Friday, March 21, 2014
Robert L. Moshman (Attorney, New York and New Jersey) recently published his article entitled, Exploiting DSUE Portability 2014-18, The Estate Analyst (Feb. 2014). An excerpt from the article is below:
Should a portability election be filed for the estate of every first spouse to die? What if the joint marital estates are relatively small?Is there a downside to overreliance on portability?Let's consider how the deceased spouse's unused exemption (DSUE) impacts planningin several different scenarios and consider the latest IRS guidance on extensions for filing the election from Revenue Procedure 2014-18.Portability ArrivesIt was the end of days, Tax-pocalypse, where space and time warped to form the end of the estate tax (and the beginning), a reversion to 2001, and a combination of the stepped-up basis and carryover basis for assets held at death. But then came 2011, and the estate tax was reinstated by Congress with a $5-million exemption and a brand-new portability provision to salvage the unused estate tax exemption of the first spouse to die.The specific background of portability was recently summarized in Revenue Procedure 2014-18 as follows:"Sections 302(a)(1) and 303(a) of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (TRUIRJCA), Pub. L. No. 111-312, 124 Stat. 3296, 3302 (2010), amended § 2010(c) of the Code to allow the estate of a decedent who is survived by a spouse to make a portability election, which allows the surviving spouse to apply the decedent's DSUE amount to the surviving spouse's own transfers during life and at death. The portability election applies to estates of decedents dying after December 31, 2010, if such decedent was survived by a spouse. The portability provisions under § 2010(c) of the Code were scheduled to expire on January 1, 2013, pursuant to § 304 of TRUIRJCA. However, § 101(a) of the American Taxpayer Relief Act of 2012, Pub. L. No. 112-rev. 0, 126 Stat. 2313 (ATRA), made portability permanent."