July 29, 2022 12:50 am

Simplified Method for Extension to Make a Portability Election

Estates of decedents that have not used up their exemption amount ($12.06 million for decedents dying in 2022) may make a portability election, called the deceased spousal unused exclusion (DSUE). To make the election, Form 706 must be filed. The problem has been that smaller estates—those below the exemption amount, including adjusted taxable gifts—did not have to file the form, so the election wasn’t made. Filing Form 706 remained the only way to make the election and preserve to unused exclusion.

In 2017, the IRS created a 2-year period from the date of death to make the portability election (Rev. Proc. 2017-34). However, this period hasn’t been sufficient, as evidenced by the numerous private letter ruling requests seeking additional time to file Form 706 so the election can be made.

Now, the IRS has created a 5-year period for making the portability election by estates not otherwise required to file Form 706 (Rev. Proc. 2022-32). The simplified method is used instead of the private letter ruling route; no user fee is required. File Form 706 within the 5-year period and write at the top: “FILED PURSUANT TO REV. PROC. 2022- 32 TO ELECT PORTABILITY UNDER § 2010(c)(5)(A).”

Tax Glossary

Adjusted gross income (AGI)

Gross income less allowable adjustments, such as IRA, alimony, and Keogh deductions. AGI determines whether various tax benefits are phased out, such as personal exemptions, itemized deductions, and the rental loss allowance and modified adjusted gross income (MAGI).

More terms