The Estate Analyst: Exploiting DSUE Portability Revenue Procedure 2014-18 & Mysteries of The Wang Estates
By Robert L. Moshman, Esq.
It 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.”
Inside a Gift Horse’s Mouth
The portability of the DSUE to a surviving spouse is a concept with multiple connotations, mostly positive. Deferring taxation is good. Exemptions from tax are even better. So preserving a deceased spouse’s estate tax exemption is a useful tool. Thanks, Congress...