For green card spouse, annual gift exclusion is $160,000 from citizen spouse. This means gift under this amount will not have any tax consequences. (Gift between citizen spouses are unlimited).
For amount over $160,000, the citizen spouse just need to report the amount $X on his tax return and deduct from the citizen's estate tax exemption ($11 million).
And when citizen spouse die, the green card spouse would have the estate tax exemption of ($11 milllion - $X). (inheritance between citizen spouse are unlimited).
So to recap: annual gift exclusion of $160,000 means gift under $160,000 from citizen spouse to non-citizen spouse is completely tax free. Any amount above $160,000 will be deducted from estate tax exemption. So that green card spouse only pay tax when the life time gift + estate is > $11 million.
