Estate receives more time to allocate wife's GST exemption

Plain-English summary

A husband created a trust for children and their descendants and later transferred property to it in a year before 2001. He and his wife told their tax preparer that they intended to split the gift and allocate generation-skipping transfer tax exemption, but the preparer filed their Forms 709 without making the GST allocation. After the wife's death, her estate requested relief under IRC § 2642(g). The IRS found that the regulatory requirements were satisfied and granted the estate 120 days to allocate the wife's GST exemption to the transfer, to the extent she is treated as the transferor. The allocation must be made on an amended Form 709 for the transfer year and filed at the address specified in the ruling.

Ruling snapshot

• Question: May the wife's estate make a late allocation of her GST exemption to the pre-2001 trust transfer?
• Outcome: Approved, with 120 days to file an amended Form 709 allocating the exemption
• Key authorities: IRC §§ 2513, 2631, 2632, 2642(g), 2652; Treas. Reg. § 26.2642-7

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224

Number: 202535001
Third Party Communication: None
Release Date: 8/29/2025
Date of Communication: Not Applicable
Index Number: 2642.07-00
Person To Contact:
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Telephone Number:
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Refer Reply To:
CC:PT&E:B04
PLR-103669-25
Date:
June 02, 2025
RE: ------------------------------

Legend

Husband = --------------------------
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Wife = -----------------
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Date 1 = --------------------------
Date 2 = -----------------------
Year = -------
Trust = ------------------------------
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Tax Preparer = ---------------
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Attorney = ------------------

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

This letter responds to your authorized representative’s letter dated December 2, 2024, and subsequent correspondence, requesting an extension of time under § 2642(g) of the Internal Revenue Code (Code) and § 26.2642-7 of the Generation-Skipping Transfer (GST) Tax Regulations to allocate GST exemption to the transfer to trust.

The facts and representations submitted are as follows:

On Date 1, Husband established Trust for the benefit of children and children’s descendants. In Year, a year before 2001, Husband made a transfer to Trust.

During Year, Husband and Wife retained Attorney for estate planning advice and the drafting of Trust. Attorney coordinated this estate planning with Tax Preparer who
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Husband and Wife retained to prepare any necessary Forms 709, United States Gift (and Generation-Skipping Transfer) Tax Returns. Tax Preparer was advised that Husband and Wife intended to treat gifts made by Husband as made one-half by each and to allocate GST exemption to transfers made or deemed to be made by Husband and Wife to Trust in Year. Tax Preparer prepared Year Forms 709 for Husband and Wife on which Husband and Wife each made a split-gift election under § 2513. However, Tax Preparer failed to allocate GST exemption to the Year transfer to Trust on the Forms 709.

It is represented that Wife had sufficient GST exemption to allocate to the Year transfer to Trust.

Wife died on Date 2.

RULING REQUESTED

Wife’s estate requests an extension of time under § 2642(g) to allocate GST exemption to the transfer she made or is deemed to have made to Trust in Year.

LAW AND ANALYSIS

Section 2601 imposes a tax on every generation-skipping transfer. A generation-skipping transfer is defined under § 2611(a) as (1) a taxable distribution, (2) a taxable termination, and (3) a direct skip.

Section 2602 provides that the amount of the tax imposed by § 2601 is the taxable amount multiplied by the applicable rate.

Section 2631(a) provides that, for purposes of determining the inclusion ratio, every individual shall be allowed a GST exemption which may be allocated by such individual (or his executor) to any property with respect to which such individual is the transferor.

Section 2631(b) provides that any allocation under § 2631(a), once made, shall be irrevocable.

Section 2632(a)(1) provides that an individual’s GST exemption may be allocated at any time on or before the date prescribed for filing the estate tax return for such individual’s estate (determined with regard to extensions), regardless of whether such return is required to be filed. Section 2632(a)(2) provides that the manner in which allocations are to be made shall be prescribed by forms or regulations issued by the Secretary.

Section 2632(c)(1) provides that if any individual makes an indirect skip during such individual’s lifetime, any unused portion of such individual’s GST exemption shall be allocated to the property transferred to the extent necessary to make the inclusion ratio
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for such property zero. If the amount of the indirect skip exceeds such unused portion, the entire unused portion shall be allocated to the property transferred. Section 2632(c)(3)(A) provides that for purposes of this subsection, the term “indirect skip” means any transfer of property (other than a direct skip) subject to the tax imposed by chapter 12 made to a GST trust.

Section 2632(c)(5)(A)(i) provides that an individual may elect to have the automatic allocation rules not apply to (I) an indirect skip, or (II) any or all transfers made by such individual to a particular trust.

Section 2642(b)(1)(A) provides that, except as provided in § 2642(f), if the allocation of the GST exemption to any transfers of property is made on a gift tax return filed on or before the date prescribed by § 6075(b) for such transfer or is deemed to be made under § 2632(b)(1) or (c)(1), the value of such property for purposes of § 2642(a) shall be its value as finally determined for purposes of chapter 12 (within the meaning of
§ 2001(f)(2)), or, in the case of an allocation deemed to have been made at the close of an estate tax inclusion period, its value at the time of the close of the estate tax inclusion period.

Section 2513(a) provides, generally, that, if the parties consent, a gift made by one spouse to any person other than his or her spouse shall, for gift tax purposes, be considered as made one-half by the donor spouse and one-half by his or her spouse.

Section 2652(a)(2) provides that if, under § 2513, one-half of a gift is treated as made by an individual and one-half of such gift is treated as made by the spouse of such individual, such gift shall be so treated for purposes of chapter 13.

Section 2642(g)(1)(A) provides that the Secretary shall by regulation prescribe such circumstances and procedures under which extensions of time will be granted to make an allocation of GST exemption described in § 2642(b)(1) or (2), and an election under
§ 2632(b)(3) or (c)(5). Such regulations shall include procedures for requesting comparable relief with respect to transfers made before the date of the enactment of
§ 2642(g).

Section 2642(g)(1)(B) provides that in determining whether to grant relief under this paragraph, the Secretary shall take into account all relevant circumstances, including evidence of intent contained in the trust instrument or instrument of transfer and such other factors as the Secretary deems relevant. For purposes of determining whether to grant relief under this paragraph, the time for making the allocation (or election) shall be treated as if not expressly prescribed by statute.

Section 26.2642-7 of the Generation-Skipping Transfer Tax Regulations sets forth the procedures for requesting an extension of time to make an allocation of GST exemption described in § 2642(b)(1) or (2), and an election under § 2632(b)(3) or (c)(5), and the standards used to determine whether relief may be granted.
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Section 26.2642-7(d)(1) provides that requests for relief will be granted when and to the extent that the transferor or the executor of the transferor’s estate provides evidence establishing to the satisfaction of the IRS that the transferor or the executor of the transferor’s estate acted reasonably and in good faith, and that the grant of relief will not prejudice the interests of the government.

Section 26.2642-7(d)(2) provides a nonexclusive list of factors that will be considered in determining whether the transferor or the executor of the transferor’s estate acted reasonably and in good faith for purposes of § 26.2642-7, including reasonable reliance by the transferor or the executor of the transferor’s estate on the advice of a qualified tax professional.

Based on the facts submitted and the representations made, we conclude that the requirements of § 26.2642-7 have been satisfied. Therefore, Wife’s estate is granted an extension of time of 120 days from the date of this letter to allocate Wife’s GST exemption to the Year transfer to Trust, to the extent she is considered the transferor under § 26.2652-1(a)(4).

The allocation of GST exemption should be made on an amended Form 709 for Year. The Form 709 should be filed with the Internal Revenue Service at the following address: Internal Revenue Service Center, ATTN: E&G, Stop 824G, 7940 Kentucky Drive, Florence, KY 41042-2915.

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

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 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.
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Sincerely,

Associate Chief Counsel
(Passthroughs, Trusts, and Estates)

By: __/s/_____
Melissa C. Liquerman
Senior Counsel, Branch 4
Office of the Associate Chief Counsel
(Passthroughs, Trusts, and Estates)

Enclosure:
Copy for § 6110 purposes

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