The Late Portability Election Deadline: You Have Five Years, Not Nine Months.

Picture a widow three years out from her husband's death. His estate was about $3.8 million, all of it passed to her under the unlimited marital deduction, no federal estate tax was due, and so nobody filed a return. Now she is selling the family business and her own estate projects out near $24 million. She wants to know whether her husband's unused exemption is gone. In most cases like hers it is not. The nine-month Form 706 deadline everyone remembers is not the late portability election deadline, and the gap between them is years.

Form 706 is due nine months after death under IRC §6075(a), and Form 4768 buys an automatic six-month extension, so the outside date on an ordinary estate tax return is 15 months. Portability (the rule that lets a surviving spouse use whatever exemption the first spouse did not, called the deceased spousal unused exclusion, or DSUE, amount) has to be elected on a return filed inside that window under Treas. Reg. §20.2010-2(a)(1). For an estate too small to owe tax, though, that deadline comes from a regulation rather than the statute, which means Treasury can move it. It did. Rev. Proc. 2022-32, effective July 8, 2022, replaced the two-year window in Rev. Proc. 2017-34 with a flat five years from the date of death.

Four conditions, all easy to check. The decedent was a citizen or resident of the United States at death, died after December 31, 2010, and was survived by a spouse. And the executor was not required to file under IRC §6018(a), which is judged on the gross estate plus adjusted taxable gifts against the basic exclusion amount for the year of death, ignoring the fact that you now want to file for portability. An estate that crossed that threshold is out, and it is out for good: the deadline for those estates sits in the statute, and neither a revenue procedure nor a private ruling can move a statutory deadline. Also out is an estate that already filed a timely Form 706. That return either made the election or affirmatively opted out in Part 6, Section A, and either way the decision is spent.

Prepare a complete and properly prepared Form 706 under Treas. Reg. §20.2010-2(a)(7) and write across the top of page 1: FILED PURSUANT TO REV. PROC. 2022-32 TO ELECT PORTABILITY UNDER §2010(c)(5)(A). That is the entire procedure. No user fee, no ruling request, no explanation letter. The word complete is what scares executors into ordering appraisals they do not need. Treas. Reg. §20.2010-2(a)(7)(ii) lets an estate that was not required to file skip reporting the value of property passing to the surviving spouse or to charity, and instead report the description, ownership, and beneficiary along with a good-faith estimate of value arrived at with due diligence, using the estimate ranges in the Form 706 instructions. On a return where the house, the accounts, and the life insurance all went to the survivor, that strips out most of the valuation cost. What is left is a preparation fee, not an appraisal project.

The DSUE amount is the lesser of the basic exclusion amount and the part of the first spouse's exclusion that went unused, measured in the year that spouse died, and it is never indexed afterward. A 2022 death caps it at $12,060,000. A 2026 death caps it at $15,000,000, the figure OBBBA wrote into IRC §2010(c)(3), which I covered in the 2026 estate tax exemption. The survivor's own exclusion keeps climbing with inflation; the inherited piece does not. That cuts both ways. Waiting will not grow the DSUE, and it will not shrink it either, so the only thing the calendar actually threatens is the election itself. One timing note: the DSUE also applies against lifetime gifts under IRC §2505, and it gets used before the survivor's own exclusion, so a survivor who plans to make large gifts should get the election on file first.

Miss the five-year mark and the only route left is a request for an extension under Treas. Reg. §301.9100-3, which means a private letter ruling: a written submission arguing that the executor acted reasonably and in good faith and that relief will not prejudice the government. The user fee alone runs $3,450 to $14,500 depending on gross income under the Rev. Proc. 2026-1 schedule effective January 30, 2026, and that is before preparation and the months of waiting. The IRS grants these routinely on facts like a widow's, so what a missed five-year window usually costs is money and time rather than the exemption. Separately, Rev. Proc. 2022-32 does nothing for the refund clock. If the survivor already paid gift or estate tax the DSUE would have erased, IRC §6511 still requires the claim within three years of filing the return or two years of paying the tax, whichever is later, so file a protective claim while the 706 is in process.

Here is the honest downside. In Estate of Sower v. Commissioner, 149 T.C. 279 (2017), the Tax Court held that the IRS may examine the predeceased spouse's return to determine the correct DSUE amount when the surviving spouse's estate uses it, even after the assessment period on that first return has closed. No tax is being assessed against the first estate, so its statute of limitations is not implicated. In practice the values reported on a portability-only return, including the good-faith estimates, stay open to challenge for as long as the DSUE sits unused. That is not a reason to skip the election, and the math above shows why. It is a reason to prepare the return as though someone will read it years later, because someone can.