No federal estate taxes are imposed between spouses; the surviving spouse does not pay federal estate taxes.

• A. Portable
• B. Unlimited Marital Deduction
• C. Unified Gift and Estate Tax
• D. Taxable Estate

Answer: (B)

The main concept here is the unlimited marital deduction. This rule lets an unlimited amount of assets pass from the deceased spouse to the surviving spouse without federal estate tax at the first death, provided the surviving spouse is a U.S. citizen. That is why no federal estate tax is imposed on transfers to a spouse at the time of the first death—the tax is avoided by this deduction.

Portability is a related idea: it lets the surviving spouse use any unused estate tax exemption from the deceased spouse, potentially increasing the survivor’s own exemption. The unified gift and estate tax describes the overall system that combines gift and estate taxes under one framework, not the specific spousal exemption. The taxable estate is simply the value that would be taxed after deductions and exemptions.