9100 relief to make a QTIP election the estate's accountant never advised

Plain-English summary

Property left to a surviving spouse can qualify for the estate tax marital deduction, and a "QTIP" election under Section 2056(b)(7) lets an executor claim that deduction for a trust that pays the spouse income for life. Here, a decedent's revocable trust set up a Marital Trust that paid the surviving spouse all its income and let the executor elect QTIP treatment. The spouse, acting as personal representative, hired an accountant to prepare the federal estate tax return (Form 706), but the accountant never advised her about the QTIP election, so the return reported no QTIP property and no election was made. After she discovered the omission, the estate asked the IRS for more time. Under Treasury Regulation Section 301.9100-3, the IRS can grant extra time for a missed regulatory election when the taxpayer acted reasonably and in good faith and relief will not prejudice the government; reasonable reliance on a tax professional who failed to advise the election is an accepted basis. The IRS found those standards met and granted 120 days to make the QTIP election on a supplemental Form 706. (This contrasts with a companion ruling the same week that denied relief where a QTIP election had already been made and the estate merely wanted to enlarge it.)

Ruling snapshot

• Question: May an estate get an extension of time to make a QTIP election that was never made because the accountant failed to advise it?
• Outcome: approved (120-day extension granted to make the election on a supplemental Form 706)
• Key authorities: IRC § 2056(b)(7); Treas. Reg. § 20.2056(b)-7(b)(4); Treas. Reg. §§ 301.9100-1, -3(b)(1)(v)

Full text (IRS public release)

 Internal Revenue Service                                      Department of the Treasury
                                                               Washington, DC 20224

 Number: 202504004                                             Third Party Communication: None
 Release Date: 1/24/2025                                       Date of Communication: Not Applicable
 Index Number: 2056.00-00, 2056.07-00,
               9100.00-00                                      Person To Contact:
                                                               ---------------------, ID No. -----------------
 -----------------------------------------------------------   Telephone Number:
 ------------------------------------                          --------------------
 --------------------------                                    Refer Reply To:
 ------------------------                                      CC:PSI:B04
 ------------------------------                                PLR-108372-24
                                                               Date:
                                                               October 24, 2024
 Re: ------------------------------------




Legend

Decedent         =        ------------------------
                          -------------------------
Spouse           =        ----------------------
                          -------------------------
Trust            =        -----------------------------------------------
                          -----------------------
Date 1           =        ---------------------------
Date 2           =        ---------------------------
Date 3           =        -----------------------
Accountant       =        -----------------------

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

This letter responds to a letter dated April 4, 2024, and subsequent correspondence,
submitted on behalf of Decedent’s estate, requesting an extension of time under
§ 301.9100-1 and § 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 (Code).

The facts and representations submitted are as follows. On Date 1, Decedent
established a revocable trust, Trust. Trust became irrevocable upon Decedent’s death
on Date 2.

Article Three of Trust provides for the distribution of Trust property upon Decedent’s
death.

Section 3.01 provides for the outright distribution of certain items of tangible personal
property and household furnishings of Decedent upon Decedent’s death.
PLR-108372-24                                  2

Section 3.02 provides for the distribution of a portion of the remaining Trust assets to a
Marital Trust for Spouse’s benefit. Sections 3.02(a) and (b) provide that, during
Spouse’s lifetime, the trustee of Marital Trust is required to pay all income from Marital
Trust to Spouse at least quarterly and may make distributions of Marital Trust principal
to Spouse for Spouse’s health and support in reasonable comfort. Section 3.02(c)
provides that the personal representative of Decedent’s estate may elect to have a
specific portion or all of Marital Trust treated as qualified terminable interest property for
federal estate tax purposes. Section 3.02(d) provides that Spouse may direct the
trustee of Marital Trust to sell any Marital Trust property that is not productive of income
and convert such property into property productive of income. Section 3.02(e) provides,
in relevant part, that upon Spouse’s death, the trustee is directed to distribute accrued
or undistributed income to Spouse’s estate, and after payment of certain estate and
inheritance taxes payable by reason of Spouse’s death and inclusion of Marital Trust
property in Spouse’s estate, to distribute remaining trust assets in further trust for the
benefit of Decedent’s descendants as Spouse may direct in Spouse’s will. Sections
3.02(e) and 3.04 further provide that the trustee shall thereafter distribute any Marital
Trust property remaining after the foregoing distributions to Decedent’s descendants.

After Decedent’s death, Spouse, in her capacity as personal representative of
Decedent’s estate, retained Accountant to prepare Form 706, United States Estate (and
Generation-Skipping Transfer) Tax Return, for Decedent’s estate. Spouse relied on
Accountant for advice regarding preparation of the Form 706 and federal estate tax
matters. On Date 3, a Form 706 was filed on behalf of Decedent’s estate. Accountant
failed to advise Spouse regarding the availability of the QTIP election and the Form 706
did not report any assets as QTIP Property on Schedule M, “Bequests, etc., to Surviving
Spouse.” Thus, no QTIP election was made with respect to Marital Trust. Thereafter,
Spouse discovered the failure to report Marital Trust assets on Schedule M and to make
the QTIP election.

You have requested an extension of time under §§ 301.9100-1 and 301.9100-3 to make
the QTIP election under § 2056(b)(7) to treat Marital Trust as QTIP property.

LAW AND ANALYSIS

Section 2001(a) of the Code 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.
PLR-108372-24                                  3

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) defines 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)(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 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 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 relief 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.

Section 301.9100-3(b)(1)(v) provides that a taxpayer is deemed to have acted
reasonably and in good faith if the taxpayer reasonably relied on a qualified tax
professional, including a tax professional employed by the taxpayer, and the tax
professional failed to make, or advise the taxpayer to make, the election.

Based on the facts submitted and the representations made, we conclude that the
requirements of § 301.9100-3 have been satisfied. Therefore, the personal
representative of Decedent’s estate is granted an extension of time of 120 days from
the date of this letter to make a QTIP election with respect to Marital Trust.
PLR-108372-24                                   4


The election should be made on a supplemental Form 706 filed with the Internal
Revenue Service Center at the following address: Department of the Treasury, Internal
Revenue Service Center, Stop 824G, 7940 Kentucky Drive, Florence, KY 41042-2915.
A copy of this letter should be attached to the supplemental Form 706.

Except as expressly provided herein, no opinion is expressed or implied concerning the
tax consequences of any aspect of any transaction or item discussed or referenced in
this letter.

This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) of the Code
provides that it may not be used or cited as precedent.

In accordance with the Power of Attorney on file with this office, a copy of this letter is
being sent to your authorized representative.

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.

                                          Sincerely,

                                          Associate Chief Counsel
                                          (Passthroughs & Special Industries)


                                    By:
                                          Karlene M. Lesho
                                          Chief, Branch 4
                                          (Passthroughs & Special Industries)

Enclosure
      Copy for § 6110 purposes
PLR-108372-24                                          5

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