Calculating Estate Tax Portability Exemption Amount: The Nuts and Bolts of DSUE Computations

Planning Opportunities and Compliance Challenges in Reporting the Deceased Spouse Unused Exemption Amount

Recording of a 110-minute CPE webinar with Q&A


Conducted on Wednesday, January 20, 2016

Recorded event now available

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Program Materials

This webinar will provide tax advisers with a thorough and comprehensive guide to the computation and reporting of the deceased spouse’s unused exemption (DSUE), which is used to calculate the applicable exclusion amount for the surviving spouse when portability has been elected. The panel will define the DSUE, offer best practices on determining when portability is the most appropriate strategy to elect, and demonstrate the 7-step calculation to show the DSUE amount transferable from the deceased spouse to the surviving spouse. The webinar will contain a case study showing completed DSUE calculations on Part 6 of the Form 706. The panel will also detail required gift tax reporting on Schedule C of Form 709.

Description

When estate exemption “portability” became permanent, many commentators rightfully referred to the practice as a “game changer” in estate planning, and much has been written about portability provisions for estate planners. Determining whether portability is the best tax strategy involves calculations that are as, or even more, critical. Often the decision of whether a taxpayer should elect to utilize the deceased spouse’s portability is made by the tax adviser at the time of the estate tax return’s completion.

The regulations governing portability require the executor of a decedent’s estate to include a computation of the DSUE amount on the estate tax return in order for the surviving spouse to elect portability. The regs define the DSUE amount and prescribe a multi-step process for calculating the unused exemption amount. The key for tax and estate advisers to remember is that portability is not automatic—the executor must elect it—and the portability election is not always the best tax strategy for every surviving spouse.

Additionally, portability often requires filing a Form 709 Gift Tax return to report the DSUE amount. This can provide additional tax saving opportunities as the surviving spouse can utilize the DSUE of the deceased spouse as an additional gift tax exclusion. Getting the DSUE calculations right is a crucial first step in determining whether to elect estate tax exemption portability.

Listen as our experienced panel provides detailed and practical guidance on how to calculate DSUE amounts, discusses the planning opportunities and decision points from DSUE calculations, and offers illustrations on how to report those amounts on Form 706 and Form 709.

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Outline

  1. Definition and rules for electing portability
  2. Definition of DSUE
  3. Process for calculating DSUE
  4. Reporting DSUE on Form 706 Part 6
  5. Reporting DSUE on Form 709 Schedule C
  6. Filing 706 for sole purpose of electing portability

Benefits

The panel will review these and other critical components of estate portability reporting and DSUE calculations:

  • Final DSUE Regulations
  • How to calculate DSUE amounts per IRS guidelines
  • Evaluating DSUE amounts against other factors in determining whether to recommend portability election
  • Simplified rules for estates filing a Form 706 return for sole purpose of electing portability
  • Reporting DSUE on Estate Tax Return Form 706
  • Reporting DSUE on Gift Tax Return Form 709 Schedule C

Faculty

Robert M. Maxwell, Esq.
Robert M. Maxwell, Esq.
Managing Director
Glenmede

Mr. Maxwell focuses on post-mortem planning. He prepares estate tax returns for estates where his firm is executor and...  |  Read More

James Daneri, Esq.
James Daneri, Esq.

Blanchard Krasner & French

Mr. Daneri focuses his practice in the areas of estate planning, taxation, and business law. His estate planning...  |  Read More

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