Estate of Rowland v. Commissioner, United States Tax Court, Filed July 15, 2025
Summary: An estate tax return filed within 21 months of date of death did not make portability election because the return did not provide complete descriptions or valuation information and therefore, the return was not a "complete and property prepared" estate tax return.
Fay Rowland died on April 8, 2016. Although Fay's estate tax return was due on July 8, 2017, the executor of Fay's estate filed her estate tax return on December 29, 2017. Fay's estate tax return reflected a gross estate of $3 million and a DSUE amount of $3,712,562. Fay's estate tax return listed various assets, but did not include any information as to the fair market value of those assets and instead estimated the gross value of the estate.
Fay's husband, Billy Rowland, died on January 24, 2018. The timely-filed estate tax return for Billy's estate reported Fay's DSUE of $3,712,562 together with Billy's remaining estate tax exemption amount for a total applicable exclusion of $14,892,562. Billy's estate tax return reported a net estate tax of $4,477,555.
After Billy's return was selected for audit, the IRS determined that Billy's estate was ineligible to claim Faye's DSUE because Fay's return was not timely filed and, to be deemed timely, the return had to satisfy the requirements of the safe harbor set forth in Rev. Proc. 2017-34, which required a "complete and properly return" filed on or before the later of January 2, 2018 or the second anniversary of the date of death made in accordance with Treasury Regulation Section 20-2010-2(a)(7). Fay's return was not a complete and properly prepared return because it failed to provide valuation information.
The tax court agreed with the IRS, and held that "as a matter of law, Fay's return failed to make a timely DSUE election under Rev. Proc. 2017-34, and Billy's estate therefore cannot port the DSUE amount to reduce its taxable estate."
Although the Revenue Procedure in this case has been superseded, the current Revenue Procedure includes the same requirement: to make a valid portability election, the executor must do so on a "complete and properly prepared" estate tax return. This case is an instructive reminder of the importance of preparing an estate tax return in accordance with the applicable Treasury Regulations.
Goebner v. Superior Court, Court of Appeals Case No. A171241, First District, Div. Three Filed April 30, 2025
Summary: Thomas R. McDonald filed a petition contesting amendments to a Trust, alleging the amendments, which removed him and his sister as beneficiaries, were due to undue influence, fraud, and financial elder abuse. Two days before a scheduled hearing, William Goebner, as successor trustee, filed a demurrer to dismiss McDonald’s claims. The trial court overruled the demurrer as untimely under Code of Civil Procedure Section 430.40, requiring demurrers to be filed within 30 days after service of the complaint.
Goebner petitioned for a writ of mandate to vacate the trial court’s order. He argued that Probate Code Section 1043, which allows an interested person to "make a response or objection in writing at or before the hearing," should govern the timing for filing a demurrer in probate proceedings, not the Code of Civil Procedure.
The Court of Appeal agreed with Goebner, holding that Section 1043 of the Probate Code governs the timing for filing a demurrer in probate proceedings, allowing it to be filed at or before the hearing. The court concluded that Goebner’s demurrer, filed two days before the hearing, was timely. The court issued a writ of mandate directing the trial court to vacate its order overruling the demurrer as untimely and to consider the demurrer on its merits.