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rev proc 2016-49

December 13, 2016 • Theresa Donnelly • Log In to Post Comments

Hi - I am wondering if you have examples of filing the 706 electing the qtip election, I think it is just completing the schedule M? 

Also how far back can we go with this new rev proc?

Thanks

 


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We don't have any materials with specific examples of QTIP elections. But, you make the QTIP election simply by listing the qualified terminable interest property on Part A of Schedule M and inserting its value. You are presumed to have made the QTIP election if you list the property and insert its value on Schedule M. If you make this election, the surviving spouse's gross estate will include the value of the qualified terminable interest property. See the instructions for Part 4—General Information, line 7, for more details. The election is irrevocable.

The Rev. Proc. is effective September 27, 2016. However, the clarification that a QTIP election can be made in conjunction with a portabloity election would be effective for earlier portability elections. 

How much earlier would the qtip be effective?  15 months from September 27, 2016 or how far back can we go?

Thank you!

I'm not clear on your question. Are you asking when QTIP elections in general became effective? The QTIP election concept is not new. The election is made after the death of the first spouse, and then reported on the 706. 

for a previously filed 706, how far can we go back and use the rev proc?  Can we amend previously filed 706's, or is just for 706's filed after 9-17-16?

Thank you!

Theresa:

Rev Proc 2016-49 doesn't give any additional time to go back and "fix" something, it simply eliminates a potential problem that may have been created by Rev. Proc. 2001-38, where a QTIP wasn't needed by an estate to reduce the liability to zero and therefore was treated as void by the IRS under 2001-38.  Rev. Proc. 2001-38 assumed that no one would make a QTIP election unless it was needed, so if one wasn't necessary to reduce the tax to zero Rev Proc 2001-38 allowed you to treat it as void.  With portabililty, it may now be advantageous to take advantage of both portabiility and QTIP.  So Rev. Proc. 2016-49 deals with how to go back and treat a QTIP as void if you really don't want.  It kind of reverses the assumption and acknowledges that you may very well want both a QTIP and portability.  

So it does not allow you to go back and fix a failed portability election, nor does it allow you to go back and make a missed QTIP election.  It simply clarifies how to treat a QTIP election that was made as void if you combined the two and really don't want a valid QTIP, short of doing the full private ruling route.

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