Extension of Time for Making Certain Elections

Internal Revenue Service Department of the Treasury
Washington, DC 20224
Number: 201801001
Release Date: 1/5/2018
Index Number: 2642.00-00, 9100.00-00
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In Re: ---
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Third Party Communication: None
Date of Communication: Not Applicable
Person To Contact:
---, ID No. ---
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Telephone Number:
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Refer Reply To:
CC:PSI:B04
PLR-111445-17
Date:
September 20, 2017
Legend
Decedent = ---
Spouse = ---
Trust 1 = ---
Trust 2 = ---
Trustees = ---
Son = ---
Attorney 1 = ---
Attorney 2 = ---
Date 1 = ---
Date 2 = ---
Year 1 = ---
Year 2 = ---
Dear ---:
This responds to your personal representative’s letter of March 31, 2017, requesting an extension of time under § 301.9100 of the Procedure and Administration Regulations and § 2642(g) of the Internal Revenue Code to allocate generation-skipping transfer

(GST) exemption to a trust.

# Facts

The facts and representations submitted are summarized as follows: Decedent executed a will on Date 1. Decedent’s son, Son, is the personal representative of Decedent’s estate. Decedent died on Date 2. Under Decedent’s will the residue to his estate passed to Trust 1. Trust 1 created an irrevocable sub-trust, Trust 2, established PLR-111445-17 2 on Date 2, for the benefit of Decedent’s Spouse and issue. No additional transfers have been made to Trust 2.
Section D of Trust 2 provides, in part, that during Spouse’s lifetime, the Trustee, shall pay or apply for the benefit of Spouse all of the net income of Trust 2. No part of the principal of Trust 2 is to be distributed to Spouse during her lifetime. Spouse has a limited power to appoint the principal of Trust 2 in favor of Decedent’s issue, by a writing signed by Spouse during her lifetime or by will. Any property not appointed during Spouse’s lifetime or at death passes to Decedent’s children. If a child predeceases Decedent the property is to be distributed to the child’s issue by right of representation.
Attorney prepared Form 706 United States Estate (and Generation-Skipping Transfer)
Tax Return for Year 1. However, Attorney failed to allocate Decedent’s GST exemption to Trust 2. The error was discovered in Year 2 when Spouse and Son consulted Attorney 2 regarding the family estate planning and discovered that Decedent’s GST exemption had not been allocated to the Year 1 transfer to Trust 2 on the Form 706.
You have requested an extension of time under § 2642(g)(1) and § 301.9100-3 to allow to allocate Decedent’s GST exemption to the transfer to Trust 2 in Year 1.

# Law and Analysis

Section 2601 imposes a tax on every generation-skipping transfer. A generationskipping transfer is defined under § 2611(a) as (1) a taxable distribution, (2) a taxable termination, and (3) a direct skip.
Section 2631(a) provides that, for purposes of determining the GST tax, every individual shall be allowed a GST exemption amount which may be allocated by such individual (or his executor) to any property with respect to which such individual is the transferor.
Section 2631(b) provides that any allocation under § 2631(a), once made, shall be irrevocable.
Section 2642(b)(2)(A) provides that if property is transferred as a result of the death of the transferor, the value of such property for purposes of section 2642(a) shall be its value as finally determined for purposes of chapter 11; except that, if the requirements prescribed by the Secretary respecting allocation of post-death changes in value are not met, the value of such property shall be determined as of the time of the distribution concerned. Section 2642(b)(2)(B) provides that any allocation to property transferred as a result of the death of the transferor shall be effective on and after the date of the death of the transferor.
Section 2642(g)(1)(A) provides that the Secretary shall by regulation prescribe such circumstances and procedures under which extensions of time will be granted to make an allocation of GST exemption described in § 2642(b)(1) or (2), and an election under § 2632(b)(3) or (c)(5). Such regulations shall include procedures for requesting PLR-111445-17 3 comparable relief with respect to transfers made before the date of the enactment of this paragraph.
Section 2642(g)(1)(B) provides that in determining whether to grant relief under this paragraph, the Secretary shall take into account all relevant circumstances, including evidence of intent contained in the trust instrument or instrument of transfer and such other factors as the Secretary deems relevant. For purposes of determining whether to grant relief under this paragraph, the time for making the allocation (or election) shall be treated as if not expressly prescribed by statute.
Notice 2001-50, 2001-2 C.B. 189, provides that, under § 2642(g)(1)(B), the time for allocating the GST exemption to lifetime transfers is to be treated as if not expressly prescribed by statute and taxpayers may seek an extension of time to make an allocation described in § 2642(b)(1) or (b)(2) under the provisions of § 301.9100-3.
Section 301.9100-1(c) provides that the Commissioner has discretion to grant a reasonable extension of time under the rules set forth in §§ 301.9100-2 and 301.9100-3 to make a regulatory election, or a statutory election (but no more than 6 months except in the case of a taxpayer who is abroad), under all subtitles of the Code except subtitles E, G, H, and I.
Section 301.9100-3 provides the standards used to determine whether to grant an extension of time to make an election whose due date is prescribed by a regulation (and not expressly provided by statute). In accordance with § 2642(g)(1)(B) and Notice 2001-50, taxpayers may seek an extension of time to make an allocation described in § 2642(b)(1) or (b)(2) or an election described in § 2632(b)(3) or (c)(5) under the provisions of § 301.9100-3.
Requests for relief under § 301.9100-3 will be granted when the taxpayer provides the evidence to establish to the satisfaction of the Commissioner that the taxpayer acted reasonably and in good faith, and that granting relief will not prejudice the interests of the government.
Section 301.9100-3(b)(1)(v) provides that a taxpayer is deemed to have acted reasonably and in good faith if the taxpayer reasonably relied on a qualified tax professional, including a tax professional employed by the taxpayer, and the tax professional failed to make, or advise the taxpayer to make, the election.
Based on the facts submitted and the representations made, we conclude that the requirements of § 301.9100-3 have been satisfied. Therefore, Son, as personal representative of Decedent’s estate, is granted an extension of time of 120 days from the date of this letter to allocate Decedent’s available GST exemption to the Year 1 transfer to Trust 2. The allocation will be effective as of the respective date of the transfer to Trust 2 and the value of the transfer to Trust 2 as determined for federal PLR-111445-17 4 estate tax purposes will be used in determining the amount of Decedent’s GST exemption to be allocated to Trust 2.
This allocation should be made on a supplemental Form 709 and filed with the
Cincinnati Service Center at the following address: Internal Revenue Service, Cincinnati
Service Center – Stop 82, Cincinnati, OH 45999. A copy of this letter should be attached to the supplemental Forms 709.
The rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party. While this office has not verified any of the material submitted in support of the request for rulings, it is subject to verification on examination.
Except as specifically ruled herein, we express or imply no opinion on the federal tax consequences of the transaction under the cited provisions or under any other provisions of the Code.
This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) provides that it may not be used or cited as precedent.
Sincerely,
Associate Chief Counsel
(Passthroughs & Special Industries)
By: Lorraine E. Gardner
Lorraine E. Gardner
Senior Counsel, Branch 4
Office of the Associate Chief Counsel
(Passthroughs and Special Industries)
Enclosures
Copy for section 6110 purposes
Copy of this letter cc: