GiftLaw Note:
Decedent executed and amended a revocable trust (Trust). Decedent died and was survived by Spouse. Upon Decedent’s death, the terms of Trust provide that the trustee is to establish a Marital Farm Trust. The terms of Marital Farm Trust require all net income of Marital Farm Trust to be paid to Spouse on at least a quarterly basis and provide that the principal may be paid to or for the benefit of Spouse for necessary expenses related to maintenance, upkeep and operation of the House and Farm. The terms of the Marital Farm Trust also allow the Spouse the right to require that the trustees make unproductive trust property productive or dispose of it to invest the proceeds in productive property. Decedent’s estate employed tax professionals to prepare tax forms and make any necessary elections. Accordingly, Decedent’s estate timely filed Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, but mistakenly failed to list QTIP property on Schedule M. Decedent’s estate requested an extension of time to make a QTIP election under Sec. 301.9100-1 and Sec. 301.9100-3.
 
Under Sec. 2001(a), a tax is imposed on the transfer of the taxable estate of every U.S. decedent citizen or resident. The value of the taxable estate is determined by deducting amounts passed to the surviving spouse from the gross estate. Sec. 2056(a). Section 2056(b)(7) provides an exception for QTIP elections. To qualify for a QTIP election, the surviving spouse must have a qualifying income interest for life in the trust, payable at least annually and the trust cannot be appointed to any person other than surviving spouse. Sec. 2056(b)(7)(B)(i). The QTIP election must be made on the estate tax return. Reg. 20.2056(b)-7(b)(4)(i). Regulation 301.9100-3 allows for an extension of time to be granted if the taxpayer acted reasonably and in good faith and the relief granted will not prejudice the interests of the government. Regulation 301.9100-3(b)(1)(v) states that a taxpayer will be deemed to have acted reasonably and in good faith if the taxpayer reasonably relied on a qualified tax professional and the tax professional failed to make or advise the taxpayer to make the election. Here, the Service determined that Decedent’s estate met the requirements of Sec. 301.9100-3. The Service, therefore, granted an extension of time to make a QTIP election with respect to Marital Farm Trust.