An estate tax return is required to be filed within nine months (unless extended) of a decedent's date of death in order to elect portability and preserve their lifetime exclusion for use by a surviving spouse. The Revenue Procedure 2014-18, effective Jan. 27, 2014, offers an automatic extension of time to file an estate tax return (Form 706) to elect portability to certain taxpayers.
This is good news for surviving spouses who may have missed the filing deadline. Electing portability allows the surviving spouse to apply the deceased spousal unused exclusion amount (DSUE), up to $5 million (indexed for inflation), to the surviving spouse's transfers during life or at death. The automatic extension portability election applies to estates of decedents dying after December 31, 2010, and on or before December 31, 2013, and must meet the following additional requirements:
- The estate is not otherwise required to file an estate tax return, and,
- The estate did not file a timely estate tax return.
To take advantage of the extension, the surviving spouse must elect portability of the DSUE amount on Form 706 (estate tax return) by Dec. 31, 2014. If the deadline is missed, the only option for an extension to file is requesting a private letter ruling with the IRS Commissioner.
For assistance, please contact Michael Deering, CPA, Mowery & Schoenfeld, at mdeering@msllc.com or 847-247-8959.