Preserving the Deceased Spousal Unused Exclusion Amount for the Surviving Spouse: IRC Section 2010(c) and Notice 2011-82

By Diane L. Mutolo

INTRODUCTION:

The Tax Relief Unemployment Insurance Reauthorization and Job Creation Act of 2010 amended IRC Section 2010(c) to allow, after December 31, 2010, a surviving spouse to increase his or her applicable exclusion amount by the deceased spouse's unused exclusion amount.1 
Under the amended provision, the surviving spouse's applicable exclusion amount is the sum of the surviving spouse's basic exclusion amount ($5,000,000) and the deceased spouse's unused exclusion amount.2 The Internal Revenue Service has issued Notice 2011-82 to provide guidance on electing portability of the deceased spouse's unused exclusion amount for the surviving spouse. This Emerging Issues Analysis discusses IRC Section 2010(c) and the guidance provided in Notice 2011-82.

ANALYSIS:

Portability of the Deceased Spouse's Exclusion Amount under IRC Section 2010(c).

The unified credit against estate tax. The Tax Relief Unemployment Insurance Reauthorization and Job Creation Act of 2010 (2010 Tax Relief Act)3
, signed into law by President Obama on December 17, 2010, amended the applicable credit amount provisions under IRC Section 2010, the section of the Internal Revenue Code that allows the unified credit amount to be taken against the amount of tax imposed against an estate under IRC Section 2001.4 IRC Section 2010(a) states: "A credit of the applicable credit amount shall be allowed to the estate of every decedent against the tax imposed by section 2001."

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1 The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, Pub L No 111-312, 111th Cong, 2d Sess, §§ 302(a)(1), 303(a) (Dec 17, 2010).

2 IRC §2010(c)(2), (3)
.

3 Pub L No 111-312, 111th Cong, 2d Sess (Dec 17, 2010).

4 "Technical Explanation of the Revenue Provisions Contained in the 'Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010' Scheduled for Consideration by the United States Senate," JCX-55-10, Joint Committee on Taxation (Dec 10, 2010).

 

ABOUT THE AUTHOR:

Diane L. Mutolo, J.D., LL.M. is a member of the New York Bar, and her LL.M. is in Taxation. She is the update author for the LexisNexis Matthew Bender treatise, How to Save Time & Taxes Preparing Fiduciary Income Tax Returns.

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