Blog · 16 October 2026

Estate Tax Portability and DSUE: Form 706 Lessons from PLR 202641004 for US CPA Firms

By Keshav Bansal, CA

Estate tax portability lets a surviving spouse use a decedent’s unused basic exclusion—the deceased spousal unused exclusion (DSUE) amount—but only if the executor elects it on a timely, complete Form 706. Bloomberg Tax (October 13, 2026) reported that PLR 202641004 gave one estate a 120-day extension under IRC §2010 and Treas. Reg. §301.9100 to make that election. For US CPA firms, it is a reminder of the Form 706 clock, the Rev. Proc. 2022-32 late window, and when a §301.9100-3 ruling is the only path left.

What PLR 202641004 held

Primary source: PLR 202641004 (letter dated July 14, 2026; released October 9, 2026; PLR-104938-26). The decedent died survived by a spouse. The estate represented that, based on the value of the gross estate and any taxable gifts, it was not required under §6018(a) to file Form 706, but that unused applicable exclusion remained and portability was needed for the spouse’s DSUE. For various reasons no Form 706 was timely filed; after discovery the estate requested §301.9100-3 relief (letter dated April 29, 2026).

The IRS concluded §§301.9100-1 and 301.9100-3 were satisfied and granted 120 days from the date of the letter to elect portability by filing a complete Form 706, with a copy of the ruling, at Kansas City, MO 64999. A Form 706 filed in that window is timely for electing portability. If the estate later proves to have been required to file under §6018(a), the extension is null and void. Under §6110(k)(3), the ruling may not be cited as precedent—same limit as in our notes on 9100 relief and PLR 202641003 and late Form 8832 / PLR 202641005.

How estate tax portability and DSUE work

Under 26 U.S.C. §2010(c), the applicable exclusion amount is the basic exclusion amount plus, for a surviving spouse, the DSUE amount. Pub. L. 119-21 §70106 (July 4, 2025)—also cited in our 2026 gift tax annual exclusion guide via Rev. Proc. 2025-32 §3.14—sets the basic exclusion at $15,000,000 for deaths and gifts after December 31, 2025. Form 706 instructions (07/2026) and the IRS estate tax FAQs list the same amount for 2026. Section 2010(c)(3)(B) indexes it for deaths in years after 2026. The Form 706 unified rate schedule tops out at 40% on amounts over $1,000,000.

Section 2010(c)(4) defines DSUE as the lesser of the basic exclusion amount or the excess of the last deceased spouse’s applicable exclusion over the amount on which tentative tax is determined under §2001(b)(1). Treas. Reg. §20.2010-2(c)(1) uses the basic exclusion in effect in the year of the decedent’s death—so DSUE is fixed at the first death and does not later inflate, while the survivor’s own basic exclusion follows current law. Section 2010(c)(5)(A) requires a return that computes DSUE and elects that it may be taken into account; the election is irrevocable and cannot be made late. Under Treas. Reg. §20.2010-2(a)(2), a timely complete Form 706 elects portability unless the executor opts out per the instructions.

The Form 706 clock—even when no tax is owed

The IRS estate tax FAQs require a Form 706 to transfer any DSUE amount, regardless of the size of the gross estate. Form 706 instructions (07/2026) say the same for 2026 decedents: file if the gross estate plus adjusted taxable gifts and specific exemption exceeds $15,000,000, or if the executor elects to transfer DSUE. Due date is nine months after death; Form 4768 gives an automatic six-month extension to file (including solely for portability). Tax is still generally due at nine months unless payment relief applies. Miss the timely-filing window and the next question is whether the estate had a §6018(a) filing requirement independent of portability.

Rev. Proc. 2022-32: late window to the fifth anniversary

Rev. Proc. 2022-32 (2022-30 I.R.B. 101) supersedes Rev. Proc. 2017-34 and gives certain estates a simplified method—in lieu of a letter ruling—to obtain an extension under §301.9100-3 to elect portability. No user fee is required. It applies only to estates that are not required to file under §6018(a) because the gross estate plus adjusted taxable gifts is under the filing threshold.

The executor must file a complete and properly prepared Form 706 on or before the fifth annual anniversary of death, and state at the top of the return (per the revenue procedure and the IRS FAQs): “FILED PURSUANT TO REV. PROC. 2022-32 TO ELECT PORTABILITY UNDER § 2010(c)(5)(A).” Form 706 instructions (07/2026) paraphrase that legend and point to the same procedure. Estates that do have a §6018(a) filing requirement cannot use Rev. Proc. 2022-32, and—per Treas. Reg. §20.2010-2(a)(1) and the IRS FAQs—cannot get a §301.9100-3 extension to elect portability either.

When the path is a §301.9100-3 PLR

Outside Rev. Proc. 2022-32, estates without a §6018(a) filing requirement may still seek a §301.9100-3 ruling. Relief turns on reasonable action and good faith, and on no prejudice to the Government—the same framework in our 9100 relief guide. PLR 202641004 is that route: a 120-day grant after a missed Form 706, conditioned on staying below the filing threshold. User fees for §301.9100-3 rulings appear in Rev. Proc. 2026-1 (as cited in the 9100 relief post); Rev. Proc. 2022-32 itself is fee-free when it applies.

Preparer checklist for DSUE and Form 706

• Calendar nine months + Form 4768 — even for below-threshold estates that need portability only.
• Decide opt-in vs. opt-out — timely Form 706 elects portability unless the executor affirmatively opts out; compute DSUE on the return.
• Test the §6018(a) threshold — gross estate plus adjusted taxable gifts against the year-of-death amount ($15,000,000 for 2026 deaths).
• If late and under threshold — use Rev. Proc. 2022-32 through the fifth anniversary with the required top-of-return statement; no user fee.
• If late, under threshold, and past the fifth anniversary — consider a §301.9100-3 ruling (as in PLR 202641004); move before the IRS discovers the miss.
• If a §6018(a) return was required — do not expect Rev. Proc. 2022-32 or §301.9100-3 portability relief.
• Track DSUE for the survivor — usable against later gifts and the survivor’s estate under §2010(c); measured against the basic exclusion at the first death.

Where Tax Brew fits

Portability elections fail when Form 706 is treated as optional because “no tax is due.” Tax Brew provides bookkeeping, cleanup and tax prep support for US CPA firms, including estate-return workpapers and election checklists your reviewers can rely on, with the first 20 hours free for qualifying engagements. Your firm keeps the advice and the sign-off. See our services, or email info@taxbrewglobal.com.

Sources: PLR 202641004 (dated July 14, 2026; released Oct. 9, 2026); Bloomberg Tax (Oct. 13, 2026), IRS Issues PLR Granting Extension for Estate Tax Portability Election; IRS, Frequently asked questions on estate taxes; Instructions for Form 706 (07/2026); Rev. Proc. 2022-32; 26 U.S.C. §2010 and Treas. Reg. §20.2010-2 (Cornell LII); 26 CFR §301.9100-3 (Cornell LII). General information, not tax or legal advice.