In this Analysis, Elaine Gagliardi discusses determination of
the applicable exclusion amount available to estates of decedents dying in 2011
and 2012. In particular, Notice 2011-82 provides guidance as to how to preserve
the deceased spousal unused exclusion amount and how to make the election. Ms. Gagliardi
For decedents dying in 2011 and 2012, the applicable exclusion amount
is comprised of the "basic applicable exclusion amount" and the
"deceased spousal unused exclusion amount" (DSUE amount) The basic
applicable exclusion amount equals $5 million in 2011. In 2012, indexing of the
basic applicable exclusion amount begins. Indexing for cost of living
adjustment is based on calendar year 2010 dollars and increased in $10,000
intervals. The basic applicable exclusion is then added to the DSUE amount, to
determine the applicable exclusion amount available to estates of decedents
dying in 2011 and 2012.
The Code indicates the DSUE amount may only be claimed by the estate
of a surviving spouse, if the deceased spouse's estate filed an estate tax
return, computed the DSUE amount, and made an election on a timely filed return
(including extensions). It also limits the DSUE amount claimed by the estate of
the surviving spouse to the DSUE amount elected in the estate of the "last
. . . deceased spouse." The Service has not yet issued regulations
addressing the DSUE amount. It has, however, issued Notice 2011-82 providing
guidance as to how the election is to be made.
Notice 2011-82 confirms that it is necessary to file an
estate tax return to preserve the DSUE amount and make the election. An estate
tax return must be filed even if the estate of the first spouse to die does not
exceed the basic exclusion amount. Thus, the executor must timely file the
estate tax return for estates of 2011 and 2012 decedents if the estate wishes
to provide the surviving spouse the benefit of the decedent's DSUE amount. Estates
of decedents dying prior to 2011 may not make the election. To obtain the
benefits of portability, the executor must file even if the estate is not of
sufficient size to otherwise require filing.
Access the full
version of Elaine Gagliardi on Determination of the Applicable Exclusion Amount
with your lexis.com ID. Additional fees may be incurred. (approx. 7 pages)
If you do not have a lexis.com ID, you can purchase this commentary and
additional Emerging Issues Analysis content at the LexisNexis Store.
. . . .
Explore the LEXIS.com Estates, Gifts & Trusts and Elder Law resources
Discover the features and benefits of LexisNexis® Tax Center
For more information about LexisNexis products and
solutions connect with us through our corporate