Draft Form 706 Includes Option for Opting Out of Portability

Join us next Thursday, September 6th for a special 60-minute teleconference with nationally renowned CPA, Robert S. Keebler, on the topic of Portability and the New Form 706. For more information and to register, click here.

Last Friday, the Internal Revenue Service released a draft of the new Form 706. For the first time, the form addresses the issue of portability of a deceased spouse’s unused estate and gift tax exclusion amount by providing an option for the executor to opt out of electing portability of the unused portion.

Under the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, a surviving spouse can increase his or her applicable exclusion amount by the amount of the unused exclusion amount of the deceased spouse, provided that the deceased spouse died after 2010. This provision is currently scheduled to expire after on December 31st of this year. This election is made by the executor of the deceased spouse’s estate. Form 706 must be filed to make the election, and even estates that would not otherwise be required to file Form 706 must file in order to make the election.

Because filing Form 706, by default, causes the election to be made, the draft Form 706 provides a mechanism for estates that are required to file because the value of the gross estate exceeds the applicable exclusion amount or for another reason to opt out of the election.

Again, we will be covering the new Portability Rules and this new Form 706 on our teleconference next Thursday, so be sure to register right away!

Leave a Comment