How to Complete Federal Estate Tax Form 706

Any decedent with a gross estate of at least $3.5 million who passed away during the year must have Form 706 filed with the IRS by his executor on his behalf. Learn how to find out whether you must file this form if you are the executor of an estate and how to do so.

Determine whether you must file Form 706 if you are the executor of a decedent's estate. Add any adjusted taxable gifts to the total exemption amount of any gifts made by the decedent and combine that amount with the decedent's taxable gross estate as valued on the day of death. The gross estate encompasses all property and interests owned by the decedent, including annuities and receivables

Begin completing Form 706 by listing your personal information in Part I if you are the executor. Then start subtracting the various deductions available for decedents on line 3b. The State Death Tax Deduction allows the executor to reduce the amount of the taxable estate by any death, estate, inheritance, legacy or successor taxes paid to any state other than Washington, D.C.

Apply the remaining amount of Unified Credit allowed to the decedent on lines 9, 10, 11 of the Form 706. Use Part 3 of the form to elect the Alternative Valuation date if you feel this will be beneficial. This rule allows you as the executor to specify that the estate be valued as of exactly 9 months after the date of death of the decedent instead of on the day of death. You would choose this option because you believe that the value of the estate will be assessed less than 9 months after the decedent's death, thus lowering the value of the taxable estate and the subsequent tax assessed.

Complete the rest of Form 706 by providing a breakdown of all property in the estate and their respective values, as well as a list of what has been bequeathed to any beneficiaries. Don't forget to complete all relevant schedules breaking down the decedent's debts and expenses, including funeral costs, as well as charitable gifts and bequests.

File Form 706 within 9 months of the date of the decedent's death. Mail your completed Form 706 to:

Dept. of the Treasury

Internal Revenue Service Center

Cincinnati, OH 45999

Include a check payable to the U.S. Treasury with the decedent's name, Social Security number and "Form 706" printed on the front.


About the Author

Mark Cussen has more than 17 years of experience in the financial industry. He received his B.S. in English from the University of Kansas and became a Certified Financial Planner in 2001. He has published financial educational articles on such websites as Investopedia and Money Crashers. He also provides financial education and counseling for members of the U.S. military and their families.