IRS Updates Guidance on Prior and Future Estates of Same-Sex Couples by Edward N. Cooper, CPA
Posted on March 06, 2017 by Edward Cooper
In January 2017, the Internal Revenue Service (IRS) issued tax guidance relating to the estates of married same-sex couples. More specifically, the guidance relates to gifts, bequests and generation-skipping transfers between same-sex couples when applying the Supreme Court’s landmark Windsor decision that grants lawfully married same-sex gay and lesbian couples equal rights, recognition, benefits and protections under the law.
IRS Notice 2017-15 allows same-sex couples and executors of their estates to recalculate a taxpayer’s remaining applicable exclusion amount and remaining generation-skipping transfer (GST) exemptions when transfers were made between spouses prior to Windsor decision in 2013. More specifically, affected taxpayers may automatically elect to establish that pre-2013 transfers between same-sex spouses did in fact qualify for a marital deduction and are therefore permitted to recover these amounts and qualify for the marital deduction on previously filed tax returns, even when the limitation periods on those returns have expired. However, the ruling specifies that “qualification for the marital deduction or a reverse qualified terminable interest property (QTIP) election would require a QTIP, qualified domestic trust (QDO) or reverse QTIP election” would require taxpayers to formally request relief to make such an election.
The LGBT Business and Families practice with Berkowitz Pollack Brant works individuals and same-sex domestic partnerships and married couples to navigate complex tax issues related to estate planning and tax compliance and planning in a challenging and changing environment. Its professionals work closely with advisors in the firm’s other practice areas, including real estate services, business taxes and employee benefits planning.
About the Author: Edward N. Cooper, CPA, is director-in-charge of Tax Services with Berkowitz Pollack Brant, where he provides business and tax consulting services to real estate entities, multi-national companies and their owners. He can be reached at the CPA firm’s Miami office at (305) 379-7000 or via email at firstname.lastname@example.org.