Relief for Missed Portability Elections

1. Relief for Missed Portability Elections Rev. Proc. 2014-18 Presented by: Robert S. Keebler, CPA, MST 1

2. Rev. Proc. 2014-18 Summary of the Service’s Stated Purpose: To provide a simplified method for certain taxpayers to obtain an extension of time to make a portability election. © 2014 Robert S. Keebler, CPA, MST Keebler & Associates, LLP All Rights Reserved American I nstitute of CPAs ® 2

3. Rev. Proc. 2014-18 The Estate Tax Regulations provide that an estate is required to file a return in order to elect portability. See Treas. Reg. 20.2010-2T(a)(1). © 2014 Robert S. Keebler, CPA, MST Keebler & Associates, LLP All Rights Reserved American I nstitute of CPAs ® 3

4. Rev. Proc. 2014-18 United States v. Windsor & Rev. Rul. 2013-17 • In Windsor, the Supreme Court found the Defense of Marriage Act unconstitutional • In Rev. Rul. 2013-17 the Service determined that it would construe the definition of the terms “spouse,” “husband,” “wife,” etc… to include married same sex couples. © 2014 Robert S. Keebler, CPA, MST Keebler & Associates, LLP All Rights Reserved American I nstitute of CPAs ® 4

5. Rev. Proc. 2014-18 Rev. Proc. 2014-18 Applies If: (1) The estate of a decedent who: (a) has a surviving spouse; (b) died after December 31, 2010, and on or before December 31, 2013; and (c) was a citizen or resident of the United States on the date of death. (2) The taxpayer is not required to file an estate tax return under § 6018(a) (3) The taxpayer did not file an estate tax return within the time required to elect portability; and (4) All requirements of Section 4 of this revenue procedure are satisfied. © 2014 Robert S. Keebler, CPA, MST Keebler & Associates, LLP All Rights Reserved American I nstitute of CPAs ® 5

6. Rev. Proc. 2014-18 Requirements of Section 4 – Procedural (1) Form 706 must be filed on or before December 31, 2014. (2) Must state on top of Form 706: “FILED PURSUANT TO REV. PROC. 2014-18 TO ELECT PORTABILITY UNDER § 2010(c)(5)(A).” © 2014 Robert S. Keebler, CPA, MST Keebler & Associates, LLP All Rights Reserved American I nstitute of CPAs ® 6

7. Rev. Proc. 2014-18 PERIOD FOR CLAIM FOR CREDIT OR REFUND: Claim for credit or refund of an overpayment of tax must be filed within three years from the date of filing the tax return, or within two years from the date of payment of the tax, whichever period expires later. © 2014 Robert S. Keebler, CPA, MST Keebler & Associates, LLP All Rights Reserved American I nstitute of CPAs ® 7

8. Rev. Proc. 2014-18 Example: (a) S1 dies on 1/1/11, survived S2. S1’s gross estate consists bank accounts held jointly with S2 with rights of survivorship in the amount of $2,000,000. S1 made no taxable gifts during life. S1’s executor is not required to file an estate tax return under § 6018(a), and does not file such a return. (b) S2 dies on 01/14/11. S2’s taxable estate is $8,000,000 and made no taxable gifts during life. S2’s executor files a Form 706 on behalf of S2’s estate on 10/14/11, and includes payment of the estate tax on the $3,000,000 in excess of S2’s applicable exclusion amount. © 2014 Robert S. Keebler, CPA, MST Keebler & Associates, LLP All Rights Reserved American I nstitute of CPAs ® 8

9. Rev. Proc. 2014-18 Example (cont): (c) Pursuant to this revenue procedure, S1’s executor files a Form 706 on behalf of S1’s estate on 11/1/14, reporting a DSUE amount of $5,000,000. In 2015, the Service (i) determines that S1’s estate has met the requirements for a grant of relief under this revenue procedure and is deemed to have made a valid portability election, (ii) accepts S1’s return with no changes, and (iii) issues an estate tax closing letter to S1’s estate. © 2014 Robert S. Keebler, CPA, MST Keebler & Associates, LLP All Rights Reserved American I nstitute of CPAs ® 9

10. Rev. Proc. 2014-18 Example (cont): To recover the estate tax paid, S2’s executor must file a claim for credit or refund of tax by 10/14/14, even though a Form 706 to elect portability has not been filed on behalf of S1’s estate at that time. Such a claim filed in anticipation of the filing of the Form 706 by S1’s executor will be considered a protective claim for credit or refund of tax. © 2014 Robert S. Keebler, CPA, MST Keebler & Associates, LLP All Rights Reserved American I nstitute of CPAs ® 10

12. Circular 230 Disclosure Pursuant to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, nothing contained in this communication was intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose. No one, without our express prior written permission, may use or refer to any tax advice in this communication in promoting, marketing, or recommending a partnership or other entity, investment plan or arrangement to any other party. For discussion purposes only. This work is intended to provide general information about the tax and other laws applicable to retirement benefits. The author, his firm or anyone forwarding or reproducing this work shall have neither liability nor responsibility to any person or entity with respect to any loss or damage caused, or alleged to be caused, directly or indirectly by the information contained in this work. This work does not represent tax, accounting, or legal advice. The individual taxpayer is advised to and should rely on their own advisors. American I nstitute of CPAs ® 12