Schedule C is used to report and apply a deceased spousal unused exclusion amount on Form 709. This schedule documents exclusion amounts received from a predeceased spouse and shows how those amounts are applied to current or prior lifetime gifts under federal portability rules.
When Schedule C is required
Schedule C must be completed if the donor applies a deceased spousal unused exclusion amount to gifts reported on the current Form 709 or on any prior Form 709. This requirement is identified in Part I of the main return, where the donor indicates whether DSUE has been applied.
What DSUE represents
The deceased spousal unused exclusion amount represents the portion of a deceased spouse’s estate and gift tax exclusion that was not used during that spouse’s lifetime and was made available to the surviving spouse through a valid portability election. Schedule C records this amount and tracks its application.
Information reported on Schedule C
Schedule C identifies each deceased spouse whose exclusion is being applied, the date of death, whether a portability election was made, and the amount of DSUE received. The schedule also lists how much of that exclusion has been applied to lifetime gifts and the dates of those gifts.
How Schedule C affects the tax computation
Amounts reported on Schedule C are used to calculate the donor’s applicable credit amount in Part II of Form 709. The applicable credit reflects the donor’s own basic exclusion amount plus any DSUE and restored exclusion amounts, reduced by exclusions already applied to prior gifts.
Interaction with other schedules
Schedule C works in conjunction with Schedule A and Schedule B. Gifts reported on Schedule A may be offset by DSUE recorded on Schedule C, while Schedule B ensures that DSUE applied in prior periods is properly reflected in the cumulative credit calculation.
Why Schedule C must be accurate
Incorrect reporting on Schedule C can affect lifetime exclusion tracking and result in miscalculated credits or tax. Because DSUE can be applied across multiple years and multiple gifts, accurate documentation on this schedule is essential.
This page explains how Schedule C functions within Form 709. For an overview of how all schedules connect, see Form 709 structure explained. For current-year gift reporting, see Schedule A explained. For official schedule layout and authoritative instructions, refer to the IRS Form 709 official document overview.