In order to establish the Deceased Spouse's Unused Exemption Amount (DSUEA) for the surviving spouse, which of the following must be true at the first spouse's death?

In order to establish the Deceased Spouse's Unused Exemption Amount (DSUEA) for the surviving spouse, which of the following must be true at the first spouse's death?

• A. The first decedent spouse must have a taxable estate at death.
• B. A timely filed estate tax return was filed.
• C. A timely filed estate tax return was not required.
• D. No requirements except that all of the exemption was not, in fact, used at the first spouse's death.

Answer: (B)

Portability of the deceased spouse’s unused exclusion amount lets the surviving spouse use whatever portion of the first spouse’s exclusion was not used at death. To establish that unused amount (the DSUEA), the first spouse’s estate must file an estate tax return (Form 706) and report the decedent’s assets, the exclusions used, and the remaining amount. That return must be filed timely, even if no tax is due, so that the unused exclusion can be claimed by the surviving spouse later. Without a timely return, there is no DSUEA to transfer. So, the essential requirement is that a timely filed estate tax return was filed for the first spouse. The other statements aren’t correct because DSUEA can exist even if the first estate wasn’t taxable, it does require a timely return to elect portability, and you don’t rely on “no other requirements” if the election isn’t properly made.

Portability of the deceased spouse’s unused exclusion amount lets the surviving spouse use whatever portion of the first spouse’s exclusion was not used at death. To establish that unused amount (the DSUEA), the first spouse’s estate must file an estate tax return (Form 706) and report the decedent’s assets, the exclusions used, and the remaining amount. That return must be filed timely, even if no tax is due, so that the unused exclusion can be claimed by the surviving spouse later. Without a timely return, there is no DSUEA to transfer.

So, the essential requirement is that a timely filed estate tax return was filed for the first spouse. The other statements aren’t correct because DSUEA can exist even if the first estate wasn’t taxable, it does require a timely return to elect portability, and you don’t rely on “no other requirements” if the election isn’t properly made.