Portability Election Extended

02/03/2014

The IRS recently released Rev. Proc 2014-18 which provides relief for taxpayers who should have, but did not, make a portability election in an estate tax return (Form 706).  Part of the reason for this Rev. Proc. is the Supreme Court's decision in Windsor which now will recognize same-sex marriages for federal estate tax purposes and the overall general confusion surrounding the status of federal estates taxes at the end of 2013.

Rev. Proc 2014-18 gives executors of the estates of certain decedents the ability to make the federal estate tax portability election by filing a federal estate tax return on or before December 31, 2014.

In order to qualify, Rev. Proc. 2014-18 requires the estate to meet the following criteria:

1.  The taxpayer is the executor of the estate of a decedent who:

(a) Has a surviving spouse;

(b) Died after December 31, 2010, and on or before December 31, 2013;

(c) Was a citizen or resident of the United States on the date of death.

2.  The taxpayer was not required to file a federal estate tax return (as determined based on the value of the gross estate and adjusted taxable gifts); and

3.  The taxpayer in fact did not file a federal estate tax return in order to elect portability; and

4.  A person permitted to make the election on behalf of a decedent files a completed and properly-prepared federal estate tax return on or before December 31, 2014; and

5.  The person filing the federal estate tax return on behalf of the decedent's estate must state at the top of the return that it is being "FILED PURSUANT TO REV. PROC. 2014-18 TO ELECT PORTABILITY UNDER § 2010(c)(5)(A)."

If all of the above requirements are met, a portability election could still be made.