Late QTIP and reverse QTIP elections approved

Plain-English summary

A decedent's trust created a separate trust that paid all net income to the surviving spouse at least annually and permitted principal distributions for the spouse's health, support, and maintenance. The accountant who prepared the estate tax return did not advise the executors about the qualified terminable interest property election or the reverse QTIP election. As a result, the return reported no QTIP property and included no Schedule R. The IRS found that the estate satisfied the regulatory requirements for relief because it reasonably relied on a qualified tax professional who failed to advise it to make the elections. It granted 120 days to file a supplemental Form 706 making both elections for the trust.

Ruling snapshot

• Question: May the estate receive additional time to make QTIP and reverse QTIP elections for the surviving spouse's trust?
• Outcome: Approved, with 120 days to file a supplemental Form 706
• Key authorities: IRC §§ 2056(b)(7), 2652(a)(3); Treas. Reg. §§ 301.9100-1, 301.9100-3

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 202532003 Third Party Communication: None
Release Date: 8/8/2025 Date of Communication: Not Applicable
Index Number: 9100.00-00, 2056.00-00,
2652.01-02 Person To Contact:
---------------, ID No. -----------------
------------------------------------------ Telephone Number:
------------------------------------------------------------ ---------------------
----------------------------- Refer Reply To:
------------------------------ CC:PT&E:04
-------------------------------------------- PLR-120314-24
Date:
April 30, 2025
Re: ------------------------------------------

Legend

Decedent = --------------------------------------------------------
Spouse = -------------------------------------- -----------------
Child 1 = ----------------------------
Child 2 = ----------------------
Family Trust = ------------------------------------------------------------------------------------------

Trust A = -----------------------------------------------------------------------------------------

-

Date 1 = -----------------------
Date 2 = -------------------------
Date 3 = -----------------------
Date 4 = ----------------------
Date 5 = ----------------
Accountant = --------------------------

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

This letter responds to your authorized representative’s letter of October 10, 2024, and
supplemental 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) and a “reverse” QTIP
election under § 2652(a)(3).
PLR-120314-24 2

The facts and representations submitted are as follows.

On Date 1, Decedent and Spouse (Settlors) executed a revocable trust, Family Trust.
Family Trust was amended and restated on Date 2, amended on Date 3, and became
irrevocable on Date 4, Decedent’s date of death. The Co-Trustees of Family Trust are
Spouse, Child 1, and Child 2.

Pursuant to Article Five of Family Trust, upon the death of Decedent, Family Trust shall
be divided into separate trusts, including Trust A. The trustee shall pay to or apply for
the benefit of Spouse, the entire net income of Trust A, at least annually. If the trustee
considers the income of Trust A to be insufficient to provide for Spouse’s proper health,
support and maintenance, the trustee shall pay to or apply for the benefit of Spouse as
much principal of Trust A as the trustee considers necessary for those needs. Upon the
death of Spouse, Trust A shall be divided into separate shares, one for each child who
is then living and one for each child who is then deceased but who has descendants
who are then living, by right of representation, in further trust under the terms of Article
Six.

Article Thirteen, Paragraph One of Family Trust provides that the trustee may, in the
trustee’s discretion, allocate Decedent’s GST exemption under § 2631 to transfers of
Decedent’s property under Family Trust agreement.

Accountant, a certified public accountant, was engaged to prepare Decedent’s
Form 706 (United States Estate (and Generation-Skipping Transfer) Tax Return). On
Date 5, the Form 706 was timely filed on behalf of the estate. The Form 706 reported
Decedent’s assets as “all other property” on Schedule M and reported no “QTIP
property.” No Schedule R was filed with the return. Accountant did not advise Spouse,
Child 1, and Child 2, as the executors of Decedent’s estate of the ability to make the
QTIP election and the reverse QTIP election. Accordingly, no valid QTIP election was
made with respect to Trust A, and no reverse QTIP election was made with respect to
Trust A. It is represented that Decedent has sufficient GST exemption to allocate to
Trust A.

You have requested an extension of time under §§ 301.9100-1 and 301.9100-3 to make
a QTIP election with respect to Trust A under § 2056(b)(7) and a reverse QTIP election
with respect to Trust A pursuant to § 2652(a)(3).

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 is determined by deducting from the value of the gross estate an
PLR-120314-24 3

amount equal to the value of any interest in property that passes or has passed from the
decedent to the surviving spouse. Section 2056(b)(1) provides the general rule that no
deduction shall be allowed under § 2056(a) for an interest passing to the surviving
spouse if, on the lapse of time, on the occurrence of an event or contingency, or on the
failure of an event or contingency to occur, the interest will terminate or fail.

Section 2056(b)(7)(A) provides that, in the case of qualified terminable interest property,
such property shall be treated as passing to the surviving spouse, and for purposes of
§ 2056(a), no part of the 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: (1) which passes from the decedent; (2) in which the surviving spouse has a
qualifying income interest for life; and (3) 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: (1) 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 (2) 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 is to be made by the executor on the return of tax imposed by § 2001.
The election, once made, is irrevocable.

Section 20.2056(b)-7(b)(4) of the Estate Tax Regulations provides, generally, that the
QTIP election is made on 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 2601 imposes a tax on every GST. Section 2611 provides that a GST includes
a taxable distribution, a taxable termination, and a direct skip.

Section 2602 provides that the amount of the GST tax is the taxable amount multiplied
by the applicable rate. Section 2641(a) defines “applicable rate” as the product of the
maximum federal estate tax rate and the inclusion ratio with respect to the transfer.

Section 2631(a) provides that, for purposes of determining the inclusion ratio, every
individual shall be allowed a GST exemption amount which may be allocated by the
individual (or his executor) to any property with respect to which the individual is the
transferor. Section 2631(b) provides that any allocation under § 2631(a), once made,
shall be irrevocable.
PLR-120314-24 4

Under § 2632(a), any allocation by an individual of his GST exemption may be made at
any time on or before the date prescribed for filing the individual’s estate tax return
(including extensions).

Section 2632(e)(1) provides that any portion of an individual’s GST exemption which
has not been allocated within the time prescribed by § 2632(a) shall be deemed to be
allocated as follows: (A) first, to property which is the subject of a direct skip occurring at
such individual’s death, and (B) second, to trusts with respect to which such individual is
the transferor and from which a taxable distribution or a taxable termination might occur
at or after such individual’s death.

Section 2642(a)(1) provides that, generally, the inclusion ratio with respect to any
property transferred in a GST is the excess of one over the applicable fraction
determined for the trust. Section 2642(a)(2) provides that, in general, the applicable
fraction is a fraction the numerator of which is the amount of the GST exemption
allocated to the trust and the denominator of which is the value of the property
transferred to the trust, reduced by the sum of any federal estate tax or state death tax
actually recovered from the trust attributable to such property, and any charitable
deduction allowed under § 2055 or 2522 with respect to such property.

Section 2652(a)(1) provides that for purposes of chapter 13, the term “transferor”
means: (A) in the case of any property subject to the tax imposed by chapter 11, the
decedent; and (B) in the case of any property subject to the tax imposed by chapter 12,
the donor. An individual shall be treated as transferring any property with respect to
which such individual is the transferor.

Section 2652(a)(3) provides, in pertinent part, that in the case of any trust with respect
to which a deduction is allowed to the decedent under § 2056(b)(7), the estate of the
decedent may elect to treat all of the property in such trust for GST tax purposes as if
the election to be treated as qualified terminable interest property had not been made
(“reverse” QTIP election).

Section 26.2652-2(a) of the Generation-Skipping Transfer Tax Regulations provides, in
part, that a reverse QTIP election is not effective unless it is made with respect to all of
the property in the trust to which the QTIP election applies. Section 26.2652-2(b)
provides that an election under § 2652(a)(3) is made on the return on which the QTIP
election is made.

Section 26.2652-1(a)(3) provides that solely for purposes of chapter 13, if a transferor
makes a reverse QTIP election, the identity of the transferor of the property is
determined without regard to the application of §§ 2044, 2207A and 2519.

Sections 301.9100-1 through 301.9100-3 provide standards the Commissioner will use
to determine whether to grant an extension of time to make a regulatory election.
PLR-120314-24 5

Under § 301.9100-1(c), 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 a
taxpayer who is abroad), under all subtitles of the Code except subtitles E, G, H, and I.
Requests for relief subject to § 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 the grant of 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 are satisfied. Accordingly, Decedent’s estate is granted an extension of
time of 120 days from the date of this letter to file a supplemental Form 706 to make a
QTIP election with respect to Trust A under § 2056(b)(7) and to make a reverse QTIP
election with respect to Trust A under § 2652(a)(3).

The supplemental Form 706 should be filed with the Internal Revenue Service Center,
Stop 824G, 7940 Kentucky Drive, Florence, KY 41042-2915. A copy of this letter
should be attached to the return.

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.

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.
PLR-120314-24 6

                                            Sincerely,

                                            Associate Chief Counsel
                                            (Passthroughs, Trusts, and Estates)

                                               Karlene M. Lesho
                                      By:
                                            Karlene M. Lesho
                                            Chief, Branch 4
                                            Office of the Associate Chief Counsel
                                            (Passthroughs, Trusts, and Estates)

Enclosure
Copy for § 6110 purposes

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