Cross References
- Rev. Proc. 2017-34

A decedent is allowed an exclusion amount against the Federal Estate and Gift tax. For decedent's dying in 2017, the inflation adjusted exclusion amount is $5,490,000. This means that for decedent's dying in 2017, lifetime gifts plus the value of assets included in the gross estate up to $5,490,000 are excluded from the Federal Estate tax. For purposes of the Federal Estate and Gift tax, a portability election allows a surviving spouse to add the decedent's unused estate and gift tax exclusion amount to the surviving spouse's own exclusion amount. For example, if a decedent dies in 2017 with total lifetime gifts and a gross estate of $3 million, the surviving spouse can elect to add $2,490,000 ($5,490,000 minus $3,000,000) to his or her own exclusion amount.

The executor of the estate of the deceased spouse must elect portability of the unused estate and gift tax exclusion amount by filing an estate tax return for the decedent within nine months of the decedent's date of death (plus extensions) and include a calculation of the unused exclusion amount on that return. A return must be filed by the executor to elect portability even if the decedent was not otherwise required to file a Federal Estate tax return.

Regulation section 301.9100-3 provides relief for executors who fail to make the election by the due date of the return by allowing an extension of time to make the election under certain circumstances. Generally, since December 31, 2014, executors needed to apply via a private letter ruling to request the IRS to grant an extension of time to make the election. As a result of numerous requests for relief, the IRS has issued a new revenue procedure for a new simplified method to make the election.

See printable version for remainder of article.