Form 706 Checklist for Tax Year 2010 (Decedents Dying January 1–December 31, 2010)
Why 2010 Is Unique
Form 706 for 2010 reflects unprecedented estate tax rules, including a $5,000,000 exclusion with a 35% maximum rate, an optional Section 1022 election to opt out of estate tax (accepting a modified carryover basis instead), the first-time portability of deceased spousal unused exclusion (DSUE), and a zero percent generation-skipping transfer tax rate. The filing deadline is September 19, 2011—not the standard nine-month date—due to congressional action after December 17, 2010. Executors choosing Section 1022 opt-out file Form 8939 by January 17, 2012 (extended from November 15, 2011, per IRS Notice 2011-76), receiving up to $1,300,000 general basis allocation plus $3,000,000 for spousal property, but forfeiting stepped-up basis and Form 706 filing.
Seven-Step Form 706 Filing Checklist
Step 1: Determine Filing Requirement and Election Path
File Form 706 if gross estate plus adjusted taxable gifts plus specific exemption exceeds $5,000,000, OR to elect portability of unused spousal exemption regardless of estate size. Filing deadline: September 19, 2011. If choosing Section 1022 opt-out, file Form 8939 by January 17, 201,2, instead; do not file Form 706. Use Form 4768 for automatic six-month extension (extended deadline: March 19, 2012).
Step 2: Gather Identification and Appointment Documents
Attach a certified death certificate. Confirm decedent’s Social Security Number and domicile (actual residence at death, not hospital address). If a U.S. citizen or resident, use Form 706; if a nonresident noncitizen, use Form 706-NA. Provide a certified copy of the will and codicils (testate) or court order (intestate). Obtain proof of the executor’s appointment; the executor’s statement alone is insufficient. If there are multiple executors, name all of them on Form 706. Attach Form 2848 if the authorizing representative.
Step 3: Value All Assets and Complete Asset Schedules
Document the fair market value of the entire gross estate as of the date of death. Complete appropriate schedules: Schedule A (real estate), Schedule B (stocks/bonds), Schedule C (cash/mortgages), Schedule D (life insurance—obtain Form 712 from each insurer), Schedule E (jointly owned property), Schedule F (miscellaneous property). If electing alternate valuation under Section 2032, value the property six months after death (or earlier sale/distribution date); obtain both date-of-death and alternate values. Include transfers under Sections 2035–2038 on Schedule G if applicable.
Step 4: Calculate Adjusted Taxable Gifts
Add all taxable gifts made after December 31, 1976, reported on Form 709 or Form 709-A, plus unreported gifts exceeding the annual exclusion. Complete Worksheet TG to recompute gift tax payable using Table A—Unified Rate Schedule as in effect on date of death (not date of gift); use 2010 rates (35% maximum) to refigure prior gift taxes.Include the total on line 4.
Step 5: Itemize Deductions—Debts, Expenses, Marital, and Charitable
- Schedule J & K: List funeral expenses, executor commissions, attorney fees,and administration costs (Schedule J). Document all debts, mortgages, and liens (Schedule K). For state death taxes, deduct actual state inheritance taxes paid;attach a certified state tax authority statement showing total tax, discounts,penalties, interest, and payment date.
- Schedule M (Marital Deduction): Describe property passing to the surviving spouse qualifying under Section 2056. For the QTIP election under Section 2056(b)(7), complete Schedule M and attach the trust instrument. For a non-U.S. citizen spouse, property must pass to a qualified domestic trust (QDOT) by the filing date; complete Schedule M(D) and attach the QDOT agreement.
- Schedule O (Charitable Deduction): List property passing to qualified charitable organizations; reduce by any estate tax, state death tax, or GST tax payable from charitable property.
- Schedule L: Claim losses during administration and expenses not subject to claims if applicable.
Step 6: Compute Estate Tax and Apply Credits
Complete Part II—Tax Computation. Enter taxable estate (line 1). Compute tentative tax using Table A—Unified Rate Schedule (35% maximum for amounts over $1,000,000).Subtract recomputed gift taxes using date-of-death rates (line 7). Claim unified credit of $1,730,800 for 2010 decedents (line 9d). If decedent received DSUE from predeceased spouse, include in applicable exclusion amount. Enter net estate tax due (line 9f); if zero or negative, no estate tax owed.
Step 7: Elect Portability, Special Valuations, and Sign/File
- Part 6—Portability: Complete to elect transfer of deceased spouse’s unused exclusion amount (DSUE) to the surviving spouse, making it available for the survivor’s later transfers. This election requires a timely Form 706 filing regardless of estate size.
- Special Elections: If electing special-use valuation under Section 2032A, complete Schedule T. If electing conservation easement exclusion under Section 2031©, complete Schedule U.
- Assembly and Filing: The executor signs under penalty of perjury; the paid preparer must sign, date, and provide their PTIN. Assemble pages 1–3, then schedules with entries only (A–U as applicable). Attach certified death certificate, will, Form 712 for each policy, trust instruments, state death tax certificate, Form 706-CE (foreign death tax credit if applicable). File by September 19, 2011, via certified mail or private delivery service (FedEx/UPS); no electronic filing available.
Key 2010 Form Changes
Part 1 now emphasizes decedent’s domicile (actual residence) and requires documentation proving the executor’s appointment. Part 2, Line 7 requires recomputation of gift tax using date of-death rates, not amounts paid initially. Part 6 (new for 2010) allows portability election of DSUE to the surviving spouse.
Compliance Notes
State death tax credit was repealed for decedents dying after December 31, 2004; only deduction allowed. Section 1022 opt-out is available only for 2010 decedents and precludes Form 706 filing. Nonresident noncitizens cannot claim the marital deduction unless property passes to QDOT. Penalties apply for late filing (20% substantial understatement, 40% gross understatement) unless reasonable cause is shown after notice. September 19, 2011, is a fixed deadline; a six-month extension via Form 4768 moves the deadline to March 19, 2012. No further automatic extension is available.
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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.