Source: http://www.irs.gov/instructions/i706/ch02.html
Timestamp: 2014-04-23 16:00:30
Document Index: 726962272

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Instructions for Form 706 (08/2013) Specific Instructions
Line 6a. Name of Executor
Line 6b. Executor's Address
Line 6c. Executor's Social Security Number
Line 6d. Multiple Executors Line 11. Special Rule
Line 3b. State Death Tax Deduction
Lines 9a through 9d. Applicable Credit Amount (formerly Unified Credit Amount)
Line 10. Adjustment to Applicable Credit Line 15. Total Credits
Line 1. Alternate Valuation
Line 2. Special-Use Valuation of Section 2032A
Line 3. Section 6166 Installment Payments
Line 4. Reversionary or Remainder Interests
Line 6. Protective Claim for Refund
Line 7. Section 2044 Property
Line 9. Insurance Not Included in the Gross Estate
Line 11. Partnership Interests and Stock in Close Corporations
Line 13. Trusts
Line 15. Foreign Accounts
Gross Estate—Items 1 through 11
Exclusion — Item 12
Deductions — Items 14 through 23
Part 6—Portability of Deceased Spousal Unused Exclusion (DSUE)
Last Deceased Spouse Limitation
Special Rule Where Value of Certain Property Not Required to Be Reported on Form 706
Specific Instructions Schedule A—Real Estate
Checklist for Section 2032A Election
Schedule D—Insurance on the Decedent's Life
Schedule F—Other Miscellaneous Property
You must complete Schedule F and file it with the return.
Schedule G—Transfers During Decedent's Life
Line A. Lump Sum Distribution Election
How To Complete Schedule I
Schedule K—Debts of the Decedent and Mortgages and Liens
Schedule M—Bequests, etc., to Surviving Spouse (Marital Deduction)
Line 2. Qualified Disclaimer
How To Complete the Schedule Q Worksheet
Schedules R and R-1 –Generation-Skipping Transfer Tax
Schedule PC—Protective Claim for Refund
Related Ancillary Expenses
Notice of Final Resolution of Claim
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. IF . . .
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 20.2010–2T(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 lines 10 and 23 of Part 5— Recapitulation.
you claim an exclusion on item 11, 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.
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.
Form 706 has 31 numbered pages. The pages are perforated so that you can remove them for copying and filing.
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 line 1 of Part 3—Elections by the Executor.
When you complete the return, staple all the required pages together in the proper order.
Enter the social security number (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
If there is more than one executor, enter the name of the executor to be contacted by the IRS and see line 6d.
Use Form 8822 to report a change of the executor's address.
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 names, addresses, telephone numbers,
and SSNs 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 20.2010–2T(a)(7)(ii), check
here and see the instructions for lines 10 and 23 of Part 5—Recapitulation.
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, Line
4 Worksheet, and Line 7 Worksheet.
You must complete Part 2—Tax Computation.
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
If you elected alternate valuation on line 1, Part 3—Elections by the Executor, enter the amount you entered in the “Alternate value” column of item 13 of Part 5—Recapitulation. Otherwise, enter the amount from the “Value at date of death” column.
The estates of decedents dying after December 31, 2004, will be allowed a deduction for state death taxes, instead of a credit.
The state death tax credit was repealed as of January 1, 2005. You may take a deduction on line 3b for estate, inheritance, legacy, or succession taxes paid 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.
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 Revenue
Ruling 86-117, 1986-2 C.B. 157, prior to the repeal of section 2011.
Send the following evidence to the IRS:
Certificate of the proper officer of the taxing state, or the District of Columbia, showing the:
Total amount of tax imposed (before adding interest and penalties and before allowing discount),
Amount of discount allowed,
Amount of penalties and interest imposed or charged,
Total amount actually paid in cash, and Date of payment.
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
To figure the tentative tax on the amount on line 5, use Table A—Unified Rate Schedule, above, and put the result on this
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.
Worksheet TG and Line 4 Worksheet
Worksheet TG
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 for 1977 through 1981 was $3,000, $10,000 for 1981 through 2001,
$11,000 for 2002 through 2005, $12,000 for 2006 through 2008, and $13,000 for 2009 through 2012. For 2013, the annual exclusion
for gifts of present interest is $14,000 per donee.
Tax Period1
Taxable Gifts for Applicable Period
Taxable Gifts for Prior Periods 2
Cumulative Taxable Gifts Including Applicable Period (add Row (b) and Row (c))
Tax at Date of Death Rates for Prior Gifts (from Row (c))3
Tax at Date of Death Rates for Cumulative Gifts including Applicable Period (from Row (d))
Tax at Date of Death Rates for Gifts in Applicable Period (subtract Row (e) from Row (f))
Total DSUE applied from Prior Periods and Applicable Period (from Line 2 of Schedule C of Applicable Period Form 709)
Basic Exclusion for Applicable Period (Enter the amount from the Table of Basic Exclusion Amounts)
Basic Exclusion amount plus Total DSUE applied in prior periods and applicable period (add Row (h) and Row (i)) (k)
Maximum Applicable Credit amount based on Row (j) (Using Table A—Unified Rate Schedule)4
Applicable Credit amount used in Prior Periods (add Row (l) and Row (n) from prior period)
Available Credit in Applicable Period (subtract Row (l) from Row (k))
Credit Allowable (lesser of Row (g) or Row (m))
Tax paid or payable at Date of Death rates for Applicable Period (subtract Row (n) from Row (g))
Tax on Cumulative Gifts less tax paid or payable for Applicable Period (subtract Row (o) from Row (f))
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)
Gifts in the Applicable Period on which tax was payable (subtract Row (q) from Row (d))
Total gift taxes payable on gifts after 1976 (sum of amounts in Row (o)).
Gift taxes paid by the decedent on gifts that qualify for “special treatment.” Enter the amount from Worksheet TG, line 2,
col. (e).
Gift tax paid by decedent's spouse on split gifts included on Schedule G. Enter amount from Worksheet TG, line 2, col. (f).
Add lines 3 and 4. Enter here and on Part 2—Tax Computation, line 7.
Cumulative lifetime gifts on which tax was paid or payable. Enter this amount on line 3, Section C, Part 6 of Form 706 (sum
of amounts in Row (r)).
Footnotes:	1Row (a): For annual returns, enter the tax period as (YYYY). For quarterly returns enter tax period as (YYYY–Q). 2Row (c): Enter amount from Row (d) of the previous column. 3Row (e): Enter amount from Row (f) of the previous column. 4Row (k): Calculate 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 percent of any amount allowed as a specific exemption for gifts made after September
8, 1976, and before January 1, 1977.)
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
– – – – – – 1,000,000
How to complete 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). Row (b). Enter all taxable gifts made in the specified year. Enter all pre-1977 gifts on 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, earlier. 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. See line
2 of 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 Rows (h) and Row (i). Row (k). Calculate the applicable credit on the amount in Row (j) using Table A — Unified Rate Schedule, and enter here. Note.
The entries in each column of Row (k) must be reduced by 20 percent 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 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 to report prior gifts,
please attach additional sheets.
Credit Equivalent at 2013 rates
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 calculate 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.
The applicable credit amount is allowable credit against estate and gift taxes. It is calculated 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:
Line 9a: The basic exclusion amount. In 2013, the basic exclusion amount, as adjusted for inflation under 2010(c)(3), is $5,250,000.
Line 9b: The deceased spousal unused exclusion amount (DSUE). If the decedent had a spouse who died on or after January 1,
2011, 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 calculated and attached
to his or her 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 calculated in Part
6, Section D.
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
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
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
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
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:
page 1 of Form 706 with a notation, “Canadian marital credit.”
Also, attach a statement to the return that refers to the treaty, waives QDOT rights, and shows the computation of
the marital credit. See the 1995 Canadian income tax treaty protocol for details on figuring the credit.
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 instructions for Part 6—Portability of Deceased Spousal Unused Exclusion, below, and sections 2010(c)(4)
See the example showing the use of Schedule B where the alternate valuation is adopted.
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.
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 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
Any property, interest, or estate that is affected by mere lapse of time is valued as of the date of 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 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.