Friday, October 7, 2022
HomeWealth ManagementIRS Revises Simplified Late Portability Election Process

IRS Revises Simplified Late Portability Election Process


On July, 8, 2022, the Inside Income Service launched Income Process 2022-32, which supplies a simplified technique for sure estates to make a late portability election to permit the surviving partner of the decedent to make use of the decedent’s unused unified present and property tax exemption (that’s, the deceased spousal unused exclusion or DSUE). The Rev. Proc. expressly supersedes Rev. Proc. 2017-34, which allowed an property that wasn’t required to file an property tax return (as a result of worth of the gross property and adjusted taxable items being underneath the submitting threshold in Inside Income Code Part 6018(a)) to make a late election by the second anniversary of dying.  

New Necessities for Portability Election

Below the brand new process, the executor of the decedent’s property could elect for portability of the DSUE to a surviving partner if: (1) the decedent died after Dec. 31, 2010, (2) the decedent was a citizen or resident on date of dying, (3) the decedent’s property isn’t required to file an property tax return (that’s, the decedent’s property is under the submitting threshold in IRC Part 6018(a)), and (4) the property didn’t the truth is file a well timed property tax return.  To avail themselves of the brand new process, the executor of the decedent’s property is required to file a accomplished property tax return on or earlier than the fifth anniversary of the decedent’s date of dying, and the highest of the return should state: “FILED PURSUANT TO REV. PROC. 2022-32 TO ELECT PORTABILITY UNDER 2010(C)(5)(A).”  If the necessities of the income process are met, the return and the election might be thought-about well timed filed, and the DSUE quantity of the decedent is offered to the decedent’s surviving partner (or the property of the surviving partner) for software to the surviving partner’s transfers made on or after the decedent’s date of dying.  If the IRS later determines that the executor was the truth is required to file an property tax return, the grant of an extension underneath the brand new process might be void. 

Notably, if the rise within the surviving partner’s exemption quantity attributable to the addition of the decedent’s DSUE quantity leads to an overpayment of present or property tax by the surviving partner (or the survivor’s property), the statute of limitations underneath IRC Part 6511(a) nonetheless applies (that’s, Rev Proc. 2022-32 doesn’t serve to increase the statute of limitations underneath Part 6511(a) for software of credit score or refund).   Rev. Proc. 2022-32 states nonetheless, that if the decedent’s property tax return hasn’t but been filed to elect portability, the surviving partner (or the survivor’s property) could file a protecting declare for credit score or refund in anticipation of the DSUE, to stop the survivor from being barred from such credit score or refund underneath the statute of limitations. 

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