August Couch died July 15, 2015. His estate tax return, filed on January 4, 2016, showed a taxable estate of $3.1 million with no estate tax payable. Form 706, Part 6, addressing Portability of Deceased Spousal Unused Exclusion (DSUE), showed the DSUE amount portable to his surviving spouse (June Couch) as $2.33 million ($5,430,000 - $3,100,000). August had made taxable gifts of $1 million in 2014, and these gifts (which triggered no gift tax liability) were reported on a timely filed Form 709. The gifts, however, did not appear on his Form 706 as adjusted taxable gifts. Thus, on the return filed, his estate tax base was understated and his DSUE amount overstated. In November 2017, the IRS issued Letter 627, Estate Tax Closing Document, to August’s estate. The letter indicated the return had been accepted as filed unless among other issues there was “a clearly defined substantial error . . .”

 June Couch did not remarry and died July 3, 2020. Preliminary work on her estate tax return indicates that her estate tax base will exceed $11.58 million. After reviewing August’s estate return (prepared by another firm), your manager became concerned about the DSUE amount shown as portable to June from August. She requests that you research the issue of whether the $2.33 million DSUE amount reported on August’s estate tax return is “cast in stone” as the amount portable to June. She suggests that you research the recent case of Sower and write a memo addressing your conclusion. She does not recall the citation of the Sower case, so you will need to determine that as well.