1 of 8 in Series:
The Essentials of Completing the Estate Tax Return (Form 706)
If the estate you’re administering requires a Form 706 for any reason, you must complete the first three pages, together with all the other schedules pertinent to the estate. In Part 1 of Form 706, report information about the decedent and executor. The tax computations in Part 2 can be difficult. Complete Part 2 of the return last. Don’t hesitate to contact a tax advisor if you need assistance.
Estate Form Part 1: Decedent and executor
On the face of the Form 706, fill in the decedent’s name, address, Social Security Number, year domicile (residence) was established in the decedent’s state of residence, date of birth, and date of death. On line 6a, list the executor you want the IRS to contact. List any additional executors on an attached exhibit and refer to it here.
Estate Form Part 2: Tax computation
You can’t complete Part 2 until you’ve completed all the other necessary schedules. If you’re just beginning, skip ahead to Part 3, and return to Part 2 after you’ve finished the rest of the return.
Lines 1–20 determine the total transfer taxes due, if any. The following are guidelines for completing some of the more difficult sections of Part 2. Consult the Instructions for Form 706 to help you complete the other sections.
Line 3: The state death tax deduction referred to on line 3b is available if estate, inheritance, succession, or legacy taxes are paid on the estate to any state or the District of Columbia.
Line 3: The state death tax deduction referred to on line 3b is available if estate, inheritance, succession, or legacy taxes are paid on the estate to any state or the District of Columbia.
You’ll need the decedent’s 709s to complete this worksheet. In addition to gifts reported on the 709, include any taxable gifts you discover from prior years that should have been reported on 709s but weren’t. Check the annual exclusion amount (the amount that can be gifted without being taxed) for each year that the decedent made unreported taxable gifts.
Line 7: Enter the total gift tax paid or payable by the decedent on gifts made after December 31, 1976. If the decedent was the donor of gifts that are includible in the gross estate but were divided 50/50 between the decedent and his or her spouse on their gift tax returns (split gifts), include gift taxes paid by the decedent’s spouse.
Line 10: Enter adjustments, if any, to the unified credit (applicable credit amount). Adjustments apply only if the decedent (or the decedent’s spouse, in the case of split gifts) made gifts between September 8, 1976, and January 1, 1977, for which he or she claimed a specific exemption. Enter 20 percent of the specific exemption that was claimed for these gifts.
Line 13: Enter any credit for foreign death taxes from Schedule P and attach Form(s) 706-CE.
Line 15: Add lines 13 and 14 to arrive at the total credit. You may also use Line 15 to take a credit for pre-1977 federal gift taxes under a formula laid out on page 6 of the Instructions. Identify the credit and note it, on the dotted line on the left, as a “section 2012 credit.” Complete and attach Form 4808, Computation of Credit for Gift Tax.
You may also claim the Canadian marital credit under the 1995 Canadian Protocol on line 15. Enter the credit and note it as a “Canadian marital credit.” Attach a statement as an exhibit to the return referring to the treaty, waiving QDOT rights, and showing the computation of the credit. You may want to consult a tax advisor when preparing this section.
Although only one signature is required, it is a good idea to have all the estate representatives sign and date the return at the bottom of page 1.If someone other than the estate representative(s) prepares the return, he or she signs the return in accordance with the Instructions.
dummies
Source:http://www.dummies.com/how-to/content/how-to-complete-parts-1-and-2-of-estate-form-706.html
No comments:
Post a Comment