Instructions for Form 706

(Rev. September 2023)

For decedents dying after December 31, 2022

United States Estate (and Generation-Skipping Transfer) Tax Return

Department of the Treasury

Internal Revenue Service

Section references are to the Internal Revenue Code unless 

otherwise noted.

Revisions of Form 706

For Decedents Dying Use Revision of 

After and Before Form 706 Dated

December 31, 1998 January 1, 2001 July 1999

December 31, 2000 January 1, 2002 November 2001

December 31, 2001 January 1, 2003 August 2002

December 31, 2002 January 1, 2004 August 2003

December 31, 2003 January 1, 2005 August 2004

December 31, 2004 January 1, 2006 August 2005

December 31, 2005 January 1, 2007 October 2006

December 31, 2006 January 1, 2008 September 2007

December 31, 2007 January 1, 2009 August 2008

December 31, 2008 January 1, 2010 September 2009

December 31, 2009 January 1, 2011 July 2011

December 31, 2010 January 1, 2012 August 2011

December 31, 2011 January 1, 2013 August 2012

December 31, 2012 January 1, 2017 August 2013

December 31, 2016 January 1, 2018 August 2017

December 31, 2017 January 1, 2019 November 2018

December 31, 2018 August 2019

Future Developments

For the latest information about developments related to 

Form 706 and its instructions, such as legislation enacted 

after they were published, go to IRS.gov/Form706.

What's New

Various dollar amounts and limitations in Form 706 are 

indexed for inflation. For decedents dying in 2023, the 

following amounts are applicable.

• The basic exclusion amount is $12,920,000.

• The ceiling on special-use valuation is $1,310,000.

• The amount used in figuring the 2% portion of estate tax 

payable in installments is $1,750,000.

• The basic credit amount is $5,113,800.

The IRS will publish amounts for future years in annual 

revenue procedures.

Reminders

Schedule R-1 is a separate form. Schedule R-1 isn’t part 

of Form 706; instead, you will need to obtain a separate 

Schedule R-1 to complete and file with Form 706.

Identifying exhibits. Copies of tax returns filed with Form 

706 must be identified as exhibits to the Form 706.

Estate tax closing letter fee. Effective October 28, 2021, a 

user fee of $67 was established for persons requesting the 

issuance of an estate tax closing letter (ETCL). See ETCL 

fee, later, for more information.

Extension of time to elect portability. Effective July 8, 

2022, Rev. Proc. 2022-32 provides a simplified method for 

certain estates to obtain an extension of time to file a return 

on or before the fifth anniversary of the decedent’s death to 

elect portability of the deceased spousal unused exclusion 

(DSUE) amount. See Extension to elect portability, later, for 

more information.

General Instructions

Purpose of Form

The executor of a decedent's estate uses Form 706 to figure 

the estate tax imposed by chapter 11 of the Internal Revenue 

Code. This tax is levied on the entire taxable estate and not 

just on the share received by a particular beneficiary. Form 

706 is also used to figure the generation-skipping transfer 

(GST) tax imposed by chapter 13 on direct skips (transfers to 

skip persons of interests in property included in the 

decedent's gross estate).

Which Estates Must File

For decedents who died in 2023, Form 706 must be filed by 

the executor of the estate of every U.S. citizen or resident:

a. Whose gross estate, plus adjusted taxable gifts and 

specific exemption, is more than $12,920,000; or

b. Whose executor elects to transfer the deceased 

spousal unused exclusion (DSUE) amount to the 

surviving spouse, regardless of the size of the decedent's 

gross estate. See the instructions for Part 6—Portability 

of Deceased Spousal Unused Exclusion, later, and 

sections 2010(c)(4) and (c)(5).

To determine whether you must file a return for the estate 

under (a) above, add:

1. The adjusted taxable gifts (as defined in section 2503) 

made by the decedent after December 31, 1976;

2. The total specific exemption allowed under section 2521 

(as in effect before its repeal by the Tax Reform Act of 

1976) for gifts made by the decedent after September 8, 

1976; and

3. The decedent's gross estate valued as of the date of 

death.

Gross Estate

The gross estate includes all property in which the decedent 

had an interest (including property outside the United 

States). It also includes:

• Certain transfers made during the decedent's life without 

an adequate and full consideration in money or money's 

worth,

• Annuities,

• The includible portion of joint estates with right of 

survivorship (see the instructions for Schedule E),

• The includible portion of tenancies by the entirety (see 

the instructions for Schedule E),

Sep 5, 2023 Cat. No. 16779E
• Certain life insurance proceeds (even though payable to 

beneficiaries other than the estate) (see the instructions 

for Schedule D),

• Digital assets (see the instructions for Schedule F),

• Property over which the decedent possessed a general 

power of appointment,

• Dower or curtesy (or statutory estate) of the surviving 

spouse, and

• Community property to the extent of the decedent's 

interest as defined by applicable law.

Note. Under the special rule of Regulations section 

20.2010-2(a)(7)(ii), executors of estates who are not required 

to file Form 706 under section 6018(a), but who are filing to 

elect portability of the DSUE amount to the surviving spouse, 

are not required to report the value of certain property eligible 

for the marital deduction under section 2056 or 2056A or the 

charitable deduction under section 2055. However, the value 

of those assets must be estimated and included in the total 

value of the gross estate. See the instructions for Part 

5—Recapitulation, items 10 and 23, later, for more 

information.

For more specific information, see the instructions for 

Schedules A through I.

U.S. Citizens or Residents; Nonresident 

Noncitizens

File Form 706 for the estates of decedents who were either 

U.S. citizens or U.S. residents at the time of death. For estate 

tax purposes, a resident is someone who had a domicile in 

the United States at the time of death. A person acquires a 

domicile by living in a place for even a brief period of time, as 

long as the person had no intention of moving from that 

place. See Regulations section 20.0-1(b).

Decedents who were neither U.S. citizens nor U.S. 

residents at the time of death file Form 706-NA, United 

States Estate (and Generation-Skipping Transfer) Tax Return, 

Estate of nonresident not a citizen of the United States.

Residents of U.S. Possessions

All references to citizens of the United States are subject to 

the provisions of sections 2208 and 2209, relating to 

decedents who were U.S. citizens and residents of a U.S. 

possession on the date of death. If such decedents became 

U.S. citizens only because of their connections with a 

possession, then the decedents are considered nonresidents 

not citizens of the United States for estate tax purposes, and 

you should file Form 706-NA. If such decedents became U.S. 

citizens wholly independently of their connections with a 

possession, then the decedents are considered U.S. citizens 

for estate tax purposes, and you should file Form 706.

Executor

The term “executor” includes the executor, personal 

representative, or administrator of the decedent's estate. If 

none of these is appointed, qualified, and acting in the United 

States, every person in actual or constructive possession of 

any property of the decedent is considered an executor and 

must file a return.

Executors must provide documentation proving their 

status. Documentations will vary but may include documents 

such as certified copies of wills or court orders designating 

the executor(s). Statements by executors attesting to their 

status are insufficient.

When To File

You must file Form 706 to report estate and/or GST tax within 

9 months after the date of the decedent's death. If you are 

unable to file Form 706 by the due date, you may receive an 

extension of time to file. Use Form 4768, Application for 

Extension of Time To File a Return and/or Pay U.S. Estate 

(and Generation-Skipping Transfer) Taxes, to apply for an 

automatic 6-month extension of time to file.

Portability election. An executor can only elect to transfer 

the DSUE amount to the surviving spouse if the Form 706 is 

filed timely, that is, within 9 months of the decedent's date of 

death or, if you have received an extension of time to file, 

before the 6-month extension period ends.

Extension to elect portability. Executors who did not 

have a filing requirement under section 6018(a) but failed to 

timely file Form 706 to make the portability election may be 

eligible for an extension under Rev. Proc. 2022-32, 2022-30 

I.R.B. 101 (superseding Rev. Proc. 2017-34, 2017-26 I.R.B. 

1282). Executors filing to elect portability may now file Form 

706 on or before the fifth anniversary of the decedent’s death.

An executor wishing to elect portability under this 

extension must state at the top of the Form 706 being filed 

that the return is “Filed Pursuant to Rev. Proc. 2022-32 to 

Elect Portability under section 2010(c)(5)(A).” For more 

information on this extension, see Rev. Proc. 2022-32.

Note. Any estate that is filing an estate tax return only to 

elect portability and did not file timely or within the extension 

provided in Rev. Proc. 2022-32 may seek relief under 

Regulations section 301.9100-3 to make the portability 

election.

Where To File

File Form 706 at the following address.

Department of the Treasury

Internal Revenue Service

Kansas City, MO 64999

If you’re using a private delivery service (PDS), file at this 

address.

Internal Revenue Submission Processing Center

333 W. Pershing Road

Kansas City, MO 64108

If you’re filing an amended Form 706, use the following 

address.

Internal Revenue Service Center

Attn: E&G, Stop 824G

7940 Kentucky Drive

Florence, KY 41042-2915

If you’re using a PDS for your amended Form 706, use this 

address.

Internal Revenue Service Center

Attn: E&G, Stop 824G

7940 Kentucky Drive

Florence, KY 41042-2915

-2- Instructions for Form 706 (Rev. 09-2023)
Paying the Tax

The estate and GST taxes are due within 9 months of the 

date of the decedent's death. You may request an extension 

of time for payment by filing Form 4768. You may also elect 

under section 6166 to pay in installments or under section 

6163 to postpone the part of the tax attributable to a 

reversionary or remainder interest. These elections are made 

by checking “Yes” on lines 3 and 4 (respectively) of Part 

3—Elections by the Executor and attaching the required 

statements.

If the tax paid with the return is different from the balance 

due as figured on the return, explain the difference in an 

attached statement. If you have made prior payments to the 

IRS, attach a statement to Form 706 including these facts.

Paying by check. Make the check payable to “United States 

Treasury.” Please write the decedent's name, social security 

number (SSN), and “Form 706” on the check to assist us in 

posting it to the proper account.

No checks of $100 million or more accepted. The IRS 

cannot accept a single check (including a cashier's check) for 

amounts of $100,000,000 ($100 million) or more. If you're 

sending $100 million or more by check, you'll need to spread 

the payments over 2 or more checks, with each check made 

out for an amount less than $100 million. The $100 million or 

more amount limit does not apply to other methods of 

payment (such as electronic payments). Please consider a 

method of payment other than a check if the amount of the 

payment is over $100 million.

Paying electronically. Payment of the tax due shown on 

Form 706 may be submitted electronically through the 

Electronic Federal Tax Payment System (EFTPS). EFTPS is 

a free service of the Department of the Treasury.

To be considered timely, payments made through EFTPS 

must be completed no later than 8 p.m. Eastern time the day 

before the due date. All EFTPS payments must be scheduled 

in advance of the due date and, if necessary, may be 

changed or canceled up to 2 business days before the 

scheduled payment date.

To get more information about EFTPS or to enroll in 

EFTPS, visit EFTPS.gov or call 800-555-4477. To contact 

EFTPS using Telecommunications Relay Service (TRS) for 

people who are deaf, hard of hearing, or have a speech 

disability, dial 711 and then provide the TRS assistant the 

800-555-4477 number, above, or 800-733-4829. Additional 

information about EFTPS is available in Pub. 966, Electronic 

Federal Tax Payment System: A Guide to Getting Started.

Signature and Verification

If there is more than one executor, all listed executors 

are responsible for the return. However, it is sufficient 

for only one of the co-executors to sign the return.

All executors are responsible for the return as filed and are 

liable for penalties imposed for erroneous or false returns.

If two or more persons are liable for filing the return, they 

should all join together in filing one complete return. 

However, if they are unable to join in making one complete 

return, each is required to file a return disclosing all the 

information the person has about the estate, including the 

name of every person holding an interest in the property and 

a full description of the property. If the appointed, qualified, 

and acting executor is unable to make a complete return, 

then every person holding an interest in the property must, on 

notice from the IRS, make a return regarding that interest.

CAUTION

!

The executor who files the return must, in every case, sign 

the declaration on page 1 under penalties of perjury.

Generally, anyone who is paid to prepare the return must 

sign the return in the space provided and fill in the Paid 

Preparer Use Only area. See section 7701(a)(36)(B) for 

exceptions.

In addition to signing and completing the required 

information, the paid preparer must give a copy of the 

completed return to the executor.

Note. A paid preparer may sign original or amended returns 

by rubber stamp, mechanical device, or computer software 

program.

Amending Form 706

If you find that you must change something on a return that 

has already been filed, you should:

• File another Form 706;

• Enter “Supplemental Information” across the top of 

page 1 of the form;

• Include a statement of what has changed, along with the 

supporting information; and

• Attach a copy of pages 1, 2, 3, and 4 of the original Form 

706 that has already been filed.

For the mailing address for supplemental Form 706, see 

Filing Estate and Gift Tax Returns.

File the amended Form 706 at the following address.

Internal Revenue Service Center

Attn: E&G, Stop 824G

7940 Kentucky Drive

Florence, KY 41042-2915

If you’re using a PDS, file at this address.

Internal Revenue Service Center

Attn: E&G, Stop 824G

7940 Kentucky Drive

Florence, KY 41042-2915

If you have already been notified that the return has been 

selected for examination, you should provide the additional 

information directly to the office conducting the examination.

Supplemental Documents

Note. You must attach the death certificate to the return.

If the decedent was a citizen or resident of the United 

States and died testate (leaving a valid will), attach a certified 

copy of the will to the return. If you cannot obtain a certified 

copy, attach a copy of the will and an explanation of why it is 

not certified. Other supplemental documents may be 

required, as explained later. Examples include Form 712, Life 

Insurance Statement; Form 709, United States Gift (and 

Generation-Skipping Transfer) Tax Return; Form 706-CE, 

Certificate of Payment of Foreign Death Tax; trust and power 

of appointment instruments; and state certification of 

payment of death taxes. If you do not file these documents 

with the return, the processing of the return will be delayed.

If the decedent was a U.S. citizen but not a resident of the 

United States, you must attach the following documents to 

the return.

1. A copy of the inventory of property and the schedule of 

liabilities, claims against the estate, and expenses of 

Instructions for Form 706 (Rev. 09-2023) -3-
administration filed with the foreign court of probate 

jurisdiction, certified by a proper official of the court.

2. A copy of the return filed under the foreign inheritance, 

estate, legacy, succession tax, or other death tax act, 

certified by a proper official of the foreign tax 

department, if the estate is subject to such a foreign tax.

3. If the decedent died testate, a certified copy of the will.

Rounding Off to Whole Dollars

You may round off cents to whole dollars on the return and 

schedules. If you do round to whole dollars, you must round 

all amounts. To round, drop amounts under 50 cents and 

increase amounts from 50 to 99 cents to the next dollar. For 

example, $1.39 becomes $1 and $2.50 becomes $3.

Penalties

Late filing and late payment. Section 6651 provides for 

penalties for both late filing and for late payment unless there 

is reasonable cause for the delay. The law also provides for 

penalties for willful attempts to evade payment of tax. The 

late filing penalty will not be imposed if the taxpayer can show 

that the failure to file a timely return is due to reasonable 

cause.

Reasonable-cause determinations. If you receive a notice 

about penalties after you file Form 706, send an explanation 

and we will determine if you meet reasonable-cause criteria. 

Do not attach an explanation when you file Form 706. 

Explanations attached to the return at the time of filing will not 

be considered.

Valuation understatement. Section 6662 provides a 20% 

penalty for the underpayment of estate tax that exceeds 

$5,000 when the underpayment is attributable to valuation 

understatements. A valuation understatement occurs when 

the value of property reported on Form 706 is 65% or less of 

the actual value of the property.

This penalty increases to 40% if there is a gross valuation 

understatement. A gross valuation understatement occurs if 

any property on the return is valued at 40% or less of the 

value determined to be correct.

Penalties also apply to late filing, late payment, and 

underpayment of GST taxes.

Return preparer. Estate tax return preparers who prepare 

any return or claim for refund which reflects an 

understatement of tax liability due to an unreasonable 

position are subject to a penalty equal to the greater of 

$1,000 or 50% of the income earned (or to be earned) for the 

preparation of each such return.

Estate tax return preparers who prepare a return or claim 

for refund which reflects an understatement of tax liability due 

to willful or reckless conduct are subject to a penalty of 

$5,000 or 75% of the income earned (or income to be 

earned), whichever is greater, for the preparation of each 

such return.

Estate tax return preparers who prepare any return or 

claim for a refund are required to furnish a copy to the 

taxpayer, sign the return, and provide their PTIN, but who fail 

to do so, are subject to a penalty of $50 for such failure, 

unless it is shown that such failure is due to reasonable 

cause and not due to willful neglect.

See sections 6694 and 6695, the related regulations, and 

Announcement 2009-15, 2009-11 I.R.B. 687, available at 

Announcement 2009-15, for more information.

Consistent Basis Reporting

Certain estates are required to report to the IRS and the 

recipient, the estate tax value of each asset included in the 

gross estate within 30 days of the due date (including 

extensions) of Form 706 or the date of filing Form 706 if the 

return is filed late. The basis of certain assets when sold or 

otherwise disposed of must be consistent with the basis 

(estate tax value) of the asset when it was received by the 

beneficiary. To satisfy the consistent basis reporting 

requirements, the estate must file Form 8971, Information 

Regarding Beneficiaries Acquiring Property From a 

Decedent, separately from the Form 706. Failure to file Form 

8971, when required, is subject to information return 

penalties under sections 6721 and 6722. See Form 8971 and 

its instructions for more information.

Estate Tax Closing Letters

An estate tax closing letter (ETCL) will not be issued unless a 

request is made via Pay.gov. To allow time for processing, 

please wait at least 9 months after filing Form 706 to request 

an ETCL.

ETCL fee. Effective October 28, 2021, final regulations TD 

9957 established a user fee of $67 for persons requesting the 

issuance of an ETCL. To make an ETCL request after 

October 28, 2021, you must go to Pay.gov to submit a 

request and pay the user fee. Go to Frequently Asked 

Questions on the Estate Tax Closing Letter, for instructions 

and more information related to ETCLs.

Account transcript in lieu of ETCL. Instead of an ETCL, 

the executor of the estate may request an account transcript, 

which reflects transactions including the acceptance of Form 

706 or the completion of an examination. Account transcripts 

are available online to registered tax professionals using the 

Transcript Delivery System (TDS) or to authorized 

representatives making requests using Form 4506-T. Go to 

Transcripts in Lieu of Estate Tax Closing Letters for specific 

instructions to request online transcripts using the TDS or 

hardcopy transcripts using Form 4506-T.

Note. For information about the release of nonresident U.S. 

citizen decedents' assets using transfer certificates under 

Regulations section 20.6325-1, go to Transfer Certificate 

Filing Requirements for the Estates of Nonresident Citizens 

of the United States or write to:

Internal Revenue Service Center

Attn: E&G, Stop 824G

7940 Kentucky Drive

Florence, KY 41042-2915

Obtaining Forms and Publications To 

File or Use

Internet. You can access the IRS website at IRS.gov 24 

hours a day, 7 days a week to:

• Download forms, including talking tax forms, instructions, 

and publications;

• Order IRS products online;

• Research your tax questions online;

• Search publications online by topic or keyword;

• Use the online Internal Revenue Code, regulations, or 

other official guidance;

• View Internal Revenue Bulletins (IRBs) published in the 

last few years; and

-4- Instructions for Form 706 (Rev. 09-2023)
• Sign up to receive local and national tax news by email.

Other forms that may be required. 

• Form SS-5, Application for a Social Security Card.

• Form 706-CE, Certificate of Payment of Foreign Death 

Tax.

• Form 706-NA, United States Estate (and 

Generation-Skipping Transfer) Tax Return, Estate of 

nonresident not a citizen of the United States.

• Form 709, United States Gift (and Generation-Skipping 

Transfer) Tax Return.

• Form 712, Life Insurance Statement.

• Form 2848, Power of Attorney and Declaration of 

Representative.

• Form 4768, Application for Extension of Time To File a 

Return and/or Pay U.S. Estate (and Generation-Skipping 

Transfer) Taxes.

• Form 4808, Computation of Credit for Gift Tax.

• Form 8821, Tax Information Authorization.

• Form 8822, Change of Address.

• Form 8971, Information Regarding Beneficiaries 

Acquiring Property From a Decedent.

Additional Information. Pub. 559, Survivors, Executors, 

and Administrators, may assist you in learning about and 

preparing Form 706.

Specific Instructions

You must file the first four pages of Form 706 and all required 

schedules. File Schedules A through I, as appropriate, to 

support the entries in items 1 through 9 of Part 

5—Recapitulation.

Make sure to complete the required pages and 

schedules in their entirety. Returns filed without 

entries in each field will not be processed.

IF . . . THEN . . .

you enter zero on any item of the 

Recapitulation

you need not file the schedule 

(except for Schedule F) referred to on 

that item.

you are estimating the value of 

one or more assets pursuant to 

the special rule of Regulations 

section 20.2010-2(a)(7)(ii)

you must report the asset on the 

appropriate schedule, but you are not 

required to enter a value for the 

asset. Include the estimated value of 

the asset in the totals entered on Part 

5—Recapitulation, items 10 and 23.

you claim an exclusion on item 12 complete and attach Schedule U. 

you claim any deductions on items 

14 through 22 of the Recapitulation

complete and attach the appropriate 

schedules to support the claimed 

deductions.

you claim credits for foreign death 

taxes or tax on prior transfers

complete and attach Schedule P or 

Q.

CAUTION

!

IF . . . THEN . . .

there is not enough space on a 

schedule to list all the items

attach a Continuation Schedule (or 

additional sheets of the same size) to 

the back of the schedule (see the 

Continuation Schedule at the end of 

Form 706); photocopy the blank 

schedule before completing it, if you 

will need more than one copy.

Also consider the following.

• Form 706 has 29 numbered pages.

• Number the items you list on each schedule, beginning 

with the number “1” each time, or using the numbering 

convention as indicated on the schedule (for example, 

Schedule M).

• Total the items listed on the schedule and its 

attachments, Continuation Schedules, etc.

• Enter the total of all attachments, Continuation 

Schedules, etc., at the bottom of the printed schedule, 

but do not carry the totals forward from one schedule to 

the next.

• Enter the total, or totals, for each schedule on page 3, 

Part 5—Recapitulation.

• Do not complete the “Alternate valuation date” or 

“Alternate value” columns of any schedule unless you 

elected alternate valuation on Part 3—Elections by the 

Executor, line 1.

• When you complete the return, staple all the required 

pages together in the proper order.

Part 1—Decedent and Executor

Line 2

Enter the SSN assigned specifically to the decedent. You 

cannot use the SSN assigned to the decedent's spouse. If 

the decedent did not have an SSN, the executor should 

obtain one for the decedent by filing Form SS-5 with a local 

Social Security Administration (SSA) office.

Line 6a. Name of Executor

If there is more than one executor, enter the name of the 

executor to be contacted by the IRS and see line 6d.

Line 6b. Executor's Address

Use Form 8822 to report a change of the executor's address.

Line 6c. Executor's Social Security Number

Only one executor should complete this line. If there is more 

than one executor, see line 6d.

Line 6d. Multiple Executors

Check here if there is more than one executor. On an 

attached statement, provide the name, address, telephone 

number, and SSN of any executor other than the one named 

on line 6a.

Line 11. Special Rule

If the estate is estimating the value of assets under the 

special rule of Regulations section 20.2010-2(a)(7)(ii), check 

here and see the instructions for Part 5—Recapitulation, 

items 10 and 23.

Instructions for Form 706 (Rev. 09-2023) -5-
Part 2—Tax Computation

In general, the estate tax is figured by applying the unified 

rates shown in Table A to the total of transfers both during life 

and at death, and then subtracting the gift taxes, as refigured 

based on the date of death rates. See Worksheet TG, the 

Line 4 Worksheet, and the Line 7 Worksheet.

Note. You must complete Part 2—Tax Computation.

Line 1

If you elected alternate valuation on Part 3—Elections by the 

Executor, line 1, enter the amount you entered in the 

“Alternate value” column of Part 5—Recapitulation, item 13. 

Otherwise, enter the amount from the “Value at date of death” 

column.

Line 3b. State Death Tax Deduction

You may take a deduction on line 3b for estate, 

inheritance, legacy, or succession taxes paid on any property 

included in the gross estate as the result of the decedent's 

death to any state or the District of Columbia.

You may claim an anticipated amount of deduction and 

figure the federal estate tax on the return before the state 

death taxes have been paid. However, the deduction cannot 

be finally allowed unless you pay the state death taxes and 

claim the deduction within 4 years after the return is filed, or 

later (see section 2058(b)) if:

• A petition is filed with the Tax Court of the United States,

• You have an extension of time to pay, or

• You file a claim for refund or credit of an overpayment 

which extends the deadline for claiming the deduction.

Note. The deduction is not subject to dollar limits.

If you make a section 6166 election to pay the federal 

estate tax in installments and make a similar election to pay 

the state death tax in installments, see section 2058(b) for 

exceptions and periods of limitation.

If you transfer property other than cash to the state in 

payment of state inheritance taxes, the amount you may 

claim as a deduction is the lesser of the state inheritance tax 

liability discharged or the fair market value (FMV) of the 

property on the date of the transfer. For more information on 

the application of such transfers, see the principles 

discussed in Rev. Rul. 86-117, 1986-2 C.B. 157, prior to the 

repeal of section 2011.

Send the following evidence to the IRS.

1. Certificate of the proper officer of the taxing state, or the 

District of Columbia, showing the following.

a. Total amount of tax imposed (before adding interest 

and penalties and before allowing discount).

b. Amount of discount allowed.

c. Amount of penalties and interest imposed or 

charged.

d. Total amount actually paid in cash.

e. Date of payment.

2. Any additional proof the IRS specifically requests.

File the evidence requested above with the return, if 

possible. Otherwise, send it as soon as possible after 

the return is filed.

Line 6

To figure the tentative tax on the amount on line 5, use Table 

A—Unified Rate Schedule and put the result on this line.

Lines 4 and 7

Three worksheets are provided to help you figure the entries 

for these lines. Worksheet TG—Taxable Gifts Reconciliation 

allows you to reconcile the decedent's lifetime taxable gifts to 

figure totals that will be used for the Line 4 Worksheet and 

the Line 7 Worksheet.

You must have all of the decedent's gift tax returns (Forms 

709) before completing Worksheet TG—Taxable Gifts 

Reconciliation. The amounts needed for Worksheet TG can 

usually be found on the filed returns that were subject to tax. 

However, if any of the returns were audited by the IRS, use 

the amounts that were finally determined as a result of the 

audits.

In addition, you must make a reasonable effort to discover 

any gifts in excess of the annual exclusion made by the 

decedent (or on behalf of the decedent under a power of 

attorney) for which no Forms 709 were filed. Include the value 

of such gifts in column b of Worksheet TG. The annual 

exclusion per donee is as follows.

Table A—Unified Rate Schedule

Column A

Taxable amount over

Column B

Taxable amount not over

Column C

Tax on amount in column A

Column D

Rate of tax on excess over amount 

in column A

$0 $10,000 $0 18%

10,000 20,000 1,800 20%

20,000 40,000 3,800 22%

40,000 60,000 8,200 24%

60,000 80,000 13,000 26%

80,000 100,000 18,200 28%

100,000 150,000 23,800 30%

150,000 250,000 38,800 32%

250,000 500,000 70,800 34%

500,000 750,000 155,800 37%

750,000 1,000,000 248,300 39%

1,000,000 – – – – 345,800 40%

-6- Instructions for Form 706 (Rev. 09-2023)
Period Annual Exclusion Amount Per 

Donee

1977 through 1981 $3,000

1981 through 2001 $10,000

2002 through 2005 $11,000

2006 through 2008 $12,000

2009 through 2012 $13,000

2013 through 2017 $14,000

2018 through 2021 $15,000

2022 $16,000

2023 $17,000

Taxable Gift Amount Table

Column A Column B Column C Column D

Amount in Row 

(p), Line 7 

Worksheet over...

Amount in Row 

(p), Line 7 

Worksheet not 

over...

Property Value 

on Amount in 

Column A

Rate (Divisor) 

on Excess of 

Amount in 

Column A

0 1,800 0 18%

1,800 3,800 10,000 20%

3,800 8,200 20,000 22%

8,200 13,000 40,000 24%

13,000 18,200 60,000 26%

18,200 23,800 80,000 28%

23,800 38,800 100,000 30%

38,800 70,800 150,000 32%

70,800 155,800 250,000 34%

155,800 248,300 500,000 37%

248,300 345,800 750,000 39%

345,800 – – – – – – 1,000,000 40%

How to complete the Line 7 Worksheet. 

Row (a). Beginning with the earliest year in which the taxable 

gifts were made, enter the tax period of prior gifts. If you filed 

returns for gifts made after 1981, enter the calendar year in 

Row (a) as (YYYY). If you filed returns for gifts made after 

1976 and before 1982, enter the calendar quarters in Row (a) 

as (YYYY-Q).

Worksheet TG—Taxable Gifts Reconciliation

Worksheet TG—Taxable Gifts Reconciliation

(To be used for lines 4 and 7 of the Tax Computation)

Gifts 

made 

after 

June 6, 

1932, 

and 

before 

1977

a.

Calendar year or 

calendar quarter

b.

Total taxable gifts for 

period (see Note)

Note. For the definition of a taxable gift, see section 2503. Follow Form 709. That is, include only 

the decedent’s one-half of split gifts, whether the gifts were made by the decedent or the 

decedent’s spouse. In addition to gifts reported on Form 709, you must include any taxable gifts 

in excess of the annual exclusion that were not reported on Form 709.

c.

Taxable amount 

included in column b 

for gifts included in 

the gross estate

d.

Taxable amount included 

in column b for gifts that 

qualify for “special 

treatment of split gifts” 

described below

e.

Gift tax paid by 

decedent on gifts in 

column d

f.

Gift tax paid by 

decedent's spouse 

on gifts in column c

1. Total taxable gifts 

made before 1977

Gifts 

made 

after 

1976

2. Totals for gifts made after 

1976

Line 4 Worksheet—Adjusted Taxable Gifts Made After 1976

1. Taxable gifts made after 1976. Enter the amount from Worksheet TG, line 2, column b ......................... 1.

2. Taxable gifts made after 1976 reportable on Schedule G. Enter the amount from Worksheet 

TG, line 2, column c .................................................... 2.

3. Taxable gifts made after 1976 that qualify for “special treatment.” Enter the amount from 

Worksheet TG, line 2, column d ........................................... 3.

4. Add lines 2 and 3 ........................................................................ 4.

5. Adjusted taxable gifts. Subtract line 4 from line 1. Enter here and on Part 2—Tax Computation, line 4 .............. 5.

Instructions for Form 706 (Rev. 09-2023) -7-
Row (b). Enter all taxable gifts made in the specified year. 

Enter all pre-1977 gifts in the pre-1977 column.

Row (c). Enter the amount from Row (d) of the previous 

column.

Row (d). Enter the sum of Row (b) and Row (c) from the 

current column.

Row (e). Enter the amount from Row (f) of the previous 

column.

Row (f). Enter the tax based on the amount in Row (d) of the 

current column using Table A—Unified Rate Schedule.

Row (g). Subtract the amount in Row (e) from the amount in 

Row (f) for the current column.

Row (h). Complete this row only if a DSUE amount was 

received from predeceased spouse(s) and was applied to 

lifetime gifts or if a Restored Exclusion Amount on taxable 

gifts to a same-sex spouse was applied to lifetime gifts (or 

both). Enter the sum of lines 2 and 3 from Schedule C on the 

Form 709 filed for the year listed in Row (a) for the amount to 

be entered in this row.

Row (i). Enter the applicable amount from the Table of Basic 

Exclusion Amounts.

Row (j). Enter the sum of Row (h) and Row (i).

Row (k). Figure the applicable credit on the amount in Row 

(j) using Table A—Unified Rate Schedule, and enter here.

Line 7 Worksheet—Submit a copy with Form 706

Line 7 Worksheet, Part A—Used to determine Applicable Credit Allowable for Prior Periods after 1976

(a) Tax Period1 Pre-1977

(b) Taxable Gifts for Applicable Period

(c) Taxable Gifts for Prior Periods2

(d) Cumulative Taxable Gifts Including Applicable 

Period (add Row (b) and Row (c))

(e) Tax at Date of Death Rates for Prior Gifts (from 

Row (c))3

(f) Tax at Date of Death Rates for Cumulative 

Taxable Gifts Including Applicable Period (from 

Row (d))

(g) Tax at Date of Death Rates for Gifts in 

Applicable Period (subtract Row (e) from Row 

(f))

(h) Total DSUE applied and Restorable Exclusion 

Amount from Prior Periods and Applicable 

Period (see instructions later)

(i) Basic Exclusion for Applicable Period (Enter the 

amount from the Table of Basic Exclusion 

Amounts)

(j) Applicable Exclusion Amount (add Row (h) and 

Row (i)) 

(k) Maximum Applicable Credit amount based on 

Row (j) (Using Table A—Unified Rate 

Schedule)4

(l) Applicable Credit amount used in Prior Periods 

(add Row (l) and Row (n) from prior period)

(m) Available Credit in Applicable Period (subtract 

Row (l) from Row (k))

(n) Credit Allowable (lesser of Row (g) or Row (m))

(o) Tax paid or payable at Date of Death rates for 

Applicable Period (subtract Row (n) from Row 

(g))

(p) Tax on Cumulative Gifts less tax paid or payable 

for Applicable Period (subtract Row (o) from 

Row (f))

(q) Cumulative Taxable Gifts less Gifts in the 

Applicable Period on which tax was paid or 

payable based on Row (p) (Using the Taxable 

Gift Amount Table)

(r) Gifts in the Applicable Period on which tax was 

payable (subtract Row (q) from Row (d))

Line 7 Worksheet, Part B

1 Total gift taxes payable on gifts after 1976 (sum of amounts in Row (o)).

2 Gift taxes paid by the decedent on gifts that qualify for “special treatment.” Enter the amount from Worksheet TG, line 2, col. e.

3 Subtract line 2 from line 1.

4 Gift tax paid by decedent's spouse on split gifts included on Schedule G. Enter amount from Worksheet TG, line 2, col. f.

5 Add lines 3 and 4. Enter here and on Part 2—Tax Computation, line 7.

6

Cumulative lifetime gifts on which tax was paid or payable. Enter this amount on Form 706, Part 6–Portability of Deceased 

Spousal Unused Exclusion (DSUE), Section C, line 3 (sum of amounts in Row (r)).

1

 Row (a): For annual returns, enter the tax period as (YYYY). For quarterly returns, enter tax period as (YYYY-Q).

2

 Row (c): Enter amount from Row (d) of the previous column. 

3 Row (e): Enter amount from Row (f) of the previous column.

4 Row (k): Figure the applicable credit on the amount in Row (j), using Table A—Unified Rate Schedule, and enter here. (For each column in Row (k), subtract 20% of any 

amount allowed as a specific exemption for gifts made after September 8, 1976, and before January 1, 1977.)

-8- Instructions for Form 706 (Rev. 09-2023)
Note. The entries in each column of Row (k) must be 

reduced by 20% of the amount allowed as a specific 

exemption for gifts made after September 8, 1976, and 

before January 1, 1977 (but no more than $6,000).

Row (l). Add the amounts in Row (l) and Row (n) from the 

previous column.

Row (m). Subtract the amount in Row (l) from the amount in 

Row (k) to determine the amount of any available credit. 

Enter the result in Row (m).

Row (n). Enter the lesser of the amounts in Row (g) or Row 

(m).

Row (o). Subtract the amount in Row (n) from the amount in 

Row (g) for the current column.

Row (p). Subtract the amount in Row (o) from the amount in 

Row (f) for the current column.

Row (q). Enter the Cumulative Taxable Gift amount based on 

the amount in Row (p) using the Taxable Gift Amount Table.

Row (r). If Row (o) is greater than zero in the applicable 

period, subtract Row (q) from Row (d). If Row (o) is not 

greater than zero, enter -0-.

Repeat for each year in which taxable gifts were made.

Remember to submit a copy of the Line 7 Worksheet 

when you file Form 706. If additional space is needed 

CAUTION

to report prior gifts, please attach additional sheets.

!

Table of Basic Exclusion Amounts

Period Basic Exclusion 

Amount

Credit Equivalent 

at 2023 Rates

1977 (Quarters 1 and 2) $30,000 $6,000

1977 (Quarters 3 and 4) $120,667 $30,000

1978 $134,000 $34,000

1979 $147,333 $38,000

1980 $161,563 $42,500

1981 $175,625 $47,000

1982 $225,000 $62,800

1983 $275,000 $79,300

1984 $325,000 $96,300

1985 $400,000 $121,800

1986 $500,000 $155,800

1987 through 1997 $600,000 $192,800

1998 $625,000 $202,050

1999 $650,000 $211,300

2000 and 2001 $675,000 $220,550

2002 through 2010 $1,000,000 $345,800

2011 $5,000,000 $1,945,800

2012 $5,120,000 $1,993,800

2013 $5,250,000 $2,045,800

2014 $5,340,000 $2,081,800

2015 $5,430,000 $2,117,800

2016 $5,450,000 $2,125,800

2017 $5,490,000 $2,141,800

2018 $11,180,000 $4,417,800

2019 $11,400,000 $4,505,800

2020 $11,580,000 $4,577,800

2021 $11,700,000 $4,625,800

2022 $12,060,000 $4,769,800

2023 $12,920,000 $5,113,800

Note. In figuring the line 7 amount, do not include any tax 

paid or payable on gifts made before 1977. The line 7 amount 

is a hypothetical figure used to figure the estate tax.

Special treatment of split gifts. These special rules apply 

only if:

• The decedent's spouse predeceased the decedent;

• The decedent's spouse made gifts that were “split” with 

the decedent under the rules of section 2513;

• The decedent was the “consenting spouse” for those split 

gifts, as that term is used on Form 709; and

• The split gifts were included in the decedent's spouse's 

gross estate under section 2035.

If all four conditions above are met, do not include these 

gifts on line 4 of the Tax Computation and do not include the 

gift taxes payable on these gifts on line 7 of the Tax 

Computation. These adjustments are incorporated into the 

worksheets.

Instructions for Form 706 (Rev. 09-2023) -9-
Lines 9a Through 9e. Applicable Credit Amount 

(Formerly Unified Credit Amount)

The applicable credit amount is allowable credit against 

estate and gift taxes. It is figured by determining the tentative 

tax on the applicable exclusion amount, which is the amount 

that can be transferred before an estate tax liability will be 

incurred.

The applicable exclusion amount equals the total of lines 

9a, 9b, and 9c. See Lines 9d and 9e, applicable exclusion 

and credit amount, later, for more information.

Line 9a, basic exclusion amount. In 2023, the basic 

exclusion amount, as adjusted for inflation under section 

2010(c)(3), is $12,920,000.

Line 9b, DSUE. If the decedent had a spouse who died after 

2010, whose estate did not use all of its applicable exclusion 

against gift or estate tax liability, a DSUE amount may be 

available for use by the decedent's estate. If the predeceased 

spouse died in 2011, the DSUE amount was figured and 

attached to the predeceased spouse’s Form 706. If the 

predeceased spouse died in 2012 or after, this amount is 

found in Part 6, Section C, of the Form 706 filed by the estate 

of the decedent's predeceased spouse. The amount to be 

entered on line 9b is figured in Part 6, Section D.

Line 9c, restored exclusion amount. If a decedent made a 

taxable gift during the decedent's lifetime to the decedent's 

same-sex spouse and that transfer resulted in a reduction of 

the decedent's available applicable exclusion amount, the 

amount of the applicable exclusion that was reduced can be 

restored. If the applicable exclusion was previously restored 

on a Form 709, enter the value on Schedule C, line 3, of Form 

709. If the applicable exclusion has not yet been previously 

restored, follow the directions in the instructions for Form 

709, Schedule C, to determine the Restored Exclusion 

Amount. The Restored Exclusion Amount is entered on 

line 9c.

Lines 9d and 9e, applicable exclusion and credit 

amount. The total of lines 9a, 9b, and 9c is entered on 

line 9d. If the amounts entered on both lines 9b and 9c are 

zero, enter $5,113,800 on line 9e. Otherwise, determine the 

applicable credit on the amount on line 9d by using Table 

A—Unified Rate Schedule and enter the result on line 9e.

Line 10. Adjustment to Applicable Credit

If the decedent made gifts (including gifts made by the 

decedent's spouse and treated as made by the decedent by 

reason of gift splitting) after September 8, 1976, and before 

January 1, 1977, for which the decedent claimed a specific 

exemption, the applicable credit amount on this estate tax 

return must be reduced. The reduction is figured by entering 

20% of the specific exemption claimed for these gifts.

Note. The specific exemption was allowed by section 2521 

for gifts made before January 1, 1977.

If the decedent did not make any gifts between September 

8, 1976, and January 1, 1977, or if the decedent made gifts 

during that period but did not claim the specific exemption, 

enter zero.

Line 15. Total Credits

Generally, line 15 is used to report the total of credit for 

foreign death taxes (line 13) and credit for tax on prior 

transfers (line 14).

However, you may also use line 15 to report credit taken 

for federal gift taxes imposed by chapter 12 of the Code, and 

the corresponding provisions of prior laws, on certain 

transfers the decedent made before January 1, 1977, that are 

included in the gross estate. The credit cannot be more than 

the amount figured by the following formula.

Gross estate tax minus (the sum of the state 

death taxes and unified credit)

x 

Value of 

included

 gift

Value of gross estate minus (the sum of the 

deductions for charitable, public, and similar 

gifts and bequests and marital deduction)

When taking the credit for pre-1977 federal gift taxes:

• Include the credit in the amount on line 15; and

• Identify and enter the amount of the credit you are taking 

on the dotted line to the left of the entry space for line 15 

on page 1 of Form 706 with a notation, “Section 2012 

credit.”

For more information, see the regulations under section 

2012. This computation may be made using Form 4808. 

Attach a copy of a completed Form 4808 or the computation 

of the credit. Also, attach all available copies of Forms 709 

filed by the decedent, with "Exhibit to Estate Tax Return" 

entered across the top of the first page of each, to help verify 

the amounts entered on lines 4 and 7, and the amount of 

credit taken (on line 15) for pre-1977 federal gift taxes.

Canadian marital credit. In addition to using line 15 to 

report credit for federal gift taxes on pre-1977 gifts, you may 

also use line 15 to claim the Canadian marital credit, where 

applicable.

When taking the marital credit under the 1995 Canadian 

Protocol:

• Include the credit in the amount on line 15; and

• Identify and enter the amount of the credit you are taking 

on the dotted line to the left of the entry space for line 15 

on page 1 of Form 706 with a notation, “Canadian marital 

credit.”

Also, attach a statement to the return that refers to the 

treaty, waives qualifying domestic trust (QDOT) rights, and 

shows the computation of the marital credit. See the 1995 

Canadian income tax treaty protocol for details on figuring the 

credit.

Part 3—Elections by the Executor

Note. The election to allow the decedent's surviving spouse 

to use the decedent's unused exclusion amount is made by 

filing a timely and complete Form 706. See the instructions 

for Part 6—Portability of Deceased Spousal Unused 

Exclusion, later, and sections 2010(c)(4) and (c)(5).

Line 1. Alternate Valuation

See the example showing the use of Schedule B 

where the alternate valuation is adopted, later.

Unless you elect at the time the return is filed to adopt 

alternate valuation, as authorized by section 2032, value all 

property included in the gross estate as of the date of the 

decedent's death. Alternate valuation cannot be applied to 

only a part of the property.

You may elect special-use valuation (line 2) in addition to 

alternate valuation.

TIP

-10- Instructions for Form 706 (Rev. 09-2023)
You may not elect alternate valuation unless the election 

will decrease both the value of the gross estate and the sum 

(reduced by allowable credits) of the estate and GST taxes 

payable by reason of the decedent's death for the property 

includible in the decedent's gross estate.

Elect alternate valuation by checking “Yes” on line 1 and 

filing Form 706. You may make a protective alternate 

valuation election by checking “Yes” on line 1, writing the 

word “protective,” and filing Form 706 using regular values.

Once made, the election may not be revoked. The election 

may be made on a late-filed Form 706, provided it is not filed 

later than 1 year after the due date (including extensions 

actually granted). Relief under Regulations sections 

301.9100-1 and 301.9100-3 may be available to make an 

alternate valuation election or a protective alternate valuation 

election, provided a Form 706 is filed no later than 1 year 

after the due date of the return (including extensions actually 

granted).

If alternate valuation is elected, value the property 

included in the gross estate as of the following dates, as 

applicable.

• Any property distributed, sold, exchanged, or otherwise 

disposed of or separated or passed from the gross estate 

by any method within 6 months after the decedent's 

death is valued on the date of distribution, sale, 

exchange, or other disposition. Value this property on the 

date it ceases to be a part of the gross estate; for 

example, on the date the title passes as the result of its 

sale, exchange, or other disposition.

• Any property not distributed, sold, exchanged, or 

otherwise disposed of within the 6-month period is 

valued as of 6 months after the date of the decedent's 

death.

• Any property, interest, or estate that is affected by mere 

lapse of time is valued as of the date of the decedent's 

death or on the date of its distribution, sale, exchange, or 

other disposition, whichever occurs first. However, you 

may change the date of death value to account for any 

change in value that is not due to a “mere lapse of time” 

on the date of its distribution, sale, exchange, or other 

disposition.

The property included in the alternate valuation and 

valued as of 6 months after the date of the decedent's death, 

or as of some intermediate date (as described above), is the 

property included in the gross estate on the date of the 

decedent's death. Therefore, you must first determine what 

property was part of the gross estate at the decedent's death.

Interest. Interest accrued to the date of the decedent's 

death on bonds, notes, and other interest-bearing obligations 

is property of the gross estate on the date of death and is 

included in the alternate valuation.

Rent. Rent accrued to the date of the decedent's death on 

leased real or personal property is property of the gross 

estate on the date of death and is included in the alternate 

valuation.

Dividends. Outstanding dividends that were declared to 

stockholders of record on or before the date of the 

decedent's death are considered property of the gross estate 

on the date of death and are included in the alternate 

valuation. Ordinary dividends declared to stockholders of 

record after the date of the decedent's death are not included 

in the gross estate on the date of death and are not eligible 

for alternate valuation. However, if dividends are declared to 

stockholders of record after the date of the decedent's death 

so that the shares of stock at the later valuation date do not 

reasonably represent the same property at the date of the 

decedent's death, include those dividends (except dividends 

paid from earnings of the corporation after the date of the 

decedent's death) in the alternate valuation.

On Schedules A through I, you must show the following.

1. What property is included in the gross estate on the date 

of the decedent's death.

2. What property was distributed, sold, exchanged, or 

otherwise disposed of within the 6-month period after the 

decedent's death, and the dates of these distributions, 

etc. (These two items should be entered in the 

“Description” column of each schedule. Briefly explain 

the status or disposition governing the alternate 

valuation date, such as “Not disposed of within 6 months 

following death,” “Distributed,” “Sold,” “Bond paid on 

maturity,” etc. In this same column, describe each item of 

principal and includible income.)

3. The date of death value, entered in the appropriate value 

column with items of principal and includible income 

shown separately.

4. The alternate value, entered in the appropriate value 

column with items of principal and includible income 

shown separately. (In the case of any interest or estate, 

the value of which is affected by lapse of time, such as 

patents, leaseholds, estates for the life of another, or 

remainder interests, the value shown under the heading 

“Alternate value” must be the adjusted value, for 

example, the value as of the date of death with an 

adjustment reflecting any difference in its value as of the 

later date not due to lapse of time.)

Note. If any property on Schedules A through I is being 

valued pursuant to the special rule of Regulations section 

20.2010-2(a)(7)(ii), values for those assets are not required 

to be reported on the schedule. See Part 5—Recapitulation, 

item 10, later.

Distributions, sales, exchanges, and other dispositions of 

the property within the 6-month period after the decedent's 

death must be supported by evidence. If the court issued an 

order of distribution during that period, you must submit a 

certified copy of the order as part of the evidence. The IRS 

may require you to submit additional evidence, if necessary.

If the alternate valuation method is used, the values of life 

estates, remainders, and similar interests are figured using 

the age of the recipient on the date of the decedent's death 

and the value of the property on the alternate valuation date.

Line 2. Special-Use Valuation of Section 2032A

In general. Under section 2032A, you may elect to value 

certain farm and closely held business real property at its 

farm or business use value rather than its FMV. Both 

special-use valuation and alternate valuation may be elected.

To elect special-use valuation, check “Yes” on line 2 and 

complete and attach Schedule A-1 and its required additional 

statements. You must file Schedule A-1 and its required 

attachments with Form 706 for this election to be valid. You 

may make the election on a late-filed return so long as it’s the 

first return filed.

The total value of the property valued under section 2032A 

may not be decreased from FMV by more than $1,310,000 

for decedents dying in 2023.

Instructions for Form 706 (Rev. 09-2023) -11-
Real property may qualify for the section 2032A election if:

1. The decedent was a U.S. citizen or resident at the time of 

death;

2. The real property is located in the United States;

3. At the decedent's death, the real property was used by 

the decedent or a family member for farming or in a trade 

or business, or was rented for such use by either the 

surviving spouse or a lineal descendant of the decedent 

to a family member on a net cash basis;

4. The real property was acquired from or passed from the 

decedent to a qualified heir of the decedent;

5. The real property was owned and used in a qualified 

manner by the decedent or a member of the decedent's 

family during 5 of the 8 years before the decedent's 

death;

6. There was material participation by the decedent or a 

member of the decedent's family during 5 of the 8 years 

before the decedent's death; and

7. The property meets the following percentage 

requirements.

a. At least 50% of the adjusted value of the gross estate 

must consist of the adjusted value of real or personal 

property that was being used as a farm or in a closely 

held business and that was acquired from, or passed 

from, the decedent to a qualified heir of the 

decedent.

b. At least 25% of the adjusted value of the gross estate 

must consist of the adjusted value of qualified farm or 

closely held business real property.

For this purpose, adjusted value is the value of property 

determined without regard to its special-use value. The value 

is reduced for unpaid mortgages on the property or any 

indebtedness against the property, if the full value of the 

decedent's interest in the property (not reduced by such 

mortgage or indebtedness) is included in the value of the 

gross estate. The adjusted value of the qualified real and 

personal property used in different businesses may be 

combined to meet the 50% and 25% requirements.

Qualified Real Property

Qualified use. Qualified use means use of the property as a 

farm for farming purposes or in a trade or business other than 

farming. Trade or business applies only to the active conduct 

of a business. It does not apply to passive investment 

activities or the mere passive rental of property to a person 

other than a member of the decedent's family. Also, no trade 

or business is present in the case of activities not engaged in 

for profit.

Ownership. To qualify as special-use property, the decedent 

or a member of the decedent's family must have owned and 

used the property in a qualified use for 5 of the last 8 years 

before the decedent's death. Ownership may be direct or 

indirect through a corporation, a partnership, or a trust.

If the ownership is indirect, the business must qualify as a 

closely held business under section 6166. The indirect 

ownership, when combined with periods of direct ownership, 

must meet the requirements of section 6166 on the date of 

the decedent's death and for a period of time that equals at 

least 5 of the 8 years preceding death.

Directly owned property leased by the decedent to a 

separate closely held business is considered qualified real 

property if the business entity to which it was rented was a 

closely held business (as defined by section 6166) for the 

decedent on the date of the decedent's death and for 

sufficient time to meet the “5 in 8 years” test explained above.

Structures and other real property improvements. 

Qualified real property includes residential buildings and 

other structures and real property improvements regularly 

occupied or used by the owner or lessee of real property (or 

by the employees of the owner or lessee) to operate a farm or 

other closely held business. A farm residence that the 

decedent occupied is considered to have been occupied for 

the purpose of operating the farm even when a family 

member and not the decedent was the person materially 

participating in the operation of the farm.

Qualified real property also includes roads, buildings, and 

other structures and improvements functionally related to the 

qualified use.

Elements of value such as mineral rights that are not 

related to the farm or business use are not eligible for 

special-use valuation.

Property acquired from the decedent. Property is 

considered to have been acquired from or to have passed 

from the decedent if one of the following applies.

• The property is considered to have been acquired from 

or to have passed from the decedent under section 

1014(b) (relating to basis of property acquired from a 

decedent).

• The property is acquired by any person from the estate.

• The property is acquired by any person from a trust, to 

the extent the property is includible in the gross estate.

Qualified heir. A person is a qualified heir of property if the 

person is a member of the decedent's family and acquired or 

received the property from the decedent. If a qualified heir 

disposes of any interest in qualified real property to any 

member of the qualified heir’s family, that person will then be 

treated as the qualified heir for that interest.

A member of the family includes only:

• An ancestor (parent, grandparent, etc.) of the individual;

• The spouse of the individual;

• The lineal descendant (child, stepchild, grandchild, etc.) 

of the individual, the individual's spouse, or a parent of 

the individual; or

• The spouse or surviving spouse of any lineal descendant 

described above.

Note. A legally adopted child of an individual is treated as a 

child of that individual by blood.

Material Participation

To elect special-use valuation, either the decedent or a 

member of the decedent’s family must have materially 

participated in the operation of the farm or other business for 

at least 5 of the 8 years ending on the date of the decedent's 

death. The existence of material participation is a factual 

determination. Passively collecting rents, salaries, draws, 

dividends, or other income from the farm or other business is 

not sufficient for material participation, nor is merely 

advancing capital and reviewing a crop plan and financial 

reports each season or business year.

-12- Instructions for Form 706 (Rev. 09-2023)
In determining whether the required participation has 

occurred, disregard brief periods (that is, 30 days or less) 

during which there was no material participation, as long as 

such periods were both preceded and followed by substantial 

periods (more than 120 days) during which there was 

uninterrupted material participation.

Retirement or disability. If, on the date of death, the time 

period for material participation could not be met because the 

decedent was retired or disabled, a substitute period may 

apply. The decedent must have retired on social security or 

been disabled for a continuous period ending with death. A 

person is disabled for this purpose if the person was mentally 

or physically unable to materially participate in the operation 

of the farm or other business.

The substitute time period for material participation for 

these decedents is a period totaling at least 5 years out of the 

8-year period that ended on the earlier of:

• The date the decedent began receiving social security 

benefits, or

• The date the decedent became disabled.

Surviving spouse. A surviving spouse who received 

qualified real property from the predeceased spouse is 

considered to have materially participated if the surviving 

spouse was engaged in the active management of the farm 

or other business. If the surviving spouse died within 8 years 

of the first spouse's death, you may add the period of 

material participation of the predeceased spouse to the 

period of active management by the surviving spouse to 

determine if the surviving spouse's estate qualifies for 

special-use valuation. To qualify for this, the property must 

have been eligible for special-use valuation in the 

predeceased spouse's estate, though it does not have to 

have been elected by that estate.

For additional details regarding material participation, see 

Regulations section 20.2032A-3(e).

Valuation Methods

The primary method of valuing special-use property that is 

used for farming purposes is the annual gross cash rental 

method. If comparable gross cash rentals are not available, 

you can substitute comparable average annual net share 

rentals. If neither of these is available, or if you so elect, you 

can use the method for valuing real property in a closely held 

business.

Average annual gross cash rental. Generally, the 

special-use value of property that is used for farming 

purposes is determined as follows.

1. Subtract the average annual state and local real estate 

taxes on actual tracts of comparable real property from 

the average annual gross cash rental for that same 

comparable property.

2. Divide the result in (1) by the average annual effective 

interest rate charged for all new federal land bank loans. 

See Effective interest rate, later.

The computation of each average annual amount is based 

on the 5 most recent calendar years ending before the date 

of the decedent's death.

Gross cash rental. Generally, gross cash rental is the 

total amount of cash received in a calendar year for the use 

of actual tracts of comparable farm real property in the same 

locality as the property being specially valued. You may not 

use:

• Appraisals or other statements regarding rental value or 

areawide averages of rentals,

• Rents paid wholly or partly in-kind, or

• Property for which the amount of rent is based on 

production.

The rental must have resulted from an arm's-length 

transaction and the amount of rent may not be reduced by 

the amount of any expenses or liabilities associated with the 

farm operation or the lease.

Comparable property. Comparable property must be 

situated in the same locality as the qualified real property as 

determined by generally accepted real property valuation 

rules. The determination of comparability is based on a 

number of factors, none of which carries more weight than 

the others. It is often necessary to value land in segments 

where there are different uses or land characteristics 

included in the specially valued land.

The following list contains some of the factors considered 

in determining comparability.

• Similarity of soil.

• Whether the crops grown would deplete the soil in a 

similar manner.

• Types of soil conservation techniques that have been 

practiced on the two properties.

• Whether the two properties are subject to flooding.

• Slope of the land.

• For livestock operations, the carrying capacity of the 

land.

• For timbered land, whether the timber is comparable.

• Whether the property as a whole is unified or segmented. 

If segmented, the availability of the means necessary for 

movement among the different sections.

• Number, types, and conditions of all buildings and other 

fixed improvements located on the properties and their 

location as it affects efficient management, use, and 

value of the property.

• Availability and type of transportation facilities in terms of 

costs and of proximity of the properties to local markets.

You must specifically identify on the return the property 

being used as comparable property. Use the type of 

descriptions used to list real property on Schedule A.

Effective interest rate. See Tables 1 and 2 of Rev. Rul. 

2023-15, 2023-34 I.R.B. 559, available at Rev. Rul. 2023-15, 

for the average annual effective interest rates in effect for 

2023.

Net share rental. You may use average annual net share 

rental from comparable land only if there is no comparable 

land from which average annual gross cash rental can be 

determined. Net share rental is the difference between the 

gross value of produce received by the lessor from the 

comparable land and the cash operating expenses (other 

than real estate taxes) of growing the produce that, under the 

lease, are paid by the lessor. The production of the produce 

must be the business purpose of the farming operation. For 

this purpose, produce includes livestock.

The gross value of the produce is generally the gross 

amount received if the produce was disposed of in an 

arm's-length transaction within the period established by the 

Department of Agriculture for its price support program. 

Otherwise, the value is the weighted average price for which 

the produce sold on the closest national or regional 

commodities market. The value is figured for the date or 

Instructions for Form 706 (Rev. 09-2023) -13-
dates on which the lessor received (or constructively 

received) the produce.

Valuing a real property interest in a closely held business. Use this method to determine the special-use 

valuation for qualifying real property used in a trade or 

business other than farming. You may also use this method 

for qualifying farm property if there is no comparable land or if 

you elect to use it. Under this method, the following factors 

are considered.

• The capitalization of income that the property can be 

expected to yield for farming or for closely held business 

purposes over a reasonable period of time with prudent 

management and traditional cropping patterns for the 

area, taking into account soil capacity, terrain 

configuration, and similar factors.

• The capitalization of the fair rental value of the land for 

farming or for closely held business purposes.

• The assessed land values in a state that provides a 

differential or use value assessment law for farmland or 

closely held business.

• Comparable sales of other farm or closely held business 

land in the same geographical area far enough removed 

from a metropolitan or resort area so that nonagricultural 

use is not a significant factor in the sales price.

• Any other factor that fairly values the farm or closely held 

business value of the property.

Making the Election

Include the words “Section 2032A valuation” in the 

“Description” column of any Form 706 schedule if section 

2032A property is included in the decedent's gross estate.

An election under section 2032A need not include all the 

property in an estate that is eligible for special-use valuation, 

but sufficient property to satisfy the threshold requirements of 

section 2032A(b)(1)(B) must be specially valued under the 

election.

If joint or undivided interests (that is, interests as joint 

tenants or tenants in common) in the same property are 

received from a decedent by qualified heirs, an election for 

one heir's joint or undivided interest need not include any 

other heir's interest in the same property if the electing heir's 

interest plus other property to be specially valued satisfies 

the requirements of section 2032A(b)(1)(B).

If successive interests (that is, life estates and remainder 

interests) are created by a decedent in otherwise qualified 

property, an election under section 2032A is available only for 

that property (or part) in which qualified heirs of the decedent 

receive all of the successive interests, and such an election 

must include the interests of all of those heirs.

For example, if a surviving spouse receives a life estate in 

otherwise qualified property and the spouse's sibling 

receives a remainder interest in fee, no part of the property 

may be valued under a section 2032A election.

Where successive interests in specially valued property 

are created, remainder interests are treated as being 

received by qualified heirs only if the remainder interests are 

not contingent on surviving a nonfamily member or are not 

subject to divestment in favor of a nonfamily member.

Protective Election

You may make a protective election to specially value 

qualified real property. Under this election, whether or not you 

may ultimately use special-use valuation depends upon final 

values (as shown on the return determined following 

examination of the return) meeting the requirements of 

section 2032A.

To make a protective election, check “Yes” on line 2 and 

complete Schedule A-1 according to the instructions for 

Protective election, later.

If you make a protective election, complete the initial Form 

706 by valuing all property at its FMV. Do not use special-use 

valuation. Usually, this will result in higher estate and GST tax 

liabilities than will be ultimately determined if special-use 

valuation is allowed. The protective election does not extend 

the time to pay the taxes shown on the return. If you wish to 

extend the time to pay the taxes, file Form 4768 in adequate 

time before the due date of the return. See the Instructions for 

Form 4768.

If the estate qualifies for special-use valuation based on 

the values as finally determined, you must file an amended 

Form 706 (with a complete section 2032A election) within 60 

days after the date of this determination. Prepare the 

amended return using special-use values under the rules of 

section 2032A, complete Schedule A-1, and attach all of the 

required statements.

Additional Information

For definitions and additional information, see section 2032A 

and the related regulations.

Line 3. Section 6166 Installment Payments

If the gross estate includes an interest in a closely held 

business, you may be able to elect to pay part of the estate 

tax in installments under section 6166.

The maximum amount that can be paid in installments is 

that part of the estate tax that is attributable to the closely 

held business; see Determine how much of the estate tax 

may be paid in installments under section 6166, later. In 

general, that amount is the amount of tax that bears the same 

ratio to the total estate tax that the value of the closely held 

business included in the gross estate bears to the adjusted 

gross estate.

Bond or lien. The IRS may require that an estate furnish a 

surety bond when granting the installment payment election. 

In the alternative, the executor may consent to elect the 

special lien provisions of section 6324A in lieu of the bond. 

The IRS will contact you regarding the specifics of furnishing 

the bond or electing the special lien. The IRS will make this 

determination on a case-by-case basis, and you may be 

asked to provide additional information.

If you elect the lien provisions, section 6324A requires that 

the lien be placed on property having a value equal to the 

total deferred tax plus 4 years of interest. The property must 

be expected to survive the deferral period, and does not 

necessarily have to be property of the estate. In addition, all 

people with an interest in the designated property must 

consent to the creation of this lien.

Percentage requirements. To qualify for installment 

payments, the value of the interest in the closely held 

-14- Instructions for Form 706 (Rev. 09-2023)
business that is included in the gross estate must be more 

than 35% of the adjusted gross estate (the gross estate less 

expenses, indebtedness, taxes, and losses—Schedules J, K, 

and L of Form 706 (do not include any portion of the state 

death tax deduction)).

Interests in two or more closely held businesses are 

treated as an interest in a single business if at least 20% of 

the total value of each business is included in the gross 

estate. For this purpose, include any interest held by the 

surviving spouse that represents the surviving spouse's 

interest in a business held jointly with the decedent as 

community property or as joint tenants, tenants by the 

entirety, or tenants in common.

Value. The value used for meeting the percentage 

requirements is the same value used for determining the 

gross estate. Therefore, if the estate is valued under alternate 

valuation or special-use valuation, you must use those values 

to meet the percentage requirements.

Transfers before death. Generally, gifts made before 

death are not included in the gross estate. However, the 

estate must meet the 35% requirement by both including in 

and excluding from the gross estate any gifts made by the 

decedent in the 3-year period ending on the date of death.

Passive assets. In determining the value of a closely held 

business and whether the 35% requirement is met, do not 

include the value of any passive assets held by the business. 

A passive asset is any asset not used in carrying on a trade 

or business. Any asset used in a qualifying lending and 

financing business is treated as an asset used in carrying on 

a trade or business; see section 6166(b)(10) for details. 

Stock in another corporation is a passive asset unless the 

stock is treated as held by the decedent because of the 

election to treat holding company stock as business 

company stock; see Holding company stock, later.

If a corporation owns at least 20% in value of the voting 

stock of another corporation, or the other corporation had no 

more than 45 shareholders and at least 80% of the value of 

the assets of each corporation is attributable to assets used 

in carrying on a trade or business, then these corporations 

will be treated as a single corporation and the stock will not 

be treated as a passive asset. Stock held in the other 

corporation is not taken into account in determining the 80% 

requirement.

Interest in a closely held business. For purposes of the 

installment payment election, an interest in a closely held 

business means:

• Ownership of a trade or business carried on as a 

proprietorship;

• An interest as a partner in a partnership carrying on a 

trade or business, if 20% or more of the total capital 

interest was included in the gross estate of the decedent 

or the partnership had no more than 45 partners; or

• Stock in a corporation carrying on a trade or business, if 

20% or more in value of the voting stock of the 

corporation is included in the gross estate of the 

decedent or the corporation had no more than 45 

shareholders.

The partnership or corporation must be carrying on a trade 

or business at the time of the decedent's death. For further 

information on whether certain partnerships or corporations 

owning real property interests constitute a closely held 

business, see Rev. Rul. 2006-34, 2006-26 I.R.B. 1171, 

available at Rev. Rul. 2006-34.

In determining the number of partners or shareholders, a 

partnership or stock interest is treated as owned by one 

partner or shareholder if it is community property or held by 

spouses as joint tenants, tenants in common, or tenants by 

the entirety.

Property owned directly or indirectly by or for a 

corporation, partnership, estate, or trust is treated as owned 

proportionately by or for its shareholders, partners, or 

beneficiaries. For trusts, only beneficiaries with present 

interests are considered.

The interest in a closely held farm business includes the 

interest in the residential buildings and related improvements 

occupied regularly by the owners, lessees, and employees 

operating the farm.

Holding company stock. The executor may elect to treat 

as business company stock the portion of any holding 

company stock that represents direct ownership (or indirect 

ownership through one or more other holding companies) in 

a business company. A holding company is a corporation 

holding stock in another corporation. A business company is 

a corporation carrying on a trade or business.

In general, this election applies only to stock that is not 

readily tradable. However, the election can be made if the 

business company stock is readily tradable, as long as all of 

the stock of each holding company is not readily tradable.

For purposes of the 20%-voting-stock requirement, stock 

is treated as voting stock to the extent the holding company 

owns voting stock in the business company.

If the executor makes this election, the first installment 

payment is due when the estate tax return is filed. The 5-year 

deferral for payment of the tax, as discussed later under Time 

for payment, does not apply. In addition, the 2% interest rate, 

discussed later under Interest computation, will not apply. 

Also, if the business company stock is readily tradable, as 

explained above, the tax must be paid in five installments.

Determine how much of the estate tax may be paid in installments under section 6166. To determine whether the 

election may be made, you must figure the adjusted gross 

estate. (See the Line 3 Worksheet—Adjusted Gross Estate 

below.) To determine the value of the adjusted gross estate, 

subtract the deductions (Schedules J, K, and L) from the 

value of the gross estate.

Instructions for Form 706 (Rev. 09-2023) -15-
Line 3 Worksheet—Adjusted Gross Estate

1. Enter the value of the decedent's interest in closely held business(es) included in the gross estate (less value of 

passive assets, as mentioned in section 6166(b)(9)) ..................................

2. Enter the value of the gross estate (Form 706, Part 5, item 13) .............................

3. Add items 18, 19, and 20 from Form 706, Part 5 .....................................

4. Subtract line 3 from line 2 to figure the adjusted gross estate ..............................

5. Divide line 1 by line 4 to figure the value the business interest bears to the value of the adjusted gross estate. For 

purposes of this calculation, carry the decimal to the sixth place; the IRS will make this adjustment for purposes 

of determining the correct amount. If this amount is less than 0.350000, the estate does not qualify to make the 

election under section 6166 .................................................

6. Multiply line 5 by the amount on line 16 of Form 706, Part 2. This is the maximum amount of estate tax that may 

be paid in installments under section 6166. (Certain GST taxes may be deferred as well; see section 6166(i) for 

more information.) .......................................................

To determine over how many installments the estate tax 

may be paid, please refer to sections 6166(a), (b)(7), (b)(8), 

and (b)(10).

Time for payment. Under the installment method, the 

executor may elect to defer payment of the qualified estate 

tax, but not interest, for up to 5 years from the original 

payment due date. After the first installment of tax is paid, 

you must pay the remaining installments annually by the date 

1 year after the due date of the preceding installment. There 

can be no more than 10 installment payments.

Interest on the unpaid portion of the tax is not deferred and 

must be paid annually. Interest must be paid at the same time 

as and as a part of each installment payment of the tax.

Acceleration of payments. If the estate fails to make 

payments of tax or interest within 6 months of the due date, 

the IRS may terminate the right to make installment payments 

and force an acceleration of payment of the tax upon notice 

and demand. Upon notice and demand, a penalty will be 

imposed for an amount that is 5% of the payment multiplied 

by the number of months (or fractions thereof) after the due 

date and before the payment is made.

Generally, if any portion of the interest in the closely held 

business which qualifies for installment payments is 

distributed, sold, exchanged, or otherwise disposed of, or 

money and other property attributable to such an interest is 

withdrawn, and the aggregate of those events equals or 

exceeds 50% of the value of the interest, then the right to 

make installment payments will be terminated, and the 

unpaid portion of the tax will be due upon notice and 

demand. See section 6166(g)(1)(A).

Interest computation. A special interest rate applies to 

installment payments. For decedents dying in 2023, the 

interest rate is 2% on the lesser of:

• $700,000, or

• The amount of the estate tax that is attributable to the 

closely held business and that is payable in installments.

2% portion. The 2% portion is an amount equal to the 

amount of the tentative estate tax (on $1 million plus the 

applicable exclusion amount in effect) minus the applicable 

credit amount in effect. However, if the amount of estate tax 

extended under section 6166 is less than the amount figured 

above, the 2% portion is the lesser amount.

Inflation adjustment. The $1 million amount used to 

figure the 2% portion is indexed for inflation for the estates of 

decedents who died in a calendar year after 1998. For an 

estate of a decedent who died in 2023, the dollar amount 

used to determine the “2% portion” of the estate tax payable 

in installments under section 6166 is $1,750,000.

Computation. Interest on the portion of the tax in excess 

of the 2% portion is figured at 45% of the annual rate of 

interest on underpayments. This rate is based on the federal 

short-term rate and is announced quarterly by the IRS in the 

Internal Revenue Bulletin.

If you elect installment payments and the estate tax due is 

more than the maximum amount to which the 2% interest rate 

applies, each installment payment is deemed to comprise 

both tax subject to the 2% interest rate and tax subject to 

45% of the regular underpayment rate. The amount of each 

installment that is subject to the 2% rate is the same as the 

percentage of total tax payable in installments that is subject 

to the 2% rate.

The interest paid on installment payments is not 

deductible as an administrative expense of the 

estate.

Making the election. If you check this line to make a final 

election, you must attach the notice of election described in 

Regulations section 20.6166-1(b). If you check this line to 

make a protective election, you must attach a notice of 

protective election as described in Regulations section 

20.6166-1(d). Regulations section 20.6166-1(b) requires that 

the notice of election is made by attaching to a timely filed 

estate tax return the following information.

• The decedent's name and taxpayer identification number 

(TIN) as they appear on the estate tax return.

• The amount of tax that is to be paid in installments.

• The date selected for payment of the first installment.

• The number of annual installments, including first 

installment, in which the tax is to be paid.

• The properties shown on the estate tax return that are the 

closely held business interest (identified by schedule and 

item number).

• The facts that formed the basis for the executor's 

conclusion that the estate qualifies for payment of the 

estate tax in installments.

You may also elect to pay certain GST taxes in 

installments. See section 6166(i).

Line 4. Reversionary or Remainder Interests

For details of this election, see section 6163 and the related 

regulations.

CAUTION

!

-16- Instructions for Form 706 (Rev. 09-2023)
Part 4—General Information

Authorization

Completing the authorization will authorize one attorney, 

accountant, or enrolled agent to represent the estate and 

receive confidential tax information, but will not authorize the 

representative to enter into closing agreements for the estate. 

If you would like to authorize your representative to enter into 

agreements or perform other designated acts on behalf of the 

estate, you must file Form 2848 with Form 706.

Note. If you intend for the representative to represent the 

estate before the IRS, the representative must complete and 

sign this authorization.

Complete and attach Form 2848 if you would like to 

authorize:

• Persons other than attorneys, accountants, or enrolled 

agents to represent the estate;

• More than one person to receive confidential information 

or represent the estate; or

• Someone to sign agreements, consents, waivers, or 

other documents for the estate.

Filing a completed Form 2848 with this return may 

expedite processing of the Form 706.

If you wish only to authorize someone to inspect and/or 

receive confidential tax information (but not to represent you 

before the IRS), complete and file Form 8821.

Line 3

Enter the marital status of the decedent at the time of death 

by checking the appropriate box on line 3a. If the decedent 

was married at the time of death, complete line 4. If the 

decedent had one or more prior marriages, complete line 3b 

by providing the name and SSN of each former spouse, the 

date(s) the marriage ended, and specify whether the 

marriage ended by annulment, divorce decree, or death of 

spouse. If the prior marriage ended in death and the 

predeceased spouse died after December 31, 2010, 

complete Part 6—Portability of Deceased Spousal Unused 

Exclusion, Section D, if the estate of the predeceased 

spouse elected to allow the decedent to use any unused 

exclusion amount. For more information, see section 2010(c)

(4) and related regulations.

Line 4

Complete line 4 whether or not there is a surviving spouse 

and whether or not the surviving spouse received any 

benefits from the estate. If there was no surviving spouse on 

the date of the decedent's death, enter “None” on line 4a and 

leave lines 4b and 4c blank. The value entered on line 4c 

need not be exact. See Amount under line 5, later.

Note. Do not include any DSUE amount transferred to the 

surviving spouse in the total entered on line 4c.

Line 5

Name. Enter the name of each individual, trust, or estate 

that received (or will receive) benefits of $5,000 or more from 

the estate directly as an heir, next-of-kin, devisee, or legatee; 

or indirectly (for example, as beneficiary of an annuity or 

insurance policy, shareholder of a corporation, or partner of a 

partnership that is an heir, etc.).

Identifying number. Enter the SSN of each individual 

beneficiary listed. If the number is unknown, or the individual 

has no number, please indicate “unknown” or “none.” For 

trusts and other estates, enter the employer identification 

number (EIN).

Relationship. For each individual beneficiary, enter the 

relationship (if known) to the decedent by reason of blood, 

marriage, or adoption. For trust or estate beneficiaries, 

indicate “TRUST” or “ESTATE.”

Amount. Enter the amount actually distributed (or to be 

distributed) to each beneficiary including transfers during the 

decedent's life from Schedule G required to be included in 

the gross estate. The value to be entered need not be exact. 

A reasonable estimate is sufficient. For example, where 

precise values cannot readily be determined, as with certain 

future interests, a reasonable approximation should be 

entered. The total of these distributions should approximate 

the amount of gross estate reduced by funeral and 

administrative expenses, debts and mortgages, bequests to 

surviving spouse, charitable bequests, and any federal and 

state estate and GST taxes paid (or payable) relating to the 

benefits received by the beneficiaries listed on lines 4 and 5.

All distributions of less than $5,000 to specific 

beneficiaries may be included with distributions to 

unascertainable beneficiaries on the line provided.

Line 6. Protective Claim for Refund

If you answered “Yes,” complete Schedule PC for each claim. 

Two copies of each Schedule PC must be filed with the 

return.

A protective claim for refund may be filed when there is an 

unresolved claim or expense that will not be deductible under 

section 2053 before the expiration of the period of limitation 

under section 6511(a). To preserve the estate's right to a 

refund once the claim or expense has been finally 

determined, the protective claim must be filed before the end 

of the limitations period. For more information on how to file a 

protective claim for refund with this Form 706, see the 

instructions for Schedule PC, later.

Line 7. Section 2044 Property

If you answered “Yes,” these assets must be shown on 

Schedule F.

Section 2044 property is property for which a previous 

section 2056(b)(7) election (QTIP election) has been made, 

or for which a similar gift tax election (section 2523) has been 

made. For more information, see the instructions for 

Schedule F, later.

Line 9. Insurance Not Included in the Gross 

Estate

If you answered “Yes” to either line 9a or 9b, for each policy 

you must complete and attach Schedule D, Form 712, and an 

explanation of why the policy or its proceeds are not 

includible in the gross estate.

Line 11. Partnership Interests and Stock in 

Close Corporations

If you answered “Yes” on line 11a, you must include full 

details for partnerships (including family limited 

partnerships), unincorporated businesses, and limited liability 

companies (LLCs) on Schedule F (Schedule E if the 

partnership interest is jointly owned). Also include full details 

Instructions for Form 706 (Rev. 09-2023) -17-
for fractional interests in real estate on Schedule A and for 

stock of inactive or close corporations on Schedule B.

Value these interests using the rules of Regulations 

section 20.2031-2 (stocks) or 20.2031-3 (other business 

interests).

A close corporation is a corporation whose shares are 

owned by a limited number of shareholders. Often, one family 

holds the entire stock issue. As a result, little, if any, trading of 

the stock takes place. There is, therefore, no established 

market for the stock, and those sales that do occur are at 

irregular intervals and seldom reflect all the elements of a 

representative transaction as defined by FMV.

Line 13. Trusts

If you answered “Yes” on either line 13a or line 13b, attach a 

copy of the trust instrument for each trust.

Complete Schedule G if you answered “Yes” on line 13a 

and Schedule F if you answered “Yes” on line 13b.

Line 15. Foreign Accounts

Check “Yes” on line 15 if the decedent at the time of death 

had an interest in or signature or other authority over a 

financial account in a foreign country, such as a bank 

account, securities account, an offshore trust, or other 

financial account.

Part 5—Recapitulation

Gross Estate—Items 1 Through 11

Items 1 through 9. You must make an entry in each of items 

1 through 9.

If the gross estate does not contain any assets of the type 

specified by a given item, enter zero for that item. Entering 

zero for any of items 1 through 9 is a statement by the 

executor, made under penalties of perjury, that the gross 

estate does not contain any includible assets covered by that 

item.

Do not enter any amounts in the “Alternate value” column 

unless you elected alternate valuation on Part 3—Elections 

by the Executor, line 1.

Note. If estimating the value of one or more assets pursuant 

to the special rule of Regulations section 20.2010-2(a)(7)(ii), 

do not enter values for those assets in items 1 through 9. 

Total the estimated values for those assets and follow the 

instructions for item 10.

Which schedules to attach for items 1 through 9. You 

must attach the following.

• Schedule F. Answer its questions even if you report no 

assets on it.

• Schedules A, B, and C, if the gross estate includes any 

(1) Real Estate, (2) Stocks and Bonds, or (3) Mortgages, 

Notes, and Cash, respectively.

• Schedule D, if the gross estate includes any life 

insurance or if you answered “Yes” to question 9a of Part 

4—General Information.

• Schedule E, if the gross estate contains any jointly 

owned property or if you answered “Yes” to question 10 

of Part 4—General Information.

• Schedule G, if the decedent made any of the lifetime 

transfers to be listed on that schedule or if you answered 

“Yes” to question 12 or 13a of Part 4—General 

Information.

• Schedule H, if you answered “Yes” to question 14 of Part 

4—General Information.

• Schedule I, if you answered “Yes” to question 16 of Part 

4—General information.

Item 10. Under Regulations section 20.2010-2(a)(7)(ii), if 

the total value of the gross estate and adjusted taxable gifts 

is less than the basic exclusion amount (see section 6018(a)) 

and Form 706 is being filed only to elect portability of the 

DSUE amount, the estate is not required to report the value 

of certain property eligible for the marital or charitable 

deduction. For this property being reported on Schedules A, 

B, C, D, E, F, G, H, and I, the executor must figure the best 

estimate of the value. Do not include the estimated value on 

the line corresponding to the schedule on which the property 

was reported. Instead, total the estimated value of the assets 

subject to the special rule and enter on item 10 the amount 

from the Table of Estimated Values, later, that corresponds to 

that total.

Note. The special rule does not apply if the valuation of the 

asset is needed to determine the estate's eligibility for the 

provisions of section 2032, 2032A, 2652(a)(3), or 6166, or 

any other provision of the Code or regulations.

Note. As applies to all other values reported on Form 706, 

estimates of the value of property subject to the special rule 

of Regulations section 20.2010-2(a)(7)(ii) must result from 

the executor’s exercise of due diligence and are subject to 

penalties of perjury.

Exclusion—Item 12

Item 12. Conservation easement exclusion. Complete 

and attach Schedule U (along with any required attachments) 

to claim the exclusion on this line.

Deductions—Items 14 Through 23

Items 14 through 22. Attach the appropriate schedules for 

the deductions claimed.

Item 18. If item 17 is less than or equal to the value (at the 

time of the decedent's death) of the property subject to 

claims, enter the amount from item 17 on item 18.

If the amount on item 17 is more than the value of the 

property subject to claims, enter the greater of:

• The value of the property subject to claims, or

• The amount actually paid at the time the return is filed.

In no event should you enter more on item 18 than the 

amount on item 17. See section 2053 and the related 

regulations for more information.

Item 23. Under Regulations section 20.2010-2(a)(7)(ii), if 

the total value of the gross estate and adjusted taxable gifts 

is less than the basic exclusion amount (see section 6018(a)) 

and Form 706 is being filed only to elect portability of the 

DSUE amount, the estate is not required to report the value 

of certain property eligible for the marital or charitable 

deduction. For this property being reported on Schedule M or 

O, enter on item 23 the amount from item 10.

Part 6—Portability of Deceased 

Spousal Unused Exclusion (DSUE)

Section 2010(c)(4) authorizes estates of decedents dying 

after December 31, 2010, to elect to transfer any unused 

exclusion to the surviving spouse. The amount received by 

-18- Instructions for Form 706 (Rev. 09-2023)
Table of Estimated Values

If the total estimated value of the assets 

eligible for the special rule under Reg. 

section 20.2010-2(a)(7)(ii) is more than:

But less than or equal to: Include this amount on lines 10 and 23:

$0 $250,000 $250,000

$250,000 $500,000 $500,000

$500,000 $750,000 $750,000

$750,000 $1,000,000 $1,000,000

$1,000,000 $1,250,000 $1,250,000

$1,250,000 $1,500,000 $1,500,000

$1,500,000 $1,750,000 $1,750,000

$1,750,000 $2,000,000 $2,000,000

$2,000,000 $2,250,000 $2,250,000

$2,250,000 $2,500,000 $2,500,000

$2,500,000 $2,750,000 $2,750,000

$2,750,000 $3,000,000 $3,000,000

$3,000,000 $3,250,000 $3,250,000

$3,250,000 $3,500,000 $3,500,000

$3,500,000 $3,750,000 $3,750,000

$3,750,000 $4,000,000 $4,000,000

$4,000,000 $4,250,000 $4,250,000

$4,250,000 $4,500,000 $4,500,000

$4,500,000 $4,750,000 $4,750,000

$4,750,000 $5,000,000 $5,000,000

$5,000,000 $5,250,000 $5,250,000

$5,250,000 $5,500,000 $5,500,000

$5,500,000 $5,750,000 $5,750,000

$5,750,000 $6,000,000 $6,000,000

$6,000,000 $6,250,000 $6,250,000

$6,250,000 $6,500,000 $6,500,000

$6,500,000 $6,750,000 $6,750,000

$6,750,000 $7,000,000 $7,000,000

$7,000,000 $7,250,000 $7,250,000

$7,250,000 $7,500,000 $7,500,000

$7,500,000 $7,750,000 $7,750,000

$7,750,000 $8,000,000 $8,000,000

$8,000,000 $8,250,000 $8,250,000

$8,250,000 $8,500,000 $8,500,000

$8,500,000 $8,750,000 $8,750,000

$8,750,000 $9,000,000 $9,000,000

$9,000,000 $9,250,000 $9,250,000

$9,250,000 $9,500,000 $9,500,000

$9,500,000 $9,750,000 $9,750,000

$9,750,000 $10,000,000 $10,000,000

$10,000,000 $10,250,000 $10,250,000

$10,250,000 $10,500,000 $10,500,000

$10,500,000 $10,750,000 $10,750,000

$10,750,000 $11,000,000 $11,000,000

Instructions for Form 706 (Rev. 09-2023) -19-
the surviving spouse is called the deceased spousal unused 

exclusion (DSUE) amount. If the executor of the decedent’s 

estate elects transfer, or portability, of the DSUE amount, the 

surviving spouse can apply the DSUE amount received from 

the estate of the surviving spouse’s last deceased spouse 

(defined later) against any tax liability arising from 

subsequent lifetime gifts and transfers at death.

Note. A nonresident surviving spouse who is not a citizen of 

the United States may not take into account the DSUE 

amount of a deceased spouse, except to the extent allowed 

by treaty with the nonresident surviving spouse’s country of 

citizenship.

Last Deceased Spouse Limitation

The last deceased spouse is the most recently deceased 

person who was married to the surviving spouse at the time 

of that person’s death. The identity of the last deceased 

spouse is determined as of the day a taxable gift is made, or 

in the case of a transfer at death, the date of the surviving 

spouse's death. The identity of the last deceased spouse is 

not impacted by whether the decedent's estate elected 

portability or whether the last deceased spouse had any 

DSUE amount available. Remarriage also does not affect the 

designation of the last deceased spouse and does not 

prevent the surviving spouse from applying the DSUE 

amount to taxable transfers.

When a taxable gift is made, the DSUE amount received 

from the last deceased spouse is applied before the surviving 

spouse’s basic exclusion amount. A surviving spouse may 

use the DSUE amount of the last deceased spouse to offset 

the tax on any taxable transfer made after the deceased 

spouse's death. A surviving spouse who has more than one 

predeceased spouse is not precluded from using the DSUE 

amount of each spouse in succession. A surviving spouse 

may not use the sum of DSUE amounts from multiple 

predeceased spouses at one time nor may the DSUE amount 

of a predeceased spouse be applied after the death of a 

subsequent spouse.

Making the Election

A timely filed and complete Form 706 is required to elect 

portability of the DSUE amount to a surviving spouse. The 

filing requirement applies to all estates of decedents 

choosing to elect portability of the DSUE amount, regardless 

of the size of the estate. A timely filed return is one that is 

filed on or before the due date of the return, including 

extensions. See Rev. Proc. 2022-32 (superseding Rev. Proc. 

2017-34) for the simplified procedures for late elections.

The timely filing of a complete Form 706 with DSUE will be 

deemed a portability election if there is a surviving spouse. 

The election is effective as of the decedent’s date of death, 

so the DSUE amount received by a surviving spouse may be 

applied to any transfer occurring after the decedent’s death. 

A portability election is irrevocable, unless an adjustment or 

amendment to the election is made on a subsequent return 

filed on or before the due date.

Note. Under Regulations section 20.2010-2(a)(5), the 

executor of an estate of a nonresident decedent who was not 

a citizen of the United States at the time of death cannot 

make a portability election.

If an executor is appointed, qualified, and acting with the 

United States on behalf of the decedent’s estate, only that 

executor may make or opt out of a portability election. If there 

is no executor, see Regulations section 20.2010-2(a)(6)(ii).

Opting Out

If an estate files a Form 706 but does not wish to make the 

portability election, the executor can opt out of the portability 

election by checking the box indicated in Section A of this 

Part. If no return is required under section 6018(a), not filing 

Form 706 will avoid making the election.

Figuring the DSUE Amount

Regulations section 20.2010-2(b)(1) requires that a 

decedent's DSUE be figured on the estate tax return. The 

DSUE amount is the lesser of (a) the basic exclusion amount 

in effect on the date of death of the decedent whose DSUE is 

being figured, or (b) the decedent's applicable exclusion 

amount less the amount on line 5 of Part 2—Tax Computation 

on the Form 706 for the estate of the decedent. Amounts on 

which gift taxes were paid are excluded from adjusted taxable 

gifts for the purpose of this computation.

When a surviving spouse applies the DSUE amount to a 

lifetime gift or bequest at death, the IRS may examine any 

return of a predeceased spouse whose executor elected 

portability to verify the allowable DSUE amount. The DSUE 

amount may be adjusted or eliminated as a result of the 

examination; however, the IRS may only make an 

assessment of additional tax on the return of the 

predeceased spouse within the applicable limitations period 

under section 6501.

Special Rule Where Value of Certain Property 

Not Required To Be Reported on Form 706

The regulations provide that executors of estates who are not 

otherwise required to file Form 706 under section 6018(a) do 

not have to report the value of certain property qualifying for 

Table of Estimated Values (continued)

If the total estimated value of the assets 

eligible for the special rule under Reg. 

section 20.2010-2(a)(7)(ii) is more than:

But less than or equal to: Include this amount on lines 10 and 23:

$11,000,000 $11,180,000 $11,180,000

$11,180,000 $11,400,000 $11,400,000

$11,400,000 $11,580,000 $11,580,000

$11,580,000 $11,700,000 $11,700,000

$11,700,000 $12,060,000 $12,060,000

$12,060,000 $12,920,000 $12,920,000

-20- Instructions for Form 706 (Rev. 09-2023)
the marital or charitable deduction. For such property, the 

executor may estimate the value in good faith and with the 

due diligence to be afforded all assets includible in the gross 

estate. The amount reported on Form 706 will correspond to 

a range of dollar values and will be included in the value of 

the gross estate shown on Part 2—Tax Computation, line 1. 

See the instructions for Part 5—Recapitulation, items 10 and 

23, earlier, for more details.

Specific Instructions

Portability Election. If you intend to elect portability of the 

DSUE amount, timely filing a complete Form 706 is all that is 

required. Complete Section B if any assets of the estate are 

being transferred to a qualified domestic trust and complete 

Section C of this Part to figure the DSUE amount that will be 

transferred to the surviving spouse.

Section A. Opting Out of Portability. If you are filing Form 

706 and do not wish to elect portability, then check the box 

indicated. Do not complete Section B or C.

Section B. Portability and Qualified Domestic Trusts 

(QDOTs). A QDOT allows the estate of a decedent to 

bequeath property to a surviving spouse who is not a citizen 

of the United States and still receive a marital deduction. 

When property passes to a QDOT, estate tax is imposed 

under section 2056A as distributions are made from the trust. 

When a QDOT is established and there is a DSUE amount, 

the executor of the decedent’s estate will determine a 

preliminary DSUE amount for the purpose of electing 

portability. This amount will decrease as section 2056A 

distributions are made. In estates with a QDOT, the DSUE 

amount generally may not be applied against tax arising from 

lifetime gifts because it will not be available to the surviving 

spouse until it is finally determined, usually upon the death of 

the surviving spouse or when the QDOT is terminated.

Note. If a surviving spouse who is not a citizen of the United 

States becomes a citizen and the section 2056A tax no 

longer applies to the assets of the QDOT, as of the date the 

surviving spouse becomes a U.S. citizen, the DSUE amount 

is considered final and is available for application by the 

surviving spouse. See Regulations sections 20.2010-2(c)(4), 

20.2010-3(c)(3), and 25.2505-2(d)(3).

Check the appropriate box in this section and see the 

instructions for Schedule M if more information is needed 

about QDOT.

Section C. DSUE Amount Portable to Decedent's Surviving Spouse. Complete Section C only if electing portability 

of the DSUE amount to the surviving spouse.

On line 1, enter the decedent’s applicable exclusion 

amount from Part 2—Tax Computation, line 9d. The 

applicable exclusion amount is the sum of the basic exclusion 

amount for the year of death, any DSUE amount received 

from a predeceased spouse, if applicable, and any Restored 

Exclusion Amount.

Line 2 is reserved.

On line 3, enter the value of the cumulative lifetime gifts on 

which gift tax was paid or payable. This amount is figured on 

line 6 of the Line 7 Worksheet, Part B, as the total of Row (r) 

from the Line 7 Worksheet, Part A. Enter the amount as it 

appears on line 6 of the Line 7 Worksheet, Part B.

Figure the unused exclusion amount on line 9. The DSUE 

amount available to the surviving spouse will be the lesser of 

this amount or the basic exclusion amount shown on Part 

2—Tax Computation, line 9a. Enter the DSUE amount as 

determined on line 10.

Section D. DSUE Amount Received From Predeceased 

Spouse(s). Complete Section D if the decedent was a 

surviving spouse who received a DSUE amount from one or 

more predeceased spouses.

Section D requests information on all DSUE amounts 

received from the decedent’s last deceased spouse and any 

previously deceased spouses. Each line in the chart should 

reflect a different predeceased spouse; enter the calendar 

year(s) in column F. In Part 1, provide information on the 

decedent’s last deceased spouse. In Part 2, provide 

information as requested if the decedent had any other 

predeceased spouse whose executor made the portability 

election. Any remaining DSUE amount which was not used 

prior to the death of a subsequent spouse is not considered 

in this calculation and cannot be applied against any taxable 

transfer. In column E, total only the amounts of DSUE 

received and used from spouses who died before the 

decedent’s last deceased spouse. Add this amount to the 

amount from Part 1, column D, if any, to determine the 

decedent’s total DSUE amount.

Schedule A—Real Estate

If any assets to which the special rule of Regulations 

section 20.2010-2(a)(7)(ii) applies are reported on 

this schedule, do not enter any value in the last three 

columns. See the instructions for Part 5—Recapitulation, item 

10, for information on how to estimate and report the value of 

these assets.

CAUTION

!

Instructions for Form 706 (Rev. 09-2023) -21-
Schedule A—Example 1

In this example, alternate valuation is not adopted; the date of death is January 1, 2023.

Item 

number

Description Alternate 

valuation 

date

Alternate 

value

Value at 

date of 

death

1 House and lot, 1921 William Street NW, Washington, DC (lot 6, square 481). Rent of $8,100 due at 

the end of each quarter, February 1, May 1, August 1, and November 1. Value based on appraisal, 

copy of which is attached ........................................... $550,000

Rent due on item 1 for quarter ending November 1, 2022, but not collected at date of death ... 8,100

Rent accrued on item 1 for November and December 2022 ...................... 5,400

2 House and lot, 304 Jefferson Street, Alexandria, VA (lot 18, square 40). Rent of $1,800 payable 

monthly. Value based on appraisal, copy of which is attached ..................... 375,000

Rent due on item 2 for December 2022, but not collected at death .................. 1,800

Schedule A—Example 2

In this example, alternate valuation is adopted; the date of death is January 1, 2023.

Item 

number

Description Alternate 

valuation 

date

Alternate 

value

Value at 

date of 

death

1 House and lot, 1921 William Street NW, Washington, DC (lot 6, square 481). Rent of $8,100 due at 

the end of each quarter, February 1, May 1, August 1, and November 1. Value based on appraisal, 

copy of which is attached. Not disposed of within 6 months of date of death ............. 7/1/23 $535,000 $550,000

Rent due on item 1 for quarter ending November 1, 2022, but not collected until February 1, 

2023 ....................................................... 2/1/23 8,100 8,100

Rent accrued on item 1 for November and December 2022, collected on February 1, 2023 .... 2/1/23 5,400 5,400

2 House and lot, 304 Jefferson Street, Alexandria, VA (lot 18, square 40). Rent of $1,800 payable 

monthly. Value based on appraisal, copy of which is attached. Property exchanged for farm on May 

1, 2023 ..................................................... 5/1/23 369,000 375,000

Rent due on item 2 for December 2022, but not collected until February 1, 2023 .......... 2/1/23 1,800 1,800

If the total gross estate contains any real estate, complete 

Schedule A and file it with the return. On Schedule A, list real 

estate the decedent owned or had contracted to purchase. 

Number each parcel in the left-hand column.

Describe the real estate in enough detail so that the IRS 

can easily locate it for inspection and valuation. For each 

parcel of real estate, report the area and, if the parcel is 

improved, describe the improvements. For city or town 

property, report the street and number, ward, subdivision, 

block and lot, etc. For rural property, report the township, 

range, landmarks, etc.

If any item of real estate is subject to a mortgage for which 

the decedent's estate is liable, that is, if the indebtedness 

may be charged against other property of the estate that is 

not subject to that mortgage, or if the decedent was 

personally liable for that mortgage, you must report the full 

value of the property in the value column. Enter the amount of 

the mortgage under “Description” on this schedule. The 

unpaid amount of the mortgage may be deducted on 

Schedule K.

If the decedent’s estate is not liable for the amount of the 

mortgage, report only the value of the equity of redemption 

(or value of the property less the indebtedness) in the value 

column as part of the gross estate. Do not enter any amount 

less than zero. Do not deduct the amount of indebtedness on 

Schedule K.

Also list on Schedule A real property the decedent 

contracted to purchase. Report the full value of the property 

and not the equity in the value column. Deduct the unpaid 

part of the purchase price on Schedule K.

Report the value of real estate without reducing it for 

homestead or other exemption, or the value of dower, 

curtesy, or a statutory estate created instead of dower or 

curtesy.

Explain how the reported values were determined and 

attach copies of any appraisals.

Schedule A-1—Section 2032A 

Valuation

The election to value certain farm and closely held business 

property at its special-use value is made by checking “Yes” 

on Form 706, Part 3—Elections by the Executor, line 2. 

Schedule A-1 is used to report the additional information that 

must be submitted to support this election. In order to make a 

valid election, you must complete Schedule A-1 and attach 

all of the required statements and appraisals.

For definitions and additional information concerning 

special-use valuation, see section 2032A and the related 

regulations.

Part 1. Type of Election

Estate and GST tax elections. If you elect special-use 

valuation for the estate tax, you must also elect special-use 

valuation for the GST tax and vice versa.

-22- Instructions for Form 706 (Rev. 09-2023)
Protective election. To make the protective election 

described in the separate instructions for Part 3—Elections 

by the Executor, line 2, you must complete the following.

• Check the box in Part 1. Type of Election.

• Enter the decedent's name and SSN in the spaces 

provided at the top of Schedule A-1.

• Complete Part 2. Notice of Election, line 1, and column A 

for lines 3 and 4.

For purposes of the protective election, list on line 3 all of 

the real property that passes to the qualified heirs even 

though some of the property will be shown on line 2 when the 

additional notice of election is subsequently filed.

You don’t need to complete columns B through D of lines 3 

and 4 or any other line entries on Schedule A-1.

Completing Schedule A-1 as described above constitutes 

a Notice of Protective Election as described in Regulations 

section 20.2032A-8(b).

Part 2. Notice of Election

Line 10. Because the special-use valuation election creates 

a potential tax liability for the recapture tax of section 

2032A(c), you must list each person who receives an interest 

in the specially valued property on Schedule A-1. If there are 

more than eight persons who receive interests, use an 

additional sheet that follows the format of line 10. In the 

columns “Fair market value” and “Special-use value,” enter 

the total respective values of all the specially valued property 

interests received by each person.

GST Tax Savings

To figure the additional GST tax due upon disposition (or 

cessation of qualified use) of the property, each “skip person” 

(as defined in the instructions for Schedule R) who receives 

an interest in the specially valued property must know the 

total GST tax savings all interests in specially valued property 

received. The GST tax savings is the difference between the 

total GST tax that was imposed on all interests in specially 

valued property received by the skip person valued at their 

special-use value and the total GST tax that would have been 

imposed on the same interests received by the skip person 

had they been valued at their FMV.

Because the GST tax depends on the executor's 

allocation of the GST exemption and the grandchild 

exclusion, the skip person who receives the interests is 

unable to figure this GST tax savings. Therefore, for each 

skip person who receives an interest in specially valued 

property, you must attach a calculation of the total GST tax 

savings attributable to that person's interests in specially 

valued property.

How to figure the GST tax savings. Before figuring each 

skip person's GST tax savings, complete Schedules R and 

R-1 for the entire estate (using the special-use values).

For each skip person, complete two Schedules R (Parts 2 

and 3 only) as worksheets, one showing the interests in 

specially valued property received by the skip person at their 

special-use value and one showing the same interests at 

their FMV.

If the skip person received interests in specially valued 

property that were shown on Schedule R-1, show these 

interests on the Schedule R, Parts 2 and 3 worksheets, as 

appropriate. Do not use Schedule R-1 as a worksheet.

Completing the special-use value worksheets. On 

Schedule R, Parts 2 and 3, lines 2 through 4 and 6, enter -0-.

Completing the fair market value worksheets.

• Schedule R, Parts 2 and 3, lines 2 and 3, fixed taxes and 

other charges. If valuing the interests at FMV (instead of 

special-use value) causes any of these taxes and 

charges to increase, enter the increased amount (only) 

on these lines and attach an explanation of the increase. 

Otherwise, enter -0-.

• Schedule R, Parts 2 and 3, line 6—GST exemption 

allocation. If you completed Schedule R, Part 1, line 10, 

enter on line 6 the amount shown for the skip person on 

the line 10 special-use allocation schedule you attached 

to Schedule R. If you did not complete Schedule R, Part 

1, line 10, enter -0- on line 6.

Total GST tax savings. For each skip person, subtract the 

tax amount on line 10, Part 2, of the special-use value 

worksheet from the tax amount on line 10, Part 2, of the fair 

market value worksheet. This difference is the skip person's 

total GST tax savings.

Part 3. Agreement to Special Valuation Under 

Section 2032A

The agreement to special valuation is required under 

sections 2032A(a)(1)(B) and (d)(2) and must be signed by all 

parties who have any interest in the property being valued 

based on its qualified use as of the date of the decedent's 

death.

An interest in property is an interest that, as of the date of 

the decedent's death, can be asserted under applicable law 

so as to affect the disposition of the specially valued property 

by the estate. Any person who at the decedent's death has 

any such interest in the property, whether present, future, 

vested, or contingent, must enter into the agreement. 

Included are the following.

• Owners of remainder and executory interests;

• Holders of general or special powers of appointment;

• Beneficiaries of a gift over in default of exercise of any 

such power;

• Joint tenants and holders of similar undivided interests 

when the decedent held only a joint or undivided interest 

in the property or when only an undivided interest is 

specially valued; and

• Trustees of trusts and representatives of other entities 

holding title to or any interests in the property.

An heir who has the power under local law to challenge a will 

and thereby affect disposition of the property is not, however, 

considered to be a person with an interest in property under 

section 2032A solely by reason of that right. Likewise, 

creditors of an estate are not such persons solely by reason 

of their status as creditors.

If persons required to enter into the agreement desire that 

an agent act for them or cannot legally bind themselves due 

to infancy or other incompetency, or due to death before the 

election under section 2032A is timely exercised, a 

representative authorized by local law to bind persons in 

agreements of this nature may sign the agreement on the 

person’s behalf.

The IRS will contact the agent designated in the 

agreement on all matters relating to continued qualification 

under section 2032A of the specially valued real property and 

on all matters relating to the special lien arising under section 

6324B. It is the duty of the agent as attorney-in-fact for the 

parties with interests in the specially valued property to 

furnish the IRS with any requested information and to notify 

Instructions for Form 706 (Rev. 09-2023) -23-
the IRS of any disposition or cessation of qualified use of any 

part of the property.

Checklist for Section 2032A Election

When making the special-use valuation election on 

Schedule A-1, please use this checklist to ensure 

that you are providing everything necessary to make 

a valid election.

To have a valid special-use valuation election under 

section 2032A, you must file, in addition to the federal estate 

tax return, (a) a notice of election (Schedule A-1, Part 2), and 

(b) a fully executed agreement (Schedule A-1, Part 3). You 

must include certain information in the notice of election. To 

ensure that the notice of election includes all of the 

information required for a valid election, use the following 

checklist. The checklist is for your use only. Do not file it with 

the return.

Does the notice of election include the decedent's 

name and SSN as they appear on the estate tax 

return?

Does the notice of election include the relevant 

qualified use of the property to be specially valued?

Does the notice of election describe the items of 

real property shown on the estate tax return that are 

to be specially valued and identify the property by 

the Form 706 schedule and item number?

Does the notice of election include the FMV of the 

real property to be specially valued and also include 

its value based on the qualified use (determined 

without the adjustments provided in section 

2032A(b)(3)(B))?

Does the notice of election include the adjusted 

value (as defined in section 2032A(b)(3)(B)) of (a) 

all real property that both passes from the decedent 

and is used in a qualified use, without regard to 

whether it is to be specially valued; and (b) all real 

property to be specially valued?

Does the notice of election include (a) the items of 

personal property shown on the estate tax return 

that pass from the decedent to a qualified heir, and 

that are used in qualified use; and (b) the total value 

of such personal property adjusted under section 

2032A(b)(3)(B)?

Does the notice of election include the adjusted 

value of the gross estate? (See section 2032A(b)(3)

(A).)

Does the notice of election include the method used 

to determine the special-use value?

Does the notice of election include copies of written 

appraisals of the FMV of the real property?

CAUTION

!

Does the notice of election include a statement that 

the decedent and/or a member of the decedent’s 

family has owned all of the specially valued property 

for at least 5 years of the 8 years immediately 

preceding the date of the decedent's death?

Does the notice of election include a statement as to 

whether there were any periods during the 8-year 

period preceding the decedent's date of death 

during which the decedent or a member of the 

decedent’s family did not (a) own the property to be 

specially valued, (b) use it in a qualified use, or (c) 

materially participate in the operation of the farm or 

other business? (See section 2032A(e)(6).)

Does the notice of election include, for each item of 

specially valued property, the name of every person 

who has an interest in that item of specially valued 

property and the following information about each 

such person: (a) the person's address, (b) the 

person's TIN, (c) the person's relationship to the 

decedent, and (d) the value of the property interest 

passing to that person based on both FMV and 

qualified use?

Does the notice of election include affidavits 

describing the activities constituting material 

participation and the identities of the material 

participants?

Does the notice of election include a legal 

description of each item of specially valued 

property? (Note. The legal description must be the 

complete legal description of the property. An 

abbreviated description is not sufficient.)

(In the case of an election made for qualified woodlands, 

the information included in the notice of election must 

include the reason for entitlement to the woodlands 

election.)

Any election made under section 2032A will not be valid 

unless a properly executed agreement (Schedule A-1, Part 3) 

is filed with the estate tax return. To ensure that the 

agreement satisfies the requirements for a valid election, use 

the following checklist. The checklist is for your use only. Do 

not file it with the return.

Has the agreement been signed by each qualified 

heir having an interest in the property being 

specially valued?

Has every qualified heir expressed consent to 

personal liability under section 2032A(c) in the 

event of an early disposition or early cessation of 

qualified use?

-24- Instructions for Form 706 (Rev. 09-2023)
Is the agreement that is actually signed by the 

qualified heirs in a form that is binding on all of the 

qualified heirs having an interest in the specially 

valued property?

Does the agreement designate an agent to act for 

the parties to the agreement in all dealings with the 

IRS on matters arising under section 2032A?

Has the agreement been signed by the designated 

agent and does it give the address of the agent?

Schedule B—Stocks and Bonds

If any assets to which the special rule of Regulations 

section 20.2010-2(a)(7)(ii) applies are reported on 

this schedule, do not enter any value in the last three 

columns. See the instructions for Part 5—Recapitulation, item 

10, for information on how to estimate and report the value of 

these assets.

Before completing Schedule B, see the examples 

illustrating the alternate valuation dates being 

adopted and not being adopted, later.

If the total gross estate contains any stocks or bonds, you 

must complete Schedule B and file it with the return.

On Schedule B, list the stocks and bonds included in the 

decedent's gross estate. Number each item in the left-hand 

column.

Note. Unless specifically exempted by an estate tax 

provision of the Code, bonds that are exempt from federal 

income tax are not exempt from estate tax. You should list 

these bonds on Schedule B.

Public housing bonds includible in the gross estate must 

be included at their full value.

If you paid any estate, inheritance, legacy, or succession 

tax to a foreign country on any stocks or bonds included in 

this schedule, group those stocks and bonds together and 

label them “Subjected to Foreign Death Taxes.”

List interest and dividends on each stock or bond on a 

separate line.

Indicate as a separate item dividends that have not been 

collected at death and are payable to the decedent or the 

estate because the decedent was a stockholder of record on 

the date of death. However, if the stock is being traded on an 

exchange and is selling ex-dividend on the date of the 

decedent's death, do not include the amount of the dividend 

as a separate item. Instead, add it to the ex-dividend 

quotation in determining the FMV of the stock on the date of 

the decedent's death. Dividends declared on shares of stock 

before the death of the decedent but payable to stockholders 

of record on a date after the decedent's death are not 

includible in the gross estate for federal estate tax purposes 

and should not be listed here.

Description

Stocks. For stocks, indicate:

• Number of shares;

• Whether common or preferred;

CAUTION

!

TIP

• Issue;

• Par value where needed for identification;

• Price per share;

• Exact name of corporation;

• Principal exchange upon which sold, if listed on an 

exchange; and

• Nine-digit CUSIP number (defined later).

Bonds. For bonds, indicate:

• Quantity and denomination;

• Name of obligor;

• Date of maturity;

• Interest rate;

• Interest due date;

• Principal exchange, if listed on an exchange; and

• Nine-digit CUSIP number.

If the stock or bond is unlisted, show the company's 

principal business office.

If the gross estate includes any interest in a trust, 

partnership, or closely held entity, provide the EIN of the 

entity in the description column on Schedules B, E, F, G, M, 

and O. You must also provide the EIN of an estate (if any) in 

the description column on the above-noted schedules, where 

applicable.

CUSIP number. The CUSIP (Committee on Uniform 

Security Identification Procedures) number is a nine-digit 

number that is assigned to all stocks and bonds traded on 

major exchanges and many unlisted securities. Usually, the 

CUSIP number is printed on the face of the stock certificate. 

If you do not have a stock certificate, the CUSIP may be 

found on the broker's or custodian's statement or by 

contacting the company's transfer agent.

Valuation

List the FMV of the stocks or bonds. The FMV of a stock or 

bond (whether listed or unlisted) is the mean between the 

highest and lowest selling prices quoted on the valuation 

date. If only the closing selling prices are available, then the 

FMV is the mean between the quoted closing selling price on 

the valuation date and on the trading day before the valuation 

date.

If there were no sales on the valuation date, figure the 

FMV as follows.

1. Find the mean between the highest and lowest selling 

prices on the nearest trading date before and the nearest 

trading date after the valuation date. Both trading dates 

must be reasonably close to the valuation date.

2. Prorate the difference between the mean prices to the 

valuation date.

3. Add or subtract (whichever applies) the prorated part of 

the difference to or from the mean price figured for the 

nearest trading date before the valuation date.

If no actual sales were made reasonably close to the 

valuation date, make the same computation using the mean 

between the bona fide bid and asked prices instead of sales 

prices. If actual sales prices or bona fide bid and asked 

prices are available within a reasonable period of time before 

the valuation date but not after the valuation date, or vice 

versa, use the mean between the highest and lowest sales 

prices or bid and asked prices as the FMV.

For example, assume that sales of stock nearest the 

valuation date (June 15) occurred 2 trading days before 

Instructions for Form 706 (Rev. 09-2023) -25-
(June 13) and 3 trading days after (June 18). On those days, 

the mean sale prices per share were $10 and $15, 

respectively. Therefore, the price of $12 is considered the 

FMV of a share of stock on the valuation date. If, however, on 

June 13 and 18, the mean sale prices per share were $15 

and $10, respectively, the FMV of a share of stock on the 

valuation date is $13.

If only closing prices for bonds are available, see 

Regulations section 20.2031-2(b).

Apply the rules in the section 2031 regulations to 

determine the value of inactive stock and stock in close 

corporations. Attach to Schedule B complete financial and 

other data used to determine value, including balance sheets 

(particularly the one nearest to the valuation date) and 

statements of the net earnings or operating results and 

dividends paid for each of the 5 years immediately before the 

valuation date.

Securities reported as of no value, of nominal value, or 

obsolete should be listed last. Include the address of the 

company and the state and date of incorporation. Attach 

copies of correspondence or statements used to determine 

the “no value.”

If the security was listed on more than one stock 

exchange, use either the records of the exchange where the 

security is principally traded or the composite listing of 

combined exchanges, if available, in a publication of general 

circulation. In valuing listed stocks and bonds, you should 

carefully check accurate records to obtain values for the 

applicable valuation date.

If you get quotations from brokers, or evidence of the sale 

of securities from the officers of the issuing companies, 

Schedule B Examples

Example showing use of Schedule B where the alternate valuation is not adopted; date of death, January 1, 2023.

Item 

number

Description, including face amount of bonds or number of shares and par value 

where needed for identification. Give CUSIP number. If trust, partnership, or 

closely held entity, give EIN.

Unit value Alternate 

valuation 

date

Alternate 

value

Value at 

date of 

death

CUSIP number or 

EIN, where 

applicable

1 $60,000—Arkansas Railroad Co. first mortgage 4%, 20-year 

bonds, due 2024. Interest payable quarterly on Feb. 1, May 1, 

Aug. 1, and Nov. 1; N.Y. Exchange ................. XXXXXXXXX 100 - - - - - - - $- - - - - - - $ 60,000

Interest coupons attached to bonds, item 1, due and payable on 

Nov. 1, 2022, but not cashed at date of death ........... - - - - - - - - - - - - - - - - - - - - - 600

Interest accrued on item 1, from Nov. 1, 2022, to Jan. 1, 

2023 ................................... - - - - - - - - - - - - - - - - - - - - - 400

2 500 shares Public Service Corp., common; N.Y. Exchange . . XXXXXXXXX 110 - - - - - - - - - - - - - - 55,000

Dividend on item 2 of $2 per share declared Dec. 10, 2022, 

payable on Jan. 9, 2023, to holders of record on Dec. 30, 

2022 ................................... - - - - - - - - - - - - - - - - - - - - - 1,000

Example showing use of Schedule B where the alternate valuation is adopted; date of death, January 1, 2023.

Item 

number

Description, including face amount of bonds or number of shares and par value 

where needed for identification. Give CUSIP number. If trust, partnership, or 

closely held entity, give EIN.

Unit value Alternate 

valuation 

date

Alternate 

value

Value at 

date of 

death

CUSIP number or 

EIN, where 

applicable

1 $60,000—Arkansas Railroad Co. first mortgage 4%, 20-year 

bonds, due 2024. Interest payable quarterly on Feb. 1, May 1, 

Aug. 1, and Nov. 1; N.Y. Exchange ................. XXXXXXXXX 100 - - - - - - $- - - - - - $ 60,000

$30,000 of item 1 distributed to legatees on Apr. 1, 2023 .... 99 4/1/23 29,700 - - - - - - 

$30,000 of item 1 sold by executor on May 1, 2023 ....... 98 5/1/23 29,400 - - - - - - 

Interest coupons attached to bonds, item 1, due and payable on 

Nov. 1, 2022, but not cashed at date of death. Cashed by executor 

on Feb. 2, 2023 ............................ - - - - - - 2/2/23 600 600

Interest accrued on item 1, from Nov. 1, 2022, to Jan. 1, 2023. 

Cashed by executor on Feb. 2, 2023 ................ - - - - - - 2/2/23 400 400

2 500 shares Public Service Corp., common; N.Y. Exchange ... XXXXXXXXX 110 - - - - - - - - - - - - 55,000

Not disposed of within 6 months following death ......... 90 7/1/23 45,000 - - - - - - 

Dividend on item 2 of $2 per share declared Dec. 10, 2022, paid 

on Jan. 9, 2023, to holders of record on Dec. 30, 2022 ..... - - - - - - 1/9/23 1,000 1,000

-26- Instructions for Form 706 (Rev. 09-2023)
attach to the schedule copies of the letters furnishing these 

quotations or evidence of sale.

Schedule C—Mortgages, Notes, and 

Cash

If any assets to which the special rule of Regulations 

section 20.2010-2(a)(7)(ii) applies are reported on 

this schedule, do not enter any value in the last three 

columns. See the instructions for Part 5—Recapitulation, item 

10, for information on how to estimate and report the value of 

these assets.

Complete Schedule C and file it with your return if the total 

gross estate contains any:

• Mortgages,

• Notes, or

• Cash.

List on Schedule C:

• Mortgages and notes payable to the decedent at the 

time of death, and

• Cash the decedent had at the date of death.

Note. Do not list mortgages and notes payable by the 

decedent on Schedule C. (If these are deductible, list them 

on Schedule K.)

Schedule C reporting order. List the items on Schedule C 

in the following order.

1. Mortgages.

2. Promissory notes.

3. Contracts by decedent to sell land.

4. Cash in possession.

5. Cash in banks, savings and loan associations, and other 

types of financial organizations.

Description

Mortgages. For mortgages, list:

• Face value,

• Unpaid balance,

• Date of mortgage,

• Name of maker,

• Property mortgaged,

• Date of maturity,

• Interest rate, and

• Interest date.

Mortgage description example. “Bond and mortgage of 

$50,000, unpaid balance: $17,000; dated: January 1, 1992; 

J. Doe to R. Roe; premises: 22 Clinton Street, Newark, NJ; 

due: January 1, 2023; interest payable at 10% a 

year—January 1 and July 1.”

Promissory notes. For promissory notes, list in the same 

way as mortgages.

Contracts by the decedent to sell land. For contracts by 

the decedent to sell land, list:

• Name of purchaser,

• Contract date,

• Property description,

• Sale price,

• Initial payment,

• Amounts of installment payment,

• Unpaid balance of principal, and

CAUTION

!

• Interest rate.

Cash in possession. For cash on hand, list such cash 

separately from bank deposits.

Cash in financial organizations. For cash in banks, 

savings and loan associations, and other types of financial 

organizations, list:

• Name and address of each financial organization;

• Amount in each account;

• Serial or account number;

• Nature of account—checking, savings, time deposit, etc.; 

and

• Unpaid interest accrued from date of last interest 

payment to the date of death.

Note. If you obtain statements from the financial 

organizations, keep them for IRS inspection.

Schedule D—Insurance on the 

Decedent's Life

If any assets to which the special rule of Regulations 

section 20.2010-2(a)(7)(ii) applies are reported on 

this schedule, do not enter any value in the last three 

columns. See the instructions for Part 5—Recapitulation, item 

10, for information on how to estimate and report the value of 

these assets.

If you are required to file Form 706 and there was any 

insurance on the decedent's life, whether or not included in 

the gross estate, you must complete Schedule D and file it 

with the return.

Insurance you must include on Schedule D. Under 

section 2042, you must include in the gross estate:

• Insurance on the decedent's life receivable by or for the 

benefit of the estate; and

• Insurance on the decedent's life receivable by 

beneficiaries other than the estate, as described below.

The term “insurance” refers to life insurance of every 

description, including death benefits paid by fraternal 

beneficiary societies operating under the lodge system, and 

death benefits paid under no-fault automobile insurance 

policies if the no-fault insurer was unconditionally bound to 

pay the benefit in the event of the insured's death.

Insurance in favor of the estate. Include on Schedule D 

the full amount of the proceeds of insurance on the life of the 

decedent receivable by the executor or otherwise payable to 

or for the benefit of the estate. Insurance in favor of the estate 

includes insurance used to pay the estate tax, and any other 

taxes, debts, or charges that are enforceable against the 

estate. The manner in which the policy is drawn is immaterial 

as long as there is an obligation, legally binding on the 

beneficiary, to use the proceeds to pay taxes, debts, or 

charges. You must include the full amount even though the 

premiums or other consideration may have been paid by a 

person other than the decedent.

Insurance receivable by beneficiaries other than the estate. Include on Schedule D the proceeds of all insurance on 

the life of the decedent not receivable by, or for the benefit of, 

the decedent's estate if the decedent possessed at death 

any of the following incidents of ownership, exercisable either 

alone or in conjunction with any person or entity.

Incidents of ownership in a policy include the following.

• The right of the insured or estate to its economic benefits.

CAUTION

!

Instructions for Form 706 (Rev. 09-2023) -27-
• The power to change the beneficiary.

• The power to surrender or cancel the policy.

• The power to assign the policy or to revoke an 

assignment.

• The power to pledge the policy for a loan.

• The power to obtain from the insurer a loan against the 

surrender value of the policy.

• A reversionary interest if the value of the reversionary 

interest was more than 5% of the value of the policy 

immediately before the decedent died. (An interest in an 

insurance policy is considered a reversionary interest if, 

for example, the proceeds become payable to the 

insured's estate or payable as the insured directs if the 

beneficiary dies before the insured.)

Life insurance not includible in the gross estate under 

section 2042 may be includible under some other section of 

the Code. For example, a life insurance policy could be 

transferred by the decedent in such a way that it would be 

includible in the gross estate under section 2036, 2037, or 

2038. See the instructions for Schedule G for a description of 

these sections.

Completing the Schedule

You must list every insurance policy on the life of the 

decedent, whether or not it is included in the gross estate.

Under “Description,” list:

• The name of the insurance company, and

• The number of the policy.

For every life insurance policy listed on the schedule, 

request a statement on Form 712 from the company that 

issued the policy. Attach the Form 712 to Schedule D.

Note. If the insurance company that issued the policy will not 

provide Form 712, you should attach evidence that verifies 

the amount includible on Schedule D, including but not 

limited to an attachment, rider, assignment, copy of insurance 

proceeds check, and other relevant material.

If the policy proceeds are paid in one sum, enter the net 

proceeds received (from Form 712, line 24) in the value (and 

alternate value) columns of Schedule D. If the policy 

proceeds are not paid in one sum, enter the value of the 

proceeds as of the date of the decedent's death (from Form 

712, line 25).

If part or all of the policy proceeds are not included in the 

gross estate, explain why they were not included.

Schedule E—Jointly Owned Property

If any assets to which the special rule of Regulations 

section 20.2010-2(a)(7)(ii) applies are reported on 

this schedule, do not enter any value in the last three 

columns. See the instructions for Part 5—Recapitulation, item 

10, for information on how to estimate and report the value of 

these assets.

If you are required to file Form 706, complete Schedule E 

and file it with the return if the decedent owned any joint 

property at the time of death, whether or not the decedent's 

interest is includible in the gross estate.

Enter on this schedule all property of whatever kind or 

character, whether real estate, personal property, or bank 

accounts, in which the decedent held at the time of death an 

interest either as a joint tenant with right to survivorship or as 

a tenant by the entirety.

CAUTION

!

Do not list on this schedule property that the decedent 

held as a tenant in common, but report the value of the 

interest on Schedule A if real estate, or on the appropriate 

schedule if personal property. Similarly, community property 

held by the decedent and spouse should be reported on the 

appropriate Schedules A through I. The decedent's interest in 

a partnership should not be entered on this schedule unless 

the partnership interest itself is jointly owned. Solely owned 

partnership interests should be reported on Schedule F.

Part 1. Qualified joint interests held by decedent and 

spouse. Under section 2040(b)(2), a joint interest is a 

qualified joint interest if the decedent and the surviving 

spouse held the interest as:

• Tenants by the entirety, or

• Joint tenants with right of survivorship if the decedent 

and the decedent's spouse are the only joint tenants.

Interests that meet either of the two requirements above 

should be entered in Part 1. Joint interests that do not meet 

either of the two requirements above should be entered in 

Part 2.

Under “Description,” describe the property as required in 

the instructions for Schedules A, B, C, and F for the type of 

property involved. For example, jointly held stocks and bonds 

should be described using the rules given in the instructions 

for Schedule B.

Under “Alternate value” and “Value at date of death,” enter 

the full value of the property.

Note. You cannot claim the special treatment under section 

2040(b) for property held jointly by a decedent and a 

surviving spouse who is not a U.S. citizen. Report these joint 

interests on Part 2 of Schedule E, not Part 1.

Part 2. All other joint interests. All joint interests that were 

not entered in Part 1 must be entered in Part 2.

For each item of property, enter the appropriate letter A, B, 

C, etc., from line 2a to indicate the name and address of the 

surviving co-tenant.

Under “Description,” describe the property as required in 

the instructions for Schedules A, B, C, and F for the type of 

property involved.

In the “Percentage includible” column, enter the 

percentage of the total value of the property included in the 

gross estate.

Generally, you must include the full value of the jointly 

owned property in the gross estate. However, the full value 

should not be included if you can show that a part of the 

property originally belonged to the other tenant(s) and was 

never received or acquired by the other tenant(s) from the 

decedent for less than adequate and full consideration in 

money or money's worth. Full value of jointly owned property 

also does not have to be included in the gross estate if you 

can show that any part of the property was acquired with 

consideration originally belonging to the surviving joint 

tenant(s). In this case, you may exclude from the value of the 

property an amount proportionate to the consideration 

furnished by the other tenant(s). Relinquishing or promising 

to relinquish dower, curtesy, or statutory estate created 

instead of dower or curtesy, or other marital rights in the 

decedent's property or estate is not consideration in money 

or money's worth. See the Schedule A instructions for the 

value to show for real property that is subject to a mortgage.

If the property was acquired by the decedent and another 

person or persons by gift, bequest, devise, or inheritance as 

-28- Instructions for Form 706 (Rev. 09-2023)
joint tenants, and their interests are not otherwise specified 

by law, include only that part of the value of the property that 

is figured by dividing the full value of the property by the 

number of joint tenants.

If you believe that less than the full value of the entire 

property is includible in the gross estate for tax purposes, you 

must establish the right to include the smaller value by 

attaching proof of the extent, origin, and nature of the 

decedent's interest and the interest(s) of the decedent's 

co-tenant(s).

In the “Includible alternate value” and “Includible value at 

date of death” columns, enter only the values that you believe 

are includible in the gross estate.

Schedule F—Other Miscellaneous 

Property

If any assets to which the special rule of Regulations 

section 20.2010-2(a)(7)(ii) applies are reported on 

this schedule, do not enter any value in the last three 

columns. See the instructions for Part 5—Recapitulation, item 

10, for information on how to estimate and report the value of 

these assets.

You must complete Schedule F and file it with the return. On Schedule F, list all items that must be included in 

the gross estate that are not reported on any other schedule, 

including:

• Debts due the decedent (other than notes and 

mortgages included on Schedule C);

• Interests in business;

• Any interest in an Archer medical savings account (MSA) 

or health savings account (HSA), unless such interest 

passes to the surviving spouse;

• Insurance on the life of another (obtain and attach Form 

712, for each policy) (see Note below);

• Section 2044 property (see Decedent Who Was a 

Surviving Spouse, later);

• Claims (including the value of the decedent's interest in a 

claim for refund of income taxes or the amount of the 

refund actually received);

• Rights;

• Digital assets are any digital representations of value that 

are recorded on a cryptographically secured distributed 

ledger or any similar technology. For example, digital 

assets include non-fungible tokens (NFTs) and virtual 

currencies, such as cryptocurrencies and stablecoins. If 

a particular asset has the characteristics of a digital 

asset, it will be treated as a digital asset for federal 

transfer tax purposes;

• Royalties;

• Leaseholds;

• Judgments;

• Reversionary or remainder interests;

• Shares in trust funds (attach a copy of the trust 

instrument);

• Household goods and personal effects, including 

wearing apparel;

• Farm products and growing crops;

• Livestock;

• Farm machinery; and

• Automobiles.

Note (for single premium or paid-up policies). In certain 

situations (for example, where the surrender value of the 

CAUTION

!

policy exceeds its replacement cost), the true economic 

value of the policy will be greater than the amount shown on 

Form 712, line 59. In these situations, report the full 

economic value of the policy on Schedule F. See Rev. Rul. 

78-137, 1978-1 C.B. 280, for details.

Interests. If the decedent owned any interest in a 

partnership or unincorporated business, attach a statement 

of assets and liabilities for the valuation date and for the 5 

years before the valuation date. Also, attach statements of 

the net earnings for the same 5 years. Be sure to include the 

EIN of the entity. You must account for goodwill in the 

valuation. In general, furnish the same information and follow 

the methods used to value close corporations. See the 

instructions for Schedule B.

All partnership interests should be reported on Schedule F 

unless the partnership interest is jointly owned. Jointly owned 

partnership interests should be reported on Schedule E.

If real estate is owned by a sole proprietorship, it should be 

reported on Schedule F and not on Schedule A. Describe the 

real estate with the same detail required for Schedule A.

Valuation discounts. If you answered “Yes” to Part 

4—General Information, line 11b, for any interest in a 

partnership, an unincorporated business, an LLC, or stock in 

a closely held corporation, attach a statement that lists the 

item number from Schedule F and identifies the total effective 

discount taken (that is, XX.XX%) on such interest.

Example of effective discount:

a Pro-rata value of LLC (before any discounts) $100.00

b Minus: 10% discounts for lack of control (10.00)

c Marketable minority interest value (as if freely traded 

minority interest value) $90.00

d Minus: 15% discount for lack of marketability (13.50)

e Nonmarketable minority interest value $76.50

Calculation of effective discount:

(a minus e) divided by a = effective discount

($100.00 - $76.50) ÷ $100.00 = 23.50%

Note. The amount of discounts are based on the factors 

pertaining to a specific interest and those discounts shown in 

the example are for demonstration purposes only.

If you answered “Yes” to Part 4—General Information, 

line 11b, for any transfer(s) described in (1) through (5) in the 

Schedule G instructions (and made by the decedent), attach 

a statement to Schedule G which lists the item number 

from that schedule and identifies the total effective discount 

taken (that is, XX.XX%) on such transfer(s).

Line 1. If the decedent owned at the date of death works of 

art or items with collectible value (for example, jewelry, furs, 

silverware, books, statuary, vases, oriental rugs, coin or 

stamp collections), check the “Yes” box on line 1 and provide 

full details. If any item or collection of similar items is valued 

at more than $3,000, attach an appraisal by an expert under 

oath and the required statement regarding the appraiser's 

qualifications (see Regulations section 20.2031-6(b)).

Instructions for Form 706 (Rev. 09-2023) -29-
Decedent Who Was a Surviving Spouse

If the decedent was a surviving spouse, the decedent may 

have received qualified terminable interest property (QTIP) 

from the predeceased spouse for which the marital deduction 

was elected either on the predeceased spouse's estate tax 

return or on a gift tax return, Form 709. The election is 

available for transfers made and decedents dying after 

December 31, 1981. List such property on Schedule F.

If this election was made and the surviving spouse 

retained interest in the QTIP property at death, the full value 

of the QTIP property is includible in the estate, even though 

the qualifying income interest terminated at death. It is valued 

as of the date of the surviving spouse's death, or alternate 

valuation date, if applicable. Do not reduce the value by any 

annual exclusion that may have applied to the transfer 

creating the interest.

The value of such property included in the surviving 

spouse's gross estate is treated as passing from the 

surviving spouse. It therefore qualifies for the charitable and 

marital deductions on the surviving spouse's estate tax return 

if it meets the other requirements for those deductions.

For additional details, see Regulations section 20.2044-1.

Schedule G—Transfers During 

Decedent's Life

If any assets to which the special rule of Regulations 

section 20.2010-2(a)(7)(ii) applies are reported on 

this schedule, do not enter any value in the last three 

columns. See the instructions for Part 5—Recapitulation, item 

10, for information on how to estimate and report the value of 

these assets.

Complete Schedule G and file it with the return if the 

decedent made any of the transfers described in (1) through 

(5) later, or if you answered “Yes” to question 12 or 13a of 

Part 4—General Information.

Report the following types of transfers on this schedule.

IF. . . AND . . . THEN . . .

the decedent made a 

transfer from a trust

at the time of the 

transfer, the transfer 

was from a portion of 

the trust that was 

owned by the grantor 

under section 676 

(other than by reason 

of section 672(e)) by 

reason of a power in 

the grantor

for purposes of 

sections 2035 and 

2038, treat the transfer 

as made directly by the 

decedent. Any such 

transfer within the 

annual gift tax 

exclusion is not 

includible in the gross 

estate.

1. Certain gift taxes (section 2035(b)). Enter on item A 

of Schedule G the total value of the gift taxes that were 

paid by the decedent or the estate on gifts made by the 

decedent or the decedent's spouse within 3 years of 

death.

The date of the gift, not the date of payment of the gift 

tax, determines whether a gift tax paid is included in the 

gross estate under this rule. Therefore, you should 

carefully examine the Forms 709 filed by the decedent 

and the decedent's spouse to determine what part of the 

total gift taxes reported on them was attributable to gifts 

made within 3 years of death.

CAUTION

!

For example, if the decedent died on July 10, 2023, 

you should examine gift tax returns for 2023, 2022, 2021, 

and 2020. However, the gift taxes on the 2020 return that 

are attributable to gifts made on or before July 10, 2020, 

are not included in the gross estate.

Explain how you figured the includible gift taxes if the 

entire gift taxes shown on any Form 709 filed for gifts 

made within 3 years of death are not included in the 

gross estate. Also attach copies of any relevant gift tax 

returns filed by the decedent's spouse, with "Exhibit to 

Estate Tax Return" entered across the top of the first 

page of each, for gifts made within 3 years of death.

2. Other transfers within 3 years of death (section 

2035(a)). These transfers include only the following.

• Any transfer by the decedent with respect to a life 

insurance policy within 3 years of death.

• Any transfer within 3 years of death of a retained 

section 2036 life estate, section 2037 reversionary 

interest, or section 2038 power to revoke, etc., if the 

property subject to the life estate, interest, or power 

would have been included in the gross estate had 

the decedent continued to possess the life estate, 

interest, or power until death.

These transfers are reported on Schedule G, 

regardless of whether a gift tax return was required to be 

filed for them when they were made. However, the 

amount includible and the information required to be 

shown for the transfers are determined:

• For insurance on the life of the decedent using the 

instructions for Schedule D (attach Form 712);

• For insurance on the life of another using the 

instructions for Schedule F (attach Form 712); and

• For sections 2036, 2037, and 2038 transfers, using 

paragraphs (3), (4), and (5) of these instructions.

3. Transfers with retained life estate (section 2036).

These are transfers by the decedent in which the 

decedent retained an interest in the transferred property. 

The transfer can be in trust or otherwise, but excludes 

bona fide sales for adequate and full consideration.

Interests or rights. Section 2036 applies to the 

following retained interests or rights.

• The right to income from the transferred property.

• The right to the possession or enjoyment of the 

property.

• The right, either alone or with any person, to 

designate the persons who shall receive the income 

from, possess, or enjoy, the property.

Retained annuity, unitrust, and other income 

interests in trusts. If a decedent transferred property 

into a trust and retained or reserved the right to use the 

property, or the right to an annuity, unitrust, or other 

interest in such trust for the property for the decedent's 

life, any period not ascertainable without reference to the 

decedent's death, or for a period that does not, in fact, 

end before the decedent's death, then the decedent's 

right to use the property or the retained annuity, unitrust, 

or other interest (whether payable from income and/or 

principal) is the retention of the possession or enjoyment 

of, or the right to the income from, the property for 

purposes of section 2036. See Regulations section 

20.2036-1(c)(2).

Retained voting rights. Transfers with a retained life 

estate also include transfers of stock in a controlled 

corporation made after June 22, 1976, if the decedent 

-30- Instructions for Form 706 (Rev. 09-2023)
retained or acquired voting rights in the stock. If the 

decedent retained direct or indirect voting rights in a 

controlled corporation, the decedent is considered to 

have retained enjoyment of the transferred property. A 

corporation is a controlled corporation if the decedent 

owned (actually or constructively) or had the right (either 

alone or with any other person) to vote at least 20% of 

the total combined voting power of all classes of stock. 

See section 2036(b)(2). If these voting rights ceased or 

were relinquished within 3 years of the decedent's death, 

the corporate interests are included in the gross estate 

as if the decedent had actually retained the voting rights 

until death.

The amount includible in the gross estate is the value 

of the transferred property at the time of the decedent's 

death. If the decedent kept or reserved an interest or 

right to only a part of the transferred property, the amount 

includible in the gross estate is a corresponding part of 

the entire value of the property.

A retained life estate does not have to be legally 

enforceable. What matters is that a substantial economic 

benefit was retained. For example, if a parent transferred 

the home title to one’s child, but with the informal 

understanding that the parent was to continue living 

there until the parent’s death, the value of the home 

would be includible in the parent’s estate even if the 

agreement would not have been legally enforceable.

4. Transfers taking effect at death (section 2037). A 

transfer that takes effect at the decedent's death is one 

under which possession or enjoyment can be obtained 

only by surviving the decedent. A transfer is not treated 

as one that takes effect at the decedent's death unless 

the decedent retained a reversionary interest (defined 

later) in the property that immediately before the 

decedent's death had a value of more than 5% of the 

value of the transferred property. If the transfer was made 

before October 8, 1949, the reversionary interest must 

have arisen by the express terms of the instrument of 

transfer.

A reversionary interest is, generally, any right under 

which the transferred property will or may be returned to 

the decedent or the decedent's estate. It also includes 

the possibility that the transferred property may become 

subject to a power of disposition by the decedent. It does 

not matter if the right arises by the express terms of the 

instrument of transfer or by operation of law. For this 

purpose, reversionary interest does not include the 

possibility that the income alone from the property may 

return to the decedent or become subject to the 

decedent's power of disposition.

5. Revocable transfers (section 2038). The gross estate 

includes the value of any transferred property which was 

subject to the decedent's power to alter, amend, revoke, 

or terminate the transfer at the time of the decedent's 

death. A decedent's power to change beneficiaries and 

to increase any beneficiary's enjoyment of the property 

are examples of this.

It does not matter whether the power was reserved at 

the time of the transfer, whether it arose by operation of 

law, or whether it was later created or conferred. The rule 

applies regardless of the source from which the power 

was acquired, and regardless of whether the power was 

exercisable by the decedent alone or with any person 

(and regardless of whether that person had a substantial 

adverse interest in the transferred property).

The capacity in which the decedent could use a 

power has no bearing. If the decedent gave property in 

trust and was the trustee with the power to revoke the 

trust, the property would be included in the decedent’s 

gross estate. For transfers or additions to an irrevocable 

trust after October 28, 1979, the transferred property is 

includible if the decedent reserved the power to remove 

the trustee at will and appoint another trustee.

If the decedent relinquished within 3 years of death 

any of the includible powers described above, figure the 

gross estate as if the decedent had actually retained the 

powers until death.

Only the part of the transferred property that is subject 

to the decedent's power is included in the gross estate.

For more detailed information on which transfers are 

includible in the gross estate, see Regulations section 

20.2038-1.

Special Valuation Rules for Certain Lifetime 

Transfers

Sections 2701 through 2704 provide rules for valuing certain 

transfers to family members.

Section 2701 deals with the transfer of an interest in a 

corporation or partnership while retaining certain distribution 

rights, or a liquidation, put, call, or conversion right.

Section 2702 deals with the transfer of an interest in a trust 

while retaining any interest other than a qualified interest. In 

general, a qualified interest is a right to receive certain 

distributions from the trust at least annually, or a 

noncontingent remainder interest if all of the other interests in 

the trust are distribution rights specified in section 2702.

Section 2703 provides rules for the valuation of property 

transferred to a family member but subject to an option, 

agreement, or other right to acquire or use the property at 

less than FMV. It also applies to transfers subject to 

restrictions on the right to sell or use the property.

Finally, section 2704 provides that in certain cases, the 

lapse of a voting or liquidation right in a family-owned 

corporation or partnership will result in a deemed transfer.

These rules have potential consequences for the valuation 

of property in an estate. If the decedent (or any member of 

the decedent’s family) was involved in any such transactions, 

see sections 2701 through 2704 and the related regulations 

for additional details.

How To Complete Schedule G

All transfers (other than outright transfers not in trust and 

bona fide sales) made by the decedent at any time during life 

must be reported on Schedule G, regardless of whether you 

believe the transfers are subject to tax. If the decedent made 

any transfers not described in these instructions, the 

transfers should not be shown on Schedule G. Instead, 

attach a statement describing these transfers by listing:

• The date of the transfer,

• The amount or value of the transferred property, and

• The type of transfer.

Complete the schedule for each transfer that is included in 

the gross estate under sections 2035(a), 2036, 2037, and 

2038, as described in the instructions for Schedule G.

Instructions for Form 706 (Rev. 09-2023) -31-
In the “Item number” column, number each transfer 

consecutively beginning with “1.” In the “Description” column, 

list the name of the transferee and the date of the transfer, 

and give a complete description of the property. Transfers 

included in the gross estate should be valued on the date of 

the decedent's death or, if alternate valuation is elected, 

according to section 2032.

If only part of the property transferred meets the terms of 

section 2035(a), 2036, 2037, or 2038, then only a 

corresponding part of the value of the property should be 

included in the value of the gross estate. If the transferee 

makes additions or improvements to the property, the 

increased value of the property at the valuation date should 

not be included on Schedule G. However, if only a part of the 

value of the property is included, enter the value of the whole 

under the column headed “Description” and explain what part 

was included.

Attachments. If a transfer, by trust or otherwise, was made 

by a written instrument, attach a copy of the instrument to 

Schedule G. If the copy of the instrument is of public record, it 

should be certified; if not of public record, the copy should be 

verified.

Schedule H—Powers of Appointment

If any assets to which the special rule of Regulations 

section 20.2010-2(a)(7)(ii) applies are reported on 

this schedule, do not enter any value in the last three 

columns. See the instructions for Part 5—Recapitulation, item 

10, for information on how to estimate and report the value of 

these assets.

Complete Schedule H and file it with the return if you 

answered “Yes” to question 14 of Part 4—General 

Information.

On Schedule H, include the following in the gross estate.

• The value of property for which the decedent possessed 

a general power of appointment (defined later) on the 

date of the decedent’s death.

• The value of property for which the decedent possessed 

a general power of appointment that the decedent 

exercised or released before death by disposing of it in 

such a way that if it were a transfer of property owned by 

the decedent, the property would be includible in the 

decedent's gross estate as a transfer with a retained life 

estate, a transfer taking effect at death, or a revocable 

transfer.

With the above exceptions, property subject to a power of 

appointment is not includible in the gross estate if the 

decedent released the power completely and the decedent 

held no interest in or control over the property.

If the failure to exercise a general power of appointment 

results in a lapse of the power, the lapse is treated as a 

release only to the extent that the value of the property that 

could have been appointed by the exercise of the lapsed 

power is more than the greater of $5,000 or 5% of the total 

value, at the time of the lapse, of the assets out of which, or 

the proceeds of which, the exercise of the lapsed power 

could have been satisfied.

Powers of Appointment

A power of appointment determines who will own or enjoy the 

property subject to the power and when they will own or enjoy 

it. The power must be created by someone other than the 

CAUTION

!

decedent. It does not include a power created or held on 

property transferred by the decedent.

A power of appointment includes all powers which are, in 

substance and effect, powers of appointment regardless of 

how they are identified and regardless of local property laws. 

For example, if a settlor transfers property in trust for the life 

of the settlor’s spouse, with a power in the spouse to 

appropriate or consume the principal of the trust, the spouse 

has a power of appointment.

Some powers do not in themselves constitute a power of 

appointment. For example, a power to amend only 

administrative provisions of a trust that cannot substantially 

affect the beneficial enjoyment of the trust property or income 

is not a power of appointment. A power to manage, invest, or 

control assets, or to allocate receipts and disbursements, 

when exercised only in a fiduciary capacity, is not a power of 

appointment.

General power of appointment. A general power of 

appointment is a power that is exercisable in favor of the 

decedent, the decedent's estate, the decedent's creditors, or 

the creditors of the decedent's estate, except the following.

1. A power to consume, invade, or appropriate property for 

the benefit of the decedent that is limited by an 

ascertainable standard relating to health, education, 

support, or maintenance of the decedent.

2. A power exercisable by the decedent only in conjunction 

with:

a. The creator of the power; or

b. A person who has a substantial interest in the 

property subject to the power, which is adverse to the 

exercise of the power in favor of the decedent.

A part of a power is considered a general power of 

appointment if the power:

1. May only be exercised by the decedent in conjunction 

with another person, and

2. Is also exercisable in favor of the other person (in 

addition to being exercisable in favor of the decedent, 

the decedent's creditors, the decedent's estate, or the 

creditors of the decedent's estate).

When there is a partial power, figure the amount included 

in the gross estate by dividing the value of the property by the 

number of persons (including the decedent) in favor of whom 

the power is exercisable.

Date power was created. Generally, a power of 

appointment created by will is considered created on the 

date of the testator's death.

A power of appointment created by an inter vivos 

instrument is considered created on the date the instrument 

takes effect. If the holder of a power exercises it by creating a 

second power, the second power is considered as created at 

the time of the exercise of the first.

Attachments

If the decedent ever possessed a power of appointment, 

attach a certified or verified copy of the instrument granting 

the power and a certified or verified copy of any instrument by 

which the power was exercised or released. You must file 

these copies even if you contend that the power was not a 

general power of appointment, and that the property is not 

otherwise includible in the gross estate.

-32- Instructions for Form 706 (Rev. 09-2023)
Schedule I—Annuities

If any assets to which the special rule of Regulations 

section 20.2010-2(a)(7)(ii) applies are reported on 

this schedule, do not enter any value in the last three 

columns. See the instructions for Part 5—Recapitulation, item 

10, for information on how to estimate and report the value of 

these assets.

Complete Schedule l and file it with the return if you 

answered “Yes” to question 16 of Part 4—General 

Information.

Enter on Schedule I every annuity that meets all of the 

conditions under General, later, and every annuity described 

in paragraphs (a) through (h) of Annuities Under Approved 

Plans, later, even if the annuities are wholly or partially 

excluded from the gross estate.

For a discussion regarding the QTIP treatment of certain 

joint and survivor annuities, see the Schedule M, line 3, 

instructions.

General

These rules apply to all types of annuities, including pension 

plans, individual retirement arrangements (IRAs), purchased 

commercial annuities, and private annuities.

In general, you must include in the gross estate all or part 

of the value of any annuity that meets the following 

requirements.

• It is receivable by a beneficiary following the death of the 

decedent and by reason of surviving the decedent.

• The annuity is under a contract or agreement entered 

into after March 3, 1931.

• The annuity was payable to the decedent (or the 

decedent possessed the right to receive the annuity) 

either alone or in conjunction with another, for the 

decedent's life or for any period not ascertainable without 

reference to the decedent's death or for any period that 

did not in fact end before the decedent's death.

• The contract or agreement is not a policy of insurance on 

the life of the decedent.

Note. A private annuity is an annuity issued by a party not 

engaged in the business of writing annuity contracts, typically 

a junior generation family member or a family trust.

An annuity contract that provides periodic payments to a 

person for life and ceases at the person's death is not 

includible in the gross estate. Social security benefits are not 

includible in the gross estate even if the surviving spouse 

receives benefits.

An annuity or other payment that is not includible in the 

decedent's or the survivor's gross estate as an annuity may 

still be includible under some other applicable provision of 

the law. For example, see Powers of Appointment and the 

instructions for Schedule G—Transfers During Decedent's 

Life, earlier. See also Regulations section 20.2039-1(e).

If the decedent retired before January 1, 1985, see 

Annuities Under Approved Plans, later, for rules that allow the 

exclusion of part or all of certain annuities.

Part Includible

If the decedent contributed only part of the purchase price of 

the contract or agreement, include in the gross estate only 

CAUTION

!

that part of the value of the annuity receivable by the 

surviving beneficiary that the decedent's contribution to the 

purchase price of the annuity or agreement bears to the total 

purchase price.

For example, if the value of the survivor's annuity was 

$20,000 and the decedent had contributed 75% of the 

purchase price of the contract, the amount includible is 

$15,000 (75% (0.75) × $20,000).

Except as provided under Annuities Under Approved 

Plans, later, contributions made by the decedent's employer 

to the purchase price of the contract or agreement are 

considered made by the decedent if they were made by the 

employer because of the decedent's employment. For more 

information, see section 2039(b).

Definitions

Annuity. An annuity consists of one or more payments 

extending over any period of time. The payments may be 

equal or unequal, conditional or unconditional, periodic or 

sporadic.

Examples. The following are examples of contracts (but 

not necessarily the only forms of contracts) for annuities that 

must be included in the gross estate.

1. A contract under which the decedent immediately before 

death was receiving or was entitled to receive, for the 

duration of life, an annuity with payments to continue 

after death to a designated beneficiary, if surviving the 

decedent.

2. A contract under which the decedent immediately before 

death was receiving or was entitled to receive, together 

with another person, an annuity payable to the decedent 

and the other person for their joint lives, with payments to 

continue to the survivor following the death of either.

3. A contract or agreement entered into by the decedent 

and employer under which the decedent immediately 

before death and following retirement was receiving, or 

was entitled to receive, an annuity payable to the 

decedent for life. After the decedent's death, if survived 

by a designated beneficiary, the annuity was payable to 

the beneficiary with payments either fixed by contract or 

subject to an option or election exercised or exercisable 

by the decedent. However, see Annuities Under 

Approved Plans, later.

4. A contract or agreement entered into by the decedent 

and the decedent's employer under which at the 

decedent's death, before retirement, or before the 

expiration of a stated period of time, an annuity was 

payable to a designated beneficiary, if surviving the 

decedent. However, see Annuities Under Approved 

Plans, later.

5. A contract or agreement under which the decedent 

immediately before death was receiving, or was entitled 

to receive, an annuity for a stated period of time, with the 

annuity to continue to a designated beneficiary, surviving 

the decedent, upon the decedent's death and before the 

expiration of that period of time.

6. An annuity contract or other arrangement providing for a 

series of substantially equal periodic payments to be 

made to a beneficiary for life or over a period of at least 

36 months after the date of the decedent's death under 

an individual retirement account, annuity, or bond as 

Instructions for Form 706 (Rev. 09-2023) -33-
described in section 2039(e) (before its repeal by P.L. 

98-369).

Payable to the decedent. An annuity or other payment was 

payable to the decedent if, at the time of death, the decedent 

was in fact receiving an annuity or other payment, with or 

without an enforceable right to have the payments continued.

Right to receive an annuity. The decedent had the right to 

receive an annuity or other payment if, immediately before 

death, the decedent had an enforceable right to receive 

payments at some time in the future, whether or not at the 

time of death the decedent had a present right to receive 

payments.

Annuities Under Approved Plans

The following rules relate to whether part or all of an 

otherwise includible annuity may be excluded. These rules 

have been repealed and apply only if the decedent either:

• On December 31, 1984, was both a participant in the 

plan and in pay status (for example, had received at least 

one benefit payment on or before December 31, 1984) 

and had irrevocably elected the form of the benefit before 

July 18, 1984; or

• Had separated from service before January 1, 1985, and 

did not change the form of benefit before death.

The amount excluded cannot exceed $100,000 unless 

either of the following conditions is met.

• On December 31, 1982, the decedent was both a 

participant in the plan and in pay status (for example, had 

received at least one benefit payment on or before 

December 31, 1982) and the decedent irrevocably 

elected the form of the benefit before January 1, 1983.

• The decedent separated from service before January 1, 

1983, and did not change the form of benefit before 

death.

Approved Plans

Approved plans may be separated into two categories.

• Pension, profit-sharing, stock bonus, and other similar 

plans.

• IRAs and retirement bonds.

Different exclusion rules apply to the two categories of 

plans.

Pension, etc., plans. The following plans are approved 

plans for the exclusion rules.

a. An employees' trust (or a contract purchased by an 

employees' trust) forming part of a pension, stock bonus, or 

profit-sharing plan that met all the requirements of section 

401(a), either at the time of the decedent's separation from 

employment (whether by death or otherwise) or at the time of 

the termination of the plan (if earlier).

b. A retirement annuity contract purchased by the 

employer (but not by an employees' trust) under a plan that, 

at the time of the decedent's separation from employment (by 

death or otherwise), or at the time of the termination of the 

plan (if earlier), was a plan described in section 403(a).

c. A retirement annuity contract purchased for an 

employee by an employer that is an organization referred to 

in section 170(b)(1)(A)(ii) or (vi), or that is a religious 

organization (other than a trust), and that is exempt from tax 

under section 501(a).

d. Chapter 73 of title 10 of the United States Code.

e. A bond purchase plan described in section 405 (before 

its repeal by P.L. 98-369, effective for obligations issued after 

December 31, 1983).

Exclusion rules for pension, etc., plans. If an annuity 

under an approved plan described in (a) through (e) above is 

receivable by a beneficiary other than the executor and the 

decedent made no contributions under the plan toward the 

cost, no part of the value of the annuity, subject to the 

$100,000 limitation (if applicable), is includible in the gross 

estate.

If the decedent made a contribution under a plan 

described in (a) through (e) above toward the cost, include in 

the gross estate on this schedule that proportion of the value 

of the annuity which the amount of the decedent's 

contribution under the plan bears to the total amount of all 

contributions under the plan. The remaining value of the 

annuity is excludable from the gross estate subject to the 

$100,000 limitation (if applicable). For the rules to determine 

whether the decedent made contributions to the plan, see 

Regulations section 20.2039-1(c).

IRAs and retirement bonds. The following plans are 

approved plans for the exclusion rules.

f. An individual retirement account described in section 

408(a).

g. An individual retirement annuity described in section 

408(b).

h. A retirement bond described in section 409(a) (before 

its repeal by P.L. 98-369).

Exclusion rules for IRAs and retirement bonds. These 

plans are approved plans only if they provide for a series of 

substantially equal periodic payments made to a beneficiary 

for life, or over a period of at least 36 months after the date of 

the decedent's death.

Subject to the $100,000 limitation (if applicable), if an 

annuity under a “plan” described in (f) through (h) above is 

receivable by a beneficiary other than the executor, the entire 

value of the annuity is excludable from the gross estate even 

if the decedent made a contribution under the plan.

However, if any payment to or for an account or annuity 

described in paragraph (f), (g), or (h) earlier was not 

allowable as an income tax deduction under section 219 (and 

was not a rollover contribution, as described in section 

2039(e) before its repeal by P.L. 98-369), include in the gross 

estate on this schedule that proportion of the value of the 

annuity which the amount not allowable as a deduction under 

section 219 and not a rollover contribution bears to the total 

amount paid to or for such account or annuity. For more 

information, see Regulations section 20.2039-5.

Rules applicable to all approved plans. The following 

rules apply to all approved plans described in paragraphs (a) 

through (h), earlier.

If any part of an annuity under a “plan” described in (a) 

through (h), earlier, is receivable by the executor, it is 

generally includible in the gross estate to the extent that it is 

receivable by the executor in that capacity. In general, the 

annuity is receivable by the executor if it is to be paid to the 

executor or if there is an agreement (expressed or implied) 

that it will be applied by the beneficiary for the benefit of the 

estate (such as in discharge of the estate's liability for death 

taxes or debts of the decedent, etc.) or that its distribution will 

be governed to any extent by the terms of the decedent's will 

or the laws of descent and distribution.

-34- Instructions for Form 706 (Rev. 09-2023)
If data available to you does not indicate whether the plan 

satisfies the requirements of section 401(a), 403(a), 408(a), 

408(b), or 409(a), you may obtain that information from the 

IRS office where the employer's principal place of business is 

located.

Line A. Lump-Sum Distribution Election

Note. The following rules have been repealed and apply only 

if the decedent:

• On December 31, 1984, was both a participant in the 

plan and in pay status (for example, had received at least 

one benefit payment on or before December 31, 1984) 

and had irrevocably elected the form of the benefit before 

July 18, 1984; or

• Had separated from service before January 1, 1985, and 

did not change the form of benefit before death.

Generally, the entire amount of any lump-sum distribution 

is included in the decedent's gross estate. However, under 

this special rule, all or part of a lump-sum distribution from a 

qualified (approved) plan will be excluded if the lump-sum 

distribution is included in the recipient's income for income 

tax purposes.

If the decedent was born before 1936, the recipient may 

be eligible to elect special “10-year averaging” rules (under 

repealed section 402(e)) and capital gain treatment (under 

repealed section 402(a)(2)) in figuring the income tax on the 

distribution. For more information, see Pub. 575, Pension and 

Annuity Income. If this option is available, the estate tax 

exclusion cannot be claimed unless the recipient elects to 

forego the “10-year averaging” and capital gain treatment in 

figuring the income tax on the distribution. The recipient 

elects to forego this treatment by treating the distribution as 

taxable on the recipient’s income tax return, as described in 

Regulations section 20.2039-4(d). The election is 

irrevocable.

The amount excluded from the gross estate is the portion 

attributable to the employer contributions. The portion, if any, 

attributable to the employee-decedent's contributions is 

always includible. Also, you may not figure the gross estate in 

accordance with this election unless you check “Yes” on line 

A and attach the names, addresses, and identifying numbers 

of the recipients of the lump-sum distributions. See 

Regulations section 20.2039-4(d)(2).

How To Complete Schedule I

In describing an annuity, give the name and address of the 

grantor of the annuity. Specify if the annuity is under an 

approved plan.

IF . . . THEN . . .

the annuity is under an approved 

plan

state the ratio of the decedent's 

contribution to the total purchase 

price of the annuity.

the decedent was employed at the 

time of death and an annuity as 

described earlier in Definitions, 

Annuity, Example 4 became 

payable to any beneficiary because 

the beneficiary survived the 

decedent

state the ratio of the decedent's 

contribution to the total purchase 

price of the annuity. 

IF . . . THEN . . .

an annuity under an individual 

retirement account or annuity 

became payable to any beneficiary 

because that beneficiary survived 

the decedent and is payable to the 

beneficiary for life or for at least 36 

months following the decedent's 

death

state the ratio of the amount paid 

for the individual retirement 

account or annuity that was not 

allowable as an income tax 

deduction under section 219 (other 

than a rollover contribution) to the 

total amount paid for the account or 

annuity.

the annuity is payable out of a trust 

or other fund

the description should be 

sufficiently complete to fully identify 

it.

the annuity is payable for a term of 

years

include the duration of the term and 

the date on which it began.

the annuity is payable for the life of 

a person other than the decedent

include the date of birth of that 

person.

the annuity is wholly or partially 

excluded from the gross estate

enter the amount excluded under 

“Description” and explain how you 

figured the exclusion.

Schedule J—Funeral Expenses and 

Expenses Incurred in Administering 

Property Subject to Claims

Use Schedule PC to make a protective claim for 

refund for expenses which are not currently 

deductible under section 2053. For such a claim, 

report the expense on Schedule J but without a value in the 

last column.

General. Complete and file Schedule J if you claim a 

deduction on item 14 of Part 5—Recapitulation.

On Schedule J, itemize funeral expenses and expenses 

incurred in administering property subject to claims. List the 

names and addresses of persons to whom the expenses are 

payable and describe the nature of the expense. Do not list 

expenses incurred in administering property not 

subject to claims on this schedule. List them on 

Schedule L instead.

The deduction is limited to the amount paid for these 

expenses that is allowable under local law but may not 

exceed:

1. The value of property subject to claims included in the 

gross estate, plus

2. The amount paid out of property included in the gross 

estate but not subject to claims. This amount must 

actually be paid by the due date of the estate tax return.

The applicable local law under which the estate is being 

administered determines which property is and is not subject 

to claims. If under local law a particular property interest 

included in the gross estate would bear the burden for the 

payment of the expenses, then the property is considered 

property subject to claims.

Unlike certain claims against the estate for debts of the 

decedent (see the instructions for Schedule K), you cannot 

deduct expenses incurred in administering property subject 

CAUTION

!

Instructions for Form 706 (Rev. 09-2023) -35-
to claims on both the estate tax return and the estate's 

income tax return. If you choose to deduct them on the estate 

tax return, you cannot deduct them on a Form 1041, U.S. 

Income Tax Return for Estates and Trusts, filed for the estate. 

Funeral expenses are only deductible on the estate tax 

return.

Funeral expenses. Itemize funeral expenses on line A. 

Deduct from the expenses any amounts that were 

reimbursed, such as death benefits payable by the SSA or 

the Veterans Administration.

Executors' commissions. When you file the return, you 

may deduct commissions that have actually been paid to you 

or that you expect will be paid. Do not deduct commissions if 

none will be collected. If the amount of the commissions has 

not been fixed by decree of the proper court, the deduction 

will be allowed on the final examination of the return, 

provided that:

• The Chief, Estate and Gift/Excise Tax Examination, is 

reasonably satisfied that the commissions claimed will be 

paid;

• The amount entered as a deduction is within the amount 

allowable by the laws of the jurisdiction where the estate 

is being administered; and

• It is in accordance with the usually accepted practice in 

that jurisdiction for estates of similar size and character.

If you have not been paid the commissions claimed at the 

time of the final examination of the return, you must support 

the amount you deducted with an affidavit or statement 

signed under the penalties of perjury that the amount has 

been agreed upon and will be paid.

You may not deduct a bequest or devise made to you 

instead of commissions. If, however, the decedent fixed by 

will the compensation payable to you for services to be 

rendered in the administration of the estate, you may deduct 

this amount to the extent it is not more than the 

compensation allowable by the local law or practice.

Do not deduct on this schedule amounts paid as trustees' 

commissions whether received by you acting in the capacity 

of a trustee or by a separate trustee. If such amounts were 

paid in administering property not subject to claims, deduct 

them on Schedule L.

Note. Executors' commissions are taxable income to the 

executors. Therefore, be sure to include them as income on 

your individual income tax return.

Attorney fees. Enter the amount of attorney fees that have 

actually been paid or that you reasonably expect to be paid. 

If, on the final examination of the return, the fees claimed 

have not been awarded by the proper court and paid, the 

deduction will be allowed, provided the Chief, Estate and Gift/

Excise Tax Examination, is reasonably satisfied that the 

amount claimed will be paid and that it does not exceed a 

reasonable payment for the services performed, taking into 

account the size and character of the estate and the local law 

and practice. If the fees claimed have not been paid at the 

time of final examination of the return, the amount deducted 

must be supported by an affidavit, or statement signed under 

penalties of perjury, by the executor or the attorney stating 

that the amount has been agreed upon and will be paid.

Do not deduct attorney fees incidental to litigation incurred 

by the beneficiaries. These expenses are charged against 

the beneficiaries personally and are not administration 

expenses authorized by the Code.

Interest expense. Interest expenses incurred after the 

decedent's death are generally allowed as a deduction if they 

are reasonable, necessary to the administration of the estate, 

and allowable under local law.

Interest incurred as the result of a federal estate tax 

deficiency is a deductible administrative expense. Penalties 

on estate tax deficiencies are not deductible even if they are 

allowable under local law.

Note. If you elect to pay the tax in installments under section 

6166, you may not deduct the interest payable on the 

installments.

Miscellaneous expenses. Miscellaneous administration 

expenses necessarily incurred in preserving and distributing 

the estate are deductible. These expenses include 

appraiser's and accountant's fees, certain court costs, and 

costs of storing or maintaining assets of the estate.

The expenses of selling assets are deductible only if the 

sale is necessary to pay the decedent's debts, the expenses 

of administration, or taxes, or to preserve the estate or carry 

out distribution.

Schedule K—Debts of the Decedent, 

and Mortgages and Liens

Use Schedule PC to make a protective claim for 

refund for expenses which are not currently 

deductible under section 2053. For such a claim, 

report the expense on Schedule K but without a value in the 

last column.

You must complete and attach Schedule K if you claimed 

deductions on either item 15 or item 16 of Part 

5—Recapitulation.

Income vs. estate tax deduction. Taxes, interest, and 

business expenses accrued at the date of the decedent's 

death are deductible both on Schedule K and as deductions 

in respect of the decedent on the income tax return of the 

estate.

If you choose to deduct medical expenses of the decedent 

only on the estate tax return, they are fully deductible as 

claims against the estate. If, however, they are claimed on the 

decedent's final income tax return under section 213(c), they 

may also not be claimed on the estate tax return. In this case, 

you may also not deduct on the estate tax return any 

amounts that were not deductible on the income tax return 

because of the percentage limitations.

Debts of the Decedent

List under Debts of the Decedent only valid debts the 

decedent owed at the time of death. List any indebtedness 

secured by a mortgage or other lien on property of the gross 

estate under Mortgages and Liens. If the amount of the debt 

is disputed or the subject of litigation, deduct only the amount 

the estate concedes to be a valid claim.

Generally, if the claim against the estate is based on a 

promise or agreement, the deduction is limited to the extent 

that the liability was contracted bona fide and for an adequate 

and full consideration in money or money's worth. However, 

any enforceable claim based on a promise or agreement of 

the decedent to make a contribution or gift (such as a pledge 

or a subscription) to or for the use of a charitable, public, 

religious, etc., organization is deductible to the extent that the 

CAUTION

!

-36- Instructions for Form 706 (Rev. 09-2023)
deduction would be allowed as a bequest under the statute 

that applies.

Certain claims of a former spouse against the estate 

based on the relinquishment of marital rights are deductible 

on Schedule K. For these claims to be deductible, all of the 

following conditions must be met.

• The decedent and the decedent's spouse must have 

entered into a written agreement relative to their marital 

and property rights.

• The decedent and the spouse must have been divorced 

before the decedent's death and the divorce must have 

occurred within the 3-year period beginning on the date 1 

year before the agreement was entered into. It is not 

required that the agreement be approved by the divorce 

decree.

• The property or interest transferred under the agreement 

must be transferred to the decedent's spouse in 

settlement of the spouse's marital rights.

You may not deduct a claim made against the estate by a 

remainderman relating to section 2044 property. Section 

2044 property is described in the instructions for Part 

4—General Information, line 7.

Include in this schedule notes unsecured by mortgage or 

other lien and give full details, including:

• Name of payee,

• Face and unpaid balance,

• Date and term of note,

• Interest rate, and

• Date to which interest was paid before death.

Include the exact nature of the claim as well as the name 

of the creditor. If the claim is for services performed over a 

period of time, state the period covered by the claim.

Example. Electric Illuminating Co., for electric service 

during December 2022, $150.

If the amount of the claim is the unpaid balance due on a 

contract for the purchase of any property included in the 

gross estate, indicate the schedule and item number where 

you reported the property. If the claim represents a joint and 

separate liability, give full facts and explain the financial 

responsibility of the co-obligor.

Property and income taxes. The deduction for property 

taxes is limited to the taxes accrued before the date of the 

decedent's death. Federal taxes on income received during 

the decedent's lifetime are deductible, but taxes on income 

received after death are not deductible.

Keep all vouchers or original records for inspection by the 

IRS.

Allowable death taxes. If you elect to take a deduction for 

foreign death taxes under section 2053(d) rather than a credit 

under section 2014, the deduction is subject to the limitations 

described in section 2053(d) and its regulations.

Mortgages and Liens

Under Mortgages and Liens, list only obligations secured by 

mortgages or other liens on property included in the gross 

estate at its full value or at a value that was undiminished by 

the amount of the mortgage or lien. If the debt is enforceable 

against other property of the estate not subject to the 

mortgage or lien, or if the decedent was personally liable for 

the debt, include the full value of the property subject to the 

mortgage or lien in the gross estate under the appropriate 

schedule and deduct the mortgage or lien on the property on 

this schedule.

However, if the decedent's estate is not liable, include in 

the gross estate only the value of the equity of redemption (or 

the value of the property less the amount of the debt), and do 

not deduct any portion of the indebtedness on this schedule.

Notes and other obligations secured by the deposit of 

collateral, such as stocks, bonds, etc., should also be listed 

under Mortgages and Liens.

Description

Include under the “Description” column the particular 

schedule and item number where the property subject to the 

mortgage or lien is reported in the gross estate.

Include the name and address of the mortgagee, payee, 

or obligee, and the date and term of the mortgage, note, or 

other agreement by which the debt was established. Also 

include the face amount, the unpaid balance, the rate of 

interest, and the date to which the interest was paid before 

the decedent's death.

Schedule L—Net Losses During 

Administration and Expenses 

Incurred in Administering Property 

Not Subject to Claims

Use Schedule PC to make a protective claim for 

refund for expenses which are not currently 

deductible under section 2053. For such a claim, 

report the expense on Schedule L but without a value in the 

last column.

Complete Schedule L and file it with the return if you claim 

deductions on either item 19 or item 20 of Part 

5—Recapitulation.

Net Losses During Administration

You may deduct only those losses from thefts, fires, storms, 

shipwrecks, or other casualties that occurred during the 

settlement of the estate. Deduct only the amount not 

reimbursed by insurance or otherwise.

Describe in detail the loss sustained and the cause. If you 

received insurance or other compensation for the loss, state 

the amount collected. Identify the property for which you are 

claiming the loss by indicating the schedule and item number 

where the property is included in the gross estate.

If you elect alternate valuation, do not deduct the amount 

by which you reduced the value of an item to include it in the 

gross estate.

Do not deduct losses claimed as a deduction on a federal 

income tax return or depreciation in the value of securities or 

other property.

Expenses Incurred in Administering Property 

Not Subject to Claims

You may deduct expenses incurred in administering property 

that is included in the gross estate but that is not subject to 

claims. Only deduct these expenses if they were paid before 

the section 6501 period of limitations for assessment expired.

The expenses deductible on this schedule are usually 

expenses incurred in the administration of a trust established 

by the decedent before death. They may also be incurred in 

the collection of other assets or the transfer or clearance of 

CAUTION

!

Instructions for Form 706 (Rev. 09-2023) -37-
title to other property included in the decedent's gross estate 

for estate tax purposes, but not included in the decedent's 

probate estate.

The expenses deductible on this schedule are limited to 

those that are the result of settling the decedent's interest in 

the property or of vesting good title to the property in the 

beneficiaries. Expenses incurred on behalf of the transferees 

(except those described earlier) are not deductible. 

Examples of deductible and nondeductible expenses are 

provided in Regulations section 20.2053-8(d).

List the names and addresses of the persons to whom 

each expense was payable and the nature of the expense. 

Identify the property for which the expense was incurred by 

indicating the schedule and item number where the property 

is included in the gross estate. If you do not know the exact 

amount of the expense, you may deduct an estimate, 

provided that the amount may be verified with reasonable 

certainty and will be paid before the period of limitations for 

assessment (referred to earlier) expires. Keep all vouchers 

and receipts for inspection by the IRS.

Schedule M—Bequests, etc., to 

Surviving Spouse (Marital Deduction)

If any assets to which the special rule of Regulations 

section 20.2010-2(a)(7)(ii) applies are reported on 

this schedule, do not enter any value in the last three 

columns. See the instructions for Part 5—Recapitulation, item 

23, for information on how to estimate and report the value of 

these assets.

General

You must complete Schedule M and file it with the return if 

you claim a deduction on item 21 of Part 5—Recapitulation.

The marital deduction is authorized by section 2056 for 

certain property interests that pass from the decedent to the 

surviving spouse. You may claim the deduction only for 

property interests that are included in the decedent's gross 

estate (Schedules A through I).

Note. The marital deduction is generally not allowed if the 

surviving spouse is not a U.S. citizen. The marital deduction 

is allowed for property passing to such a surviving spouse in 

a QDOT or if such property is transferred or irrevocably 

assigned to such a trust before the estate tax return is filed. 

The executor must elect QDOT status on the return. See the 

instructions that follow for details on the election.

Property Interests That You May List on 

Schedule M

Generally, you may list on Schedule M all property interests 

that pass from the decedent to the surviving spouse and are 

CAUTION

!

included in the gross estate. However, do not list any 

nondeductible terminable interests (described later) on 

Schedule M unless you are making a QTIP election. The 

property for which you make this election must be included 

on Schedule M. See Qualified terminable interest property, 

later.

For the rules on common disaster and survival for a limited 

period, see section 2056(b)(3).

You may list on Schedule M only those interests that the 

surviving spouse takes:

1. As the decedent's legatee, devisee, heir, or donee;

2. As the decedent's surviving tenant by the entirety or joint 

tenant;

3. As an appointee under the decedent's exercise of a 

power or as a taker in default at the decedent's 

nonexercise of a power;

4. As a beneficiary of insurance on the decedent's life;

5. As the surviving spouse taking under dower or curtesy 

(or similar statutory interest); and

6. As a transferee of a transfer made by the decedent at 

any time.

Property Interests That You May Not List on 

Schedule M

Do not list the following on Schedule M.

1. The value of any property that does not pass from the 

decedent to the surviving spouse.

2. Property interests that are not included in the decedent's 

gross estate.

3. The full value of a property interest for which a deduction 

was claimed on Schedules J through L. The value of the 

property interest should be reduced by the deductions 

claimed with respect to it.

4. The full value of a property interest that passes to the 

surviving spouse subject to a mortgage or other 

encumbrance or an obligation of the surviving spouse. 

Include on Schedule M only the net value of the interest 

after reducing it by the amount of the mortgage or other 

debt.

5. Nondeductible terminable interests (described later).

6. Any property interest disclaimed by the surviving 

spouse.

Terminable Interests

Certain interests in property passing from a decedent to a 

surviving spouse are referred to as terminable interests. 

Example—Listing Property Interests on Schedule M

Item 

number

Description of property interests passing to surviving spouse. 

For securities, give CUSIP number. If trust, partnership, or closely held entity, give EIN. Amount

All other property:

B1 One-half the value of a house and lot, 256 South West Street, held by decedent and surviving spouse as joint tenants 

with right of survivorship under deed dated July 15, 1975 (Schedule E, Part 1, item 1) .................. $182,500

B2 Proceeds of Metropolitan Life Insurance Company Policy No. 104729, payable in one sum to surviving spouse 

(Schedule D, item 3) ........................................................ 200,000

B3 Cash bequest under Paragraph Six of will ............................................ 100,000

-38- Instructions for Form 706 (Rev. 09-2023)
These are interests that will terminate or fail after the passage 

of time, or on the occurrence or nonoccurrence of a 

designated event. Examples are life estates, annuities, 

estates for terms of years, and patents.

The ownership of a bond, note, or other contractual 

obligation, which when discharged would not have the effect 

of an annuity for life or for a term, is not considered a 

terminable interest.

Nondeductible terminable interests. Unless you are 

making a QTIP election, do not enter a terminable interest on 

Schedule M if:

1. Another interest in the same property passed from the 

decedent to some other person for less than adequate 

and full consideration in money or money's worth; and

2. By reason of its passing, the other person or that 

person's heirs may enjoy part of the property after the 

termination of the surviving spouse's interest.

This rule applies even though the interest that passes from 

the decedent to a person other than the surviving spouse is 

not included in the gross estate, and regardless of when the 

interest passes. The rule also applies regardless of whether 

the surviving spouse's interest and the other person's interest 

pass from the decedent at the same time.

Property interests that are considered to pass to a person 

other than the surviving spouse are any property interest that 

(a) passes under a decedent's will or intestacy; (b) was 

transferred by a decedent during life; or (c) is held by or 

passed on to any person as a decedent's joint tenant, as 

appointee under a decedent's exercise of a power, as taker in 

default at a decedent's release or nonexercise of a power, or 

as a beneficiary of insurance on the decedent's life. See 

Regulations section 20.2056(c)-3.

For example, a spouse was devised real property for life, 

from the decedent, with remainder to the children. The life 

interest that passed to the spouse does not qualify for the 

marital deduction because it will terminate at the spouse’s 

death and the children will thereafter possess or enjoy the 

property.

However, if the decedent purchased a joint and survivor 

annuity for themselves and the spouse who survived them, 

the value of the survivor's annuity, to the extent that it is 

included in the gross estate, qualifies for the marital 

deduction because even though the interest will terminate on 

the spouse’s death, no one else will possess or enjoy any 

part of the property.

The marital deduction is not allowed for an interest that the 

decedent directed the executor or a trustee to convert, after 

death, into a terminable interest for the surviving spouse. The 

marital deduction is not allowed for such an interest even if 

there was no interest in the property passing to another 

person and even if the terminable interest would otherwise 

have been deductible under the exceptions described later 

for life estates, life insurance, and annuity payments with 

powers of appointment. For more information, see 

Regulations section 20.2056(b)-1(f); and Regulations section 

20.2056(b)-1(g), Example (7).

If any property interest passing from the decedent to the 

surviving spouse may be paid or otherwise satisfied out of 

any of a group of assets, the value of the property interest is, 

for the entry on Schedule M, reduced by the value of any 

asset or assets that, if passing from the decedent to the 

surviving spouse, would be nondeductible terminable 

interests. Examples of property interests that may be paid or 

otherwise satisfied out of any of a group of assets are a 

bequest of the residue of the decedent's estate, or of a share 

of the residue, and a cash legacy payable out of the general 

estate.

Example. A decedent bequeathed $100,000 to the 

surviving spouse. The general estate includes a term for 

years (valued at $10,000 in determining the value of the 

gross estate) in an office building, which interest was retained 

by the decedent under a deed of the building by gift to the 

decedent’s child. Accordingly, the value of the specific 

bequest entered on Schedule M is $90,000.

Life estate with power of appointment in the surviving 

spouse. A property interest, whether or not in trust, will be 

treated as passing to the surviving spouse, and will not be 

treated as a nondeductible terminable interest if the following 

five conditions apply.

1. The surviving spouse is entitled for life to all of the 

income from the entire interest.

2. The income is payable annually or at more frequent 

intervals.

3. The surviving spouse has the power, exercisable in favor 

of the surviving spouse or the estate of the surviving 

spouse, to appoint the entire interest.

4. The power is exercisable by the surviving spouse alone 

and (whether exercisable by will or during life) is 

exercisable by the surviving spouse in all events.

5. No part of the entire interest is subject to a power in any 

other person to appoint any part to any person other than 

the surviving spouse (or the surviving spouse's legal 

representative or relative if the surviving spouse is 

disabled; see Regulations section 20.2056(b)-5(a) and 

Rev. Rul. 85-35, 1985-1 C.B. 328).

If these five conditions are satisfied only for a specific 

portion of the entire interest, see Regulations sections 

20.2056(b)-5(b) and -5(c) to determine the amount of the 

marital deduction.

Life insurance, endowment, or annuity payments, with 

power of appointment in surviving spouse. A property 

interest consisting of the entire proceeds under a life 

insurance, endowment, or annuity contract is treated as 

passing from the decedent to the surviving spouse, and will 

not be treated as a nondeductible terminable interest if the 

following five conditions apply.

1. The surviving spouse is entitled to receive the proceeds 

in installments, or is entitled to interest on them, with all 

amounts payable during the life of the spouse, payable 

only to the surviving spouse.

2. The installment or interest payments are payable 

annually, or more frequently, beginning not later than 13 

months after the decedent's death.

3. The surviving spouse has the power, exercisable in favor 

of the surviving spouse or of the estate of the surviving 

spouse, to appoint all amounts payable under the 

contract.

4. The power of appointment is exercisable by the surviving 

spouse alone and (whether exercisable by will or during 

life) is exercisable by the surviving spouse in all events.

5. No part of the amount payable under the contract is 

subject to a power in any other person to appoint any 

part to any person other than the surviving spouse.

Instructions for Form 706 (Rev. 09-2023) -39-
If these five conditions are satisfied only for a specific 

portion of the proceeds, see Regulations section 

20.2056(b)-6(b) to determine the amount of the marital 

deduction.

Charitable remainder trusts. An interest in a charitable 

remainder trust will not be treated as a nondeductible 

terminable interest if:

1. The interest in the trust passes from the decedent to the 

surviving spouse, and

2. The surviving spouse is the only beneficiary of the trust 

other than charitable organizations described in section 

170(c).

A charitable remainder trust is either a charitable 

remainder annuity trust or a charitable remainder unitrust. 

See section 664 for descriptions of these trusts.

Election To Deduct Qualified Terminable Interest 

Property (QTIP)

You may elect to claim a marital deduction for qualified 

terminable interest property or property interests. You make 

the QTIP election simply by listing the qualified terminable 

interest property on Part A of Schedule M and inserting its 

value. You are presumed to have made the QTIP election if 

you list the property and insert its value on Schedule M. If you 

make this election, the surviving spouse's gross estate will 

include the value of the qualified terminable interest property. 

See the instructions for Part 4—General Information, line 7, 

for more details. The election is irrevocable.

If you file a Form 706 in which you do not make this 

election, you may not file an amended return to make the 

election unless you file the amended return on or before the 

due date for filing the original Form 706.

The effect of the election is that the property (interest) will 

be treated as passing to the surviving spouse and will not be 

treated as a nondeductible terminable interest. All of the 

other marital deduction requirements must still be satisfied 

before you may make this election. For example, you may not 

make this election for property or property interests that are 

not included in the decedent's gross estate.

Qualified terminable interest property. Qualified 

terminable interest property is property (a) that passes from 

the decedent, (b) in which the surviving spouse has a 

qualifying income interest for life, and (c) for which election 

under section 2056(b)(7) has been made.

The surviving spouse has a qualifying income interest for 

life if the surviving spouse is entitled to all of the income from 

the property payable annually or at more frequent intervals, or 

has a usufruct interest for life in the property, and during the 

surviving spouse's lifetime no person has a power to appoint 

any part of the property to any person other than the 

surviving spouse. An annuity is treated as an income interest 

regardless of whether the property from which the annuity is 

payable can be separately identified.

Regulations sections 20.2044-1 and 20.2056(b)-7(d)(3) 

state that an interest in property is eligible for QTIP treatment 

if the income interest is contingent upon the executor's 

election even if that portion of the property for which no 

election is made will pass to or for the benefit of beneficiaries 

other than the surviving spouse.

The QTIP election may be made for all or any part of 

qualified terminable interest property. A partial election must 

relate to a fractional or percentile share of the property so 

that the elective part will reflect its proportionate share of the 

increase or decline in the whole of the property when 

applying section 2044 or 2519. Thus, if the interest of the 

surviving spouse in a trust (or other property in which the 

spouse has a qualified life estate) is qualified terminable 

interest property, you may make an election for a part of the 

trust (or other property) only if the election relates to a 

defined fraction or percentage of the entire trust (or other 

property). The fraction or percentage may be defined by 

means of a formula.

Election to deduct qualified terminable interest property under section 2056(b)(7). If a trust (or other property) 

meets the requirements of qualified terminable interest 

property under section 2056(b)(7), and

1. The trust or other property is listed on Schedule M, and

2. The value of the trust (or other property) is entered in 

whole or in part as a deduction on Schedule M,

then unless the executor specifically identifies the trust (all or 

a fractional portion or percentage) or other property to be 

excluded from the election, the executor shall be deemed to 

have made an election to have such trust (or other property) 

treated as qualified terminable interest property under 

section 2056(b)(7).

If less than the entire value of the trust (or other property) 

that the executor has included in the gross estate is entered 

as a deduction on Schedule M, the executor shall be 

considered to have made an election only as to a fraction of 

the trust (or other property). The numerator of this fraction is 

equal to the amount of the trust (or other property) deducted 

on Schedule M. The denominator is equal to the total value of 

the trust (or other property).

Qualified Domestic Trust (QDOT) Election

The marital deduction is allowed for transfers to a surviving 

spouse who is not a U.S. citizen only if the property passes to 

the surviving spouse in a QDOT or if such property is 

transferred or irrevocably assigned to a QDOT before the 

decedent's estate tax return is filed.

A QDOT is any trust:

1. That requires at least one trustee to be either a citizen of 

the United States or a domestic corporation,

2. That requires that no distribution of corpus from the trust 

can be made unless such a trustee has the right to 

withhold from the distribution the tax imposed on the 

QDOT,

3. That meets the requirements of any applicable 

regulations, and

4. For which the executor has made an election on the 

estate tax return of the decedent.

Note. For trusts created by an instrument executed before 

November 5, 1990, items 1 and 2 above will be treated as 

met if the trust instrument requires that all trustees be 

individuals who are citizens of the United States or domestic 

corporations.

You make the QDOT election simply by listing the qualified 

domestic trust or the entire value of the trust property on 

Schedule M and deducting its value. You are presumed to 

have made the QDOT election if you list the trust or trust 

property and insert its value on Schedule M. Once made, 

the election is irrevocable.

-40- Instructions for Form 706 (Rev. 09-2023)
If an election is made to deduct qualified domestic trust 

property under section 2056A(d), provide the following 

information for each qualified domestic trust on an 

attachment to this schedule.

1. The name and address of every trustee.

2. A description of each transfer passing from the decedent 

that is the source of the property to be placed in trust.

3. The EIN for the trust.

The election must be made for an entire QDOT trust. In 

listing a trust for which you are making a QDOT election, 

unless you specifically identify the trust as not subject 

to the election, the election will be considered made for 

the entire trust.

The determination of whether a trust qualifies as a QDOT 

will be made as of the date the decedent's Form 706 is filed. 

If, however, judicial proceedings are brought before the Form 

706's due date (including extensions) to have the trust 

revised to meet the QDOT requirements, then the 

determination will not be made until the court-ordered 

changes to the trust are made.

Election to deduct qualified domestic trust property under section 2056A. If a trust meets the requirement of a 

QDOT under section 2056A(a), the return is filed no later 

than 1 year after the time prescribed by law (including 

extensions), and the entire value of the trust or trust property 

is listed and entered as a deduction on Schedule M, then 

unless the executor specifically identifies the trust to be 

excluded from the election, the executor shall be deemed to 

have made an election to have the entire trust treated as 

qualified domestic trust property.

Note. For trusts with assets in excess of $2 million, see 

Regulations section 20.2056A-2(d) for additional 

requirements to ensure collection of the section 2056A estate 

tax.

Line 1

If property passes to the surviving spouse as the result of a 

qualified disclaimer, check “Yes” and attach a copy of the 

written disclaimer required by section 2518(b).

Line 3

Section 2056(b)(7)(C)(ii) creates an automatic QTIP election 

for certain joint and survivor annuities that are includible in 

the estate under section 2039. To qualify, only the surviving 

spouse can have the right to receive payments before the 

death of the surviving spouse.

The executor can elect out of QTIP treatment, however, by 

checking the “Yes” box on line 3. Once made, the election 

is irrevocable. If there is more than one such joint and 

survivor annuity, you are not required to make the election for 

all of them.

If you make the election out of QTIP treatment by checking 

“Yes” on line 3, you cannot deduct the amount of the annuity 

on Schedule M. If you do not elect out, you must list the joint 

and survivor annuities on Schedule M.

Listing Property Interests on Schedule M

List each property interest included in the gross estate that 

passes from the decedent to the surviving spouse and for 

which a marital deduction is claimed. This includes otherwise 

nondeductible terminable interest property for which you are 

making a QTIP election. Number each item in sequence and 

describe each item in detail. Describe the instrument 

(including any clause or paragraph number) or provision of 

law under which each item passed to the surviving spouse. 

Indicate the schedule and item number of each asset.

In listing otherwise nondeductible property for which you 

are making a QTIP election, unless you specifically identify a 

fractional portion of the trust or other property as not subject 

to the election, the election will be considered made for the 

entire interest.

Enter the value of each interest before taking into account 

the federal estate tax or any other death tax. The valuation 

dates used in determining the value of the gross estate also 

apply on Schedule M.

If Schedule M includes a bequest of the residue or a part 

of the residue of the decedent's estate, attach a copy of the 

computation showing how the value of the residue was 

determined. Include a statement showing the following.

• The value of all property that is included in the 

decedent's gross estate (Schedules A through I) but is 

not a part of the decedent's probate estate, such as 

lifetime transfers, jointly owned property that passed to 

the survivor on the decedent's death, and the insurance 

payable to specific beneficiaries.

• The values of all specific and general legacies or 

devises, with reference to the applicable clause or 

paragraph of the decedent's will or codicil. (If legacies 

are made to each member of a class, for example, 

$1,000 to each of the decedent's employees, only the 

number in each class and the total value of property 

received by them need be furnished.)

• The dates of birth of all persons, the length of whose 

lives may affect the value of the residuary interest 

passing to the surviving spouse.

• Any other important information such as that relating to 

any claim to any part of the estate not arising under the 

will.

Lines 5a, 5b, and 5c. The total of the values listed on 

Schedule M must be reduced by the amount of the federal 

estate tax, the federal GST tax, and the amount of state or 

other death and GST taxes paid out of the property interest 

involved. If you enter an amount for state or other death or 

GST taxes on line 5b or 5c, identify the taxes and attach your 

computation of them.

Attachments. If you list property interests passing by the 

decedent's will on Schedule M, attach a certified copy of the 

order admitting the will to probate. If, when you file the return, 

the court of probate jurisdiction has entered any decree 

interpreting the will or any of its provisions affecting any of the 

interests listed on Schedule M, or has entered any order of 

distribution, attach a copy of the decree or order. In addition, 

the IRS may request other evidence to support the marital 

deduction claimed.

Schedule O—Charitable, Public, and 

Similar Gifts and Bequests

If any assets to which the special rule of Regulations 

section 20.2010-2(a)(7)(ii) applies are reported on 

this schedule, do not enter any value in the last three 

columns. See the instructions for Part 5—Recapitulation, item 

23, for information on how to estimate and report the value of 

these assets.

CAUTION

!

Instructions for Form 706 (Rev. 09-2023) -41-
General

You must complete Schedule O and file it with the return if 

you claim a deduction on item 22 of Part 5—Recapitulation.

You can claim the charitable deduction allowed under 

section 2055 for the value of property in the decedent's gross 

estate that was transferred by the decedent during life or by 

will to or for the use of any of the following.

• The United States, a state, a political subdivision of a 

state, or the District of Columbia, for exclusively public 

purposes.

• Any corporation or association organized and operated 

exclusively for religious, charitable, scientific, literary, or 

educational purposes, including the encouragement of 

art, or to foster national or international amateur sports 

competition (but only if none of its activities involve 

providing athletic facilities or equipment, unless the 

organization is a qualified amateur sports organization) 

and the prevention of cruelty to children and animals. No 

part of the net earnings may benefit any private individual 

and no substantial activity may be undertaken to carry on 

propaganda, or otherwise attempt to influence legislation 

or participate in any political campaign on behalf of any 

candidate for public office.

• A trustee or a fraternal society, order, or association 

operating under the lodge system, if the transferred 

property is to be used exclusively for religious, charitable, 

scientific, literary, or educational purposes, or for the 

prevention of cruelty to children or animals. No 

substantial activity may be undertaken to carry on 

propaganda or otherwise attempt to influence legislation, 

or participate in any political campaign on behalf of any 

candidate for public office.

• Any veterans organization incorporated by an Act of 

Congress or any of its departments, local chapters, or 

posts, for which none of the net earnings benefits any 

private individual.

• Employee stock ownership plans, if the transfer qualifies 

as a qualified gratuitous transfer of qualified employer 

securities within the meaning provided in section 664(g).

For this purpose, certain Indian tribal governments are 

treated as states and transfers to them qualify as deductible 

charitable contributions. See section 7871 and Rev. Proc. 

2008-55, 2008-39 I.R.B. 768, available at Rev. Proc. 

2008-55, as modified and supplemented by subsequent 

revenue procedures, for a list of qualifying Indian tribal 

governments.

You may also claim a charitable contribution deduction for 

a qualifying conservation easement granted after the 

decedent's death under the provisions of section 2031(c)(9).

The charitable deduction is allowed for amounts that are 

transferred to charitable organizations as a result of either a 

qualified disclaimer (see Line 2. Qualified Disclaimer, later) or 

the complete termination of a power to consume, invade, or 

appropriate property for the benefit of an individual. It does 

not matter whether termination occurs because of the death 

of the individual or in any other way. The termination must 

occur within the period of time (including extensions) for filing 

the decedent's estate tax return and before the power has 

been exercised.

The deduction is limited to the amount actually available 

for charitable uses. Therefore, if under the terms of a will or 

the provisions of local law, or for any other reason, the federal 

estate tax, the federal GST tax, or any other estate, GST, 

succession, legacy, or inheritance tax is payable in whole or 

in part out of any bequest, legacy, or devise that would 

otherwise be allowed as a charitable deduction, the amount 

you may deduct is the amount of the bequest, legacy, or 

devise reduced by the total amount of the taxes.

If you elected to make installment payments of the estate 

tax, and the interest is payable out of property transferred to 

charity, you must reduce the charitable deduction by an 

estimate of the maximum amount of interest that will be paid 

on the deferred tax.

For split-interest trusts or pooled income funds, only the 

figure that is passing to the charity should be entered in the 

“Amount” column. Do not enter the entire amount that passes 

to the trust or fund.

If you are deducting the value of the residue or a part of 

the residue passing to charity under the decedent's will, 

attach a copy of the computation showing how you 

determined the value, including any reduction for the taxes 

described earlier.

Also include the following.

• A statement that shows the values of all specific and 

general legacies or devises for both charitable and 

noncharitable uses. For each legacy or devise, indicate 

the paragraph or section of the decedent's will or codicil 

that applies. If legacies are made to each member of a 

class (for example, $1,000 to each of the decedent's 

employees), show only the number of each class and the 

total value of property they received.

• The dates of birth of all life tenants or annuitants, the 

length of whose lives may affect the value of the interest 

passing to charity under the decedent's will.

• A statement showing the value of all property that is 

included in the decedent's gross estate but does not 

pass under the will, such as transfers, jointly owned 

property that passed to the survivor on the decedent's 

death, and insurance payable to specific beneficiaries.

• Any agreements with charitable beneficiaries, whether 

entered before or after the date of death of the decedent.

• Verification of the sale or purchase of property that is the 

subject of a charitable deduction.

• Any other important information such as that relating to 

any claim, not arising under the will, to any part of the 

estate (that is, a spouse claiming dower or curtesy, or 

similar rights).

Line 2. Qualified Disclaimer

The charitable deduction is allowed for amounts that are 

transferred to charitable organizations as a result of a 

qualified disclaimer. To be a qualified disclaimer, a refusal to 

accept an interest in property must meet the conditions of 

section 2518. These are explained in Regulations sections 

25.2518-1 through 25.2518-3. If property passes to a 

charitable beneficiary as the result of a qualified disclaimer, 

check the “Yes” box on line 2 and attach a copy of the written 

disclaimer required by section 2518(b).

Attachments

If the charitable transfer was made by will, attach a certified 

copy of the order admitting the will to probate, in addition to 

the copy of the will. If the charitable transfer was made by any 

other written instrument, attach a copy. If the instrument is of 

record, the copy should be certified; if not, the copy should 

be verified.

-42- Instructions for Form 706 (Rev. 09-2023)
Value

The valuation dates used in determining the value of the 

gross estate also apply on Schedule O.

Schedule P—Credit for Foreign Death 

Taxes

General

If you claim a credit on Part 2—Tax Computation, line 13, 

complete Schedule P and file it with the return. Attach 

Form(s) 706-CE to Form 706 to support any credit you claim.

If the foreign government refuses to certify Form 706-CE, 

file it directly with the IRS as instructed on the Form 706-CE. 

See Form 706-CE for instructions on how to complete the 

form and a description of the items that must be attached to 

the form when the foreign government refuses to certify it.

The credit for foreign death taxes is allowable only if the 

decedent was a citizen or resident of the United States. 

However, see section 2053(d) and the related regulations for 

exceptions and limitations if the executor has elected, in 

certain cases, to deduct these taxes from the value of the 

gross estate. For a resident not a citizen, who was a citizen or 

subject of a foreign country for which the President has 

issued a proclamation under section 2014(h), the credit is 

allowable only if the country of which the decedent was a 

national allows a similar credit to decedents who were U.S. 

citizens residing in that country.

The credit is authorized either by statute or by treaty. If a 

credit is authorized by a treaty, whichever of the following is 

the most beneficial to the estate is allowed.

• The credit figured under the treaty.

• The credit figured under the statute.

• The credit figured under the treaty, plus the credit figured 

under the statute for death taxes paid to each political 

subdivision or possession of the treaty country that are 

not directly or indirectly creditable under the treaty.

Under the statute, the credit is authorized for all death 

taxes (national and local) imposed in the foreign country. 

Whether local taxes are the basis for a credit under a treaty 

depends upon the provisions of the particular treaty.

If a credit for death taxes paid in more than one foreign 

country is allowable, a separate computation of the credit 

must be made for each foreign country. The copies of 

Schedule P on which the additional computations are made 

should be attached to the copy of Schedule P provided in the 

return.

The total credit allowable for any property, whether 

subjected to tax by one or more than one foreign country, is 

limited to the amount of the federal estate tax attributable to 

the property. The anticipated amount of the credit may be 

figured on the return, but the credit cannot finally be allowed 

until the foreign tax has been paid and a Form 706-CE 

evidencing payment is filed. Section 2014(g) provides that for 

credits for foreign death taxes, each U.S. possession is 

deemed a foreign country.

Convert death taxes paid to the foreign country into U.S. 

dollars by using the rate of exchange in effect at the time 

each payment of foreign tax is made.

If a credit is claimed for any foreign death tax that is later 

recovered, see Regulations section 20.2016-1 for the notice 

required within 30 days.

Limitation Period

The credit for foreign death taxes is limited to those taxes that 

were actually paid and for which a credit was claimed within 

the later of 4 years after the filing of the estate tax return, 

before the date of expiration of any extension of time for 

payment of the federal estate tax, or 60 days after a final 

decision of the Tax Court on a timely filed petition for a 

redetermination of a deficiency.

Credit Under the Statute

For the credit allowed by the statute, the question of whether 

particular property is situated in the foreign country imposing 

the tax is determined by the same principles that would apply 

in determining whether similar property of a nonresident not a 

U.S. citizen is situated within the United States for purposes 

of the federal estate tax. See the Instructions for Form 

706-NA.

Computation of Credit Under the Statute

Item 1. Enter the amount of the estate, inheritance, legacy, 

and succession taxes paid to the foreign country and its 

possessions or political subdivisions, attributable to property 

that is:

• Situated in that country,

• Subjected to these taxes, and

• Included in the gross estate.

The amount entered on item 1 should not include any tax 

paid to the foreign country for property not situated in that 

country and should not include any tax paid to the foreign 

country for property not included in the gross estate. If only a 

part of the property subjected to foreign taxes is both situated 

in the foreign country and included in the gross estate, it will 

be necessary to determine the portion of the taxes 

attributable to that part of the property. Also, attach the 

computation of the amount entered on item 1.

Item 2. Enter the value of the gross estate, less the total of 

the deductions on items 21 and 22 of Part 5—Recapitulation.

Item 3. Enter the value of the property situated in the foreign 

country that is subjected to the foreign taxes and included in 

the gross estate, less those portions of the deductions taken 

on Schedules M and O that are attributable to the property.

Item 4. Subtract any credit claimed on line 15 for federal gift 

taxes on pre-1977 gifts (section 2012) from line 12 of Part 

2—Tax Computation, and enter the balance on item 4 of 

Schedule P.

Credit Under Treaties

If you are reporting any items on this return based on the 

provisions of a death tax treaty, you may have to attach a 

statement to this return disclosing the return position that is 

treaty based. See Regulations section 301.6114-1 for details.

In general. If the provisions of a treaty apply to the estate of 

a U.S. citizen or resident, a credit is authorized for payment of 

the foreign death tax or taxes specified in the treaty. Treaties 

with death tax conventions are in effect with the following 

countries: Australia, Austria, Canada, Denmark, Finland, 

France, Germany, Greece, Ireland, Italy, Japan, the 

Netherlands, South Africa, Switzerland, and the United 

Kingdom.

Instructions for Form 706 (Rev. 09-2023) -43-
A credit claimed under a treaty is in general figured on 

Schedule P in the same manner as the credit is figured under 

the statute with the following principal exceptions.

• The situs rules contained in the treaty apply in 

determining whether property was situated in the foreign 

country.

• The credit may be allowed only for payment of the death 

tax or taxes specified in the treaty (but see the 

instructions earlier for credit under the statute for death 

taxes paid to each political subdivision or possession of 

the treaty country that are not directly or indirectly 

creditable under the treaty).

• If specifically provided, the credit is proportionately 

shared for the tax applicable to property situated outside 

both countries, or that was deemed in some instances 

situated within both countries.

• The amount entered on item 4 of Schedule P is the 

amount shown on line 12 of Part 2—Tax Computation, 

less the total of the credits claimed for federal gift taxes 

on pre-1977 gifts (section 2012) and for tax on prior 

transfers (line 14 of Part 2—Tax Computation). (If a credit 

is claimed for tax on prior transfers, it will be necessary to 

complete Schedule Q before completing Schedule P.) 

For examples of computations of credits under the 

treaties, see the applicable regulations.

Note. For computation of credit, in cases where property is 

situated outside both countries or deemed situated within 

both countries, see the appropriate treaty for details.

Schedule Q—Credit for Tax on Prior 

Transfers

General

Complete Schedule Q and file it with the return if you claim a 

credit on Part 2—Tax Computation, line 14.

The term “transferee” means the decedent for whose 

estate this return is filed. If the transferee received property 

from a transferor who died within 10 years before, or 2 years 

after, the transferee, a credit is allowable on this return for all 

or part of the federal estate tax paid by the transferor's estate 

for the transfer. There is no requirement that the property be 

identified in the estate of the transferee or that it exist on the 

date of the transferee's death. It is sufficient for the allowance 

of the credit that the transfer of the property was subjected to 

federal estate tax in the estate of the transferor and that the 

specified period of time has not elapsed. A credit may be 

allowed for property received as the result of the exercise or 

nonexercise of a power of appointment when the property is 

included in the gross estate of the donee of the power.

If the transferee was the transferor's surviving spouse, no 

credit is allowed for property received from the transferor to 

the extent that a marital deduction was allowed to the 

transferor's estate for the property. There is no credit for tax 

on prior transfers for federal gift taxes paid in connection with 

the transfer of the property to the transferee.

If you are claiming a credit for tax on prior transfers on 

Form 706-NA, you should first complete and attach Part 

5—Recapitulation from Form 706 before figuring the credit on 

Schedule Q from Form 706.

Section 2056(d)(3) contains specific rules for allowing a 

credit for certain transfers to a spouse who was not a U.S. 

citizen where the property passed outright to the spouse, or 

to a qualified domestic trust.

Property

The term “property” includes any interest (legal or equitable) 

of which the transferee received the beneficial ownership. 

The transferee is considered the beneficial owner of property 

over which the transferee received a general power of 

appointment. Property does not include interests to which the 

transferee received only a bare legal title, such as that of a 

trustee. Neither does it include an interest in property over 

which the transferee received a power of appointment that is 

not a general power of appointment. In addition to interests in 

which the transferee received the complete ownership, the 

credit may be allowed for annuities, life estates, terms for 

years, remainder interests (whether contingent or vested), 

and any other interest that is less than the complete 

ownership of the property, to the extent that the transferee 

became the beneficial owner of the interest.

Maximum Amount of the Credit

The maximum amount of the credit is the smaller of:

1. The amount of the estate tax of the transferor's estate 

attributable to the transferred property, or

2. The amount by which:

a. An estate tax on the transferee's estate determined 

without the credit for tax on prior transfers exceeds

b. An estate tax on the transferee's estate determined 

by excluding from the gross estate the net value of 

the transfer.

If credit for a particular foreign death tax may be taken under 

either the statute or a death duty convention, and on this 

return the credit actually is taken under the convention, then 

no credit for that foreign death tax may be taken into 

consideration in figuring estate tax (2a) or estate tax (2b) 

above.

Percent Allowable

Where transferee predeceased the transferor. If not 

more than 2 years elapsed between the dates of death, the 

credit allowed is 100% of the maximum amount. If more than 

2 years elapsed between the dates of death, no credit is 

allowed.

Where transferor predeceased the transferee. The 

percent of the maximum amount that is allowed as a credit 

depends on the number of years that elapsed between dates 

of death. It is determined using the following table.

Period of Time

Exceeding Not Exceeding

Percent 

Allowable

- - - - - 2 years 100

2 years 4 years 80

4 years 6 years 60

6 years 8 years 40

8 years 10 years 20

10 years - - - - - none

How To Figure the Credit

A worksheet for Schedule Q is provided to allow you to figure 

the limits before completing Schedule Q. Transfer the 

appropriate amounts from the worksheet to Schedule Q as 

indicated on the schedule. You do not need to file the 

worksheet with Form 706, but keep it for your records.

-44- Instructions for Form 706 (Rev. 09-2023)
Cases involving transfers from two or more transferors. 

Part I of the worksheet and Schedule Q enable you to figure 

the credit for as many as three transferors. The number of 

transferors is irrelevant to Part II of the worksheet. If you are 

figuring the credit for more than three transferors, use more 

than one worksheet and Schedule Q, Part I, and combine the 

totals for the appropriate lines.

Section 2032A additional tax. If the transferor's estate 

elected special-use valuation and the additional estate tax of 

section 2032A(c) was imposed at any time up to 2 years after 

the death of the decedent for whom you are filing this return, 

check the box on Schedule Q. On lines 1 and 9 of the 

worksheet, include the property subject to the additional 

estate tax at its FMV rather than its special-use value. On 

line 10 of the worksheet, include the additional estate tax 

paid as a federal estate tax paid.

How To Complete the Schedule Q Worksheet

Most of the information to complete Part I of the worksheet 

should be obtained from the transferor's Form 706.

Line 5. Enter on line 5 the applicable marital deduction 

claimed for the transferor's estate (from the transferor's Form 

706).

Lines 10 through 18. Enter on these lines the appropriate 

taxes paid by the transferor's estate.

If the transferor's estate elected to pay the federal estate 

tax in installments, enter on line 10 only the total of the 

installments that have actually been paid at the time you file 

this Form 706. See Rev. Rul. 83-15, 1983-1 C.B. 224, for 

more details.

Line 21. Add lines 11 (allowable applicable credit) and 13 

(foreign death taxes credit) of Part 2—Tax Computation to the 

amount of any credit taken (on line 15) for federal gift taxes 

on pre-1977 gifts (section 2012). Subtract this total from Part 

2—Tax Computation, line 8. Enter the result on line 21 of the 

worksheet.

Line 26. If you figured the marital deduction using the 

unlimited marital deduction in effect for decedents dying after 

1981, for purposes of determining the marital deduction for 

the reduced gross estate, see Rev. Rul. 90-2, 1990-1 C.B. 

169. To determine the “reduced adjusted gross estate,” 

subtract the amount on line 25 of the Worksheet for 

Schedule Q from the amount on line 24 of the worksheet. If 

community property is included in the amount on line 24 of 

the worksheet, figure the reduced adjusted gross estate 

using the rules of Regulations section 20.2056(c)-2 and Rev. 

Rul. 76-311, 1976-2 C.B. 261.

Instructions for Form 706 (Rev. 09-2023) -45-
Worksheet for Schedule Q—Credit for Tax on Prior Transfers

Part I Transferor’s tax on prior transfers

Total for all transfers

(line 8 only) Item

Transferor (From Schedule Q)

A B C

1. Gross value of prior transfer to this transferee .............

2. Death taxes payable from prior transfer .................

3. Encumbrances allocable to prior transfer ................

4. Obligations allocable to prior transfer ..................

5. Marital deduction applicable to line 1 above, as shown on transferor’s 

Form 706 ..................................

6. TOTAL. Add lines 2, 3, 4, and 5 .....................

7. Net value of transfers. Subtract line 6 from line 1 ..........

8. Net value of transfers. Add columns A, B, and C of line 7 ......

9. Transferor’s tentative taxable estate (see line 3a, page 1, Form 

706) .....................................

10. Federal estate tax paid ..........................

11. State death taxes paid ...........................

12. Foreign death taxes paid .........................

13. Other death taxes paid ..........................

14. TOTAL taxes paid. Add lines 10, 11, 12, and 13 ...........

15. Value of transferor’s estate. Subtract line 14 from line 9 ......

16. Net federal estate tax paid on transferor’s estate ............

17. Credit for gift tax paid on transferor’s estate with respect to pre-1977 

gifts (section 2012) ............................

18. Credit allowed transferor’s estate for tax on prior transfers from prior 

transferor(s) who died within 10 years before death of 

decedent ..................................

19. Tax on transferor’s estate. Add lines 16, 17, and 18 .........

20. Transferor’s tax on prior transfers ((line 7 ÷ line 15) × line 19 of 

respective estates) ............................

Part II Transferee’s tax on prior transfers

Item Amount

21. Transferee’s actual tax before allowance of credit for prior transfers (see instructions) .................................. 21.

22. Total gross estate of transferee from line 1 of the Tax Computation, page 1, Form 706 .................................. 22.

23. Net value of all transfers from line 8 of this worksheet ..................................................... 23.

24. Transferee’s reduced gross estate. Subtract line 23 from line 22 ............................................... 24.

25. Total debts and deductions (not including marital and charitable deductions) (line 3b of Part 2—Tax 

Computation, page 1; and items 18, 19, and 20 of the Recapitulation, page 3, Form 706) .......... 25.

26. Marital deduction from item 21, Recapitulation, page 3, Form 706 (see instructions) ............. 26.

27. Charitable bequests from item 22, Recapitulation, page 3, Form 706 ...................... 27.

28. Charitable deduction proportion ([line 23 ÷ (line 22 – line 25)] × line 27) .................... 28.

29. Reduced charitable deduction. Subtract line 28 from line 27 ........................... 29.

30. Transferee’s deduction as adjusted. Add lines 25, 26, and 29 ................................................ 30.

31. (a) Transferee’s reduced taxable estate. Subtract line 30 from line 24 .............................................. 31(a).

(b) Adjusted taxable gifts ....................................................................... 31(b).

(c) Total reduced taxable estate. Add lines 31(a) and 31(b) ................................................... 31(c).

32. Tentative tax on reduced taxable estate ....................................... 32.

33. (a) Post-1976 gift taxes paid ......................... 33(a).

(b) Unified credit (applicable credit amount) ................ 33(b).

(c) Section 2012 gift tax credit ........................ 33(c).

(d) Section 2014 foreign death tax credit .................. 33(d).

(e) Total credits. Add lines 33(a) through 33(d) ..................................... 33(e).

34. Net tax on reduced taxable estate. Subtract line 33(e) from line 32 ............................................. 34.

35. Transferee’s tax on prior transfers. Subtract line 34 from line 21 ............................................... 35.

-46- Instructions for Form 706 (Rev. 09-2023)
Schedules R and 

R-1—Generation-Skipping Transfer 

Tax

Introduction and Overview

Schedule R is used to figure the generation-skipping transfer 

(GST) tax that is payable by the estate. Schedule R-1 is used 

to figure the GST tax that is payable by certain trusts that are 

includible in the gross estate.

The GST tax reported on Form 706 is imposed on only 

direct skips occurring at death. Unlike the estate tax, which is 

imposed on the value of the entire taxable estate regardless 

of who receives it, the GST tax is imposed on only the value 

of interests in property, wherever located, that actually pass 

to certain transferees, who are referred to as skip persons 

(defined later).

For purposes of Form 706, the property interests 

transferred must be includible in the gross estate before they 

are subject to the GST tax. Therefore, the first step in figuring 

the GST tax liability is to determine the property interests 

includible in the gross estate by completing Schedules A 

through I of Form 706.

The second step is to determine who the skip persons are. 

To do this, assign each transferee to a generation and 

determine whether each transferee is a natural person or a 

trust for GST purposes. See section 2613 and Regulations 

section 26.2612-1(d) for details.

The third step is to determine which skip persons are 

transferees of interests in property. If the skip person is a 

natural person, anything transferred is an interest in property. 

If the skip person is a trust, make this determination using the 

rules under Interest in property, later. These first three steps 

are described in detail under Determining Which Transfers 

Are Direct Skips, later.

The fourth step is to determine whether to enter the 

transfer on Schedule R or on Schedule R-1. See the rules 

under Dividing Direct Skips Between Schedules R and R-1, 

later.

The fifth step is to complete Schedules R and R-1 using 

the How To Complete instructions for each schedule.

Determining Which Transfers Are Direct Skips

Effective dates. The rules below apply only for the purpose 

of determining if a transfer is a direct skip that should be 

reported on Schedule R or R-1 of Form 706.

In general. The GST tax is effective for the estates of 

decedents dying after October 22, 1986.

Irrevocable trusts. The GST tax will not apply to any 

transfer under a trust that was irrevocable on September 25, 

1985, but only to the extent that the transfer was not made 

out of corpus added to the trust after September 25, 1985. 

An addition to the corpus after that date will cause a 

proportionate part of future income and appreciation to be 

subject to the GST tax. For more information, see 

Regulations section 26.2601-1(b)(1).

Mental disability. If, on October 22, 1986, the decedent 

was under a mental disability to change the disposition of 

property owned and did not regain the competence to 

dispose of property before death, the GST tax will not apply 

to any property included in the gross estate (other than 

property transferred on behalf of the decedent during life and 

after October 21, 1986). The GST tax will also not apply to 

any transfer under a trust to the extent that the trust consists 

of property included in the gross estate (other than property 

transferred on behalf of the decedent during life and after 

October 21, 1986).

Under a mental disability means the decedent lacked the 

competence to execute an instrument governing the 

disposition of property owned, regardless of whether there 

was an adjudication of incompetence or an appointment of 

any other person charged with the care of the person or 

property of the transferor.

If the decedent had been adjudged mentally incompetent, 

a copy of the judgment or decree must be filed with this 

return.

If the decedent had not been adjudged mentally 

incompetent, the executor must file with the return a 

certification from a qualified physician stating that in the 

physician’s opinion the decedent had been mentally 

incompetent at all times on and after October 22, 1986, and 

that the decedent had not regained the competence to 

modify or revoke the terms of the trust or will prior to the 

decedent’s death or a statement as to why no such 

certification may be obtained from a physician.

Direct skip. The GST tax reported on Form 706 and 

Schedule R-1 is imposed only on direct skips. For purposes 

of Form 706, a direct skip is a transfer that is:

• Subject to the estate tax,

• Of an interest in property, and

• To a skip person.

All three requirements must be met before the transfer is 

subject to the GST tax. A transfer is subject to the estate tax if 

you are required to list it on any of Schedules A through I of 

Form 706. To determine if a transfer is of an interest in 

property and to a skip person, you must first determine if the 

transferee is a natural person or a trust, as defined later.

Trust. For purposes of the GST tax, a trust includes not only 

an ordinary trust (as defined in Special rule for trusts other 

than ordinary trusts, later), but also any other arrangement 

(other than an estate) which, although not explicitly a trust, 

has substantially the same effect as a trust. For example, a 

trust includes life estates with remainders, terms for years, 

and insurance and annuity contracts.

Substantially separate and independent shares of different 

beneficiaries in a trust are treated as separate trusts.

Interest in property. If a transfer is made to a natural 

person, it is always considered a transfer of an interest in 

property for purposes of the GST tax.

If a transfer is made to a trust, a person will have an 

interest in the property transferred to the trust if that person 

either has a present right to receive income or corpus from 

the trust (such as an income interest for life) or is a 

permissible current recipient of income or corpus from the 

trust (that is, may receive income or corpus at the discretion 

of the trustee).

Skip person. A transferee who is a natural person is a skip 

person if that transferee is assigned to a generation that is 

two or more generations below the generation assignment of 

the decedent. See Determining the generation of a 

transferee, later.

A transferee who is a trust is a skip person if all the 

interests in the property (as defined above) transferred to the 

Instructions for Form 706 (Rev. 09-2023) -47-
trust are held by skip persons. Thus, whenever a non-skip 

person has an interest in a trust, the trust will not be a skip 

person even though a skip person also has an interest in the 

trust.

A trust will also be a skip person if there are no interests in 

the property transferred to the trust held by any person, and 

future distributions or terminations from the trust can be 

made only to skip persons.

Non-skip person. A non-skip person is any transferee who 

is not a skip person.

Determining the generation of a transferee. Generally, a 

generation is determined along family lines as follows.

1. Where the beneficiary is a lineal descendant of a 

grandparent of the decedent (that is, the decedent's 

cousin, niece, nephew, etc.), the number of generations 

between the decedent and the beneficiary is determined 

by subtracting the number of generations between the 

grandparent and the decedent from the number of 

generations between the grandparent and the 

beneficiary.

2. Where the beneficiary is a lineal descendant of a 

grandparent of a spouse (or former spouse) of the 

decedent, the number of generations between the 

decedent and the beneficiary is determined by 

subtracting the number of generations between the 

grandparent and the spouse (or former spouse) from the 

number of generations between the grandparent and the 

beneficiary.

3. A person who at any time was married to a person 

described in (1) or (2) above is assigned to the 

generation of that person. A person who at any time was 

married to the decedent is assigned to the decedent's 

generation.

4. A relationship by adoption or half-blood is treated as a 

relationship by whole-blood.

5. A person who is not assigned to a generation according 

to (1), (2), (3), or (4) above is assigned to a generation 

based on the birth date, as follows.

a. A person who was born not more than 121/2 years 

after the decedent is in the decedent's generation.

b. A person born more than 121/2 years, but not more 

than 371/2 years, after the decedent is in the first 

generation younger than the decedent.

c. A similar rule applies for a new generation every 25 

years.

If more than one of the rules for assigning generations 

applies to a transferee, that transferee is generally assigned 

to the youngest of the generations that would apply.

If an estate, trust, partnership, corporation, or other entity 

(other than certain charitable organizations and trusts 

described in sections 511(a)(2) and 511(b)(2)) is a 

transferee, then each person who indirectly receives the 

property interests through the entity is treated as a transferee 

and is assigned to a generation, as explained in the above 

rules. However, this look-through rule does not apply for the 

purpose of determining whether a transfer to a trust is a direct 

skip.

Generation assignment where intervening parent is 

deceased. A special rule may apply in the case of the death 

of a parent of the transferee. For terminations, distributions, 

and transfers after December 31, 1997, the existing rule that 

applied to grandchildren of the decedent has been extended 

to apply to other lineal descendants.

If property is transferred to an individual who is a 

descendant of a parent of the transferor, and that individual's 

parent (who is a lineal descendant of the parent of the 

transferor) is deceased at the time the transfer is subject to 

gift or estate tax, then for purposes of generation assignment, 

the individual is treated as if the individual is a member of the 

generation that is one generation below the lower of:

• The transferor's generation; or

• The generation assignment of the youngest living 

ancestor of the individual, who is also a descendant of 

the parent of the transferor.

The same rules apply to the generation assignment of any 

descendant of the individual.

This rule does not apply to a transfer to an individual who 

is not a lineal descendant of the transferor if the transferor 

has any living lineal descendants.

If any transfer of property to a trust would have been a 

direct skip except for this generation assignment rule, then 

the rule also applies to transfers from the trust attributable to 

such property.

See the examples in Regulations section 26.2651-1(c).

Generation assignment under Notice 2017-15. Notice 

2017-15 permits taxpayers to reduce their GST exemption 

allocated to transfers that were made to or for the benefit of 

transferees whose generation assignment is changed as a 

result of the Windsor decision. A taxpayer’s GST exemption 

that was allocated to a transfer to (or to a trust for the sole 

benefit of) one or more transferees whose generation 

assignment should have been determined on the basis of a 

familial relationship as the result of the Windsor decision, and 

are non-skip persons, is deemed void. For additional 

information, go to IRS.gov/Businesses/Small-BusinessesSelf-Employed/Estate-and-Gift-Taxes.

Ninety-day rule. For purposes of determining if an 

individual's parent is deceased at the time of a testamentary 

transfer, an individual's parent who dies no later than 90 days 

after a transfer occurring by reason of the death of the 

transferor is treated as having predeceased the transferor. 

The 90-day rule applies to transfers occurring on or after July 

18, 2005. See Regulations section 26.2651-1 for more 

information.

Charitable organizations. Charitable organizations and 

trusts described in sections 511(a)(2) and 511(b)(2) are 

assigned to the decedent's generation. Transfers to such 

organizations are therefore not subject to the GST tax.

Charitable remainder trusts. Transfers to or in the form 

of charitable remainder annuity trusts, charitable remainder 

unitrusts, and pooled income funds are not considered made 

to skip persons and, therefore, are not direct skips even if all 

of the life beneficiaries are skip persons.

Estate tax value. Estate tax value is the value shown on 

Schedules A through I of this Form 706.

Examples. The rules above can be illustrated by the 

following examples.

1. Under the will, the decedent's house is transferred to the 

decedent's child for the child’s life, with the remainder 

passing to the child’s children. This transfer is made to a 

“trust” even though there is no explicit trust instrument. 

The interest in the property transferred (the present right 

to use the house) is transferred to a non-skip person (the 

-48- Instructions for Form 706 (Rev. 09-2023)
decedent's child). Therefore, the trust is not a skip 

person because there is an interest in the transferred 

property that is held by a non-skip person. The transfer is 

not a direct skip.

2. The will bequeaths $100,000 to the decedent's 

grandchild. This transfer is a direct skip that is not made 

in trust and should be shown on Schedule R.

3. The will establishes a trust that is required to accumulate 

income for 10 years and then pay its income to the 

decedent's grandchildren for the rest of their lives and, 

upon their deaths, distribute the corpus to the decedent's 

great-grandchildren. Because the trust has no current 

beneficiaries, there are no present interests in the 

property transferred to the trust. All of the persons to 

whom the trust can make future distributions (including 

distributions upon the termination of interests in property 

held in trust) are skip persons (for example, the 

decedent's grandchildren and great-grandchildren). 

Therefore, the trust itself is a skip person and you should 

show the transfer on Schedule R.

4. The will establishes a trust that is to pay all of its income 

to the decedent's grandchildren for 10 years. At the end 

of 10 years, the corpus is to be distributed to the 

decedent's children. All of the present interests in this 

trust are held by skip persons. Therefore, the trust is a 

skip person and you should show this transfer on 

Schedule R. You should show the estate tax value of all 

the property transferred to the trust even though the trust 

has some ultimate beneficiaries who are non-skip 

persons.

Dividing Direct Skips Between Schedules R and 

R-1

Report all generation-skipping transfers on 

Schedule R unless the rules below specifically 

provide that they are to be reported on Schedule R-1.

Under section 2603(a)(2), the GST tax on direct skips 

from a trust (as defined for GST tax purposes) is to be paid 

by the trustee and not by the estate. Schedule R-1 serves as 

a notification from the executor to the trustee that a GST tax 

is due.

For a direct skip to be reportable on Schedule R-1, the 

trust must be includible in the decedent's gross estate.

If the decedent was a surviving spouse receiving lifetime 

benefits from a marital deduction power of appointment (or 

QTIP) trust created by the decedent's spouse, then transfers 

caused by reason of the decedent's death from that trust to 

skip persons are direct skips required to be reported on 

Schedule R-1.

If a direct skip is made “from a trust” under these rules, it is 

reportable on Schedule R-1 even if it is also made “to a trust” 

rather than to an individual.

Similarly, if property in a trust (as defined for GST tax 

purposes) is included in the decedent's gross estate under 

section 2035, 2036, 2037, 2038, 2039, 2041, or 2042 and 

such property is, by reason of the decedent's death, 

transferred to skip persons, the transfers are direct skips 

required to be reported on Schedule R-1.

Special rule for trusts other than ordinary trusts. An 

ordinary trust is defined in Regulations section 301.7701-4(a) 

as “an arrangement created by a will or by an inter vivos 

TIP

declaration whereby trustees take title to property for the 

purpose of protecting or conserving it for the beneficiaries 

under the ordinary rules applied in chancery or probate 

courts.” Direct skips from ordinary trusts are required to be 

reported on Schedule R-1 regardless of their size unless the 

executor is also a trustee (see Executor as trustee below).

Direct skips from trusts that are trusts for GST tax 

purposes but are not ordinary trusts are to be shown on 

Schedule R-1 only if the total of all tentative maximum direct 

skips from the entity is $250,000 or more. If this total is less 

than $250,000, the skips should be shown on Schedule R. 

For purposes of the $250,000 limit, tentative maximum direct 

skips is the amount you would enter on line 5 of 

Schedule R-1 if you were to file that schedule.

A liquidating trust (such as a bankruptcy trust) under 

Regulations section 301.7701-4(d) is not treated as an 

ordinary trust for the purposes of this special rule.

If the proceeds of a life insurance policy are includible in 

the gross estate and are payable to a beneficiary who is a 

skip person, the transfer is a direct skip from a trust that is not 

an ordinary trust. It should be reported on Schedule R-1 if the 

total of all the tentative maximum direct skips from the 

company is $250,000 or more. Otherwise, it should be 

reported on Schedule R.

Similarly, if an annuity is includible on Schedule I and its 

survivor benefits are payable to a beneficiary who is a skip 

person, then the estate tax value of the annuity should be 

reported as a direct skip on Schedule R-1 if the total tentative 

maximum direct skips from the entity paying the annuity are 

$250,000 or more.

Executor as trustee. If any of the executors of the 

decedent's estate are trustees of the trust, then all direct 

skips for that trust must be shown on Schedule R and not on 

Schedule R-1, even if they would otherwise have been 

required to be shown on Schedule R-1. This rule applies 

even if the trust has other trustees who are not executors of 

the decedent's estate.

How To Complete Schedules R and R-1

Valuation. Enter on Schedules R and R-1 the estate tax 

value of the property interests subject to the direct skips. If 

you elected alternate valuation (section 2032) and/or 

special-use valuation (section 2032A), you must use the 

alternate and/or special-use values on Schedules R and R-1.

How To Complete Schedule R

Part 1. GST Exemption Reconciliation

Part 1, line 6, of both Parts 2 and 3, and line 4 of 

Schedule R-1 are used to allocate the decedent's GST 

exemption. This allocation is made by filing Form 706 and 

attaching a completed Schedule R and/or R-1. Once made, 

the allocation is irrevocable. You are not required to allocate 

all of the decedent's GST exemption. However, the portion of 

the exemption that you do not allocate will be allocated by the 

IRS under the deemed allocation of unused GST exemption 

rules of section 2632(e).

For transfers made through 1998, the GST exemption was 

$1 million. The current GST exemption is $12,920,000. The 

exemption amounts for 1999 through 2023 are as follows.

Instructions for Form 706 (Rev. 09-2023) -49-
Year of transfer GST exemption

1999 $1,010,000

2000 $1,030,000

2001 $1,060,000

2002 $1,100,000

2003 $1,120,000

2004 and 2005 $1,500,000

2006, 2007, and 2008 $2,000,000

2009 $3,500,000

2010 and 2011 $5,000,000

2012 $5,120,000

2013 $5,250,000

2014 $5,340,000

2015 $5,430,000

2016 $5,450,000

2017 $5,490,000

2018 $11,180,000

2019 $11,400,000

2020 $11,580,000

2021 $11,700,000

2022 $12,060,000

2023 $12,920,000

The amount of each increase can only be allocated to 

transfers made (or appreciation that occurred) during or after 

the year of the increase. The following example shows the 

application of this rule.

Example. In 2003, Alex made a direct skip of $1,120,000 

and applied the full $1,120,000 of GST exemption to the 

transfer. Alex made a $450,000 taxable direct skip in 2004 

and another of $90,000 in 2006. For 2004, Alex can only 

apply $380,000 of exemption ($380,000 inflation adjustment 

from 2004) to the $450,000 transfer in 2004. For 2006, Alex 

can apply $90,000 of exemption to the 2006 transfer, but 

nothing to the transfer made in 2004. At the end of 2006, Alex 

would have $410,000 of unused exemption that can apply to 

future transfers (or appreciation) starting in 2007.

Special QTIP election. In the case of property for which a 

marital deduction is allowed to the decedent's estate under 

section 2056(b)(7) (QTIP election), section 2652(a)(3) allows 

you to treat such property for purposes of the GST tax as if 

the election to be treated as qualified terminable interest 

property had not been made.

The section 2652(a)(3) election must include the value of 

all property in the trust for which a QTIP election was allowed 

under section 2056(b)(7).

If a section 2652(a)(3) election is made, then the decedent 

will, for GST tax purposes, be treated as the transferor of all 

the property in the trust for which a marital deduction was 

allowed to the decedent's estate under section 2056(b)(7). In 

this case, the executor of the decedent's estate may allocate 

part or all of the decedent's GST exemption to the property.

You make the election simply by listing qualifying property 

on line 9 of Part 1.

Line 2. These allocations will have been made either on 

Forms 709 filed by the decedent or on Notices of Allocation 

made by the decedent for inter vivos transfers that were not 

direct skips but to which the decedent allocated the GST 

exemption. These allocations by the decedent are 

irrevocable.

Also include on this line allocations deemed to have been 

made by the decedent under the rules of section 2632. 

Unless the decedent elected out of the deemed allocation 

rules, allocations are deemed to have been made in the 

following order.

1. To inter vivos direct skips.

2. Beginning with transfers made after December 31, 2000, 

to lifetime transfers to certain trusts, by the decedent, 

that constituted indirect skips that were subject to the gift 

tax.

For more information, see section 2632 and related 

regulations.

Line 3. Make an entry on this line if you are filing Form(s) 

709 for the decedent and wish to allocate any exemption.

Lines 4, 5, and 6. These lines represent your allocation of 

the GST exemption to direct skips made by reason of the 

decedent's death. Complete Parts 2 and 3 and Schedule R-1 

before completing these lines.

Line 9. Line 9 is used to allocate the remaining unused GST 

exemption (from line 8) and to help you figure the trust's 

inclusion ratio. Line 9 is a Notice of Allocation for allocating 

the GST exemption to trusts as to which the decedent is the 

transferor and from which a generation-skipping transfer 

could occur after the decedent's death.

If line 9 is not completed, the deemed allocation at death 

rules will apply to allocate the decedent's remaining unused 

GST exemption. The exemption will first be allocated to 

property that is the subject of a direct skip occurring at the 

decedent's death, and then to trusts as to which the 

decedent is the transferor. To avoid the application of the 

deemed allocation rules, you should enter on line 9 every 

trust (except certain trusts entered on Schedule R-1, as 

described later) to which you wish to allocate any part of the 

decedent's GST exemption. Unless you enter a trust on 

line 9, the unused GST exemption will be allocated to it under 

the deemed allocation rules.

If a trust is entered on Schedule R-1, the amount you 

entered on line 4 of Schedule R-1 serves as a Notice of 

Allocation and you need not enter the trust on line 9 unless 

you wish to allocate more than the Schedule R-1, line 4, 

amount to the trust. However, you must enter the trust on 

line 9 if you wish to allocate any of the unused GST 

exemption amount to it. Such an additional allocation would 

not ordinarily be appropriate in the case of a trust entered on 

Schedule R-1 when the trust property passes outright (rather 

than to another trust) at the decedent's death. However, 

where section 2032A property is involved, it may be 

appropriate to allocate additional exemption amounts to the 

property. See the instructions for line 10, later.

To avoid application of the deemed allocation rules, 

Form 706 and Schedule R should be filed to allocate 

the exemption to trusts that may later have taxable 

terminations or distributions under section 2612 even if the 

form is not required to be filed to report estate or GST tax.

Line 9, column C. Enter the GST exemption, included on 

lines 2 through 6 of Part 1 of Schedule R (discussed above), 

that was allocated to the trust.

Line 9, column D. Allocate the amount on line 8 of Part 1 

of Schedule R in line 9, column D. This amount may be 

allocated to transfers into trusts that are not otherwise 

reported on Form 706. For example, the line 8 amount may 

be allocated to an inter vivos trust established by the 

decedent during the decedent’s lifetime and not included in 

the gross estate. This allocation is made by identifying the 

CAUTION

!

-50- Instructions for Form 706 (Rev. 09-2023)
trust on line 9 and making an allocation to it using column D. 

If the trust is not included in the gross estate, value the trust 

as of the date of death. Inform the trustee of each trust listed 

on line 9 of the total GST exemption you allocated to the trust. 

The trustee will need this information to figure the GST tax on 

future distributions and terminations.

Line 9, column E. Trust's inclusion ratio. The trustee 

must know the trust's inclusion ratio to figure the trust's GST 

tax for future distributions and terminations. You are not 

required to inform the trustee of the inclusion ratio and may 

not have enough information to figure it. Therefore, you are 

not required to make an entry in column E. However, column 

E and the worksheet later are provided to assist you in 

figuring the inclusion ratio for the trustee if you wish to do so.

Inform the trustee of the amount of the GST exemption you 

allocated to the trust. Line 9, columns C and D, may be used 

to figure this amount for each trust.

Note. This worksheet will figure an accurate inclusion ratio 

only if the decedent was the only settlor of the trust. Use a 

separate worksheet for each trust (or a separate share of a 

trust that is treated as a separate trust).

WORKSHEET (Inclusion Ratio)

1. Total estate and gift tax value of all of the property 

interests that passed to the trust ..........

2. Estate taxes, state death taxes, and other charges 

actually recovered from the trust ..........

3. GST taxes imposed on direct skips to skip persons 

other than this trust and borne by the property 

transferred to this trust ................

4. GST taxes actually recovered from this trust (from 

Schedule R, Part 2, line 8; or Schedule R-1, 

line 6) ..........................

5. Add lines 2 through 4 .................

6. Subtract line 5 from line 1 ..............

7. Add columns C and D of line 9 ...........

8. Divide line 7 by line 6 .................

9. Trust's inclusion ratio. Subtract line 8 from 

1.000 ..........................

Line 10. Special-use allocation. For skip persons who 

receive an interest in section 2032A special-use property, you 

may allocate more GST exemption than the direct skip 

amount to reduce the additional GST tax that would be due 

when the interest is later disposed of or qualified use ceases. 

See Schedule A-1, earlier, for more details about this 

additional GST tax.

Enter on line 10 the total additional GST exemption 

available to allocate to all skip persons who received any 

interest in section 2032A property. Attach a special-use 

allocation statement listing each such skip person and the 

amount of the GST exemption allocated to that person.

If you do not allocate the GST exemption, it will 

automatically be allocated under the deemed allocation at 

death rules. To the extent any amount is not so allocated, it 

will be automatically allocated to the earliest disposition or 

cessation that is subject to the GST tax. Under certain 

circumstances, post-death events may cause the decedent 

to be treated as a transferor for purposes of chapter 13.

Line 10 may be used to set aside an exemption amount for 

such an event. Attach a statement listing each such event 

and the amount of exemption allocated to that event.

Parts 2 and 3

Use Part 2 to figure the GST tax on transfers in which the 

property interests transferred are to bear the GST tax on the 

transfers. Use Part 3 to report the GST tax on transfers in 

which the property interests transferred do not bear the GST 

tax on the transfers.

Section 2603(b) requires that, unless the governing 

instrument provides otherwise, the GST tax is to be charged 

to the property constituting the transfer. Therefore, you will 

usually enter all of the direct skips on Part 2.

You may enter a transfer on Part 3 only if the will or trust 

instrument directs, by specific reference, that the GST tax is 

not to be paid from the transferred property interests.

Part 2, line 3. Enter zero on this line unless the will or trust 

instrument specifies that the GST taxes will be paid by 

property other than that constituting the transfer (as 

described above). Enter on line 3 the total of the GST taxes 

shown on Part 3 and Schedule(s) R-1 that are payable out of 

the property interests shown on Part 2, line 1.

Part 2, line 6. Do not enter more than the amount on line 5. 

Additional allocations may be made using Part 1.

Part 3, line 3. See the instructions for Part 2, line 3, above. 

Enter only the total of the GST taxes shown on Schedule(s) 

R-1 that are payable out of the property interests shown on 

Part 3, line 1.

Part 3, line 6. See the instructions for Part 2, line 6, above.

How To Complete Schedule R-1

Filing due date. Enter the due date of Form 706. You must 

send the copies of Schedule R-1 to the fiduciary before this 

date.

Line 4. Do not enter more than the amount on line 3. If you 

wish to allocate an additional GST exemption, you must use 

Schedule R, Part 1. Making an entry on line 4 constitutes a 

Notice of Allocation of the decedent's GST exemption to the 

trust.

Line 6. If the property interests entered on line 1 will not bear 

the GST tax, multiply line 6 by 40% (0.40).

Signature. The executor(s) must sign Schedule R-1 in the 

same manner as Form 706. See Signature and Verification, 

earlier.

Filing Schedule R-1. Attach to Form 706 one copy of each 

Schedule R-1 that you prepare. Send two copies of each 

Schedule R-1 to the fiduciary.

Schedule U—Qualified Conservation 

Easement Exclusion

If at the time of the contribution of the conservation 

easement, the value of the easement, the value of 

the land subject to the easement, or the value of any 

retained development right was different from the estate tax 

value, you must complete a separate computation in addition 

to completing Schedule U.

Use a copy of Schedule U as a worksheet for this separate 

computation. Complete lines 4 through 14 of the worksheet 

Schedule U. However, the value you use on lines 4, 5, 7, and 

10 of the worksheet is the value for these items as of the date 

CAUTION

!

Instructions for Form 706 (Rev. 09-2023) -51-
of the contribution of the easement, not the estate tax value. 

If the date of contribution and the estate tax values are the 

same, you do not need to do a separate computation.

After completing the worksheet, enter the amount from 

line 14 of the worksheet on line 14 of Schedule U. Finish 

completing Schedule U by entering amounts on lines 4, 7, 

and 15 through 20, following the instructions later for those 

lines. At the top of Schedule U, enter "worksheet attached." 

Attach the worksheet to the return.

Under section 2031(c), you may elect to exclude a portion 

of the value of land that is subject to a qualified conservation 

easement. You make the election by filing Schedule U with all 

of the required information and excluding the applicable value 

of the land that is subject to the easement on Part 

5—Recapitulation, on item 12. To elect the exclusion, include 

on Schedule A, B, E, F, G, or H, as appropriate, the 

decedent's interest in the land that is subject to the exclusion. 

You must make the election on a timely filed Form 706, 

including extensions.

The exclusion is the lesser of:

• The applicable percentage of the value of land (after 

certain reductions) subject to a qualified conservation 

easement, or

• $500,000.

Once made, the election is irrevocable.

General Requirements

Qualified Land

Land may qualify for the exclusion if all of the following 

requirements are met.

• The decedent or a member of the decedent's family must 

have owned the land for the 3-year period ending on the 

date of the decedent's death.

• No later than the date the election is made, a qualified 

conservation easement on the land has been made by 

the decedent, a member of the decedent's family, the 

executor of the decedent's estate, or the trustee of a trust 

that holds the land.

• The land is located in the United States or one of its 

possessions.

Member of Family

Members of the decedent's family include the decedent's 

spouse; ancestors; lineal descendants of the decedent, of 

the decedent's spouse, and of the parents of the decedent; 

and the spouse of any lineal descendant. A legally adopted 

child of an individual is considered a child of the individual by 

blood.

Indirect Ownership of Land

The qualified conservation easement exclusion applies if the 

land is owned indirectly through a partnership, corporation, or 

trust, if the decedent owned (directly or indirectly) at least 

30% of the entity. For the rules on determining ownership of 

an entity, see Ownership rules next.

Ownership rules. An interest in property owned, directly or 

indirectly, by or for a corporation, partnership, or trust is 

considered proportionately owned by or for the entity's 

shareholders, partners, or beneficiaries. A person is the 

beneficiary of a trust only if the person has a present interest 

in the trust. For additional information, see the ownership 

rules in section 2057(e)(3).

Qualified Conservation Easement

A qualified conservation easement is one that would qualify 

as a qualified conservation contribution under section 170(h). 

It must be a contribution:

• Of a qualified real property interest,

• To a qualified organization, and

• Exclusively for conservation purposes.

Qualified real property interest. A qualified real property 

interest is any of the following.

• The entire interest of the donor, other than a qualified 

mineral interest.

• A remainder interest.

• A restriction granted in perpetuity on the use that may be 

made of the real property. The restriction must include a 

prohibition on more than a de minimis use for commercial 

recreational activity.

Qualified organization. A qualified organization includes 

the following.

• Corporations and any community chest, fund, or 

foundation, organized and operated exclusively for 

religious, charitable, scientific, testing for public safety, 

literary, or educational purposes, or to foster national or 

international amateur sports competition, or for the 

prevention of cruelty to children or animals, without net 

earnings benefitting any individual shareholder and 

without activity with the purpose of influencing legislation 

or political campaigning, which:

a. Receives more than one-third of its support from 

gifts, contributions, membership fees, or receipts from 

sales, admissions fees, or performance of services; or

b. Is controlled by such an organization.

• Any entity that qualifies under section 170(b)(1)(A)(v) or 

(vi).

Conservation purpose. An easement has a conservation 

purpose if it is for:

• The preservation of land areas for outdoor recreation by, 

or for the education of, the public;

• The protection of a relatively natural habitat of fish, 

wildlife, or plants, or a similar ecosystem; or

• The preservation of open space (including farmland and 

forest land) where such preservation is for the scenic 

enjoyment of the general public, or under a clearly 

delineated federal, state, or local conservation policy and 

will yield a significant public benefit.

Specific Instructions

Line 1

If the land is reported as one or more item numbers on a 

Form 706 schedule, simply list the schedule and item 

numbers. If the land subject to the easement is only part of 

an item, however, list the schedule and item number and 

describe the part subject to the easement. See the 

instructions for Schedule A—Real Estate, earlier, for 

information on how to describe the land.

-52- Instructions for Form 706 (Rev. 09-2023)
Line 3

Using the general rules for describing real estate, provide 

enough information so the IRS can value the easement. Give 

the date the easement was granted and by whom it was 

granted.

Line 4

Enter on this line the gross value at which the land was 

reported on the applicable asset schedule on this Form 706. 

Do not reduce the value by the amount of any mortgage 

outstanding. Report the estate tax value even if the easement 

was granted by the decedent (or someone other than the 

decedent) prior to the decedent's death.

Note. If the value of the land reported on line 4 was different 

at the time the easement was contributed from that reported 

on Form 706, see the Caution at the beginning of the 

Schedule U instructions.

Line 5

The amount on line 5 should be the date of death value of 

any qualifying conservation easements granted prior to the 

decedent's death, whether granted by the decedent or 

someone other than the decedent, for which the exclusion is 

being elected.

Note. If the value of the easement reported on line 5 was 

different at the time the easement was contributed than at the 

date of death, see the Caution at the beginning of the 

Schedule U instructions.

Line 7

You must reduce the land value by the value of any 

development rights retained by the donor in the conveyance 

of the easement. A development right is any right to use the 

land for any commercial purpose that is not subordinate to or 

directly supportive of the use of the land as a farm for farming 

purposes.

Note. If the value of the retained development rights 

reported on line 7 was different at the time the easement was 

contributed than at the date of death, see the Caution at the 

beginning of the Schedule U instructions.

You do not have to make this reduction if everyone with an 

interest in the land (regardless of whether in possession) 

agrees to permanently extinguish the retained development 

right. The agreement must be filed with this return and must 

include all of the following information and terms.

1. A statement that the agreement is made under section 

2031(c)(5).

2. A list of all persons in being, holding an interest in the 

land that is subject to the qualified conservation 

easement. Include each person's name, address, TIN, 

relationship to the decedent, and a description of their 

interest.

3. The items of real property shown on the estate tax return 

that are subject to the qualified conservation easement 

(identified by schedule and item number).

4. A description of the retained development right that is to 

be extinguished.

5. A clear statement of consent that is binding on all parties 

under applicable local law:

a. To take whatever action is necessary to permanently 

extinguish the retained development rights listed in 

the agreement; and

b. To be personally liable for additional taxes under 

section 2031(c)(5)(C) if this agreement is not 

implemented by the earlier of:

• The date that is 2 years after the date of the 

decedent's death, or

• The date of sale of the land subject to the 

qualified conservation easement.

6. A statement that in the event this agreement is not timely 

implemented, that they will report the additional tax on 

whatever return is required by the IRS and will file the 

return and pay the additional tax by the last day of the 

6th month following the applicable date described above.

All parties to the agreement must sign the agreement.

For an example of an agreement containing some of the 

same terms, see Part 3 of Schedule A-1.

Line 10

Enter the total value of the qualified conservation easements 

on which the exclusion is based. This could include 

easements granted by the decedent (or someone other than 

the decedent) prior to the decedent's death, easements 

granted by the decedent that take effect at death, easements 

granted by the executor after the decedent's death, or some 

combination of these.

Use the value of the easement as of the date of 

death, even if the easement was granted prior to the 

date of death. But, if the value of the easement was 

different at the time the easement was contributed than at the 

date of death, see the Caution at the beginning of the 

Schedule U instructions.

Explain how this value was determined and attach copies 

of any appraisals. Normally, the appropriate way to value a 

conservation easement is to determine the FMV of the land 

both before and after the granting of the easement, with the 

difference being the value of the easement.

Reduce the reported value of the easement by the amount 

of any consideration received for the easement. If the date of 

death value of the easement is different from the value at the 

time the consideration was received, reduce the value of the 

easement by the same proportion that the consideration 

received bears to the value of the easement at the time it was 

granted.

For example, assume the value of the easement at the 

time it was granted was $100,000 and $10,000 was received 

in consideration for the easement. If the easement was worth 

$150,000 at the date of death, you must reduce the value of 

the easement by $15,000 ($10,000/$100,000 × $150,000) 

and report the value of the easement on line 10 as $135,000.

Line 15

If a charitable contribution deduction for this land has been 

taken on Schedule O, enter the amount of the deduction 

CAUTION

!

Instructions for Form 706 (Rev. 09-2023) -53-
here. If the easement was granted after the decedent's death, 

a contribution deduction may be taken on Schedule O, if it 

otherwise qualifies, as long as no income tax deduction was 

or will be claimed for the contribution by any person or entity.

Line 16

Reduce the value of the land by the amount of any acquisition 

indebtedness on the land at the date of the decedent's death. 

Acquisition indebtedness includes the unpaid amount of:

• Any indebtedness incurred by the donor in acquiring the 

property;

• Any indebtedness incurred before the acquisition if the 

indebtedness would not have been incurred but for the 

acquisition;

• Any indebtedness incurred after the acquisition if the 

indebtedness would not have been incurred but for the 

acquisition and the incurrence of the indebtedness was 

reasonably foreseeable at the time of the acquisition; and

• The extension, renewal, or refinancing of acquisition 

indebtedness.

Schedule PC—Protective Claim for 

Refund

A protective claim for refund preserves the estate’s right to a 

refund of tax paid on any amount included in the gross estate 

which would be deductible under section 2053 but has not 

been paid or otherwise will not meet the requirements of 

section 2053 until after the limitations period for filing the 

claim has passed. See section 6511(a).

Only use Schedule PC for section 2053 protective 

claims for refund being filed with Form 706. If the 

initial notice of the protective claim for refund is being 

submitted after Form 706 has been filed, use Form 843, 

Claim for Refund and Request for Abatement, to file the 

claim.

Schedule PC may be used to file a section 2053 protective 

claim for refund by estates of decedents who died after 

December 31, 2011. It will also be used to inform the IRS 

when the contingency leading to the protective claim for 

refund is resolved and the refund due the estate is finalized. 

The estate must indicate whether the Schedule PC being 

filed is the initial notice of protective claim for refund, notice of 

partial claim for refund, or notice of the final resolution of the 

claim for refund.

Because each separate claim or expense requires a 

separate Schedule PC, more than one Schedule PC may be 

included with Form 706, if applicable. Two copies of each 

Schedule PC must be included with Form 706.

Note. Filing a section 2053 protective claim for refund on 

Schedule PC will not suspend the IRS’s review and 

examination of Form 706, nor will it delay the issuance of a 

closing letter for the estate.

Initial Notice of Claim

The first Schedule PC to be filed is the initial notice of 

protective claim for refund. The estate will receive a written 

acknowledgment of receipt of the claim from the IRS. If the 

acknowledgment is not received within 180 days of filing the 

protective claim for refund on Schedule PC, the fiduciary 

should contact the IRS at 866-699-4083 to inquire about the 

receipt and processing of the claim. A certified mail receipt or 

CAUTION

!

other evidence of delivery is not sufficient to confirm receipt 

and processing of the protective claim for refund.

Note. The written acknowledgment of receipt does not 

constitute a determination that all requirements for a valid 

protective claim for refund have been met.

In general, the claim will not be subject to substantive 

review until the amount of the claim has been established. 

However, a claim can be disallowed at the time of filing. For 

example, the claim for refund will be rejected if:

• The claim was not timely filed,

• The claim was not filed by the fiduciary or other person 

with authority to act on behalf of the estate,

• The acknowledgment of the penalties of perjury 

statement (on page 1 of Form 706) was not signed, or

• The claim is not adequately described.

If the IRS does not raise such a defect when the claim is 

filed, it will not be precluded from doing so in the later 

substantive review.

The estate may be given an opportunity to cure any 

defects in the initial notice by filing a corrected and signed 

protective claim for refund before the expiration of the 

limitations period in section 6511(a) or within 45 days of 

notice of the defect, whichever is later.

Related Ancillary Expenses

If a section 2053 protective claim for refund has been 

adequately identified on Schedule PC, the IRS will presume 

that the claim includes certain expenses related to resolving, 

defending, or satisfying the claim. These ancillary expenses 

may include attorneys’ fees, court costs, appraisal fees, and 

accounting fees. The estate is not required to separately 

identify or substantiate these expenses; however, each 

expense must meet the requirements of section 2053 to be 

deductible.

Notice of Final Resolution of Claim

When an expense that was the subject of a section 2053 

protective claim for refund is finally determined, the estate 

must notify the IRS that the claim for refund is ready for 

consideration. The notification should provide facts and 

evidence substantiating the deduction under section 2053 

and the resulting recomputation of the estate tax liability. A 

separate notice of final resolution must be filed with the IRS 

for each resolved section 2053 protective claim for refund.

There are two means by which the estate may notify the 

IRS of the resolution of the uncertainty that deprived the 

estate of the deduction when Form 706 was filed. The estate 

may file a supplemental Form 706 with an updated 

Schedule PC and include each schedule affected by the 

allowance of the deduction under section 2053. Page 1 of 

Form 706 should contain the notation “Supplemental 

Information—Notification of Consideration of Section 2053 

Protective Claim(s) for Refund” and include the filing date of 

the initial notice of protective claim for refund. A copy of the 

initial notice of claim should also be submitted.

Alternatively, the estate may notify the IRS by filing an 

updated Form 843. Form 843 must contain the notation 

“Notification of Consideration of Section 2053 Protective 

Claim(s) for Refund,” including the filing date of the initial 

notice of protective claim for refund, on page 1. A copy of the 

initial notice of claim must also be submitted.

The estate should notify the IRS of resolution within 90 

days of the date the claim or expense is paid or the date on 

-54- Instructions for Form 706 (Rev. 09-2023)
which the amount of the claim becomes certain and no 

longer subject to contingency, whichever is later. Separate 

notifications must be submitted for every section 2053 

protective claim for refund that was filed.

If the final section 2053 claim or expense involves multiple 

or recurring payments, the 90-day period begins on the date 

of the last payment. The estate may also notify the IRS (not 

more than annually) as payments are being made and 

possibly qualify for a partial refund based on the amounts 

paid through the date of the notice.

Specific Instructions

Part 1. General Information

Complete Part 1 by providing information that is correct and 

complete as of the time Schedule PC is filed. If filing an 

updated Schedule PC with a supplemental Form 706 or as 

notice of final resolution of the protective claim for refund, be 

sure to update the information from the original filing to 

ensure that it is accurate. Be particularly careful to verify that 

contact information (addresses and telephone numbers) and 

the reason for filing Schedule PC are indicated correctly. If 

the fiduciary is different from the executor identified on 

page 1 of Form 706 or has changed since the initial notice of 

protective claim for refund was filed, attach letters 

testamentary, letters of administration, or similar 

documentation evidencing the fiduciary's authority to file the 

protective claim for refund on behalf of the estate. Include a 

copy of Form 56, Notice Concerning Fiduciary Relationship, if 

it has been filed.

Part 2. Claim Information

For a protective claim for refund to be properly filed and 

considered, the claim or expense forming the basis of the 

potential section 2053 deduction must be clearly identified. 

Using the check boxes provided, indicate whether you are 

filing the initial claim for refund, a claim for partial refund, or a 

final claim.

On the chart in Part 2, give the Form 706 schedule and 

item number of the claim or expense. List any amounts 

claimed under exceptions for ascertainable amounts 

(Regulations section 20.2053-1(d)(4)), claims and 

counterclaims in related matters (Regulations section 

20.2053-4(b)), or claims under $500,000 (Regulations 

section 20.2053-4(c)). Provide all relevant information as 

described, including, most importantly, an explanation of the 

reasons and contingencies delaying the actual payment to be 

made in satisfaction of the claim or expense. Complete 

columns E and F only if filing a notice of partial or final 

resolution. Show the amount of ancillary or related expenses 

to be included in the claim for refund and indicate whether 

this amount is estimated, agreed upon, or has been paid. 

Also show the amount being claimed for refund.

Note. If you made partial claims for a recurring expense, the 

amount presently claimed as a deduction under section 2053 

will only include the amount presently claimed, not the 

cumulative amount.

Part 3. Other Schedules PC and Forms 843 Filed 

by the Estate

On the chart in Part 3, provide information on other protective 

claims for refund that have been previously filed on behalf of 

the estate (if any), whether on other Schedules PC or on 

Form 843. When the initial claim for refund is filed, only 

information from Form(s) 843 need be included in Part 3. 

However, when filing a partial or final claim for refund, 

complete Part 3 by including the status of all claims filed by or 

on behalf of the estate, including those filed on other 

Schedules PC with Form 706. For each such claim, give the 

place of filing, date of filing, and amount of the claim.

Continuation Schedule

When you need to list more assets or deductions than you 

have room for on one of the main schedules, use the 

Continuation Schedule at the end of Form 706. It provides a 

uniform format for listing additional assets from Schedules A 

through I and additional deductions from Schedules J, K, L, 

M, and O.

Please remember to do the following.

• Use a separate Continuation Schedule for each main 

schedule you are continuing. Do not combine assets or 

deductions from different schedules on one Continuation 

Schedule.

• Make copies of the blank schedule before completing it if 

you expect to need more than one.

• Use as many Continuation Schedules as needed to list 

all the assets or deductions.

• Enter the letter of the schedule you are continuing in the 

space at the top of the Continuation Schedule.

• Use the Unit value column only if continuing Schedule B, 

E, or G. For all other schedules, use this space to 

continue the description.

• Carry the total from the Continuation Schedules forward 

to the appropriate line on the main schedule.

If continuing Report Where on Continuation Schedule

Schedule E, Pt. 2 Percentage includible Alternate valuation date

Schedules J, L, M Continued description of deduction Alternate valuation date and Alternate value

Schedule O Character of institution Alternate valuation date and Alternate value

Schedule O Amount of each deduction Value at date of death or amount deductible

Privacy Act and Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue 

laws of the United States. You are required to give us the information. We need it to ensure that you are complying with these 

laws and to allow us to figure and collect the right amount of tax. Subtitle B and section 6109, and the regulations require you to 

provide this information.

Instructions for Schedules -55-
You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless 

the form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as 

their contents may become material in the administration of any Internal Revenue law. Generally, tax returns and return 

information are confidential as required by section 6103. However, section 6103 allows or requires the Internal Revenue Service 

to disclose information from this form in certain circumstances. For example, we may disclose information to the Department of 

Justice for civil or criminal litigation, and to cities, states, the District of Columbia, and U.S. commonwealths or possessions for 

use in administering their tax laws. We may also disclose this information to other countries under a tax treaty, to federal and 

state agencies to enforce federal nontax criminal laws, or to federal law enforcement and intelligence agencies to combat 

terrorism. Failure to provide this information, or providing false information, may subject you to penalties.

The time needed to complete and file this form and related schedules will vary depending on individual circumstances. The 

estimated average times are:

Form Recordkeeping Learning about the law 

or the form

 Preparing the form Copying, assembling, and sending 

the form to the IRS

Form 706 & embedded 

schedules 6 hr., 46 min. 7 hr., 39 min. 13 hr., 8 min. 9 hr., 10 min.

Form Schedule R-1 (706) 6 min. 29 min. 24 min. 20 min.

If you have comments concerning the accuracy of these time estimates or suggestions for making Form 706 simpler, we 

would be happy to hear from you. You can send us comments through IRS.gov/FormComments. Or you can write to:

Internal Revenue Service

Tax Forms and Publications Division

1111 Constitution Ave. NW, IR-6526

Washington, DC 20224

Do not send the tax form to this address. Instead, see Where To File, earlier.

-56- Instructions for Form 706 (Rev. 09-2023)
Index

A

Address, executor 5

Administration Expenses 35

Alternate valuation 10

Amending Form 706 3

Annuities 33

Applicable Credit Adjustment 10

Applicable Credit Amount 10

Authorized Representative 17

B

Bonds 25

C

Canadian marital credit 10

Charitable Deduction 41

Claim for refund 54

Close Corporations 17

Closing letters 4

Conservation Easement 51

Continuation Schedule 55

Credit for foreign death taxes 43

Credit for tax on prior transfers 44

D

Death certificate 3

Debts of the decedent 36

Deductions 18

Direct skips 47

Disclaimer, qualified 42

Documents, supplemental 3

DSUE 18

E

Election 14, 16

Election, lump-sum distribution 35

Estate tax closing letters 4

Estimated Values 20

Exclusion amount 7

Executor 2, 5

F

Foreign Accounts 18

Foreign Death Taxes 43

Forms and publications, obtaining 4

Funeral Expenses 35

G

General Information 17

General Instructions 1

Gross estate 1, 18

GST 47

GST exemption table 50

I

Inclusion ratio for trust 51

Installment payments 14

Insurance 27

J

Joint Property 28

L

Liens 37

Line 3 Worksheet 16

Line 4 Worksheet 7

Line 7 Worksheet 8

Losses 37

Lump-sum distribution election 35

M

Marital Deduction 38

Material participation 12

Member of family 12

Mortgages and liens 37

N

Nonresident Noncitizens 2

P

Part 1. Decedent and Executor 5

Part 2. Tax Computation 6

Part 3. Elections by the Executor 10

Part 4. General Information 17

Part 5. Recapitulation 18

Part 6. Portability of Deceased Spousal 

Unused Exclusion 18

Partnership Interests 17

Paying the Tax 3

Penalties 4

Portability 18

Powers of appointment 32

Protective Claim for Refund 54

Publications, obtaining 4

Purpose of Form 1

Q

QDOT 40

QTIP 40

Qualified heir 12

Qualified real property 12

R

Recapitulation 18

Residents of U. S. Possessions 2

Reversionary or Remainder Interests 16

Revisions of Form 706 1

Rounding off to whole dollars 4

S

Schedule A-1, Section 2032A Valuation 22

Schedule A, Real Estate 21

Schedule B, Stocks and Bonds 25

Schedule C, Mortgages, Notes, and 

Cash 27

Schedule D, Insurance on Decedent's 

Life 27

Schedule E, Jointly Owned Property 28

Schedule F, Miscellaneous Property 29

Schedule G, Transfers During Decedent's 

Life 30

Schedule H, Powers of appointment 32

Schedule I, Annuities 33

Schedule J, Funeral Expenses and 

Expenses Incurred in Administering 

Property Subject to Claims 35

Schedule K, Debts of the Decedent and 

Mortgages and Liens 36

Schedule L, Net Losses During 

Administration and Expenses Incurred 

in Administering Property Not Subject 

to Claims 37

Schedule M, Bequests to Surviving 

Spouses 38

Schedule O, Charitable, Public, and 

Similar Gifts and Bequests 41

Schedule P, Credit for Foreign Death 

Taxes 43

Schedule PC, Protective Claim for 

Refund 54

Schedule Q, Credit for Tax on Prior 

Transfers 44

Schedule U, Qualified Conservation 

Easement Exclusion 51

Schedules R and R-1, Generation-Skipping 

Transfer Tax 47

Section 2032A 11

Section 2035(a) transfers 30

Section 2036 transfers 30

Section 2037 transfers 31

Section 2038 transfers 31

Section 2044 17

Section 6163 16

Section 6166 14

Signature and verification 3

Social security number 5

Special Rule – Portability 21

Special-Use Valuation 11, 22

Specific Instructions 5

Stocks 25

T

Table A, Unified Rate Schedule 6

Table of Basic Exclusion Amounts 9

Table of Estimated Values 19, 20

Table, Taxable Gift Amount 7

Tax Computation 6

Taxable Gift Amount Table 7

Terminable Interests 38

Total Credits 10

Transfers, valuation rules 31

Trusts 18

U

U. S. Citizens or Residents 2

Unified Credit (Applicable Credit 

Amount) 10

Unified credit adjustment 10

V

Valuation methods 13

Valuation rules, transfers 31

W

What's New 1

When To File 2

Where To File 2

Which Estates Must File 1

Worksheet for Schedule Q 46

Worksheet TG-Taxable Gifts 

Reconciliation 7

Worksheet, inclusion ratio for trust 51

Worksheet, line 3 16

Worksheet, line 4 7

Worksheet, line 7 8

-57-
Checklists for Completing Form 706

To ensure a complete return, review the following checklists before filing Form 706.

Attachments . . .

Death Certificate.

Certified copy of the will—if decedent died testate, you must attach a certified copy of the will. If not certified, explain why.

Appraisals—attach any appraisals used to value property included on the return.

Copies of all trust documents where the decedent was a grantor or a beneficiary.

Form 2848 or 8821, if applicable.

Copy of any Form(s) 709 filed by the decedent, with "Exhibit to Estate Tax Return" entered across the top of the first page(s).

Copy of Line 7 Worksheet, if applicable, with “Exhibit to Estate Tax Return” entered across the top of the page(s).

Form 712, if any policies of life insurance are included on the return.

Form 706-CE, if claiming a foreign death tax credit.

-58-
Have you . . .

Signed the return at the bottom of page 1?

Had the preparer sign, if applicable?

Obtained the signature of your authorized representative on Part 4—General Information, page 2?

Entered a Total on all schedules filed?

Made an entry on every line of the Recapitulation, even if it is a zero?

Included the CUSIP number for all stocks and bonds?

Included the EIN of trusts, partnerships, and closely held entities?

Included the first 4 pages of the return and all required schedules?

Completed Schedule F? It must be filed with all returns.

Completed Part 4—General Information, line 4, on page 2, if there is a surviving spouse?

Completed and attached Schedule D to report insurance on the life of the decedent, even if its value is not included in the 

estate?

Included any QTIP property received from a predeceased spouse?

Entered the decedent's name, SSN, and “Form 706” on your check or money order?

Completed Part 6, Section A, if the estate elects not to transfer any DSUE amount to the surviving spouse?

Completed Part 6, Section C, if the estate elects portability of any DSUE amount?

Completed Part 6, Section D, and included a copy of the Form 706, with “Exhibit to Estate Tax Return” entered across the 

top of the first page, of any predeceased spouse(s) from whom a DSUE amount was received and applied?

-59-