Form 706 Estate Tax Return: 2013 Filing Checklist
Overview of 2013 Form 706
Form 706 for 2013 introduced permanent portability of the deceased spousal unused exclusion amount as amended by the American Taxpayer Relief Act of 2012. Part 6 was added to facilitate portability elections, allowing surviving spouses to use their deceased spouse’s unused $5,250,000 exclusion. Lines 9a through 9d replaced line 9 to calculate applicable credit amounts, including DSUE. Schedule PC was introduced to preserve refund rights for unresolved section 2053 expenses.
Key 2013 Tax Amounts
The basic exclusion amount is $5,250,000 with an applicable credit of $2,045,800. The maximum estate and GST tax rate is 40 percent. The special-use valuation ceiling is $1,070,000.
Ten-Step Filing Process
Step 1: Determine Filing Requirements
File Form 706 if gross estate plus adjusted taxable gifts made after December 31, 1976, plus specific exemption for gifts between September 8, 1976, and December 31, 1976, exceeds $5,250,000. Filing is also mandatory when electing DSUE portability, regardless of estate size. Submit within nine months of death or request a six-month extension using Form 4768.
Step 2: Collect Required Information
Obtain the decedent’s social security number, dates of birth and death, domicile information, and citizenship status. U.S. citizens or residents use Form 706; nonresident noncitizens file Form 706-NA. Confirm executor authority with certified copies of the will, court orders, or letters of administration. Paid preparers must sign Form 706 and provide their preparer tax identification number.
Step 3: Complete Asset Schedules
Complete Schedule A for real estate, Schedule B for stocks and bonds, Schedule C for mortgages and cash, Schedule D for life insurance with Form 712 attached, Schedule E for jointly owned property, Schedule F for miscellaneous property, and Schedule G for lifetime transfers under sections 2035 through 2038. Use the fair market value as of the date of death, or elect an alternate valuation using values six months after death.
Step 4: Calculate Taxable Estate
Transfer asset totals from Schedules A through I to Part 5, items 1 through 10, and calculate the total gross estate on item 11. Enter deductions from Schedules J through O on Part 5, items 14 through 23. On Part 2, enter the gross estate from Part 5, item 13, on line 1 and deductions from item 24 on line 2 to calculate the tentative taxable estate on line 3a.
Step 5: Compute Adjusted Taxable Gifts
Complete Worksheet TG for taxable gifts made after December 31, 1976. Enter adjusted taxable gifts on Part 2, line 4. Add tentative taxable estate and adjusted taxable gifts on line 5. Calculate tentative tax using Table A on line 6. Subtract prior gift tax on line 7 to determine tentative estate tax on line 8.
Step 6: Calculate Applicable Credit Amount
Enter the basic exclusion of $5,250,000 on line 9a. Report DSUE from predeceased spouses who died after December 31, 2010, on line 9b from Part 6, Section D. Add lines 9a and 9b for the applicable exclusion amount on line 9c. Calculate the appropriate credit on line 9d using Table A. Enter an adjustment that does not exceed $6,000 on line 10. Subtract line 10 from line 9d for allowable credit on line 11.
Step 7: Apply Additional Credits
Complete Schedule P for foreign death tax credits and enter them on line 13. Complete Schedule Q for tax on prior transfers and enter it on line 14. Add lines 13 and 14 for total credits on line 15. Subtract line 15 from line 12 for net estate tax on line 16.
Step 8: Calculate GST Tax
Complete Schedule R for direct skips to skip individuals. Determine GST exemption allocation on Schedule R, lines 1 through 4. Calculate GST tax using the applicable rate, which equals 40 percent multiplied by the inclusion ratio. For Schedule R, Part 2, line 6, if the property does not bear GST tax, multiply by 40%. Report total GST taxes on Part 2, line 17. Attach Schedule R-1 for trusts with direct skips.
Step 9: Make Executor Elections
On Part 3, line 1, elect alternate valuation if it decreases both estate value and taxes. On line 2, elect special-use valuation under section 2032A for qualified farms and businesses, completing Schedule A-1 with all qualified heirs’ signatures. Maximum reduction is $1,070,000. On line 3, elect installment payment under section 6166 if eligible. Complete Part 6, Section C, to calculate DSUE portable to the surviving spouse, entering the applicable exclusion from line 9c on Section C, line 1. Refer to Part 6, Section A, to opt out of portability if desired.
Step 10: File Protective Claims and Finalize
Complete Schedule PC in duplicate for each unresolved claim, expense, or liability that has not been paid or fixed by the filing deadline. Reference the applicable Form 706 schedule and line number. Provide claimant identification, a claim basis, and contingencies that delay resolution. Assemble all four pages of Form 706, along with the required schedules, in the correct order. Attach the death certificate and a certified copy of the will if applicable.
Include Schedules A through I as needed, plus Schedule A-1 for special-use valuation, Schedule P for foreign taxes, Schedule Q for prior transfers, Schedule M for marital deduction, Schedule O for charitable deduction, and Schedule PC for protective claims. Executor signs under penalties of perjury. File at the IRS address specified in the Form 706 instructions.
Filing Requirements and Limitations
Form 706 must be filed for estates exceeding $5,250,000 or when electing DSUE portability. Estates with unrelated business income of $1,000 or more must also file Form 990-T. Use only the August 2013 revision for decedents dying after December 31, 2012.
Portability Election
Timely filing of a complete Form 706 automatically elects portability unless the executor opts out in Part 6, Section A. This allows surviving spouses to use the deceased spouse’s unused exclusion for future transfers.
Documentation and Compliance
Executors must provide documentation proving their status. Maintain complete records supporting all values, deductions, and elections. Schedule PC preserves refund rights under Section 2053 for unresolved expenses if the limitation period has otherwise expired. All dollar amounts and calculations must follow the instructions for Form 706, as of 2013.
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This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
