Summary

In Notice 2012-21, the Service deals with the "portability" election that allows a surviving spouse to apply the decedent's unused federal estate tax exemption amount to subsequent taxable transfers. Solely for purposes of making the election, the Service is allowing the estate of a married decedent who died during the first six months of 2011 to extend the deadline for filing the estate tax return.

Extended Summary

Many executors have chosen not to file an estate tax return where the decedent's estate was less than the $5 million filing threshold for 2011, unaware that the portability election must be made on a timely filed Form 706. This was a significant trap for the unwary (see our earlier commentary)!

Until the issuance of Notice 2011-82 on October 17, 2011, executors had no formal guidance on the matter at all. The Notice made it clear that in order to make the portability election, an executor must file a complete form 706. No shortened or simplified form was to be provided (see our earlier commentary).

The present Notice extends the time for filing an estate tax return for a married decedent with an estate of $5 million or less by six months, even if the executor did not timely request an extension. However, to receive the benefit of the extended deadline, an executor must file not only the Form 706, but also the extension request (Form 4768) by the extended due date, stating that the filing is made pursuant to the Notice.

The first returns to be filed under the extended deadline will be due starting April 2, 2012.

CPC Commentary

This Notice is a welcome pronouncement!

Relevant Documents

	Notice 2012-21	2/17/12
	CPC Commentary: Estate Planning Organizations Suggest Portability Guidance	11/9/11
	Notice 2011-82	9/30/11
	IRS Form 706: United States Estate (and Generation-Skipping Transfer) Tax Return (SUPERSEDED)	9/27/11
	Highlights CPC Commentary: "Trap for Unwary" in Portability Election - You Must File Form 706!	9/12/11
	IRS Form 4768: Application for Extension of Time To File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes (SUPERSEDED)	5/5/09