The IRS has extended the deadline for estates of married individuals who died in 2011 to make the “portability” election for unused unified federal gift and estate tax exemptions. (IRS Notice 2012-21)
Under the 2010 Tax Relief Act, which provided a generous $5 million estate tax exemption for decedents dying in 2011 or 2012 (indexed to $5.12 million in 2012), an election can be made to leave the unused exemption of a deceased spouse to the surviving spouse. The election must be made with the estate tax return for the deceased spouse.
Normally, an estate tax return must be filed within nine months of death, but the IRS says it will allow an automatic six-month extension of the estate tax return filing deadline for estates when there’s a surviving spouse, the decedent died between Jan. 1 and June 30, 2011, and the estate’s value doesn’t exceed $5 million.