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The recent U.S. Tax Court decision in Estate of Rowland v. Commβr offers a timely reminder of the strict requirements governing portability elections for the deceased spousal unused exclusion (DSUE) under IRC Β§ 2010(c)(5)(A).
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The estate of Fay Rowland failed to file its Form 706 by the extended deadline, rendering the portability election statutorily invalid. A late filingβno matter how minimalβcannot satisfy the timeliness requirement without a valid extension or relief under a safe harbor.
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The court analyzed whether the estate qualified for the safe harbor relief that allows late-filed returns to be treated as timely if βcomplete and properly prepared.β
However, the return did not include the required valuation details for each property interest under Treas. Reg. Β§ 20.2010-2(a)(7) and Form 706 instructions. The estate incorrectly applied the relaxed reporting rules beyond marital and charitable deduction property.
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The estate argued that its filing βsubstantially compliedβ with the regulations.
The court rejected this, emphasizing that substantial compliance cannot cure the absence of essential information the IRS needs to determine the DSUE amount.
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The court also declined to apply equitable estoppel, finding no evidence of affirmative misconduct, false representation, or detrimental reliance on the part of the IRS.
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Granting partial summary judgment to the Commissioner, the Tax Court reaffirmed that no genuine dispute of material fact existedβthe return was late and incomplete as a matter of law. The opinion also clarified that relaxed reporting standards apply narrowly and not to assets whose valuation impacts other property distributions.
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The Rowland decision underscores that portability elections demand strict complianceβboth in timing and content.
Practitioners should ensure estate tax returns are timely filed and fully documented, particularly when relying on portability to preserve the DSUE for surviving spouses. Safe harbor and equitable doctrines offer no substitute for statutory precision.
Source: Estate of Rowland v. Commissioner, T.C. Memo 2025-76 (July 15, 2025)
