Instructions for Form 706 (2010) Checklist
Purpose and Filing Context
Form 706 for 2010 decedents is used to report the gross estate, apply allowable deductions, and compute any federal estate tax or generation-skipping transfer tax under the 2010 Tax Act rules. It applies to estates of U.S. citizens or residents and reflects transfer taxes administered by the Internal Revenue Service.
A critical 2010 feature is the option to avoid filing an estate tax return by making a Section 1022
Election using Form 8939, which replaces estate tax with Carryover Basis reporting. When that election applies, the federal estate tax and GST tax are not imposed, and Form 706 is not filed.
Key 2010 Framework Considerations
Executors must first determine whether the estate is subject to estate tax or whether carryover basis elections under Section 1022 apply, based on asset values, estate planning choices, and filing requirements. This decision directly affects tax liability, reporting obligations, and future income tax consequences for estate property and beneficiaries.
For 2010 decedents, the exemption amount is $5,000,000, the maximum federal estate tax rate is 35 percent, and the GST applicable rate is zero, eliminating GST tax despite generation-skipping transfer reporting. These rules differ materially from later Tax Cuts and Jobs
Act frameworks and must be applied carefully.
Ten-Step Filing Checklist
Step 1: Confirm Filing Requirement and Correct Return Path
Confirm whether the gross estate, adjusted taxable gifts, and property transferred during life exceed the filing threshold under the 2010 instructions and whether Form 706 is required.
Confirm the decedent’s status as a U.S. citizen or resident and verify that no Section 1022
Election or Form 8939 filing will replace the estate tax return.
Step 2: Assemble Executor Authority and Core Documentation
Collect the death certificate, trust agreement, will, court appointment records, and executor authority documents required to support estate tax compliance and IRS review. Gather account
statements, real estate deeds, life insurance policy records, and ownership documents supporting gross estate assets and trust planning structures.
Step 3: Establish Valuation Methodology and Appraisal Support
Determine whether assets will be reported using fair market value at the date of death or under the alternate valuation election permitted by IRS Form 706 rules. Obtain qualified appraisals for real estate, closely held interests, life estate interests, and estate property requiring valuation methods consistent with IRS guidance.
Step 4: Report Gross Estate Assets on Correct Schedules
Report real estate on Schedule A, stocks and bonds on Schedule B, and cash or notes receivable on Schedule C using accurate asset descriptions and values. Use Schedule D for life insurance proceeds, Schedule E for jointly owned property, Schedule F for miscellaneous estate property, and Schedule G for lifetime transfers included in the gross estate.
Step 5: Separate Assets From Deductions to Avoid Structural Errors
Maintain distinct asset and deduction workpapers to ensure debts, medical expenses, and claims are not mistakenly reported as gross estate assets. This separation supports accurate reporting across Schedules A through I for assets and Schedules J through O for deductions and transfer tax adjustments.
Step 6: Prepare Administration Expenses, Debts, and Loss Deductions
Report funeral and administration expenses on Schedule J and coordinate deductions to avoid impermissible overlap with estate income tax filings. Report debts, mortgages, and liens on
Schedule K and limit Schedule L to administrative losses or expenses related to property not subject to claims.
Step 7: Apply Marital and Charitable Deductions Correctly
Use Schedule M for marital deduction property, including QTIP trust interests, credit shelter trust planning, and qualifying life estate transfers. Use Schedule O for charitable deductions, including gifts to charitable family foundations, ensuring charitable transfers are not misclassified as marital interests.
Step 8: Compute Recapitulation and Estate Tax Liability
Transfer the schedule totals accurately to the recapitulation section and confirm consistency between the valuation columns and the reported deductions. Apply the basic exclusion amount, compute any tax due, and recognize that the GST exemption applies automatically at a zero rate for 2010 generation-skipping transfers.
Step 9: Apply State Death Tax Deduction and Avoid Outdated Credits
Apply the state death tax deduction where relevant and avoid references to repealed state death tax credits under pre-2010 law. Confirm all terminology and calculations align with Internal
Revenue Service instructions and current interpretations reflected in IRS Notice 2011-66 and related guidance.
- Full IRS transcript retrieval (Wage & Income + Account)
- Professional tax form review
- Preparation & filing support
- Tax relief options if you owe the IRS
Step 10: Execute, Assemble, and File the Return
Ensure the executor signs the return, that required IRS forms, such as Form 712, are attached, and that preparer information is completed when using return preparation software. File the return at the address listed in the 2010 instructions or request an extension of time using Form
4768 if timely filing cannot be completed.
Important 2010 Accuracy Notes
Portability election concepts and the Deceased Spousal Unused Exclusion Amount do not apply to 2010 decedents and should not be referenced in estate planning analysis. Schedule F should not be described as an income tax schedule, and Schedule R or Schedule R-1 should only be used when GST tax reporting is expressly required.
Practical Review Before Filing
Confirm gross estate totals reconcile across schedules, valuation support matches reported figures, and tax liability calculations follow the 2010 Tax Act framework. For complex estates involving trust planning, blended families, or carryover basis elections, professional advice from an experienced tax professional is strongly recommended.
If you’re missing tax documents or want to ensure the numbers you enter match IRS records, we can help.
