTIP, that election will be binding for
State tax purposes. Thus, the State QTIP election must be in the same amount and
cover the same property as the QTIP election under § 2056(b)(7) reported on the
Form 706. See Citation 1; Citation 2. The State revenue authority assessed a tax
based on the denied deduction.
PLR-108093-24                                  3

       You have requested an extension of time under § 301.9100-3 to augment the
original QTIP election under § 2056(b)(7) by adding an additional amount, comprising
$b of property in the Family Trust.

                                   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 2056(a) provides that, for purposes of the tax imposed by § 2001, the
value of the taxable estate shall, except as limited by § 2056(b), be determined by
deducting from the value of the gross estate an amount equal to the value of any
interest in property which passes or has passed from the decedent to the surviving
spouse, but only to the extent that such interest is included in determining the value of
the gross estate.

       Section 2056(b)(1) provides, in part, that no deduction shall be allowed under
§ 2056(a) where, on the lapse of time, on the occurrence of an event or contingency, or
on the failure of an event or contingency to occur, an interest passing to the surviving
spouse will terminate or fail, and on such termination, an interest in that property passes
or has passed from the decedent to any person other than the surviving spouse.

       Section 2056(b)(7)(A) provides that, in the case of qualified terminable interest
property, for purposes of § 2056(a), such property shall be treated as passing to the
surviving spouse, and for purposes of § 2056(b)(1)(A), no part of such property shall be
treated as passing to any person other than the surviving spouse.

       Section 2056(b)(7)(B)(i) defined the term “qualified terminable interest property”
as property: (I) which passes from the decedent; (II) in which the surviving spouse has
a qualifying income interest for life as defined in § 2056(b)(7)(B)(ii); and (III) to which an
election under § 2056(b)(7) applies.

         Section 2056(b)(7)(B)(ii) provides that the surviving spouse has a qualifying
income interest for life if: (I) the surviving spouse is entitled to all the income from the
property, payable annually or at more frequent intervals, or has a usufruct interest for
life in the property; and (II) no person has a power to appoint any part of the property to
any person other than the surviving spouse.

      Section 2056(b)(7)(B)(v) provides that an election under § 2056(b)(7) with
respect to any property shall be made by the executor on the return of tax imposed by
§ 2001. Such an election, once made, shall be irrevocable.

       Section 20.2056(b)-7(b)(4)(i) of the Estate Tax Regulations provides that, in
general, the election referred to in § 2056(b)(7)(B)(i)(III) and (v) is made on the return of
tax imposed by § 2001. For purposes of this paragraph, the term “return of tax imposed
PLR-108093-24                                   4

by § 2001” means the last estate tax return filed by the executor on or before the due
date of the return, including extensions or, if a timely return is not filed, the first estate
tax return filed by the executor after the due date.

        Section 20.2056(b)-7(b)(4)(ii) provides, in part, that the election, once made, is
irrevocable. If an executor appointed under local law has made an election on the return
of tax imposed by § 2001 (or § 2101) with respect to one or more properties, no
subsequent election may be made with respect to other properties included in the gross
estate after the return of tax imposed by § 2001 is filed.

      Section 301.9100-1(c) provides that the Commissioner has discretion to 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 a taxpayer who is abroad), under all subtitles of the Internal
Revenue Code except subtitles E, G, H, and I.

      Section 301.9100-3 provides the standards used to determine whether to grant
an extension of time to make an election whose date is prescribed by a regulation (and
not expressly provided by statute).

      Requests for under § 301.9100-3 will be granted when the taxpayer provides the
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.

       In this case, the estate made a valid QTIP election on Form 706 for the value of
the Marital Trust and requests to augment the amount subject to the QTIP election by
including a portion of the Family Trust as QTIP. Based on the facts submitted and
representations made, we conclude that in the instant case, the estate is not seeking an
extension of time to make the QTIP election. Rather, the estate is seeking to change a
previously made QTIP election to include additional property, which is not permitted
under § 20.2056(b)-7(b)(4)(ii). Accordingly, § 301.9100 is not applicable in this case
and the request for relief is denied.

      In accordance with the Power of Attorney on file with this office, we have sent a
copy of this letter to your authorized representatives.

       Except as expressly provided herein, we neither express nor imply any opinion
concerning the tax consequences of any aspect of any transaction or item discussed or
referenced in this letter.

      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
PLR-108093-24                                          5

material submitted in support of the request for rulings, it is subject to verification on
examination.

      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.


                                                Sincerely,

                                                Associate Chief Counsel
                                                Passthroughs and Special Industries

                                                Melissa C. Liquerman
                                                _________________________
                                       By:      [Melissa C. Liquerman]
                                                Senior Counsel, Branch 4
                                                Office of the Associate Chief Counsel
                                                (Passthroughs and Special Industries)


       Enclosure
             Copy for § 6110 purposes

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