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Department of the Treasury General Instructions

Internal Revenue Service Purpose of Form
The executor of a decedent’s estate uses

Instructions for Form 706 Form 706 to figure the estate tax imposed
by Chapter 11 of the Internal Revenue
Code. This tax is levied on the entire
(Revised August 1993) taxable estate, not just on the share
received by a particular beneficiary. Form
United States Estate (and Generation-Skipping 706 is also used to compute the
Transfer) Tax Return generation-skipping transfer (GST) tax
imposed by Chapter 13 on direct skips
For decedents dying after October 8, 1990. (transfers to skip persons of interests in
Section references are to the Inter nal Revenue Code unless otherwise noted. property included in the decedent’s gross
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 Which Estates Must File
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. Form 706 must be filed by the executor for
The time needed to complete and file this form and related schedules will vary the estate of every U.S. citizen or resident
depending on individual circumstances. The estimated average times are: whose gross estate, plus adjusted taxable
Copying, assembling, gifts and specific exemption, is more than
Learning about the law Preparing and sending the form certain limits.
Form Recordkeeping or the form the form to the IRS To determine whether you must file a
706 2 hr., 11 min. 1 hr., 9 min. 3 hr., 26 min. 49 min. return for the estate, add:
Sch. A 20 min. 16 min. 10 min. 20 min. 1. The adjusted taxable gifts (under
A-1 46 min. 25 min. 59 min. 49 min. section 2001(b)) made by the decedent
after December 31, 1976;
B 20 min. 10 min. 11 min. 20 min.
2. The total specific exemption allowed
C 13 min. 2 min. 8 min. 20 min.
under section 2521 (as in effect before its
D 7 min. 6 min. 8 min. 20 min. repeal by the Tax Reform Act of 1976) for
E 40 min. 7 min. 24 min. 20 min. gifts made by the decedent after
F 33 min. 6 min. 21 min. 20 min. September 8, 1976; and
G 26 min. 18 min. 11 min. 14 min. 3. The decedent’s gross estate valued
H 26 min. 6 min. 10 min. 14 min. at the date of death.
I 26 min. 25 min. 11 min. 20 min. You must file a return for the estate if
J 26 min. 5 min. 16 min. 20 min.
the total of 1, 2, and 3 above is more than
$600,000 for decedents dying after 1986.
K 26 min. 9 min. 10 min. 20 min. For filing requirements for decedents dying
L 13 min. 5 min. 10 min. 20 min. after 1981 and before 1986, see the
M 13 min. 31 min. 24 min. 20 min. November 1987 Revision of Form 706.
O 20 min. 9 min. 18 min. 17 min.
Gross Estate
P 7 min. 14 min. 18 min. 14 min.
Q 7 min. 10 min. 11 min. 14 min. The gross estate includes all property in
which the decedent had an interest
Q Wksht. 7 min. 10 min. 59 min. 20 min.
(including real property outside the United
R 20 min. 34 min. 1 hr., 1 min. 49 min. States). It also includes:
R-1 7 min. 29 min. 24 min. 20 min. ● Certain transfers made during the
S 26 min. 22 min. 37 min. 25 min. decedent’s life without an adequate and
Contin. 20 min. 3 min. 7 min. 20 min. full consideration in money or money’s
If you have comments concerning the accuracy of these time estimates or suggestions worth;
for making this form more simple, we would be happy to hear from you. You can write to ● Annuities;
both the Internal Revenue Service, Attention: Reports Clearance Officer, T:FP, ● Joint estates with right of survivorship;
Washington, DC 20224; and the Office of Management and Budget, Paperwork
● Tenancies by the entirety;
Reduction Project (1545-0015), Washington, DC 20503. DO NOT send the tax form to
either of these offices. Instead, see Where To File on page 2. ● Life insurance proceeds (even though
payable to beneficiaries other than the
Change To Note ● Property over which the decedent
possessed a general power of
● The Omnibus Budget Reconciliation Act of 1993 increased the maximum estate tax appointment;
rate to 53% for taxable estates in excess of $2.5 million and 55% for taxable estates in
excess of $3 million. This increase is permanent and applies to the estates of decedents ● Dower or curtesy (or statutory estate) of
dying after December 31, 1992. Because the February 1993 revision of Form 706 is the surviving spouse;
based on a maximum estate tax rate of 50%, it should not be used. ● Community property to the extent of the
decedent’s interest as defined by
For Decedents Dying Use Revision of applicable law.
After and Before Form 706 Dated
For more specific information, see the
----------------------- January 1, 1982 November, 1981 instructions for Schedules A through I.
December 31, 1981 October 23, 1986 November, 1987
October 22, 1986 January 1, 1990 October, 1988
December 31, 1989 October 9, 1990 July, 1990
October 8, 1990 January 1, 1993 October, 1991
October 8, 1990 ------------------- August, 1993
Cat. No. 16779E
U.S. Citizens or Residents; New Jersey, New York
Signature and Verification
Nonresident Noncitizens (New York City and If there is more than one executor, all
counties of Nassau, Holtsville, NY 00501 listed executors must verify and sign the
File Form 706 for the estates of decedents Rockland, Suffolk, and
who were either U.S. citizens or U.S. Westchester)
return. All executors are responsible for
residents at the time of death. File Form the return as filed and are liable for
706-NA, United States Estate (and New York (all other penalties provided for erroneous or false
counties), Connecticut, returns.
Generation-Skipping Transfer) Tax Return, Maine, Massachusetts, New Andover, MA 05501
Estate of nonresident not a citizen of the Hampshire, Rhode Island, If two or more persons are liable for filing
United States, for the estates of Vermont the return, they should all join together in
nonresident alien decedents (decedents filing one complete return. However, if they
who were neither U.S. citizens nor Illinois, Iowa, Minnesota,
Missouri, Wisconsin
Kansas City, MO 64999 are unable to join in making one complete
residents at the time of death). return, each is required to file a return
Delaware, District of disclosing all the information the person
Residents of U.S. Possessions Columbia, Maryland, Philadelphia, PA 19255 has in the case, including the name of
Pennsylvania, Virginia every person holding an interest in the
All references to citizens of the United
States are subject to the provisions of Indiana, Kentucky, property and a full description of the
sections 2208 and 2209, relating to Michigan, Ohio, West Cincinnati, OH 45999 property. If the appointed, qualified, and
decedents who were U.S. citizens and Virginia acting executor is unable to make a
residents of a U.S. possession on the date Kansas, New Mexico,
complete return, then every person holding
Austin, TX 73301 an interest in the property must, on notice
of death. If such a decedent became a Oklahoma, Texas
U.S. citizen only because of his or her from the IRS, make a return regarding that
Alaska, Arizona, California interest.
connection with a possession, then the (counties of Alpine, Amador,
decedent is considered a nonresident alien Butte, Calaveras, Colusa, The executor who files the return must,
decedent for estate tax purposes, and you Contra Costa, Del Norte, El in every case, sign the declaration on page
should file Form 706-NA. If such a Dorado, Glenn, Humboldt, 1 under penalties of perjury. If the return is
decedent became a U.S. citizen wholly Lake, Lassen, Marin, prepared by someone other than the
independently of his or her connection with Mendocino, Modoc, Napa, person who is filing the return, the preparer
Nevada, Placer, Plumas,
a possession, then the decedent is must also sign at the bottom of page 1.
Sacramento, San Joaquin,
considered a U.S. citizen for estate tax Shasta, Sierra, Siskiyou,
Ogden, UT 84201
purposes, and you should file Form 706. Solano, Sonoma, Sutter, Part 1
Tehama, Trinity, Yolo, and
Yuba), Colorado, Idaho,
Executor Montana, Nebraska,
Line 2
The term “executor” means the executor, Nevada, North Dakota, Enter the social security number assigned
personal representative, or administrator of Oregon, South Dakota, specifically to the decedent. You cannot
Utah, Washington, use the social security number assigned to
the decedent’s estate. If none of these is Wyoming
appointed, qualified, and acting in the the decedent’s spouse. If the decedent did
United States, every person in actual or California (all other
Fresno, CA 93888
not have a social security number, the
constructive possession of any property of counties), Hawaii executor should obtain one for the
the decedent is considered an executor Alabama, Arkansas,
decedent by filing Form SS-5 with a local
and must file a return. Louisiana, Mississippi, Memphis, TN 37501 Social Security Administration office.
North Carolina, Tennessee
Line 6a—Name of Executor
When To File
If there is more than one executor, enter
You must file Form 706 to report estate Paying the Tax the name of the executor to be contacted
and/or generation-skipping transfer tax The estate and GST taxes are due within 9 by the IRS. List the other executors’
within 9 months after the date of the months after the date of the decedent’s names, addresses, and SSNs (if applicable)
decedent’s death unless you receive an death unless an extension of time for on an attached sheet.
extension of time to file. Use Form 4768, payment has been granted, or unless you
Application for Extension of Time To File a have properly elected under section 6166 Line 6b—Executor’s Address
Return and/or Pay U.S. Estate (and to pay in installments, or under section
Generation-Skipping Transfer) Taxes, to Use Form 8822, Change of Address, to
6163 to postpone the part of the tax report a change of the executor’s address.
apply for an extension of time. If you attributable to a reversionary or remainder
received an extension, attach a copy of it
to Form 706.
interest. These elections are made by Line 6c—Executor’s Social
checking lines 3 and 4 (respectively) of Security Number
Part 3, Elections by the Executor, and
Where To File attaching the required statements. Only individual executors should complete
If the tax paid with the return is different this line. If there is more than one
Unless the return is hand carried to the individual executor, all should list their
office of the District Director, please mail it from the balance due as figured on the
return, explain the difference in an social security numbers on an attached
to the Internal Revenue Service Center sheet.
indicated below for the state where the attached statement. If you have made prior
decedent was domiciled at the time of payments to IRS or redeemed certain
death. If you are filing a return for the marketable United States Treasury bonds Supplemental Documents
estate of a nonresident U.S. citizen, mail it to pay the estate tax (see the last
paragraph of the instructions to Schedule You must attach the death certificate to
to the Internal Revenue Service Center,
B), attach a statement to Form 706 the return.
Philadelphia, PA 19255, USA.
including these facts. If an extension of If the decedent was a citizen or resident
Where To File.—
time to pay has been granted, attach a and died testate, attach a certified copy of
Ä Ä copy of the approved Form 4768 to Form the will to the return. Other supplemental
706. documents may be required as explained
Florida, Georgia, South
Atlanta, GA 39901 Make the check payable to the Internal below. Examples include Forms 712, 709,
Revenue Service. Please write the 709-A, and 706CE, trust and power of
decedent’s name, social security number, appointment instruments, death certificate,
and “Form 706” on the check to assist us and state certification of payment of death
in posting it to the proper account. taxes. If you do not file these documents
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with the return, the processing of the Schedule(s) to support the claimed this property on the date it ceases to form
return will be delayed. deductions. a part of the gross estate, that is, on the
If the decedent was a U.S. citizen but If you claim the credits for foreign death date the title passes as the result of its
not a resident of the United States, you taxes or tax on prior transfers, you must sale, exchange, or other disposition.
must attach the following documents to complete and attach Schedule P or Q. 2. Any property not distributed, sold,
the return: (1) a copy of the inventory of Form 706 has 41 numbered pages. The exchanged, or otherwise disposed of
property and the schedule of liabilities, pages are perforated so that you can within the 6-month period is valued on the
claims against the estate, and expenses of remove them for copying and filing. When date 6 months after the date of the
administration filed with the foreign court you complete the return, staple all the decedent’s death.
of probate jurisdiction, certified by a proper required pages together in the proper 3. Any property, interest, or estate that is
official of the court; (2) a copy of the return order. “affected by mere lapse of time” is valued
filed under the foreign inheritance, estate, as of the date of decedent’s death or on
legacy, succession tax, or other death tax Number the items you list on each
schedule, beginning with 1 each time. the date of its distribution, sale, exchange,
act, certified by a proper official of the or other disposition, whichever occurs first.
foreign tax department, if the estate is Total the items listed on the schedule and
its attachments, Continuation Schedules, However, you may change the date of
subject to such a foreign tax; and (3) if the death value to account for any change in
decedent died testate, a certified copy of etc. Enter the total of all attachments,
Continuation Schedules, etc., at the value that is not due to a “mere lapse of
the will. time” on the date of its distribution, sale,
bottom of the printed schedule, but do not
carry the totals forward from one schedule exchange, or other disposition.
Rounding Off to Whole to the next. Enter the total or totals for The property included in the alternate
Dollars each schedule on the Recapitulation, page valuation and valued as of 6 months after
3, Form 706. the date of the decedent’s death, or as of
You may show the money items on the some intermediate date (as described
return and accompanying schedules as Do not complete the “Alternate valuation
date” or “Alternate value” columns of any above) is the property included in the
whole-dollar amounts. To do so, drop any gross estate on the date of the decedent’s
amount less than 50 cents and increase schedule unless you elected alternate
valuation on line 1 of Part 3, Elections by death. Therefore, you must first determine
any amount from 50 cents through 99 what property constituted the gross estate
cents to the next higher dollar. the Executor.
at the decedent’s death.
If there is not enough space on a
schedule to list all the items, attach a Interest accrued to the date of the
Penalties Continuation Schedule (or additional decedent’s death on bonds, notes, and
Section 6651 provides for penalties for sheets of the same size) to the back of the other interest-bearing obligations is
both late filing and for late payment unless schedule. The Continuation Schedule is property of the gross estate on the date of
there is reasonable cause for the delay. located at the end of the Form 706 death and is included in the alternate
The law also provides for penalties for package. You should photocopy the blank valuation. Rent accrued to the date of the
willful attempts to evade payment of tax. schedule before completing it if you will decedent’s death on leased real or
The late filing penalty will not be imposed if need more than one copy. personal property is property of the gross
the taxpayer can show that the failure to estate on the date of death and is included
file a timely return is due to reasonable in the alternate valuation.
cause. Executors filing late (after the due
Instructions for Part 3.— Outstanding dividends that were
date, including extensions) should attach Elections by the Executor declared to stockholders of record on or
an explanation to the return to show before the date of the decedent’s death
reasonable cause. Line 1—Alternate Valuation are considered property of the gross estate
Section 6662 provides a penalty for the Unless you elect at the time you file the on the date of death, and are included in
underpayment of estate tax of $5,000 or return to adopt alternate valuation as the alternate valuation. Ordinary dividends
more when the underpayment is authorized by section 2032, you must declared to stockholders of record after
attributable to valuation understatements. value all property included in the gross the date of the decedent’s death are not
A valuation understatement occurs when estate on the date of the decedent’s property of the gross estate on the date of
the value of property reported on Form 706 death. Alternate valuation cannot be death and are not included in the alternate
is 50 percent or less of the actual value of applied to only a part of the property. You valuation. However, if dividends are
the property. may elect special use valuation (line 2) in declared to stockholders of record after
addition to alternate valuation. the date of the decedent’s death so that
These penalties also apply to late filing, the shares of stock at the later valuation
late payment, and underpayment of GST You may not elect alternate valuation
unless the election will decrease both the date do not reasonably represent the same
taxes. property at the date of the decedent’s
value of the gross estate and the total net
estate and GST taxes due after application death, include those dividends (except
Publication 448 of all allowable credits. dividends paid from earnings of the
corporation after the date of the
Additional information may be found in Alternate valuation is elected by decedent’s death) in the alternate
Pub. 448, Federal Estate and Gift Taxes. checking “Yes” on line 1 and filing Form valuation.
706. Once made, the election may not be
revoked. The election may be made on a As part of each Schedule A through I,
Specific Instructions late filed Form 706 provided it is not filed you must show: (1) what property is
You must file the first three pages of Form later than 1 year after the due date included in the gross estate on the date of
706 and all required schedules. Schedules (including extensions). the decedent’s death; (2) what property
A through I must be filed, as appropriate, was distributed, sold, exchanged, or
If you elect alternate valuation, value the otherwise disposed of within the 6-month
to support the entries in items 1 through 9 property that is included in the gross
of the Recapitulation. period after the decedent’s death, and the
estate as of the applicable dates as dates of these distributions, etc. These two
If you enter zero on any item of the follows: items should be entered in the
Recapitulation, you need not file the 1. Any property distributed, sold, “Description” column of each schedule.
schedule (except for Schedule F) referred exchanged, or otherwise disposed of or Briefly explain the status or disposition
to on that item. separated or passed from the gross estate governing the alternate valuation date,
If you claim any deductions on items 11 by any method within 6 months after the such as: “Not disposed of within 6 months
through 19 of the Recapitulation, you must decedent’s death is valued on the date of following death,” “Distributed,” “Sold,”
complete and attach the appropriate distribution, sale, exchange, or other “Bond paid on maturity,” etc. In this same
disposition, whichever occurs first. Value column, describe each item of principal

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and includible income; (3) the date of 7. The qualified property is the pay the taxes, you should file Form 4768 in
death value, entered in the appropriate percentage of the decedent’s gross estate adequate time before the return due date.
value column with items of principal and specified in section 2032A. If it is found that the estate qualifies for
includible income shown separately; For definitions and additional special use valuation based on the values
and (4) the alternate value, entered in the information, see section 2032A and the as finally determined (or agreed to
appropriate value column with items of related regulations. following examination of the return), you
principal and includible income shown must file an amended Form 706 (with a
separately. In the case of any interest or Include the words “section 2032A
valuation” in the “Description” column of complete section 2032A election) within 60
estate, the value of which is affected by days after the date of this determination.
lapse of time, such as patents, leaseholds, any Form 706 schedule if section 2032A
property is included in the decedent’s Complete the amended return using
estates for the life of another, or remainder special use values under the rules of
interests, the value shown under the gross estate.
section 2032A, and complete Schedule
heading “Alternate value” must be the An election under section 2032A need A-1 and attach all of the required
adjusted value (i.e., the value as of the not include all the property in an estate statements.
date of death with an adjustment reflecting that is eligible for special use valuation, but
any difference in its value as of the later sufficient property to satisfy the threshold Line 3—Installment Payments
date not due to lapse of time). requirements of section 2032A(b)(1)(B)
must be specially valued under the If you check this line to make a protective
Distributions, sales, exchanges, and election, you should attach a notice of
other dispositions of the property within election.
protective election as described in
the 6-month period after the decedent’s If joint or undivided interests (e.g.,
Regulations section 20.6166-1(d). If you
death must be supported by evidence. If interests as joint tenants or tenants in
check this line to make a final election, you
the court issued an order of distribution common) in the same property are
should attach the notice of election
during that period, you must submit a received from a decedent by qualified
described in Regulations section
certified copy of the order as part of the heirs, an election with respect to one heir’s
evidence. The District Director may require joint or undivided interest need not include
you to submit additional evidence if any other heir’s interest in the same In computing the adjusted gross estate
necessary. property if the electing heir’s interest plus under section 6166(b)(6) to determine
other property to be specially valued whether an election may be made under
Line 2—Special Use Valuation of satisfies the requirements of section section 6166, the net amount of any real
2032A(b)(1)(B). estate in a closely held business must be
Section 2032A used.
If successive interests (e.g., life estates
Under section 2032A, you may elect to You may also elect to pay GST taxes in
and remainder interests) are created by a
value certain farm and closely held installments. See section 6166(i).
decedent in otherwise qualified property,
business real property at its farm or
an election under section 2032A is
business use value rather than its fair Line 4—Reversionary or
available only with respect to that property
market value. You may elect both special Remainder Interests
(or part) in which qualified heirs of the
use valuation and alternate valuation. To
decedent receive all of the successive For the details of this election, see section
elect this valuation you must check “Yes”
interests, and such an election must 6163 and the related regulations.
to line 2 and complete and attach
include the interests of all of those heirs.
Schedule A-1 and its required additional
statements. You must file Schedule A-1 For example, if a surviving spouse
receives a life estate in otherwise qualified
Instructions for Part 4.—
and its required attachments with Form
706 for this election to be valid. You may property and the spouse’s brother receives General Information (pages
make the election on a late filed return so a remainder interest in fee, no part of the 2 and 3)
long as it is the first return filed. property may be valued pursuant to an
election under section 2032A. Power of Attorney
The total value of the property valued
under section 2032A may not be Where successive interests in specially Completing the authorization on page 2 of
decreased from fair market value by more valued property are created, remainder Form 706 will authorize one attorney,
than $750,000. interests are treated as being received by accountant, or enrolled agent to represent
qualified heirs only if the remainder the estate and receive confidential tax
Real property may qualify for the section
interests are not contingent on surviving a information, but will not authorize the
2032A election if:
nonfamily member or are not subject to representative to enter into closing
1. The decedent was a U.S. citizen or divestment in favor of a nonfamily member.
resident at the time of death; agreements for the estate. If you wish to
Protective Election.—You may make a represent the estate, you must complete
2. The real property is located in the protective election to specially value and sign the authorization.
United States; qualified real property. Under this election, If you wish to authorize persons other
3. At the decedent’s death the real whether or not you may ultimately use than attorneys, accountants, and enrolled
property was used by the decedent or a special use valuation depends upon values agents, or if you wish to authorize more
family member for farming or in a trade or as finally determined (or agreed to than one person, to receive confidential
business or is rented for such use by the following examination of the return) information or represent the estate, you
surviving spouse to a family member on a meeting the requirements of section must complete and attach Form 2848,
net cash basis; 2032A. Power of Attorney and Declaration of
4. The real property was acquired from To make a protective election, check Representative.
or passed from the decedent to a qualified “Yes” to line 2 and complete Schedule A-1 You must also complete and attach
heir of the decedent; according to its instructions for “Protective Form 2848 if you wish to authorize
5. The real property was owned and Election.” someone to enter into closing agreements
used in a qualified manner by the If you make a protective election, you for the estate.
decedent or a member of the decedent’s should complete this Form 706 by valuing If you wish only to authorize someone to
family during 5 of the 8 years before the all property at its fair market value. Do not inspect and/or receive confidential tax
decedent’s death; use special use valuation. Usually, this will information (but not to represent you
6. There was material participation by result in higher estate and GST tax before the IRS), you must complete and
the decedent or a member of the liabilities than will be ultimately determined file Form 8821, Tax Information
decedent’s family during 5 of the 8 years if special use valuation is allowed. The Authorization.
before the decedent’s death; and protective election does not extend the
time to pay the taxes shown on the
return. If you wish to extend the time to
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Line 4 Statement, for each policy and an 4980A(d) excess retirement accumulation.
explanation of why the policy or its If it appears, after reading these rules, that
Complete line 4 whether or not there is a proceeds are not includible in the gross there is the possibility of such an excess,
surviving spouse and whether or not the estate. see the instructions for Schedule S on
surviving spouse received any benefits page 20 for more information.
from the estate. If there was no surviving Line 10—Partnership Interests and
spouse on the date of decedent’s death, A “qualified plan” means any:
Stock in Close Corporations 1. Qualified pension, profit-sharing, or
enter “None” in line 4a and leave lines 4b
and 4c blank. The value entered in line 4c If you answered “Yes” to line 10, you must stock bonus plan described in section
need not be exact. See the instructions for include full details for partnerships and 401(a) that includes a trust exempt from
“Amount,” under line 5, below. unincorporated businesses on Schedule F tax under section 501(a);
(Schedule E if the partnership interest is 2. Annuity plan described in section
Line 5 jointly owned). You must include full details 403(a);
Name.—Enter the name of each individual, for the stock of inactive or close
3. Annuity contract, custodial account,
trust, or estate who received (or will corporations on Schedule B.
or retirement income account described in
receive) benefits of $5,000 or more from Value these interests using the rules of section 403(b)(1), 403(b)(7), or 403(b)(9);
the estate directly as an heir, next-of-kin, Regulations section 20.2031-2 (stocks) or
4. Qualified bond purchase plan
devisee, or legatee; or indirectly (for 20.2031-3 (other business interests).
described in section 405(a) prior to that
example, as beneficiary of an annuity or A “close corporation” is a corporation section’s repeal by section 491(a) of the
insurance policy, shareholder of a whose shares are owned by a limited Tax Reform Act of 1984.
corporation, or partner of a partnership number of shareholders. Often, one family
that is an heir, etc.). To determine if the decedent had an
holds the entire stock issue. As a result,
excess retirement accumulation, you must
Identifying Number.—Enter the social little, if any, trading of the stock takes
first total all of the decedent’s interests (as
security number of each individual place. There is, therefore, no established
of the date of death) in qualified plans and
beneficiary listed. If the number is market for the stock, and those sales that
individual retirement plans. Then determine
unknown, or the individual has no number, do occur are at irregular intervals and
the present (date of death or alternate
please indicate “unknown” or “none.” For seldom reflect all the elements of a
valuation date) value of a hypothetical life
trusts and other estates, enter the representative transaction as defined by
annuity for the decedent. This hypothetical
employer identification number. the term “fair market value.”
life annuity must pay the decedent the
Relationship.—For each individual Line 12—Trusts greater of $150,000 (unindexed) or
beneficiary enter the relationship (if known) $112,500 (indexed) per year, times the
to the decedent by reason of blood, If you answered “Yes” to either 12a or multiplier described in the instructions for
marriage, or adoption. For trust or estate 12b, you must attach a copy of the trust line 3, Part III, of Schedule S. Those
beneficiaries, indicate TRUST or ESTATE. instrument for each trust. instructions are on page 21.
Amount.—Enter the amount actually You must complete Schedule G if you If the decedent’s total interest in the
distributed (or to be distributed) to each answered “Yes” to 12a and Schedule F if plans is greater than the value of this
beneficiary including transfers during the you answered “Yes” to 12b. hypothetical annuity, then there is an
decedent’s life from Schedule G required excess retirement accumulation, and you
to be included in the gross estate. The Line 14—Transitional Marital should check “Yes” to question 16 and
value to be entered need not be exact. A Deduction Computation attach Schedule S to your return.
reasonable estimate is sufficient. For
example, where precise values cannot You must check “Yes” if property passes
readily be determined, as with certain to the surviving spouse under a maximum Instructions for Part 5.—
future interests, a reasonable marital deduction formula provision that Recapitulation (Page 3 of
approximation should be entered. The total meets the requirements of section 403(e)(3)
of the Economic Recovery Tax Act of 1981 Form 706)
of these distributions should approximate
the amount of gross estate reduced by (P. L. 97-34; 95 Stat. 305).
Gross Estate
funeral and administrative expenses, debts If you check “Yes” to line 14, you must
and mortgages, bequests to surviving compute the marital deduction under the Items 1 through 9.—You must make an
spouse, charitable bequests, and any rules that were in effect before the entry in each of items 1 through 9. If the
Federal and state estate and GST taxes Economic Recovery Tax Act of 1981. gross estate does not contain any assets
paid (or payable) relating to the benefits of the type specified by a given item, enter
For a format for this computation, you
received by the beneficiaries listed on lines zero for that item. Entering zero for any of
should obtain the November 1981 revision
4 and 5. items 1 through 9 is a statement by the
of Form 706 and its instructions. The
executor, made under penalties of perjury,
All distributions of less than $5,000 to computation is items 19 through 26 of the
that the gross estate does not contain any
specific beneficiaries may be included with Recapitulation. You should also apply the
includible assets covered by that item. Do
distributions to unascertainable rules of Rev. Rul. 80-148, 1980-1 C.B. 207,
not enter any amounts in the “Alternate
beneficiaries on the line provided. if there is property that passes to the
value” column unless you elected alternate
surviving spouse outside of the maximum
valuation on line 1 of Elections by the
Line 6—Section 2044 Property marital deduction formula provision.
Executor on page 2.
If you answered “Yes,” these assets must Line 16—Excess Retirement Which Schedules To Attach for Items 1
be shown on Schedule F.
Accumulation Through 9.—You must attach Schedule F
Section 2044 property is property for to the return and answer its questions
which a previous section 2056(b)(7) If the decedent did not have any interest in even if you report no assets on it.
election (QTIP election) has been made, or a qualified employer plan or individual
retirement plan (defined in section You must attach Schedules A, B, and C
for which a similar gift tax election (section
7701(a)(37)), check “No” to this question. if the gross estate includes any Real
2523) has been made. For more details
Estate; Stocks and Bonds; or Mortgages,
see Pub. 448. Note: The tax on excess retirement Notes, and Cash, respectively. You must
accumulations will not apply to most attach Schedule D if the gross estate
Line 8—Insurance Not Included in decedents because the present value of includes any Life Insurance or if you
the Gross Estate the hypothetical annuity is usually so large answered “Yes” to question 8a. You must
that very few decedents will have a larger attach Schedule E if the gross estate
If you checked “Yes” for either 8a or 8b,
total interest in qualified plans and contains any Jointly Owned Property or if
you must complete and attach Schedule D
individual retirement plans. The rules below you answered “Yes” to question 9. You
and attach a Form 712, Life Insurance
are a general description of the section must attach Schedule G if the decedent
Page 5
made any of the lifetime transfers to be reconcile the decedent’s lifetime taxable The specific exemption was allowed by
listed on that schedule or if you answered gifts to compute totals that will be used for section 2521 for gifts made before January
“Yes” to question 11 or 12a. You must the line 4 and line 9 worksheets. You must 1, 1977.)
attach Schedule H if you answered “Yes” get all of the decedent’s gift tax returns If the decedent did not make any gifts
to question 13. You must attach Schedule (Form 709, United States Gift (and between September 8, 1976, and January
I if you answered “Yes” to question 15. Generation-Skipping Transfer) Tax Return) 1, 1977, or if the decedent made gifts
before you complete Worksheet TG. The during that period but did not claim the
Deductions amounts you will enter on Worksheet TG specific exemption, enter zero.
Items 11 Through 19.—You must attach can usually be derived from these returns
the appropriate schedules for the as filed. However, if any of the returns Line 15
deductions you claim. were audited by the IRS, you should use
the amounts that were finally determined You may take a credit on line 15 for estate,
Item 15.—If item 14 is less than or equal as a result of the audits. inheritance, legacy, or succession taxes
to the value (at the time of the decedent’s paid as the result of the decedent’s death
death) of the property subject to claims, Special Treatment of Split Gifts.—These to any state or the District of Columbia.
enter the amount from item 14 on item 15. special rules apply only if: However, see section 2053(d) and the
If the amount on item 14 is more than 1. The decedent’s spouse predeceased related regulations for exceptions and
the value of the property subject to claims, the decedent; limits if you elected to deduct the taxes
enter the greater of (a) the value of the 2. The decedent’s spouse made gifts from the value of the gross estate.
property subject to claims, or (b) the that were “split” with the decedent under If you make a section 6166 election to
amount actually paid at the time the return the rules of section 2513; pay the Federal estate tax in installments
is filed. 3. The decedent was the “consenting and make a similar election to pay the
In no event should you enter more on spouse” for those split gifts, as that term is state death tax in installments, see Rev.
item 15 than the amount on item 14. See used on Form 709; and Rul. 86-38, 1986-1 C.B. 296, for the
section 2053 and the related regulations method of computing the credit allowed
4. The split gifts were included in the with this Form 706.
for more information. decedent’s spouse’s gross estate under
section 2035. The credit may not be more than the
Instructions for Part 2.—Tax amount figured by using Table B on page
If all four conditions above are met, do 9, based on the value of the adjusted
Computation (Page 1 of not include these gifts on line 4 of the Tax taxable estate. The adjusted taxable estate
Form 706) Computation and do not include the gift is the amount of the Federal taxable estate
taxes payable on these gifts on line 9 of (line 3 of the Tax Computation) reduced by
In general, the estate tax is figured by the Tax Computation. These adjustments $60,000. You may claim an anticipated
applying the unified rates shown in Table A are incorporated into the worksheets. amount of credit and figure the Federal
to the total of transfers both during life and estate tax on the return before the state
at death, and then subtracting the gift Line 7 death taxes have been paid. However, the
taxes. You must complete the Tax Lines 7a–c are used to calculate the credit cannot be finally allowed unless you
Computation. phaseout of the unified credit and pay the state death taxes and claim the
graduated rates. The phaseout applies only credit within 4 years after the return is filed
Line 1 (or later as provided by the Code if a
to estates in which the amount the
If you elected alternate valuation on line 1, tentative tax is computed on exceeds $10 petition is filed with the Tax Court of the
Part 3, Elections by the Executor, enter million. United States, or if you have an extension
the amount you entered in the “Alternate of time to pay) and submit evidence that
value” column of item 10 of Part 5, Line 12 the tax has been paid. If you claim the
Recapitulation. Otherwise, enter the credit for any state death tax that is later
If the decedent made gifts (including gifts
amount from the “Value at date of death” recovered, see Regulations section
made by the decedent’s spouse and
column. 20.2016-1 for the notice you are required
treated as made by the decedent by
to give the IRS within 30 days.
Lines 4 and 9 reason of gift splitting) after September 8,
1976, and before January 1, 1977, for If you transfer property other than cash
Three worksheets are provided to help you which the decedent claimed a specific to the state in payment of state inheritance
compute the entries for these lines. You exemption, the unified credit on this estate taxes, the amount you may claim as credit
need not file these worksheets with your tax return must be reduced. The reduction is the lesser of the state inheritance tax
return but should keep them for your is figured by entering 20% of the specific liability discharged or the fair market value
records. Worksheet TG allows you to exemption claimed for these gifts. (Note: of the property on the date of the transfer.

Page 6
Worksheet TG Taxable Gifts Reconciliation
To be used for lines 4 and 9 of the Tax Computation
a. b.
Note: For the definition of a taxable gift see section 2503. Ignore the old specific
Gifts made after June 6,

Total taxable gifts
exemption. Follow Form 709. That is, include only the decedent’s one-half of split
1932, and before 1977

Calendar year or reported on Form 709 for
calendar quarter period (see Note) gifts, whether the gifts were made by the decedent or the decedent’s spouse.

c. d. e. f.
Taxable amount
Taxable amount included in col. b for Gift tax paid by Gift tax paid by
included in col. b gifts that qualify for decedent on gifts decedent’s spouse on
for gifts included “special treatment of in col. d gifts in col. c
1. Total taxable gifts in the gross estate split gifts” described
made before 1977 above
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 line 2, column b, Worksheet TG
2. Taxable gifts made after 1976 reportable on Schedule G. Enter the amount from line 2,
column c, Worksheet TG
3. Taxable gifts made after 1976 that qualify for “special treatment.” Enter the amount
from line 2, column d, Worksheet TG
4. Add lines 2 and 3
5. Adjusted taxable gifts. Subtract line 4 from line 1. Enter here and on line 4 of the Tax Computation of Form

Page 7
Line 9 Worksheet Gift Tax on Gifts Made After 1976

a. b.
Calendar year Total taxable gifts for prior
or calendar periods (from Form 709,
quarter Tax Computation, line 2) c. d. e. f.
Taxable gifts for this Tax payable for this
Total pre-1977 Tax payable using Table Unused unified credit for
period (from Form 709, period (subtract col.
taxable gifts. Enter A (on page 9) this period (see below)
Tax Computation, line 1) e from col. d)
the amount from line
1, Worksheet TG

1. Total gift taxes payable on gifts made after 1976 (combine the amounts in column f)
2. Gift taxes paid by the decedent on gifts that qualify for “special treatment.” Enter the amount from
line 2, column e, Worksheet TG on page 7
3. Subtract line 2 from line 1
4. Gift tax paid by decedent’s spouse on split gifts included on Schedule G. Enter the amount from line
2, column f, Worksheet TG on page 7
5. Add lines 3 and 4. Enter here and on line 9 of the Tax Computation of Form 706
Column d: To figure the “tax payable” for this column, you must use Table A in these instructions, as it applies to the year of the decedent’s death rather than to the
year the gifts were actually made. To compute the entry for col. d, you should figure the “tax payable” on the amount in col. b and subtract it from the “tax payable”
on the amounts in cols. b and c added together. Enter the difference in col. d.
If the amount in columns b and c combined exceeds $10 million for any given calendar year, then you must calculate the tax in column d for that year using the
Form 709 revision in effect for the year of the decedent’s death.
To calculate the tax, enter the amount for the appropriate year from column c of the worksheet on line 1 of the Tax Computation of the Form 709. Enter the
amount from column b on line 2 of the Tax Computation. Complete the Tax Computation through the tax due before any reduction for the unified credit and enter
that amount in column d, above.
Column e: To figure the unused unified credit, use the unified credit in effect for the year the gift was made. This amount should be on line 12 of the Tax
Computation of the Form 709 filed for the gift.

For more details, see Rev. Rul. 86-117, For more information, see the regulations Instructions for Schedule
1986-2 C.B. 157. under section 2012. This computation may
You should send the following evidence be made using Form 4808, Computation B.—Stocks and Bonds
to the IRS: of Credit for Gift Tax. Attach a copy of a
completed Form 4808 or the computation
1. Certificate of the proper officer of the of the credit. Also attach all available If the total gross estate contains any
taxing state, or the District of Columbia, copies of Forms 709 filed by the decedent stocks or bonds, you must complete
showing: (a) the total amount of tax to help verify the amounts entered on lines Schedule B and file it with the return.
imposed (before adding interest and 4, 9, and 17.
penalties and before allowing discount); (b) On Schedule B list the stocks and bonds
the amount of discount allowed; (c) the included in the decedent’s gross estate.
Line 23 Number each item in the left-hand column.
amount of penalties and interest imposed
or charged; (d) the total amount actually If you answered “Yes” to question 16 of Bonds that are exempt from Federal
paid in cash; and (e) the date of payment. General Information, you must complete income taxes are not exempt from
Schedule S. Enter the tax due from line 17 estate taxes unless specifically
2. Any additional proof the IRS exempted by an estate tax provision of
of Schedule S on line 23. This increased
specifically requests. the Code. Therefore, you should list these
estate tax may not be offset by any of the
You should file the evidence requested estate tax credits on lines 11–19. bonds on Schedule B.
above with the return if possible. Public housing bonds includible in the
Otherwise, send it as soon after you file Line 26 gross estate must be included at their full
the return as possible. value.
You may not use these bonds to pay the
Line 17 GST tax. You may use these bonds to pay If you paid any estate, inheritance,
the increased estate tax shown on line 23. legacy, or succession tax to a foreign
You may take a credit for Federal gift taxes country on any stocks or bonds included
imposed by Chapter 12 of the Code, and
the corresponding provisions of prior laws, Instructions for Schedule
(continued on page 10)
on certain transfers the decedent made A.—Real Estate
before January 1, 1977, that are included
See the reverse side of Schedule A on
in the gross estate. The credit cannot be
Form 706.
more than the amount figured by the
following formula:
Gross estate tax minus (the
sum of the state death taxes
and unified credit) Value of
included gift
Value of gross estate minus
(the sum of the deductions for
charitable, public, and similar
gifts and bequests and marital

Page 8
Table A—Unified Rate Schedule Table B Worksheet
Federal Adjusted Taxable Estate
Column A Column B Column C Column D
Rate of tax on
Taxable Taxable Tax on 1 Federal taxable estate (from Tax Computation,
excess over $
amount amount amount in Form 706, line 3)
amount in
over not over column A column A 2 Adjustment 60,000
3 Federal adjusted taxable estate. Subtract line 2
(Percent) from line 1. Use this amount to compute
0 $10,000 0 18 maximum credit for state death taxes in Table B.
$10,000 20,000 $1,800 20
20,000 40,000 3,800 22
40,000 60,000 8,200 24
60,000 80,000 13,000 26
80,000 100,000 18,200 28
100,000 150,000 23,800 30
150,000 250,000 38,800 32
250,000 500,000 70,800 34
500,000 750,000 155,800 37
750,000 1,000,000 248,300 39
1,000,000 1,250,000 345,800 41
1,250,000 1,500,000 448,300 43
1,500,000 2,000,000 555,800 45
2,000,000 2,500,000 780,800 49
2,500,000 3,000,000 1,025,800 53
3,000,000 1,290,800 55

Table B

Computation of Maximum Credit for State Death Taxes
(Based on Federal adjusted taxable estate computed using the worksheet above.)
(1) (2) (3) (4) (1) (2) (3) (4)
Adjusted taxable Adjusted taxable Credit on amount Rate of credit on Adjusted taxable Adjusted taxable Credit on amount Rate of credit on
estate equal to or estate less than— in column (1) excess over amount estate equal to or estate less than— in column (1) excess over amount
more than— in column (1) more than— in column (1)

(Percent) (Percent)
0 $40,000 0 None 2,040,000 2,540,000 106,800 8.0
$40,000 90,000 0 0.8 2,540,000 3,040,000 146,800 8.8
90,000 140,000 $400 1.6 3,040,000 3,540,000 190,800 9.6
140,000 240,000 1,200 2.4 3,540,000 4,040,000 238,800 10.4
240,000 440,000 3,600 3.2 4,040,000 5,040,000 290,800 11.2

440,000 640,000 10,000 4.0 5,040,000 6,040,000 402,800 12.0
640,000 840,000 18,000 4.8 6,040,000 7,040,000 522,800 12.8
840,000 1,040,000 27,600 5.6 7,040,000 8,040,000 650,800 13.6
1,040,000 1,540,000 38,800 6.4 8,040,000 9,040,000 786,800 14.4
1,540,000 2,040,000 70,800 7.2 9,040,000 10,040,000 930,800 15.2
10,040,000 1,082,800 16.0

Examples showing use of Schedule B
Example where the alternate valuation is not adopted; date of death, January 1, 1993
Alternate Alternate
Item Description including face amount of bonds or number of shares and par value where Unit value valuation Value at date
number needed for identification. Give CUSIP number if available. value of death

1 $60,000-Arkansas Railroad Co. first mortgage 4%, 20-year bonds,
due 1995. Interest payable quarterly on Feb. 1, May 1, Aug. 1 and
Nov. 1; N.Y. Exchange, CUSIP No. XXXXXXXXX 100 60,000
Interest coupons attached to bonds, item 1, due and payable on Nov.
1, 1992, but not cashed at date of death 600
Interest accrued on item 1, from Nov. 1, 1992, to Jan. 1, 1993 400
2 500 shares Public Service Corp., common; N.Y. Exchange, CUSIP No.
XXXXXXXXX 110 55,000
Dividend on item 2 of $2 per share declared Dec. 10, 1992, payable
on Jan. 10, 1993, to holders of record on Dec. 30, 1992 1,000

Page 9
Example where the alternate valuation is adopted; date of death, January 1, 1993
Item Description including face amount of bonds or number of shares and par value where Alternate Alternate Value at date
Unit value valuation
number needed for identification. Give CUSIP number if available. value of death

1 $60,000-Arkansas Railroad Co. first mortgage 4%, 20-year bonds,
due 1995. Interest payable quarterly on Feb. 1, May 1, Aug. 1 and
Nov. 1; N.Y. Exchange, CUSIP No. XXXXXXXXX 100 60,000
$30,000 of item 1 distributed to legatees on Apr. 1, 1993 99 4/1/93 29,700
$30,000 of item 1 sold by executor on May 2, 1993 98 5/2/93 29,400
Interest coupons attached to bonds, item 1, due and payable on
Nov. 1, 1992, but not cashed at date of death. Cashed by executor
on Feb. 1, 1993 2/1/93 600 600
Interest accrued on item 1, from Nov. 1, 1992, to Jan. 1, 1993. Cashed
by executor on Feb. 1, 1993 2/1/93 400 400
2 500 shares of Public Service Corp., common; N.Y. Exchange, CUSIP
No. XXXXXXXXX 110 55,000
Not disposed of within 6 months following death 90 7/1/93 45,000
Dividend on item 2 of $2 per share declared Dec. 10, 1992, and paid
on Jan. 10, 1993, to holders of record on Dec. 30, 1992 1/10/93 1,000 1,000
(Continued from page 8)

in this schedule, group those stocks and If the stock or bond is unlisted, show the prices or bid and asked prices as the fair
bonds together and label them “Subjected company’s principal business office. market value.
to Foreign Death Taxes.” The CUSIP (Committee on Uniform For example, assume that sales of stock
List interest and dividends on each stock Security Identification Procedure) number nearest the valuation date (June 15)
or bond separately. Indicate as a separate is a nine-digit number that is assigned to occurred 2 trading days before (June 13)
item dividends that have not been all stocks and bonds traded on major and 3 trading days after (June 18). On
collected at death, but which are payable exchanges and many unlisted securities. those days the mean sale prices per share
to the decedent or the estate because the Usually, the CUSIP number is printed on were $10 and $15, respectively. Therefore,
decedent was a stockholder of record on the face of the stock certificate. If the the price of $12 is considered the fair
the date of death. However, if the stock is CUSIP number is not printed on the market value of a share of stock on the
being traded on an exchange and is selling certificate, it may be obtained through the valuation date. If, however, on June 13 and
ex-dividend on the date of the decedent’s company’s transfer agent. 18, the mean sale prices per share were
death, do not include the amount of the $15 and $10, respectively, the fair market
dividend as a separate item. Instead, add it Valuation value of a share of stock on the valuation
to the ex-dividend quotation in determining List the fair market value of the stocks or date is $13.
the fair market value of the stock on the bonds. The fair market value of a stock or If only closing prices for bonds are
date of the decedent’s death. Dividends bond (whether listed or unlisted) is the available, see Regulations section
declared on shares of stock before the mean between the highest and lowest 20.2031-2(b).
death of the decedent but payable to selling prices quoted on the valuation date.
stockholders of record on a date after the Apply the rules in the section 2031
If only the closing selling prices are regulations to determine the value of
decedent’s death are not includible in the available, then the fair market value is the
gross estate for Federal estate tax inactive stock and stock in close
mean between the quoted closing selling corporations. Send with the schedule
purposes. price on the valuation date and on the complete financial and other data used to
trading day before the valuation date. To determine value, including balance sheets
Description figure the fair market value if there were no (particularly the one nearest to the
For stocks indicate: sales on the valuation date: valuation date) and statements of the net
● Number of shares 1. Find the mean between the highest earnings or operating results and dividends
● Whether common or preferred and lowest selling prices on the nearest paid for each of the 5 years immediately
trading date before and the nearest trading before the valuation date.
● Issue date after the valuation date. Both trading Securities reported as of no value,
● Par value where needed for identification dates must be reasonably close to the nominal value, or obsolete should be listed
● Price per share valuation date. last. Include the address of the company
● Exact name of corporation 2. Prorate the difference between the and the state and date of the
mean prices to the valuation date. incorporation. Attach copies of
● Principal exchange upon which sold, if correspondence or statements used to
listed on an exchange 3. Add or subtract (whichever applies)
the prorated part of the difference to or determine the “no value.”
● CUSIP number, if available If the security was listed on more than
from the mean price figured for the nearest
For bonds indicate: trading date before the valuation date. one stock exchange, use either the records
● Quantity and denomination If no actual sales were made reasonably of the exchange where the security is
● Name of obligor close to the valuation date, make the same principally traded or the composite listing
computation using the mean between the of combined exchanges, if available, in a
● Date of maturity publication of general circulation. In valuing
bona fide bid and asked prices instead of
● Interest rate sales prices. If actual sales prices or bona listed stocks and bonds, you should
● Interest due date fide bid and asked prices are available carefully check accurate records to obtain
within a reasonable period of time before values for the applicable valuation date.
● Principal exchange, if listed on an
exchange the valuation date but not after the If you get quotations from brokers, or
valuation date, or vice versa, use the mean evidence of the sale of securities from the
● CUSIP number, if available between the highest and lowest sales officers of the issuing companies, attach to
the schedule copies of the letters
Page 10
furnishing these quotations or evidence of of any pertinent gift tax returns filed by the 4. Transfers taking effect at death
sale. decedent’s spouse within 3 years of death. (section 2037).—These are transfers made
See Rev. Rul. 69-489, 1969-2 C.B. 172, 2. Other transfers within 3 years before on or after September 8, 1916, that took
for the special valuation rules for certain death.—Section 2035(a). These transfers effect at the decedent’s death. A transfer
marketable U.S. Treasury Bonds (issued include only the following: that takes effect at the decedent’s death is
before March 4, 1971). These bonds, one under which possession or enjoyment
● Any transfer by the decedent with can be obtained only by surviving the
commonly called “flower bonds,” may be respect to a life insurance policy within 3
redeemed at par plus accrued interest in decedent. A transfer is not treated as one
years before death. that takes effect at the decedent’s death
payment of the tax at any Federal Reserve
bank, the office of the Treasurer of the ● Any transfer within 3 years before death unless the decedent retained a
United States, or the Bureau of the Public of a retained section 2036 life estate, reversionary interest in the property that
Debt, as explained in Rev. Proc. 69-18, section 2037 reversionary interest, or immediately before the decedent’s death
1969-2 C.B. 300. section 2038 power to revoke, etc., if the had a value of more than 5% of the value
property subject to the life estate, interest, of the transferred property. If the transfer
or power would have been included in the was made before October 8, 1949, the
Instructions for gross estate had the decedent continued reversionary interest must have arisen by
Schedule D.—Insurance on to possess the life estate, interest, or the express terms of the instrument of
power until death. transfer.
the Decedent’s Life
These transfers are reported on 5. Revocable transfers (section 2038).—
See the reverse side of Schedule D on Schedule G regardless of whether a gift These are transfers in which the enjoyment
Form 706. tax return was required to be filed for them of the transferred property was subject at
when they were made. However, the decedent’s death to any change through
Instructions for Schedule amount includible and the information the exercise of a power to alter, amend,
required to be shown for the transfers are revoke, or terminate, as follows:
E.—Jointly Owned Property determined: ● If the transfer was made before 4:01
See the reverse side of Schedule E on ● For insurance on the life of the decedent p.m., eastern standard time, June 2, 1924,
Form 706. using the instructions to Schedule D. and the power was reserved at the time of
(Attach Form(s) 712.) the transfer and was exercisable by the
Instructions for Schedule ● For insurance on the life of another using decedent alone or with a person who had
the instructions to Schedule F. (Attach no substantial adverse interest in the
F.—Other Miscellaneous transferred property.
Form(s) 712.)
Property ● For sections 2036, 2037, and 2038 ● If the transfer was made on or after 4:01
See the reverse side of Schedule F on transfers, using paragraphs 3, 4, and 5 of p.m., eastern standard time, June 2, 1924,
Form 706. these instructions. and before June 23, 1936, and the power
was reserved at the time of the transfer
3. Transfers with retained life estate
and was exercisable by the decedent
Instructions for (section 2036).—These are transfers in
alone or with any person (regardless of
Schedule G.—Transfers which the decedent retained the income
whether that person had a substantial
from the transferred property or the right to
During Decedent’s Life adverse interest in the transferred
designate the person or persons who will
property), or
You must complete Schedule G and file it possess or enjoy the transferred property,
or the income from the transferred property ● If the transfer was made after June 22,
with the return if the decedent made any
if the transfer was made: 1936, regardless of whether the power was
of the transfers described below in 1
reserved at the time of the transfer or later
through 5 or if you answered “Yes” on line (a) Between March 4, 1931, and June 6,
created or conferred, regardless of the
11 or 12a of Part 4, General Information. 1932, inclusive, and the decedent alone
source from which the power was
Five types of transfers should be retained the right to so designate for life,
acquired, regardless of whether the power
reported on this schedule: or for any period that did not in fact end
was exercisable by the decedent alone or
before the decedent’s death; or
1. Certain gift taxes.—Section 2035(c). with any person, and regardless of whether
Enter at item A of the Schedule the total (b) After June 6, 1932, and the decedent that person had a substantial adverse
value of the gift taxes that were paid by retained the right to so designate, either interest in the transferred property.
alone or with any person, for life, for any
the decedent or the estate on gifts made ● If the decedent relinquished within 3
by the decedent or the decedent’s spouse period that must be ascertained by
years before death any of the includible
within 3 years before death. reference to the decedent’s death, or for
powers described above, you should
any period that did not in fact end before
The date of the gift, not the date of determine the gross estate as if the
the decedent’s death.
payment of the gift tax, determines decedent had actually retained the powers
whether a gift tax paid is included in the Retained Voting Rights. Transfers with a until death.
gross estate under this rule. Therefore, you retained life estate also include transfers of
For more detailed information on which
should carefully examine the Forms 709 stock in a “controlled corporation” after
transfers are includible in the gross estate,
filed by the decedent and the decedent’s June 22, 1976, if the decedent retained or
see the Estate Tax Regulations.
spouse to determine what part of the total acquired voting rights in the stock. If the
gift taxes reported on them was decedent retained direct or indirect voting Special Valuation Rules for Certain
attributable to gifts made within 3 years rights in a controlled corporation, the
decedent is considered to have retained Lifetime Transfers
before death. For example, if the decedent
died on July 10, 1993, you should examine enjoyment of the transferred property. A Note: Code sections 2701–2704 were
gift tax returns for 1993, 1992, 1991, and corporation is a “controlled corporation” if enacted by the Omnibus Budget
1990. However, the gift taxes on the 1990 the decedent owned (actually or Reconciliation Act of 1990. These sections
returns that are attributable to gifts made constructively) or had the right (either alone provide rules for valuing certain transfers to
before July 10, 1990, are not included in or with any other person) to vote at least family members and are generally effective
the gross estate. 20% of the total combined voting power of for transfers occurring after October 8,
all classes of stock. See section 2036(b). If 1990.
Attach an explanation of how you these voting rights ceased or were
computed the includible gift taxes if you do Section 2701 deals with the transfer of
relinquished within 3 years before the
not include in the gross estate the entire an interest in a corporation or partnership
decedent’s death, the corporate interests
gift taxes shown on any Form 709 filed while retaining certain distribution rights, or
are included in the gross estate as if the
within 3 years of death. Also attach copies a liquidation, put, call, or conversion right.
decedent had actually retained the voting
rights until death.
Page 11
Section 2702 deals with the transfer of to the Schedule. If of public record, the The part to include in the gross estate as
an interest in a trust while retaining any copy should be certified; if not of record, a general power of appointment is figured
interest other than a qualified interest. In the copy should be verified. by dividing the value of the property by the
general, a qualified interest is a right to number of persons (including the
receive certain distributions from the trust Instructions for decedent) in favor of whom the power is
at least annually, or a noncontingent exercisable.
remainder interest if all of the other Schedule H.—Powers of Date Power Was Created.—Generally, a
interests in the trust are distribution rights Appointment power of appointment created by will is
specified in section 2702. considered created on the date of the
You must complete Schedule H and file it
Section 2703 provides rules for the with the return if you answered “Yes” to testator’s death. However, a power of
valuation of property transferred to a family line 13 of Part 4, General Information. appointment created by a will executed on
member but subject to an option, or before October 21, 1942, is considered
agreement, or other right to acquire or use On Schedule H include in the gross a power created on or before that date if
the property at less than fair market value. estate: the person executing the will died before
It also applies to transfers subject to 1. The value of property for which the July 1, 1949, without having republished
restrictions on the right to sell or use the decedent possessed a general power of the will, by codicil or otherwise, after
property. appointment on the date of his or her October 21, 1942.
Finally, section 2704 provides that in death; and A power of appointment created by an
certain cases the lapse of a voting or 2. The value of property for which the inter vivos instrument is considered
liquidation right in a family-owned decedent possessed a general power of created on the date the instrument takes
corporation or partnership will result in a appointment which he or she exercised or effect. If the holder of a power exercises it
deemed transfer. released before death by disposing of it in by creating a second power, the second
These rules have potential consequenses such a way that if it were a transfer of power is considered as created at the time
for the valuation of property in an estate. If property owned by the decedent, the of the exercise of the first.
the decedent (or any member of his or her property would be includible in the
family) was involved in any such decedent’s gross estate. (See section 2041 Attachments
transactions, see Code sections 2701–2704 and Pub. 448 for more details.) If the decedent ever possessed a power of
for additional details. appointment, attach a certified or verified
Powers of Appointment copy of the instrument granting the power
How To Complete A power of appointment includes all and a certified or verified copy of any
Schedule G powers which are in substance and effect instrument by which the power was
powers of appointment regardless of how exercised or released. You must file these
All transfers (other than outright transfers they are identified and regardless of local copies even if you contend that the power
not in trust and bona fide sales) made by property laws. For example, if a settlor was not a general power of appointment,
the decedent at any time during life must transfers property in trust for the life of his and that the property is not otherwise
be reported on the Schedule regardless of wife, with a power in the wife to includible in the gross estate.
whether you believe the transfers are appropriate or consume the principal of the
subject to tax. If the decedent made any trust, the wife has a power of appointment.
transfers not described in the instructions Instructions for
General Power of Appointment.—A
on page 11, the transfers should not be
general power of appointment is a power
Schedule I.—Annuities
shown on Schedule G. Instead, attach a
statement describing these transfers: list that is exercisable in favor of the decedent, You must complete Schedule l and file it
the date of the transfer, the amount or the decedent’s estate, the decedent’s with the return if you answered “Yes” to
value, and the type of transfer. creditors, or the creditors of the question 15 of Part 4, General Information.
decedent’s estate, except: Enter on Schedule I every annuity that
Complete the schedule for each transfer meets all of conditions 1–4 under General,
that is included in the gross estate under 1. A power to consume, invade, or
appropriate property for the benefit of the below, and every annuity described in
sections 2035(a), 2036, 2037, and 2038 as paragraphs a–h of Annuities Under
described on page 11. decedent that is limited by an
ascertainable standard relating to health, Approved Plans, even if the annuities are
In the “Item number” column, number education, support, or maintenance of the wholly or partially excluded from the gross
each transfer consecutively beginning with decedent. estate.
1. In the “Description” column, list the See the instructions for line 3 of
name of the transferee, the date of the 2. A power created on or before October
21, 1942, that is exercisable by the Schedule M for a discussion regarding the
transfer, and give a complete description QTIP treatment of certain joint and survivor
of the property. Transfers included in the decedent only in conjunction with another
person. annuities.
gross estate should be valued on the date
of the decedent’s death or, if the alternate 3. A power created after October 21, General
valuation is adopted, according to section 1942, exercisable by the decedent only in
2032. conjunction with (a) the creator of the Except as otherwise provided under
power, or (b) a person who has a Annuities Under Approved Plans on page
If only part of the property transferred
substantial interest in the property subject 13, include in the gross estate on this
meets the terms of section 2035(a), 2036,
to the power, which is adverse to the schedule all or part of the value of an
2037, or 2038, then only a corresponding
exercise of the power in favor of the annuity receivable by any beneficiary
part of the value of the property should be
decedent. following the death of the decedent under
included in the value of the gross estate. If
a contract or agreement that satisfies all
the transferee makes additions or A part of a power created after October
four conditions below:
improvements to the property, the 21, 1942, is considered a general power of
increased value of the property at the appointment if the power: 1. The contract or agreement is not a
valuation date should not be included on policy of insurance on the life of the
1. May only be exercised by the
Schedule G. However, if only a part of the decedent;
decedent in conjunction with another
value of the property is included, enter the person; and 2. The contract or agreement was
value of the whole under the column entered into after March 3, 1931;
headed “Description” and explain what 2. Is also exercisable in favor of the
other person (in addition to being 3. The annuity is receivable by the
part was included. beneficiary because he or she survived the
exercisable in favor of the decedent, the
Attachments.—If a transfer, by trust or decedent’s creditors, the decedent’s decedent; and
otherwise, was made by a written estate, or the creditors of the decedent’s 4. Under the contract or agreement, an
instrument, attach a copy of the instrument estate). annuity was payable to the decedent (or
Page 12
the decedent possessed the right to 5. A contract or agreement under which c. A retirement annuity contract
receive the annuity) either alone or in the decedent immediately before death purchased for an employee by an
conjunction with another, for the was receiving, or was entitled to receive, employer that is an organization referred to
decedent’s life or for any period not an annuity for a stated period of time, with in section 170(b)(1)(A)(ii) or (vi), or that is a
ascertainable without reference to the the annuity to continue to a designated religious organization (other than a trust),
decedent’s death or for any period that did beneficiary, surviving the decedent, upon and that is exempt from tax under section
not in fact end before the decedent’s the decedent’s death before the expiration 501(a);
death. of that period of time; d. Chapter 73 of Title 10 of the United
Part Includible.—If the decedent 6. An annuity contract or other States Code;
contributed only part of the purchase price arrangement providing for a series of e. A bond purchase plan described in
of the contract or agreement, include in substantially equal periodic payments to be section 405 (before its repeal by
the gross estate only that part of the value made to a beneficiary for life or over a P.L. 98-369, effective for obligations issued
of the annuity receivable by the surviving period of at least 36 months after the date after December 31, 1983.)
beneficiary that the decedent’s contribution of the decedent’s death under an
to the purchase price of the annuity or individual retirement account, annuity, or If an annuity under an “approved plan”
agreement bears to the total purchase bond as described in section 2039(e) described in a–e above is receivable by a
price. For example, if the value of the (before its repeal by P.L. 98-369). beneficiary other than the executor and the
survivor’s annuity was $20,000 and the decedent made no contributions under the
Annuities Under Approved Plans.—The plan toward the cost, no part of the value
decedent had contributed three-fourths of statute allowing an exclusion for annuities
the purchase price of the contract, the of the annuity, subject to the $100,000
under approved plans has been repealed. limitation (if applicable), is includible in the
amount includible is $15,000 (3⁄4 3 However, under the special rules provided
$20,000). Except as provided under gross estate. If the decedent made a
for the annuities described in a–h below, it contribution under a plan described in a–e
Annuities Under Approved Plans, may be possible to exclude part or all of
contributions made by the decedent’s above toward the cost, include in the gross
the value of these annuities from the gross estate on this schedule that proportion of
employer to the purchase price of the estate.
contract or agreement are considered the value of the annuity which the amount
made by the decedent if they were made No exclusion is allowed for annuities of the decedent’s contribution under the
by the employer because of the under approved plans unless either plan bears to the total amount of all
decedent’s employment. For more condition 1 or 2 below is met: contributions under the plan. The
information, see section 2039. 1. On December 31, 1984, the decedent remaining value of the annuity is
was both a participant in the plan and in excludable from the gross estate subject to
“Annuity” Defined.—The term “annuity” the $100,000 limitation (if applicable). For
includes one or more payments extending pay status (i.e., had received at least one
benefit payment on or before December the rules to determine whether the
over any period of time. The payments decedent made contributions to the plan,
may be equal or unequal, conditional or 31, 1984), and the decedent irrevocably
elected the form of the benefit before July see Pub. 448.
unconditional, periodic or sporadic. The
following are examples of contracts (but 18, 1984; or Note: The accounts, annuities, and bonds
not necessarily the only forms of contracts) 2. The decedent separated from service described in f–h, below, are “approved
for annuities that must be included in the before January 1, 1985, and did not plans” only if they provide for a series of
gross estate: change the form of benefit before death. substantially equal periodic payments to be
made to a beneficiary for life, or over a
1. A contract under which the decedent If either of the above conditions is met, period of at least 36 months after the date
immediately before death was receiving or an exclusion is allowed. The exclusion may of the decedent’s death.
was entitled to receive, for the duration of not exceed $100,000 unless either of the
life, an annuity with payments to continue two additional conditions below is met: f. An individual retirement account
after death to a designated beneficiary, if described in section 408(a);
1. On December 31, 1982, the decedent
surviving the decedent; was both a participant in the plan and in g. An individual retirement annuity
2. A contract under which the decedent pay status (i.e., had received at least one described in section 408(b);
immediately before death was receiving or benefit payment on or before December h. A retirement bond described in
was entitled to receive, together with 31, 1982), and the decedent irrevocably section 409(a)(before its repeal by
another person, an annuity payable to the elected the form of the benefit before P.L. 98-369).
decedent and the other person for their January 1, 1983; or Subject to the $100,000 limitation, if
joint lives, with payments to continue to 2. The decedent separated from service applicable, if an annuity under a “plan”
the survivor following the death of either; before January 1, 1983, and did not described in f–h above is receivable by a
3. A contract or agreement entered into change the form of benefit before death. beneficiary other than the executor, the
by the decedent and employer under If either of the above conditions is met, entire value of the annuity is excludable
which the decedent immediately before the exclusion is not subject to the from the gross estate even if the decedent
death and following retirement was $100,000 limitation. made a contribution under the plan.
receiving, or was entitled to receive, an However, if any payment to or for an
annuity payable to the decedent for life Approved Plans: account or annuity described in paragraph
and after the decedent’s death to a a. An employees’ trust (or under a f, g, or h above was not allowable as an
designated beneficiary, if surviving the contract purchased by an employees’ income tax deduction under section 219
decedent, whether the payments after the trust) forming part of a pension, stock (and was not a rollover contribution as
decedent’s death are fixed by the contract bonus, or profit-sharing plan that met all described in section 2039(e) before its
or subject to an option or election the requirements of section 401(a), either repeal by P.L. 98-369), include in the gross
exercised or exercisable by the decedent. at the time of the decedent’s separation estate on this schedule that proportion of
However, see Annuities Under Approved from employment (whether by death or the value of the annuity which the amount
Plans, below; otherwise) or at the time of the termination not allowable as a deduction under section
4. A contract or agreement entered into of the plan (if earlier); 219 and not a rollover contribution bears
by the decedent and employer under to the total amount paid to or for such
b. A retirement annuity contract account or annuity. For more information,
which at the decedent’s death, before purchased by the employer (but not by an
retirement or before the expiration of a see Regulations section 20.2039-5.
employees’ trust) under a plan that, at the
stated period of time, an annuity was time of the decedent’s separation from If any part of an annuity under a “plan”
payable to a designated beneficiary, if employment (by death or otherwise), or at described in a–h above is receivable by
surviving the decedent. However, see the time of the termination of the plan (if the executor, it is generally includible in the
Annuities Under Approved Plans, below; earlier), was a plan described in section gross estate on this schedule to the extent
403(a); that it is receivable by the executor in that

Page 13
capacity. In general, the annuity is trust or other fund, the description should to the decedent’s spouse in settlement of
receivable by the executor if it is to be be sufficiently complete to fully identify it. the spouse’s marital rights.
paid to the executor or if there is an If the annuity is payable for a term of You may not deduct a claim made
agreement (expressed or implied) that it years, include the duration of the term and against the estate by a remainderman
will be applied by the beneficiary for the the date on which it began, and if payable relating to section 2044 property. Section
benefit of the estate (such as in discharge for the life of a person other than the 2044 property is described in the
of the estate’s liability for death taxes or decedent, include the date of birth of that instructions to line 6 of Part 4, General
debts of the decedent, etc.) or that its person. If the annuity is wholly or partially Information.
distribution will be governed to any extent excluded from the gross estate, enter the
by the terms of the decedent’s will or the amount excluded under “Description” and Include in this schedule notes unsecured
laws of descent and distribution. explain how you computed the exclusion. by mortgage or other lien and give full
details, including name of payee, face and
If data available to you does not indicate unpaid balance, date and term of note,
whether the plan satisfies the requirements Instructions for Schedule interest rate, and date to which interest
of section 401(a), 403(a), 408(a), 408(b), or
409(a), you may obtain that information
J.—Funeral Expenses and was paid before death. Include the exact
nature of the claim as well as the name of
from the District Director of Internal Expenses Incurred in the creditor. If the claim is for services
Revenue for the district where the Administering Property performed over a period of time, state the
employer’s principal place of business is period covered by the claim. Example:
located. Subject to Claims Edison Electric Illuminating Co., for electric
See the reverse side of Schedule J on service during December 1992, $150.
Line A—Lump Sum Distribution Form 706. If the amount of the claim is the unpaid
Election balance due on a contract for the
The election pertaining to the lump sum Instructions for Schedule purchase of any property included in the
distribution from qualified plans (approved K.—Debts of the Decedent gross estate, indicate the schedule and
plans) excludes from the gross estate all or item number where you reported the
part of the lump sum distribution that and Mortgages and Liens property. If the claim represents a joint and
would otherwise be includible. When the You must complete and attach Schedule K separate liability, give full facts and explain
recipient makes the election to take a lump if you claimed deductions on either item 12 the financial responsibility of the
sum distribution and include it in his or her or item 13 of Part 5, Recapitulation. co-obligor.
income tax, the amount excluded from the Property and Income Taxes.—The
gross estate is the portion attributable to Debts of the Decedent deduction for property taxes is limited to
the employer contributions. The portion, if the taxes accrued before the date of the
any, attributable to the List under “Debts of the Decedent” only
valid debts the decedent owed at the time decedent’s death. Federal taxes on income
employee-decedent’s contributions is received during the decedent’s lifetime are
always includible. The actual election is of death. List any indebtedness secured by
a mortgage or other lien on property of the deductible, but taxes on income received
made by the recipient of the distribution by after death are not deductible.
taking the lump sum distribution and by gross estate under the heading “Mortgages
and Liens.” If the amount of the debt is Keep all vouchers or original records for
treating it as taxable on his or her income
disputed or the subject of litigation, deduct inspection by the Internal Revenue Service.
tax return as described in Regulations
section 20.2039-4(d). The election is only the amount the estate concedes to be Allowable Death Taxes.—If you elect to
irrevocable. However, you may not a valid claim. Enter the amount in contest take a deduction under section 2053(d)
compute the gross estate in accordance in the column provided. rather than a credit under section 2011 or
with this election unless you check “Yes” Generally, if the claim against the estate section 2014, the deduction is subject to
to line A and attach the name, address, is based on a promise or agreement, the the limitations described in section 2053(d)
and identifying number of the recipients of deduction is limited to the extent that the and its regulations. If you have difficulty
the lump sum distributions. See liability was contracted bona fide and for figuring the deduction, you may request a
Regulations section 20.2039-4. an adequate and full consideration in computation of it. Send your request within
money or money’s worth. However, any a reasonable amount of time before the
How To Complete the Schedule enforceable claim based on a promise or due date of the return to the Commissioner
agreement of the decedent to make a of Internal Revenue, Washington, DC
In describing an annuity, give the name
contribution or gift (such as a pledge or a 20224. Attach to your request a copy of
and address of the grantor of the annuity.
subscription) to or for the use of a the will and relevant documents, a
Specify if the annuity is under an approved
charitable, public, religious, etc., statement showing the distribution of the
plan. If it is under an approved plan, you
organization is deductible to the extent estate under the decedent’s will, and a
must state the ratio of the decedent’s
that the deduction would be allowed as a computation of the state or foreign death
contribution to the total purchase price of
bequest under the statute that applies. tax showing the amount payable by
the annuity. If the decedent was employed
Certain claims of a former spouse charity.
at the time of death and an annuity as
described in paragraph 4 of Annuity against the estate based on the
relinquishment of marital rights are
Mortgages and Liens
Defined, on page 13, became payable to
any beneficiary because the beneficiary deductible on Schedule K. For these List under “Mortgages and Liens” only
survived the decedent, you must state the claims to be deductible, all of the following obligations secured by mortgages or other
ratio of the decedent’s contribution to the conditions must be met: liens on property that you included in the
total purchase price of the annuity. If an ● The decedent and the decedent’s gross estate at its full value or at a value
annuity under an individual retirement spouse must have entered into a written that was undiminished by the amount of
account or annuity became payable to any agreement relative to their marital and the mortgage or lien. If the debt is
beneficiary because that beneficiary property rights. enforceable against other property of the
survived the decedent and is payable to estate not subject to the mortgage or lien,
● The decedent and the spouse must have or if the decedent was personally liable for
the beneficiary for life or for at least 36 been divorced before the decedent’s death
months following the decedent’s death, the debt, you must include the full value of
and the divorce must have occurred within the property subject to the mortgage or
you must state the ratio of the amount the 3-year period beginning on the date 1
paid for the individual retirement account lien in the gross estate under the
year before the agreement was entered appropriate schedule and may deduct the
or annuity that was not allowable as an into. It is not required that the agreement
income tax deduction under section 219 mortgage or lien on the property on this
be approved by the divorce decree. schedule. However, if the decedent’s
(other than a rollover contribution) to the
total amount paid for the account or ● The property or interest transferred estate is not liable, include in the gross
annuity. If the annuity is payable out of a under the agreement must be transferred estate only the value of the equity of
Page 14
redemption (or the value of the property the decedent before death. They may also the charity. Do not enter the entire amount
less the amount of the debt), and do not be incurred in the collection of other that passes to the trust (fund).
deduct any portion of the indebtedness on assets or the transfer or clearance of title If you are deducting the value of the
this schedule. to other property included in the residue or a part of the residue passing to
Notes and other obligations secured by decedent’s gross estate for estate tax charity under the decedent’s will, attach a
the deposit of collateral, such as stocks, purposes, but not included in the copy of the computation showing how you
bonds, etc., also should be listed under decedent’s probate estate. The expenses determined the value, including any
“Mortgages and Liens.” deductible on this schedule are limited to reduction for the taxes described above.
those that are the result of settling the
decedent’s interest in the property or of Also include:
vesting good title to the property in the 1. A statement that shows the values of
Include under the “Description” column the beneficiaries. Expenses incurred on behalf all specific and general legacies or devises
particular schedule and item number where of the transferees (except those described for both charitable and noncharitable uses.
the property subject to the mortgage or above) are not deductible. Examples of For each legacy or devise, indicate the
lien is reported in the gross estate. deductible and nondeductible expenses paragraph or section of the decedent’s will
Include the name and address of the are provided in Regulations section or codicil that applies. (If legacies are
mortgagee, payee, or obligee, and the date 20.2053-8. made to each member of a class (e.g.,
and term of the mortgage, note, or other List the names and addresses of the $1,000 to each of the decedent’s
agreement by which the debt was persons to whom each expense was employees), show only the number of each
established. Also include the face amount, payable and the nature of the expense. class and the total value of property they
the unpaid balance, the rate of interest, Identify the property for which the expense received.)
and date to which the interest was paid was incurred by indicating the schedule 2. The date of birth of all life tenants or
before the decedent’s death. and item number where the property is annuitants, the length of whose lives may
included in the gross estate. If you do not affect the value of the interest passing to
Instructions for Schedule know the exact amount of the expense, charity under the decedent’s will.
L.—Net Losses During you may deduct an estimate, provided that 3. A statement showing the value of all
the amount may be verified with property that is included in the decedent’s
Administration and reasonable certainty and will be paid gross estate but does not pass under the
Expenses Incurred in before the period of limitations for will, such as transfers, jointly owned
assessment (referred to above) expires. property that passed to the survivor on
Administering Property Not Keep all vouchers and receipts for decedent’s death, and insurance payable
Subject to Claims inspection by the Internal Revenue Service. to specific beneficiaries.
You must complete Schedule L and file it 4. Any other important information such
with the return if you claim deductions on Instructions for Schedule as that relating to any claim, not arising
either item 16 or item 17 of Part 5, M.—Bequests, etc. to under the will, to any part of the estate
Recapitulation. (e.g., a spouse claiming dower or curtesy,
Surviving Spouse (Marital or similar rights).
Net Losses During Administration Deduction)
Line 2
You may deduct only those losses from See pages 28 through 30 of Form 706 for
thefts, fires, storms, shipwrecks, or other these instructions. The charitable deduction is allowed for
casualties that occurred during the amounts that are transferred to charitable
settlement of the estate. You may deduct organizations as a result of a qualified
only the amount not reimbursed by Instructions for disclaimer. To be a qualified disclaimer, a
insurance or otherwise. Schedule O.—Charitable, refusal to accept an interest in property
must meet the conditions of section 2518.
Describe in detail the loss sustained and Public, and Similar Gifts and These are explained in Pub. 448 and
the cause. If you received insurance or
other compensation for the loss, state the
Bequests Regulations sections 25.2518-1 through
amount collected. Identify the property for 25.2518-3. If property passes to a
General charitable beneficiary as the result of a
which you are claiming the loss by
indicating the particular schedule and item You must complete Schedule O and file it qualified disclaimer, check the “Yes” box
number where the property is included in with the return if you claim a deduction on on line 2 and attach a copy of the written
the gross estate. item 19 of the Recapitulation. disclaimer required by section 2518(b).
If you elect alternate valuation, do not You can claim the charitable deduction Attachments
deduct the amount by which you reduced allowed under section 2055 for the value of
the value of an item to include it in the property in the decedent’s estate that was If the charitable transfer was made by will,
gross estate. transferred by the decedent during life or attach a certified copy of the order
by will to a charitable institution as admitting the will to probate, in addition to
Do not deduct losses claimed as a the copy of the will. If the charitable
deduction on a Federal income tax return explained in Pub. 448.
The deduction is limited to the amount transfer was made by any other written
or depreciation in the value of securities or instrument, attach a copy. If the instrument
other property. actually available for charitable uses.
Therefore, if under the terms of a will or is of record, the copy should be certified; if
not, the copy should be verified.
Expenses Incurred in the provisions of local law, or for any other
Administering Property Not reason, the Federal estate tax, the Federal Value
GST tax, or any other estate, GST,
Subject to Claims succession, legacy, or inheritance tax is The valuation dates used in determining
You may deduct expenses incurred in payable in whole or in part out of any the value of the gross estate apply also on
administering property that is included in bequest, legacy, or devise that would Schedule O.
the gross estate but that is not subject to otherwise be allowed as a charitable
claims. You may only deduct these deduction, the amount you may deduct is
expenses if they were paid before the the amount of the bequest, legacy, or
section 6501 period of limitations for devise reduced by the total amount of the
assessment expired. taxes.
The expenses deductible on the For split-interest trusts (or pooled
schedule are usually expenses incurred in income funds) enter in the “Amount”
the administration of a trust established by column the amount treated as passing to
Page 15
Instructions for Schedule situated in the foreign country imposing statute for death taxes paid to each
the tax is determined by the same political subdivision or possession of the
P.—Credit for Foreign Death principles that would apply in determining treaty country that are not directly or
Taxes whether similar property of a nonresident indirectly creditable under the treaty); (c) if
not a U.S. citizen is situated within the specifically provided, the credit is
General United States for purposes of the Federal proportionately shared for the tax
If you claim a credit on line 18 of Part 2, estate tax. See the instructions for Form applicable to property situated outside
Tax Computation, you must complete 706-NA. both countries, or that was deemed in
Schedule P and file it with the return. You some instances situated within both
Computation of Credit Under the countries; and (d) the amount entered at
must attach Form(s) 706CE, Certificate
of Payment of Foreign Death Tax, to Statute item 4 of Schedule P is the amount shown
support any credit you claim. on line 16 of Part 2, Tax Computation, less
Item 1.—Enter the amount of the estate, the total of the amounts on lines 17 and 19
The credit for foreign death taxes is inheritance, legacy, and succession taxes of the Tax Computation. (If a credit is
allowable only if the decedent was a paid to the foreign country and its claimed for tax on prior transfers, it will be
citizen or resident of the United States. possessions or political subdivisions, necessary to complete Schedule Q before
However, see section 2053(d) and the attributable to property that is (a) situated completing Schedule P.) For examples of
related regulations for exceptions and in that country, (b) subjected to these computation of credits under the treaties,
limitations if the executor has elected, in taxes, and (c) included in the gross estate. see the applicable regulations.
certain cases, to deduct these taxes from The amount entered at item 1 should not
the value of the gross estate. For a include any tax paid to the foreign country Computation of Credit in Cases Where
resident, not a citizen, who was a citizen or with respect to property not situated in Property Is Situated Outside Both
subject of a foreign country for which the that country and should not include any Countries or Deemed Situated Within
President has issued a proclamation under tax paid to the foreign country with respect Both Countries.—See the appropriate
section 2014(h), the credit is allowable only to property not included in the gross treaty for details.
if the country of which the decedent was a estate. If only a part of the property
national allows a similar credit to subjected to foreign taxes is both situated Instructions for
decedents who were U.S. citizens residing in the foreign country and included in the Schedule Q.—Credit for Tax
in that country. gross estate, it will be necessary to
The credit is authorized either by statute determine the portion of the taxes on Prior Transfers
or by treaty. If a credit is authorized by a attributable to that part of the property.
Also attach the computation of the amount General
treaty, whichever of the following is the
most beneficial to the estate is allowed: entered at item 1. You must complete Schedule Q and file it
(a) the credit computed under the treaty; Item 2.—Enter the value of the gross with the return if you claim a credit on line
(b) the credit computed under the statute; estate less the total of the deductions on 19 of Part 2, Tax Computation.
or (c) the credit computed under the items 18 and 19 of Part 5, Recapitulation. The term “transferee” means the
treaty, plus the credit computed under the Item 3.—Enter the value of the property decedent for whose estate this return is
statute for death taxes paid to each situated in the foreign country that is filed. If the transferee received property
political subdivision or possession of the subjected to the foreign taxes and from a transferor who died within 10 years
treaty country that are not directly or included in the gross estate, less those before, or 2 years after, the transferee, a
indirectly creditable under the treaty. Under portions of the deductions taken on credit is allowable on this return for all or
the statute, the credit is authorized for all Schedules M and O that are attributable to part of the Federal estate tax paid by the
death taxes (national and local) imposed in the property. transferor’s estate with respect to the
the foreign country. Whether local taxes transfer. There is no requirement that the
Item 4.—Subtract line 17, Part 2, Form
are the basis for a credit under a treaty property be identified in the estate of the
706 from line 16, Part 2, Form 706, and
depends upon the provisions of the transferee or that it exist on the date of the
enter the balance at item 4 of Schedule P.
particular treaty. transferee’s death. It is sufficient for the
If a credit for death taxes paid in more Credit Under Treaties allowance of the credit that the transfer of
than one foreign country is allowable, a the property was subjected to Federal
separate computation of the credit must If you are reporting any items on this return estate tax in the estate of the transferor
be made for each foreign country. The based on the provisions of a death tax and that the specified period of time has
copies of Schedule P on which the treaty, you may have to attach a statement not elapsed. A credit may be allowed with
additional computations are made should to this return disclosing the return position respect to property received as the result
be attached to the copy of Schedule P that is treaty based. See Regulations of the exercise or nonexercise of a power
provided in the return. section 301.6114-1 for details. of appointment when the property is
In General.—If the provisions of a treaty included in the gross estate of the donee
The total credit allowable in respect to
apply to the estate of a U.S. citizen or of the power.
any property, whether subjected to tax by
one or more than one foreign country, is resident, a credit is authorized for payment If the transferee was the transferor’s
limited to the amount of the Federal estate of the foreign death tax or taxes specified surviving spouse, no credit is allowed for
tax attributable to the property. The in the treaty. Death tax conventions are in property received from the transferor to the
anticipated amount of the credit may be effect with the following countries: extent that a marital deduction was
computed on the return, but the credit Australia, Austria, Denmark, Germany, allowed to the transferor’s estate for the
cannot finally be allowed until the foreign Finland, France, Greece, Ireland, Italy, property. There is no credit for tax on prior
tax has been paid and a Form 706CE Japan, Netherlands, Norway, Republic of transfers for Federal gift taxes paid in
evidencing payment is filed. Section South Africa, Sweden, Switzerland, and the connection with the transfer of the
2014(g) provides that for credits for foreign United Kingdom. property to the transferee.
death taxes, each U.S. possession is A credit claimed under a treaty is in If you are claiming a credit for tax on
deemed a foreign country. general computed on Schedule P in the prior transfers on Form 706-NA, you
If a credit is claimed for any foreign same manner as the credit is computed should first complete and attach the
death tax that is later recovered, see under the statute with the following Recapitulation from Form 706 before
Regulations section 20.2016-1 for the principal exceptions: (a) the situs rules computing the credit on Schedule Q from
notice required within 30 days. contained in the treaty apply in determining Form 706.
whether property was situated in the
Section 2056(d)(3) contains specific rules
Credit Under the Statute foreign country; (b) the credit may be
for allowing a credit for certain transfers to
allowed only for payment of the death tax
For the credit allowed by the statute, the a spouse who was not a U.S. citizen where
or taxes specified in the treaty (but see the
question of whether particular property is instructions above for credit under the
Page 16
the property passed outright to the How To Compute the Credit 1990-1 C.B. 170. To determine the
spouse, or to a “qualified domestic trust.” “reduced adjusted gross estate,” subtract
A worksheet is provided on the last page the amount on line 25 of the Schedule Q
Property of these instructions to allow you to worksheet from the amount on line 24 of
compute the limits before completing the worksheet. If community property is
The term “property” includes any interest Schedule Q. Transfer the appropriate
(legal or equitable) of which the transferee included in the amount on line 24 of the
amounts from the worksheet to Schedule worksheet, compute the reduced adjusted
received the beneficial ownership. The Q as indicated on the schedule. You do
transferee is considered the beneficial gross estate using the rules of Regulations
not need to file the worksheet with your section 20.2056(c)-2 and Rev. Rul. 76-311,
owner of property over which the Form 706, but should keep it for your
transferee received a general power of 1976-2 C.B. 261.
appointment. Property does not include
interests to which the transferee received Cases Involving Transfers From Two or Instructions for
only a bare legal title, such as that of a More Transferors.—Part I of the
trustee. Neither does it include an interest worksheet and Schedule Q enable you to Schedules R and R-1.—
in property over which the transferee compute the credit for as many as three Generation-Skipping
transferors. The number of transferors is
received a power of appointment that is
irrelevant to Part II of the worksheet. If you Transfer Tax
not a general power of appointment. In
addition to interests in which the transferee are computing the credit for more than Introduction and Overview
received the complete ownership, the three transferors, use more than one
credit may be allowed for annuities, life worksheet and Schedule Q, Part I, and Schedule R is used to compute the
estates, terms for years, remainder combine the totals for the appropriate generation-skipping transfer (GST) tax that
interests (whether contingent or vested), lines. is payable by the estate. Schedule R-1
and any other interest that is less than the Section 2032A Additional Tax.—If the (Form 706) is used to compute the GST
complete ownership of the property, to the transferor’s estate elected special use tax that is payable by certain trusts that
extent that the transferee became the valuation and the additional estate tax of are includible in the gross estate.
beneficial owner of the interest. section 2032A(c) was imposed at any time The GST tax that is to be reported on
up to 2 years after the death of the Form 706 is imposed only on “direct skips
Maximum Amount of the Credit decedent for whom you are filing this occurring at death.” Unlike the estate tax,
return, check the box on Schedule Q. On which is imposed on the value of the entire
The maximum amount of the credit is the
lines 1 and 9 of the worksheet, include the taxable estate regardless of whom it is
smaller of:
property subject to the additional estate distributed to, the GST tax is imposed only
1. The amount of the estate tax of the tax at its fair market value rather than its on the value of interests in property,
transferor’s estate attributable to the special use value. On line 10 of the wherever located, that actually pass to
transferred property, or worksheet, include the additional estate certain transferees, who are referred to as
2. The amount by which (a) an estate tax paid as a Federal estate tax paid. “skip persons.”
tax on the transferee’s estate determined For purposes of Form 706, the property
without the credit for tax on prior transfers, How To Complete the Worksheet interests transferred must be includible in
exceeds (b) an estate tax on the Most of the information to complete Part I the gross estate before they are subject to
transferee’s estate determined by of the worksheet should be obtained from the GST tax. Therefore, the first step in
excluding from the gross estate the net the transferor’s Form 706. computing the GST tax liability is to
value of the transfer. If credit for a determine the property interests includible
particular foreign death tax may be taken Line 5.—Enter on line 5 the applicable
marital deduction claimed for the in the gross estate by completing
under either the statute or a death duty Schedules A–I of Form 706.
convention, and on this return the credit transferor’s estate (from the transferor’s
Form 706). The second step is to determine who the
actually is taken under the convention,
Lines 10–18.—Enter on these lines the “skip persons” are. To do this, assign each
then no credit for that foreign death tax
appropriate taxes paid by the transferor’s transferee to a generation and determine
may be taken into consideration in
estate. whether each transferee is a “natural
computing estate tax (a) or estate tax (b).
person” or a “trust” for GST purposes.
If the transferor’s estate elected to pay
Percent Allowable the Federal estate tax in installments, enter The third step is to determine which skip
on line 10 only the total of the installments persons are transferees of “interests in
Where Transferee Predeceased the
that have actually been paid at the time property.” If the skip person is a “natural
Transferor.—If not more than 2 years
you file this Form 706. See Rev. Rul. person,” anything transferred is an
elapsed between the dates of death, the
83-15, 1983-1 C.B. 224, for more details. “interest in property.” If the skip person is
credit allowed is 100% of the maximum
Do not include as estate tax any tax a “trust,” make this determination using
amount. If more than 2 years elapsed
attributable to section 4980A. the rules under Interest in Property, on
between the dates of death, no credit is
page 18. These first three steps are
allowed. Line 21.—Add lines 13, 15, 17, and 18 of described in detail under the heading
Where Transferor Predeceased the Part 2, Tax Computation, of this Form 706 Determining Which Transfers Are Direct
Transferee.—The percent of the maximum and subtract this total from line 10 of the Skips.
amount that is allowed as a credit depends Tax Computation. Enter the result on line
21 of the worksheet. The fourth step is to determine whether
on the number of years that elapsed
to enter the transfer on Schedule R or on
between dates of death. It is determined Line 26.—If you computed the marital Schedule R-1. See the rules under the
using the following table: deduction on this Form 706 using the rules heading Dividing Direct Skips Between
that were in effect before the Economic Schedules R and R-1.
Period of Time Percent Recovery Tax Act of 1981 (as described in
Exceeding Not Exceeding Allowable
the instructions to line 14 of Part 4 of The fifth step is to complete Schedules
General Information), enter on line 26 the R and R-1 using the How To Complete
----- 2 years 100 lesser of: the marital deduction you instructions on page 19, for each schedule.
2 years 4 years 80 claimed on line 18 of Part 5 of the
4 years 6 years 60 Determining Which Transfers Are
Recapitulation; or 50% of the “reduced
6 years 8 years 40
adjusted gross estate.” If you computed Direct Skips
8 years 10 years 20
10 years ----- none the marital deduction using the unlimited Effective Dates.—The rules below apply
marital deduction in effect for decedents only for the purpose of determining if a
dying after 1981, for purposes of transfer is a direct skip that should be
determining the marital deduction for the reported on Schedule R or R-1 of Form
reduced gross estate, see Rev. Rul. 90-2, 706.
Page 17
In General.—The GST tax is effective for Trust.—For purposes of the GST tax, a above is assigned to the generation of that
the estates of decedents dying after “trust” includes not only an explicit trust person. A person who at any time was
October 22, 1986. (as defined in Special Rule for Trusts married to the decedent is assigned to the
Wills and revocable trusts.—For the Other than Explicit Trusts on page 19), decedent’s generation.
estates of decedents dying before January but also any other arrangement (other than 4. A relationship by adoption or
1, 1987, the GST tax will not apply to an estate) which, although not explicitly a half-blood is treated as a relationship by
transfers under wills and revocable trusts trust, has substantially the same effect as whole-blood.
executed before October 22, 1986. a trust. For example, “trust” includes life
estates with remainders, terms for years, 5. A person who is not assigned to a
Irrevocable trusts.—The GST tax will not and insurance and annuity contracts. generation according to 1, 2, 3, or 4 above
apply to any transfer under a trust that was is assigned to a generation based on his or
irrevocable on September 25, 1985, but Substantially separate and independent her birth date, as follows:
only to the extent that the transfer was not shares of different beneficiaries in a trust
are treated as separate trusts. a. A person who was born not more
made out of corpus added to the trust than 121⁄2 years after the decedent is in the
after September 25, 1985. An addition to Interest in Property.—If a transfer is made decedent’s generation.
the corpus after that date will cause a to a “natural person,” it is always
proportionate part of future income and considered a transfer of an interest in b. A person born more than 121⁄2 years,
appreciation to be subject to the GST tax. property for purposes of the GST tax. but not more than 371⁄2 years, after the
For more information, see Temporary decedent is in the first generation younger
If a transfer is made to a “trust,” a than the decedent.
Regulations section 26.2601-1(b)(1)(ii). person will have an interest in the property
Mental disability.—If the decedent was, transferred to the trust if that person either c. A similar rule applies for a new
on October 22, 1986, under a mental has a present right to receive income or generation every 25 years.
disability to change the disposition of his corpus from the trust (such as an income If more than one of the rules for
or her property and did not regain the interest for life) or is a permissible current assigning generations applies to a
competence to dispose of property before recipient of income or corpus from the transferee, that transferee is generally
death, the GST tax will not apply to any trust (e.g., may receive income or corpus assigned to the youngest of the
property included in the gross estate (other at the discretion of the trustee). generations that would apply.
than property transferred on behalf of the Skip Person.—A transferee who is a If an estate, trust, partnership,
decedent during life and after October 21, “natural person” is a “skip person” if that corporation, or other entity (other than
1986). The GST tax will also not apply to transferee is assigned to a generation that certain charitable organizations and trusts
any transfer under a trust to the extent that is two or more generations below the described in sections 511(a)(2) and
the trust consists of property included in generation assignment of the decedent. 511(b)(2)) is a transferee, then each person
the gross estate (other than property See Determining the Generation of a who indirectly receives the property
transferred on behalf of the decedent Transferee, below. interests through the entity is treated as a
during life and after October 21, 1986). transferee and is assigned to a generation
A transferee who is a “trust” is a “skip
The term “mental disability” means the person” if all the “interests in the property” as explained in the above rules. However,
decedent’s mental incompetence to (as defined above) transferred to the trust this look-thru rule does not apply for the
execute an instrument governing the are held by skip persons. Thus, whenever purpose of determining whether a transfer
disposition of his or her property, whether a non-skip person has an interest in a to a trust is a direct skip.
or not there has been an adjudication of trust, the trust will not be a skip person Generation Assignment Where Intervening
incompetence and whether or not there even though a skip person also has an Parent Is Dead.—If property is transferred
has been an appointment of any other interest in the trust. to the decedent’s grandchild, and at the
person charged with the care of the person date of death, the grandchild’s parent (who
or property of the transferor. A trust will also be a “skip person” if
there are no “interests in the property” is the decedent’s or the decedent’s
If the decedent had been adjudged transferred to the trust held by any person, spouse’s or the decedent’s former
mentally incompetent, a copy of the and future distributions or terminations spouse’s child) is dead, then for purposes
judgment or decree must be filed with this from the trust can be made only to skip of generation assignment the grandchild
return. persons. will be considered to be the decedent’s
If the decedent had not been adjudged child rather than the decedent’s
Non-Skip Person.—A non-skip person is grandchild. Thus, the transfer of the
mentally incompetent, the executor must any transferee who is not a skip person.
file with the return a certification from a property will not be a direct skip. The
qualified physician stating that in his Determining the Generation of a grandchild’s children will be treated as the
opinion the decedent had been mentally Transferee.—Generally, a generation is decedent’s grandchildren rather than the
incompetent at all times on and after determined along family lines as follows: decedent’s great-grandchildren.
October 22, 1986, and that the decedent 1. Where the beneficiary is a lineal This rule is also applied to the
had not regained the competence to descendant of a grandparent of the decedent’s lineal descendants below the
modify or revoke the terms of the trust or decedent (for example, the decedent’s level of grandchild. For example, if the
will prior to his death or a statement as to cousin, niece, nephew, etc.), the number of decedent’s grandchild is dead, the
why no such certification may be obtained generations between the decedent and the decedent’s great-grandchildren who are
from a physician. beneficiary is determined by subtracting lineal descendants of the dead grandchild
Direct Skip.—The GST tax reported on the number of generations between the are considered the decedent’s
Form 706 and Schedule R-1 (Form 706) is grandparent and the decedent from the grandchildren for purposes of the GST tax.
imposed only on direct skips. For purposes number of generations between the If any transfer of property to a trust
of Form 706, a direct skip is a transfer that grandparent and the beneficiary. would have been a direct skip except for
is: (1) subject to the estate tax, (2) of an 2. Where the beneficiary is a lineal this generation assignment rule, then the
interest in property, and (3) to a skip descendant of a grandparent of a spouse rule also applies to transfers from the trust
person. All three requirements must be met (or former spouse) of the decedent, the attributable to such property.
before the transfer is subject to the GST number of generations between the Charitable Organizations.—Charitable
tax. A transfer is “subject to the estate tax” decedent and the beneficiary is determined organizations and trusts described in
if you are required to list it on any of by subtracting the number of generations sections 511(a)(2) and 511(b)(2) are
Schedules A–I of Form 706. To determine between the grandparent and the spouse assigned to the decedent’s generation.
if a transfer is of an “interest in property” (or former spouse) from the number of Transfers to such organizations are
and to a “skip person,” you must first generations between the grandparent and therefore not subject to the GST tax.
determine if the transferee is a “natural the beneficiary.
Charitable Remainder Trusts.—Transfers to
person” or a “trust” as defined below. 3. A person who at any time was or in the form of charitable remainder
married to a person described in 1 or 2
Page 18
annuity trusts, charitable remainder For a direct skip to be reportable on with respect to that trust must be shown
unitrusts, and pooled income funds are not Schedule R-1, the trust must be includible on Schedule R and not on Schedule R-1
considered made to skip persons and, in the decedent’s gross estate. even if they would otherwise have been
therefore, are not direct skips even if all of If the decedent was the surviving spouse required to be shown on Schedule R-1.
the life beneficiaries are skip persons. life beneficiary of a marital deduction This rule applies even if the trust has other
Estate Tax Value.—Estate tax value is the power of appointment (or QTIP) trust trustees who are not executors of the
value shown on Schedules A–I of this Form created by the decedent’s spouse, then decedent’s estate.
706. transfers caused by reason of the
decedent’s death from that trust to skip How To Complete Schedules R
Examples.—The rules above can be
illustrated by the following examples: persons are direct skips required to be and R-1
reported on Schedule R-1. Valuation.—Enter on Schedules R and R-1
Example 1.—Under the will, the
decedent’s house is transferred to the If a direct skip is made “from a trust” the estate tax value of the property
decedent’s daughter for her life with the under these rules, it is reportable on interests subject to the direct skips. If you
remainder passing to her children. This Schedule R-1 even if it is also made “to a elected alternate valuation (section 2032)
transfer is made to a “trust” even though trust” rather than to an individual. and/or special use valuation (section
there is no explicit trust instrument. The Similarly, if property in a trust (as defined 2032A), you must use the alternate and/or
interest in the property transferred (the for GST tax purposes on page 18) is special values on Schedules R and R-1.
present right to use the house) is included in the decedent’s gross estate
transferred to a nonskip person (the under section 2035, 2036, 2037, 2038, How To Complete Schedule R
decedent’s daughter). Therefore, the trust 2039, 2041, or 2042 and such property is, Part 1—GST Exemption Reconciliation.—
is not a skip person because there is an by reason of the decedent’s death, Part 1, line 6 of both Parts 2 and 3, and
interest in the transferred property that is transferred to skip persons, the transfers line 4 of Schedule R-1 are used to allocate
held by a nonskip person. The transfer is are direct skips required to be reported on the decedent’s $1 million GST exemption.
not a direct skip. Schedule R-1. This allocation is made by filing Form 706.
Example 2.—The will bequeaths Special Rule For Trusts Other Than Once made, the allocation is irrevocable.
$100,000 to the decedent’s grandchild. Explicit Trusts.—An explicit trust is a You are not required to allocate all of the
This transfer is a direct skip that is not trust as defined in Regulations section decedent’s GST exemption. However, the
made in trust and should be shown on 301.7701-4(a) as “an arrangement created portion of the exemption that you do not
Schedule R. by a will or by an inter vivos declaration allocate will be allocated by IRS under the
whereby trustees take title to property for deemed allocation at death rules of section
Example 3.—The will establishes a trust
the purpose of protecting or conserving it 2632(c).
that is required to accumulate income for
10 years and then pay its income to the for the beneficiaries under the ordinary Special QTIP election.—In the case of
decedent’s grandchildren for the rest of rules applied in chancery or probate property for which a marital deduction is
their lives and, upon their deaths, distribute courts.” Direct skips from explicit trusts are allowed to the decedent’s estate under
the corpus to the decedent’s required to be reported on Schedule R-1 section 2056(b)(7) (QTIP election), section
great-grandchildren. Because the trust has regardless of their size unless the executor 2652(a)(3) allows you to treat such property
no current beneficiaries, there are no is also a trustee (see below). for purposes of the GST tax as if the
present interests in the property transferred Direct skips from trusts that are trusts election to be treated as qualified
to the trust. All of the persons to whom the for GST tax purposes but are not explicit terminable interest property had not been
trust can make future distributions trusts are to be shown on Schedule R-1 made.
(including distributions upon the only if the total of all tentative maximum The 2652(a)(3) election must include the
termination of interests in property held in direct skips from the entity is more than value of all property in the trust for which a
trust) are skip persons (i.e., the decedent’s $100,000. If this total is $100,000 or less, QTIP election was allowed under section
grandchildren and great-grandchildren). the skips should be shown on Schedule R. 2056(b)(7).
Therefore, the trust itself is a skip person For purposes of the $100,000 limit, If a section 2652(a)(3) election is made,
and you should show the transfer on “tentative maximum direct skips” is the then the decedent will for GST tax
Schedule R. amount you would enter on line 5 of purposes be treated as the transferor of all
Example 4.—The will establishes a trust Schedule R-1 if you were to file that the property in the trust for which a marital
that is to pay all of its income to the schedule. deduction was allowed to the decedent’s
decedent’s grandchildren for 10 years. At A liquidating trust (such as a bankruptcy estate under section 2056(b)(7). In this
the end of 10 years, the corpus is to be trust) under Regulations section case, the executor of the decedent’s
distributed to the decedent’s children. All 301.7701-4(d) is not treated as an explicit estate may allocate part or all of the
of the interests in this trust are held by trust for the purposes of this special rule. decedent’s GST exemption to the property.
skip persons. Therefore, the trust is a skip If the proceeds of a life insurance policy Line 2.—These allocations will have been
person and you should show this transfer are includible in the gross estate and are made either on Forms 709 filed by the
on Schedule R. You should show the payable to a beneficiary who is a skip decedent or on Notices of Allocation made
estate tax value of all the property person, the transfer is a direct skip from a by the decedent for inter vivos transfers
transferred to the trust even though the trust that is not an explicit trust. It should that were not direct skips but to which the
trust has some ultimate beneficiaries who be reported on Schedule R-1 if the total of decedent allocated the GST exemption.
are nonskip persons. all the tentative maximum direct skips from These allocations by the decedent are
the company is more than $100,000. irrevocable.
Dividing Direct Skips Between Otherwise, it should be reported on
Schedules R and R-1 Line 3.—Make an entry on this line if you
Schedule R. are filing Form(s) 709 for the decedent and
Report all generation-skipping transfers Similarly, if an annuity is includible on wish to allocate any exemption.
on Schedule R unless the rules below Schedule I and its survivor benefits are Lines 4, 5, and 6.—These lines represent
specifically provide that they are to be payable to a beneficiary who is a skip your allocation of the GST exemption to
reported on Schedule R-1. person, then the estate tax value of the direct skips made by reason of the
Under section 2603(a)(2), the GST tax on annuity should be reported as a direct skip decedent’s death. Complete Parts 2 and 3
direct skips from a trust (as defined for on Schedule R-1 if the total tentative and Schedule R-1 before completing these
GST tax purposes on page 18) is to be maximum direct skips from the entity lines.
paid by the trustee and not by the estate. paying the annuity is more than $100,000.
Line 9.—Line 9 is used to allocate the
Schedule R-1 serves as a notification from Executor as Trustee.—If any of the remaining unused GST exemption (from
the executor to the trustee that a GST tax executors of the decedent’s estate are line 8) and to help you compute the trust’s
is due. trustees of the trust, then all direct skips inclusion ratio. Line 9 is a Notice of
Page 19
Allocation for allocating the GST exemption entry in column E. However, column E and in which the property interests transferred
to trusts as to which the decedent is the the worksheet below are provided to assist do not bear the GST tax on the transfers.
transferor and from which a you in computing the inclusion ratio for the Section 2603(b) requires that unless the
generation-skipping transfer could occur trustee if you wish to do so. governing instrument provides otherwise,
after the decedent’s death. If line 9 is not You should inform the trustee of the the GST tax is to be charged to the
completed, the deemed allocation at death amount of the GST exemption you property constituting the transfer.
rules will apply to allocate the decedent’s allocated to the trust. Line 9, columns C Therefore, you will usually enter all of the
remaining unused GST exemption, first to and D may be used to compute this direct skips on Part 2.
property that is the subject of a direct skip amount for each trust.
occurring at the decedent’s death, and You may enter a transfer on Part 3 only
then to trusts as to which the decedent is This worksheet will compute an accurate if the will or trust instrument directs, by
the transferor. If you wish to avoid the inclusion ratio only if the decedent was the specific reference, that the GST tax is not
application of the deemed allocation rules, only settlor of the trust. You should use a to be paid from the transferred property
you should enter on line 9 every trust separate worksheet for each trust (or interests.
(except certain trusts entered on Schedule separate share of a trust that is treated as
Part 2—Line 3.—Enter -0- on this line
R-1, as described below) to which you a separate trust).
unless the will or trust instrument specifies
wish to allocate any part of the decedent’s that the GST taxes will be paid by property
GST exemption. Unless you enter a trust 1 Total estate and gift tax value of all of other than that constituting the transfer (as
on line 9, the unused GST exemption will the property interests that passed to
the trust
described above). Enter on line 3 the total
be allocated to it under the deemed of the GST taxes shown on Part 3 and
2 Estate taxes, state death taxes, and
allocation rules. other charges actually recovered from Schedule(s) R-1 that are payable out of the
If a trust is entered on Schedule R-1, the the trust property interests shown on Part 2, line 1.
amount you entered on line 4 of Schedule 3 GST taxes imposed on direct skips to Part 2—Line 6.—Do not enter more than
R-1 serves as a Notice of Allocation and skip persons other than this trust and the amount on line 5. Additional allocations
borne by the property transferred to
you need not enter the trust on line 9 may be made using Part 1.
this trust
unless you wish to allocate more than the 4 GST taxes actually recovered from this
Schedule R-1, line 4 amount to the trust. Part 3—Line 3.—See the instructions to
trust (from Schedule R, Part 2, line 8 Part 2, line 3, above. Enter only the total of
However, you must enter the trust on line or Schedule R-1, line 6)
9 if you wish to allocate any of the unused the GST taxes shown on Schedule(s) R-1
5 Add lines 2–4
GST exemption amount to it. Such an that are payable out of the property
6 Subtract line 5 from line 1
additional allocation would not ordinarily be interests shown on Part 3, line 1.
7 Add columns C and D of line 9
appropriate in the case of a trust entered 8 Divide line 7 by line 6 Part 3—Line 6.—See the instructions to
on Schedule R-1 when the trust property 9 Trust’s inclusion ratio. Subtract line 8 Part 2, line 6, above.
passes outright (rather than to another from 1.000
trust) at the decedent’s death. However, How To Complete Schedule R-1
where section 2032A property is involved it Line 10.—Special Use Allocation.—For skip Filing Due Date.—Enter the due date of
may be appropriate to allocate additional persons who receive an interest in section Schedule R, Form 706. You must send the
exemption amounts to the property. See 2032A special use property, you may copies of Schedule R-1 to the fiduciary by
the instructions for line 10. allocate more GST exemption than the this date.
Note: To avoid application of the deemed direct skip amount to reduce the additional
Line 4.—Do not enter more than the
allocation rules, Form 706 and Schedule R GST tax that would be due when the
amount on line 3. If you wish to allocate an
should be filed to allocate the exemption to interest is later disposed of or qualified use
additional GST exemption, you must use
trusts that may later have taxable ceases. See Schedule A-1 of this Form
Schedule R, Part 1. Making an entry in line
terminations or distributions under section 706 for more details about this additional
4 constitutes a Notice of Allocation of the
2612 even if the form is not required to be GST tax.
decedent’s GST exemption to the trust.
filed to report estate or GST tax. Enter on line 10 the total additional GST
Line 6.—If the property interests entered
Line 9, Column C.—Enter the GST exemption you are allocating to all skip
on line 1 will not bear the GST tax, multiply
exemption included on lines 2–6, above, persons who received any interest in
line 6 by 55% (.55).
that was allocated to the trust. section 2032A property. Attach a special
use allocation schedule listing each such Signature.—The executor(s) must sign
Line 9, Column D.—The line 8 amount is to Schedule R-1 in the same manner as Form
skip person and the amount of the GST
be allocated in column D of line 9. This 706. See Signature and Verification on
exemption allocated to that person.
amount may be allocated to transfers into page 2.
trusts that are not otherwise reported on If you do not allocate the GST
Form 706. For example, the line 8 amount exemption, it will be automatically Filing Schedule R-1.—Attach one copy of
may be allocated to an inter vivos trust allocated under the deemed allocation at each Schedule R-1 that you prepare to
established by the decedent during his or death rules. To the extent any amount is Form 706. Send two copies of each
her lifetime and not included in the gross not so allocated it will be automatically Schedule R-1 to the fiduciary.
estate. This allocation is made by allocated (under regulations to be
identifying the trust on line 9 and making published) to the earliest disposition or Instructions for Schedule
an allocation to it using column D. If the cessation that is subject to the GST tax.
trust is not included in the gross estate, Under certain circumstances, post-death S.—Increased Estate Tax on
value the trust as of the date of death. You events may cause the decedent to be Excess Retirement
should inform the trustee of each trust treated as a transferor for purposes of Accumulations
listed on line 9 of the total GST exemption Chapter 13.
you allocated to the trust. The trustee will Line 10 may be used to set aside an The executor uses Schedule S to figure the
need this information to compute the GST exemption amount for such an event. You increased estate tax imposed by section
tax on future distributions and must attach a schedule listing each such 4980A(d) on excess accumulations in
terminations. event and the amount of exemption qualified employer plans (plans) and
allocated to that event. individual retirement plans (IRAs). Schedule
Line 9, Column E.—Trust’s Inclusion S may be filed only as an attachment to
Ratio.—The trustee must know the trust’s Parts 2 and 3.—Part 2 is used to compute Form 706.
inclusion ratio to figure the trust’s GST tax the GST tax on transfers in which the
for future distributions and terminations. property interests transferred are to bear Which Estates Must File
You are not required to inform the trustee the GST tax on the transfers. Part 3 is to
of the inclusion ratio and may not have All estates must file Schedule S if the
be used to report the GST tax on transfers
enough information to compute it. estate has any excess accumulation (as
Therefore, you are not required to make an calculated on line 16 of the Tax
Page 20
Computation of Schedule S). Schedule S name, do not list the IRA on line 2 unless benefit payable under the policy exceeds
must be filed regardless of the size of the contributions or transfers other than the the cash surrender value of the policy
gross estate and regardless of whether the rollover amount were made to the IRA. If immediately before the decedent’s death.
estate is otherwise required to file Form such other contributions or transfers were Do not enter on this line amounts that are
706. made, then you must list the IRA on line 2 excludable from gross income under
The section 4980A(d) tax also applies to and include the entire value of the section 101(b) (employee death benefits).
the estates of nonresident alien decedents decedent’s interest in the IRA on line 3. Line 9.—Decedent’s Interest as a
whether or not they are otherwise required If the decedent was a surviving spouse Beneficiary.—Enter on this line the amount
to file Form 706-NA. In these instructions, who elected to treat an inherited IRA of the decedent’s interest in a plan or IRA
references to Form 706 should be (described in section 408(d)(3)(C)(ii)) as his by reason of the death of another
construed as references to Form 706-NA if or her own IRA and made no further individual.
the decedent was a nonresident alien. contributions to it, do not list the IRA on Do not enter on this line any plans or
line 2. IRAs that are reported on line 2 of Part I as
When To File If the decedent (whether or not a a result of the decedent having made a
Schedule S is considered an integral part surviving spouse) elected to treat an IRA spousal election under section 4980A(d)(5).
of Form 706 and you must file it with the as subject to the distribution requirements Line 17.—Increased Estate Tax.—The tax
estate’s Form 706. Therefore, the due date of section 408(a)(6) (before its amendment shown on line 17 may not be reduced or
is determined by the due date, with by section 521(b) of the Tax Reform Act of offset by any of the estate tax credits.
extensions, of the estate’s Form 706. 1984), under Regulations section Enter the line 17 amount on line 23 of the
1.408-2(b)(7)(ii), do not list the IRA on line 2 Tax Computation on page 1 of Form 706.
Where To File if it meets those distribution requirements. (If you are filing Schedule S with Form
Schedule S must be attached to and filed Lines 3–10.—Consolidate all of the 706-NA, enter the line 17 amount on line
with the Form 706. decedent’s IRAs in column D. If there are 16 of the Tax Computation of Form
more than three plans, compute their value 706-NA.)
Paying the Tax on an attached sheet following the same
format as lines 3–10. Part II.—Grandfather Election
The increased estate tax shown on
Schedule S is due at the same time as the Line 3.—Value of Decedent’s Interest.— Line 1.—If you checked “Yes,” attach the
estate tax (if any) shown on the Form 706. Value the decedent’s interest in the plan or Form 5329, Return for Additional Taxes
IRA using the estate tax valuation rules, Attributable to Qualified Retirement Plans
You may not make a section 6166 or
including the alternate valuation election (Including IRAs), Annuities, and Modified
6163 election to defer the payment of the
under section 2032. See page 3 for details Endowment Contracts, on which the
increased estate tax.
on making this election. Do not reduce this election was made.
Part I.—Tax Computation value by any of the credits, deductions, Line 2.—Initial Grandfather Amount.—If
exclusions, etc., that otherwise apply for you checked “Yes” on line 1, enter the
Line 1.—Spousal Election.—Section estate tax purposes. Do not apply initial grandfather amount shown on the
4980A(d)(5) provides that if a surviving community property rules to reduce the Form 5329 on which the grandfather
spouse is the beneficiary of all of the value of the decedent’s interest. election was made.
decedent’s retirement accumulations
You should include in the value all Line 3.—Previously Recovered
(subject to a de minimis exception), then
amounts payable to beneficiaries of the Amounts.—Enter the total of the amounts
the spouse may elect not to have the
decedent under the plan or IRA (including treated as recoveries of the grandfather
excess accumulation rules apply to the
amounts payable to a surviving spouse amount from previously filed Forms 5329.
decedent but to have section 4980A apply
under a qualified joint and survivor annuity
to such interests and any distributions
or qualified preretirement survivor annuity), Part III.—Computation of
attributable to such interests as if they
whether or not these amounts are
were the surviving spouse’s.
otherwise included in valuing the
Hypothetical Life Annuity
To make the election, the spouse must decedent’s gross estate. Line 1.—Decedent’s Attained Age.—
attach a statement to the decedent’s Form Enter the decedent’s attained age in whole
Exclude from the value the excess (if
706. The statement must be signed by the years on the date of death. For example, if
any) of interests payable immediately after
spouse and must indicate clearly that the the decedent was 60 years and 11 months
death over the value of the same interests
spouse is making the election provided for old on the date of death, enter “60” on line
immediately before death.
in section 4980A(d)(5). 1.
Line 4.—Post-Death Rollovers.—Enter on
If the spouse makes the election, check Line 2.—Annual Annuity Amount.—If you
this line any amounts that: (1) were
the box on line 1 and complete lines 2–12 did not check “Yes” to line 1 of Part II,
distributed from the plan or account within
of Part I, Schedule S. enter the greater of $150,000 or $112,500
60 days before the decedent’s death, and
Line 2.—List each plan and IRA in which (2) were rolled over into an IRA after the indexed for inflation as described in Temp.
the decedent had any interest at the time date of death and within 60 days after the Regs. section 54.4981A-1T(a-9).
of death. If you need more space, list the distribution. Value the rolled over amounts If you checked “Yes” to line 1 of Part II,
additional plans and IRAs on an attached as of the date they were received by the enter $112,500 indexed for inflation as
sheet. Also list any plans in which the IRA. described in Temp. Regs. section
decedent was an alternate payee if 54.4981A-1T(a-9).
Line 6.—Alternate Payees.—Enter on this
payments to the decedent would have
line the amount of any portion of the Line 3.—Present Value Multipliers.—
been includible in the decedent’s gross
decedent’s interest in the plan that is Section 5031 of the Technical and
income under a qualified domestic
payable to an alternate payee and is Miscellaneous Revenue Act of 1988
relations order within the meaning of
included in the payee’s gross income required the IRS to issue new present
section 414(p).
under a qualified domestic relations order value tables using revised mortality figures.
If an IRA does not have an EIN, enter (within the meaning of section 414(p)). Also, to determine the present value
“None” in the EIN column. multiplier under the new procedure, you
Line 8.—Excess Life Insurance
Rollover IRAs.—If the decedent was a Amounts.—If the plan held a life insurance must use an interest rate that is revised
surviving spouse who rolled over a policy on the decedent’s life, enter here monthly. The IRS will announce the
distribution from a plan or IRA of the the amount excludable from the applicable rate in a news release and will
predeceased spouse into an IRA beneficiary’s income under section 101(a). publish it in a revenue ruling in the Internal
established in the surviving spouse’s own This is the amount by which the death Revenue Bulletin.

Page 21
The IRS has published new present which can be purchased from the To calculate the present value of an
value tables for some interest rates in Superintendent of Documents, U.S. annuity if the tables are not available, and
Notice 89-60, 1989-1 C.B. 700. The Government Printing Office, Washington, for additional information on the new rules,
complete tables have been printed in Pub. DC 20402. see Notice 89-60 as noted above, and
1457, Actuarial Values—Alpha Volume, Notice 89-24, 1989-1 C.B. 660.

Page 22
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)
Item (line 8 only)
1. Gross value of prior transfer to this transferee
2. Death taxes payable from prior transfer
3. Encumbrances allocable to prior transfer
4. Obligations allocable to prior transfer
5. Marital deduction applicable to line 1 above,
as shown on transferor’s Form 706
6. Total (Add lines 2, 3, 4, and 5)
7. Net value of transfers (Subtract line 6
from line 1)
8. Net value of transfers (Add columns A,
B, and C of line 7)
9. Transferor’s taxable estate
10. Federal estate tax paid
11. State death taxes paid
12. Foreign death taxes paid
13. Other death taxes paid
14. Total taxes paid (Add lines 10, 11,
12, and 13)
15. Value of transferor’s estate (Subtract
line 14 from line 9)
16. Net Federal estate tax paid on
transferor’s estate
17. Credit for gift tax paid on transferor’s estate
18. Credit allowed transferor’s estate for tax on prior
transfers from prior transferor(s) who died within
10 years before death of decedent

19. Tax on transferor’s estate (Add lines 16,
17, and 18)
20. Transferor’s tax on prior transfers ((Line 74
line 15) 3 line 19 of respective estates)
Part II Transferee’s tax on prior transfers
Item Amount
21. Transferee’s actual tax before allowance of credit for prior transfers (see instructions)
22. Total gross estate of transferee (from line 1 of the Tax Computation, page 1, Form 706)
23. Net value of all transfers (from line 8 of this worksheet)
24. Transferee’s reduced gross estate (subtract line 23 from line 22)
25. Total debts and deductions (not including marital and charitable deductions) (items 15,
16, and 17 of the Recapitulation, page 3, Form 706)
26. Marital deduction (from item 18, Recapitulation, page 3, Form 706) (see instructions)
27. Charitable bequests (from item 19, Recapitulation, page 3, Form 706)
28. Charitable deduction proportion ( [ line 23 4 (line 22–line 25) ] 3 line 27)
29. Reduced charitable deduction (subtract line 28 from line 27)
30. Transferee’s deduction as adjusted (add lines 25, 26, and 29)
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))
32. Tentative tax on reduced taxable estate
33. (a) Post-1976 gift taxes paid
(b) Unified credit
(c) Section 2011 state death tax credit
(d) Section 2012 gift tax credit
(e) Section 2014 foreign death tax credit
(f) Total credits (add lines 33(a) through 33(e))
34. Net tax on reduced taxable estate (subtract line 33(f) from line 32)
35. Transferee’s tax on prior transfers (subtract line 34 from line 21)
Page 23