IRS Grants Extension for Portability Election Under § 2010(c)(5)(A)

IRS Grants 120-Day Extension for Portability Election After Untimely Filing

The IRS granted a 120-day extension to an estate seeking to make a portability election under § 2010(c)(5)(A), allowing the surviving spouse to claim the deceased spouse’s unused exclusion (DSUE) amount despite missing the original filing deadline. The estate’s request for relief under § 301.9100-3 was approved because the estate demonstrated it acted reasonably and in good faith, and granting the extension would not prejudice the government’s interests. This ruling underscores that estates may still secure the DSUE amount even after an untimely filing, provided they meet the IRS’s criteria for relief.

IRS Grants Extension Despite Untimely Filing

The IRS granted a 120-day extension under § 301.9100-3 to an estate that missed the deadline to elect portability of the deceased spouse’s unused exclusion (DSUE) amount. The estate, whose gross estate fell below the § 6018(a) filing threshold, failed to timely file Form 706 to preserve the DSUE for the surviving spouse. The estate demonstrated that the delay resulted from administrative oversight—not willful neglect—and that granting relief would not prejudice the government’s interests. This ruling confirms that estates may secure the DSUE amount even after an untimely filing, provided they meet the IRS’s criteria for relief under § 301.9100-3.

Background: Administrative Oversight Leads to Missed Deadline

The estate’s failure to timely file Form 706 stemmed from an administrative oversight. The decedent’s gross estate fell below the § 6018(a) filing threshold, meaning no estate tax return was otherwise required. However, the estate later discovered an unused portion of the decedent’s applicable exclusion amount (DSUE), which could have been transferred to the surviving spouse via a portability election. A portability election requires timely filing of Form 706, including the election statement, within nine months of the decedent’s death. The estate missed this deadline due to oversight and subsequently requested relief under § 301.9100-3.

IRS Rationale: Extension Granted Under § 301.9100-3

The IRS granted the estate’s request for a 120-day extension under § 301.9100-3, which permits discretionary relief for regulatory elections when the taxpayer demonstrates:

1. Reasonable cause and good faith;
2. No willful neglect; and
3. No prejudice to the government’s interests.

The estate submitted affidavits and documentation explaining the administrative oversight that caused the missed deadline. The IRS confirmed that the delay was not intentional and that the estate’s gross estate and adjusted taxable gifts remained below the § 6018(a) filing threshold, ensuring no loss of tax revenue. Based on these submissions, the IRS concluded the estate met all prerequisites for relief.

The estate must now file a complete Form 706, including the portability election statement, within 120 days of the IRS’s determination letter.

Key Takeaways for Estates and Taxpayers

This Private Letter Ruling (PLR-104938-26) provides guidance but is non-precedential under § 6110(k)(3), meaning it cannot be cited as precedent. Estates seeking similar relief must still demonstrate reasonable cause and good faith under § 301.9100-3, supported by verifiable documentation.

If the estate’s value later exceeds the § 6018(a) filing threshold, the granted extension becomes null and void, per § 20.2010-2(a)(1). The IRS reserves the right to audit and challenge the DSUE amount claimed by the surviving spouse.

The ruling underscores that timeliness is critical: the IRS’s discretionary relief under § 301.9100-3 is not a substitute for complying with § 6018(a). Estates that miss the filing deadline risk losing the DSUE amount entirely.