IRS Provides AICPA-Requested Relief for Portability Elections

February 27, 2014

The Internal Revenue Service responded to requests from the American Institute of CPAs (AICPA) when it issued Rev. Proc. 2014-18 on Jan. 27, 2014 providing an automatic extension (until the end of 2014) for certain estates that did not have a filing requirement to elect portability of the decedent’s unused exclusion amount for the benefit of the surviving spouse.  It was published in Internal Revenue Bulletin 2014-07 on Feb. 10, 2014.

The action by the IRS simplifies the process for estates whose assets did not meet the threshold for estate tax return filing to file for portability and protects executors of estates who were unaware of the need to file to obtain portability.

Previously, the only method of relief was to seek a private letter ruling from the IRS.  This revenue procedure relief applies to certain estates of decedents who died after Dec. 31, 2010, and before Jan. 1, 2014, including decedents in recognized same-sex marriages.  The election must be made by Dec. 31, 2014. 

The AICPA requested relief for practitioners and estate clients who missed filing the portability election.  The AICPA requested additional guidance on the process for estates of decedents in a same-sex marriage to claim portability of the estate tax exemption if they were not required to, and did not previously, file Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, because they were below the filing threshold.  In addition, the AICPA previously requested that the IRS issue closing letters to estates that elect portability, and the new revenue procedure states that such closing letters will be issued to estates who file under Rev. Proc. 2014-18.