Final answer:
A bequest to a U.S. citizen spouse is deducted on the decedent's estate Form 706, which reduces the potential estate tax due thanks to the unlimited marital deduction. It is not taxable to the surviving spouse, nor does it increase the gross estate or affect the total estate tax due.
option c is the correct
Step-by-step explanation:
The effect of a bequest to a U.S. citizen spouse on the decedent’s estate’s Form 706 is that it is deducted on Form 706. A bequest to a spouse is eligible for the unlimited marital deduction, which allows assets to be transferred to the surviving spouse without incurring any federal estate tax liability. This means that the value of the assets bequeathed to the surviving spouse will not be included in the taxable estate of the decedent, effectively reducing the potential estate tax due.
It is important to note that the United States has an estate tax, a tax on the transfer of the estate of a deceased person. The tax applies only to estate values above a certain threshold, which was $5.43 million in 2015. The unlimited marital deduction is a significant tool for estate planning, allowing wealthy individuals to pass on assets to a surviving spouse without tax implications.
It should be emphasized that the bequest itself is not taxable to the surviving spouse and it does not increase the value of the gross estate. The bequest also does not have an effect on the total estate tax due as long as the surviving spouse is a U.S. citizen and the estate falls under the marital deduction provision.