March 26, 2012
Authored by: Kathy Sherby and Stephanie Moll
Under the “What’s New” section of the Instructions for Form 709, there does not appear to be much new. Set out in this section are the amounts in 2011 for the annual exclusion ($13,000) and for the annual exclusion for non-U.S. citizen spouses ($136,000), the due date in 2012 for the 2011 Form 709 (4/17/2012), the unified credit for 2011 ($1,730,800) and the top gift tax and GST rates for 2011 (35%), all of which is well-known.
However there is one section that is new in the Instructions to the Form 709 that is not mentioned in the “What’s New” section. The Instructions include a description on page 15 of the detail required with the Form 709 for the taxpayer to use the deceased spousal unused exclusion amount of his or her predeceased spouse. The Instructions advise that if the taxpayer’s spouse died after 2010 and his/her executor made the election to allow the taxpayer to use the deceased spouse’s unused exclusion amount (“DSUE”), the taxpayer must attach the Form 706 for the “spouse’s estate and a calculation of the DSUE amount”, cross referencing the instructions for Form 706 on this topic.
It is important to note that this calculation of the DSUE amount is different from the calculation of the DSUE amount when making the election to allow the surviving spouse to use the decedent’s DSUE amount that was temporarily waived by the Service in Notice 2011-82, issued earlier in the year on this score.
So if the Form 706 filed for the predeceased spouse does not contain a calculation of the DSUE amount, the gift tax return and the estate tax return of the surviving spouse will have to attach the calculation of the DSUE amount in any event in order to claim the additional exclusion. However, the surviving spouse taxpayer can extend the due date of the return until October 15, 2012 to provide additional time for making that calculation.