Portability Extensions for First Half of 2011 Decedents 


    IRS Listens to AICPA’s Request for Relief and Allows Six Month Extension to File for Portability Election for Certain 2011 Deaths

    In response to relief requested by the AICPA and others, the IRS recently announced in Notice 2012-21 (and IR 2012-24) that estates of individuals who died in the first half of 2011 have an extra six months (15 months, rather than the usual nine months, from the date of the decedent’s death) to make the portability election so that the surviving spouse can later utilize the decedent’s unused exemption amount. The relief provisions were requested by the AICPA and others for those that missed the making the portability election because they did not know that they needed file a Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, to make the portability election because the estates were under the $ 5 million filing threshold for Form 706. For qualifying estates, the executor must follow the procedures listed below and file within 15 months after the decedent's date of death Form 4768, Application of Time to File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes, requesting an extension, and Form 706. Both forms may be filed at the same time as long as both are filed within 15 months of the decedent’s date of death.

    Estates qualifying for this election must meet the following requirements:

    • The decedent died after 12/31/10 and before 7/1/11
    • The decedent must be survived by a spouse
    • The fair market value of the gross estate does not exceed $5 million
    • The estate did not already request an automatic six-month extension of time to file Form 706 by timely filing Form 4768 on or before the due date for filing Form 706.

    To obtain the extension, the executor must:

    • File Form 4768 with the Service office designated in the form's instructions;
    • File Form 4768 no later than 15 months from the decedent's date of death; and
    • The executor enters at the top of Form 4768 the notation "Notice 2012-21, Extension for Good Cause Shown" or otherwise sufficiently notifies the Service on or with Form 4768 that Form 4768 is being filed pursuant to this notice.

    An executor following these requirements will be deemed to have shown good and sufficient cause and to have provided all explanations required without the need to include any further explanations on Form 4768.

    If, before the issuance of Notice 2012-21, an executor of a qualifying estate filed a Form 706 after the due date for filing Form 706 had passed, but before 15 months from the decedent’s date of death, without having timely requested an automatic six-month extension of time to file Form 706, the executor may file Form 4768 in accordance with the requirements of Notice 2012-21 and the extension will relate back to the due date of Form 706.

    The first estate tax returns (and required extension request) for estates eligible to make the portability election under Notice 2012-21 will now be due on Monday, April 2, 2012.




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