The Internal Revenue Service said that the estates of married individuals who have died after 2010 need to file an estate tax return in order to pass along any unused amount of their estate and gift tax exclusion to their surviving spouse.
The new portability election, which is available for the first time this year, allows estates of married taxpayers to pass along the unused part of their exclusion amount, normally $5 million in 2011, to their surviving spouse. The provision, which was enacted last December as part of the tax cut extension deal, eliminates the need for spouses to retitle their property and create trusts solely to take full advantage of each spouse’s exclusion amount.
The IRS said last week that it expects that most estates of people who are married will want to make the portability election, including people who are not required to file an estate tax return for some other reason. The only way to make the election is by properly and timely filing an estate tax return on Form 706. There are no special boxes to check or statements needed to make the election.
The first estate tax returns for estates eligible to make the portability election (because the date of death is after Dec. 31, 2010) were due as early as Monday, Oct. 3, 2011. This is because the estate tax return is due nine months after the date of death. Estates that were unable to meet this deadline can request an automatic six-month filing extension by filing Form 4768. The IRS emphasized that estates of those who died before 2011 are not eligible to make this election.
The IRS plans to issue regulations providing further guidance on this election and welcomes public comment on a number of issues. Comments can be emailed to Notice.Comments@irscounsel.treas.gov. Include “Notice 2011-82” in the subject line.
The deadline is Oct. 31, 2011. Further details are in Notice 2011-82, posted on IRS.gov.
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