26 CFR § 1.981-3 - Definitions and other special rules.

(a) Open taxable years.

(1) For purposes of paragraph (a) of § 1.981-1, and paragraph (a) of § 1.981-2, a taxable year of the U.S. citizen, and the taxable year or years of his nonresident alien spouse ending or beginning within such taxable year of such citizen, shall be treated as open if the period prescribed by section 6501(a) (or section 6501(c)(4) if the period is extended by agreement) for assessing a deficiency against the citizen for his taxable year has not expired before the date of the election, determined under paragraph (b) of this section. Thus, for example, a taxable year of a U.S. citizen beginning before January 1, 1967, is open for purposes of this subparagraph if, before the election under section 981(c)(1) and § 1.981-2, such citizen has never filed a return for such year and a return was required under section 6012 without reference to section 981. For example, if a U.S. citizen spouse on a calendar year basis who has never filed a return for 1960 decides in 1975 that he wishes to make the election under section 981(c)(1) and § 1.981-2 in order to avoid being subject to tax for 1960 on his share of the community income for that year, he may in 1975 elect the benefits of section 981(c)(2) by filing an election in accordance with paragraph (c) of § 1.981-2. In such case, a taxable year or years of the nonresident alien spouse of such citizen ending or beginning within 1960 shall be treated in 1975 as an open taxable year.

(2) Subparagraph (1) of this paragraph shall apply even though the period prescribed by section 6501 for assessing a deficiency against the nonresident alien spouse for his taxable year or years ending or beginning within the taxable year of the U.S. citizen has expired before the election is made.

(3) If either spouse dies during a taxable year to which an election under § 1.981-1 or § 1.981-2 applies, the taxable year of the decedent and the surviving spouse shall be determined under this paragraph without regard to section 981(e)(4), relating to death of spouse during the taxable year. See paragraph (a)(2) of § 1.443-1.

(4) For definition of the term “taxable year”, see section 441(b) and the regulations thereunder.

(b) Date of election.

(1) For purposes of § 1.981-1 and this section the date of an election made under section 981(a) and § 1.981-1 is the date on which the return, amended return, or claim for refund required by paragraph (c)(1) of § 1.981-1 is filed.

(2) For purposes of § 1.981-2 and this section the date of an election made under section 981(c)(1) and § 1.981-2 is the date on which the returns, amended returns, or claims for refund, required by paragraph (c)(1) of § 1.981-2 are filed.

(3) For provisions treating timely mailing as timely filing, see section 7502 and the regulations thereunder.

(c) Spouses with different taxable years. If the U.S. citizen and his nonresident alien spouse do not have the same taxable year, as defined in section 441(b) and the regulations thereunder, the election under § 1.981-1 or § 1.981-2 shall apply to each taxable year of such citizen in respect of which the election is made and to that period falling within the consecutive taxable years of the nonresident alien spouse which coincides with the period covered by such taxable year of the citizen.

(d) Election on behalf of deceased spouse. Any election, statement, or request, required to be made under paragraph (c) of § 1.981-1, or paragraph (c) of § 1.981-2, by one of the spouses may, if such spouse is deceased, be made by the executor, administrator, or other person charged with the property of such deceased spouse.

(e) Extension of period of limitations on assessment or refund -

(1) Assessment of deficiency. Except as provided in subparagraph (3) of this paragraph, if an election under section 981(a) and § 1.981-1, or under section 981(c)(1) and § 1.981-2, is properly made, the period within which a deficiency may be assessed for any taxable year to which the election applies shall, to the extent the deficiency is attributable to the application of such election, not expire before one year after the date of the election, determined under paragraph (b) of this section.

(2) Refund of tax. Except as provided in subparagraph (3) of this paragraph, if an election under section 981(a) and § 1.981-1, or under section 981(c)(1) and § 1.981-2, is properly made, the period within which a claim for credit or refund of an overpayment for any taxable year to which the election applies may be filed shall, to the extent the overpayment is attributable to the application of the election, not expire before one year after the date of the election, determined under paragraph (b) of this section.

(3) Exception in case of nonelecting alien. Subparagraphs (1) and (2) of this paragraph shall not apply to any taxable year of a nonresident alien spouse who, in accordance with paragraph (a)(3) of § 1.981-2, is not required to join in the election by the U.S. citizen spouse under section 981(c)(1) and § 1.981-2.

(f) Payment of interest for extension period. To the extent that an overpayment or deficiency for any taxable year is attributable to an election made under § 1.981-1 or § 1.981-2, no interest shall be allowed or paid for any period ending with the day before the date which is one year after the date of the election, determined under paragraph (b) of this section.

[T.D. 7330, 39 FR 38374, Oct. 31, 1974]

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