Userid: CPM Schema:

instrx

Leadpct: 100% Pt. size: 9.5

Draft Ok to Print

AH XSL/XML

Fileid: … ons/i706/202309/a/xml/cycle03/source (Init. & Date) _______

Page 1 of 59 12:20 - 5-Sep-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Instructions for Form 706

(Rev. September 2023)

For the latest information about developments related to

Form 706 and its instructions, such as legislation enacted

after they were published, go to

IRS.gov/Form706.

The IRS will publish amounts for future years in annual

revenue procedures.

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

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

fee, later, for more information.

Extension of time to elect portability. Effective July 8,

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

a. Whose gross estate, plus adjusted taxable gifts and

of Deceased Spousal Unused Exclusion, later, and

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

To determine whether you must file a return for the estate

made by the decedent after December 31, 1976;

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

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

1976; and

Certain transfers made during the decedent's life without

an adequate and full consideration in money or money's

worth,

Annuities,

The includible portion of joint estates with right of

survivorship (see the instructions for Schedule E),

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

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

elect portability of the DSUE amount to the surviving spouse,

are not required to report the value of certain property eligible

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

charitable deduction under section 2055. However, the value

of those assets must be estimated and included in the total

value of the gross estate. See the instructions for

Part

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

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

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

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

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

posting it to the proper account.

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

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

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

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

Form 706 may be submitted electronically through the

Electronic Federal Tax Payment System (EFTPS). EFTPS is

a free service of the Department of the Treasury.

To be considered timely, payments made through EFTPS

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

before the due date. All EFTPS payments must be scheduled

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

changed or canceled up to 2 business days before the

scheduled payment date.

To get more information about EFTPS or to enroll in

Federal Tax Payment System: A Guide to Getting Started.

All executors are responsible for the return as filed and are

liable for penalties imposed for erroneous or false returns.

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

should all join together in filing one complete return.

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

Generally, anyone who is paid to prepare the return must

In addition to signing and completing the required

Enter “Supplemental Information” across the top of

page 1 of the form;

Include a statement of what has changed, along with the

supporting information; and

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

706 that has already been filed.

For the mailing address for supplemental Form 706, see

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

Internal Revenue Service Center

Attn: E&G, Stop 824G

7940 Kentucky Drive

Florence, KY 41042-2915

If you have already been notified that the return has been

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

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

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

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

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

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

Late filing and late payment. Section 6651 provides for

Reasonable-cause determinations. If you receive a notice

about penalties after you file Form 706, send an explanation

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

Do not attach an explanation when you file Form 706.

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

be considered.

Valuation understatement. Section 6662 provides a 20%

penalty for the underpayment of estate tax that exceeds

$5,000 when the underpayment is attributable to valuation

understatements. A valuation understatement occurs when

Penalties also apply to late filing, late payment, and

underpayment of GST taxes.

Return preparer. Estate tax return preparers who prepare

any return or claim for refund which reflects an

understatement of tax liability due to an unreasonable

position are subject to a penalty equal to the greater of

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

preparation of each such return.

Estate tax return preparers who prepare a return or claim

for refund which reflects an understatement of tax liability due

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

support the entries in items 1 through 9 of Part

5—Recapitulation.

Also consider the following.

Form 706 has 29 numbered pages.

Number the items you list on each schedule, beginning

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

convention as indicated on the schedule (for example,

Schedule M).

Total the items listed on the schedule and its

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

Part 5—Recapitulation.

Do not complete the “Alternate valuation date” or

“Alternate value” columns of any schedule unless you

elected alternate valuation on Part 3—Elections by the

Executor, line 1.

When you complete the return, staple all the required

Part 5—Recapitulation,

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

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

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

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

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

column.

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

inheritance, legacy, or succession taxes paid on any property

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

death to any state or the District of Columbia.

You may claim an anticipated amount of deduction and

figure the federal estate tax on the return before the state

Note. The deduction is not subject to dollar limits.

If you make a section 6166 election to pay the federal

estate tax in installments and make a similar election to pay

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

exceptions and periods of limitation.

If you transfer property other than cash to the state in

c. Amount of penalties and interest imposed or

charged.

d. Total amount actually paid in cash.

e. Date of payment.

File the evidence requested above with the return, if

possible. Otherwise, send it as soon as possible after

the return is filed.

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

In addition, you must make a reasonable effort to discover

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

column.

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

current column.

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

column.

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

current column using Table A—Unified Rate Schedule.

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

Row (f) for the current column.

(d) Cumulative Taxable Gifts Including Applicable

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

(f) Tax at Date of Death Rates for Cumulative

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

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

(k) Maximum Applicable Credit amount based on

4

(l) Applicable Credit amount used in Prior Periods

(q) Cumulative Taxable Gifts less Gifts in the

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

Line 7 Worksheet, Part B

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

1

2

3

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

4

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

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

Note. The entries in each column of Row (k) must be

reduced by 20% of the amount allowed as a specific

exemption for gifts made after September 8, 1976, and

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

Row (g) for the current column.

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

Row (f) for the current column.

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

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

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

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

greater than zero, enter -0-.

Repeat for each year in which taxable gifts were made.

The decedent's spouse predeceased the decedent;

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

the decedent under the rules of section 2513;

The decedent was the “consenting spouse” for those split

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

To determine over how many installments the estate tax

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

and (b)(10).

can be no more than 10 installment payments.

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

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

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

Acceleration of payments. If the estate fails to make

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

the IRS may terminate the right to make installment payments

and force an acceleration of payment of the tax upon notice

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

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

withdrawn, and the aggregate of those events equals or

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

make installment payments will be terminated, and the

unpaid portion of the tax will be due upon notice and

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

Interest computation. A special interest rate applies to

installment payments. For decedents dying in 2023, the

interest rate is 2% on the lesser of:

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

extended under section 6166 is less than the amount figured

above, the 2% portion is the lesser amount.

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

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

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

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

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

Computation.

Interest on the portion of the tax in excess

The interest paid on installment payments is not

deductible as an administrative expense of the

estate.

The decedent's name and taxpayer identification number

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

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

The date selected for payment of the first installment.

The number of annual installments, including first

installment, in which the tax is to be paid.

estate tax in installments.

You may also elect to pay certain GST taxes in

-16-

for fractional interests in real estate on Schedule A and for

stock of inactive or close corporations on Schedule B.

Value these interests using the rules of Regulations

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

irregular intervals and seldom reflect all the elements of a

representative transaction as defined by FMV.

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

copy of the trust instrument for each trust.

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

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

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

had an interest in or signature or other authority over a

1 through 9.

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

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

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

executor, made under penalties of perjury, that the gross

estate does not contain any includible assets covered by that

item.

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

unless you elected alternate valuation on

Part 3—Elections

Which schedules to attach for items 1 through 9. You

must attach the following.

Part 4—General

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

4—General Information.

4—General information.

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

The value of the property subject to claims, or

$0 $250,000 $250,000

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

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

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

the marital or charitable deduction. For such property, the

executor may estimate the value in good faith and with the

due diligence to be afforded all assets includible in the gross

estate. The amount reported on Form 706 will correspond to

(QDOTs). A QDOT allows the estate of a decedent to

bequeath property to a surviving spouse who is not a citizen

of the United States and still receive a marital deduction.

When property passes to a QDOT, estate tax is imposed

under section 2056A as distributions are made from the trust.

When a QDOT is established and there is a DSUE amount,

the executor of the decedent’s estate will determine a

preliminary DSUE amount for the purpose of electing

portability. This amount will decrease as section 2056A

distributions are made. In estates with a QDOT, the DSUE

longer applies to the assets of the QDOT, as of the date the

surviving spouse becomes a U.S. citizen, the DSUE amount

is considered final and is available for application by the

surviving spouse. See Regulations sections 20.2010-2(c)(4),

20.2010-3(c)(3), and 25.2505-2(d)(3).

Check the appropriate box in this section and see the

instructions for Schedule M if more information is needed

about QDOT.

Section C. DSUE Amount Portable to Decedent's Surviv-

ing Spouse. Complete Section C only if electing portability

Figure the unused exclusion amount on line 9. The DSUE

Part

Section D requests information on all DSUE amounts

If any assets to which the special rule of Regulations

estate the decedent owned or had contracted to purchase.

Number each parcel in the left-hand column.

Describe the real estate in enough detail so that the IRS

can easily locate it for inspection and valuation. For each

parcel of real estate, report the area and, if the parcel is

improved, describe the improvements. For city or town

property, report the street and number, ward, subdivision,

block and lot, etc. For rural property, report the township,

range, landmarks, etc.

If any item of real estate is subject to a mortgage for which

unpaid amount of the mortgage may be deducted on

Schedule K.

If the decedent’s estate is not liable for the amount of the

mortgage, report only the value of the equity of redemption

(or value of the property less the indebtedness) in the value

column as part of the gross estate. Do not enter any amount

less than zero. Do not deduct the amount of indebtedness on

Schedule K.

Also list on Schedule A real property the decedent

contracted to purchase. Report the full value of the property

Explain how the reported values were determined and

-22-

Part 3—Elections

You don’t need to complete columns B through D of lines 3

Schedule R, Parts 2 and 3, lines 2 and 3, fixed taxes and

charges to increase, enter the increased amount (only)

on these lines and attach an explanation of the increase.

the IRS of any disposition or cessation of qualified use of any

part of the property.

a valid election.

To have a valid special-use valuation election under

section 2032A, you must file, in addition to the federal estate

tax return, (a) a notice of election (Schedule A-1, Part 2), and

(b) a fully executed agreement (Schedule A-1, Part 3). You

must include certain information in the notice of election. To

ensure that the notice of election includes all of the

information required for a valid election, use the following

family has owned all of the specially valued property

for at least 5 years of the 8 years immediately

preceding the date of the decedent's death?

Does the notice of election include a statement as to

whether there were any periods during the 8-year

period preceding the decedent's date of death

during which the decedent or a member of the

decedent’s family did not (a) own the property to be

specially valued, (b) use it in a qualified use, or (c)

materially participate in the operation of the farm or

person's TIN, (c) the person's relationship to the

decedent, and (d) the value of the property interest

passing to that person based on both FMV and

qualified use?

Does the notice of election include affidavits

describing the activities constituting material

participation and the identities of the material

participants?

Does the notice of election include a legal

description of each item of specially valued

Any election made under section 2032A will not be valid

Has the agreement been signed by each qualified

heir having an interest in the property being

specially valued?

columns. See the instructions for Part 5—Recapitulation, item

10, for information on how to estimate and report the value of

these assets.

column.

Note. Unless specifically exempted by an estate tax

provision of the Code, bonds that are exempt from federal

income tax are not exempt from estate tax. You should list

these bonds on Schedule B.

Public housing bonds includible in the gross estate must

be included at their full value.

If you paid any estate, inheritance, legacy, or succession

tax to a foreign country on any stocks or bonds included in

this schedule, group those stocks and bonds together and

the date of death. However, if the stock is being traded on an

exchange and is selling ex-dividend on the date of the

decedent's death, do not include the amount of the dividend

as a separate item. Instead, add it to the ex-dividend

quotation in determining the FMV of the stock on the date of

the decedent's death. Dividends declared on shares of stock

before the death of the decedent but payable to stockholders

of record on a date after the decedent's death are not

includible in the gross estate for federal estate tax purposes

and should not be listed here.

Issue;

Par value where needed for identification;

Exact name of corporation;

Principal exchange upon which sold, if listed on an

exchange; and

Quantity and denomination;

Name of obligor;

Date of maturity;