Before the Sun Sets

Examining the Portability Election and Related Temporary Regulations

James F. Hopson, JD, CPA

Although tax professionals had been achieving estate and gift tax credit portability through different planning techniques since the introduction of the estate tax exclusion, portability was officially enacted into law on December 17, 2010. The Tax Relief, Unemployment insurance Reauthorization, and Job Creation Act of 2010 (the Tax Relief Act) allows a surviving spouse the right to use any unused applicable exclusion amount (the $5 million exclusion) of a spouse dying on or after January 1, 2011; however, the law sunsets at the end of 2012. On June 15, 2012, the iRS issued taxpayer-friendly temporary and proposed regulations: internal Revenue Code (IRC) section 20.2010-1T, 2T, and 3T, on section 303(a) of the Tax Relief Act. In addition, the IRS made conforming amendments to IRC sections 2505(a), 2631(c), and 6018(a)(1).