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706
(Rev. October 2006)
Part 2—Tax Computation
Part 1—Decedent and Executor
Department of the Treasury
Internal Revenue Service
United States Estate (and Generation-Skipping
Transfer) Tax Return
OMB No. 1545-0015
Estate of a citizen or resident of the United States (see separate instructions).
To be filed for decedents dying after December 31, 2005, and before January 1, 2007.
1a
Decedent’s first name and middle initial (and maiden name, if any) 1b Decedent’s last name
3a
County, state, and ZIP code, or foreign country, of legal
residence (domicile) at time of death
2 Decedent’s Social Security No.
3b Year domicile established 4 Date of birth
5 Date of death
6b Executor’s address (number and street including apartment or suite no. or rural
route; city, town, or post office; state; and ZIP code) and phone no.
6a
Name of executor (see page 4 of the instructions)
6c
Executor’s social security number (see page 4 of the instructions)
7a
Name and location of court where will was probated or estate administered
8
10
If decedent died testate, check here ©
and attach a certified copy of the will. 9 If you extended the time to file this Form 706, check here
If Schedule R-1 is attached, check here ©
Phone no. (
Total gross estate less exclusion (from Part 5—Recapitulation, page 3, item 12)
2
Tentative total allowable deductions (from Part 5—Recapitulation, page 3, item 22)
2
3a Tentative taxable estate (before state death tax deduction) (subtract line 2 from line 1)
3a
b State death tax deduction
3b
c Taxable estate (subtract line 3b from line 3a)
3c
4
Adjusted taxable gifts (total taxable gifts (within the meaning of section 2503) made by the decedent
after December 31, 1976, other than gifts that are includible in decedent’s gross estate (section 2001(b)))
4
5
Add lines 3c and 4
5
6
Tentative tax on the amount on line 5 from Table A on page 4 of the instructions
6
7
Total gift tax paid or payable with respect to gifts made by the decedent after December 31, 1976.
Include gift taxes by the decedent’s spouse for such spouse’s share of split gifts (section 2513) only if
the decedent was the donor of these gifts and they are includible in the decedent’s gross estate (see
instructions)
7
8
Gross estate tax (subtract line 7 from line 6)
8
9
Maximum unified credit (applicable credit amount) against estate tax
11
12
©
1
1
10
)
7b Case number
9
Adjustment to unified credit (applicable credit amount). (This adjustment
10
may not exceed $6,000. See page 6 of the instructions.)
Allowable unified credit (applicable credit amount) (subtract line 10 from line 9)
11
Subtract line 11 from line 8 (but do not enter less than zero)
12
13
Credit for foreign death taxes (from Schedule(s) P). (Attach Form(s)
706-CE.)
13
14
Credit for tax on prior transfers (from Schedule Q)
14
15
16
Total credits (add lines 13 and 14)
Net estate tax (subtract line 15 from line 12)
15
17
18
19
20
Generation-skipping transfer (GST) taxes payable (from Schedule R, Part 2, line 10)
Total transfer taxes (add lines 16 and 17)
Prior payments. Explain in an attached statement
Balance due (or overpayment) (subtract line 19 from line 18)
17
16
18
19
20
Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief,
it is true, correct, and complete. Declaration of preparer other than the executor is based on all information of which preparer has any knowledge.
Date
Signature(s) of executor(s)
Signature of preparer other than executor
Address (and ZIP code)
For Privacy Act and Paperwork Reduction Act Notice, see page 28 of the separate instructions for this form.
Date
Cat. No. 20548R
Form
706
(Rev. 10-2006)
Form 706 (Rev. 10-2006)
Estate of:
Part 3—Elections by the Executor
Yes No
Please check the “Yes” or “No” box for each question (see instructions beginning on page 6).
Note. Some of these elections require the posting of bonds or liens.
1
Do you elect alternate valuation?
1
2
Do you elect special-use valuation?
If “Yes,” you must complete and attach Schedule A–1.
2
3
Do you elect to pay the taxes in installments as described in section 6166?
If “Yes,” you must attach the additional information described on pages 9 and 10 of the instructions.
4
Note. By electing section 6166, you agree to provide security for estate tax deferred under section 6166 and
interest in the form of a surety bond or a section 6324A special lien.
3
Do you elect to postpone the part of the taxes attributable to a reversionary or remainder interest as described in
section 6163?
4
Part 4—General Information
(Note. Please attach the necessary supplemental documents. You must attach the death
certificate.) (see instructions on page 11)
Authorization to receive confidential tax information under Regs. sec. 601.504(b)(2)(i); to act as the estate’s representative before the IRS; and to make written
or oral presentations on behalf of the estate if return prepared by an attorney, accountant, or enrolled agent for the executor:
Name of representative (print or type)
State
Address (number, street, and room or suite no., city, state, and ZIP code)
I declare that I am the
attorney/
certified public accountant/
enrolled agent (you must check the applicable box) for the executor and prepared
this return for the executor. I am not under suspension or disbarment from practice before the Internal Revenue Service and am qualified to practice in the
state shown above.
Signature
CAF number
Date
1
Death certificate number and issuing authority (attach a copy of the death certificate to this return).
2
Decedent’s business or occupation. If retired, check here
3
Marital status of the decedent at time of death:
©
Telephone number
and state decedent’s former business or occupation.
Married
Widow or widower—Name, SSN, and date of death of deceased spouse
Single
Legally separated
Divorced—Date divorce decree became final
4a Surviving spouse’s name
©
©
4b Social security number
4c Amount received (see page 11 of the instructions)
Individuals (other than the surviving spouse), trusts, or other estates who receive benefits from the estate (do not include charitable beneficiaries
shown in Schedule O) (see instructions).
5
Name of individual, trust, or estate receiving $5,000 or more
Identifying number
Relationship to decedent
All unascertainable beneficiaries and those who receive less than $5,000
Amount (see instructions)
©
Total
Please check the “Yes” or “No” box for each question.
6
Yes No
Does the gross estate contain any section 2044 property (qualified terminable interest property (QTIP) from a prior gift or estate)
(see page 11 of the instructions)?
7a Have federal gift tax returns ever been filed?
If “Yes,” please attach copies of the returns, if available, and furnish the following information:
7b Period(s) covered
7c Internal Revenue office(s) where filed
(continued on next page)
Page 2
Form 706 (Rev. 10-2006)
Part 4—General Information (continued)
Yes No
If you answer “Yes” to any of questions 8–16, you must attach additional information as described in the instructions.
8a Was there any insurance on the decedent’s life that is not included on the return as part of the gross estate?
b Did the decedent own any insurance on the life of another that is not included in the gross estate?
9
Did the decedent at the time of death own any property as a joint tenant with right of survivorship in which (a) one or more of
the other joint tenants was someone other than the decedent’s spouse, and (b) less than the full value of the property is included
on the return as part of the gross estate? If “Yes,” you must complete and attach Schedule E
10
Did the decedent, at the time of death, own any interest in a partnership or unincorporated business or any stock in an inactive or
closely held corporation?
11
Did the decedent make any transfer described in section 2035, 2036, 2037, or 2038 (see the instructions for Schedule G beginning
on page 13 of the separate instructions)? If “Yes,” you must complete and attach Schedule G
12a Were there in existence at the time of the decedent’s death any trusts created by the decedent during his or her lifetime?
b Were there in existence at the time of the decedent’s death any trusts not created by the decedent under which the decedent
possessed any power, beneficial interest, or trusteeship?
c Was the decedent receiving income from a trust created after October 22, 1986 by a parent or grandparent?
If “Yes,” was there a GST taxable termination (under section 2612) upon the death of the decedent?
d If there was a GST taxable termination (under section 2612), attach a statement to explain. Provide a copy of the trust or will
creating the trust, and give the name, address, and phone number of the current trustee(s).
e Did decedent at any time during his or her lifetime transfer or sell an interest in a partnership, limited liability company, or closely
held corporation to a trust described in question 12a or 12b?
If “Yes,” provide the EIN number to this transferred/sold item. ©
13
Did the decedent ever possess, exercise, or release any general power of appointment? If “Yes,” you must complete and attach Schedule H
14
Was the marital deduction computed under the transitional rule of Public Law 97-34, section 403(e)(3) (Economic Recovery Tax Act of 1981)?
If “Yes,” attach a separate computation of the marital deduction, enter the amount on item 20 of the Recapitulation, and note on
item 20 “computation attached.”
15
Was the decedent, immediately before death, receiving an annuity described in the “General” paragraph of the instructions for
Schedule I or a private annuity? If “Yes,” you must complete and attach Schedule I
16
Was the decedent ever the beneficiary of a trust for which a deduction was claimed by the estate of a pre-deceased spouse
under section 2056(b)(7) and which is not reported on this return? If “Yes,” attach an explanation
Part 5—Recapitulation
Item
number
Gross estate
Alternate value
1
Schedule A—Real Estate
2
3
Schedule B—Stocks and Bonds
Schedule C—Mortgages, Notes, and Cash
4
Schedule D—Insurance on the Decedent’s Life (attach Form(s) 712)
Schedule E—Jointly Owned Property (attach Form(s) 712 for life insurance)
5
6
7
8
9
10
11
12
Schedule F—Other Miscellaneous Property (attach Form(s) 712 for life insurance)
Schedule G—Transfers During Decedent’s Life (att. Form(s) 712 for life insurance)
Schedule H—Powers of Appointment
Schedule I—Annuities
Total gross estate (add items 1 through 9)
Schedule U—Qualified Conservation Easement Exclusion
Total gross estate less exclusion (subtract item 11 from item 10). Enter here
and on line 1 of Part 2—Tax Computation
Item
number
Value at date of death
1
2
3
4
5
6
7
8
9
10
11
12
Deductions
13
Schedule J—Funeral Expenses and Expenses Incurred in Administering Property Subject to Claims
14
Schedule K—Debts of the Decedent
15
Schedule K—Mortgages and Liens
16
Total of items 13 through 15
17
Allowable amount of deductions from item 16 (see the instructions for item 17 of the Recapitulation)
18
Schedule L—Net Losses During Administration
19
20
21
Schedule L—Expenses Incurred in Administering Property Not Subject to Claims
Schedule M—Bequests, etc., to Surviving Spouse
Schedule O—Charitable, Public, and Similar Gifts and Bequests
22
Tentative total allowable deductions (add items 17 through 21). Enter here and on line 2 of the Tax Computation
Page 3
Amount
13
14
15
16
17
18
19
20
21
22
Form 706 (Rev. 10-2006)
Estate of:
SCHEDULE A—Real Estate
● For jointly owned property that must be disclosed on Schedule E, see the instructions on the reverse side of Schedule E.
● Real estate that is part of a sole proprietorship should be shown on Schedule F.
● Real estate that is included in the gross estate under section 2035, 2036, 2037, or 2038 should be shown on
Schedule G.
● Real estate that is included in the gross estate under section 2041 should be shown on Schedule H.
● If you elect section 2032A valuation, you must complete Schedule A and Schedule A-1.
Item
number
Description
Alternate
valuation date
Alternate value
Value at date of death
1
Total from continuation schedules or additional sheets attached to this schedule
TOTAL. (Also enter on Part 5—Recapitulation, page 3, at item 1.)
(If more space is needed, attach the continuation schedule from the end of this package or additional sheets of the same size.)
(See the instructions on the reverse side.)
Schedule A—Page 4
Form 706 (Rev. 10-2006)
Instructions for Schedule A—Real Estate
If the total gross estate contains any real estate, you must
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 Examples
In this example, alternate valuation is not adopted; the date of death is January 1, 2006.
Item
number
1
2
Description
Alternate
valuation date
Alternate
value
Value at
date of death
House and lot, 1921 William Street NW, Washington, DC (lot 6, square 481). Rent
of $2,700 due at end of each quarter, February 1, May 1, August 1, and November
1. Value based on appraisal, copy of which is attached
$108,000
Rent due on item 1 for quarter ending November 1, 2005, but not collected at date
of death
2,700
Rent accrued on item 1 for November and December 2005
1,800
House and lot, 304 Jefferson Street, Alexandria, VA (lot 18, square 40). Rent of $600
payable monthly. Value based on appraisal, copy of which is attached
96,000
Rent due on item 2 for December 2005, but not collected at date of death
600
In this example, alternate valuation is adopted; the date of death is January 1, 2006.
Item
number
1
2
Description
Alternate
valuation date
Alternate
value
House and lot, 1921 William Street NW, Washington, DC (lot 6, square 481). Rent
of $2,700 due at 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 following death
7/1/06
90,000
$108,000
Rent due on item 1 for quarter ending November 1, 2005, but not collected until
February 1, 2006
2/1/06
2,700
2,700
Rent accrued on item 1 for November and December 2005, collected on
February 1, 2006
2/1/06
1,800
1,800
House and lot, 304 Jefferson Street, Alexandria, VA (lot 18, square 40). Rent of $600
payable monthly. Value based on appraisal, copy of which is attached. Property
exchanged for farm on May 1, 2006
5/1/06
90,000
96,000
Rent due on item 2 for December 2005, but not collected until February 1, 2006
2/1/06
600
600
Schedule A—Page 5
Value at
date of death
Form 706 (Rev. 10-2006)
Instructions for Schedule A-1. Section
2032A Valuation
specially valued property received by the skip person at their
special-use value and one showing the same interests at their
fair market value.
The election to value certain farm and closely held business
property at its special-use value is made by checking “Yes” to
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.
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.
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.
You must value each specific property interest at the same
value for GST tax purposes that you value it at for estate tax
purposes.
Protective election. To make the protective election described
in the separate instructions for Part 3—Elections by the
Executor, line 2, you must check this box, enter the decedent’s
name and social security number in the spaces provided at the
top of Schedule A-1, and complete Part 2. Notice of Election,
line 1 and lines 3 and 4, column A. 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 need not complete columns B through D
of lines 3 and 4. You need not complete 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,” you should enter the total
respective values of all the specially valued property interests
received by each person.
GST Tax Savings
To compute the additional GST tax due upon disposition (or
cessation of qualified use) of the property, each “skip person”
(as defined in the instructions to Schedule R) who receives an
interest in the specially valued property must know the total GST
tax savings on all of the interests in specially valued property
received. This GST tax savings is the difference between the
total GST tax that was imposed on all of the 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 fair market value.
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 compute this GST
tax savings. Therefore, for each skip person who receives an
interest in specially valued property, you must attach worksheets
showing the total GST tax savings attributable to all of that
person’s interests in specially valued property.
How to compute the GST tax savings. Before computing each
skip person’s GST tax savings, you must complete Schedules R
and R-1 for the entire estate (using the special-use values).
For each skip person, you must complete two Schedules R
(Parts 2 and 3 only) as worksheets, one showing the interests in
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 their fair market value (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 by persons with an interest in
property is required under section 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 local 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 or future, or
vested or contingent, must enter into the agreement. Included
are owners of remainder and executory interests; the 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 holding any
interests in the property. An heir who has the power under local
law to caveat (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 any person required to enter into the agreement either
desires that an agent act for him or her or cannot legally bind
himself or herself 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 the
person in an agreement of this nature may sign the agreement
on his or her behalf.
The Internal Revenue Service 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 the IRS of any disposition or cessation
of qualified use of any part of the property.
Schedule A-1—Page 6
Form 706 (Rev. 10-2006)
Checklist for Section 2032A Election.
If you are going to make the special-use
valuation election on Schedule A-1, please
use this checklist to ensure that you are
providing everything necessary to make a
CAUTION
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.
1. Does the notice of election include the decedent’s
name and social security number as they appear on
the estate tax return?
2. Does the notice of election include the relevant
qualified use of the property to be specially valued?
3. 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?
4. Does the notice of election include the fair market
value 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))?
5. 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?
6. 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)?
7. Does the notice of election include the adjusted
value of the gross estate? (See section 2032A(b)(3)(A).)
8. Does the notice of election include the method
used to determine the special-use value?
9. Does the notice of election include copies of
written appraisals of the fair market value of the real
property?
10. Does the notice of election include a statement
that the decedent and/or a member of his or her family
has owned all of the specially valued property for at
Schedule A-1—Page 7
least 5 years of the 8 years immediately preceding the
date of the decedent’s death?
11. 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 his or her 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).)
12. Does the notice of election include, for each item
of specially valued property, the name of every person
taking 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
taxpayer identification number, (c) the person’s
relationship to the decedent, and (d) the value of the
property interest passing to that person based on both
fair market value and qualified use?
13. Does the notice of election include affidavits
describing the activities constituting material
participation and the identity of the material
participants?
14. Does the notice of election include a legal
description of each item of specially valued property?
(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.
1. Has the agreement been signed by each and
every qualified heir having an interest in the property
being specially valued?
2. 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?
3. 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?
4. 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?
5. Has the agreement been signed by the designated
agent and does it give the address of the agent?
Form 706 (Rev. 10-2006)
Decedent’s Social Security Number
Estate of:
SCHEDULE A-1—Section 2032A Valuation
Part 1. Type of Election (Before making an election, see the checklist on page 7.):
Protective election (Regulations section 20.2032A-8(b)). Complete Part 2, line 1, and column A of lines 3 and 4. (see instructions)
Regular election. Complete all of Part 2 (including line 11, if applicable) and Part 3. (see instructions)
Before completing Schedule A-1, see the checklist on page 7 for the information and documents that must be included to make
a valid election.
The election is not valid unless the agreement (that is, Part 3. Agreement to Special Valuation Under Section 2032A):
● Is signed by each and every qualified heir with an interest in the specially valued property and
● Is attached to this return when it is filed.
Part 2. Notice of Election (Regulations section 20.2032A-8(a)(3))
Note. All real property entered on lines 2 and 3 must also be entered on Schedules A, E, F, G, or H, as applicable.
1
Qualified use—check one
©
Farm used for farming, or
Trade or business other than farming
Real property used in a qualified use, passing to qualified heirs, and to be specially valued on this Form 706.
©
2
A
B
C
D
Schedule and item number
from Form 706
Full value
(without section 2032A(b)(3)(B)
adjustment)
Adjusted value (with section
2032A(b)(3)(B)
adjustment)
Value based on qualified use
(without section 2032A(b)(3)(B)
adjustment)
Totals
Attach a legal description of all property listed on line 2.
Attach copies of appraisals showing the column B values for all property listed on line 2.
3
Real property used in a qualified use, passing to qualified heirs, but not specially valued on this Form 706.
A
B
C
D
Schedule and item number
from Form 706
Full value
(without section 2032A(b)(3)(B)
adjustment)
Adjusted value (with section
2032A(b)(3)(B)
adjustment)
Value based on qualified use
(without section 2032A(b)(3)(B)
adjustment)
Totals
If you checked “Regular election,” you must attach copies of appraisals showing the column B values for all property listed on line 3.
(continued on next page)
Schedule A-1—Page 8
Form 706 (Rev. 10-2006)
4 Personal property used in a qualified use and passing to qualified heirs.
A
Schedule and item
number from Form 706
B
Adjusted value (with
section 2032A(b)(3)(B)
adjustment)
B (continued)
Adjusted value (with
section 2032A(b)(3)(B)
adjustment)
A (continued)
Schedule and item
number from Form 706
“Subtotal” from Col. B, below left
Subtotal
Total adjusted value
5 Enter the value of the total gross estate as adjusted under section 2032A(b)(3)(A). ©
6 Attach a description of the method used to determine the special value based on qualified use.
7 Did the decedent and/or a member of his or her family own all property listed on line 2 for at least 5 of the
8 years immediately preceding the date of the decedent’s death?
Yes
No
8 Were there any periods during the 8-year period preceding the date of the decedent’s death during which
Yes No
the decedent or a member of his or her family:
a Did not own the property listed on line 2 above?
b Did not use the property listed on line 2 above in a qualified use?
c Did not materially participate in the operation of the farm or other business within the meaning of section
2032A(e)(6)?
If “Yes” to any of the above, you must attach a statement listing the periods. If applicable, describe whether the exceptions of
sections 2032A(b)(4) or (5) are met.
9 Attach affidavits describing the activities constituting material participation and the identity and relationship to the
decedent of the material participants.
10 Persons holding interests. Enter the requested information for each party who received any interest in the specially valued property.
(Each of the qualified heirs receiving an interest in the property must sign the agreement, and the agreement must be filed
with this return.)
Name
Address
A
B
C
D
E
F
G
H
Identifying number
Relationship to decedent
Fair market value
Special-use value
A
B
C
D
E
F
G
H
You must attach a computation of the GST tax savings attributable to direct skips for each person listed above who is a skip person. (see instructions)
11 Woodlands election. Check here ©
if you wish to make a Woodlands election as described in section 2032A(e)(13). Enter the
schedule and item numbers from Form 706 of the property for which you are making this election ©
You must attach a statement explaining why you are entitled to make this election. The IRS may issue regulations that require more
information to substantiate this election. You will be notified by the IRS if you must supply further information.
Schedule A-1—Page 9
Form 706 (Rev. 10-2006)
Part 3. Agreement to Special Valuation Under Section 2032A
Estate of:
Date of Death
Decedent’s Social Security Number
There cannot be a valid election unless:
● The agreement is executed by each and every one of the qualified heirs and
● The agreement is included with the estate tax return when the estate tax return is filed.
We (list all qualified heirs and other persons having an interest in the property required to sign this agreement)
,
being all the qualified heirs and
,
being all other parties having interests in the property which is qualified real property and which is valued under section 2032A of the
,
Internal Revenue Code, do hereby approve of the election made by
Executor/Administrator of the estate of
,
pursuant to section 2032A to value said property on the basis of the qualified use to which the property is devoted and do hereby enter
into this agreement pursuant to section 2032A(d).
The undersigned agree and consent to the application of subsection (c) of section 2032A of the Code with respect to all the property
described on Form 706, Schedule A-1, Part 2, line 2, attached to this agreement. More specifically, the undersigned heirs expressly agree
and consent to personal liability under subsection (c) of 2032A for the additional estate and GST taxes imposed by that subsection with
respect to their respective interests in the above-described property in the event of certain early dispositions of the property or early
cessation of the qualified use of the property. It is understood that if a qualified heir disposes of any interest in qualified real property to
any member of his or her family, such member may thereafter be treated as the qualified heir with respect to such interest upon filing a
Form 706-A and a new agreement.
The undersigned interested parties who are not qualified heirs consent to the collection of any additional estate and GST taxes imposed
under section 2032A(c) of the Code from the specially valued property.
If there is a disposition of any interest which passes, or has passed to him or her, or if there is a cessation of the qualified use of any
specially valued property which passes or passed to him or her, each of the undersigned heirs agrees to file a Form 706-A, United States
Additional Estate Tax Return, and pay any additional estate and GST taxes due within 6 months of the disposition or cessation.
It is understood by all interested parties that this agreement is a condition precedent to the election of special-use valuation under section
2032A of the Code and must be executed by every interested party even though that person may not have received the estate (or GST)
tax benefits or be in possession of such property.
Each of the undersigned understands that by making this election, a lien will be created and recorded pursuant to section 6324B of the
Code on the property referred to in this agreement for the adjusted tax differences with respect to the estate as defined in section
2032A(c)(2)(C).
As the interested parties, the undersigned designate the following individual as their agent for all dealings with the Internal Revenue Service
concerning the continued qualification of the specially valued property under section 2032A of the Code and on all issues regarding the
special lien under section 6324B. The agent is authorized to act for the parties with respect to all dealings with the Service on matters
affecting the qualified real property described earlier. This includes the authorization:
● To receive confidential information 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;
● To furnish the Internal Revenue Service with any requested information concerning the property;
● To notify the Internal Revenue Service of any disposition or cessation of qualified use of any part of the property;
● To receive, but not to endorse and collect, checks in payment of any refund of Internal Revenue taxes, penalties, or interest;
● To execute waivers (including offers of waivers) of restrictions on assessment or collection of deficiencies in tax and waivers of
notice of disallowance of a claim for credit or refund; and
● To execute closing agreements under section 7121.
(continued on next page)
Schedule A-1— Page 10
Form 706 (Rev. 10-2006)
Part 3. Agreement to Special Valuation Under Section 2032A (continued)
Date of Death
Estate of:
Decedent’s Social Security Number
● Other acts (specify) ©
By signing this agreement, the agent agrees to provide the Internal Revenue Service with any requested information concerning this property
and to notify the Internal Revenue Service of any disposition or cessation of the qualified use of any part of this property.
Name of Agent
Signature
Address
The property to which this agreement relates is listed in Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return,
and in the Notice of Election, along with its fair market value according to section 2031 of the Code and its special-use value according
to section 2032A. The name, address, social security number, and interest (including the value) of each of the undersigned in this property
are as set forth in the attached Notice of Election.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands at
this
day of
.
SIGNATURES OF EACH OF THE QUALIFIED HEIRS:
Signature of qualified heir
Signature of qualified heir
Signature of qualified heir
Signature of qualified heir
Signature of qualified heir
Signature of qualified heir
Signature of qualified heir
Signature of qualified heir
Signature of qualified heir
Signature of qualified heir
Signature of qualified heir
Signature of qualified heir
Signatures of other interested parties
Signatures of other interested parties
Schedule A-1—Page 11
,
Form 706 (Rev. 10-2006)
Estate of:
SCHEDULE B—Stocks and Bonds
(For jointly owned property that must be disclosed on Schedule E, see the instructions for Schedule E.)
Item
number
Description, including face amount of bonds or number of shares and par
value 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
Total from continuation schedules (or additional sheets) attached to this schedule
TOTAL. (Also enter on Part 5—Recapitulation, page 3, at item 2.)
(If more space is needed, attach the continuation schedule from the end of this package or additional sheets of the same size.)
(The instructions to Schedule B are in the separate instructions.)
Schedule B—Page 12
Form 706 (Rev. 10-2006)
Estate of:
SCHEDULE C—Mortgages, Notes, and Cash
(For jointly owned property that must be disclosed on Schedule E, see the instructions for Schedule E.)
Item
number
Description
Alternate
valuation date
Alternate value
Value at date of death
1
Total from continuation schedules (or additional sheets) attached to this schedule
TOTAL. (Also enter on Part 5—Recapitulation, page 3, at item 3.)
(If more space is needed, attach the continuation schedule from the end of this package or additional sheets of the same size.)
(See the instructions on the reverse side.)
Schedule C—Page 13
Form 706 (Rev. 10-2006)
Instructions for Schedule C—
Mortgages, Notes, and Cash
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.
● Cash the decedent had at the date of death.
Do not list on Schedule C:
● Mortgages and notes payable by the decedent. (If
these are deductible, list them on Schedule K.)
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; and
5. Cash in banks, savings and loan associations,
and other types of financial organizations.
What to enter in the “Description” column:
For mortgages, list:
● Face value,
● Unpaid balance,
● Date of mortgage,
● Name of maker,
● Property mortgaged,
● Date of maturity,
● Interest rate, and
● Interest date.
Schedule C—Page 14
Example to enter in “Description” column:
“Bond and mortgage of $50,000, unpaid balance:
$25,000; dated: January 1, 1992; John Doe to Richard
Roe; premises: 22 Clinton Street, Newark, NJ; due:
January 1, 2012; interest payable at 10% a
year—January 1 and July 1.”
For promissory notes, list in the same way as
mortgages.
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
● Interest rate.
For cash in possession, list such cash separately from
bank deposits.
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.
Form 706 (Rev. 10-2006)
Estate of:
SCHEDULE D—Insurance on the Decedent’s Life
You must list all policies on the life of the decedent and attach a Form 712 for each policy.
Item
number
Description
Alternate
valuation date
Alternate value
Value at date of death
1
Total from continuation schedules (or additional sheets) attached to this schedule
TOTAL. (Also enter on Part 5—Recapitulation, page 3, at item 4.)
(If more space is needed, attach the continuation schedule from the end of this package or additional sheets of the same size.)
(See the instructions on the reverse side.)
Schedule D—Page 15
Form 706 (Rev. 10-2006)
Instructions for Schedule D—Insurance on
the Decedent’s Life
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 incidents of
ownership, exercisable either alone or in conjunction
with any person.
Incidents of ownership in a policy include:
● The right of the insured or estate to its economic
benefits;
● The power to change the beneficiary;
Schedule D—Page 16
● 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; and
● 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 to Schedule G for a description of these
sections.
Completing the Schedule
You must list every policy of insurance 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 policy of life insurance listed on the
schedule, you must request a statement on Form 712,
Life Insurance Statement, from the company that
issued the policy. Attach the Form 712 to the back of
Schedule D.
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, you must explain why they were
not included.
Form 706 (Rev. 10-2006)
Estate of:
SCHEDULE E—Jointly Owned Property
(If you elect section 2032A valuation, you must complete Schedule E and Schedule A-1.)
PART 1. Qualified Joint Interests—Interests Held by the Decedent and His or Her Spouse as the Only Joint
Tenants (Section 2040(b)(2))
Item
number
Description. For securities, give CUSIP number. If trust, partnership, or
closely held entity, give EIN
Alternate
valuation date
Alternate value
Value at date of death
CUSIP number or
EIN, where
applicable
1
Total from continuation schedules (or additional sheets) attached to this schedule
1a
1b
1a Totals
1b Amounts included in gross estate (one-half of line 1a)
PART 2. All Other Joint Interests
2a State the name and address of each surviving co-tenant. If there are more than three surviving co-tenants, list the additional co-tenants
on an attached sheet.
Name
Address (number and street, city, state, and ZIP code)
A.
B.
C.
Enter
Item
letter for
number co-tenant
Description (including alternate valuation date if any). For securities, give
CUSIP number. If trust, partnership, or closely held entity, give EIN
Percentage
includible
Includible
alternate value
Includible value at
date of death
CUSIP number or
EIN, where
applicable
1
Total from continuation schedules (or additional sheets) attached to this schedule
2b Total other joint interests
3
Total includible joint interests (add lines 1b and 2b). Also enter on Part 5—Recapitulation,
page 3, at item 5
2b
3
(If more space is needed, attach the continuation schedule from the end of this package or additional sheets of the same size.)
(See the instructions on the reverse side.)
Schedule E—Page 17
Form 706 (Rev. 10-2006)
Instructions for Schedule E—Jointly Owned
Property
If you are required to file Form 706, you must 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.
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, “Other Miscellaneous Property.”
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 to 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. You
must report these joint interests on Part 2 of
Schedule E, not Part 1.
Schedule E—Page 18
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 that you
intend to include 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 or tenants and was never received or
acquired by the other tenant or tenants from the
decedent for less than adequate and full consideration
in money or money’s worth, or unless you can show
that any part of the property was acquired with
consideration originally belonging to the surviving joint
tenant or tenants. In this case, you may exclude from
the value of the property an amount proportionate to
the consideration furnished by the other tenant or
tenants. 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 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 or co-tenants.
In the “Includible alternate value” and “Includible
value at date of death” columns, you should enter only
the values that you believe are includible in the gross
estate.
Form 706 (Rev. 10-2006)
Estate of:
SCHEDULE F—Other Miscellaneous Property Not Reportable Under Any Other Schedule
(For jointly owned property that must be disclosed on Schedule E, see the instructions for Schedule E.)
(If you elect section 2032A valuation, you must complete Schedule F and Schedule A-1.)
1
Did the decedent at the time of death own any works of art or items with collectible value in excess of $3,000 or Yes No
any collections whose artistic or collectible value combined at date of death exceeded $10,000?
If “Yes,” submit full details on this schedule and attach appraisals.
2
Has the decedent’s estate, spouse, or any other person, received (or will receive) any bonus or award as a result of
the decedent’s employment or death?
If “Yes,” submit full details on this schedule.
3
Did the decedent at the time of death have, or have access to, a safe deposit box?
If ‘‘Yes,’’ state location, and if held in joint names of decedent and another, state name and relationship of joint
depositor.
If any of the contents of the safe deposit box are omitted from the schedules in this return, explain fully why
omitted.
Item
number
Description. For securities, give CUSIP number. If trust, partnership, or
closely held entity, give EIN
Alternate
valuation date
Alternate value
Value at date of death
CUSIP number or
EIN, where
applicable
1
Total from continuation schedules (or additional sheets) attached to this schedule
TOTAL. (Also enter on Part 5—Recapitulation, page 3, at item 6.)
(If more space is needed, attach the continuation schedule from the end of this package or additional sheets of the same size.)
(See the instructions on the reverse side.)
Schedule F—Page 19
Form 706 (Rev. 10-2006)
Instructions for Schedule F—Other
Miscellaneous Property
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; and
● Insurance on the life of another (obtain and attach
Form 712, Life Insurance Statement, for each
policy).
Note (for single premium or paid-up policies). In
certain situations, for example where the surrender
value of the policy exceeds its replacement cost, the
true economic value of the policy will be greater
than the amount shown on line 59 of Form 712. In
these situations, you should report the full economic
value of the policy on Schedule F. See
Rev. Rul. 78-137, 1978-1 C.B. 280 for details.
● Section 2044 property (see Decedent Who Was a
Surviving Spouse below);
● 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;
● 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.
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
Schedule F—Page 20
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, itself, is
jointly owned. Jointly owned partnership interests
should be reported on Schedule E.
If real estate is owned by the 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.
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
one work of art or item with collectible value is valued
at more than $3,000, or any collection of similar
articles is valued at more than $10,000, attach an
appraisal by an expert under oath and the required
statement regarding the appraiser’s qualifications (see
Regulations section 20.2031-6(b)).
Decedent Who Was a Surviving Spouse
If the decedent was a surviving spouse, he or she 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 was available for gifts
made and decedents dying after December 31, 1981.
List such property on Schedule F.
If this election was made and the surviving spouse
retained his or her interest in the QTIP property at
death, the full value of the QTIP property is includible
in his or her 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.
Form 706 (Rev. 10-2006)
Estate of:
SCHEDULE G—Transfers During Decedent’s Life
(If you elect section 2032A valuation, you must complete Schedule G and Schedule A-1.)
Item
number
A.
Description. For securities, give CUSIP number. If trust,
partnership, or closely held entity, give EIN
Gift tax paid or payable by the decedent or the estate for all gifts
made by the decedent or his or her spouse within 3 years before
the decedent’s death (section 2035(b))
Transfers includible under section 2035(a), 2036, 2037, or 2038:
B.
1
Alternate
valuation date
Alternate value
Value at date of death
X X X X X
Total from continuation schedules (or additional sheets) attached to this schedule
TOTAL. (Also enter on Part 5—Recapitulation, page 3, at item 7.)
SCHEDULE H—Powers of Appointment
(Include “5 and 5 lapsing” powers (section 2041(b)(2)) held by the decedent.)
(If you elect section 2032A valuation, you must complete Schedule H and Schedule A-1.)
Item
number
Description
Alternate
valuation date
Alternate value
Value at date of death
1
Total from continuation schedules (or additional sheets) attached to this schedule
TOTAL. (Also enter on Part 5—Recapitulation, page 3, at item 8.)
(If more space is needed, attach the continuation schedule from the end of this package or additional sheets of the same size.)
(The instructions to Schedules G and H are in the separate instructions.)
Schedules G and H—Page 21
Form 706 (Rev. 10-2006)
Estate of:
SCHEDULE I—Annuities
Note. Generally, no exclusion is allowed for the estates of decedents dying after December 31, 1984 (see page 16 of the instructions).
A Are you excluding from the decedent’s gross estate the value of a lump-sum distribution described in section Yes No
2039(f)(2) (as in effect before its repeal by the Deficit Reduction Act of 1984)?
If “Yes,” you must attach the information required by the instructions.
Item
number
Description.
Show the entire value of the annuity before any exclusions
Alternate
valuation date
Includible
alternate value
Includible
value at date of death
1
Total from continuation schedules (or additional sheets) attached to this schedule
TOTAL. (Also enter on Part 5—Recapitulation, page 3, at item 9.)
(If more space is needed, attach the continuation schedule from the end of this package or additional sheets of the same size.)
Schedule I—Page 22
(The instructions to Schedule I are in the separate instructions.)
Form 706 (Rev. 10-2006)
Estate of:
SCHEDULE J—Funeral Expenses and Expenses Incurred in Administering Property Subject to Claims
Note. Do not list on this schedule expenses of administering property not subject to claims. For those expenses, see the instructions
for Schedule L.
If executors’ commissions, attorney fees, etc., are claimed and allowed as a deduction for estate tax purposes, they are not
allowable as a deduction in computing the taxable income of the estate for federal income tax purposes. They are allowable as
an income tax deduction on Form 1041 if a waiver is filed to waive the deduction on Form 706 (see the Form 1041 instructions).
Item
number
Description
Expense amount
Total amount
A. Funeral expenses:
1
Total funeral expenses
©
B. Administration expenses:
1 Executors’ commissions—amount estimated/agreed upon/paid. (Strike out the words that do
not apply.)
2 Attorney fees—amount estimated/agreed upon/paid. (Strike out the words that do not apply.)
3
Accountant fees—amount estimated/agreed upon/paid. (Strike out the words that do not apply.)
4
Miscellaneous expenses:
Total miscellaneous expenses from continuation schedules (or additional sheets)
attached to this schedule
Total miscellaneous expenses
Expense amount
©
©
TOTAL. (Also enter on Part 5—Recapitulation, page 3, at item 13.)
(If more space is needed, attach the continuation schedule from the end of this package or additional sheets of the same size.)
(See the instructions on the reverse side.)
Schedule J—Page 23
Form 706 (Rev. 10-2006)
Instructions for Schedule J—Funeral
Expenses and Expenses Incurred in
Administering Property Subject to Claims
General. You must complete and file Schedule J if you
claim a deduction on item 13 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 in the
separate instructions), you cannot deduct expenses
incurred in administering property subject 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 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 Social
Security Administration and 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. You may 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 Estate and Gift Tax Territory Manager 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
Schedule J—Page 24
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 Estate
and Gift Tax Territory Manager 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 the 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 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.
Form 706 (Rev. 10-2006)
Estate of:
SCHEDULE K—Debts of the Decedent, and Mortgages and Liens
Item
number
Debts of the Decedent—Creditor and nature of claim, and
allowable death taxes
Amount unpaid to date
Amount in contest
Amount claimed as
a deduction
1
Total from continuation schedules (or additional sheets) attached to this schedule
TOTAL. (Also enter on Part 5—Recapitulation, page 3, at item 14.)
Item
number
Mortgages and Liens—Description
Amount
1
Total from continuation schedules (or additional sheets) attached to this schedule
TOTAL. (Also enter on Part 5—Recapitulation, page 3, at item 15.)
(If more space is needed, attach the continuation schedule from the end of this package or additional sheets of the same size.)
(The instructions to Schedule K are in the separate instructions.)
Schedule K—Page 25
Form 706 (Rev. 10-2006)
Estate of:
SCHEDULE L—Net Losses During Administration and
Expenses Incurred in Administering Property Not Subject to Claims
Item
number
Net losses during administration
(Note. Do not deduct losses claimed on a federal income tax return.)
Amount
1
Total from continuation schedules (or additional sheets) attached to this schedule
TOTAL. (Also enter on Part 5—Recapitulation, page 3, at item 18.)
Item
number
Expenses incurred in administering property not subject to
claims. (Indicate whether estimated, agreed upon, or paid.)
Amount
1
Total from continuation schedules (or additional sheets) attached to this schedule
TOTAL. (Also enter on Part 5—Recapitulation, page 3, at item 19.)
(If more space is needed, attach the continuation schedule from the end of this package or additional sheets of the same size.)
Schedule L—Page 26
(The instructions to Schedule L are in the separate instructions.)
Form 706 (Rev. 10-2006)
Estate of:
SCHEDULE M—Bequests, etc., to Surviving Spouse
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
a. The trust or other property is listed on Schedule M and
b. 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).
Election To Deduct Qualified Domestic Trust Property Under Section 2056A. If a trust meets the requirements of a qualified
domestic trust under section 2056A(a) and this return is filed no later than 1 year after the time prescribed by law (including
extensions) for filing the return, and
a. The entire value of a trust or trust property is listed on Schedule M and
b. The entire value of the trust or trust property is 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.
Yes
1
2a
b
c
d
e
3
Did any property pass to the surviving spouse as a result of a qualified disclaimer?
If ‘‘Yes,’’ attach a copy of the written disclaimer required by section 2518(b).
In what country was the surviving spouse born?
What is the surviving spouse’s date of birth?
Is the surviving spouse a U.S. citizen?
If the surviving spouse is a naturalized citizen, when did the surviving spouse acquire citizenship?
If the surviving spouse is not a U.S. citizen, of what country is the surviving spouse a citizen?
Election Out of QTIP Treatment of Annuities. Do you elect under section 2056(b)(7)(C)(ii) not to treat as qualified
terminable interest property any joint and survivor annuities that are included in the gross estate and would otherwise
be treated as qualified terminable interest property under section 2056(b)(7)(C)? (see instructions)
Description of property interests passing to surviving spouse.
For securities, give CUSIP number. If trust, partnership, or closely held entity, give EIN
Item
number
No
1
2c
3
Amount
QTIP property:
A1
All other property:
B1
Total from continuation schedules (or additional sheets) attached to this schedule
4
5a
b
c
Total amount of property interests listed on Schedule M
5a
Federal estate taxes payable out of property interests listed on Schedule M
5b
Other death taxes payable out of property interests listed on Schedule M
Federal and state GST taxes payable out of property interests listed
5c
on Schedule M
d Add items 5a, 5b, and 5c
6 Net amount of property interests listed on Schedule M (subtract 5d from 4). Also enter on
Part 5—Recapitulation, page 3, at item 20
4
x
5d
x
6
(If more space is needed, attach the continuation schedule from the end of this package or additional sheets of the same size.)
(See the instructions on the reverse side.)
Schedule M—Page 27
Form 706 (Rev. 10-2006)
Instructions for Schedule M—Bequests,
etc., to Surviving Spouse (Marital
Deduction)
General
You must complete Schedule M and file it with the return if
you claim a deduction on Part 5—Recapitulation, item 20.
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 qualified domestic trust (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 qualified
domestic trust status on this return. See the instructions that
follow, on pages 29 and 30, 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
included in the gross estate. However, you should not list
any nondeductible terminable interests (described below) 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 on
the following page.
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
You should not list 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 below); or
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.”
These are interests that will terminate or fail after the
passage of time, or on the occurrence or nonoccurrence of
some contingency. 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. A terminable interest is
nondeductible. Unless you are making a QTIP election, a
terminable interest should not be entered 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.
For example, a decedent devised real property to his wife
for life, with remainder to his children. The life interest that
passed to the wife does not qualify for the marital deduction
because it will terminate at her death and the children will
thereafter possess or enjoy the property.
However, if the decedent purchased a joint and survivor
annuity for himself and his wife who survived him, the value
of the survivor’s annuity, to the extent that it is included in
the gross estate, qualifies for the marital deduction because
Examples of Listing of Property Interests on Schedule M
Item
number
B1
Description of property interests passing to surviving spouse.
For securities, give CUSIP number. If trust, partnership, or closely held entity, give EIN.
All other property:
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, 1957 (Schedule E, Part I, item 1)
2
Proceeds of Gibraltar Life Insurance Company policy No. 104729, payable in one sum to surviving spouse
(Schedule D, item 3)
3
Cash bequest under Paragraph Six of will
Schedule M—Page 28
Amount
$132,500
200,000
100,000
Form 706 (Rev. 10-2006)
even though the interest will terminate on the wife’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 below
for life estate and life insurance and annuity payments with
powers of appointment. For more information, see
Regulations sections 20.2056(b)-1(f) and 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 a son. 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: (a) the
surviving spouse is entitled for life to all of the income from
the entire interest; (b) the income is payable annually or at
more frequent intervals; (c) 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;
(d) 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; and (e) 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 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 the
section 2056(b) regulations 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: (a)
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; (b) the installment or interest
payments are payable annually, or more frequently, beginning
not later than 13 months after the decedent’s death; (c) 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; (d) 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; and (e) 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. If these five conditions are
satisfied only for a specific portion of the proceeds, see the
section 2056(b) regulations 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 Interests
(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 Schedule M and deducting its value. You
are presumed to have made the QTIP election if you list the
property and deduct 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 6, 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, and (b) in which the surviving spouse has a
qualifying income interest for life.
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.
Amendments to Regulations sections 20.2044-1,
20.2056(b)-7, and 20.2056(b)-10 clarify 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 sections 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
Schedule M—Page 29
Form 706 (Rev. 10-2006)
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.
Qualified Domestic Trust Election (QDOT)
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 qualified domestic trust (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 an
individual who is 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, paragraphs 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 deduct its value on Schedule M. Once made,
the election is irrevocable.
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; and
3. The employer identification number (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.
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) 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.
Schedule M—Page 30
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 make the election 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. If
possible, show where each item appears (number and
schedule) on Schedules A through I.
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 all of
the trust or other property.
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 apply
also 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 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 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
decedent’s employees, only the number in each class and
the total value of property received by them need be
furnished);
● The date of birth of all persons, the length of whose lives
may affect the value of the residuary interest passing to the
surviving spouse; and
● 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 lines 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.
Form 706 (Rev. 10-2006)
Estate of:
SCHEDULE O—Charitable, Public, and Similar Gifts and Bequests
Yes
No
1a If the transfer was made by will, has any action been instituted to have interpreted or to contest the will or any
of its provisions affecting the charitable deductions claimed in this schedule?
If ‘‘Yes,’’ full details must be submitted with this schedule.
b According to the information and belief of the person or persons filing this return, is any such action planned?
If ‘‘Yes,’’ full details must be submitted with this schedule.
2
Did any property pass to charity as the result of a qualified disclaimer?
If ‘‘Yes,’’ attach a copy of the written disclaimer required by section 2518(b).
Item
number
Name and address of beneficiary
Character of institution
Amount
1
Total from continuation schedules (or additional sheets) attached to this schedule
3
3
Total
4a Federal estate tax payable out of property interests listed above
4a
b Other death taxes payable out of property interests listed above
4b
c Federal and state GST taxes payable out of property interests listed above
4c
d Add items 4a, 4b, and 4c
5
Net value of property interests listed above (subtract 4d from 3). Also enter on Part 5—Recapitulation,
page 3, at item 21
4d
5
(If more space is needed, attach the continuation schedule from the end of this package or additional sheets of the same size.)
(The instructions to Schedule O are in the separate instructions.)
Schedule O—Page 31
Form 706 (Rev. 10-2006)
Estate of:
SCHEDULE P—Credit for Foreign Death Taxes
List all foreign countries to which death taxes have been paid and for which a credit is claimed on this return.
If a credit is claimed for death taxes paid to more than one foreign country, compute the credit for taxes paid to one country
on this sheet and attach a separate copy of Schedule P for each of the other countries.
The credit computed on this sheet is for the
(Name of death tax or taxes)
imposed in
(Name of country)
Credit is computed under the
(Insert title of treaty or “statute”)
Citizenship (nationality) of decedent at time of death
(All amounts and values must be entered in United States money.)
1 Total of estate, inheritance, legacy, and succession taxes imposed in the country named above attributable to
property situated in that country, subjected to these taxes, and included in the gross estate (as defined by statute)
1
2 Value of the gross estate (adjusted, if necessary, according to the instructions for item 2)
2
3 Value of property situated in that country, subjected to death taxes imposed in that country, and included in the
gross estate (adjusted, if necessary, according to the instructions for item 3)
3
4 Tax imposed by section 2001 reduced by the total credits claimed under sections 2010 and 2012 (see instructions)
4
5 Amount of federal estate tax attributable to property specified at item 3. (Divide item 3 by item 2 and multiply the
result by item 4.)
6 Credit for death taxes imposed in the country named above (the smaller of item 1 or item 5). Also enter on line
13 of Part 2—Tax Computation
5
6
SCHEDULE Q—Credit for Tax on Prior Transfers
Part 1. Transferor Information
Name of transferor
IRS office where estate
tax return was filed
Social security number
Date of death
A
B
C
Check here
©
if section 2013(f) (special valuation of farm, etc., real property) adjustments to the computation of the credit were made (see
page 21 of the instructions).
Part 2. Computation of Credit (see instructions beginning on page 21)
Item
Transferor
A
B
Total
A, B, & C
C
1 Transferee’s tax as apportioned (from worksheet,
(line 7 4 line 8) 3 line 35 for each column)
2 Transferor’s tax (from each column of worksheet,
line 20)
3 Maximum amount before percentage requirement
(for each column, enter amount from line 1 or 2,
whichever is smaller)
4 Percentage allowed (each column) (see instructions)
5 Credit allowable (line 3 3 line 4 for each column)
%
%
%
6 TOTAL credit allowable (add columns A, B, and C
of line 5). Enter here and on line 14 of Part 2—Tax
Computation
Schedules P and Q—Page 32
(The instructions to Schedules P and Q are in the separate instructions.)
Form 706 (Rev. 10-2006)
SCHEDULE R—Generation-Skipping Transfer Tax
Note. To avoid application of the deemed allocation rules, Form 706 and Schedule R should be filed to allocate the GST 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.
The GST tax is imposed on taxable transfers of interests in property located outside the United States as well as property
located inside the United States. (see instructions beginning on page 22)
Part 1. GST Exemption Reconciliation (Section 2631) and Section 2652(a)(3) (Special QTIP)
Election
You no longer need to check a box to make a section 2652(a)(3) (special QTIP) election. If you
list qualifying property in Part 1, line 9 below, you will be considered to have made this election.
See page 25 of the separate instructions for details.
1 Maximum allowable GST exemption
1
2 Total GST exemption allocated by the decedent against decedent’s lifetime transfers
3 Total GST exemption allocated by the executor, using Form 709, against decedent’s lifetime
transfers
2
4 GST exemption allocated on line 6 of Schedule R, Part 2
4
5 GST exemption allocated on line 6 of Schedule R, Part 3
5
6 Total GST exemption allocated on line 4 of Schedule(s) R-1
6
7 Total GST exemption allocated to inter vivos transfers and direct skips (add lines 2–6)
7
8 GST exemption available to allocate to trusts and section 2032A interests (subtract line 7 from
line 1)
8
3
9 Allocation of GST exemption to trusts (as defined for GST tax purposes):
A
Name of trust
B
C
D
E
Trust’s
EIN (if any)
GST exemption
allocated on lines 2–6,
above (see instructions)
Additional GST
exemption allocated
(see instructions)
Trust’s inclusion
ratio (optional—see
instructions)
9D Total. May not exceed line 8, above
10
9D
GST exemption available to allocate to section 2032A interests received by individual beneficiaries
(subtract line 9D from line 8). You must attach special-use allocation schedule (see instructions).
(The instructions to Schedule R are in the separate instructions.)
10
Schedule R—Page 33
Form 706 (Rev. 10-2006)
Estate of:
Part 2. Direct Skips Where the Property Interests Transferred Bear the GST Tax on the
Direct Skips
Name of skip person
Description of property interest transferred
1 Total estate tax values of all property interests listed above
2 Estate taxes, state death taxes, and other charges borne by the property interests listed above
3 GST taxes borne by the property interests listed above but imposed on direct skips other than
those shown on this Part 2 (see instructions)
4 Total fixed taxes and other charges (add lines 2 and 3)
5 Total tentative maximum direct skips (subtract line 4 from line 1)
6 GST exemption allocated
7 Subtract line 6 from line 5
8 GST tax due (divide line 7 by 3.173913)
9 Enter the amount from line 8 of Schedule R, Part 3
10 Total GST taxes payable by the estate (add lines 8 and 9). Enter here and on line 17 of
Part 2—Tax Computation, on page 1
Schedule R—Page 34
Estate tax value
1
2
3
4
5
6
7
8
9
10
Form 706 (Rev. 10-2006)
Estate of:
Part 3. Direct Skips Where the Property Interests Transferred Do Not Bear the
GST Tax on the Direct Skips
Name of skip person
Description of property interest transferred
1 Total estate tax values of all property interests listed above
2 Estate taxes, state death taxes, and other charges borne by the property interests listed above
3 GST taxes borne by the property interests listed above but imposed on direct skips other than
those shown on this Part 3 (see instructions)
4 Total fixed taxes and other charges (add lines 2 and 3)
5 Total tentative maximum direct skips (subtract line 4 from line 1)
6 GST exemption allocated
7 Subtract line 6 from line 5
8 GST tax due (multiply line 7 by .46). Enter here and on Schedule R, Part 2, line 9
Estate tax value
1
2
3
4
5
6
7
8
Schedule R—Page 35
SCHEDULE R-1
(Form 706)
Generation-Skipping Transfer Tax
(Rev. October 2006)
Department of the Treasury
Internal Revenue Service
Direct Skips From a Trust
OMB No. 1545-0015
Payment Voucher
Executor: File one copy with Form 706 and send two copies to the fiduciary. Do not pay the tax shown. See the separate instructions.
Fiduciary: See instructions on the following page. Pay the tax shown on line 6.
Name of trust
Trust’s EIN
Name and title of fiduciary
Name of decedent
Address of fiduciary (number and street)
Decedent’s SSN
City, state, and ZIP code
Name of executor
Address of executor (number and street)
City, state, and ZIP code
Date of decedent’s death
Filing due date of Schedule R, Form 706 (with extensions)
Service Center where Form 706 was filed
Part 1. Computation of the GST Tax on the Direct Skip
Description of property interests subject to the direct skip
1
2
3
4
5
6
Total estate tax value of all property interests listed above
Estate taxes, state death taxes, and other charges borne by the property interests listed above
Tentative maximum direct skip from trust (subtract line 2 from line 1)
GST exemption allocated
Subtract line 4 from line 3
GST tax due from fiduciary (divide line 5 by 3.173913). (See instructions if property will not
bear the GST tax.)
Estate tax value
1
2
3
4
5
6
Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief,
it is true, correct, and complete.
Signature(s) of executor(s)
Date
Date
Signature of fiduciary or officer representing fiduciary
Schedule R-1—Page 36
Date
Form 706 (Rev. 10-2006)
Instructions for the Trustee
Introduction
Schedule R-1 (Form 706) serves as a payment voucher for the Generation-Skipping Transfer
(GST) tax imposed on a direct skip from a trust, which you, the trustee of the trust, must pay.
The executor completes the Schedule R-1 (Form 706) and gives you 2 copies. File one copy
and keep one for your records.
How to pay
You can pay by check or money order.
● Make it payable to the “United States Treasury.”
● Make the check or money order for the amount on line 6 of Schedule R-1.
● Write “GST Tax” and the trust’s EIN on the check or money order.
Signature
You must sign the Schedule R-1 in the space provided.
What to mail
Mail your check or money order and the copy of Schedule R-1 that you signed.
Where to mail
Mail to the Service Center shown on Schedule R-1.
When to pay
The GST tax is due and payable 9 months after the decedent’s date of death (shown on the
Schedule R-1). You will owe interest on any GST tax not paid by that date.
Automatic
extension
You have an automatic extension of time to file Schedule R-1 and pay the GST tax. The
automatic extension allows you to file and pay by 2 months after the due date (with
extensions) for filing the decedent’s Schedule R (shown on the Schedule R-1).
If you pay the GST tax under the automatic extension, you will be charged interest (but no
penalties).
Additional
information
For more information, see section 2603(a)(2) and the instructions for Form 706, United States
Estate (and Generation-Skipping Transfer) Tax Return.
Schedule R-1—Page 37
Form 706 (Rev. 10-2006)
Estate of:
SCHEDULE U—Qualified Conservation Easement Exclusion
Part 1. Election
Note. The executor is deemed to have made the election under section 2031(c)(6) if he or she files Schedule U and excludes any
qualifying conservation easements from the gross estate.
Part 2. General Qualifications
1
Describe the land subject to the qualified conservation easement (see separate instructions)
2
Did the decedent or a member of the decedent’s family own the land described above during the 3-year
period ending on the date of the decedent’s death?
3
Describe the conservation easement with regard to which the exclusion is being claimed (see separate instructions).
Part 3. Computation of Exclusion
4 Estate tax value of the land subject to the qualified conservation easement (see separate
instructions)
5 Date of death value of any easements granted prior to decedent’s
5
death and included on line 10 below (see instructions)
6
6 Add lines 4 and 5
7
7 Value of retained development rights on the land (see instructions)
8 Subtract line 7 from line 6
9 Multiply line 8 by 30% (.30)
10 Value of qualified conservation easement for which the exclusion is
being claimed (see instructions)
Note. If line 10 is less than line 9, continue with line 11. If line 10
is equal to or more than line 9, skip lines 11 through 13, enter “.40”
on line 14, and complete the schedule.
11
Yes
Divide line 10 by line 8. Figure to 3 decimal places (for example,
“.123”)
4
8
9
10
11
Note. If line 11 is equal to or less than .100, stop here; the estate
does not qualify for the conservation easement exclusion.
12
Subtract line 11 from .300. Enter the answer in hundredths by rounding
any thousandths up to the next higher hundredth (that is, .030 = .03;
but .031 = .04)
13 Multiply line 12 by 2
14 Subtract line 13 from .40
15 Deduction under section 2055(f) for the conservation easement (see
separate instructions)
16 Amount of indebtedness on the land (see separate instructions)
17 Total reductions in value (add lines 7, 15, and 16)
12
13
14
15
16
17
18 Net value of land (subtract line 17 from line 4)
18
19 Multiply line 18 by line 14
20 Enter the smaller of line 19 or the exclusion limitation (see instructions). Also enter this amount
on item 11, Part 5—Recapitulation, page 3
19
Schedule U—Page 38
20
No
Form 706 (Rev. 10-2006)
(Make copies of this schedule before completing it if you will need more than one schedule.)
Estate of:
CONTINUATION SCHEDULE
Continuation of Schedule
Item
number
Description.
For securities, give CUSIP number.
If trust, partnership, or closely held entity, give EIN.
(Enter letter of schedule you are continuing.)
Unit value
Alternate
Alternate value
(Sch. B, E, or G
valuation date
only)
Value at date of
death or amount
deductible
TOTAL. (Carry forward to main schedule.)
See the instructions on the reverse side.
Continuation Schedule—Page 39
Form 706 (Rev. 10-2006)
Instructions for 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 on page 39. 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 keep the following points in mind:
● 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
Schedule K
Amount unpaid to date
Alternate valuation date
Schedule K
Amount in contest
Alternate value
Schedules J, L, M
Description of deduction
continuation
Alternate valuation date and
Alternate value
Schedule O
Character of institution
Alternate valuation date and
Alternate value
Schedule O
Amount of each deduction
Amount deductible
Continuation Schedule—Page 40
| File Type | application/pdf |
| File Title | Form 706 (Rev. October 2006) |
| Subject | United States Estate (and Generation-Skipping Transfer) Tax Return |
| Author | SE:W:CAR:MP |
| File Modified | 2006-10-27 |
| File Created | 2006-10-05 |