Late Election Allowed

Decedent’s estate was small enough that no federal estate tax return was required.  He therefore did have unused federal estate tax exemption amounts, and these are portable to the surviving spouse upon making the election on an estate tax return.  For “various reasons” no estate tax return was filed at the time.  Now the surviving spouse would like to have that additional protection from federal transfer taxes, so a request for an extension of time to file the return has been made.  The answer to the request is made via a private letter ruling.  Recently two such rulings were published, Private Letter Ruling 202609001 and Private Letter Ruling 202609006.

In both cases the IRS granted the request.  Because the estates were so small, and no estate tax return was required by law, the Service has greater administrative flexibility in such a situation.  The contents of the affidavits and representations submitted to the IRS explaining the tardiness were not revealed in the ruling, nor was it revealed just how tardy the request was, but each was held sufficient to meet the requirements of the IRS Regulations.  Accordingly, the estates were given another 120 days to file the return.

Given the steady expansion of the amount exempt from federal estate and gift tax, the tax is now likely to affect less than 1% of estates, so why are there so many requests for extensions to claim the Deceased Spousal Unused Exemption?  One possibility is that the strong stock market returns in recent years has lifted the value of surviving spouses’ estates into the taxable area.  Another is that some taxpayers and estate planners may fear that a future Congress will reduce the exempt amount—a number of Congressmen have advocated for exactly that policy.  Claiming the unused exemption may be a hedge against future tax increases.

(April 2026)

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