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IRS Posts Draft Form 709 Instructions

IRS Posts Draft Form 709 Instructions

Here are the highlights

On Sept. 28, the Internal Revenue Service posted draft instructions to accompany previously posted draft 2012 Form 709. Here are some of the highlights.



Deceased Spousal Unused Exclusion (DSUE)

There’s a new check-the-box question in Part 1 (Line 19), which asks:


 “Have you applied a DSUE amount received from a predeceased spouse to a gift or gifts reported on this or a previous Form 709?”


The instructions remind the reader that, to be eligible to use a predeceased spouse’s DSUE, the executor must have made an election to use the unused exclusion amount on Form 706.  If the election was made, a copy of Form 706 must be attached to Form 709, as well as a calculation of the DSUE amount (either as an attachment or as reflected on Form 706, Part 6).


Portability of DSUE Amount

The instructions provide more detailed guidance regarding completion of Schedule C–portability of DSUE Amount.  The IRS had added several lines marked “reserved” to the latest draft Form 709, but the draft instructions provide that the reserved lines are “inactive” and that no information is to be entered on those lines.  


In Parts 1 & 2 of Schedule C, the executor must report the DSUE received from a last deceased spouse and the DSUE received from other predeceased spouse(s) (predeceased spouses must have died on or after Jan. 1, 2011).


The donor’s applicable credit amount is calculated by: (1) adding (a) the basic exclusion amount and (b) the total DSUE amount from the last and previously predeceased spouses applied by the donor to lifetime gifts (including current and prior gifts), and (2) applying to that sum the appropriate tax rate from the rate table in the instructions.  Enter the result on Line 7 of Part 2-Tax Computation.


A Note of Caution. . .

 The instructions caution the reader that any remaining DSUE from a predeceased spouse can’t be applied against tax arising from current gifts if that spouse isn’t the most recently deceased spouse on the date of the gift.  The instructions note that rule applies even if the last predeceased spouse had no DSUE amount, if the portability election was ineffective or not made at all, or if the DSUE amount from the last deceased spouse has been fully applied to gifts in previous periods.


This material is written by Lazard Wealth Management LLC for general informational purposes only and does not represent our legal advice as to any particular set of facts and does not convey legal, accounting, tax or other professional advice of any kind; nor does it represent any undertaking to keep recipients advised of all relevant legal and regulatory developments.  The application and impact of relevant laws will vary from jurisdiction to jurisdiction and should be based on information from professional advisors.  Information and opinions presented have been obtained or derived from sources believed by Lazard Wealth Management LLC to be reliable.  Lazard Wealth Management LLC makes no representation as to their accuracy or completeness.  All opinions expressed herein are as of the date of this presentation and are subject to change.


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