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Protecting Portability Exclusion - Recent IRS Notice

Posted Tuesday, October 4, 2011 by Michael A. Larson

On September 29, 2011 the IRS issued Notice 2011-82 alerting executors of the estates of decedents dying after Dec. 31, 2010 to the requirement for filing a timely Form 706 (Estate Tax Return) to preserve a decedent spouse’s unused exclusion amount. A portability election can be made only on a Form 706 timely filed by the estate of a decedent dying after Dec. 31, 2010. Thus, a Form 706 must be timely filed (including valid extensions) even if the form is not otherwise required. Further, if the Form 706 is not timely filed, the ability to make a portability election is lost.

It should be noted that the filing of a timely return by itself will constitute the making of a portability election by the estate of a decedent dying after Dec. 31, 2010. Persons that do not wish make a portability election may do so by failing to file a timely Form 706 or by following the instructions for the Form 706 that will describe the necessary steps to avoid making the election.

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