Έντυπο 706 Οδηγίες
Οδηγίες για Έντυπο 706, Ηνωμένες Πολιτείες Estate (και Generation-Skipping Transfer) Φορολογική Επιστροφή
Αναθ. Σεπτέμβριος 2023
Σχετικές φόρμες
- Έντυπο 706 - Ηνωμένες Πολιτείες Estate (και Generation-Skipping Transfer) φορολογική απόδοση
Department of the Treasury
Internal Revenue Service
Instructions for Form 706
(Rev. September 2023)
For decedents dying after December 31, 2022
United States Estate (and Generation-Skipping Transfer) Tax Return
Section references are to the Internal Revenue Code unless
otherwise noted.
certain estates to obtain an extension of time to file a return
on or before the fifth anniversary of the decedent’s death to
elect portability of the deceased spousal unused exclusion
more information.
Revisions of Form 706
For Decedents Dying
After
Use Revision of
Form 706 Dated
July 1999
and Before
January 1, 2001
January 1, 2002
January 1, 2003
January 1, 2004
January 1, 2005
January 1, 2006
January 1, 2007
January 1, 2008
January 1, 2009
January 1, 2010
January 1, 2011
January 1, 2012
January 1, 2013
January 1, 2017
January 1, 2018
January 1, 2019
December 31, 1998
December 31, 2000
December 31, 2001
December 31, 2002
December 31, 2003
December 31, 2004
December 31, 2005
December 31, 2006
December 31, 2007
December 31, 2008
December 31, 2009
December 31, 2010
December 31, 2011
December 31, 2012
December 31, 2016
December 31, 2017
December 31, 2018
General Instructions
Purpose of Form
November 2001
August 2002
August 2003
August 2004
August 2005
October 2006
September 2007
August 2008
September 2009
July 2011
August 2011
August 2012
August 2013
August 2017
November 2018
August 2019
The executor of a decedent's estate uses Form 706 to figure
the estate tax imposed by chapter 11 of the Internal Revenue
Code. This tax is levied on the entire taxable estate and not
just on the share received by a particular beneficiary. Form
706 is also used to figure the generation-skipping transfer
(GST) tax imposed by chapter 13 on direct skips (transfers to
skip persons of interests in property included in the
decedent's gross estate).
Which Estates Must File
For decedents who died in 2023, Form 706 must be filed by
the executor of the estate of every U.S. citizen or resident:
a. Whose gross estate, plus adjusted taxable gifts and
specific exemption, is more than $12,920,000; or
b. Whose executor elects to transfer the deceased
spousal unused exclusion (DSUE) amount to the
surviving spouse, regardless of the size of the decedent's
gross estate. See the instructions for Part 6—Portability
of Deceased Spousal Unused Exclusion, later, and
sections 2010(c)(4) and (c)(5).
Future Developments
For the latest information about developments related to
Form 706 and its instructions, such as legislation enacted
What's New
To determine whether you must file a return for the estate
under (a) above, add:
Various dollar amounts and limitations in Form 706 are
indexed for inflation. For decedents dying in 2023, the
following amounts are applicable.
1. The adjusted taxable gifts (as defined in section 2503)
made by the decedent after December 31, 1976;
The basic exclusion amount is $12,920,000.
The ceiling on special-use valuation is $1,310,000.
The amount used in figuring the 2% portion of estate tax
payable in installments is $1,750,000.
•
•
•
2. The total specific exemption allowed under section 2521
(as in effect before its repeal by the Tax Reform Act of
1976) for gifts made by the decedent after September 8,
1976; and
The basic credit amount is $5,113,800.
•
3. The decedent's gross estate valued as of the date of
death.
The IRS will publish amounts for future years in annual
revenue procedures.
Gross Estate
Reminders
The gross estate includes all property in which the decedent
had an interest (including property outside the United
States). It also includes:
Schedule R-1 is a separate form. Schedule R-1 isn’t part
of Form 706; instead, you will need to obtain a separate
Schedule R-1 to complete and file with Form 706.
Certain transfers made during the decedent's life without
an adequate and full consideration in money or money's
worth,
•
Identifying exhibits. Copies of tax returns filed with Form
706 must be identified as exhibits to the Form 706.
Annuities,
•
•
Estate tax closing letter fee. Effective October 28, 2021, a
user fee of $67 was established for persons requesting the
issuance of an estate tax closing letter (ETCL). See ETCL
fee, later, for more information.
The includible portion of joint estates with right of
survivorship (see the instructions for Schedule E),
The includible portion of tenancies by the entirety (see
the instructions for Schedule E),
•
Extension of time to elect portability. Effective July 8,
2022, Rev. Proc. 2022-32 provides a simplified method for
Sep 5, 2023
Cat. No. 16779E
Certain life insurance proceeds (even though payable to
beneficiaries other than the estate) (see the instructions
for Schedule D),
•
When To File
You must file Form 706 to report estate and/or GST tax within
9 months after the date of the decedent's death. If you are
unable to file Form 706 by the due date, you may receive an
extension of time to file. Use Form 4768, Application for
Extension of Time To File a Return and/or Pay U.S. Estate
(and Generation-Skipping Transfer) Taxes, to apply for an
automatic 6-month extension of time to file.
Digital assets (see the instructions for Schedule F),
Property over which the decedent possessed a general
power of appointment,
•
•
Dower or curtesy (or statutory estate) of the surviving
spouse, and
•
•
Community property to the extent of the decedent's
interest as defined by applicable law.
Portability election. An executor can only elect to transfer
the DSUE amount to the surviving spouse if the Form 706 is
filed timely, that is, within 9 months of the decedent's date of
death or, if you have received an extension of time to file,
before the 6-month extension period ends.
Extension to elect portability. Executors who did not
have a filing requirement under section 6018(a) but failed to
timely file Form 706 to make the portability election may be
eligible for an extension under Rev. Proc. 2022-32, 2022-30
I.R.B. 101 (superseding Rev. Proc. 2017-34, 2017-26 I.R.B.
1282). Executors filing to elect portability may now file Form
706 on or before the fifth anniversary of the decedent’s death.
An executor wishing to elect portability under this
extension must state at the top of the Form 706 being filed
that the return is “Filed Pursuant to Rev. Proc. 2022-32 to
Elect Portability under section 2010(c)(5)(A).” For more
Note. Under the special rule of Regulations section
20.2010-2(a)(7)(ii), executors of estates who are not required
to file Form 706 under section 6018(a), but who are filing to
elect portability of the DSUE amount to the surviving spouse,
are not required to report the value of certain property eligible
for the marital deduction under section 2056 or 2056A or the
charitable deduction under section 2055. However, the value
of those assets must be estimated and included in the total
value of the gross estate. See the instructions for Part
5—Recapitulation, items 10 and 23, later, for more
information.
For more specific information, see the instructions for
Schedules A through I.
U.S. Citizens or Residents; Nonresident
Noncitizens
Note. Any estate that is filing an estate tax return only to
elect portability and did not file timely or within the extension
provided in Rev. Proc. 2022-32 may seek relief under
Regulations section 301.9100-3 to make the portability
election.
File Form 706 for the estates of decedents who were either
U.S. citizens or U.S. residents at the time of death. For estate
tax purposes, a resident is someone who had a domicile in
the United States at the time of death. A person acquires a
domicile by living in a place for even a brief period of time, as
long as the person had no intention of moving from that
place. See Regulations section 20.0-1(b).
Where To File
File Form 706 at the following address.
Decedents who were neither U.S. citizens nor U.S.
residents at the time of death file Form 706-NA, United
States Estate (and Generation-Skipping Transfer) Tax Return,
Estate of nonresident not a citizen of the United States.
Department of the Treasury
Internal Revenue Service
Kansas City, MO 64999
If you’re using a private delivery service (PDS), file at this
address.
Residents of U.S. Possessions
All references to citizens of the United States are subject to
the provisions of sections 2208 and 2209, relating to
Internal Revenue Submission Processing Center
333 W. Pershing Road
decedents who were U.S. citizens and residents of a U.S.
possession on the date of death. If such decedents became
U.S. citizens only because of their connections with a
possession, then the decedents are considered nonresidents
not citizens of the United States for estate tax purposes, and
you should file Form 706-NA. If such decedents became U.S.
citizens wholly independently of their connections with a
possession, then the decedents are considered U.S. citizens
for estate tax purposes, and you should file Form 706.
Kansas City, MO 64108
If you’re filing an amended Form 706, use the following
address.
Internal Revenue Service Center
Attn: E&G, Stop 824G
7940 Kentucky Drive
Florence, KY 41042-2915
Executor
The term “executor” includes the executor, personal
representative, or administrator of the decedent's estate. If
none of these is appointed, qualified, and acting in the United
States, every person in actual or constructive possession of
any property of the decedent is considered an executor and
must file a return.
If you’re using a PDS for your amended Form 706, use this
address.
Internal Revenue Service Center
Attn: E&G, Stop 824G
7940 Kentucky Drive
Florence, KY 41042-2915
Executors must provide documentation proving their
status. Documentations will vary but may include documents
such as certified copies of wills or court orders designating
the executor(s). Statements by executors attesting to their
status are insufficient.
-2-
Instructions for Form 706 (Rev. 09-2023)
The executor who files the return must, in every case, sign
the declaration on page 1 under penalties of perjury.
Paying the Tax
The estate and GST taxes are due within 9 months of the
date of the decedent's death. You may request an extension
of time for payment by filing Form 4768. You may also elect
under section 6166 to pay in installments or under section
6163 to postpone the part of the tax attributable to a
reversionary or remainder interest. These elections are made
by checking “Yes” on lines 3 and 4 (respectively) of Part
3—Elections by the Executor and attaching the required
statements.
Generally, anyone who is paid to prepare the return must
sign the return in the space provided and fill in the Paid
Preparer Use Only area. See section 7701(a)(36)(B) for
exceptions.
In addition to signing and completing the required
information, the paid preparer must give a copy of the
completed return to the executor.
If the tax paid with the return is different from the balance
due as figured on the return, explain the difference in an
attached statement. If you have made prior payments to the
IRS, attach a statement to Form 706 including these facts.
Paying by check. Make the check payable to “United States
Treasury.” Please write the decedent's name, social security
number (SSN), and “Form 706” on the check to assist us in
posting it to the proper account.
No checks of $100 million or more accepted. The IRS
cannot accept a single check (including a cashier's check) for
amounts of $100,000,000 ($100 million) or more. If you're
sending $100 million or more by check, you'll need to spread
the payments over 2 or more checks, with each check made
out for an amount less than $100 million. The $100 million or
more amount limit does not apply to other methods of
payment (such as electronic payments). Please consider a
method of payment other than a check if the amount of the
payment is over $100 million.
Note. A paid preparer may sign original or amended returns
by rubber stamp, mechanical device, or computer software
program.
Amending Form 706
If you find that you must change something on a return that
has already been filed, you should:
File another Form 706;
•
Enter “Supplemental Information” across the top of
page 1 of the form;
•
Include a statement of what has changed, along with the
supporting information; and
•
•
Attach a copy of pages 1, 2, 3, and 4 of the original Form
706 that has already been filed.
For the mailing address for supplemental Form 706, see
File the amended Form 706 at the following address.
Paying electronically. Payment of the tax due shown on
Form 706 may be submitted electronically through the
Electronic Federal Tax Payment System (EFTPS). EFTPS is
a free service of the Department of the Treasury.
Internal Revenue Service Center
Attn: E&G, Stop 824G
7940 Kentucky Drive
Florence, KY 41042-2915
To be considered timely, payments made through EFTPS
must be completed no later than 8 p.m. Eastern time the day
before the due date. All EFTPS payments must be scheduled
in advance of the due date and, if necessary, may be
changed or canceled up to 2 business days before the
scheduled payment date.
To get more information about EFTPS or to enroll in
EFTPS using Telecommunications Relay Service (TRS) for
people who are deaf, hard of hearing, or have a speech
disability, dial 711 and then provide the TRS assistant the
800-555-4477 number, above, or 800-733-4829. Additional
information about EFTPS is available in Pub. 966, Electronic
Federal Tax Payment System: A Guide to Getting Started.
If you’re using a PDS, file at this address.
Internal Revenue Service Center
Attn: E&G, Stop 824G
7940 Kentucky Drive
Florence, KY 41042-2915
If you have already been notified that the return has been
selected for examination, you should provide the additional
information directly to the office conducting the examination.
Supplemental Documents
Note. You must attach the death certificate to the return.
If the decedent was a citizen or resident of the United
States and died testate (leaving a valid will), attach a certified
copy of the will to the return. If you cannot obtain a certified
copy, attach a copy of the will and an explanation of why it is
not certified. Other supplemental documents may be
required, as explained later. Examples include Form 712, Life
Insurance Statement; Form 709, United States Gift (and
Generation-Skipping Transfer) Tax Return; Form 706-CE,
Certificate of Payment of Foreign Death Tax; trust and power
of appointment instruments; and state certification of
payment of death taxes. If you do not file these documents
with the return, the processing of the return will be delayed.
Signature and Verification
If there is more than one executor, all listed executors
are responsible for the return. However, it is sufficient
!
CAUTION
for only one of the co-executors to sign the return.
All executors are responsible for the return as filed and are
liable for penalties imposed for erroneous or false returns.
If two or more persons are liable for filing the return, they
should all join together in filing one complete return.
However, if they are unable to join in making one complete
return, each is required to file a return disclosing all the
information the person has about the estate, including the
name of every person holding an interest in the property and
a full description of the property. If the appointed, qualified,
and acting executor is unable to make a complete return,
then every person holding an interest in the property must, on
notice from the IRS, make a return regarding that interest.
If the decedent was a U.S. citizen but not a resident of the
United States, you must attach the following documents to
the return.
1. A copy of the inventory of property and the schedule of
liabilities, claims against the estate, and expenses of
-3-
Instructions for Form 706 (Rev. 09-2023)
administration filed with the foreign court of probate
jurisdiction, certified by a proper official of the court.
Consistent Basis Reporting
Certain estates are required to report to the IRS and the
recipient, the estate tax value of each asset included in the
gross estate within 30 days of the due date (including
extensions) of Form 706 or the date of filing Form 706 if the
return is filed late. The basis of certain assets when sold or
otherwise disposed of must be consistent with the basis
(estate tax value) of the asset when it was received by the
beneficiary. To satisfy the consistent basis reporting
requirements, the estate must file Form 8971, Information
Regarding Beneficiaries Acquiring Property From a
Decedent, separately from the Form 706. Failure to file Form
8971, when required, is subject to information return
penalties under sections 6721 and 6722. See Form 8971 and
its instructions for more information.
2. A copy of the return filed under the foreign inheritance,
estate, legacy, succession tax, or other death tax act,
certified by a proper official of the foreign tax
department, if the estate is subject to such a foreign tax.
3. If the decedent died testate, a certified copy of the will.
Rounding Off to Whole Dollars
You may round off cents to whole dollars on the return and
schedules. If you do round to whole dollars, you must round
all amounts. To round, drop amounts under 50 cents and
increase amounts from 50 to 99 cents to the next dollar. For
example, $1.39 becomes $1 and $2.50 becomes $3.
Penalties
Estate Tax Closing Letters
Late filing and late payment. Section 6651 provides for
penalties for both late filing and for late payment unless there
is reasonable cause for the delay. The law also provides for
penalties for willful attempts to evade payment of tax. The
late filing penalty will not be imposed if the taxpayer can show
that the failure to file a timely return is due to reasonable
cause.
An estate tax closing letter (ETCL) will not be issued unless a
please wait at least 9 months after filing Form 706 to request
an ETCL.
9957 established a user fee of $67 for persons requesting the
issuance of an ETCL. To make an ETCL request after
request and pay the user fee. Go to Frequently Asked
and more information related to ETCLs.
Reasonable-cause determinations. If you receive a notice
about penalties after you file Form 706, send an explanation
and we will determine if you meet reasonable-cause criteria.
Do not attach an explanation when you file Form 706.
Explanations attached to the return at the time of filing will not
be considered.
Valuation understatement. Section 6662 provides a 20%
penalty for the underpayment of estate tax that exceeds
$5,000 when the underpayment is attributable to valuation
understatements. A valuation understatement occurs when
the value of property reported on Form 706 is 65% or less of
the actual value of the property.
This penalty increases to 40% if there is a gross valuation
understatement. A gross valuation understatement occurs if
any property on the return is valued at 40% or less of the
value determined to be correct.
Penalties also apply to late filing, late payment, and
underpayment of GST taxes.
Account transcript in lieu of ETCL. Instead of an ETCL,
the executor of the estate may request an account transcript,
which reflects transactions including the acceptance of Form
706 or the completion of an examination. Account transcripts
are available online to registered tax professionals using the
Transcript Delivery System (TDS) or to authorized
representatives making requests using Form 4506-T. Go to
instructions to request online transcripts using the TDS or
hardcopy transcripts using Form 4506-T.
Note. For information about the release of nonresident U.S.
citizen decedents' assets using transfer certificates under
of the United States or write to:
Return preparer. Estate tax return preparers who prepare
any return or claim for refund which reflects an
Internal Revenue Service Center
Attn: E&G, Stop 824G
understatement of tax liability due to an unreasonable
position are subject to a penalty equal to the greater of
$1,000 or 50% of the income earned (or to be earned) for the
preparation of each such return.
7940 Kentucky Drive
Florence, KY 41042-2915
Estate tax return preparers who prepare a return or claim
for refund which reflects an understatement of tax liability due
to willful or reckless conduct are subject to a penalty of
$5,000 or 75% of the income earned (or income to be
earned), whichever is greater, for the preparation of each
such return.
Estate tax return preparers who prepare any return or
claim for a refund are required to furnish a copy to the
taxpayer, sign the return, and provide their PTIN, but who fail
to do so, are subject to a penalty of $50 for such failure,
unless it is shown that such failure is due to reasonable
cause and not due to willful neglect.
Obtaining Forms and Publications To
File or Use
hours a day, 7 days a week to:
Download forms, including talking tax forms, instructions,
•
and publications;
Order IRS products online;
•
•
•
•
Research your tax questions online;
Search publications online by topic or keyword;
Use the online Internal Revenue Code, regulations, or
other official guidance;
See sections 6694 and 6695, the related regulations, and
Announcement 2009-15, 2009-11 I.R.B. 687, available at
Announcement 2009-15, for more information.
View Internal Revenue Bulletins (IRBs) published in the
last few years; and
•
-4-
Instructions for Form 706 (Rev. 09-2023)
Sign up to receive local and national tax news by email.
•
IF . . .
THEN . . .
Other forms that may be required.
there is not enough space on a
schedule to list all the items
attach a Continuation Schedule (or
additional sheets of the same size) to
the back of the schedule (see the
Continuation Schedule at the end of
Form 706); photocopy the blank
schedule before completing it, if you
will need more than one copy.
Form SS-5, Application for a Social Security Card.
Form 706-CE, Certificate of Payment of Foreign Death
Tax.
•
•
Form 706-NA, United States Estate (and
Generation-Skipping Transfer) Tax Return, Estate of
nonresident not a citizen of the United States.
Form 709, United States Gift (and Generation-Skipping
Transfer) Tax Return.
•
•
Form 712, Life Insurance Statement.
Form 2848, Power of Attorney and Declaration of
Representative.
•
•
Also consider the following.
Form 706 has 29 numbered pages.
•
•
Number the items you list on each schedule, beginning
with the number “1” each time, or using the numbering
convention as indicated on the schedule (for example,
Schedule M).
Form 4768, Application for Extension of Time To File a
Return and/or Pay U.S. Estate (and Generation-Skipping
Transfer) Taxes.
•
Form 4808, Computation of Credit for Gift Tax.
Form 8821, Tax Information Authorization.
Form 8822, Change of Address.
•
•
•
•
Total the items listed on the schedule and its
attachments, Continuation Schedules, etc.
Enter the total of all attachments, Continuation
Schedules, etc., at the bottom of the printed schedule,
but do not carry the totals forward from one schedule to
the next.
•
•
Form 8971, Information Regarding Beneficiaries
Acquiring Property From a Decedent.
Additional Information. Pub. 559, Survivors, Executors,
and Administrators, may assist you in learning about and
preparing Form 706.
Enter the total, or totals, for each schedule on page 3,
Part 5—Recapitulation.
•
•
Do not complete the “Alternate valuation date” or
“Alternate value” columns of any schedule unless you
elected alternate valuation on Part 3—Elections by the
Executor, line 1.
Specific Instructions
When you complete the return, staple all the required
pages together in the proper order.
You must file the first four pages of Form 706 and all required
schedules. File Schedules A through I, as appropriate, to
support the entries in items 1 through 9 of Part
5—Recapitulation.
•
Part 1—Decedent and Executor
Line 2
Enter the SSN assigned specifically to the decedent. You
cannot use the SSN assigned to the decedent's spouse. If
the decedent did not have an SSN, the executor should
obtain one for the decedent by filing Form SS-5 with a local
Social Security Administration (SSA) office.
Make sure to complete the required pages and
schedules in their entirety. Returns filed without
!
CAUTION
entries in each field will not be processed.
IF . . .
THEN . . .
you enter zero on any item of the
Recapitulation
you need not file the schedule
(except for Schedule F) referred to on
that item.
Line 6a. Name of Executor
If there is more than one executor, enter the name of the
executor to be contacted by the IRS and see line 6d.
you are estimating the value of
one or more assets pursuant to
the special rule of Regulations
section 20.2010-2(a)(7)(ii)
you must report the asset on the
appropriate schedule, but you are not
required to enter a value for the
asset. Include the estimated value of
the asset in the totals entered on Part
5—Recapitulation, items 10 and 23.
Line 6b. Executor's Address
Use Form 8822 to report a change of the executor's address.
Line 6c. Executor's Social Security Number
you claim an exclusion on item 12 complete and attach Schedule U.
Only one executor should complete this line. If there is more
than one executor, see line 6d.
you claim any deductions on items complete and attach the appropriate
14 through 22 of the Recapitulation schedules to support the claimed
deductions.
Line 6d. Multiple Executors
Check here if there is more than one executor. On an
attached statement, provide the name, address, telephone
number, and SSN of any executor other than the one named
on line 6a.
you claim credits for foreign death complete and attach Schedule P or
taxes or tax on prior transfers
Q.
Line 11. Special Rule
If the estate is estimating the value of assets under the
special rule of Regulations section 20.2010-2(a)(7)(ii), check
here and see the instructions for Part 5—Recapitulation,
items 10 and 23.
-5-
Instructions for Form 706 (Rev. 09-2023)
Table A—Unified Rate Schedule
Column A
Taxable amount over
Column B
Taxable amount not over
Column C
Tax on amount in column A
Column D
Rate of tax on excess over amount
in column A
$0
10,000
20,000
40,000
60,000
80,000
100,000
150,000
250,000
500,000
750,000
1,000,000
$10,000
20,000
40,000
60,000
80,000
100,000
150,000
250,000
500,000
750,000
1,000,000
– – – –
$0
1,800
3,800
8,200
13,000
18,200
23,800
38,800
70,800
155,800
248,300
345,800
18%
20%
22%
24%
26%
28%
30%
32%
34%
37%
39%
40%
Send the following evidence to the IRS.
Part 2—Tax Computation
1. Certificate of the proper officer of the taxing state, or the
District of Columbia, showing the following.
In general, the estate tax is figured by applying the unified
rates shown in Table A to the total of transfers both during life
and at death, and then subtracting the gift taxes, as refigured
based on the date of death rates. See Worksheet TG, the
Line 4 Worksheet, and the Line 7 Worksheet.
a. Total amount of tax imposed (before adding interest
and penalties and before allowing discount).
b. Amount of discount allowed.
Note. You must complete Part 2—Tax Computation.
c. Amount of penalties and interest imposed or
charged.
Line 1
d. Total amount actually paid in cash.
e. Date of payment.
If you elected alternate valuation on Part 3—Elections by the
Executor, line 1, enter the amount you entered in the
“Alternate value” column of Part 5—Recapitulation, item 13.
Otherwise, enter the amount from the “Value at date of death”
column.
2. Any additional proof the IRS specifically requests.
File the evidence requested above with the return, if
possible. Otherwise, send it as soon as possible after
the return is filed.
Line 3b. State Death Tax Deduction
You may take a deduction on line 3b for estate,
inheritance, legacy, or succession taxes paid on any property
included in the gross estate as the result of the decedent's
death to any state or the District of Columbia.
Line 6
To figure the tentative tax on the amount on line 5, use Table
A—Unified Rate Schedule and put the result on this line.
You may claim an anticipated amount of deduction and
figure the federal estate tax on the return before the state
death taxes have been paid. However, the deduction cannot
be finally allowed unless you pay the state death taxes and
claim the deduction within 4 years after the return is filed, or
later (see section 2058(b)) if:
Lines 4 and 7
Three worksheets are provided to help you figure the entries
for these lines. Worksheet TG—Taxable Gifts Reconciliation
allows you to reconcile the decedent's lifetime taxable gifts to
figure totals that will be used for the Line 4 Worksheet and
the Line 7 Worksheet.
A petition is filed with the Tax Court of the United States,
You have an extension of time to pay, or
•
•
•
You must have all of the decedent's gift tax returns (Forms
709) before completing Worksheet TG—Taxable Gifts
Reconciliation. The amounts needed for Worksheet TG can
usually be found on the filed returns that were subject to tax.
However, if any of the returns were audited by the IRS, use
the amounts that were finally determined as a result of the
audits.
You file a claim for refund or credit of an overpayment
which extends the deadline for claiming the deduction.
Note. The deduction is not subject to dollar limits.
If you make a section 6166 election to pay the federal
estate tax in installments and make a similar election to pay
the state death tax in installments, see section 2058(b) for
exceptions and periods of limitation.
If you transfer property other than cash to the state in
payment of state inheritance taxes, the amount you may
claim as a deduction is the lesser of the state inheritance tax
liability discharged or the fair market value (FMV) of the
property on the date of the transfer. For more information on
the application of such transfers, see the principles
discussed in Rev. Rul. 86-117, 1986-2 C.B. 157, prior to the
repeal of section 2011.
In addition, you must make a reasonable effort to discover
any gifts in excess of the annual exclusion made by the
decedent (or on behalf of the decedent under a power of
attorney) for which no Forms 709 were filed. Include the value
of such gifts in column b of Worksheet TG. The annual
exclusion per donee is as follows.
-6-
Instructions for Form 706 (Rev. 09-2023)
Taxable Gift Amount Table
Annual Exclusion Amount Per
Donee
Period
Column A
Column B
Column C
Column D
1977 through 1981
1981 through 2001
2002 through 2005
2006 through 2008
2009 through 2012
2013 through 2017
2018 through 2021
2022
$3,000
$10,000
$11,000
$12,000
$13,000
$14,000
$15,000
$16,000
$17,000
Amount in Row
(p), Line 7
Worksheet over... Worksheet not
over...
Amount in Row
(p), Line 7
Property Value
on Amount in
Column A
Rate (Divisor)
on Excess of
Amount in
Column A
0
1,800
3,800
0
18%
20%
22%
24%
26%
28%
30%
32%
34%
37%
39%
40%
1,800
10,000
20,000
40,000
60,000
80,000
100,000
150,000
250,000
500,000
750,000
1,000,000
3,800
8,200
8,200
13,000
18,200
23,800
38,800
70,800
155,800
248,300
345,800
– – – – – –
13,000
18,200
23,800
38,800
70,800
155,800
248,300
345,800
2023
How to complete the Line 7 Worksheet.
Row (a). Beginning with the earliest year in which the taxable
gifts were made, enter the tax period of prior gifts. If you filed
returns for gifts made after 1981, enter the calendar year in
Row (a) as (YYYY). If you filed returns for gifts made after
1976 and before 1982, enter the calendar quarters in Row (a)
as (YYYY-Q).
Worksheet TG—Taxable Gifts Reconciliation
Worksheet TG—Taxable Gifts Reconciliation
(To be used for lines 4 and 7 of the Tax Computation)
a.
b.
Note. For the definition of a taxable gift, see section 2503. Follow Form 709. That is, include only
the decedent’s one-half of split gifts, whether the gifts were made by the decedent or the
decedent’s spouse. In addition to gifts reported on Form 709, you must include any taxable gifts
in excess of the annual exclusion that were not reported on Form 709.
Calendar year or
calendar quarter
Total taxable gifts for
period (see Note)
Gifts
made
after
June 6,
1932,
and
before
1977
c.
d.
e.
f.
Taxable amount
included in column b
for gifts included in
the gross estate
Taxable amount included
in column b for gifts that
qualify for “special
treatment of split gifts”
described below
Gift tax paid by
decedent on gifts in
column d
Gift tax paid by
decedent's spouse
on gifts in column c
1. Total taxable gifts
made before 1977
Gifts
made
after
1976
2. Totals for gifts made after
1976
Line 4 Worksheet—Adjusted Taxable Gifts Made After 1976
1. Taxable gifts made after 1976. Enter the amount from Worksheet TG, line 2, column b . . . . . . . . . . . . . . . . . . . . . . . . .
2. Taxable gifts made after 1976 reportable on Schedule G. Enter the amount from Worksheet
1.
2.
TG, line 2, column c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3. Taxable gifts made after 1976 that qualify for “special treatment.” Enter the amount from
3.
Worksheet TG, line 2, column d . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.
Add lines 2 and 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.
5.
5. Adjusted taxable gifts. Subtract line 4 from line 1. Enter here and on Part 2—Tax Computation, line 4 . . . . . . . . . . . . . .
-7-
Instructions for Form 706 (Rev. 09-2023)
Line 7 Worksheet—Submit a copy with Form 706
Line 7 Worksheet, Part A—Used to determine Applicable Credit Allowable for Prior Periods after 1976
(a) Tax Period1
Pre-1977
(b) Taxable Gifts for Applicable Period
(c) Taxable Gifts for Prior Periods2
(d) Cumulative Taxable Gifts Including Applicable
Period (add Row (b) and Row (c))
(e) Tax at Date of Death Rates for Prior Gifts (from
Row (c))3
(f) Tax at Date of Death Rates for Cumulative
Taxable Gifts Including Applicable Period (from
Row (d))
(g) Tax at Date of Death Rates for Gifts in
Applicable Period (subtract Row (e) from Row
(f))
(h) Total DSUE applied and Restorable Exclusion
Amount from Prior Periods and Applicable
Period (see instructions later)
(i)
Basic Exclusion for Applicable Period (Enter the
amount from the Table of Basic Exclusion
Amounts)
(j)
Applicable Exclusion Amount (add Row (h) and
Row (i))
(k) Maximum Applicable Credit amount based on
Row (j) (Using Table A—Unified Rate
Schedule)4
(l)
Applicable Credit amount used in Prior Periods
(add Row (l) and Row (n) from prior period)
(m) Available Credit in Applicable Period (subtract
Row (l) from Row (k))
(n) Credit Allowable (lesser of Row (g) or Row (m))
(o) Tax paid or payable at Date of Death rates for
Applicable Period (subtract Row (n) from Row
(g))
(p) Tax on Cumulative Gifts less tax paid or payable
for Applicable Period (subtract Row (o) from
Row (f))
(q) Cumulative Taxable Gifts less Gifts in the
Applicable Period on which tax was paid or
payable based on Row (p) (Using the Taxable
Gift Amount Table)
(r) Gifts in the Applicable Period on which tax was
payable (subtract Row (q) from Row (d))
Line 7 Worksheet, Part B
1
2
3
4
5
Total gift taxes payable on gifts after 1976 (sum of amounts in Row (o)).
Gift taxes paid by the decedent on gifts that qualify for “special treatment.” Enter the amount from Worksheet TG, line 2, col. e.
Subtract line 2 from line 1.
Gift tax paid by decedent's spouse on split gifts included on Schedule G. Enter amount from Worksheet TG, line 2, col. f.
Add lines 3 and 4. Enter here and on Part 2—Tax Computation, line 7.
Cumulative lifetime gifts on which tax was paid or payable. Enter this amount on Form 706, Part 6–Portability of Deceased
6
Spousal Unused Exclusion (DSUE), Section C, line 3 (sum of amounts in Row (r)).
1 Row (a): For annual returns, enter the tax period as (YYYY). For quarterly returns, enter tax period as (YYYY-Q).
2 Row (c): Enter amount from Row (d) of the previous column.
3 Row (e): Enter amount from Row (f) of the previous column.
4 Row (k): Figure the applicable credit on the amount in Row (j), using Table A—Unified Rate Schedule, and enter here. (For each column in Row (k), subtract 20% of any
amount allowed as a specific exemption for gifts made after September 8, 1976, and before January 1, 1977.)
Row (b). Enter all taxable gifts made in the specified year.
Enter all pre-1977 gifts in the pre-1977 column.
Row (c). Enter the amount from Row (d) of the previous
column.
Row (h). Complete this row only if a DSUE amount was
received from predeceased spouse(s) and was applied to
lifetime gifts or if a Restored Exclusion Amount on taxable
gifts to a same-sex spouse was applied to lifetime gifts (or
both). Enter the sum of lines 2 and 3 from Schedule C on the
Form 709 filed for the year listed in Row (a) for the amount to
be entered in this row.
Row (d). Enter the sum of Row (b) and Row (c) from the
current column.
Row (e). Enter the amount from Row (f) of the previous
column.
Row (i). Enter the applicable amount from the Table of Basic
Exclusion Amounts.
Row (f). Enter the tax based on the amount in Row (d) of the
current column using Table A—Unified Rate Schedule.
Row (g). Subtract the amount in Row (e) from the amount in
Row (f) for the current column.
Row (j). Enter the sum of Row (h) and Row (i).
Row (k). Figure the applicable credit on the amount in Row
(j) using Table A—Unified Rate Schedule, and enter here.
-8-
Instructions for Form 706 (Rev. 09-2023)
Note. The entries in each column of Row (k) must be
reduced by 20% of the amount allowed as a specific
exemption for gifts made after September 8, 1976, and
before January 1, 1977 (but no more than $6,000).
Row (l). Add the amounts in Row (l) and Row (n) from the
previous column.
Table of Basic Exclusion Amounts
Basic Exclusion
Credit Equivalent
at 2023 Rates
Period
Amount
1977 (Quarters 1 and 2)
$30,000
$120,667
$6,000
$30,000
1977 (Quarters 3 and 4)
Row (m). Subtract the amount in Row (l) from the amount in
Row (k) to determine the amount of any available credit.
Enter the result in Row (m).
1978
$134,000
$34,000
1979
$147,333
$38,000
Row (n). Enter the lesser of the amounts in Row (g) or Row
(m).
1980
$161,563
$42,500
1981
$175,625
$47,000
Row (o). Subtract the amount in Row (n) from the amount in
Row (g) for the current column.
1982
$225,000
$62,800
Row (p). Subtract the amount in Row (o) from the amount in
Row (f) for the current column.
1983
$275,000
$79,300
1984
$325,000
$96,300
Row (q). Enter the Cumulative Taxable Gift amount based on
the amount in Row (p) using the Taxable Gift Amount Table.
Row (r). If Row (o) is greater than zero in the applicable
period, subtract Row (q) from Row (d). If Row (o) is not
greater than zero, enter -0-.
1985
$400,000
$121,800
$155,800
$192,800
$202,050
$211,300
$220,550
$345,800
$1,945,800
$1,993,800
$2,045,800
$2,081,800
$2,117,800
$2,125,800
$2,141,800
$4,417,800
$4,505,800
$4,577,800
$4,625,800
$4,769,800
$5,113,800
1986
$500,000
1987 through 1997
1998
$600,000
Repeat for each year in which taxable gifts were made.
$625,000
Remember to submit a copy of the Line 7 Worksheet
1999
$650,000
when you file Form 706. If additional space is needed
!
2000 and 2001
2002 through 2010
2011
$675,000
CAUTION
to report prior gifts, please attach additional sheets.
$1,000,000
$5,000,000
$5,120,000
$5,250,000
$5,340,000
$5,430,000
$5,450,000
$5,490,000
$11,180,000
$11,400,000
$11,580,000
$11,700,000
$12,060,000
$12,920,000
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Note. In figuring the line 7 amount, do not include any tax
paid or payable on gifts made before 1977. The line 7 amount
is a hypothetical figure used to figure the estate tax.
Special treatment of split gifts. These special rules apply
only if:
The decedent's spouse predeceased the decedent;
The decedent's spouse made gifts that were “split” with
the decedent under the rules of section 2513;
The decedent was the “consenting spouse” for those split
gifts, as that term is used on Form 709; and
•
•
•
•
The split gifts were included in the decedent's spouse's
gross estate under section 2035.
If all four conditions above are met, do not include these
gifts on line 4 of the Tax Computation and do not include the
gift taxes payable on these gifts on line 7 of the Tax
Computation. These adjustments are incorporated into the
worksheets.
-9-
Instructions for Form 706 (Rev. 09-2023)
However, you may also use line 15 to report credit taken
for federal gift taxes imposed by chapter 12 of the Code, and
the corresponding provisions of prior laws, on certain
transfers the decedent made before January 1, 1977, that are
included in the gross estate. The credit cannot be more than
the amount figured by the following formula.
Lines 9a Through 9e. Applicable Credit Amount
(Formerly Unified Credit Amount)
The applicable credit amount is allowable credit against
estate and gift taxes. It is figured by determining the tentative
tax on the applicable exclusion amount, which is the amount
that can be transferred before an estate tax liability will be
incurred.
Gross estate tax minus (the sum of the state
death taxes and unified credit)
Value of
included
gift
The applicable exclusion amount equals the total of lines
9a, 9b, and 9c. See Lines 9d and 9e, applicable exclusion
and credit amount, later, for more information.
x
Value of gross estate minus (the sum of the
deductions for charitable, public, and similar
gifts and bequests and marital deduction)
Line 9a, basic exclusion amount. In 2023, the basic
exclusion amount, as adjusted for inflation under section
2010(c)(3), is $12,920,000.
When taking the credit for pre-1977 federal gift taxes:
Include the credit in the amount on line 15; and
Identify and enter the amount of the credit you are taking
on the dotted line to the left of the entry space for line 15
on page 1 of Form 706 with a notation, “Section 2012
credit.”
•
•
Line 9b, DSUE. If the decedent had a spouse who died after
2010, whose estate did not use all of its applicable exclusion
against gift or estate tax liability, a DSUE amount may be
available for use by the decedent's estate. If the predeceased
spouse died in 2011, the DSUE amount was figured and
attached to the predeceased spouse’s Form 706. If the
predeceased spouse died in 2012 or after, this amount is
found in Part 6, Section C, of the Form 706 filed by the estate
of the decedent's predeceased spouse. The amount to be
entered on line 9b is figured in Part 6, Section D.
Line 9c, restored exclusion amount. If a decedent made a
taxable gift during the decedent's lifetime to the decedent's
same-sex spouse and that transfer resulted in a reduction of
the decedent's available applicable exclusion amount, the
amount of the applicable exclusion that was reduced can be
restored. If the applicable exclusion was previously restored
on a Form 709, enter the value on Schedule C, line 3, of Form
709. If the applicable exclusion has not yet been previously
restored, follow the directions in the instructions for Form
709, Schedule C, to determine the Restored Exclusion
Amount. The Restored Exclusion Amount is entered on
line 9c.
For more information, see the regulations under section
2012. This computation may be made using Form 4808.
Attach a copy of a completed Form 4808 or the computation
of the credit. Also, attach all available copies of Forms 709
filed by the decedent, with "Exhibit to Estate Tax Return"
entered across the top of the first page of each, to help verify
the amounts entered on lines 4 and 7, and the amount of
credit taken (on line 15) for pre-1977 federal gift taxes.
Canadian marital credit. In addition to using line 15 to
report credit for federal gift taxes on pre-1977 gifts, you may
also use line 15 to claim the Canadian marital credit, where
applicable.
When taking the marital credit under the 1995 Canadian
Protocol:
Include the credit in the amount on line 15; and
Identify and enter the amount of the credit you are taking
on the dotted line to the left of the entry space for line 15
on page 1 of Form 706 with a notation, “Canadian marital
credit.”
•
•
Lines 9d and 9e, applicable exclusion and credit
amount. The total of lines 9a, 9b, and 9c is entered on
line 9d. If the amounts entered on both lines 9b and 9c are
zero, enter $5,113,800 on line 9e. Otherwise, determine the
applicable credit on the amount on line 9d by using Table
A—Unified Rate Schedule and enter the result on line 9e.
Also, attach a statement to the return that refers to the
treaty, waives qualifying domestic trust (QDOT) rights, and
shows the computation of the marital credit. See the 1995
Canadian income tax treaty protocol for details on figuring the
credit.
Line 10. Adjustment to Applicable Credit
If the decedent made gifts (including gifts made by the
decedent's spouse and treated as made by the decedent by
reason of gift splitting) after September 8, 1976, and before
January 1, 1977, for which the decedent claimed a specific
exemption, the applicable credit amount on this estate tax
return must be reduced. The reduction is figured by entering
20% of the specific exemption claimed for these gifts.
Part 3—Elections by the Executor
Note. The election to allow the decedent's surviving spouse
to use the decedent's unused exclusion amount is made by
filing a timely and complete Form 706. See the instructions
for Part 6—Portability of Deceased Spousal Unused
Exclusion, later, and sections 2010(c)(4) and (c)(5).
Note. The specific exemption was allowed by section 2521
for gifts made before January 1, 1977.
Line 1. Alternate Valuation
If the decedent did not make any gifts between September
8, 1976, and January 1, 1977, or if the decedent made gifts
during that period but did not claim the specific exemption,
enter zero.
See the example showing the use of Schedule B
where the alternate valuation is adopted, later.
TIP
Unless you elect at the time the return is filed to adopt
alternate valuation, as authorized by section 2032, value all
property included in the gross estate as of the date of the
decedent's death. Alternate valuation cannot be applied to
only a part of the property.
You may elect special-use valuation (line 2) in addition to
alternate valuation.
Line 15. Total Credits
Generally, line 15 is used to report the total of credit for
foreign death taxes (line 13) and credit for tax on prior
transfers (line 14).
-10-
Instructions for Form 706 (Rev. 09-2023)
You may not elect alternate valuation unless the election
will decrease both the value of the gross estate and the sum
(reduced by allowable credits) of the estate and GST taxes
payable by reason of the decedent's death for the property
includible in the decedent's gross estate.
stockholders of record after the date of the decedent's death
so that the shares of stock at the later valuation date do not
reasonably represent the same property at the date of the
decedent's death, include those dividends (except dividends
paid from earnings of the corporation after the date of the
decedent's death) in the alternate valuation.
On Schedules A through I, you must show the following.
1. What property is included in the gross estate on the date
of the decedent's death.
Elect alternate valuation by checking “Yes” on line 1 and
filing Form 706. You may make a protective alternate
valuation election by checking “Yes” on line 1, writing the
word “protective,” and filing Form 706 using regular values.
Once made, the election may not be revoked. The election
may be made on a late-filed Form 706, provided it is not filed
later than 1 year after the due date (including extensions
actually granted). Relief under Regulations sections
301.9100-1 and 301.9100-3 may be available to make an
alternate valuation election or a protective alternate valuation
election, provided a Form 706 is filed no later than 1 year
after the due date of the return (including extensions actually
granted).
2. What property was distributed, sold, exchanged, or
otherwise disposed of within the 6-month period after the
decedent's death, and the dates of these distributions,
etc. (These two items should be entered in the
“Description” column of each schedule. Briefly explain
the status or disposition governing the alternate
valuation date, such as “Not disposed of within 6 months
following death,” “Distributed,” “Sold,” “Bond paid on
maturity,” etc. In this same column, describe each item of
principal and includible income.)
If alternate valuation is elected, value the property
included in the gross estate as of the following dates, as
applicable.
3. The date of death value, entered in the appropriate value
column with items of principal and includible income
shown separately.
Any property distributed, sold, exchanged, or otherwise
disposed of or separated or passed from the gross estate
by any method within 6 months after the decedent's
death is valued on the date of distribution, sale,
exchange, or other disposition. Value this property on the
date it ceases to be a part of the gross estate; for
example, on the date the title passes as the result of its
sale, exchange, or other disposition.
•
4. The alternate value, entered in the appropriate value
column with items of principal and includible income
shown separately. (In the case of any interest or estate,
the value of which is affected by lapse of time, such as
patents, leaseholds, estates for the life of another, or
remainder interests, the value shown under the heading
“Alternate value” must be the adjusted value, for
example, the value as of the date of death with an
adjustment reflecting any difference in its value as of the
later date not due to lapse of time.)
Any property not distributed, sold, exchanged, or
otherwise disposed of within the 6-month period is
valued as of 6 months after the date of the decedent's
death.
•
•
Any property, interest, or estate that is affected by mere
lapse of time is valued as of the date of the decedent's
death or on the date of its distribution, sale, exchange, or
other disposition, whichever occurs first. However, you
may change the date of death value to account for any
change in value that is not due to a “mere lapse of time”
on the date of its distribution, sale, exchange, or other
disposition.
Note. If any property on Schedules A through I is being
valued pursuant to the special rule of Regulations section
20.2010-2(a)(7)(ii), values for those assets are not required
to be reported on the schedule. See Part 5—Recapitulation,
item 10, later.
Distributions, sales, exchanges, and other dispositions of
the property within the 6-month period after the decedent's
death must be supported by evidence. If the court issued an
order of distribution during that period, you must submit a
certified copy of the order as part of the evidence. The IRS
may require you to submit additional evidence, if necessary.
The property included in the alternate valuation and
valued as of 6 months after the date of the decedent's death,
or as of some intermediate date (as described above), is the
property included in the gross estate on the date of the
decedent's death. Therefore, you must first determine what
property was part of the gross estate at the decedent's death.
If the alternate valuation method is used, the values of life
estates, remainders, and similar interests are figured using
the age of the recipient on the date of the decedent's death
and the value of the property on the alternate valuation date.
Interest. Interest accrued to the date of the decedent's
death on bonds, notes, and other interest-bearing obligations
is property of the gross estate on the date of death and is
included in the alternate valuation.
Rent. Rent accrued to the date of the decedent's death on
leased real or personal property is property of the gross
estate on the date of death and is included in the alternate
valuation.
Line 2. Special-Use Valuation of Section 2032A
In general. Under section 2032A, you may elect to value
certain farm and closely held business real property at its
farm or business use value rather than its FMV. Both
special-use valuation and alternate valuation may be elected.
To elect special-use valuation, check “Yes” on line 2 and
complete and attach Schedule A-1 and its required additional
statements. You must file Schedule A-1 and its required
attachments with Form 706 for this election to be valid. You
may make the election on a late-filed return so long as it’s the
first return filed.
Dividends. Outstanding dividends that were declared to
stockholders of record on or before the date of the
decedent's death are considered property of the gross estate
on the date of death and are included in the alternate
valuation. Ordinary dividends declared to stockholders of
record after the date of the decedent's death are not included
in the gross estate on the date of death and are not eligible
for alternate valuation. However, if dividends are declared to
The total value of the property valued under section 2032A
may not be decreased from FMV by more than $1,310,000
for decedents dying in 2023.
-11-
Instructions for Form 706 (Rev. 09-2023)
Real property may qualify for the section 2032A election if:
Directly owned property leased by the decedent to a
separate closely held business is considered qualified real
property if the business entity to which it was rented was a
closely held business (as defined by section 6166) for the
decedent on the date of the decedent's death and for
sufficient time to meet the “5 in 8 years” test explained above.
Structures and other real property improvements.
Qualified real property includes residential buildings and
other structures and real property improvements regularly
occupied or used by the owner or lessee of real property (or
by the employees of the owner or lessee) to operate a farm or
other closely held business. A farm residence that the
decedent occupied is considered to have been occupied for
the purpose of operating the farm even when a family
member and not the decedent was the person materially
participating in the operation of the farm.
Qualified real property also includes roads, buildings, and
other structures and improvements functionally related to the
qualified use.
Elements of value such as mineral rights that are not
related to the farm or business use are not eligible for
special-use valuation.
Property acquired from the decedent. Property is
considered to have been acquired from or to have passed
from the decedent if one of the following applies.
1. The decedent was a U.S. citizen or resident at the time of
death;
2. The real property is located in the United States;
3. At the decedent's death, the real property was used by
the decedent or a family member for farming or in a trade
or business, or was rented for such use by either the
surviving spouse or a lineal descendant of the decedent
to a family member on a net cash basis;
4. The real property was acquired from or passed from the
decedent to a qualified heir of the decedent;
5. The real property was owned and used in a qualified
manner by the decedent or a member of the decedent's
family during 5 of the 8 years before the decedent's
death;
6. There was material participation by the decedent or a
member of the decedent's family during 5 of the 8 years
before the decedent's death; and
7. The property meets the following percentage
requirements.
a. At least 50% of the adjusted value of the gross estate
must consist of the adjusted value of real or personal
property that was being used as a farm or in a closely
held business and that was acquired from, or passed
from, the decedent to a qualified heir of the
decedent.
The property is considered to have been acquired from
or to have passed from the decedent under section
1014(b) (relating to basis of property acquired from a
decedent).
•
The property is acquired by any person from the estate.
The property is acquired by any person from a trust, to
the extent the property is includible in the gross estate.
•
•
b. At least 25% of the adjusted value of the gross estate
must consist of the adjusted value of qualified farm or
closely held business real property.
Qualified heir. A person is a qualified heir of property if the
person is a member of the decedent's family and acquired or
received the property from the decedent. If a qualified heir
disposes of any interest in qualified real property to any
member of the qualified heir’s family, that person will then be
treated as the qualified heir for that interest.
For this purpose, adjusted value is the value of property
determined without regard to its special-use value. The value
is reduced for unpaid mortgages on the property or any
indebtedness against the property, if the full value of the
decedent's interest in the property (not reduced by such
mortgage or indebtedness) is included in the value of the
gross estate. The adjusted value of the qualified real and
personal property used in different businesses may be
combined to meet the 50% and 25% requirements.
A member of the family includes only:
An ancestor (parent, grandparent, etc.) of the individual;
The spouse of the individual;
•
•
•
The lineal descendant (child, stepchild, grandchild, etc.)
of the individual, the individual's spouse, or a parent of
the individual; or
Qualified Real Property
Qualified use. Qualified use means use of the property as a
farm for farming purposes or in a trade or business other than
farming. Trade or business applies only to the active conduct
of a business. It does not apply to passive investment
activities or the mere passive rental of property to a person
other than a member of the decedent's family. Also, no trade
or business is present in the case of activities not engaged in
for profit.
The spouse or surviving spouse of any lineal descendant
described above.
•
Note. A legally adopted child of an individual is treated as a
child of that individual by blood.
Material Participation
To elect special-use valuation, either the decedent or a
member of the decedent’s family must have materially
participated in the operation of the farm or other business for
at least 5 of the 8 years ending on the date of the decedent's
death. The existence of material participation is a factual
determination. Passively collecting rents, salaries, draws,
dividends, or other income from the farm or other business is
not sufficient for material participation, nor is merely
advancing capital and reviewing a crop plan and financial
reports each season or business year.
Ownership. To qualify as special-use property, the decedent
or a member of the decedent's family must have owned and
used the property in a qualified use for 5 of the last 8 years
before the decedent's death. Ownership may be direct or
indirect through a corporation, a partnership, or a trust.
If the ownership is indirect, the business must qualify as a
closely held business under section 6166. The indirect
ownership, when combined with periods of direct ownership,
must meet the requirements of section 6166 on the date of
the decedent's death and for a period of time that equals at
least 5 of the 8 years preceding death.
-12-
Instructions for Form 706 (Rev. 09-2023)
In determining whether the required participation has
occurred, disregard brief periods (that is, 30 days or less)
during which there was no material participation, as long as
such periods were both preceded and followed by substantial
periods (more than 120 days) during which there was
uninterrupted material participation.
Retirement or disability. If, on the date of death, the time
period for material participation could not be met because the
decedent was retired or disabled, a substitute period may
apply. The decedent must have retired on social security or
been disabled for a continuous period ending with death. A
person is disabled for this purpose if the person was mentally
or physically unable to materially participate in the operation
of the farm or other business.
locality as the property being specially valued. You may not
use:
Appraisals or other statements regarding rental value or
areawide averages of rentals,
•
Rents paid wholly or partly in-kind, or
Property for which the amount of rent is based on
production.
•
•
The rental must have resulted from an arm's-length
transaction and the amount of rent may not be reduced by
the amount of any expenses or liabilities associated with the
farm operation or the lease.
Comparable property. Comparable property must be
situated in the same locality as the qualified real property as
determined by generally accepted real property valuation
rules. The determination of comparability is based on a
number of factors, none of which carries more weight than
the others. It is often necessary to value land in segments
where there are different uses or land characteristics
included in the specially valued land.
The substitute time period for material participation for
these decedents is a period totaling at least 5 years out of the
8-year period that ended on the earlier of:
The date the decedent began receiving social security
benefits, or
•
The date the decedent became disabled.
The following list contains some of the factors considered
•
in determining comparability.
Surviving spouse. A surviving spouse who received
qualified real property from the predeceased spouse is
considered to have materially participated if the surviving
spouse was engaged in the active management of the farm
or other business. If the surviving spouse died within 8 years
of the first spouse's death, you may add the period of
material participation of the predeceased spouse to the
period of active management by the surviving spouse to
determine if the surviving spouse's estate qualifies for
special-use valuation. To qualify for this, the property must
have been eligible for special-use valuation in the
predeceased spouse's estate, though it does not have to
have been elected by that estate.
Similarity of soil.
•
•
Whether the crops grown would deplete the soil in a
similar manner.
Types of soil conservation techniques that have been
practiced on the two properties.
•
Whether the two properties are subject to flooding.
Slope of the land.
•
•
•
For livestock operations, the carrying capacity of the
land.
For timbered land, whether the timber is comparable.
Whether the property as a whole is unified or segmented.
If segmented, the availability of the means necessary for
movement among the different sections.
Number, types, and conditions of all buildings and other
fixed improvements located on the properties and their
location as it affects efficient management, use, and
value of the property.
•
•
For additional details regarding material participation, see
•
•
Regulations section 20.2032A-3(e).
Valuation Methods
Availability and type of transportation facilities in terms of
costs and of proximity of the properties to local markets.
The primary method of valuing special-use property that is
used for farming purposes is the annual gross cash rental
method. If comparable gross cash rentals are not available,
you can substitute comparable average annual net share
rentals. If neither of these is available, or if you so elect, you
can use the method for valuing real property in a closely held
business.
Average annual gross cash rental. Generally, the
special-use value of property that is used for farming
purposes is determined as follows.
You must specifically identify on the return the property
being used as comparable property. Use the type of
descriptions used to list real property on Schedule A.
Effective interest rate. See Tables 1 and 2 of Rev. Rul.
for the average annual effective interest rates in effect for
2023.
Net share rental. You may use average annual net share
rental from comparable land only if there is no comparable
land from which average annual gross cash rental can be
determined. Net share rental is the difference between the
gross value of produce received by the lessor from the
comparable land and the cash operating expenses (other
than real estate taxes) of growing the produce that, under the
lease, are paid by the lessor. The production of the produce
must be the business purpose of the farming operation. For
this purpose, produce includes livestock.
1. Subtract the average annual state and local real estate
taxes on actual tracts of comparable real property from
the average annual gross cash rental for that same
comparable property.
2. Divide the result in (1) by the average annual effective
interest rate charged for all new federal land bank loans.
See Effective interest rate, later.
The gross value of the produce is generally the gross
amount received if the produce was disposed of in an
arm's-length transaction within the period established by the
Department of Agriculture for its price support program.
Otherwise, the value is the weighted average price for which
the produce sold on the closest national or regional
commodities market. The value is figured for the date or
The computation of each average annual amount is based
on the 5 most recent calendar years ending before the date
of the decedent's death.
Gross cash rental. Generally, gross cash rental is the
total amount of cash received in a calendar year for the use
of actual tracts of comparable farm real property in the same
-13-
Instructions for Form 706 (Rev. 09-2023)
dates on which the lessor received (or constructively
received) the produce.
Protective Election
You may make a protective election to specially value
qualified real property. Under this election, whether or not you
may ultimately use special-use valuation depends upon final
values (as shown on the return determined following
examination of the return) meeting the requirements of
section 2032A.
Valuing a real property interest in a closely held busi-
ness. Use this method to determine the special-use
valuation for qualifying real property used in a trade or
business other than farming. You may also use this method
for qualifying farm property if there is no comparable land or if
you elect to use it. Under this method, the following factors
are considered.
To make a protective election, check “Yes” on line 2 and
complete Schedule A-1 according to the instructions for
Protective election, later.
The capitalization of income that the property can be
expected to yield for farming or for closely held business
purposes over a reasonable period of time with prudent
management and traditional cropping patterns for the
area, taking into account soil capacity, terrain
configuration, and similar factors.
•
If you make a protective election, complete the initial Form
706 by valuing all property at its FMV. Do not use special-use
valuation. Usually, this will result in higher estate and GST tax
liabilities than will be ultimately determined if special-use
valuation is allowed. The protective election does not extend
the time to pay the taxes shown on the return. If you wish to
extend the time to pay the taxes, file Form 4768 in adequate
time before the due date of the return. See the Instructions for
Form 4768.
The capitalization of the fair rental value of the land for
farming or for closely held business purposes.
The assessed land values in a state that provides a
differential or use value assessment law for farmland or
closely held business.
•
•
Comparable sales of other farm or closely held business
land in the same geographical area far enough removed
from a metropolitan or resort area so that nonagricultural
use is not a significant factor in the sales price.
Any other factor that fairly values the farm or closely held
business value of the property.
•
•
If the estate qualifies for special-use valuation based on
the values as finally determined, you must file an amended
Form 706 (with a complete section 2032A election) within 60
days after the date of this determination. Prepare the
amended return using special-use values under the rules of
section 2032A, complete Schedule A-1, and attach all of the
required statements.
Making the Election
Include the words “Section 2032A valuation” in the
“Description” column of any Form 706 schedule if section
2032A property is included in the decedent's gross estate.
Additional Information
For definitions and additional information, see section 2032A
and the related regulations.
An election under section 2032A need not include all the
property in an estate that is eligible for special-use valuation,
but sufficient property to satisfy the threshold requirements of
section 2032A(b)(1)(B) must be specially valued under the
election.
Line 3. Section 6166 Installment Payments
If the gross estate includes an interest in a closely held
business, you may be able to elect to pay part of the estate
tax in installments under section 6166.
If joint or undivided interests (that is, interests as joint
tenants or tenants in common) in the same property are
received from a decedent by qualified heirs, an election for
one heir's joint or undivided interest need not include any
other heir's interest in the same property if the electing heir's
interest plus other property to be specially valued satisfies
the requirements of section 2032A(b)(1)(B).
The maximum amount that can be paid in installments is
that part of the estate tax that is attributable to the closely
held business; see Determine how much of the estate tax
may be paid in installments under section 6166, later. In
general, that amount is the amount of tax that bears the same
ratio to the total estate tax that the value of the closely held
business included in the gross estate bears to the adjusted
gross estate.
Bond or lien. The IRS may require that an estate furnish a
surety bond when granting the installment payment election.
In the alternative, the executor may consent to elect the
special lien provisions of section 6324A in lieu of the bond.
The IRS will contact you regarding the specifics of furnishing
the bond or electing the special lien. The IRS will make this
determination on a case-by-case basis, and you may be
asked to provide additional information.
If you elect the lien provisions, section 6324A requires that
the lien be placed on property having a value equal to the
total deferred tax plus 4 years of interest. The property must
be expected to survive the deferral period, and does not
necessarily have to be property of the estate. In addition, all
people with an interest in the designated property must
consent to the creation of this lien.
If successive interests (that is, life estates and remainder
interests) are created by a decedent in otherwise qualified
property, an election under section 2032A is available only for
that property (or part) in which qualified heirs of the decedent
receive all of the successive interests, and such an election
must include the interests of all of those heirs.
For example, if a surviving spouse receives a life estate in
otherwise qualified property and the spouse's sibling
receives a remainder interest in fee, no part of the property
may be valued under a section 2032A election.
Where successive interests in specially valued property
are created, remainder interests are treated as being
received by qualified heirs only if the remainder interests are
not contingent on surviving a nonfamily member or are not
subject to divestment in favor of a nonfamily member.
Percentage requirements. To qualify for installment
payments, the value of the interest in the closely held
-14-
Instructions for Form 706 (Rev. 09-2023)
business that is included in the gross estate must be more
than 35% of the adjusted gross estate (the gross estate less
expenses, indebtedness, taxes, and losses—Schedules J, K,
and L of Form 706 (do not include any portion of the state
death tax deduction)).
Interests in two or more closely held businesses are
treated as an interest in a single business if at least 20% of
the total value of each business is included in the gross
estate. For this purpose, include any interest held by the
surviving spouse that represents the surviving spouse's
interest in a business held jointly with the decedent as
community property or as joint tenants, tenants by the
entirety, or tenants in common.
corporation is included in the gross estate of the
decedent or the corporation had no more than 45
shareholders.
The partnership or corporation must be carrying on a trade
or business at the time of the decedent's death. For further
information on whether certain partnerships or corporations
owning real property interests constitute a closely held
business, see Rev. Rul. 2006-34, 2006-26 I.R.B. 1171,
In determining the number of partners or shareholders, a
partnership or stock interest is treated as owned by one
partner or shareholder if it is community property or held by
spouses as joint tenants, tenants in common, or tenants by
the entirety.
Property owned directly or indirectly by or for a
corporation, partnership, estate, or trust is treated as owned
proportionately by or for its shareholders, partners, or
beneficiaries. For trusts, only beneficiaries with present
interests are considered.
The interest in a closely held farm business includes the
interest in the residential buildings and related improvements
occupied regularly by the owners, lessees, and employees
operating the farm.
Holding company stock. The executor may elect to treat
as business company stock the portion of any holding
company stock that represents direct ownership (or indirect
ownership through one or more other holding companies) in
a business company. A holding company is a corporation
holding stock in another corporation. A business company is
a corporation carrying on a trade or business.
In general, this election applies only to stock that is not
readily tradable. However, the election can be made if the
business company stock is readily tradable, as long as all of
the stock of each holding company is not readily tradable.
For purposes of the 20%-voting-stock requirement, stock
is treated as voting stock to the extent the holding company
owns voting stock in the business company.
If the executor makes this election, the first installment
payment is due when the estate tax return is filed. The 5-year
deferral for payment of the tax, as discussed later under Time
for payment, does not apply. In addition, the 2% interest rate,
discussed later under Interest computation, will not apply.
Also, if the business company stock is readily tradable, as
explained above, the tax must be paid in five installments.
Value. The value used for meeting the percentage
requirements is the same value used for determining the
gross estate. Therefore, if the estate is valued under alternate
valuation or special-use valuation, you must use those values
to meet the percentage requirements.
Transfers before death. Generally, gifts made before
death are not included in the gross estate. However, the
estate must meet the 35% requirement by both including in
and excluding from the gross estate any gifts made by the
decedent in the 3-year period ending on the date of death.
Passive assets. In determining the value of a closely held
business and whether the 35% requirement is met, do not
include the value of any passive assets held by the business.
A passive asset is any asset not used in carrying on a trade
or business. Any asset used in a qualifying lending and
financing business is treated as an asset used in carrying on
a trade or business; see section 6166(b)(10) for details.
Stock in another corporation is a passive asset unless the
stock is treated as held by the decedent because of the
election to treat holding company stock as business
company stock; see Holding company stock, later.
If a corporation owns at least 20% in value of the voting
stock of another corporation, or the other corporation had no
more than 45 shareholders and at least 80% of the value of
the assets of each corporation is attributable to assets used
in carrying on a trade or business, then these corporations
will be treated as a single corporation and the stock will not
be treated as a passive asset. Stock held in the other
corporation is not taken into account in determining the 80%
requirement.
Interest in a closely held business. For purposes of the
installment payment election, an interest in a closely held
business means:
Determine how much of the estate tax may be paid in in-
stallments under section 6166. To determine whether the
election may be made, you must figure the adjusted gross
estate. (See the Line 3 Worksheet—Adjusted Gross Estate
below.) To determine the value of the adjusted gross estate,
subtract the deductions (Schedules J, K, and L) from the
value of the gross estate.
Ownership of a trade or business carried on as a
proprietorship;
•
•
An interest as a partner in a partnership carrying on a
trade or business, if 20% or more of the total capital
interest was included in the gross estate of the decedent
or the partnership had no more than 45 partners; or
Stock in a corporation carrying on a trade or business, if
20% or more in value of the voting stock of the
•
-15-
Instructions for Form 706 (Rev. 09-2023)
Line 3 Worksheet—Adjusted Gross Estate
1.
Enter the value of the decedent's interest in closely held business(es) included in the gross estate (less value of
passive assets, as mentioned in section 6166(b)(9))
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2.
3.
4.
5.
Enter the value of the gross estate (Form 706, Part 5, item 13)
Add items 18, 19, and 20 from Form 706, Part 5
Subtract line 3 from line 2 to figure the adjusted gross estate
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
Divide line 1 by line 4 to figure the value the business interest bears to the value of the adjusted gross estate. For
purposes of this calculation, carry the decimal to the sixth place; the IRS will make this adjustment for purposes
of determining the correct amount. If this amount is less than 0.350000, the estate does not qualify to make the
election under section 6166
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
6.
Multiply line 5 by the amount on line 16 of Form 706, Part 2. This is the maximum amount of estate tax that may
be paid in installments under section 6166. (Certain GST taxes may be deferred as well; see section 6166(i) for
more information.)
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
To determine over how many installments the estate tax
Computation. Interest on the portion of the tax in excess
may be paid, please refer to sections 6166(a), (b)(7), (b)(8),
and (b)(10).
of the 2% portion is figured at 45% of the annual rate of
interest on underpayments. This rate is based on the federal
short-term rate and is announced quarterly by the IRS in the
Internal Revenue Bulletin.
Time for payment. Under the installment method, the
executor may elect to defer payment of the qualified estate
tax, but not interest, for up to 5 years from the original
payment due date. After the first installment of tax is paid,
If you elect installment payments and the estate tax due is
more than the maximum amount to which the 2% interest rate
applies, each installment payment is deemed to comprise
both tax subject to the 2% interest rate and tax subject to
45% of the regular underpayment rate. The amount of each
installment that is subject to the 2% rate is the same as the
percentage of total tax payable in installments that is subject
to the 2% rate.
you must pay the remaining installments annually by the date
1 year after the due date of the preceding installment. There
can be no more than 10 installment payments.
Interest on the unpaid portion of the tax is not deferred and
must be paid annually. Interest must be paid at the same time
as and as a part of each installment payment of the tax.
The interest paid on installment payments is not
Acceleration of payments. If the estate fails to make
payments of tax or interest within 6 months of the due date,
the IRS may terminate the right to make installment payments
and force an acceleration of payment of the tax upon notice
and demand. Upon notice and demand, a penalty will be
imposed for an amount that is 5% of the payment multiplied
by the number of months (or fractions thereof) after the due
date and before the payment is made.
Generally, if any portion of the interest in the closely held
business which qualifies for installment payments is
distributed, sold, exchanged, or otherwise disposed of, or
money and other property attributable to such an interest is
withdrawn, and the aggregate of those events equals or
exceeds 50% of the value of the interest, then the right to
make installment payments will be terminated, and the
unpaid portion of the tax will be due upon notice and
demand. See section 6166(g)(1)(A).
deductible as an administrative expense of the
!
CAUTION
estate.
Making the election. If you check this line to make a final
election, you must attach the notice of election described in
Regulations section 20.6166-1(b). If you check this line to
make a protective election, you must attach a notice of
protective election as described in Regulations section
20.6166-1(d). Regulations section 20.6166-1(b) requires that
the notice of election is made by attaching to a timely filed
estate tax return the following information.
The decedent's name and taxpayer identification number
(TIN) as they appear on the estate tax return.
The amount of tax that is to be paid in installments.
The date selected for payment of the first installment.
The number of annual installments, including first
installment, in which the tax is to be paid.
•
•
•
•
The properties shown on the estate tax return that are the
closely held business interest (identified by schedule and
item number).
•
Interest computation. A special interest rate applies to
installment payments. For decedents dying in 2023, the
interest rate is 2% on the lesser of:
The facts that formed the basis for the executor's
conclusion that the estate qualifies for payment of the
estate tax in installments.
•
$700,000, or
•
The amount of the estate tax that is attributable to the
closely held business and that is payable in installments.
•
You may also elect to pay certain GST taxes in
2% portion. The 2% portion is an amount equal to the
amount of the tentative estate tax (on $1 million plus the
applicable exclusion amount in effect) minus the applicable
credit amount in effect. However, if the amount of estate tax
extended under section 6166 is less than the amount figured
above, the 2% portion is the lesser amount.
installments. See section 6166(i).
Line 4. Reversionary or Remainder Interests
For details of this election, see section 6163 and the related
regulations.
Inflation adjustment. The $1 million amount used to
figure the 2% portion is indexed for inflation for the estates of
decedents who died in a calendar year after 1998. For an
estate of a decedent who died in 2023, the dollar amount
used to determine the “2% portion” of the estate tax payable
in installments under section 6166 is $1,750,000.
-16-
Instructions for Form 706 (Rev. 09-2023)
Identifying number. Enter the SSN of each individual
beneficiary listed. If the number is unknown, or the individual
has no number, please indicate “unknown” or “none.” For
trusts and other estates, enter the employer identification
number (EIN).
Relationship. For each individual beneficiary, enter the
relationship (if known) to the decedent by reason of blood,
marriage, or adoption. For trust or estate beneficiaries,
indicate “TRUST” or “ESTATE.”
Amount. Enter the amount actually distributed (or to be
distributed) to each beneficiary including transfers during the
decedent's life from Schedule G required to be included in
the gross estate. The value to be entered need not be exact.
A reasonable estimate is sufficient. For example, where
precise values cannot readily be determined, as with certain
future interests, a reasonable approximation should be
entered. The total of these distributions should approximate
the amount of gross estate reduced by funeral and
Part 4—General Information
Authorization
Completing the authorization will authorize one attorney,
accountant, or enrolled agent to represent the estate and
receive confidential tax information, but will not authorize the
representative to enter into closing agreements for the estate.
If you would like to authorize your representative to enter into
agreements or perform other designated acts on behalf of the
estate, you must file Form 2848 with Form 706.
Note. If you intend for the representative to represent the
estate before the IRS, the representative must complete and
sign this authorization.
Complete and attach Form 2848 if you would like to
authorize:
Persons other than attorneys, accountants, or enrolled
agents to represent the estate;
•
•
•
administrative expenses, debts and mortgages, bequests to
surviving spouse, charitable bequests, and any federal and
state estate and GST taxes paid (or payable) relating to the
benefits received by the beneficiaries listed on lines 4 and 5.
All distributions of less than $5,000 to specific
beneficiaries may be included with distributions to
unascertainable beneficiaries on the line provided.
More than one person to receive confidential information
or represent the estate; or
Someone to sign agreements, consents, waivers, or
other documents for the estate.
Filing a completed Form 2848 with this return may
expedite processing of the Form 706.
Line 6. Protective Claim for Refund
If you wish only to authorize someone to inspect and/or
receive confidential tax information (but not to represent you
before the IRS), complete and file Form 8821.
If you answered “Yes,” complete Schedule PC for each claim.
Two copies of each Schedule PC must be filed with the
return.
Line 3
A protective claim for refund may be filed when there is an
unresolved claim or expense that will not be deductible under
section 2053 before the expiration of the period of limitation
under section 6511(a). To preserve the estate's right to a
refund once the claim or expense has been finally
Enter the marital status of the decedent at the time of death
by checking the appropriate box on line 3a. If the decedent
was married at the time of death, complete line 4. If the
decedent had one or more prior marriages, complete line 3b
by providing the name and SSN of each former spouse, the
date(s) the marriage ended, and specify whether the
marriage ended by annulment, divorce decree, or death of
spouse. If the prior marriage ended in death and the
predeceased spouse died after December 31, 2010,
complete Part 6—Portability of Deceased Spousal Unused
Exclusion, Section D, if the estate of the predeceased
spouse elected to allow the decedent to use any unused
exclusion amount. For more information, see section 2010(c)
(4) and related regulations.
determined, the protective claim must be filed before the end
of the limitations period. For more information on how to file a
protective claim for refund with this Form 706, see the
instructions for Schedule PC, later.
Line 7. Section 2044 Property
If you answered “Yes,” these assets must be shown on
Schedule F.
Section 2044 property is property for which a previous
section 2056(b)(7) election (QTIP election) has been made,
or for which a similar gift tax election (section 2523) has been
made. For more information, see the instructions for
Schedule F, later.
Line 4
Complete line 4 whether or not there is a surviving spouse
and whether or not the surviving spouse received any
benefits from the estate. If there was no surviving spouse on
the date of the decedent's death, enter “None” on line 4a and
leave lines 4b and 4c blank. The value entered on line 4c
need not be exact. See Amount under line 5, later.
Line 9. Insurance Not Included in the Gross
Estate
If you answered “Yes” to either line 9a or 9b, for each policy
you must complete and attach Schedule D, Form 712, and an
explanation of why the policy or its proceeds are not
includible in the gross estate.
Note. Do not include any DSUE amount transferred to the
surviving spouse in the total entered on line 4c.
Line 5
Line 11. Partnership Interests and Stock in
Close Corporations
Name. Enter the name of each individual, trust, or estate
that received (or will receive) benefits of $5,000 or more from
the estate directly as an heir, next-of-kin, devisee, or legatee;
or indirectly (for example, as beneficiary of an annuity or
insurance policy, shareholder of a corporation, or partner of a
partnership that is an heir, etc.).
If you answered “Yes” on line 11a, you must include full
details for partnerships (including family limited
partnerships), unincorporated businesses, and limited liability
companies (LLCs) on Schedule F (Schedule E if the
partnership interest is jointly owned). Also include full details
-17-
Instructions for Form 706 (Rev. 09-2023)
for fractional interests in real estate on Schedule A and for
stock of inactive or close corporations on Schedule B.
Schedule H, if you answered “Yes” to question 14 of Part
4—General Information.
•
•
Schedule I, if you answered “Yes” to question 16 of Part
4—General information.
Value these interests using the rules of Regulations
section 20.2031-2 (stocks) or 20.2031-3 (other business
interests).
Item 10. Under Regulations section 20.2010-2(a)(7)(ii), if
the total value of the gross estate and adjusted taxable gifts
is less than the basic exclusion amount (see section 6018(a))
and Form 706 is being filed only to elect portability of the
DSUE amount, the estate is not required to report the value
of certain property eligible for the marital or charitable
deduction. For this property being reported on Schedules A,
B, C, D, E, F, G, H, and I, the executor must figure the best
estimate of the value. Do not include the estimated value on
the line corresponding to the schedule on which the property
was reported. Instead, total the estimated value of the assets
subject to the special rule and enter on item 10 the amount
from the Table of Estimated Values, later, that corresponds to
that total.
A close corporation is a corporation whose shares are
owned by a limited number of shareholders. Often, one family
holds the entire stock issue. As a result, little, if any, trading of
the stock takes place. There is, therefore, no established
market for the stock, and those sales that do occur are at
irregular intervals and seldom reflect all the elements of a
representative transaction as defined by FMV.
Line 13. Trusts
If you answered “Yes” on either line 13a or line 13b, attach a
copy of the trust instrument for each trust.
Complete Schedule G if you answered “Yes” on line 13a
and Schedule F if you answered “Yes” on line 13b.
Note. The special rule does not apply if the valuation of the
asset is needed to determine the estate's eligibility for the
provisions of section 2032, 2032A, 2652(a)(3), or 6166, or
any other provision of the Code or regulations.
Line 15. Foreign Accounts
Check “Yes” on line 15 if the decedent at the time of death
had an interest in or signature or other authority over a
financial account in a foreign country, such as a bank
account, securities account, an offshore trust, or other
financial account.
Note. As applies to all other values reported on Form 706,
estimates of the value of property subject to the special rule
of Regulations section 20.2010-2(a)(7)(ii) must result from
the executor’s exercise of due diligence and are subject to
penalties of perjury.
Part 5—Recapitulation
Exclusion—Item 12
Gross Estate—Items 1 Through 11
Item 12. Conservation easement exclusion. Complete
and attach Schedule U (along with any required attachments)
to claim the exclusion on this line.
Items 1 through 9. You must make an entry in each of items
1 through 9.
If the gross estate does not contain any assets of the type
specified by a given item, enter zero for that item. Entering
zero for any of items 1 through 9 is a statement by the
executor, made under penalties of perjury, that the gross
estate does not contain any includible assets covered by that
item.
Do not enter any amounts in the “Alternate value” column
unless you elected alternate valuation on Part 3—Elections
by the Executor, line 1.
Deductions—Items 14 Through 23
Items 14 through 22. Attach the appropriate schedules for
the deductions claimed.
Item 18. If item 17 is less than or equal to the value (at the
time of the decedent's death) of the property subject to
claims, enter the amount from item 17 on item 18.
If the amount on item 17 is more than the value of the
property subject to claims, enter the greater of:
Note. If estimating the value of one or more assets pursuant
to the special rule of Regulations section 20.2010-2(a)(7)(ii),
do not enter values for those assets in items 1 through 9.
Total the estimated values for those assets and follow the
instructions for item 10.
The value of the property subject to claims, or
•
•
The amount actually paid at the time the return is filed.
In no event should you enter more on item 18 than the
amount on item 17. See section 2053 and the related
regulations for more information.
Which schedules to attach for items 1 through 9. You
Item 23. Under Regulations section 20.2010-2(a)(7)(ii), if
the total value of the gross estate and adjusted taxable gifts
is less than the basic exclusion amount (see section 6018(a))
and Form 706 is being filed only to elect portability of the
DSUE amount, the estate is not required to report the value
of certain property eligible for the marital or charitable
deduction. For this property being reported on Schedule M or
O, enter on item 23 the amount from item 10.
must attach the following.
Schedule F. Answer its questions even if you report no
assets on it.
•
•
Schedules A, B, and C, if the gross estate includes any
(1) Real Estate, (2) Stocks and Bonds, or (3) Mortgages,
Notes, and Cash, respectively.
Schedule D, if the gross estate includes any life
insurance or if you answered “Yes” to question 9a of Part
4—General Information.
•
•
•
Schedule E, if the gross estate contains any jointly
owned property or if you answered “Yes” to question 10
of Part 4—General Information.
Part 6—Portability of Deceased
Spousal Unused Exclusion (DSUE)
Schedule G, if the decedent made any of the lifetime
transfers to be listed on that schedule or if you answered
“Yes” to question 12 or 13a of Part 4—General
Information.
Section 2010(c)(4) authorizes estates of decedents dying
after December 31, 2010, to elect to transfer any unused
exclusion to the surviving spouse. The amount received by
-18-
Instructions for Form 706 (Rev. 09-2023)
Table of Estimated Values
If the total estimated value of the assets
eligible for the special rule under Reg.
section 20.2010-2(a)(7)(ii) is more than:
But less than or equal to:
Include this amount on lines 10 and 23:
$0
$250,000
$250,000
$500,000
$250,000
$500,000
$500,000
$750,000
$750,000
$750,000
$1,000,000
$1,250,000
$1,500,000
$1,750,000
$2,000,000
$2,250,000
$2,500,000
$2,750,000
$3,000,000
$3,250,000
$3,500,000
$3,750,000
$4,000,000
$4,250,000
$4,500,000
$4,750,000
$5,000,000
$5,250,000
$5,500,000
$5,750,000
$6,000,000
$6,250,000
$6,500,000
$6,750,000
$7,000,000
$7,250,000
$7,500,000
$7,750,000
$8,000,000
$8,250,000
$8,500,000
$8,750,000
$9,000,000
$9,250,000
$9,500,000
$9,750,000
$10,000,000
$10,250,000
$10,500,000
$10,750,000
$11,000,000
$1,000,000
$1,250,000
$1,500,000
$1,750,000
$2,000,000
$2,250,000
$2,500,000
$2,750,000
$3,000,000
$3,250,000
$3,500,000
$3,750,000
$4,000,000
$4,250,000
$4,500,000
$4,750,000
$5,000,000
$5,250,000
$5,500,000
$5,750,000
$6,000,000
$6,250,000
$6,500,000
$6,750,000
$7,000,000
$7,250,000
$7,500,000
$7,750,000
$8,000,000
$8,250,000
$8,500,000
$8,750,000
$9,000,000
$9,250,000
$9,500,000
$9,750,000
$10,000,000
$10,250,000
$10,500,000
$10,750,000
$11,000,000
$1,000,000
$1,250,000
$1,500,000
$1,750,000
$2,000,000
$2,250,000
$2,500,000
$2,750,000
$3,000,000
$3,250,000
$3,500,000
$3,750,000
$4,000,000
$4,250,000
$4,500,000
$4,750,000
$5,000,000
$5,250,000
$5,500,000
$5,750,000
$6,000,000
$6,250,000
$6,500,000
$6,750,000
$7,000,000
$7,250,000
$7,500,000
$7,750,000
$8,000,000
$8,250,000
$8,500,000
$8,750,000
$9,000,000
$9,250,000
$9,500,000
$9,750,000
$10,000,000
$10,250,000
$10,500,000
$10,750,000
-19-
Instructions for Form 706 (Rev. 09-2023)
Table of Estimated Values (continued)
If the total estimated value of the assets
eligible for the special rule under Reg.
section 20.2010-2(a)(7)(ii) is more than:
But less than or equal to:
Include this amount on lines 10 and 23:
$11,000,000
$11,180,000
$11,400,000
$11,580,000
$11,700,000
$12,060,000
$11,180,000
$11,400,000
$11,580,000
$11,700,000
$12,060,000
$12,920,000
$11,180,000
$11,400,000
$11,580,000
$11,700,000
$12,060,000
$12,920,000
the surviving spouse is called the deceased spousal unused
exclusion (DSUE) amount. If the executor of the decedent’s
estate elects transfer, or portability, of the DSUE amount, the
surviving spouse can apply the DSUE amount received from
the estate of the surviving spouse’s last deceased spouse
(defined later) against any tax liability arising from
The timely filing of a complete Form 706 with DSUE will be
deemed a portability election if there is a surviving spouse.
The election is effective as of the decedent’s date of death,
so the DSUE amount received by a surviving spouse may be
applied to any transfer occurring after the decedent’s death.
A portability election is irrevocable, unless an adjustment or
amendment to the election is made on a subsequent return
filed on or before the due date.
subsequent lifetime gifts and transfers at death.
Note. A nonresident surviving spouse who is not a citizen of
the United States may not take into account the DSUE
amount of a deceased spouse, except to the extent allowed
by treaty with the nonresident surviving spouse’s country of
citizenship.
Note. Under Regulations section 20.2010-2(a)(5), the
executor of an estate of a nonresident decedent who was not
a citizen of the United States at the time of death cannot
make a portability election.
If an executor is appointed, qualified, and acting with the
United States on behalf of the decedent’s estate, only that
executor may make or opt out of a portability election. If there
is no executor, see Regulations section 20.2010-2(a)(6)(ii).
Last Deceased Spouse Limitation
The last deceased spouse is the most recently deceased
person who was married to the surviving spouse at the time
of that person’s death. The identity of the last deceased
spouse is determined as of the day a taxable gift is made, or
in the case of a transfer at death, the date of the surviving
spouse's death. The identity of the last deceased spouse is
not impacted by whether the decedent's estate elected
portability or whether the last deceased spouse had any
DSUE amount available. Remarriage also does not affect the
designation of the last deceased spouse and does not
prevent the surviving spouse from applying the DSUE
amount to taxable transfers.
Opting Out
If an estate files a Form 706 but does not wish to make the
portability election, the executor can opt out of the portability
election by checking the box indicated in Section A of this
Part. If no return is required under section 6018(a), not filing
Form 706 will avoid making the election.
Figuring the DSUE Amount
Regulations section 20.2010-2(b)(1) requires that a
When a taxable gift is made, the DSUE amount received
from the last deceased spouse is applied before the surviving
spouse’s basic exclusion amount. A surviving spouse may
use the DSUE amount of the last deceased spouse to offset
the tax on any taxable transfer made after the deceased
spouse's death. A surviving spouse who has more than one
predeceased spouse is not precluded from using the DSUE
amount of each spouse in succession. A surviving spouse
may not use the sum of DSUE amounts from multiple
predeceased spouses at one time nor may the DSUE amount
of a predeceased spouse be applied after the death of a
subsequent spouse.
decedent's DSUE be figured on the estate tax return. The
DSUE amount is the lesser of (a) the basic exclusion amount
in effect on the date of death of the decedent whose DSUE is
being figured, or (b) the decedent's applicable exclusion
amount less the amount on line 5 of Part 2—Tax Computation
on the Form 706 for the estate of the decedent. Amounts on
which gift taxes were paid are excluded from adjusted taxable
gifts for the purpose of this computation.
When a surviving spouse applies the DSUE amount to a
lifetime gift or bequest at death, the IRS may examine any
return of a predeceased spouse whose executor elected
portability to verify the allowable DSUE amount. The DSUE
amount may be adjusted or eliminated as a result of the
examination; however, the IRS may only make an
assessment of additional tax on the return of the
predeceased spouse within the applicable limitations period
under section 6501.
Making the Election
A timely filed and complete Form 706 is required to elect
portability of the DSUE amount to a surviving spouse. The
filing requirement applies to all estates of decedents
choosing to elect portability of the DSUE amount, regardless
of the size of the estate. A timely filed return is one that is
filed on or before the due date of the return, including
extensions. See Rev. Proc. 2022-32 (superseding Rev. Proc.
2017-34) for the simplified procedures for late elections.
Special Rule Where Value of Certain Property
Not Required To Be Reported on Form 706
The regulations provide that executors of estates who are not
otherwise required to file Form 706 under section 6018(a) do
not have to report the value of certain property qualifying for
-20-
Instructions for Form 706 (Rev. 09-2023)
the marital or charitable deduction. For such property, the
executor may estimate the value in good faith and with the
due diligence to be afforded all assets includible in the gross
estate. The amount reported on Form 706 will correspond to
a range of dollar values and will be included in the value of
the gross estate shown on Part 2—Tax Computation, line 1.
See the instructions for Part 5—Recapitulation, items 10 and
23, earlier, for more details.
On line 1, enter the decedent’s applicable exclusion
amount from Part 2—Tax Computation, line 9d. The
applicable exclusion amount is the sum of the basic exclusion
amount for the year of death, any DSUE amount received
from a predeceased spouse, if applicable, and any Restored
Exclusion Amount.
Line 2 is reserved.
On line 3, enter the value of the cumulative lifetime gifts on
which gift tax was paid or payable. This amount is figured on
line 6 of the Line 7 Worksheet, Part B, as the total of Row (r)
from the Line 7 Worksheet, Part A. Enter the amount as it
appears on line 6 of the Line 7 Worksheet, Part B.
Figure the unused exclusion amount on line 9. The DSUE
amount available to the surviving spouse will be the lesser of
this amount or the basic exclusion amount shown on Part
2—Tax Computation, line 9a. Enter the DSUE amount as
determined on line 10.
Section D. DSUE Amount Received From Predeceased
Spouse(s). Complete Section D if the decedent was a
surviving spouse who received a DSUE amount from one or
more predeceased spouses.
Section D requests information on all DSUE amounts
received from the decedent’s last deceased spouse and any
previously deceased spouses. Each line in the chart should
reflect a different predeceased spouse; enter the calendar
year(s) in column F. In Part 1, provide information on the
decedent’s last deceased spouse. In Part 2, provide
information as requested if the decedent had any other
predeceased spouse whose executor made the portability
election. Any remaining DSUE amount which was not used
prior to the death of a subsequent spouse is not considered
in this calculation and cannot be applied against any taxable
transfer. In column E, total only the amounts of DSUE
received and used from spouses who died before the
decedent’s last deceased spouse. Add this amount to the
amount from Part 1, column D, if any, to determine the
decedent’s total DSUE amount.
Specific Instructions
Portability Election. If you intend to elect portability of the
DSUE amount, timely filing a complete Form 706 is all that is
required. Complete Section B if any assets of the estate are
being transferred to a qualified domestic trust and complete
Section C of this Part to figure the DSUE amount that will be
transferred to the surviving spouse.
Section A. Opting Out of Portability. If you are filing Form
706 and do not wish to elect portability, then check the box
indicated. Do not complete Section B or C.
Section B. Portability and Qualified Domestic Trusts
(QDOTs). A QDOT allows the estate of a decedent to
bequeath property to a surviving spouse who is not a citizen
of the United States and still receive a marital deduction.
When property passes to a QDOT, estate tax is imposed
under section 2056A as distributions are made from the trust.
When a QDOT is established and there is a DSUE amount,
the executor of the decedent’s estate will determine a
preliminary DSUE amount for the purpose of electing
portability. This amount will decrease as section 2056A
distributions are made. In estates with a QDOT, the DSUE
amount generally may not be applied against tax arising from
lifetime gifts because it will not be available to the surviving
spouse until it is finally determined, usually upon the death of
the surviving spouse or when the QDOT is terminated.
Note. If a surviving spouse who is not a citizen of the United
States becomes a citizen and the section 2056A tax no
longer applies to the assets of the QDOT, as of the date the
surviving spouse becomes a U.S. citizen, the DSUE amount
is considered final and is available for application by the
surviving spouse. See Regulations sections 20.2010-2(c)(4),
20.2010-3(c)(3), and 25.2505-2(d)(3).
Check the appropriate box in this section and see the
instructions for Schedule M if more information is needed
about QDOT.
Schedule A—Real Estate
If any assets to which the special rule of Regulations
section 20.2010-2(a)(7)(ii) applies are reported on
!
CAUTION
this schedule, do not enter any value in the last three
columns. See the instructions for Part 5—Recapitulation, item
10, for information on how to estimate and report the value of
these assets.
Section C. DSUE Amount Portable to Decedent's Surviv-
ing Spouse. Complete Section C only if electing portability
of the DSUE amount to the surviving spouse.
-21-
Instructions for Form 706 (Rev. 09-2023)
Schedule A—Example 1
In this example, alternate valuation is not adopted; the date of death is January 1, 2023.
Item
number
Description
Alternate
valuation
date
Alternate
value
Value at
date of
death
1
2
House and lot, 1921 William Street NW, Washington, DC (lot 6, square 481). Rent of $8,100 due at
the end of each quarter, February 1, May 1, August 1, and November 1. Value based on appraisal,
copy of which is attached
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
$550,000
Rent due on item 1 for quarter ending November 1, 2022, but not collected at date of death
Rent accrued on item 1 for November and December 2022
8,100
5,400
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
House and lot, 304 Jefferson Street, Alexandria, VA (lot 18, square 40). Rent of $1,800 payable
monthly. Value based on appraisal, copy of which is attached
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
375,000
1,800
Rent due on item 2 for December 2022, but not collected at death
Schedule A—Example 2
In this example, alternate valuation is adopted; the date of death is January 1, 2023.
Item
number
Description
Alternate
valuation
date
Alternate
value
Value at
date of
death
1
2
House and lot, 1921 William Street NW, Washington, DC (lot 6, square 481). Rent of $8,100 due at
the end of each quarter, February 1, May 1, August 1, and November 1. Value based on appraisal,
copy of which is attached. Not disposed of within 6 months of date of death
.
.
.
.
.
.
.
.
.
.
.
.
.
7/1/23
$535,000
$550,000
Rent due on item 1 for quarter ending November 1, 2022, but not collected until February 1,
2023
Rent accrued on item 1 for November and December 2022, collected on February 1, 2023
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2/1/23
2/1/23
8,100
5,400
8,100
5,400
House and lot, 304 Jefferson Street, Alexandria, VA (lot 18, square 40). Rent of $1,800 payable
monthly. Value based on appraisal, copy of which is attached. Property exchanged for farm on May
1, 2023
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
5/1/23
2/1/23
369,000
1,800
375,000
1,800
Rent due on item 2 for December 2022, but not collected until February 1, 2023
If the total gross estate contains any real estate, complete
and not the equity in the value column. Deduct the unpaid
part of the purchase price on Schedule K.
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.
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.
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.
Explain how the reported values were determined and
attach copies of any appraisals.
Schedule A-1—Section 2032A
Valuation
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.
The election to value certain farm and closely held business
property at its special-use value is made by checking “Yes”
on Form 706, Part 3—Elections by the Executor, line 2.
Schedule A-1 is used to report the additional information that
must be submitted to support this election. In order to make a
valid election, you must complete Schedule A-1 and attach
all of the required statements and appraisals.
For definitions and additional information concerning
special-use valuation, see section 2032A and the related
regulations.
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.
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.
Also list on Schedule A real property the decedent
contracted to purchase. Report the full value of the property
-22-
Instructions for Form 706 (Rev. 09-2023)
Completing the fair market value worksheets.
Schedule R, Parts 2 and 3, lines 2 and 3, fixed taxes and
other charges. If valuing the interests at FMV (instead of
special-use value) causes any of these taxes and
charges to increase, enter the increased amount (only)
on these lines and attach an explanation of the increase.
Otherwise, enter -0-.
Protective election. To make the protective election
described in the separate instructions for Part 3—Elections
by the Executor, line 2, you must complete the following.
•
•
Check the box in Part 1. Type of Election.
Enter the decedent's name and SSN in the spaces
provided at the top of Schedule A-1.
•
•
Complete Part 2. Notice of Election, line 1, and column A
for lines 3 and 4.
•
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.
For purposes of the protective election, list on line 3 all of
the real property that passes to the qualified heirs even
though some of the property will be shown on line 2 when the
additional notice of election is subsequently filed.
You don’t need to complete columns B through D of lines 3
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.
and 4 or any other line entries on Schedule A-1.
Completing Schedule A-1 as described above constitutes
a Notice of Protective Election as described in Regulations
section 20.2032A-8(b).
Part 2. Notice of Election
Part 3. Agreement to Special Valuation Under
Section 2032A
The agreement to special valuation is required under
sections 2032A(a)(1)(B) and (d)(2) and must be signed by all
parties who have any interest in the property being valued
based on its qualified use as of the date of the decedent's
death.
Line 10. Because the special-use valuation election creates
a potential tax liability for the recapture tax of section
2032A(c), you must list each person who receives an interest
in the specially valued property on Schedule A-1. If there are
more than eight persons who receive interests, use an
additional sheet that follows the format of line 10. In the
columns “Fair market value” and “Special-use value,” enter
the total respective values of all the specially valued property
interests received by each person.
An interest in property is an interest that, as of the date of
the decedent's death, can be asserted under applicable law
so as to affect the disposition of the specially valued property
by the estate. Any person who at the decedent's death has
any such interest in the property, whether present, future,
vested, or contingent, must enter into the agreement.
Included are the following.
GST Tax Savings
To figure the additional GST tax due upon disposition (or
cessation of qualified use) of the property, each “skip person”
(as defined in the instructions for Schedule R) who receives
an interest in the specially valued property must know the
total GST tax savings all interests in specially valued property
received. The GST tax savings is the difference between the
total GST tax that was imposed on all interests in specially
valued property received by the skip person valued at their
special-use value and the total GST tax that would have been
imposed on the same interests received by the skip person
had they been valued at their FMV.
Owners of remainder and executory interests;
Holders of general or special powers of appointment;
Beneficiaries of a gift over in default of exercise of any
such power;
•
•
•
Joint tenants and holders of similar undivided interests
when the decedent held only a joint or undivided interest
in the property or when only an undivided interest is
specially valued; and
•
Trustees of trusts and representatives of other entities
holding title to or any interests in the property.
•
Because the GST tax depends on the executor's
allocation of the GST exemption and the grandchild
exclusion, the skip person who receives the interests is
unable to figure this GST tax savings. Therefore, for each
skip person who receives an interest in specially valued
property, you must attach a calculation of the total GST tax
savings attributable to that person's interests in specially
valued property.
An heir who has the power under local law to challenge a will
and thereby affect disposition of the property is not, however,
considered to be a person with an interest in property under
section 2032A solely by reason of that right. Likewise,
creditors of an estate are not such persons solely by reason
of their status as creditors.
If persons required to enter into the agreement desire that
an agent act for them or cannot legally bind themselves due
to infancy or other incompetency, or due to death before the
election under section 2032A is timely exercised, a
representative authorized by local law to bind persons in
agreements of this nature may sign the agreement on the
person’s behalf.
How to figure the GST tax savings. Before figuring each
skip person's GST tax savings, complete Schedules R and
R-1 for the entire estate (using the special-use values).
For each skip person, complete two Schedules R (Parts 2
and 3 only) as worksheets, one showing the interests in
specially valued property received by the skip person at their
special-use value and one showing the same interests at
their FMV.
If the skip person received interests in specially valued
property that were shown on Schedule R-1, show these
interests on the Schedule R, Parts 2 and 3 worksheets, as
appropriate. Do not use Schedule R-1 as a worksheet.
Completing the special-use value worksheets. On
Schedule R, Parts 2 and 3, lines 2 through 4 and 6, enter -0-.
The IRS will contact the agent designated in the
agreement on all matters relating to continued qualification
under section 2032A of the specially valued real property and
on all matters relating to the special lien arising under section
6324B. It is the duty of the agent as attorney-in-fact for the
parties with interests in the specially valued property to
furnish the IRS with any requested information and to notify
-23-
Instructions for Form 706 (Rev. 09-2023)
the IRS of any disposition or cessation of qualified use of any
part of the property.
Does the notice of election include a statement that
the decedent and/or a member of the decedent’s
family has owned all of the specially valued property
for at least 5 years of the 8 years immediately
preceding the date of the decedent's death?
Checklist for Section 2032A Election
When making the special-use valuation election on
Schedule A-1, please use this checklist to ensure
!
CAUTION
that you are providing everything necessary to make
Does the notice of election include a statement as to
whether there were any periods during the 8-year
period preceding the decedent's date of death
during which the decedent or a member of the
decedent’s family did not (a) own the property to be
specially valued, (b) use it in a qualified use, or (c)
materially participate in the operation of the farm or
other business? (See section 2032A(e)(6).)
a valid election.
To have a valid special-use valuation election under
section 2032A, you must file, in addition to the federal estate
tax return, (a) a notice of election (Schedule A-1, Part 2), and
(b) a fully executed agreement (Schedule A-1, Part 3). You
must include certain information in the notice of election. To
ensure that the notice of election includes all of the
information required for a valid election, use the following
checklist. The checklist is for your use only. Do not file it with
the return.
Does the notice of election include, for each item of
specially valued property, the name of every person
who has an interest in that item of specially valued
property and the following information about each
such person: (a) the person's address, (b) the
person's TIN, (c) the person's relationship to the
decedent, and (d) the value of the property interest
passing to that person based on both FMV and
qualified use?
Does the notice of election include the decedent's
name and SSN as they appear on the estate tax
return?
Does the notice of election include the relevant
qualified use of the property to be specially valued?
Does the notice of election describe the items of
real property shown on the estate tax return that are
to be specially valued and identify the property by
the Form 706 schedule and item number?
Does the notice of election include affidavits
describing the activities constituting material
participation and the identities of the material
participants?
Does the notice of election include the FMV of the
real property to be specially valued and also include
its value based on the qualified use (determined
without the adjustments provided in section
2032A(b)(3)(B))?
Does the notice of election include a legal
description of each item of specially valued
property? (Note. The legal description must be the
complete legal description of the property. An
abbreviated description is not sufficient.)
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?
(In the case of an election made for qualified woodlands,
the information included in the notice of election must
include the reason for entitlement to the woodlands
election.)
Any election made under section 2032A will not be valid
unless a properly executed agreement (Schedule A-1, Part 3)
is filed with the estate tax return. To ensure that the
agreement satisfies the requirements for a valid election, use
the following checklist. The checklist is for your use only. Do
not file it with the return.
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)?
Has the agreement been signed by each qualified
heir having an interest in the property being
specially valued?
Does the notice of election include the adjusted
value of the gross estate? (See section 2032A(b)(3)
(A).)
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?
Does the notice of election include the method used
to determine the special-use value?
Does the notice of election include copies of written
appraisals of the FMV of the real property?
-24-
Instructions for Form 706 (Rev. 09-2023)
Issue;
•
•
•
•
•
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?
Par value where needed for identification;
Price per share;
Exact name of corporation;
Principal exchange upon which sold, if listed on an
exchange; and
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?
Nine-digit CUSIP number (defined later).
•
Bonds. For bonds, indicate:
Quantity and denomination;
Name of obligor;
•
•
•
•
•
•
•
Has the agreement been signed by the designated
agent and does it give the address of the agent?
Date of maturity;
Interest rate;
Interest due date;
Principal exchange, if listed on an exchange; and
Nine-digit CUSIP number.
Schedule B—Stocks and Bonds
If the stock or bond is unlisted, show the company's
principal business office.
If any assets to which the special rule of Regulations
section 20.2010-2(a)(7)(ii) applies are reported on
!
If the gross estate includes any interest in a trust,
partnership, or closely held entity, provide the EIN of the
entity in the description column on Schedules B, E, F, G, M,
and O. You must also provide the EIN of an estate (if any) in
the description column on the above-noted schedules, where
applicable.
CUSIP number. The CUSIP (Committee on Uniform
Security Identification Procedures) number is a nine-digit
number that is assigned to all stocks and bonds traded on
major exchanges and many unlisted securities. Usually, the
CUSIP number is printed on the face of the stock certificate.
If you do not have a stock certificate, the CUSIP may be
found on the broker's or custodian's statement or by
contacting the company's transfer agent.
CAUTION
this schedule, do not enter any value in the last three
columns. See the instructions for Part 5—Recapitulation, item
10, for information on how to estimate and report the value of
these assets.
Before completing Schedule B, see the examples
illustrating the alternate valuation dates being
adopted and not being adopted, later.
TIP
If the total gross estate contains any stocks or bonds, you
must complete Schedule B and file it with the return.
On Schedule B, list the stocks and bonds included in the
decedent's gross estate. Number each item in the left-hand
column.
Valuation
Note. Unless specifically exempted by an estate tax
provision of the Code, bonds that are exempt from federal
income tax are not exempt from estate tax. You should list
these bonds on Schedule B.
List the FMV of the stocks or bonds. The FMV of a stock or
bond (whether listed or unlisted) is the mean between the
highest and lowest selling prices quoted on the valuation
date. If only the closing selling prices are available, then the
FMV is the mean between the quoted closing selling price on
the valuation date and on the trading day before the valuation
date.
Public housing bonds includible in the gross estate must
be included at their full value.
If you paid any estate, inheritance, legacy, or succession
tax to a foreign country on any stocks or bonds included in
this schedule, group those stocks and bonds together and
label them “Subjected to Foreign Death Taxes.”
If there were no sales on the valuation date, figure the
FMV as follows.
1. Find the mean between the highest and lowest selling
prices on the nearest trading date before and the nearest
trading date after the valuation date. Both trading dates
must be reasonably close to the valuation date.
List interest and dividends on each stock or bond on a
separate line.
Indicate as a separate item dividends that have not been
collected at death and are payable to the decedent or the
estate because the decedent was a stockholder of record on
the date of death. However, if the stock is being traded on an
exchange and is selling ex-dividend on the date of the
decedent's death, do not include the amount of the dividend
as a separate item. Instead, add it to the ex-dividend
quotation in determining the FMV of the stock on the date of
the decedent's death. Dividends declared on shares of stock
before the death of the decedent but payable to stockholders
of record on a date after the decedent's death are not
includible in the gross estate for federal estate tax purposes
and should not be listed here.
2. Prorate the difference between the mean prices to the
valuation date.
3. Add or subtract (whichever applies) the prorated part of
the difference to or from the mean price figured for the
nearest trading date before the valuation date.
If no actual sales were made reasonably close to the
valuation date, make the same computation using the mean
between the bona fide bid and asked prices instead of sales
prices. If actual sales prices or bona fide bid and asked
prices are available within a reasonable period of time before
the valuation date but not after the valuation date, or vice
versa, use the mean between the highest and lowest sales
prices or bid and asked prices as the FMV.
Description
Stocks. For stocks, indicate:
Number of shares;
For example, assume that sales of stock nearest the
valuation date (June 15) occurred 2 trading days before
•
Whether common or preferred;
•
-25-
Instructions for Form 706 (Rev. 09-2023)
Schedule B Examples
Example showing use of Schedule B where the alternate valuation is not adopted; date of death, January 1, 2023.
Item
number
Description, including face amount of bonds or number of shares and par value
where needed for identification. Give CUSIP number. If trust, partnership, or
closely held entity, give EIN.
Unit value
Alternate
valuation
date
Alternate
value
Value at
date of
death
CUSIP number or
EIN, where
applicable
1
2
$60,000—Arkansas Railroad Co. first mortgage 4%, 20-year
bonds, due 2024. Interest payable quarterly on Feb. 1, May 1,
Aug. 1, and Nov. 1; N.Y. Exchange
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
XXXXXXXXX
XXXXXXXXX
100
- - - - - - - $- - - - - - -
$ 60,000
600
Interest coupons attached to bonds, item 1, due and payable on
Nov. 1, 2022, but not cashed at date of death
.
.
.
.
.
.
.
.
.
.
.
- - - - - - -
- - - - - - -
- - - - - - -
Interest accrued on item 1, from Nov. 1, 2022, to Jan. 1,
2023
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
- - - - - - -
110
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
400
500 shares Public Service Corp., common; N.Y. Exchange
55,000
Dividend on item 2 of $2 per share declared Dec. 10, 2022,
payable on Jan. 9, 2023, to holders of record on Dec. 30,
2022
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
- - - - - - -
- - - - - - -
- - - - - - -
1,000
Example showing use of Schedule B where the alternate valuation is adopted; date of death, January 1, 2023.
Item
number
Description, including face amount of bonds or number of shares and par value
where needed for identification. Give CUSIP number. If trust, partnership, or
closely held entity, give EIN.
Unit value
Alternate
valuation
date
Alternate
value
Value at
date of
death
CUSIP number or
EIN, where
applicable
1
$60,000—Arkansas Railroad Co. first mortgage 4%, 20-year
bonds, due 2024. Interest payable quarterly on Feb. 1, May 1,
Aug. 1, and Nov. 1; N.Y. Exchange
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
XXXXXXXXX
100
- - - - - -
4/1/23
5/1/23
$- - - - - -
29,700
29,400
$ 60,000
- - - - - -
- - - - - -
$30,000 of item 1 distributed to legatees on Apr. 1, 2023
$30,000 of item 1 sold by executor on May 1, 2023
99
98
.
.
.
Interest coupons attached to bonds, item 1, due and payable on
Nov. 1, 2022, but not cashed at date of death. Cashed by executor
on Feb. 2, 2023
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
- - - - - -
2/2/23
600
600
Interest accrued on item 1, from Nov. 1, 2022, to Jan. 1, 2023.
Cashed by executor on Feb. 2, 2023
500 shares Public Service Corp., common; N.Y. Exchange
Not disposed of within 6 months following death
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
- - - - - -
110
2/2/23
- - - - - -
7/1/23
400
- - - - - -
45,000
400
55,000
- - - - - -
2
XXXXXXXXX
.
.
.
.
.
.
90
Dividend on item 2 of $2 per share declared Dec. 10, 2022, paid
on Jan. 9, 2023, to holders of record on Dec. 30, 2022
.
.
.
.
.
- - - - - -
1/9/23
1,000
1,000
(June 13) and 3 trading days after (June 18). On those days,
the mean sale prices per share were $10 and $15,
respectively. Therefore, the price of $12 is considered the
FMV of a share of stock on the valuation date. If, however, on
June 13 and 18, the mean sale prices per share were $15
and $10, respectively, the FMV of a share of stock on the
valuation date is $13.
dividends paid for each of the 5 years immediately before the
valuation date.
Securities reported as of no value, of nominal value, or
obsolete should be listed last. Include the address of the
company and the state and date of incorporation. Attach
copies of correspondence or statements used to determine
the “no value.”
If the security was listed on more than one stock
exchange, use either the records of the exchange where the
security is principally traded or the composite listing of
combined exchanges, if available, in a publication of general
circulation. In valuing listed stocks and bonds, you should
carefully check accurate records to obtain values for the
applicable valuation date.
If only closing prices for bonds are available, see
Regulations section 20.2031-2(b).
Apply the rules in the section 2031 regulations to
determine the value of inactive stock and stock in close
corporations. Attach to Schedule B complete financial and
other data used to determine value, including balance sheets
(particularly the one nearest to the valuation date) and
statements of the net earnings or operating results and
If you get quotations from brokers, or evidence of the sale
of securities from the officers of the issuing companies,
-26-
Instructions for Form 706 (Rev. 09-2023)
attach to the schedule copies of the letters furnishing these
quotations or evidence of sale.
Interest rate.
•
Cash in possession. For cash on hand, list such cash
separately from bank deposits.
Schedule C—Mortgages, Notes, and
Cash
Cash in financial organizations. For cash in banks,
savings and loan associations, and other types of financial
organizations, list:
If any assets to which the special rule of Regulations
Name and address of each financial organization;
Amount in each account;
•
•
•
•
section 20.2010-2(a)(7)(ii) applies are reported on
!
CAUTION
this schedule, do not enter any value in the last three
Serial or account number;
columns. See the instructions for Part 5—Recapitulation, item
10, for information on how to estimate and report the value of
these assets.
Nature of account—checking, savings, time deposit, etc.;
and
Unpaid interest accrued from date of last interest
payment to the date of death.
•
Complete Schedule C and file it with your return if the total
gross estate contains any:
Note. If you obtain statements from the financial
Mortgages,
Notes, or
Cash.
•
•
•
organizations, keep them for IRS inspection.
Schedule D—Insurance on the
Decedent's Life
List on Schedule C:
Mortgages and notes payable to the decedent at the
time of death, and
•
•
If any assets to which the special rule of Regulations
Cash the decedent had at the date of death.
section 20.2010-2(a)(7)(ii) applies are reported on
!
CAUTION
this schedule, do not enter any value in the last three
Note. Do not list mortgages and notes payable by the
decedent on Schedule C. (If these are deductible, list them
on Schedule K.)
columns. See the instructions for Part 5—Recapitulation, item
10, for information on how to estimate and report the value of
these assets.
Schedule C reporting order. List the items on Schedule C
in the following order.
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.
1. Mortgages.
2. Promissory notes.
Insurance you must include on Schedule D. Under
3. Contracts by decedent to sell land.
4. Cash in possession.
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
•
•
5. Cash in banks, savings and loan associations, and other
types of financial organizations.
Insurance on the decedent's life receivable by
beneficiaries other than the estate, as described below.
Description
Mortgages. For mortgages, list:
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.
Face value,
•
•
•
•
•
•
•
•
Unpaid balance,
Date of mortgage,
Name of maker,
Property mortgaged,
Date of maturity,
Interest rate, and
Interest date.
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.
Mortgage description example. “Bond and mortgage of
$50,000, unpaid balance: $17,000; dated: January 1, 1992;
J. Doe to R. Roe; premises: 22 Clinton Street, Newark, NJ;
due: January 1, 2023; interest payable at 10% a
year—January 1 and July 1.”
Promissory notes. For promissory notes, list in the same
way as mortgages.
Contracts by the decedent to sell land. For contracts by
Insurance receivable by beneficiaries other than the es-
tate. Include on Schedule D the proceeds of all insurance on
the life of the decedent not receivable by, or for the benefit of,
the decedent's estate if the decedent possessed at death
any of the following incidents of ownership, exercisable either
alone or in conjunction with any person or entity.
the decedent to sell land, list:
Name of purchaser,
Contract date,
•
•
•
•
•
•
•
Property description,
Sale price,
Initial payment,
Incidents of ownership in a policy include the following.
Amounts of installment payment,
Unpaid balance of principal, and
The right of the insured or estate to its economic benefits.
•
-27-
Instructions for Form 706 (Rev. 09-2023)
The power to change the beneficiary.
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.
•
•
•
The power to surrender or cancel the policy.
The power to assign the policy or to revoke an
assignment.
The power to pledge the policy for a loan.
The power to obtain from the insurer a loan against the
surrender value of the policy.
•
•
A reversionary interest if the value of the reversionary
interest was more than 5% of the value of the policy
immediately before the decedent died. (An interest in an
insurance policy is considered a reversionary interest if,
for example, the proceeds become payable to the
insured's estate or payable as the insured directs if the
beneficiary dies before the insured.)
•
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
•
Life insurance not includible in the gross estate under
Joint tenants with right of survivorship if the decedent
and the decedent's spouse are the only joint tenants.
•
section 2042 may be includible under some other section of
the Code. For example, a life insurance policy could be
transferred by the decedent in such a way that it would be
includible in the gross estate under section 2036, 2037, or
2038. See the instructions for Schedule G for a description of
these sections.
Interests that meet either of the two requirements above
should be entered in Part 1. Joint interests that do not meet
either of the two requirements above should be entered in
Part 2.
Under “Description,” describe the property as required in
the instructions for Schedules A, B, C, and F for the type of
property involved. For example, jointly held stocks and bonds
should be described using the rules given in the instructions
for Schedule B.
Completing the Schedule
You must list every insurance policy on the life of the
decedent, whether or not it is included in the gross estate.
Under “Description,” list:
Under “Alternate value” and “Value at date of death,” enter
The name of the insurance company, and
The number of the policy.
•
•
the full value of the property.
Note. You cannot claim the special treatment under section
2040(b) for property held jointly by a decedent and a
surviving spouse who is not a U.S. citizen. Report these joint
interests on Part 2 of Schedule E, not Part 1.
For every life insurance policy listed on the schedule,
request a statement on Form 712 from the company that
issued the policy. Attach the Form 712 to Schedule D.
Note. If the insurance company that issued the policy will not
provide Form 712, you should attach evidence that verifies
the amount includible on Schedule D, including but not
limited to an attachment, rider, assignment, copy of insurance
proceeds check, and other relevant material.
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.
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).
Under “Description,” describe the property as required in
the instructions for Schedules A, B, C, and F for the type of
property involved.
In the “Percentage includible” column, enter the
percentage of the total value of the property included in the
gross estate.
If part or all of the policy proceeds are not included in the
gross estate, explain why they were not included.
Generally, you must include the full value of the jointly
owned property in the gross estate. However, the full value
should not be included if you can show that a part of the
property originally belonged to the other tenant(s) and was
never received or acquired by the other tenant(s) from the
decedent for less than adequate and full consideration in
money or money's worth. Full value of jointly owned property
also does not have to be included in the gross estate if you
can show that any part of the property was acquired with
consideration originally belonging to the surviving joint
tenant(s). In this case, you may exclude from the value of the
property an amount proportionate to the consideration
furnished by the other tenant(s). Relinquishing or promising
to relinquish dower, curtesy, or statutory estate created
instead of dower or curtesy, or other marital rights in the
decedent's property or estate is not consideration in money
or money's worth. See the Schedule A instructions for the
value to show for real property that is subject to a mortgage.
Schedule E—Jointly Owned Property
If any assets to which the special rule of Regulations
section 20.2010-2(a)(7)(ii) applies are reported on
!
CAUTION
this schedule, do not enter any value in the last three
columns. See the instructions for Part 5—Recapitulation, item
10, for information on how to estimate and report the value of
these assets.
If you are required to file Form 706, complete Schedule E
and file it with the return if the decedent owned any joint
property at the time of death, whether or not the decedent's
interest is includible in the gross estate.
Enter on this schedule all property of whatever kind or
character, whether real estate, personal property, or bank
accounts, in which the decedent held at the time of death an
interest either as a joint tenant with right to survivorship or as
a tenant by the entirety.
If the property was acquired by the decedent and another
person or persons by gift, bequest, devise, or inheritance as
-28-
Instructions for Form 706 (Rev. 09-2023)
joint tenants, and their interests are not otherwise specified
by law, include only that part of the value of the property that
is figured by dividing the full value of the property by the
number of joint tenants.
If you believe that less than the full value of the entire
property is includible in the gross estate for tax purposes, you
must establish the right to include the smaller value by
attaching proof of the extent, origin, and nature of the
decedent's interest and the interest(s) of the decedent's
co-tenant(s).
policy exceeds its replacement cost), the true economic
value of the policy will be greater than the amount shown on
Form 712, line 59. In these situations, report the full
economic value of the policy on Schedule F. See Rev. Rul.
78-137, 1978-1 C.B. 280, for details.
Interests. If the decedent owned any interest in a
partnership or unincorporated business, attach a statement
of assets and liabilities for the valuation date and for the 5
years before the valuation date. Also, attach statements of
the net earnings for the same 5 years. Be sure to include the
EIN of the entity. You must account for goodwill in the
valuation. In general, furnish the same information and follow
the methods used to value close corporations. See the
instructions for Schedule B.
In the “Includible alternate value” and “Includible value at
date of death” columns, enter only the values that you believe
are includible in the gross estate.
All partnership interests should be reported on Schedule F
unless the partnership interest is jointly owned. Jointly owned
partnership interests should be reported on Schedule E.
Schedule F—Other Miscellaneous
Property
If real estate is owned by a sole proprietorship, it should be
reported on Schedule F and not on Schedule A. Describe the
real estate with the same detail required for Schedule A.
Valuation discounts. If you answered “Yes” to Part
4—General Information, line 11b, for any interest in a
partnership, an unincorporated business, an LLC, or stock in
a closely held corporation, attach a statement that lists the
item number from Schedule F and identifies the total effective
discount taken (that is, XX.XX%) on such interest.
If any assets to which the special rule of Regulations
section 20.2010-2(a)(7)(ii) applies are reported on
!
CAUTION
this schedule, do not enter any value in the last three
columns. See the instructions for Part 5—Recapitulation, item
10, for information on how to estimate and report the value of
these assets.
You must complete Schedule F and file it with the re-
turn. On Schedule F, list all items that must be included in
the gross estate that are not reported on any other schedule,
including:
Example of effective discount:
Debts due the decedent (other than notes and
mortgages included on Schedule C);
Interests in business;
•
a
b
c
Pro-rata value of LLC (before any discounts)
Minus: 10% discounts for lack of control
$100.00
(10.00)
•
•
Any interest in an Archer medical savings account (MSA)
or health savings account (HSA), unless such interest
passes to the surviving spouse;
Marketable minority interest value (as if freely traded
minority interest value)
$90.00
(13.50)
$76.50
Insurance on the life of another (obtain and attach Form
712, for each policy) (see Note below);
Section 2044 property (see Decedent Who Was a
Surviving Spouse, later);
•
•
•
d
e
Minus: 15% discount for lack of marketability
Nonmarketable minority interest value
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);
Calculation of effective discount:
(a minus e) divided by a = effective discount
Rights;
•
•
($100.00 - $76.50) ÷ $100.00 = 23.50%
Digital assets are any digital representations of value that
are recorded on a cryptographically secured distributed
ledger or any similar technology. For example, digital
assets include non-fungible tokens (NFTs) and virtual
currencies, such as cryptocurrencies and stablecoins. If
a particular asset has the characteristics of a digital
asset, it will be treated as a digital asset for federal
transfer tax purposes;
Note. The amount of discounts are based on the factors
pertaining to a specific interest and those discounts shown in
the example are for demonstration purposes only.
If you answered “Yes” to Part 4—General Information,
line 11b, for any transfer(s) described in (1) through (5) in the
Schedule G instructions (and made by the decedent), attach
a statement to Schedule G which lists the item number
from that schedule and identifies the total effective discount
taken (that is, XX.XX%) on such transfer(s).
Line 1. If the decedent owned at the date of death works of
art or items with collectible value (for example, jewelry, furs,
silverware, books, statuary, vases, oriental rugs, coin or
stamp collections), check the “Yes” box on line 1 and provide
full details. If any item or collection of similar items is valued
at more than $3,000, attach an appraisal by an expert under
oath and the required statement regarding the appraiser's
qualifications (see Regulations section 20.2031-6(b)).
Royalties;
•
•
•
•
•
Leaseholds;
Judgments;
Reversionary or remainder interests;
Shares in trust funds (attach a copy of the trust
instrument);
Household goods and personal effects, including
wearing apparel;
•
Farm products and growing crops;
Livestock;
•
•
•
•
Farm machinery; and
Automobiles.
Note (for single premium or paid-up policies). In certain
situations (for example, where the surrender value of the
-29-
Instructions for Form 706 (Rev. 09-2023)
For example, if the decedent died on July 10, 2023,
you should examine gift tax returns for 2023, 2022, 2021,
and 2020. However, the gift taxes on the 2020 return that
are attributable to gifts made on or before July 10, 2020,
are not included in the gross estate.
Explain how you figured the includible gift taxes if the
entire gift taxes shown on any Form 709 filed for gifts
made within 3 years of death are not included in the
gross estate. Also attach copies of any relevant gift tax
returns filed by the decedent's spouse, with "Exhibit to
Estate Tax Return" entered across the top of the first
page of each, for gifts made within 3 years of death.
Decedent Who Was a Surviving Spouse
If the decedent was a surviving spouse, the decedent may
have received qualified terminable interest property (QTIP)
from the predeceased spouse for which the marital deduction
was elected either on the predeceased spouse's estate tax
return or on a gift tax return, Form 709. The election is
available for transfers made and decedents dying after
December 31, 1981. List such property on Schedule F.
If this election was made and the surviving spouse
retained interest in the QTIP property at death, the full value
of the QTIP property is includible in the estate, even though
the qualifying income interest terminated at death. It is valued
as of the date of the surviving spouse's death, or alternate
valuation date, if applicable. Do not reduce the value by any
annual exclusion that may have applied to the transfer
creating the interest.
The value of such property included in the surviving
spouse's gross estate is treated as passing from the
surviving spouse. It therefore qualifies for the charitable and
marital deductions on the surviving spouse's estate tax return
if it meets the other requirements for those deductions.
2. Other transfers within 3 years of death (section
2035(a)). These transfers include only the following.
Any transfer by the decedent with respect to a life
•
insurance policy within 3 years of death.
Any transfer within 3 years of death of a retained
section 2036 life estate, section 2037 reversionary
interest, or section 2038 power to revoke, etc., if the
property subject to the life estate, interest, or power
would have been included in the gross estate had
the decedent continued to possess the life estate,
interest, or power until death.
•
For additional details, see Regulations section 20.2044-1.
These transfers are reported on Schedule G,
regardless of whether a gift tax return was required to be
filed for them when they were made. However, the
amount includible and the information required to be
shown for the transfers are determined:
•
•
•
Schedule G—Transfers During
Decedent's Life
If any assets to which the special rule of Regulations
For insurance on the life of the decedent using the
instructions for Schedule D (attach Form 712);
For insurance on the life of another using the
instructions for Schedule F (attach Form 712); and
For sections 2036, 2037, and 2038 transfers, using
paragraphs (3), (4), and (5) of these instructions.
section 20.2010-2(a)(7)(ii) applies are reported on
!
CAUTION
this schedule, do not enter any value in the last three
columns. See the instructions for Part 5—Recapitulation, item
10, for information on how to estimate and report the value of
these assets.
Complete Schedule G and file it with the return if the
decedent made any of the transfers described in (1) through
(5) later, or if you answered “Yes” to question 12 or 13a of
Part 4—General Information.
3. Transfers with retained life estate (section 2036).
These are transfers by the decedent in which the
decedent retained an interest in the transferred property.
The transfer can be in trust or otherwise, but excludes
bona fide sales for adequate and full consideration.
Report the following types of transfers on this schedule.
Interests or rights. Section 2036 applies to the
IF. . .
AND . . .
THEN . . .
following retained interests or rights.
The right to income from the transferred property.
The right to the possession or enjoyment of the
property.
•
the decedent made a
transfer from a trust
at the time of the
for purposes of
•
transfer, the transfer
was from a portion of
the trust that was
sections 2035 and
2038, treat the transfer
as made directly by the
decedent. Any such
transfer within the
The right, either alone or with any person, to
designate the persons who shall receive the income
from, possess, or enjoy, the property.
•
owned by the grantor
under section 676
(other than by reason annual gift tax
of section 672(e)) by
reason of a power in
the grantor
Retained annuity, unitrust, and other income
exclusion is not
includible in the gross
estate.
interests in trusts. If a decedent transferred property
into a trust and retained or reserved the right to use the
property, or the right to an annuity, unitrust, or other
interest in such trust for the property for the decedent's
life, any period not ascertainable without reference to the
decedent's death, or for a period that does not, in fact,
end before the decedent's death, then the decedent's
right to use the property or the retained annuity, unitrust,
or other interest (whether payable from income and/or
principal) is the retention of the possession or enjoyment
of, or the right to the income from, the property for
purposes of section 2036. See Regulations section
20.2036-1(c)(2).
1. Certain gift taxes (section 2035(b)). Enter on item A
of Schedule G the total value of the gift taxes that were
paid by the decedent or the estate on gifts made by the
decedent or the decedent's spouse within 3 years of
death.
The date of the gift, not the date of payment of the gift
tax, determines whether a gift tax paid is included in the
gross estate under this rule. Therefore, you should
carefully examine the Forms 709 filed by the decedent
and the decedent's spouse to determine what part of the
total gift taxes reported on them was attributable to gifts
made within 3 years of death.
Retained voting rights. Transfers with a retained life
estate also include transfers of stock in a controlled
corporation made after June 22, 1976, if the decedent
-30-
Instructions for Form 706 (Rev. 09-2023)
retained or acquired voting rights in the stock. If the
decedent retained direct or indirect voting rights in a
controlled corporation, the decedent is considered to
have retained enjoyment of the transferred property. A
corporation is a controlled corporation if the decedent
owned (actually or constructively) or had the right (either
alone or with any other person) to vote at least 20% of
the total combined voting power of all classes of stock.
See section 2036(b)(2). If these voting rights ceased or
were relinquished within 3 years of the decedent's death,
the corporate interests are included in the gross estate
as if the decedent had actually retained the voting rights
until death.
The amount includible in the gross estate is the value
of the transferred property at the time of the decedent's
death. If the decedent kept or reserved an interest or
right to only a part of the transferred property, the amount
includible in the gross estate is a corresponding part of
the entire value of the property.
A retained life estate does not have to be legally
enforceable. What matters is that a substantial economic
benefit was retained. For example, if a parent transferred
the home title to one’s child, but with the informal
understanding that the parent was to continue living
there until the parent’s death, the value of the home
would be includible in the parent’s estate even if the
agreement would not have been legally enforceable.
(and regardless of whether that person had a substantial
adverse interest in the transferred property).
The capacity in which the decedent could use a
power has no bearing. If the decedent gave property in
trust and was the trustee with the power to revoke the
trust, the property would be included in the decedent’s
gross estate. For transfers or additions to an irrevocable
trust after October 28, 1979, the transferred property is
includible if the decedent reserved the power to remove
the trustee at will and appoint another trustee.
If the decedent relinquished within 3 years of death
any of the includible powers described above, figure the
gross estate as if the decedent had actually retained the
powers until death.
Only the part of the transferred property that is subject
to the decedent's power is included in the gross estate.
For more detailed information on which transfers are
includible in the gross estate, see Regulations section
20.2038-1.
Special Valuation Rules for Certain Lifetime
Transfers
Sections 2701 through 2704 provide rules for valuing certain
transfers to family members.
Section 2701 deals with the transfer of an interest in a
corporation or partnership while retaining certain distribution
rights, or a liquidation, put, call, or conversion right.
4. Transfers taking effect at death (section 2037). A
transfer that takes effect at the decedent's death is one
under which possession or enjoyment can be obtained
only by surviving the decedent. A transfer is not treated
as one that takes effect at the decedent's death unless
the decedent retained a reversionary interest (defined
later) in the property that immediately before the
decedent's death had a value of more than 5% of the
value of the transferred property. If the transfer was made
before October 8, 1949, the reversionary interest must
have arisen by the express terms of the instrument of
transfer.
Section 2702 deals with the transfer of an interest in a trust
while retaining any interest other than a qualified interest. In
general, a qualified interest is a right to receive certain
distributions from the trust at least annually, or a
noncontingent remainder interest if all of the other interests in
the trust are distribution rights specified in section 2702.
Section 2703 provides rules for the valuation of property
transferred to a family member but subject to an option,
agreement, or other right to acquire or use the property at
less than FMV. It also applies to transfers subject to
restrictions on the right to sell or use the property.
A reversionary interest is, generally, any right under
which the transferred property will or may be returned to
the decedent or the decedent's estate. It also includes
the possibility that the transferred property may become
subject to a power of disposition by the decedent. It does
not matter if the right arises by the express terms of the
instrument of transfer or by operation of law. For this
purpose, reversionary interest does not include the
possibility that the income alone from the property may
return to the decedent or become subject to the
decedent's power of disposition.
Finally, section 2704 provides that in certain cases, the
lapse of a voting or liquidation right in a family-owned
corporation or partnership will result in a deemed transfer.
These rules have potential consequences for the valuation
of property in an estate. If the decedent (or any member of
the decedent’s family) was involved in any such transactions,
see sections 2701 through 2704 and the related regulations
for additional details.
How To Complete Schedule G
5. Revocable transfers (section 2038). The gross estate
includes the value of any transferred property which was
subject to the decedent's power to alter, amend, revoke,
or terminate the transfer at the time of the decedent's
death. A decedent's power to change beneficiaries and
to increase any beneficiary's enjoyment of the property
are examples of this.
All transfers (other than outright transfers not in trust and
bona fide sales) made by the decedent at any time during life
must be reported on Schedule G, regardless of whether you
believe the transfers are subject to tax. If the decedent made
any transfers not described in these instructions, the
transfers should not be shown on Schedule G. Instead,
attach a statement describing these transfers by listing:
It does not matter whether the power was reserved at
the time of the transfer, whether it arose by operation of
law, or whether it was later created or conferred. The rule
applies regardless of the source from which the power
was acquired, and regardless of whether the power was
exercisable by the decedent alone or with any person
The date of the transfer,
•
•
•
The amount or value of the transferred property, and
The type of transfer.
Complete the schedule for each transfer that is included in
the gross estate under sections 2035(a), 2036, 2037, and
2038, as described in the instructions for Schedule G.
-31-
Instructions for Form 706 (Rev. 09-2023)
In the “Item number” column, number each transfer
consecutively beginning with “1.” In the “Description” column,
list the name of the transferee and the date of the transfer,
and give a complete description of the property. Transfers
included in the gross estate should be valued on the date of
the decedent's death or, if alternate valuation is elected,
according to section 2032.
decedent. It does not include a power created or held on
property transferred by the decedent.
A power of appointment includes all powers which are, in
substance and effect, powers of appointment regardless of
how they are identified and regardless of local property laws.
For example, if a settlor transfers property in trust for the life
of the settlor’s spouse, with a power in the spouse to
appropriate or consume the principal of the trust, the spouse
has a power of appointment.
If only part of the property transferred meets the terms of
section 2035(a), 2036, 2037, or 2038, then only a
corresponding part of the value of the property should be
included in the value of the gross estate. If the transferee
makes additions or improvements to the property, the
increased value of the property at the valuation date should
not be included on Schedule G. However, if only a part of the
value of the property is included, enter the value of the whole
under the column headed “Description” and explain what part
was included.
Attachments. If a transfer, by trust or otherwise, was made
by a written instrument, attach a copy of the instrument to
Schedule G. If the copy of the instrument is of public record, it
should be certified; if not of public record, the copy should be
verified.
Some powers do not in themselves constitute a power of
appointment. For example, a power to amend only
administrative provisions of a trust that cannot substantially
affect the beneficial enjoyment of the trust property or income
is not a power of appointment. A power to manage, invest, or
control assets, or to allocate receipts and disbursements,
when exercised only in a fiduciary capacity, is not a power of
appointment.
General power of appointment. A general power of
appointment is a power that is exercisable in favor of the
decedent, the decedent's estate, the decedent's creditors, or
the creditors of the decedent's estate, except the following.
1. A power to consume, invade, or appropriate property for
the benefit of the decedent that is limited by an
ascertainable standard relating to health, education,
support, or maintenance of the decedent.
Schedule H—Powers of Appointment
If any assets to which the special rule of Regulations
section 20.2010-2(a)(7)(ii) applies are reported on
!
2. A power exercisable by the decedent only in conjunction
with:
CAUTION
this schedule, do not enter any value in the last three
columns. See the instructions for Part 5—Recapitulation, item
10, for information on how to estimate and report the value of
these assets.
a. The creator of the power; or
b. A person who has a substantial interest in the
property subject to the power, which is adverse to the
exercise of the power in favor of the decedent.
Complete Schedule H and file it with the return if you
answered “Yes” to question 14 of Part 4—General
Information.
A part of a power is considered a general power of
appointment if the power:
On Schedule H, include the following in the gross estate.
The value of property for which the decedent possessed
a general power of appointment (defined later) on the
date of the decedent’s death.
•
•
1. May only be exercised by the decedent in conjunction
with another person, and
2. Is also exercisable in favor of the other person (in
addition to being exercisable in favor of the decedent,
the decedent's creditors, the decedent's estate, or the
creditors of the decedent's estate).
The value of property for which the decedent possessed
a general power of appointment that the decedent
exercised or released before death by disposing of it in
such a way that if it were a transfer of property owned by
the decedent, the property would be includible in the
decedent's gross estate as a transfer with a retained life
estate, a transfer taking effect at death, or a revocable
transfer.
When there is a partial power, figure the amount included
in the gross estate by dividing the value of the property by the
number of persons (including the decedent) in favor of whom
the power is exercisable.
Date power was created. Generally, a power of
appointment created by will is considered created on the
date of the testator's death.
A power of appointment created by an inter vivos
instrument is considered created on the date the instrument
takes effect. If the holder of a power exercises it by creating a
second power, the second power is considered as created at
the time of the exercise of the first.
With the above exceptions, property subject to a power of
appointment is not includible in the gross estate if the
decedent released the power completely and the decedent
held no interest in or control over the property.
If the failure to exercise a general power of appointment
results in a lapse of the power, the lapse is treated as a
release only to the extent that the value of the property that
could have been appointed by the exercise of the lapsed
power is more than the greater of $5,000 or 5% of the total
value, at the time of the lapse, of the assets out of which, or
the proceeds of which, the exercise of the lapsed power
could have been satisfied.
Attachments
If the decedent ever possessed a power of appointment,
attach a certified or verified copy of the instrument granting
the power and a certified or verified copy of any instrument by
which the power was exercised or released. You must file
these copies even if you contend that the power was not a
general power of appointment, and that the property is not
otherwise includible in the gross estate.
Powers of Appointment
A power of appointment determines who will own or enjoy the
property subject to the power and when they will own or enjoy
it. The power must be created by someone other than the
-32-
Instructions for Form 706 (Rev. 09-2023)
that part of the value of the annuity receivable by the
surviving beneficiary that the decedent's contribution to the
purchase price of the annuity or agreement bears to the total
purchase price.
Schedule I—Annuities
If any assets to which the special rule of Regulations
section 20.2010-2(a)(7)(ii) applies are reported on
!
CAUTION
this schedule, do not enter any value in the last three
For example, if the value of the survivor's annuity was
$20,000 and the decedent had contributed 75% of the
purchase price of the contract, the amount includible is
$15,000 (75% (0.75) × $20,000).
columns. See the instructions for Part 5—Recapitulation, item
10, for information on how to estimate and report the value of
these assets.
Complete Schedule l and file it with the return if you
answered “Yes” to question 16 of Part 4—General
Information.
Except as provided under Annuities Under Approved
Plans, later, contributions made by the decedent's employer
to the purchase price of the contract or agreement are
considered made by the decedent if they were made by the
employer because of the decedent's employment. For more
information, see section 2039(b).
Enter on Schedule I every annuity that meets all of the
conditions under General, later, and every annuity described
in paragraphs (a) through (h) of Annuities Under Approved
Plans, later, even if the annuities are wholly or partially
excluded from the gross estate.
Definitions
For a discussion regarding the QTIP treatment of certain
joint and survivor annuities, see the Schedule M, line 3,
instructions.
Annuity. An annuity consists of one or more payments
extending over any period of time. The payments may be
equal or unequal, conditional or unconditional, periodic or
sporadic.
General
Examples. The following are examples of contracts (but
not necessarily the only forms of contracts) for annuities that
must be included in the gross estate.
These rules apply to all types of annuities, including pension
plans, individual retirement arrangements (IRAs), purchased
commercial annuities, and private annuities.
1. A contract under which the decedent immediately before
death was receiving or was entitled to receive, for the
duration of life, an annuity with payments to continue
after death to a designated beneficiary, if surviving the
decedent.
In general, you must include in the gross estate all or part
of the value of any annuity that meets the following
requirements.
It is receivable by a beneficiary following the death of the
decedent and by reason of surviving the decedent.
The annuity is under a contract or agreement entered
into after March 3, 1931.
•
•
•
2. A contract under which the decedent immediately before
death was receiving or was entitled to receive, together
with another person, an annuity payable to the decedent
and the other person for their joint lives, with payments to
continue to the survivor following the death of either.
The annuity was payable to the decedent (or the
decedent possessed the right to receive the annuity)
either alone or in conjunction with another, for the
decedent's life or for any period not ascertainable without
reference to the decedent's death or for any period that
did not in fact end before the decedent's death.
The contract or agreement is not a policy of insurance on
the life of the decedent.
3. A contract or agreement entered into by the decedent
and employer under which the decedent immediately
before death and following retirement was receiving, or
was entitled to receive, an annuity payable to the
decedent for life. After the decedent's death, if survived
by a designated beneficiary, the annuity was payable to
the beneficiary with payments either fixed by contract or
subject to an option or election exercised or exercisable
by the decedent. However, see Annuities Under
Approved Plans, later.
•
Note. A private annuity is an annuity issued by a party not
engaged in the business of writing annuity contracts, typically
a junior generation family member or a family trust.
An annuity contract that provides periodic payments to a
person for life and ceases at the person's death is not
includible in the gross estate. Social security benefits are not
includible in the gross estate even if the surviving spouse
receives benefits.
4. A contract or agreement entered into by the decedent
and the decedent's employer under which at the
decedent's death, before retirement, or before the
expiration of a stated period of time, an annuity was
payable to a designated beneficiary, if surviving the
decedent. However, see Annuities Under Approved
Plans, later.
An annuity or other payment that is not includible in the
decedent's or the survivor's gross estate as an annuity may
still be includible under some other applicable provision of
the law. For example, see Powers of Appointment and the
instructions for Schedule G—Transfers During Decedent's
Life, earlier. See also Regulations section 20.2039-1(e).
5. A contract or agreement under which the decedent
immediately before death was receiving, or was entitled
to receive, an annuity for a stated period of time, with the
annuity to continue to a designated beneficiary, surviving
the decedent, upon the decedent's death and before the
expiration of that period of time.
If the decedent retired before January 1, 1985, see
Annuities Under Approved Plans, later, for rules that allow the
exclusion of part or all of certain annuities.
6. An annuity contract or other arrangement providing for a
series of substantially equal periodic payments to be
made to a beneficiary for life or over a period of at least
36 months after the date of the decedent's death under
an individual retirement account, annuity, or bond as
Part Includible
If the decedent contributed only part of the purchase price of
the contract or agreement, include in the gross estate only
-33-
Instructions for Form 706 (Rev. 09-2023)
described in section 2039(e) (before its repeal by P.L.
98-369).
e. A bond purchase plan described in section 405 (before
its repeal by P.L. 98-369, effective for obligations issued after
December 31, 1983).
Exclusion rules for pension, etc., plans. If an annuity
under an approved plan described in (a) through (e) above is
receivable by a beneficiary other than the executor and the
decedent made no contributions under the plan toward the
cost, no part of the value of the annuity, subject to the
$100,000 limitation (if applicable), is includible in the gross
estate.
If the decedent made a contribution under a plan
described in (a) through (e) above toward the cost, include in
the gross estate on this schedule that proportion of the value
of the annuity which the amount of the decedent's
contribution under the plan bears to the total amount of all
contributions under the plan. The remaining value of the
annuity is excludable from the gross estate subject to the
$100,000 limitation (if applicable). For the rules to determine
whether the decedent made contributions to the plan, see
Regulations section 20.2039-1(c).
Payable to the decedent. An annuity or other payment was
payable to the decedent if, at the time of death, the decedent
was in fact receiving an annuity or other payment, with or
without an enforceable right to have the payments continued.
Right to receive an annuity. The decedent had the right to
receive an annuity or other payment if, immediately before
death, the decedent had an enforceable right to receive
payments at some time in the future, whether or not at the
time of death the decedent had a present right to receive
payments.
Annuities Under Approved Plans
The following rules relate to whether part or all of an
otherwise includible annuity may be excluded. These rules
have been repealed and apply only if the decedent either:
On December 31, 1984, was both a participant in the
plan and in pay status (for example, had received at least
one benefit payment on or before December 31, 1984)
and had irrevocably elected the form of the benefit before
July 18, 1984; or
•
IRAs and retirement bonds. The following plans are
approved plans for the exclusion rules.
f. An individual retirement account described in section
Had separated from service before January 1, 1985, and
did not change the form of benefit before death.
•
408(a).
g. An individual retirement annuity described in section
408(b).
The amount excluded cannot exceed $100,000 unless
either of the following conditions is met.
h. A retirement bond described in section 409(a) (before
On December 31, 1982, the decedent was both a
participant in the plan and in pay status (for example, had
received at least one benefit payment on or before
December 31, 1982) and the decedent irrevocably
elected the form of the benefit before January 1, 1983.
The decedent separated from service before January 1,
1983, and did not change the form of benefit before
death.
•
its repeal by P.L. 98-369).
Exclusion rules for IRAs and retirement bonds. These
plans are approved plans only if they provide for a series of
substantially equal periodic payments made to a beneficiary
for life, or over a period of at least 36 months after the date of
the decedent's death.
•
Subject to the $100,000 limitation (if applicable), if an
annuity under a “plan” described in (f) through (h) above is
receivable by a beneficiary other than the executor, the entire
value of the annuity is excludable from the gross estate even
if the decedent made a contribution under the plan.
However, if any payment to or for an account or annuity
described in paragraph (f), (g), or (h) earlier was not
allowable as an income tax deduction under section 219 (and
was not a rollover contribution, as described in section
2039(e) before its repeal by P.L. 98-369), include in the gross
estate on this schedule that proportion of the value of the
annuity which the amount not allowable as a deduction under
section 219 and not a rollover contribution bears to the total
amount paid to or for such account or annuity. For more
information, see Regulations section 20.2039-5.
Approved Plans
Approved plans may be separated into two categories.
Pension, profit-sharing, stock bonus, and other similar
•
•
plans.
IRAs and retirement bonds.
Different exclusion rules apply to the two categories of
plans.
Pension, etc., plans. The following plans are approved
plans for the exclusion rules.
a. An employees' trust (or a contract purchased by an
employees' trust) forming part of a pension, stock bonus, or
profit-sharing plan that met all the requirements of section
401(a), either at the time of the decedent's separation from
employment (whether by death or otherwise) or at the time of
the termination of the plan (if earlier).
b. A retirement annuity contract purchased by the
employer (but not by an employees' trust) under a plan that,
at the time of the decedent's separation from employment (by
death or otherwise), or at the time of the termination of the
plan (if earlier), was a plan described in section 403(a).
c. A retirement annuity contract purchased for an
employee by an employer that is an organization referred to
in section 170(b)(1)(A)(ii) or (vi), or that is a religious
organization (other than a trust), and that is exempt from tax
under section 501(a).
Rules applicable to all approved plans. The following
rules apply to all approved plans described in paragraphs (a)
through (h), earlier.
If any part of an annuity under a “plan” described in (a)
through (h), earlier, is receivable by the executor, it is
generally includible in the gross estate to the extent that it is
receivable by the executor in that capacity. In general, the
annuity is receivable by the executor if it is to be paid to the
executor or if there is an agreement (expressed or implied)
that it will be applied by the beneficiary for the benefit of the
estate (such as in discharge of the estate's liability for death
taxes or debts of the decedent, etc.) or that its distribution will
be governed to any extent by the terms of the decedent's will
or the laws of descent and distribution.
d. Chapter 73 of title 10 of the United States Code.
-34-
Instructions for Form 706 (Rev. 09-2023)
IF . . .
THEN . . .
If data available to you does not indicate whether the plan
satisfies the requirements of section 401(a), 403(a), 408(a),
408(b), or 409(a), you may obtain that information from the
IRS office where the employer's principal place of business is
located.
an annuity under an individual
retirement account or annuity
became payable to any beneficiary account or annuity that was not
because that beneficiary survived
the decedent and is payable to the
beneficiary for life or for at least 36
months following the decedent's
death
state the ratio of the amount paid
for the individual retirement
allowable as an income tax
deduction under section 219 (other
than a rollover contribution) to the
total amount paid for the account or
annuity.
Line A. Lump-Sum Distribution Election
Note. The following rules have been repealed and apply only
if the decedent:
On December 31, 1984, was both a participant in the
plan and in pay status (for example, had received at least
one benefit payment on or before December 31, 1984)
and had irrevocably elected the form of the benefit before
July 18, 1984; or
•
the annuity is payable out of a trust
or other fund
the description should be
sufficiently complete to fully identify
it.
the annuity is payable for a term of
years
include the duration of the term and
the date on which it began.
Had separated from service before January 1, 1985, and
did not change the form of benefit before death.
•
Generally, the entire amount of any lump-sum distribution
the annuity is payable for the life of
a person other than the decedent
include the date of birth of that
person.
is included in the decedent's gross estate. However, under
this special rule, all or part of a lump-sum distribution from a
qualified (approved) plan will be excluded if the lump-sum
distribution is included in the recipient's income for income
tax purposes.
the annuity is wholly or partially
excluded from the gross estate
enter the amount excluded under
“Description” and explain how you
figured the exclusion.
If the decedent was born before 1936, the recipient may
be eligible to elect special “10-year averaging” rules (under
repealed section 402(e)) and capital gain treatment (under
repealed section 402(a)(2)) in figuring the income tax on the
distribution. For more information, see Pub. 575, Pension and
Annuity Income. If this option is available, the estate tax
exclusion cannot be claimed unless the recipient elects to
forego the “10-year averaging” and capital gain treatment in
figuring the income tax on the distribution. The recipient
elects to forego this treatment by treating the distribution as
taxable on the recipient’s income tax return, as described in
Regulations section 20.2039-4(d). The election is
irrevocable.
Schedule J—Funeral Expenses and
Expenses Incurred in Administering
Property Subject to Claims
Use Schedule PC to make a protective claim for
refund for expenses which are not currently
!
CAUTION
deductible under section 2053. For such a claim,
report the expense on Schedule J but without a value in the
last column.
The amount excluded from the gross estate is the portion
attributable to the employer contributions. The portion, if any,
attributable to the employee-decedent's contributions is
always includible. Also, you may not figure the gross estate in
accordance with this election unless you check “Yes” on line
A and attach the names, addresses, and identifying numbers
of the recipients of the lump-sum distributions. See
Regulations section 20.2039-4(d)(2).
General. Complete and file Schedule J if you claim a
deduction on item 14 of Part 5—Recapitulation.
On Schedule J, itemize funeral expenses and expenses
incurred in administering property subject to claims. List the
names and addresses of persons to whom the expenses are
payable and describe the nature of the expense. Do not list
expenses incurred in administering property not
subject to claims on this schedule. List them on
Schedule L instead.
The deduction is limited to the amount paid for these
expenses that is allowable under local law but may not
exceed:
How To Complete Schedule I
In describing an annuity, give the name and address of the
grantor of the annuity. Specify if the annuity is under an
approved plan.
IF . . .
THEN . . .
1. The value of property subject to claims included in the
gross estate, plus
the annuity is under an approved
plan
state the ratio of the decedent's
contribution to the total purchase
price of the annuity.
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 decedent was employed at the
time of death and an annuity as
described earlier in Definitions,
Annuity, Example 4 became
payable to any beneficiary because
the beneficiary survived the
decedent
state the ratio of the decedent's
contribution to the total purchase
price of the annuity.
The applicable local law under which the estate is being
administered determines which property is and is not subject
to claims. If under local law a particular property interest
included in the gross estate would bear the burden for the
payment of the expenses, then the property is considered
property subject to claims.
Unlike certain claims against the estate for debts of the
decedent (see the instructions for Schedule K), you cannot
deduct expenses incurred in administering property subject
-35-
Instructions for Form 706 (Rev. 09-2023)
to claims on both the estate tax return and the estate's
income tax return. If you choose to deduct them on the estate
tax return, you cannot deduct them on a Form 1041, U.S.
Income Tax Return for Estates and Trusts, filed for the estate.
Funeral expenses are only deductible on the estate tax
return.
Funeral expenses. Itemize funeral expenses on line A.
Deduct from the expenses any amounts that were
reimbursed, such as death benefits payable by the SSA or
the Veterans Administration.
Executors' commissions. When you file the return, you
may deduct commissions that have actually been paid to you
or that you expect will be paid. Do not deduct commissions if
none will be collected. If the amount of the commissions has
not been fixed by decree of the proper court, the deduction
will be allowed on the final examination of the return,
provided that:
Interest expense. Interest expenses incurred after the
decedent's death are generally allowed as a deduction if they
are reasonable, necessary to the administration of the estate,
and allowable under local law.
Interest incurred as the result of a federal estate tax
deficiency is a deductible administrative expense. Penalties
on estate tax deficiencies are not deductible even if they are
allowable under local law.
Note. If you elect to pay the tax in installments under section
6166, you may not deduct the interest payable on the
installments.
Miscellaneous expenses. Miscellaneous administration
expenses necessarily incurred in preserving and distributing
the estate are deductible. These expenses include
appraiser's and accountant's fees, certain court costs, and
costs of storing or maintaining assets of the estate.
The Chief, Estate and Gift/Excise Tax Examination, is
reasonably satisfied that the commissions claimed will be
paid;
•
•
•
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.
The amount entered as a deduction is within the amount
allowable by the laws of the jurisdiction where the estate
is being administered; and
Schedule K—Debts of the Decedent,
and Mortgages and Liens
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
Use Schedule PC to make a protective claim for
time of the final examination of the return, you must support
the amount you deducted with an affidavit or statement
signed under the penalties of perjury that the amount has
been agreed upon and will be paid.
refund for expenses which are not currently
!
CAUTION
deductible under section 2053. For such a claim,
report the expense on Schedule K but without a value in the
last column.
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
You must complete and attach Schedule K if you claimed
deductions on either item 15 or item 16 of Part
5—Recapitulation.
Income vs. estate tax deduction. Taxes, interest, and
business expenses accrued at the date of the decedent's
death are deductible both on Schedule K and as deductions
in respect of the decedent on the income tax return of the
estate.
If you choose to deduct medical expenses of the decedent
only on the estate tax return, they are fully deductible as
claims against the estate. If, however, they are claimed on the
decedent's final income tax return under section 213(c), they
may also not be claimed on the estate tax return. In this case,
you may also not deduct on the estate tax return any
amounts that were not deductible on the income tax return
because of the percentage limitations.
compensation allowable by the local law or practice.
Do not deduct on this schedule amounts paid as trustees'
commissions whether received by you acting in the capacity
of a trustee or by a separate trustee. If such amounts were
paid in administering property not subject to claims, deduct
them on Schedule L.
Note. Executors' commissions are taxable income to the
executors. Therefore, be sure to include them as income on
your individual income tax return.
Attorney fees. Enter the amount of attorney fees that have
actually been paid or that you reasonably expect to be paid.
If, on the final examination of the return, the fees claimed
have not been awarded by the proper court and paid, the
deduction will be allowed, provided the Chief, Estate and Gift/
Excise Tax Examination, is reasonably satisfied that the
amount claimed will be paid and that it does not exceed a
reasonable payment for the services performed, taking into
account the size and character of the estate and the local law
and practice. If the fees claimed have not been paid at the
time of final examination of the return, the amount deducted
must be supported by an affidavit, or statement signed under
penalties of perjury, by the executor or the attorney stating
that the amount has been agreed upon and will be paid.
Debts of the Decedent
List under Debts of the Decedent only valid debts the
decedent owed at the time of death. List any indebtedness
secured by a mortgage or other lien on property of the gross
estate under Mortgages and Liens. If the amount of the debt
is disputed or the subject of litigation, deduct only the amount
the estate concedes to be a valid claim.
Generally, if the claim against the estate is based on a
promise or agreement, the deduction is limited to the extent
that the liability was contracted bona fide and for an adequate
and full consideration in money or money's worth. However,
any enforceable claim based on a promise or agreement of
the decedent to make a contribution or gift (such as a pledge
or a subscription) to or for the use of a charitable, public,
religious, etc., organization is deductible to the extent that the
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.
-36-
Instructions for Form 706 (Rev. 09-2023)
deduction would be allowed as a bequest under the statute
that applies.
Certain claims of a former spouse against the estate
based on the relinquishment of marital rights are deductible
on Schedule K. For these claims to be deductible, all of the
following conditions must be met.
However, if the decedent's estate is not liable, include in
the gross estate only the value of the equity of redemption (or
the value of the property less the amount of the debt), and do
not deduct any portion of the indebtedness on this schedule.
Notes and other obligations secured by the deposit of
collateral, such as stocks, bonds, etc., should also be listed
under Mortgages and Liens.
The decedent and the decedent's spouse must have
entered into a written agreement relative to their marital
and property rights.
•
Description
The decedent and the spouse must have been divorced
before the decedent's death and the divorce must have
occurred within the 3-year period beginning on the date 1
year before the agreement was entered into. It is not
required that the agreement be approved by the divorce
decree.
•
Include under the “Description” column the particular
schedule and item number where the property subject to the
mortgage or lien is reported in the gross estate.
Include the name and address of the mortgagee, payee,
or obligee, and the date and term of the mortgage, note, or
other agreement by which the debt was established. Also
include the face amount, the unpaid balance, the rate of
interest, and the date to which the interest was paid before
the decedent's death.
The property or interest transferred under the agreement
must be transferred to the decedent's spouse in
settlement of the spouse's marital rights.
•
You may not deduct a claim made against the estate by a
remainderman relating to section 2044 property. Section
2044 property is described in the instructions for Part
4—General Information, line 7.
Schedule L—Net Losses During
Administration and Expenses
Incurred in Administering Property
Not Subject to Claims
Include in this schedule notes unsecured by mortgage or
other lien and give full details, including:
Name of payee,
•
•
•
•
•
Face and unpaid balance,
Date and term of note,
Use Schedule PC to make a protective claim for
Interest rate, and
refund for expenses which are not currently
!
CAUTION
Date to which interest was paid before death.
deductible under section 2053. For such a claim,
report the expense on Schedule L but without a value in the
last column.
Include the exact nature of the claim as well as the name
of the creditor. If the claim is for services performed over a
period of time, state the period covered by the claim.
Complete Schedule L and file it with the return if you claim
deductions on either item 19 or item 20 of Part
5—Recapitulation.
Example. Electric Illuminating Co., for electric service
during December 2022, $150.
If the amount of the claim is the unpaid balance due on a
contract for the purchase of any property included in the
gross estate, indicate the schedule and item number where
you reported the property. If the claim represents a joint and
separate liability, give full facts and explain the financial
responsibility of the co-obligor.
Property and income taxes. The deduction for property
taxes is limited to the taxes accrued before the date of the
decedent's death. Federal taxes on income received during
the decedent's lifetime are deductible, but taxes on income
received after death are not deductible.
Net Losses During Administration
You may deduct only those losses from thefts, fires, storms,
shipwrecks, or other casualties that occurred during the
settlement of the estate. Deduct only the amount not
reimbursed by insurance or otherwise.
Describe in detail the loss sustained and the cause. If you
received insurance or other compensation for the loss, state
the amount collected. Identify the property for which you are
claiming the loss by indicating the schedule and item number
where the property is included in the gross estate.
Keep all vouchers or original records for inspection by the
If you elect alternate valuation, do not deduct the amount
by which you reduced the value of an item to include it in the
gross estate.
IRS.
Allowable death taxes. If you elect to take a deduction for
foreign death taxes under section 2053(d) rather than a credit
under section 2014, the deduction is subject to the limitations
described in section 2053(d) and its regulations.
Do not deduct losses claimed as a deduction on a federal
income tax return or depreciation in the value of securities or
other property.
Mortgages and Liens
Expenses Incurred in Administering Property
Not Subject to Claims
You may deduct expenses incurred in administering property
that is included in the gross estate but that is not subject to
claims. Only deduct these expenses if they were paid before
the section 6501 period of limitations for assessment expired.
Under Mortgages and Liens, list only obligations secured by
mortgages or other liens on property included in the gross
estate at its full value or at a value that was undiminished by
the amount of the mortgage or lien. If the debt is enforceable
against other property of the estate not subject to the
mortgage or lien, or if the decedent was personally liable for
the debt, include the full value of the property subject to the
mortgage or lien in the gross estate under the appropriate
schedule and deduct the mortgage or lien on the property on
this schedule.
The expenses deductible on this schedule are usually
expenses incurred in the administration of a trust established
by the decedent before death. They may also be incurred in
the collection of other assets or the transfer or clearance of
-37-
Instructions for Form 706 (Rev. 09-2023)
title to other property included in the decedent's gross estate
for estate tax purposes, but not included in the decedent's
probate estate.
The expenses deductible on this schedule are limited to
those that are the result of settling the decedent's interest in
the property or of vesting good title to the property in the
beneficiaries. Expenses incurred on behalf of the transferees
(except those described earlier) are not deductible.
Examples of deductible and nondeductible expenses are
provided in Regulations section 20.2053-8(d).
List the names and addresses of the persons to whom
each expense was payable and the nature of the expense.
Identify the property for which the expense was incurred by
indicating the schedule and item number where the property
is included in the gross estate. If you do not know the exact
amount of the expense, you may deduct an estimate,
provided that the amount may be verified with reasonable
certainty and will be paid before the period of limitations for
assessment (referred to earlier) expires. Keep all vouchers
and receipts for inspection by the IRS.
included in the gross estate. However, do not list any
nondeductible terminable interests (described later) on
Schedule M unless you are making a QTIP election. The
property for which you make this election must be included
on Schedule M. See Qualified terminable interest property,
later.
For the rules on common disaster and survival for a limited
period, see section 2056(b)(3).
You may list on Schedule M only those interests that the
surviving spouse takes:
1. As the decedent's legatee, devisee, heir, or donee;
2. As the decedent's surviving tenant by the entirety or joint
tenant;
3. As an appointee under the decedent's exercise of a
power or as a taker in default at the decedent's
nonexercise of a power;
4. As a beneficiary of insurance on the decedent's life;
5. As the surviving spouse taking under dower or curtesy
(or similar statutory interest); and
Schedule M—Bequests, etc., to
Surviving Spouse (Marital Deduction)
If any assets to which the special rule of Regulations
6. As a transferee of a transfer made by the decedent at
any time.
section 20.2010-2(a)(7)(ii) applies are reported on
!
Property Interests That You May Not List on
Schedule M
Do not list the following on Schedule M.
CAUTION
this schedule, do not enter any value in the last three
columns. See the instructions for Part 5—Recapitulation, item
23, for information on how to estimate and report the value of
these assets.
1. The value of any property that does not pass from the
decedent to the surviving spouse.
General
2. Property interests that are not included in the decedent's
gross estate.
You must complete Schedule M and file it with the return if
you claim a deduction on item 21 of Part 5—Recapitulation.
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.
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).
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.
Note. The marital deduction is generally not allowed if the
surviving spouse is not a U.S. citizen. The marital deduction
is allowed for property passing to such a surviving spouse in
a QDOT or if such property is transferred or irrevocably
assigned to such a trust before the estate tax return is filed.
The executor must elect QDOT status on the return. See the
instructions that follow for details on the election.
5. Nondeductible terminable interests (described later).
6. Any property interest disclaimed by the surviving
spouse.
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
Terminable Interests
Certain interests in property passing from a decedent to a
surviving spouse are referred to as terminable interests.
Example—Listing Property Interests on Schedule M
Item
number
Description of property interests passing to surviving spouse.
For securities, give CUSIP number. If trust, partnership, or closely held entity, give EIN.
Amount
All other property:
B1
B2
B3
One-half the value of a house and lot, 256 South West Street, held by decedent and surviving spouse as joint tenants
with right of survivorship under deed dated July 15, 1975 (Schedule E, Part 1, item 1)
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
$182,500
Proceeds of Metropolitan Life Insurance Company Policy No. 104729, payable in one sum to surviving spouse
(Schedule D, item 3)
Cash bequest under Paragraph Six of will
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
200,000
100,000
-38-
Instructions for Form 706 (Rev. 09-2023)
These are interests that will terminate or fail after the passage
of time, or on the occurrence or nonoccurrence of a
designated event. Examples are life estates, annuities,
estates for terms of years, and patents.
otherwise satisfied out of any of a group of assets are a
bequest of the residue of the decedent's estate, or of a share
of the residue, and a cash legacy payable out of the general
estate.
Example. A decedent bequeathed $100,000 to the
surviving spouse. The general estate includes a term for
years (valued at $10,000 in determining the value of the
gross estate) in an office building, which interest was retained
by the decedent under a deed of the building by gift to the
decedent’s child. Accordingly, the value of the specific
bequest entered on Schedule M is $90,000.
Life estate with power of appointment in the surviving
spouse. A property interest, whether or not in trust, will be
treated as passing to the surviving spouse, and will not be
treated as a nondeductible terminable interest if the following
five conditions apply.
The ownership of a bond, note, or other contractual
obligation, which when discharged would not have the effect
of an annuity for life or for a term, is not considered a
terminable interest.
Nondeductible terminable interests. Unless you are
making a QTIP election, do not enter a terminable interest on
Schedule M if:
1. Another interest in the same property passed from the
decedent to some other person for less than adequate
and full consideration in money or money's worth; and
2. By reason of its passing, the other person or that
person's heirs may enjoy part of the property after the
termination of the surviving spouse's interest.
1. The surviving spouse is entitled for life to all of the
income from the entire 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.
2. The income is payable annually or at more frequent
intervals.
3. The surviving spouse has the power, exercisable in favor
of the surviving spouse or the estate of the surviving
spouse, to appoint the entire interest.
Property interests that are considered to pass to a person
other than the surviving spouse are any property interest that
(a) passes under a decedent's will or intestacy; (b) was
transferred by a decedent during life; or (c) is held by or
passed on to any person as a decedent's joint tenant, as
appointee under a decedent's exercise of a power, as taker in
default at a decedent's release or nonexercise of a power, or
as a beneficiary of insurance on the decedent's life. See
Regulations section 20.2056(c)-3.
For example, a spouse was devised real property for life,
from the decedent, with remainder to the children. The life
interest that passed to the spouse does not qualify for the
marital deduction because it will terminate at the spouse’s
death and the children will thereafter possess or enjoy the
property.
However, if the decedent purchased a joint and survivor
annuity for themselves and the spouse who survived them,
the value of the survivor's annuity, to the extent that it is
included in the gross estate, qualifies for the marital
deduction because even though the interest will terminate on
the spouse’s death, no one else will possess or enjoy any
part of the property.
4. The power is exercisable by the surviving spouse alone
and (whether exercisable by will or during life) is
exercisable by the surviving spouse in all events.
5. No part of the entire interest is subject to a power in any
other person to appoint any part to any person other than
the surviving spouse (or the surviving spouse's legal
representative or relative if the surviving spouse is
disabled; see Regulations section 20.2056(b)-5(a) and
Rev. Rul. 85-35, 1985-1 C.B. 328).
If these five conditions are satisfied only for a specific
portion of the entire interest, see Regulations sections
20.2056(b)-5(b) and -5(c) to determine the amount of the
marital deduction.
Life insurance, endowment, or annuity payments, with
power of appointment in surviving spouse. A property
interest consisting of the entire proceeds under a life
insurance, endowment, or annuity contract is treated as
passing from the decedent to the surviving spouse, and will
not be treated as a nondeductible terminable interest if the
following five conditions apply.
1. The surviving spouse is entitled to receive the proceeds
in installments, or is entitled to interest on them, with all
amounts payable during the life of the spouse, payable
only to the surviving spouse.
The marital deduction is not allowed for an interest that the
decedent directed the executor or a trustee to convert, after
death, into a terminable interest for the surviving spouse. The
marital deduction is not allowed for such an interest even if
there was no interest in the property passing to another
person and even if the terminable interest would otherwise
have been deductible under the exceptions described later
for life estates, life insurance, and annuity payments with
powers of appointment. For more information, see
2. The installment or interest payments are payable
annually, or more frequently, beginning not later than 13
months after the decedent's death.
3. The surviving spouse has the power, exercisable in favor
of the surviving spouse or of the estate of the surviving
spouse, to appoint all amounts payable under the
contract.
Regulations section 20.2056(b)-1(f); and Regulations section
20.2056(b)-1(g), Example (7).
If any property interest passing from the decedent to the
surviving spouse may be paid or otherwise satisfied out of
any of a group of assets, the value of the property interest is,
for the entry on Schedule M, reduced by the value of any
asset or assets that, if passing from the decedent to the
surviving spouse, would be nondeductible terminable
interests. Examples of property interests that may be paid or
4. The power of appointment is exercisable by the surviving
spouse alone and (whether exercisable by will or during
life) is exercisable by the surviving spouse in all events.
5. No part of the amount payable under the contract is
subject to a power in any other person to appoint any
part to any person other than the surviving spouse.
-39-
Instructions for Form 706 (Rev. 09-2023)
If these five conditions are satisfied only for a specific
portion of the proceeds, see Regulations section
20.2056(b)-6(b) to determine the amount of the marital
deduction.
Charitable remainder trusts. An interest in a charitable
remainder trust will not be treated as a nondeductible
terminable interest if:
that the elective part will reflect its proportionate share of the
increase or decline in the whole of the property when
applying section 2044 or 2519. Thus, if the interest of the
surviving spouse in a trust (or other property in which the
spouse has a qualified life estate) is qualified terminable
interest property, you may make an election for a part of the
trust (or other property) only if the election relates to a
defined fraction or percentage of the entire trust (or other
property). The fraction or percentage may be defined by
means of a formula.
1. The interest in the trust passes from the decedent to the
surviving spouse, and
Election to deduct qualified terminable interest proper-
ty 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
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.
1. The trust or other property is listed on Schedule M, and
2. The value of the trust (or other property) is entered in
whole or in part as a deduction on Schedule M,
Election To Deduct Qualified Terminable Interest
Property (QTIP)
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).
You may elect to claim a marital deduction for qualified
terminable interest property or property interests. You make
the QTIP election simply by listing the qualified terminable
interest property on Part A of Schedule M and inserting its
value. You are presumed to have made the QTIP election if
you list the property and insert its value on Schedule M. If you
make this election, the surviving spouse's gross estate will
include the value of the qualified terminable interest property.
See the instructions for Part 4—General Information, line 7,
for more details. The election is irrevocable.
If you file a Form 706 in which you do not make this
election, you may not file an amended return to make the
election unless you file the amended return on or before the
due date for filing the original Form 706.
Qualified Domestic Trust (QDOT) Election
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.
The marital deduction is allowed for transfers to a surviving
spouse who is not a U.S. citizen only if the property passes to
the surviving spouse in a QDOT or if such property is
transferred or irrevocably assigned to a QDOT before the
decedent's estate tax return is filed.
A QDOT is any trust:
1. That requires at least one trustee to be either a citizen of
the United States or a domestic corporation,
Qualified terminable interest property. Qualified
terminable interest property is property (a) that passes from
the decedent, (b) in which the surviving spouse has a
qualifying income interest for life, and (c) for which election
under section 2056(b)(7) has been made.
The surviving spouse has a qualifying income interest for
life if the surviving spouse is entitled to all of the income from
the property payable annually or at more frequent intervals, or
has a usufruct interest for life in the property, and during the
surviving spouse's lifetime no person has a power to appoint
any part of the property to any person other than the
surviving spouse. An annuity is treated as an income interest
regardless of whether the property from which the annuity is
payable can be separately identified.
Regulations sections 20.2044-1 and 20.2056(b)-7(d)(3)
state that an interest in property is eligible for QTIP treatment
if the income interest is contingent upon the executor's
election even if that portion of the property for which no
election is made will pass to or for the benefit of beneficiaries
other than the surviving spouse.
The QTIP election may be made for all or any part of
qualified terminable interest property. A partial election must
relate to a fractional or percentile share of the property so
2. That requires that no distribution of corpus from the trust
can be made unless such a trustee has the right to
withhold from the distribution the tax imposed on the
QDOT,
3. That meets the requirements of any applicable
regulations, and
4. For which the executor has made an election on the
estate tax return of the decedent.
Note. For trusts created by an instrument executed before
November 5, 1990, items 1 and 2 above will be treated as
met if the trust instrument requires that all trustees be
individuals who are citizens of the United States or domestic
corporations.
You make the QDOT election simply by listing the qualified
domestic trust or the entire value of the trust property on
Schedule M and deducting its value. You are presumed to
have made the QDOT election if you list the trust or trust
property and insert its value on Schedule M. Once made,
the election is irrevocable.
-40-
Instructions for Form 706 (Rev. 09-2023)
If an election is made to deduct qualified domestic trust
property under section 2056A(d), provide the following
information for each qualified domestic trust on an
attachment to this schedule.
describe each item in detail. Describe the instrument
(including any clause or paragraph number) or provision of
law under which each item passed to the surviving spouse.
Indicate the schedule and item number of each asset.
1. The name and address of every trustee.
In listing otherwise nondeductible property for which you
are making a QTIP election, unless you specifically identify a
fractional portion of the trust or other property as not subject
to the election, the election will be considered made for the
entire interest.
2. A description of each transfer passing from the decedent
that is the source of the property to be placed in trust.
3. The EIN for the trust.
The election must be made for an entire QDOT trust. In
listing a trust for which you are making a QDOT election,
unless you specifically identify the trust as not subject
to the election, the election will be considered made for
the entire trust.
Enter the value of each interest before taking into account
the federal estate tax or any other death tax. The valuation
dates used in determining the value of the gross estate also
apply on Schedule M.
The determination of whether a trust qualifies as a QDOT
will be made as of the date the decedent's Form 706 is filed.
If, however, judicial proceedings are brought before the Form
706's due date (including extensions) to have the trust
revised to meet the QDOT requirements, then the
determination will not be made until the court-ordered
changes to the trust are made.
Election to deduct qualified domestic trust property un-
der section 2056A. If a trust meets the requirement of a
QDOT under section 2056A(a), the return is filed no later
than 1 year after the time prescribed by law (including
extensions), and the entire value of the trust or trust property
is listed and entered as a deduction on Schedule M, then
unless the executor specifically identifies the trust to be
excluded from the election, the executor shall be deemed to
have made an election to have the entire trust treated as
qualified domestic trust property.
If Schedule M includes a bequest of the residue or a part
of the residue of the decedent's estate, attach a copy of the
computation showing how the value of the residue was
determined. Include a statement showing the following.
The value of all property that is included in the
decedent's gross estate (Schedules A through I) but is
not a part of the decedent's probate estate, such as
lifetime transfers, jointly owned property that passed to
the survivor on the decedent's death, and the insurance
payable to specific beneficiaries.
•
The values of all specific and general legacies or
devises, with reference to the applicable clause or
paragraph of the decedent's will or codicil. (If legacies
are made to each member of a class, for example,
$1,000 to each of the decedent's employees, only the
number in each class and the total value of property
received by them need be furnished.)
•
The dates of birth of all persons, the length of whose
lives may affect the value of the residuary interest
passing to the surviving spouse.
•
•
Note. For trusts with assets in excess of $2 million, see
Regulations section 20.2056A-2(d) for additional
requirements to ensure collection of the section 2056A estate
tax.
Any other important information such as that relating to
any claim to any part of the estate not arising under the
will.
Line 1
Lines 5a, 5b, and 5c. The total of the values listed on
Schedule M must be reduced by the amount of the federal
estate tax, the federal GST tax, and the amount of state or
other death and GST taxes paid out of the property interest
involved. If you enter an amount for state or other death or
GST taxes on line 5b or 5c, identify the taxes and attach your
computation of them.
Attachments. If you list property interests passing by the
decedent's will on Schedule M, attach a certified copy of the
order admitting the will to probate. If, when you file the return,
the court of probate jurisdiction has entered any decree
interpreting the will or any of its provisions affecting any of the
interests listed on Schedule M, or has entered any order of
distribution, attach a copy of the decree or order. In addition,
the IRS may request other evidence to support the marital
deduction claimed.
If property passes to the surviving spouse as the result of a
qualified disclaimer, check “Yes” and attach a copy of the
written disclaimer required by section 2518(b).
Line 3
Section 2056(b)(7)(C)(ii) creates an automatic QTIP election
for certain joint and survivor annuities that are includible in
the estate under section 2039. To qualify, only the surviving
spouse can have the right to receive payments before the
death of the surviving spouse.
The executor can elect out of QTIP treatment, however, by
checking the “Yes” box on line 3. Once made, the election
is irrevocable. If there is more than one such joint and
survivor annuity, you are not required to make the election for
all of them.
If you make the election out of QTIP treatment by checking
“Yes” on line 3, you cannot deduct the amount of the annuity
on Schedule M. If you do not elect out, you must list the joint
and survivor annuities on Schedule M.
Schedule O—Charitable, Public, and
Similar Gifts and Bequests
If any assets to which the special rule of Regulations
Listing Property Interests on Schedule M
section 20.2010-2(a)(7)(ii) applies are reported on
!
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
CAUTION
this schedule, do not enter any value in the last three
columns. See the instructions for Part 5—Recapitulation, item
23, for information on how to estimate and report the value of
these assets.
-41-
Instructions for Form 706 (Rev. 09-2023)
in part out of any bequest, legacy, or devise that would
otherwise be allowed as a charitable deduction, the amount
you may deduct is the amount of the bequest, legacy, or
devise reduced by the total amount of the taxes.
General
You must complete Schedule O and file it with the return if
you claim a deduction on item 22 of Part 5—Recapitulation.
You can claim the charitable deduction allowed under
section 2055 for the value of property in the decedent's gross
estate that was transferred by the decedent during life or by
will to or for the use of any of the following.
If you elected to make installment payments of the estate
tax, and the interest is payable out of property transferred to
charity, you must reduce the charitable deduction by an
estimate of the maximum amount of interest that will be paid
on the deferred tax.
The United States, a state, a political subdivision of a
state, or the District of Columbia, for exclusively public
purposes.
•
For split-interest trusts or pooled income funds, only the
figure that is passing to the charity should be entered in the
“Amount” column. Do not enter the entire amount that passes
to the trust or fund.
Any corporation or association organized and operated
exclusively for religious, charitable, scientific, literary, or
educational purposes, including the encouragement of
art, or to foster national or international amateur sports
competition (but only if none of its activities involve
providing athletic facilities or equipment, unless the
organization is a qualified amateur sports organization)
and the prevention of cruelty to children and animals. No
part of the net earnings may benefit any private individual
and no substantial activity may be undertaken to carry on
propaganda, or otherwise attempt to influence legislation
or participate in any political campaign on behalf of any
candidate for public office.
•
If you are deducting the value of the residue or a part of
the residue passing to charity under the decedent's will,
attach a copy of the computation showing how you
determined the value, including any reduction for the taxes
described earlier.
Also include the following.
A statement that shows the values of all specific and
general legacies or devises for both charitable and
noncharitable uses. For each legacy or devise, indicate
the paragraph or section of the decedent's will or codicil
that applies. If legacies are made to each member of a
class (for example, $1,000 to each of the decedent's
employees), show only the number of each class and the
total value of property they received.
•
A trustee or a fraternal society, order, or association
operating under the lodge system, if the transferred
property is to be used exclusively for religious, charitable,
scientific, literary, or educational purposes, or for the
prevention of cruelty to children or animals. No
substantial activity may be undertaken to carry on
propaganda or otherwise attempt to influence legislation,
or participate in any political campaign on behalf of any
candidate for public office.
•
The dates of birth of all life tenants or annuitants, the
length of whose lives may affect the value of the interest
passing to charity under the decedent's will.
•
•
A statement showing the value of all property that is
included in the decedent's gross estate but does not
pass under the will, such as transfers, jointly owned
property that passed to the survivor on the decedent's
death, and insurance payable to specific beneficiaries.
Any agreements with charitable beneficiaries, whether
entered before or after the date of death of the decedent.
Verification of the sale or purchase of property that is the
subject of a charitable deduction.
Any veterans organization incorporated by an Act of
Congress or any of its departments, local chapters, or
posts, for which none of the net earnings benefits any
private individual.
•
•
Employee stock ownership plans, if the transfer qualifies
as a qualified gratuitous transfer of qualified employer
securities within the meaning provided in section 664(g).
•
•
•
For this purpose, certain Indian tribal governments are
Any other important information such as that relating to
any claim, not arising under the will, to any part of the
estate (that is, a spouse claiming dower or curtesy, or
similar rights).
treated as states and transfers to them qualify as deductible
charitable contributions. See section 7871 and Rev. Proc.
2008-55, 2008-39 I.R.B. 768, available at Rev. Proc.
2008-55, as modified and supplemented by subsequent
revenue procedures, for a list of qualifying Indian tribal
governments.
Line 2. Qualified Disclaimer
The charitable deduction is allowed for amounts that are
transferred to charitable organizations as a result of a
qualified disclaimer. To be a qualified disclaimer, a refusal to
accept an interest in property must meet the conditions of
section 2518. These are explained in Regulations sections
25.2518-1 through 25.2518-3. If property passes to a
charitable beneficiary as the result of a qualified disclaimer,
check the “Yes” box on line 2 and attach a copy of the written
disclaimer required by section 2518(b).
You may also claim a charitable contribution deduction for
a qualifying conservation easement granted after the
decedent's death under the provisions of section 2031(c)(9).
The charitable deduction is allowed for amounts that are
transferred to charitable organizations as a result of either a
qualified disclaimer (see Line 2. Qualified Disclaimer, later) or
the complete termination of a power to consume, invade, or
appropriate property for the benefit of an individual. It does
not matter whether termination occurs because of the death
of the individual or in any other way. The termination must
occur within the period of time (including extensions) for filing
the decedent's estate tax return and before the power has
been exercised.
The deduction is limited to the amount actually available
for charitable uses. Therefore, if under the terms of a will or
the provisions of local law, or for any other reason, the federal
estate tax, the federal GST tax, or any other estate, GST,
succession, legacy, or inheritance tax is payable in whole or
Attachments
If the charitable transfer was made by will, attach a certified
copy of the order admitting the will to probate, in addition to
the copy of the will. If the charitable transfer was made by any
other written instrument, attach a copy. If the instrument is of
record, the copy should be certified; if not, the copy should
be verified.
-42-
Instructions for Form 706 (Rev. 09-2023)
Value
Limitation Period
The valuation dates used in determining the value of the
gross estate also apply on Schedule O.
The credit for foreign death taxes is limited to those taxes that
were actually paid and for which a credit was claimed within
the later of 4 years after the filing of the estate tax return,
before the date of expiration of any extension of time for
payment of the federal estate tax, or 60 days after a final
decision of the Tax Court on a timely filed petition for a
redetermination of a deficiency.
Schedule P—Credit for Foreign Death
Taxes
General
Credit Under the Statute
If you claim a credit on Part 2—Tax Computation, line 13,
complete Schedule P and file it with the return. Attach
Form(s) 706-CE to Form 706 to support any credit you claim.
For the credit allowed by the statute, the question of whether
particular property is situated in the foreign country imposing
the tax is determined by the same principles that would apply
in determining whether similar property of a nonresident not a
U.S. citizen is situated within the United States for purposes
of the federal estate tax. See the Instructions for Form
706-NA.
If the foreign government refuses to certify Form 706-CE,
file it directly with the IRS as instructed on the Form 706-CE.
See Form 706-CE for instructions on how to complete the
form and a description of the items that must be attached to
the form when the foreign government refuses to certify it.
Computation of Credit Under the Statute
The credit for foreign death taxes is allowable only if the
decedent was a citizen or resident of the United States.
However, see section 2053(d) and the related regulations for
exceptions and limitations if the executor has elected, in
certain cases, to deduct these taxes from the value of the
gross estate. For a resident not a citizen, who was a citizen or
subject of a foreign country for which the President has
issued a proclamation under section 2014(h), the credit is
allowable only if the country of which the decedent was a
national allows a similar credit to decedents who were U.S.
citizens residing in that country.
Item 1. Enter the amount of the estate, inheritance, legacy,
and succession taxes paid to the foreign country and its
possessions or political subdivisions, attributable to property
that is:
Situated in that country,
•
•
•
Subjected to these taxes, and
Included in the gross estate.
The amount entered on item 1 should not include any tax
paid to the foreign country for property not situated in that
country and should not include any tax paid to the foreign
country for property not included in the gross estate. If only a
part of the property subjected to foreign taxes is both situated
in the foreign country and included in the gross estate, it will
be necessary to determine the portion of the taxes
The credit is authorized either by statute or by treaty. If a
credit is authorized by a treaty, whichever of the following is
the most beneficial to the estate is allowed.
The credit figured under the treaty.
•
•
•
The credit figured under the statute.
attributable to that part of the property. Also, attach the
computation of the amount entered on item 1.
Item 2. Enter the value of the gross estate, less the total of
the deductions on items 21 and 22 of Part 5—Recapitulation.
Item 3. Enter the value of the property situated in the foreign
country that is subjected to the foreign taxes and included in
the gross estate, less those portions of the deductions taken
on Schedules M and O that are attributable to the property.
Item 4. Subtract any credit claimed on line 15 for federal gift
taxes on pre-1977 gifts (section 2012) from line 12 of Part
2—Tax Computation, and enter the balance on item 4 of
Schedule P.
The credit figured under the treaty, plus the credit figured
under the statute for death taxes paid to each political
subdivision or possession of the treaty country that are
not directly or indirectly creditable under the treaty.
Under the statute, the credit is authorized for all death
taxes (national and local) imposed in the foreign country.
Whether local taxes are the basis for a credit under a treaty
depends upon the provisions of the particular treaty.
If a credit for death taxes paid in more than one foreign
country is allowable, a separate computation of the credit
must be made for each foreign country. The copies of
Schedule P on which the additional computations are made
should be attached to the copy of Schedule P provided in the
return.
Credit Under Treaties
If you are reporting any items on this return based on the
provisions of a death tax treaty, you may have to attach a
statement to this return disclosing the return position that is
treaty based. See Regulations section 301.6114-1 for details.
The total credit allowable for any property, whether
subjected to tax by one or more than one foreign country, is
limited to the amount of the federal estate tax attributable to
the property. The anticipated amount of the credit may be
figured on the return, but the credit cannot finally be allowed
until the foreign tax has been paid and a Form 706-CE
evidencing payment is filed. Section 2014(g) provides that for
credits for foreign death taxes, each U.S. possession is
deemed a foreign country.
In general. If the provisions of a treaty apply to the estate of
a U.S. citizen or resident, a credit is authorized for payment of
the foreign death tax or taxes specified in the treaty. Treaties
with death tax conventions are in effect with the following
countries: Australia, Austria, Canada, Denmark, Finland,
France, Germany, Greece, Ireland, Italy, Japan, the
Netherlands, South Africa, Switzerland, and the United
Kingdom.
Convert death taxes paid to the foreign country into U.S.
dollars by using the rate of exchange in effect at the time
each payment of foreign tax is made.
If a credit is claimed for any foreign death tax that is later
recovered, see Regulations section 20.2016-1 for the notice
required within 30 days.
-43-
Instructions for Form 706 (Rev. 09-2023)
A credit claimed under a treaty is in general figured on
Schedule P in the same manner as the credit is figured under
the statute with the following principal exceptions.
Property
The term “property” includes any interest (legal or equitable)
of which the transferee received the beneficial ownership.
The transferee is considered the beneficial owner of property
over which the transferee received a general power of
appointment. Property does not include interests to which the
transferee received only a bare legal title, such as that of a
trustee. Neither does it include an interest in property over
which the transferee received a power of appointment that is
not a general power of appointment. In addition to interests in
which the transferee received the complete ownership, the
credit may be allowed for annuities, life estates, terms for
years, remainder interests (whether contingent or vested),
and any other interest that is less than the complete
The situs rules contained in the treaty apply in
determining whether property was situated in the foreign
country.
•
The credit may be allowed only for payment of the death
tax or taxes specified in the treaty (but see the
instructions earlier for credit under the statute for death
taxes paid to each political subdivision or possession of
the treaty country that are not directly or indirectly
creditable under the treaty).
•
If specifically provided, the credit is proportionately
shared for the tax applicable to property situated outside
both countries, or that was deemed in some instances
situated within both countries.
•
•
ownership of the property, to the extent that the transferee
became the beneficial owner of the interest.
The amount entered on item 4 of Schedule P is the
amount shown on line 12 of Part 2—Tax Computation,
less the total of the credits claimed for federal gift taxes
on pre-1977 gifts (section 2012) and for tax on prior
transfers (line 14 of Part 2—Tax Computation). (If a credit
is claimed for tax on prior transfers, it will be necessary to
complete Schedule Q before completing Schedule P.)
For examples of computations of credits under the
treaties, see the applicable regulations.
Maximum Amount of the Credit
The maximum amount of the credit is the smaller of:
1. The amount of the estate tax of the transferor's estate
attributable to the transferred property, or
2. The amount by which:
a. An estate tax on the transferee's estate determined
without the credit for tax on prior transfers exceeds
Note. For computation of credit, in cases where property is
situated outside both countries or deemed situated within
both countries, see the appropriate treaty for details.
b. An estate tax on the transferee's estate determined
by excluding from the gross estate the net value of
the transfer.
If credit for a particular foreign death tax may be taken under
either the statute or a death duty convention, and on this
return the credit actually is taken under the convention, then
no credit for that foreign death tax may be taken into
consideration in figuring estate tax (2a) or estate tax (2b)
above.
Schedule Q—Credit for Tax on Prior
Transfers
General
Complete Schedule Q and file it with the return if you claim a
credit on Part 2—Tax Computation, line 14.
Percent Allowable
The term “transferee” means the decedent for whose
estate this return is filed. If the transferee received property
from a transferor who died within 10 years before, or 2 years
after, the transferee, a credit is allowable on this return for all
or part of the federal estate tax paid by the transferor's estate
for the transfer. There is no requirement that the property be
identified in the estate of the transferee or that it exist on the
date of the transferee's death. It is sufficient for the allowance
of the credit that the transfer of the property was subjected to
federal estate tax in the estate of the transferor and that the
specified period of time has not elapsed. A credit may be
allowed for property received as the result of the exercise or
nonexercise of a power of appointment when the property is
included in the gross estate of the donee of the power.
If the transferee was the transferor's surviving spouse, no
credit is allowed for property received from the transferor to
the extent that a marital deduction was allowed to the
transferor's estate for the property. There is no credit for tax
on prior transfers for federal gift taxes paid in connection with
the transfer of the property to the transferee.
Where transferee predeceased the transferor. If not
more than 2 years elapsed between the dates of death, the
credit allowed is 100% of the maximum amount. If more than
2 years elapsed between the dates of death, no credit is
allowed.
Where transferor predeceased the transferee. The
percent of the maximum amount that is allowed as a credit
depends on the number of years that elapsed between dates
of death. It is determined using the following table.
Period of Time
Exceeding
Percent
Allowable
Not Exceeding
- - - - -
2 years
4 years
6 years
8 years
10 years
2 years
4 years
6 years
8 years
10 years
- - - - -
100
80
60
40
20
none
If you are claiming a credit for tax on prior transfers on
Form 706-NA, you should first complete and attach Part
5—Recapitulation from Form 706 before figuring the credit on
Schedule Q from Form 706.
Section 2056(d)(3) contains specific rules for allowing a
credit for certain transfers to a spouse who was not a U.S.
citizen where the property passed outright to the spouse, or
to a qualified domestic trust.
How To Figure the Credit
A worksheet for Schedule Q is provided to allow you to figure
the limits before completing Schedule Q. Transfer the
appropriate amounts from the worksheet to Schedule Q as
indicated on the schedule. You do not need to file the
worksheet with Form 706, but keep it for your records.
-44-
Instructions for Form 706 (Rev. 09-2023)
If the transferor's estate elected to pay the federal estate
tax in installments, enter on line 10 only the total of the
installments that have actually been paid at the time you file
this Form 706. See Rev. Rul. 83-15, 1983-1 C.B. 224, for
more details.
Line 21. Add lines 11 (allowable applicable credit) and 13
(foreign death taxes credit) of Part 2—Tax Computation to the
amount of any credit taken (on line 15) for federal gift taxes
on pre-1977 gifts (section 2012). Subtract this total from Part
2—Tax Computation, line 8. Enter the result on line 21 of the
worksheet.
Line 26. If you figured the marital deduction using the
unlimited marital deduction in effect for decedents dying after
1981, for purposes of determining the marital deduction for
the reduced gross estate, see Rev. Rul. 90-2, 1990-1 C.B.
169. To determine the “reduced adjusted gross estate,”
subtract the amount on line 25 of the Worksheet for
Schedule Q from the amount on line 24 of the worksheet. If
community property is included in the amount on line 24 of
the worksheet, figure the reduced adjusted gross estate
using the rules of Regulations section 20.2056(c)-2 and Rev.
Rul. 76-311, 1976-2 C.B. 261.
Cases involving transfers from two or more transferors.
Part I of the worksheet and Schedule Q enable you to figure
the credit for as many as three transferors. The number of
transferors is irrelevant to Part II of the worksheet. If you are
figuring the credit for more than three transferors, use more
than one worksheet and Schedule Q, Part I, and combine the
totals for the appropriate lines.
Section 2032A additional tax. If the transferor's estate
elected special-use valuation and the additional estate tax of
section 2032A(c) was imposed at any time up to 2 years after
the death of the decedent for whom you are filing this return,
check the box on Schedule Q. On lines 1 and 9 of the
worksheet, include the property subject to the additional
estate tax at its FMV rather than its special-use value. On
line 10 of the worksheet, include the additional estate tax
paid as a federal estate tax paid.
How To Complete the Schedule Q Worksheet
Most of the information to complete Part I of the worksheet
should be obtained from the transferor's Form 706.
Line 5. Enter on line 5 the applicable marital deduction
claimed for the transferor's estate (from the transferor's Form
706).
Lines 10 through 18. Enter on these lines the appropriate
taxes paid by the transferor's estate.
-45-
Instructions for Form 706 (Rev. 09-2023)
Worksheet for Schedule Q—Credit for Tax on Prior Transfers
Part I
Transferor’s tax on prior transfers
Total for all transfers
Transferor (From Schedule Q)
B
(line 8 only)
Item
A
C
1.
2.
3.
4.
5.
Gross value of prior transfer to this transferee . . . . . . . . . . . . .
Death taxes payable from prior transfer . . . . . . . . . . . . . . . . .
Encumbrances allocable to prior transfer . . . . . . . . . . . . . . . .
Obligations allocable to prior transfer . . . . . . . . . . . . . . . . . .
Marital deduction applicable to line 1 above, as shown on transferor’s
Form 706 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.
7.
8.
9.
TOTAL. Add lines 2, 3, 4, and 5 . . . . . . . . . . . . . . . . . . . . .
Net value of transfers. Subtract line 6 from line 1 . . . . . . . . . .
Net value of transfers. Add columns A, B, and C of line 7 . . . . . .
Transferor’s tentative taxable estate (see line 3a, page 1, Form
706) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10.
Federal estate tax paid . . . . . . . . . . . . . . . . . . . . . . . . . .
State death taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign death taxes paid . . . . . . . . . . . . . . . . . . . . . . . . .
Other death taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL taxes paid. Add lines 10, 11, 12, and 13 . . . . . . . . . . .
Value of transferor’s estate. Subtract line 14 from line 9 . . . . . .
Net federal estate tax paid on transferor’s estate . . . . . . . . . . . .
11.
12.
13.
14.
15.
16.
17.
Credit for gift tax paid on transferor’s estate with respect to pre-1977
gifts (section 2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18.
Credit allowed transferor’s estate for tax on prior transfers from prior
transferor(s) who died within 10 years before death of
decedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19.
20.
Tax on transferor’s estate. Add lines 16, 17, and 18 . . . . . . . . .
Transferor’s tax on prior transfers ((line 7 ÷ line 15) × line 19 of
respective estates) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part II
Transferee’s tax on prior transfers
Item
Amount
21.
22.
23.
24.
25.
Transferee’s actual tax before allowance of credit for prior transfers (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total gross estate of transferee from line 1 of the Tax Computation, page 1, Form 706 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net value of all transfers from line 8 of this worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transferee’s reduced gross estate. Subtract line 23 from line 22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total debts and deductions (not including marital and charitable deductions) (line 3b of Part 2—Tax
21.
22.
23.
24.
25.
26.
27.
28.
29.
Computation, page 1; and items 18, 19, and 20 of the Recapitulation, page 3, Form 706) . . . . . . . . . .
Marital deduction from item 21, Recapitulation, page 3, Form 706 (see instructions) . . . . . . . . . . . . .
Charitable bequests from item 22, Recapitulation, page 3, Form 706 . . . . . . . . . . . . . . . . . . . . . .
Charitable deduction proportion ([line 23 ÷ (line 22 – line 25)] × line 27) . . . . . . . . . . . . . . . . . . . .
Reduced charitable deduction. Subtract line 28 from line 27 . . . . . . . . . . . . . . . . . . . . . . . . . . .
26.
27.
28.
29.
30.
Transferee’s deduction as adjusted. Add lines 25, 26, and 29 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
30.
31. (a) Transferee’s reduced taxable estate. Subtract line 30 from line 24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b) Adjusted taxable gifts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(c) Total reduced taxable estate. Add lines 31(a) and 31(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
31(a).
31(b).
31(c).
32.
Tentative tax on reduced taxable estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
32.
33. (a) Post-1976 gift taxes paid . . . . . . . . . . . . . . . . . . . . . . . . .
(b) Unified credit (applicable credit amount) . . . . . . . . . . . . . . . .
(c) Section 2012 gift tax credit . . . . . . . . . . . . . . . . . . . . . . . .
(d) Section 2014 foreign death tax credit . . . . . . . . . . . . . . . . . .
33(a).
33(b).
33(c).
33(d).
(e)
Total credits. Add lines 33(a) through 33(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
33(e).
34.
35.
Net tax on reduced taxable estate. Subtract line 33(e) from line 32 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transferee’s tax on prior transfers. Subtract line 34 from line 21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
34.
35.
-46-
Instructions for Form 706 (Rev. 09-2023)
property transferred on behalf of the decedent during life and
after October 21, 1986). The GST tax will also not apply to
any transfer under a trust to the extent that the trust consists
of property included in the gross estate (other than property
transferred on behalf of the decedent during life and after
October 21, 1986).
Schedules R and
R-1—Generation-Skipping Transfer
Tax
Under a mental disability means the decedent lacked the
competence to execute an instrument governing the
disposition of property owned, regardless of whether there
was an adjudication of incompetence or an appointment of
any other person charged with the care of the person or
property of the transferor.
If the decedent had been adjudged mentally incompetent,
a copy of the judgment or decree must be filed with this
return.
If the decedent had not been adjudged mentally
incompetent, the executor must file with the return a
certification from a qualified physician stating that in the
physician’s opinion the decedent had been mentally
incompetent at all times on and after October 22, 1986, and
that the decedent had not regained the competence to
modify or revoke the terms of the trust or will prior to the
decedent’s death or a statement as to why no such
certification may be obtained from a physician.
Introduction and Overview
Schedule R is used to figure the generation-skipping transfer
(GST) tax that is payable by the estate. Schedule R-1 is used
to figure the GST tax that is payable by certain trusts that are
includible in the gross estate.
The GST tax reported on Form 706 is imposed on only
direct skips occurring at death. Unlike the estate tax, which is
imposed on the value of the entire taxable estate regardless
of who receives it, the GST tax is imposed on only the value
of interests in property, wherever located, that actually pass
to certain transferees, who are referred to as skip persons
(defined later).
For purposes of Form 706, the property interests
transferred must be includible in the gross estate before they
are subject to the GST tax. Therefore, the first step in figuring
the GST tax liability is to determine the property interests
includible in the gross estate by completing Schedules A
through I of Form 706.
Direct skip. The GST tax reported on Form 706 and
Schedule R-1 is imposed only on direct skips. For purposes
of Form 706, a direct skip is a transfer that is:
The second step is to determine who the skip persons are.
To do this, assign each transferee to a generation and
determine whether each transferee is a natural person or a
trust for GST purposes. See section 2613 and Regulations
section 26.2612-1(d) for details.
Subject to the estate tax,
Of an interest in property, and
To a skip person.
•
•
•
All three requirements must be met before the transfer is
The third step is to determine which skip persons are
transferees of interests in property. If the skip person is a
natural person, anything transferred is an interest in property.
If the skip person is a trust, make this determination using the
rules under Interest in property, later. These first three steps
Are Direct Skips, later.
subject to the GST tax. A transfer is subject to the estate tax if
you are required to list it on any of Schedules A through I of
Form 706. To determine if a transfer is of an interest in
property and to a skip person, you must first determine if the
transferee is a natural person or a trust, as defined later.
Trust. For purposes of the GST tax, a trust includes not only
an ordinary trust (as defined in Special rule for trusts other
than ordinary trusts, later), but also any other arrangement
(other than an estate) which, although not explicitly a trust,
has substantially the same effect as a trust. For example, a
trust includes life estates with remainders, terms for years,
and insurance and annuity contracts.
The fourth step is to determine whether to enter the
transfer on Schedule R or on Schedule R-1. See the rules
later.
The fifth step is to complete Schedules R and R-1 using
the How To Complete instructions for each schedule.
Substantially separate and independent shares of different
beneficiaries in a trust are treated as separate trusts.
Determining Which Transfers Are Direct Skips
Interest in property. If a transfer is made to a natural
person, it is always considered a transfer of an interest in
property for purposes of the GST tax.
If a transfer is made to a trust, a person will have an
interest in the property transferred to the trust if that person
either has a present right to receive income or corpus from
the trust (such as an income interest for life) or is a
permissible current recipient of income or corpus from the
trust (that is, may receive income or corpus at the discretion
of the trustee).
Skip person. A transferee who is a natural person is a skip
person if that transferee is assigned to a generation that is
two or more generations below the generation assignment of
the decedent. See Determining the generation of a
transferee, later.
Effective dates. The rules below apply only for the purpose
of determining if a transfer is a direct skip that should be
reported on Schedule R or R-1 of Form 706.
In general. The GST tax is effective for the estates of
decedents dying after October 22, 1986.
Irrevocable trusts. The GST tax will not apply to any
transfer under a trust that was irrevocable on September 25,
1985, but only to the extent that the transfer was not made
out of corpus added to the trust after September 25, 1985.
An addition to the corpus after that date will cause a
proportionate part of future income and appreciation to be
subject to the GST tax. For more information, see
Regulations section 26.2601-1(b)(1).
Mental disability. If, on October 22, 1986, the decedent
was under a mental disability to change the disposition of
property owned and did not regain the competence to
dispose of property before death, the GST tax will not apply
to any property included in the gross estate (other than
A transferee who is a trust is a skip person if all the
interests in the property (as defined above) transferred to the
-47-
Instructions for Form 706 (Rev. 09-2023)
trust are held by skip persons. Thus, whenever a non-skip
person has an interest in a trust, the trust will not be a skip
person even though a skip person also has an interest in the
trust.
A trust will also be a skip person if there are no interests in
the property transferred to the trust held by any person, and
future distributions or terminations from the trust can be
made only to skip persons.
and transfers after December 31, 1997, the existing rule that
applied to grandchildren of the decedent has been extended
to apply to other lineal descendants.
If property is transferred to an individual who is a
descendant of a parent of the transferor, and that individual's
parent (who is a lineal descendant of the parent of the
transferor) is deceased at the time the transfer is subject to
gift or estate tax, then for purposes of generation assignment,
the individual is treated as if the individual is a member of the
generation that is one generation below the lower of:
Non-skip person. A non-skip person is any transferee who
is not a skip person.
The transferor's generation; or
•
Determining the generation of a transferee. Generally, a
The generation assignment of the youngest living
ancestor of the individual, who is also a descendant of
the parent of the transferor.
•
generation is determined along family lines as follows.
1. Where the beneficiary is a lineal descendant of a
grandparent of the decedent (that is, the decedent's
cousin, niece, nephew, etc.), the number of generations
between the decedent and the beneficiary is determined
by subtracting the number of generations between the
grandparent and the decedent from the number of
generations between the grandparent and the
beneficiary.
The same rules apply to the generation assignment of any
descendant of the individual.
This rule does not apply to a transfer to an individual who
is not a lineal descendant of the transferor if the transferor
has any living lineal descendants.
If any transfer of property to a trust would have been a
direct skip except for this generation assignment rule, then
the rule also applies to transfers from the trust attributable to
such property.
2. Where the beneficiary is a lineal descendant of a
grandparent of a spouse (or former spouse) of the
decedent, the number of generations between the
decedent and the beneficiary is determined by
subtracting the number of generations between the
grandparent and the spouse (or former spouse) from the
number of generations between the grandparent and the
beneficiary.
See the examples in Regulations section 26.2651-1(c).
Generation assignment under Notice 2017-15. Notice
2017-15 permits taxpayers to reduce their GST exemption
allocated to transfers that were made to or for the benefit of
transferees whose generation assignment is changed as a
result of the Windsor decision. A taxpayer’s GST exemption
that was allocated to a transfer to (or to a trust for the sole
benefit of) one or more transferees whose generation
assignment should have been determined on the basis of a
familial relationship as the result of the Windsor decision, and
are non-skip persons, is deemed void. For additional
information, go to IRS.gov/Businesses/Small-Businesses-
Ninety-day rule. For purposes of determining if an
individual's parent is deceased at the time of a testamentary
transfer, an individual's parent who dies no later than 90 days
after a transfer occurring by reason of the death of the
transferor is treated as having predeceased the transferor.
The 90-day rule applies to transfers occurring on or after July
18, 2005. See Regulations section 26.2651-1 for more
information.
Charitable organizations. Charitable organizations and
trusts described in sections 511(a)(2) and 511(b)(2) are
assigned to the decedent's generation. Transfers to such
organizations are therefore not subject to the GST tax.
Charitable remainder trusts. Transfers to or in the form
of charitable remainder annuity trusts, charitable remainder
unitrusts, and pooled income funds are not considered made
to skip persons and, therefore, are not direct skips even if all
of the life beneficiaries are skip persons.
Estate tax value. Estate tax value is the value shown on
Schedules A through I of this Form 706.
Examples. The rules above can be illustrated by the
following examples.
3. A person who at any time was married to a person
described in (1) or (2) above is assigned to the
generation of that person. A person who at any time was
married to the decedent is assigned to the decedent's
generation.
4. A relationship by adoption or half-blood is treated as a
relationship by whole-blood.
5. A person who is not assigned to a generation according
to (1), (2), (3), or (4) above is assigned to a generation
based on the birth date, as follows.
a. A person who was born not more than 121/2 years
after the decedent is in the decedent's generation.
b. A person born more than 121/2 years, but not more
than 371/2 years, after the decedent is in the first
generation younger than the decedent.
c. A similar rule applies for a new generation every 25
years.
If more than one of the rules for assigning generations
applies to a transferee, that transferee is generally assigned
to the youngest of the generations that would apply.
If an estate, trust, partnership, corporation, or other entity
(other than certain charitable organizations and trusts
described in sections 511(a)(2) and 511(b)(2)) is a
transferee, then each person who indirectly receives the
property interests through the entity is treated as a transferee
and is assigned to a generation, as explained in the above
rules. However, this look-through rule does not apply for the
purpose of determining whether a transfer to a trust is a direct
skip.
1. Under the will, the decedent's house is transferred to the
decedent's child for the child’s life, with the remainder
passing to the child’s children. This transfer is made to a
“trust” even though there is no explicit trust instrument.
The interest in the property transferred (the present right
to use the house) is transferred to a non-skip person (the
Generation assignment where intervening parent is
deceased. A special rule may apply in the case of the death
of a parent of the transferee. For terminations, distributions,
-48-
Instructions for Form 706 (Rev. 09-2023)
decedent's child). Therefore, the trust is not a skip
person because there is an interest in the transferred
property that is held by a non-skip person. The transfer is
not a direct skip.
declaration whereby trustees take title to property for the
purpose of protecting or conserving it for the beneficiaries
under the ordinary rules applied in chancery or probate
courts.” Direct skips from ordinary trusts are required to be
reported on Schedule R-1 regardless of their size unless the
executor is also a trustee (see Executor as trustee below).
2. The will bequeaths $100,000 to the decedent's
grandchild. This transfer is a direct skip that is not made
in trust and should be shown on Schedule R.
Direct skips from trusts that are trusts for GST tax
purposes but are not ordinary trusts are to be shown on
Schedule R-1 only if the total of all tentative maximum direct
skips from the entity is $250,000 or more. If this total is less
than $250,000, the skips should be shown on Schedule R.
For purposes of the $250,000 limit, tentative maximum direct
skips is the amount you would enter on line 5 of
3. The will establishes a trust that is required to accumulate
income for 10 years and then pay its income to the
decedent's grandchildren for the rest of their lives and,
upon their deaths, distribute the corpus to the decedent's
great-grandchildren. Because the trust has no current
beneficiaries, there are no present interests in the
property transferred to the trust. All of the persons to
whom the trust can make future distributions (including
distributions upon the termination of interests in property
held in trust) are skip persons (for example, the
Schedule R-1 if you were to file that schedule.
A liquidating trust (such as a bankruptcy trust) under
Regulations section 301.7701-4(d) is not treated as an
ordinary trust for the purposes of this special rule.
If the proceeds of a life insurance policy are includible in
the gross estate and are payable to a beneficiary who is a
skip person, the transfer is a direct skip from a trust that is not
an ordinary trust. It should be reported on Schedule R-1 if the
total of all the tentative maximum direct skips from the
company is $250,000 or more. Otherwise, it should be
reported on Schedule R.
Similarly, if an annuity is includible on Schedule I and its
survivor benefits are payable to a beneficiary who is a skip
person, then the estate tax value of the annuity should be
reported as a direct skip on Schedule R-1 if the total tentative
maximum direct skips from the entity paying the annuity are
$250,000 or more.
decedent's grandchildren and great-grandchildren).
Therefore, the trust itself is a skip person and you should
show the transfer on Schedule R.
4. The will establishes a trust that is to pay all of its income
to the decedent's grandchildren for 10 years. At the end
of 10 years, the corpus is to be distributed to the
decedent's children. All of the present interests in this
trust are held by skip persons. Therefore, the trust is a
skip person and you should show this transfer on
Schedule R. You should show the estate tax value of all
the property transferred to the trust even though the trust
has some ultimate beneficiaries who are non-skip
persons.
Executor as trustee. If any of the executors of the
decedent's estate are trustees of the trust, then all direct
skips for that trust must be shown on Schedule R and not on
Schedule R-1, even if they would otherwise have been
required to be shown on Schedule R-1. This rule applies
even if the trust has other trustees who are not executors of
the decedent's estate.
Dividing Direct Skips Between Schedules R and
R-1
Report all generation-skipping transfers on
Schedule R unless the rules below specifically
TIP
provide that they are to be reported on Schedule R-1.
Under section 2603(a)(2), the GST tax on direct skips
from a trust (as defined for GST tax purposes) is to be paid
by the trustee and not by the estate. Schedule R-1 serves as
a notification from the executor to the trustee that a GST tax
is due.
How To Complete Schedules R and R-1
Valuation. Enter on Schedules R and R-1 the estate tax
value of the property interests subject to the direct skips. If
you elected alternate valuation (section 2032) and/or
special-use valuation (section 2032A), you must use the
alternate and/or special-use values on Schedules R and R-1.
For a direct skip to be reportable on Schedule R-1, the
trust must be includible in the decedent's gross estate.
How To Complete Schedule R
Part 1. GST Exemption Reconciliation
If the decedent was a surviving spouse receiving lifetime
benefits from a marital deduction power of appointment (or
QTIP) trust created by the decedent's spouse, then transfers
caused by reason of the decedent's death from that trust to
skip persons are direct skips required to be reported on
Schedule R-1.
Part 1, line 6, of both Parts 2 and 3, and line 4 of
Schedule R-1 are used to allocate the decedent's GST
exemption. This allocation is made by filing Form 706 and
attaching a completed Schedule R and/or R-1. Once made,
the allocation is irrevocable. You are not required to allocate
all of the decedent's GST exemption. However, the portion of
the exemption that you do not allocate will be allocated by the
IRS under the deemed allocation of unused GST exemption
rules of section 2632(e).
If a direct skip is made “from a trust” under these rules, it is
reportable on Schedule R-1 even if it is also made “to a trust”
rather than to an individual.
Similarly, if property in a trust (as defined for GST tax
purposes) is included in the decedent's gross estate under
section 2035, 2036, 2037, 2038, 2039, 2041, or 2042 and
such property is, by reason of the decedent's death,
transferred to skip persons, the transfers are direct skips
required to be reported on Schedule R-1.
For transfers made through 1998, the GST exemption was
$1 million. The current GST exemption is $12,920,000. The
exemption amounts for 1999 through 2023 are as follows.
Special rule for trusts other than ordinary trusts. An
ordinary trust is defined in Regulations section 301.7701-4(a)
as “an arrangement created by a will or by an inter vivos
-49-
Instructions for Form 706 (Rev. 09-2023)
Unless the decedent elected out of the deemed allocation
rules, allocations are deemed to have been made in the
following order.
Year of transfer
GST exemption
$1,010,000
$1,030,000
$1,060,000
$1,100,000
$1,120,000
$1,500,000
$2,000,000
$3,500,000
$5,000,000
$5,120,000
$5,250,000
$5,340,000
$5,430,000
$5,450,000
$5,490,000
$11,180,000
$11,400,000
$11,580,000
$11,700,000
$12,060,000
$12,920,000
1999
2000
2001
2002
2003
1. To inter vivos direct skips.
2. Beginning with transfers made after December 31, 2000,
to lifetime transfers to certain trusts, by the decedent,
that constituted indirect skips that were subject to the gift
tax.
2004 and 2005
2006, 2007, and 2008
2009
2010 and 2011
2012
For more information, see section 2632 and related
regulations.
2013
2014
2015
2016
2017
2018
2019
2020
Line 3. Make an entry on this line if you are filing Form(s)
709 for the decedent and wish to allocate any exemption.
Lines 4, 5, and 6. These lines represent your allocation of
the GST exemption to direct skips made by reason of the
decedent's death. Complete Parts 2 and 3 and Schedule R-1
before completing these lines.
Line 9. Line 9 is used to allocate the remaining unused GST
exemption (from line 8) and to help you figure the trust's
inclusion ratio. Line 9 is a Notice of Allocation for allocating
the GST exemption to trusts as to which the decedent is the
transferor and from which a generation-skipping transfer
could occur after the decedent's death.
2021
2022
2023
If line 9 is not completed, the deemed allocation at death
rules will apply to allocate the decedent's remaining unused
GST exemption. The exemption will first be allocated to
property that is the subject of a direct skip occurring at the
decedent's death, and then to trusts as to which the
decedent is the transferor. To avoid the application of the
deemed allocation rules, you should enter on line 9 every
trust (except certain trusts entered on Schedule R-1, as
described later) to which you wish to allocate any part of the
decedent's GST exemption. Unless you enter a trust on
line 9, the unused GST exemption will be allocated to it under
the deemed allocation rules.
If a trust is entered on Schedule R-1, the amount you
entered on line 4 of Schedule R-1 serves as a Notice of
Allocation and you need not enter the trust on line 9 unless
you wish to allocate more than the Schedule R-1, line 4,
amount to the trust. However, you must enter the trust on
line 9 if you wish to allocate any of the unused GST
exemption amount to it. Such an additional allocation would
not ordinarily be appropriate in the case of a trust entered on
Schedule R-1 when the trust property passes outright (rather
than to another trust) at the decedent's death. However,
where section 2032A property is involved, it may be
appropriate to allocate additional exemption amounts to the
property. See the instructions for line 10, later.
The amount of each increase can only be allocated to
transfers made (or appreciation that occurred) during or after
the year of the increase. The following example shows the
application of this rule.
Example. In 2003, Alex made a direct skip of $1,120,000
and applied the full $1,120,000 of GST exemption to the
transfer. Alex made a $450,000 taxable direct skip in 2004
and another of $90,000 in 2006. For 2004, Alex can only
apply $380,000 of exemption ($380,000 inflation adjustment
from 2004) to the $450,000 transfer in 2004. For 2006, Alex
can apply $90,000 of exemption to the 2006 transfer, but
nothing to the transfer made in 2004. At the end of 2006, Alex
would have $410,000 of unused exemption that can apply to
future transfers (or appreciation) starting in 2007.
Special QTIP election. In the case of property for which a
marital deduction is allowed to the decedent's estate under
section 2056(b)(7) (QTIP election), section 2652(a)(3) allows
you to treat such property for purposes of the GST tax as if
the election to be treated as qualified terminable interest
property had not been made.
The section 2652(a)(3) election must include the value of
all property in the trust for which a QTIP election was allowed
under section 2056(b)(7).
If a section 2652(a)(3) election is made, then the decedent
will, for GST tax purposes, be treated as the transferor of all
the property in the trust for which a marital deduction was
allowed to the decedent's estate under section 2056(b)(7). In
this case, the executor of the decedent's estate may allocate
part or all of the decedent's GST exemption to the property.
To avoid application of the deemed allocation rules,
Form 706 and Schedule R should be filed to allocate
!
CAUTION
the exemption to trusts that may later have taxable
terminations or distributions under section 2612 even if the
form is not required to be filed to report estate or GST tax.
You make the election simply by listing qualifying property
Line 9, column C. Enter the GST exemption, included on
lines 2 through 6 of Part 1 of Schedule R (discussed above),
that was allocated to the trust.
Line 9, column D. Allocate the amount on line 8 of Part 1
of Schedule R in line 9, column D. This amount may be
allocated to transfers into trusts that are not otherwise
reported on Form 706. For example, the line 8 amount may
be allocated to an inter vivos trust established by the
decedent during the decedent’s lifetime and not included in
the gross estate. This allocation is made by identifying the
on line 9 of Part 1.
Line 2. These allocations will have been made either on
Forms 709 filed by the decedent or on Notices of Allocation
made by the decedent for inter vivos transfers that were not
direct skips but to which the decedent allocated the GST
exemption. These allocations by the decedent are
irrevocable.
Also include on this line allocations deemed to have been
made by the decedent under the rules of section 2632.
-50-
Instructions for Form 706 (Rev. 09-2023)
trust on line 9 and making an allocation to it using column D.
If the trust is not included in the gross estate, value the trust
as of the date of death. Inform the trustee of each trust listed
on line 9 of the total GST exemption you allocated to the trust.
The trustee will need this information to figure the GST tax on
future distributions and terminations.
Line 9, column E. Trust's inclusion ratio. The trustee
must know the trust's inclusion ratio to figure the trust's GST
tax for future distributions and terminations. You are not
required to inform the trustee of the inclusion ratio and may
not have enough information to figure it. Therefore, you are
not required to make an entry in column E. However, column
E and the worksheet later are provided to assist you in
figuring the inclusion ratio for the trustee if you wish to do so.
Parts 2 and 3
Use Part 2 to figure the GST tax on transfers in which the
property interests transferred are to bear the GST tax on the
transfers. Use Part 3 to report the GST tax on transfers in
which the property interests transferred do not bear the GST
tax on the transfers.
Section 2603(b) requires that, unless the governing
instrument provides otherwise, the GST tax is to be charged
to the property constituting the transfer. Therefore, you will
usually enter all of the direct skips on Part 2.
You may enter a transfer on Part 3 only if the will or trust
instrument directs, by specific reference, that the GST tax is
not to be paid from the transferred property interests.
Part 2, line 3. Enter zero on this line unless the will or trust
instrument specifies that the GST taxes will be paid by
property other than that constituting the transfer (as
described above). Enter on line 3 the total of the GST taxes
shown on Part 3 and Schedule(s) R-1 that are payable out of
the property interests shown on Part 2, line 1.
Inform the trustee of the amount of the GST exemption you
allocated to the trust. Line 9, columns C and D, may be used
to figure this amount for each trust.
Note. This worksheet will figure an accurate inclusion ratio
only if the decedent was the only settlor of the trust. Use a
separate worksheet for each trust (or a separate share of a
trust that is treated as a separate trust).
Part 2, line 6. Do not enter more than the amount on line 5.
WORKSHEET (Inclusion Ratio)
Additional allocations may be made using Part 1.
Part 3, line 3. See the instructions for Part 2, line 3, above.
Enter only the total of the GST taxes shown on Schedule(s)
R-1 that are payable out of the property interests shown on
Part 3, line 1.
1. Total estate and gift tax value of all of the property
interests that passed to the trust
.
.
.
.
.
.
.
.
.
.
2. Estate taxes, state death taxes, and other charges
actually recovered from the trust
.
.
.
.
.
.
.
.
.
.
3. GST taxes imposed on direct skips to skip persons
Part 3, line 6. See the instructions for Part 2, line 6, above.
other than this trust and borne by the property
transferred to this trust
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
4. GST taxes actually recovered from this trust (from
How To Complete Schedule R-1
Filing due date. Enter the due date of Form 706. You must
send the copies of Schedule R-1 to the fiduciary before this
date.
Line 4. Do not enter more than the amount on line 3. If you
wish to allocate an additional GST exemption, you must use
Schedule R, Part 1. Making an entry on line 4 constitutes a
Notice of Allocation of the decedent's GST exemption to the
trust.
Schedule R, Part 2, line 8; or Schedule R-1,
line 6)
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
5. Add lines 2 through 4
6. Subtract line 5 from line 1
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
7. Add columns C and D of line 9
8. Divide line 7 by line 6
.
.
.
.
.
.
9. Trust's inclusion ratio. Subtract line 8 from
1.000
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
Line 10. Special-use allocation. For skip persons who
receive an interest in section 2032A special-use property, you
may allocate more GST exemption than the direct skip
amount to reduce the additional GST tax that would be due
when the interest is later disposed of or qualified use ceases.
See Schedule A-1, earlier, for more details about this
additional GST tax.
Enter on line 10 the total additional GST exemption
available to allocate to all skip persons who received any
interest in section 2032A property. Attach a special-use
allocation statement listing each such skip person and the
amount of the GST exemption allocated to that person.
Line 6. If the property interests entered on line 1 will not bear
the GST tax, multiply line 6 by 40% (0.40).
Signature. The executor(s) must sign Schedule R-1 in the
same manner as Form 706. See Signature and Verification,
earlier.
Filing Schedule R-1. Attach to Form 706 one copy of each
Schedule R-1 that you prepare. Send two copies of each
Schedule R-1 to the fiduciary.
Schedule U—Qualified Conservation
Easement Exclusion
If you do not allocate the GST exemption, it will
automatically be allocated under the deemed allocation at
death rules. To the extent any amount is not so allocated, it
will be automatically allocated to the earliest disposition or
cessation that is subject to the GST tax. Under certain
circumstances, post-death events may cause the decedent
to be treated as a transferor for purposes of chapter 13.
If at the time of the contribution of the conservation
easement, the value of the easement, the value of
!
CAUTION
the land subject to the easement, or the value of any
retained development right was different from the estate tax
value, you must complete a separate computation in addition
to completing Schedule U.
Line 10 may be used to set aside an exemption amount for
such an event. Attach a statement listing each such event
and the amount of exemption allocated to that event.
Use a copy of Schedule U as a worksheet for this separate
computation. Complete lines 4 through 14 of the worksheet
Schedule U. However, the value you use on lines 4, 5, 7, and
10 of the worksheet is the value for these items as of the date
-51-
Instructions for Form 706 (Rev. 09-2023)
of the contribution of the easement, not the estate tax value.
If the date of contribution and the estate tax values are the
same, you do not need to do a separate computation.
in the trust. For additional information, see the ownership
rules in section 2057(e)(3).
Qualified Conservation Easement
After completing the worksheet, enter the amount from
line 14 of the worksheet on line 14 of Schedule U. Finish
completing Schedule U by entering amounts on lines 4, 7,
and 15 through 20, following the instructions later for those
lines. At the top of Schedule U, enter "worksheet attached."
Attach the worksheet to the return.
Under section 2031(c), you may elect to exclude a portion
of the value of land that is subject to a qualified conservation
easement. You make the election by filing Schedule U with all
of the required information and excluding the applicable value
of the land that is subject to the easement on Part
5—Recapitulation, on item 12. To elect the exclusion, include
on Schedule A, B, E, F, G, or H, as appropriate, the
decedent's interest in the land that is subject to the exclusion.
You must make the election on a timely filed Form 706,
including extensions.
A qualified conservation easement is one that would qualify
as a qualified conservation contribution under section 170(h).
It must be a contribution:
Of a qualified real property interest,
To a qualified organization, and
•
•
•
Exclusively for conservation purposes.
Qualified real property interest. A qualified real property
interest is any of the following.
The entire interest of the donor, other than a qualified
mineral interest.
•
A remainder interest.
•
•
A restriction granted in perpetuity on the use that may be
made of the real property. The restriction must include a
prohibition on more than a de minimis use for commercial
recreational activity.
The exclusion is the lesser of:
Qualified organization. A qualified organization includes
The applicable percentage of the value of land (after
certain reductions) subject to a qualified conservation
easement, or
•
•
the following.
Corporations and any community chest, fund, or
foundation, organized and operated exclusively for
religious, charitable, scientific, testing for public safety,
literary, or educational purposes, or to foster national or
international amateur sports competition, or for the
prevention of cruelty to children or animals, without net
earnings benefitting any individual shareholder and
without activity with the purpose of influencing legislation
or political campaigning, which:
•
$500,000.
Once made, the election is irrevocable.
General Requirements
Qualified Land
Land may qualify for the exclusion if all of the following
requirements are met.
a. Receives more than one-third of its support from
gifts, contributions, membership fees, or receipts from
sales, admissions fees, or performance of services; or
The decedent or a member of the decedent's family must
have owned the land for the 3-year period ending on the
date of the decedent's death.
•
b. Is controlled by such an organization.
Any entity that qualifies under section 170(b)(1)(A)(v) or
(vi).
No later than the date the election is made, a qualified
conservation easement on the land has been made by
the decedent, a member of the decedent's family, the
executor of the decedent's estate, or the trustee of a trust
that holds the land.
•
•
Conservation purpose. An easement has a conservation
purpose if it is for:
The land is located in the United States or one of its
possessions.
The preservation of land areas for outdoor recreation by,
or for the education of, the public;
•
•
•
•
The protection of a relatively natural habitat of fish,
wildlife, or plants, or a similar ecosystem; or
Member of Family
The preservation of open space (including farmland and
forest land) where such preservation is for the scenic
enjoyment of the general public, or under a clearly
delineated federal, state, or local conservation policy and
will yield a significant public benefit.
Members of the decedent's family include the decedent's
spouse; ancestors; lineal descendants of the decedent, of
the decedent's spouse, and of the parents of the decedent;
and the spouse of any lineal descendant. A legally adopted
child of an individual is considered a child of the individual by
blood.
Specific Instructions
Line 1
Indirect Ownership of Land
If the land is reported as one or more item numbers on a
Form 706 schedule, simply list the schedule and item
numbers. If the land subject to the easement is only part of
an item, however, list the schedule and item number and
describe the part subject to the easement. See the
instructions for Schedule A—Real Estate, earlier, for
information on how to describe the land.
The qualified conservation easement exclusion applies if the
land is owned indirectly through a partnership, corporation, or
trust, if the decedent owned (directly or indirectly) at least
30% of the entity. For the rules on determining ownership of
an entity, see Ownership rules next.
Ownership rules. An interest in property owned, directly or
indirectly, by or for a corporation, partnership, or trust is
considered proportionately owned by or for the entity's
shareholders, partners, or beneficiaries. A person is the
beneficiary of a trust only if the person has a present interest
-52-
Instructions for Form 706 (Rev. 09-2023)
5. A clear statement of consent that is binding on all parties
under applicable local law:
Line 3
Using the general rules for describing real estate, provide
enough information so the IRS can value the easement. Give
the date the easement was granted and by whom it was
granted.
a. To take whatever action is necessary to permanently
extinguish the retained development rights listed in
the agreement; and
b. To be personally liable for additional taxes under
section 2031(c)(5)(C) if this agreement is not
implemented by the earlier of:
Line 4
• The date that is 2 years after the date of the
Enter on this line the gross value at which the land was
reported on the applicable asset schedule on this Form 706.
Do not reduce the value by the amount of any mortgage
outstanding. Report the estate tax value even if the easement
was granted by the decedent (or someone other than the
decedent) prior to the decedent's death.
Note. If the value of the land reported on line 4 was different
at the time the easement was contributed from that reported
on Form 706, see the Caution at the beginning of the
Schedule U instructions.
decedent's death, or
• The date of sale of the land subject to the
qualified conservation easement.
6. A statement that in the event this agreement is not timely
implemented, that they will report the additional tax on
whatever return is required by the IRS and will file the
return and pay the additional tax by the last day of the
6th month following the applicable date described above.
All parties to the agreement must sign the agreement.
Line 5
For an example of an agreement containing some of the
same terms, see Part 3 of Schedule A-1.
The amount on line 5 should be the date of death value of
any qualifying conservation easements granted prior to the
decedent's death, whether granted by the decedent or
someone other than the decedent, for which the exclusion is
being elected.
Note. If the value of the easement reported on line 5 was
different at the time the easement was contributed than at the
date of death, see the Caution at the beginning of the
Schedule U instructions.
Line 10
Enter the total value of the qualified conservation easements
on which the exclusion is based. This could include
easements granted by the decedent (or someone other than
the decedent) prior to the decedent's death, easements
granted by the decedent that take effect at death, easements
granted by the executor after the decedent's death, or some
combination of these.
Line 7
Use the value of the easement as of the date of
death, even if the easement was granted prior to the
!
You must reduce the land value by the value of any
development rights retained by the donor in the conveyance
of the easement. A development right is any right to use the
land for any commercial purpose that is not subordinate to or
directly supportive of the use of the land as a farm for farming
purposes.
Note. If the value of the retained development rights
reported on line 7 was different at the time the easement was
contributed than at the date of death, see the Caution at the
beginning of the Schedule U instructions.
CAUTION
date of death. But, if the value of the easement was
different at the time the easement was contributed than at the
date of death, see the Caution at the beginning of the
Schedule U instructions.
Explain how this value was determined and attach copies
of any appraisals. Normally, the appropriate way to value a
conservation easement is to determine the FMV of the land
both before and after the granting of the easement, with the
difference being the value of the easement.
Reduce the reported value of the easement by the amount
of any consideration received for the easement. If the date of
death value of the easement is different from the value at the
time the consideration was received, reduce the value of the
easement by the same proportion that the consideration
received bears to the value of the easement at the time it was
granted.
You do not have to make this reduction if everyone with an
interest in the land (regardless of whether in possession)
agrees to permanently extinguish the retained development
right. The agreement must be filed with this return and must
include all of the following information and terms.
1. A statement that the agreement is made under section
2031(c)(5).
For example, assume the value of the easement at the
time it was granted was $100,000 and $10,000 was received
in consideration for the easement. If the easement was worth
$150,000 at the date of death, you must reduce the value of
the easement by $15,000 ($10,000/$100,000 × $150,000)
and report the value of the easement on line 10 as $135,000.
2. A list of all persons in being, holding an interest in the
land that is subject to the qualified conservation
easement. Include each person's name, address, TIN,
relationship to the decedent, and a description of their
interest.
3. The items of real property shown on the estate tax return
that are subject to the qualified conservation easement
(identified by schedule and item number).
Line 15
4. A description of the retained development right that is to
be extinguished.
If a charitable contribution deduction for this land has been
taken on Schedule O, enter the amount of the deduction
-53-
Instructions for Form 706 (Rev. 09-2023)
here. If the easement was granted after the decedent's death,
a contribution deduction may be taken on Schedule O, if it
otherwise qualifies, as long as no income tax deduction was
or will be claimed for the contribution by any person or entity.
other evidence of delivery is not sufficient to confirm receipt
and processing of the protective claim for refund.
Note. The written acknowledgment of receipt does not
constitute a determination that all requirements for a valid
protective claim for refund have been met.
In general, the claim will not be subject to substantive
review until the amount of the claim has been established.
However, a claim can be disallowed at the time of filing. For
example, the claim for refund will be rejected if:
Line 16
Reduce the value of the land by the amount of any acquisition
indebtedness on the land at the date of the decedent's death.
Acquisition indebtedness includes the unpaid amount of:
Any indebtedness incurred by the donor in acquiring the
property;
The claim was not timely filed,
•
•
•
The claim was not filed by the fiduciary or other person
with authority to act on behalf of the estate,
The acknowledgment of the penalties of perjury
statement (on page 1 of Form 706) was not signed, or
The claim is not adequately described.
•
Any indebtedness incurred before the acquisition if the
indebtedness would not have been incurred but for the
acquisition;
•
•
Any indebtedness incurred after the acquisition if the
indebtedness would not have been incurred but for the
acquisition and the incurrence of the indebtedness was
reasonably foreseeable at the time of the acquisition; and
The extension, renewal, or refinancing of acquisition
indebtedness.
•
•
If the IRS does not raise such a defect when the claim is
filed, it will not be precluded from doing so in the later
substantive review.
The estate may be given an opportunity to cure any
defects in the initial notice by filing a corrected and signed
protective claim for refund before the expiration of the
limitations period in section 6511(a) or within 45 days of
notice of the defect, whichever is later.
Schedule PC—Protective Claim for
Refund
A protective claim for refund preserves the estate’s right to a
refund of tax paid on any amount included in the gross estate
which would be deductible under section 2053 but has not
been paid or otherwise will not meet the requirements of
section 2053 until after the limitations period for filing the
claim has passed. See section 6511(a).
Related Ancillary Expenses
If a section 2053 protective claim for refund has been
adequately identified on Schedule PC, the IRS will presume
that the claim includes certain expenses related to resolving,
defending, or satisfying the claim. These ancillary expenses
may include attorneys’ fees, court costs, appraisal fees, and
accounting fees. The estate is not required to separately
identify or substantiate these expenses; however, each
expense must meet the requirements of section 2053 to be
deductible.
Only use Schedule PC for section 2053 protective
claims for refund being filed with Form 706. If the
!
CAUTION
initial notice of the protective claim for refund is being
submitted after Form 706 has been filed, use Form 843,
Claim for Refund and Request for Abatement, to file the
claim.
Notice of Final Resolution of Claim
When an expense that was the subject of a section 2053
protective claim for refund is finally determined, the estate
must notify the IRS that the claim for refund is ready for
consideration. The notification should provide facts and
evidence substantiating the deduction under section 2053
and the resulting recomputation of the estate tax liability. A
separate notice of final resolution must be filed with the IRS
for each resolved section 2053 protective claim for refund.
There are two means by which the estate may notify the
IRS of the resolution of the uncertainty that deprived the
estate of the deduction when Form 706 was filed. The estate
may file a supplemental Form 706 with an updated
Schedule PC may be used to file a section 2053 protective
claim for refund by estates of decedents who died after
December 31, 2011. It will also be used to inform the IRS
when the contingency leading to the protective claim for
refund is resolved and the refund due the estate is finalized.
The estate must indicate whether the Schedule PC being
filed is the initial notice of protective claim for refund, notice of
partial claim for refund, or notice of the final resolution of the
claim for refund.
Because each separate claim or expense requires a
separate Schedule PC, more than one Schedule PC may be
included with Form 706, if applicable. Two copies of each
Schedule PC must be included with Form 706.
Schedule PC and include each schedule affected by the
allowance of the deduction under section 2053. Page 1 of
Form 706 should contain the notation “Supplemental
Information—Notification of Consideration of Section 2053
Protective Claim(s) for Refund” and include the filing date of
the initial notice of protective claim for refund. A copy of the
initial notice of claim should also be submitted.
Note. Filing a section 2053 protective claim for refund on
Schedule PC will not suspend the IRS’s review and
examination of Form 706, nor will it delay the issuance of a
closing letter for the estate.
Alternatively, the estate may notify the IRS by filing an
updated Form 843. Form 843 must contain the notation
“Notification of Consideration of Section 2053 Protective
Claim(s) for Refund,” including the filing date of the initial
notice of protective claim for refund, on page 1. A copy of the
initial notice of claim must also be submitted.
Initial Notice of Claim
The first Schedule PC to be filed is the initial notice of
protective claim for refund. The estate will receive a written
acknowledgment of receipt of the claim from the IRS. If the
acknowledgment is not received within 180 days of filing the
protective claim for refund on Schedule PC, the fiduciary
should contact the IRS at 866-699-4083 to inquire about the
receipt and processing of the claim. A certified mail receipt or
The estate should notify the IRS of resolution within 90
days of the date the claim or expense is paid or the date on
-54-
Instructions for Form 706 (Rev. 09-2023)
which the amount of the claim becomes certain and no
longer subject to contingency, whichever is later. Separate
notifications must be submitted for every section 2053
protective claim for refund that was filed.
If the final section 2053 claim or expense involves multiple
or recurring payments, the 90-day period begins on the date
of the last payment. The estate may also notify the IRS (not
more than annually) as payments are being made and
possibly qualify for a partial refund based on the amounts
paid through the date of the notice.
columns E and F only if filing a notice of partial or final
resolution. Show the amount of ancillary or related expenses
to be included in the claim for refund and indicate whether
this amount is estimated, agreed upon, or has been paid.
Also show the amount being claimed for refund.
Note. If you made partial claims for a recurring expense, the
amount presently claimed as a deduction under section 2053
will only include the amount presently claimed, not the
cumulative amount.
Part 3. Other Schedules PC and Forms 843 Filed
by the Estate
Specific Instructions
Part 1. General Information
On the chart in Part 3, provide information on other protective
claims for refund that have been previously filed on behalf of
the estate (if any), whether on other Schedules PC or on
Form 843. When the initial claim for refund is filed, only
information from Form(s) 843 need be included in Part 3.
However, when filing a partial or final claim for refund,
complete Part 3 by including the status of all claims filed by or
on behalf of the estate, including those filed on other
Schedules PC with Form 706. For each such claim, give the
place of filing, date of filing, and amount of the claim.
Complete Part 1 by providing information that is correct and
complete as of the time Schedule PC is filed. If filing an
updated Schedule PC with a supplemental Form 706 or as
notice of final resolution of the protective claim for refund, be
sure to update the information from the original filing to
ensure that it is accurate. Be particularly careful to verify that
contact information (addresses and telephone numbers) and
the reason for filing Schedule PC are indicated correctly. If
the fiduciary is different from the executor identified on
page 1 of Form 706 or has changed since the initial notice of
protective claim for refund was filed, attach letters
testamentary, letters of administration, or similar
Continuation Schedule
documentation evidencing the fiduciary's authority to file the
protective claim for refund on behalf of the estate. Include a
copy of Form 56, Notice Concerning Fiduciary Relationship, if
it has been filed.
When you need to list more assets or deductions than you
have room for on one of the main schedules, use the
Continuation Schedule at the end of Form 706. It provides a
uniform format for listing additional assets from Schedules A
through I and additional deductions from Schedules J, K, L,
M, and O.
Part 2. Claim Information
For a protective claim for refund to be properly filed and
considered, the claim or expense forming the basis of the
potential section 2053 deduction must be clearly identified.
Using the check boxes provided, indicate whether you are
filing the initial claim for refund, a claim for partial refund, or a
final claim.
Please remember to do the following.
Use a separate Continuation Schedule for each main
schedule you are continuing. Do not combine assets or
deductions from different schedules on one Continuation
Schedule.
•
Make copies of the blank schedule before completing it if
you expect to need more than one.
•
•
•
•
On the chart in Part 2, give the Form 706 schedule and
item number of the claim or expense. List any amounts
claimed under exceptions for ascertainable amounts
(Regulations section 20.2053-1(d)(4)), claims and
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.
counterclaims in related matters (Regulations section
20.2053-4(b)), or claims under $500,000 (Regulations
section 20.2053-4(c)). Provide all relevant information as
described, including, most importantly, an explanation of the
reasons and contingencies delaying the actual payment to be
made in satisfaction of the claim or expense. Complete
Carry the total from the Continuation Schedules forward
to the appropriate line on the main schedule.
•
If continuing
Schedule E, Pt. 2
Report
Where on Continuation Schedule
Alternate valuation date
Percentage includible
Schedules J, L, M
Schedule O
Continued description of deduction
Character of institution
Alternate valuation date and Alternate value
Alternate valuation date and Alternate value
Value at date of death or amount deductible
Schedule O
Amount of each deduction
Privacy Act and Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue
laws of the United States. You are required to give us the information. We need it to ensure that you are complying with these
laws and to allow us to figure and collect the right amount of tax. Subtitle B and section 6109, and the regulations require you to
provide this information.
-55-
Instructions for Schedules
You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless
the form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as
their contents may become material in the administration of any Internal Revenue law. Generally, tax returns and return
information are confidential as required by section 6103. However, section 6103 allows or requires the Internal Revenue Service
to disclose information from this form in certain circumstances. For example, we may disclose information to the Department of
Justice for civil or criminal litigation, and to cities, states, the District of Columbia, and U.S. commonwealths or possessions for
use in administering their tax laws. We may also disclose this information to other countries under a tax treaty, to federal and
state agencies to enforce federal nontax criminal laws, or to federal law enforcement and intelligence agencies to combat
terrorism. Failure to provide this information, or providing false information, may subject you to penalties.
The time needed to complete and file this form and related schedules will vary depending on individual circumstances. The
estimated average times are:
Form
Recordkeeping
Learning about the law
or the form
Preparing the form
Copying, assembling, and sending
the form to the IRS
Form 706 & embedded
schedules
Form Schedule R-1 (706)
6 hr., 46 min.
6 min.
7 hr., 39 min.
29 min.
13 hr., 8 min.
24 min.
9 hr., 10 min.
20 min.
If you have comments concerning the accuracy of these time estimates or suggestions for making Form 706 simpler, we
would be happy to hear from you. You can send us comments through IRS.gov/FormComments. Or you can write to:
Internal Revenue Service
Tax Forms and Publications Division
1111 Constitution Ave. NW, IR-6526
Washington, DC 20224
Do not send the tax form to this address. Instead, see Where To File, earlier.
-56-
Instructions for Form 706 (Rev. 09-2023)
Index
A
Losses 37
Schedule M, Bequests to Surviving
Spouses 38
Schedule O, Charitable, Public, and
Schedule P, Credit for Foreign Death
Schedule PC, Protective Claim for
M
Refund 54
Annuities 33
Schedule Q, Credit for Tax on Prior
Schedule U, Qualified Conservation
Schedules R and R-1, Generation-Skipping
B
N
Bonds 25
C
P
Stocks 25
Part 6. Portability of Deceased Spousal
Penalties 4
D
Portability 18
Deductions 18
T
DSUE 18
Q
QDOT 40
QTIP 40
E
R
U
Recapitulation 18
Unified Credit (Applicable Credit
Amount) 10
F
V
S
G
W
Schedule C, Mortgages, Notes, and
GST 47
Cash 27
Schedule D, Insurance on Decedent's
Life 27
Schedule G, Transfers During Decedent's
Worksheet TG-Taxable Gifts
Life 30
I
Reconciliation 7
Insurance 27
Schedule J, Funeral Expenses and
Expenses Incurred in Administering
J
Schedule K, Debts of the Decedent and
Schedule L, Net Losses During
Administration and Expenses Incurred
in Administering Property Not Subject
L
Liens 37
-57-
Checklists for Completing Form 706
To ensure a complete return, review the following checklists before filing Form 706.
Attachments . . .
Death Certificate.
Certified copy of the will—if decedent died testate, you must attach a certified copy of the will. If not certified, explain why.
Appraisals—attach any appraisals used to value property included on the return.
Copies of all trust documents where the decedent was a grantor or a beneficiary.
Form 2848 or 8821, if applicable.
Copy of any Form(s) 709 filed by the decedent, with "Exhibit to Estate Tax Return" entered across the top of the first page(s).
Copy of Line 7 Worksheet, if applicable, with “Exhibit to Estate Tax Return” entered across the top of the page(s).
Form 712, if any policies of life insurance are included on the return.
Form 706-CE, if claiming a foreign death tax credit.
-58-
Have you . . .
Signed the return at the bottom of page 1?
Had the preparer sign, if applicable?
Obtained the signature of your authorized representative on Part 4—General Information, page 2?
Entered a Total on all schedules filed?
Made an entry on every line of the Recapitulation, even if it is a zero?
Included the CUSIP number for all stocks and bonds?
Included the EIN of trusts, partnerships, and closely held entities?
Included the first 4 pages of the return and all required schedules?
Completed Schedule F? It must be filed with all returns.
Completed Part 4—General Information, line 4, on page 2, if there is a surviving spouse?
Completed and attached Schedule D to report insurance on the life of the decedent, even if its value is not included in the
estate?
Included any QTIP property received from a predeceased spouse?
Entered the decedent's name, SSN, and “Form 706” on your check or money order?
Completed Part 6, Section A, if the estate elects not to transfer any DSUE amount to the surviving spouse?
Completed Part 6, Section C, if the estate elects portability of any DSUE amount?
Completed Part 6, Section D, and included a copy of the Form 706, with “Exhibit to Estate Tax Return” entered across the
top of the first page, of any predeceased spouse(s) from whom a DSUE amount was received and applied?
-59-