Instructions for Form 706 (2011) Checklist
This checklist provides a structured guide for preparing Form 706 for estates of decedents dying after December 31, 2010, and before January 1, 2012. The estate tax return reports the gross estate, computes the federal estate tax, and determines the generation-skipping transfer tax when applicable.
Form 706 is not an income tax filing and does not replace Form 1040 or other individual returns.
It applies estate tax law under the Internal Revenue Code using fair market value unless an alternate valuation election is made.
Confirm Whether Form 706 Must Be Filed for a 2011
Decedent
Form 706 applies when the decedent was a United States citizen or resident for estate tax purposes at death. Nonresident noncitizen estates generally fall under Form 706-NA instead of
IRS Form 706.
For 2011 decedents, filing is required when the gross estate plus adjusted taxable gifts exceeds the exclusion amount or when a portability election is desired. Filing may be necessary even when no tax due exists to preserve the unused estate and gift tax exclusion amount for the decedent’s spouse.
Identify the Applicable 2011 Estate Tax Framework
The 2011 filing year reflects a federal estate tax rate of 35 percent and an exemption amount of
$5 million. These rules applied across estate tax, gift tax, and generation-skipping transfer regimes under chapters 11 and 13.
Portability election rules were introduced for 2011, allowing the transfer of the unused exclusion amount to a surviving spouse through a timely Form 706 filing. Recent developments for later years, including the Tax Cuts and Jobs Act changes, do not alter the 2011 filing mechanics.
Establish the Valuation Methodology
The default valuation method requires reporting property transferred at fair market value as of the date of death. Valuation consistency across all schedules is necessary to avoid errors in estate tax liability.
An alternate valuation election may be made to value assets six months after death, subject to disposition timing rules. If elected, the alternate valuation must be applied consistently across the entire gross estate.
Assemble Records and Organize by Schedule
Preparation begins by collecting documentation supporting asset ownership, valuation, and deductions. Organizing records using Form 706 schedules supports efficient review and reduces misstated tax liabilities.
Records typically include deeds, brokerage statements, life insurance documentation, trust instruments, Form 709 gift tax history, and invoices for administration expenses. Supporting documentation is essential for Sec. 2053 deductions and GST exemption calculations.
Ten-Step Filing Checklist
Step 1: Confirm decedent status and filing requirement
Confirm that the decedent qualifies as a U.S. citizen or resident for estate tax purposes under the Internal Revenue Code. Verify whether the estate exceeds the exclusion amount or requires a portability filing.
Confirm that Form 706 is the correct IRS form rather than Form 706-NA. This determination affects the entire return structure and applicable schedules.
Step 2: Select a valuation approach for the estate
Determine whether the estate will use date-of-death valuation or make an alternate valuation election. Apply the chosen valuation method consistently to all property interests.
Confirm valuation elections align with estate planning objectives and tax liability outcomes.
Inconsistent valuation methods can invalidate the election.
Step 3: Compile the gross estate
Identify all property included in the gross estate, including real estate, securities, business interests, life estate interests, and property subject to powers of appointment. Worldwide properties are included for the U.S. citizen or resident decedents.
Ensure proper reporting of jointly owned property and transfers during life. Schedule G captures includible lifetime transfers subject to estate tax inclusion.
Step 4: Complete Schedules A through I
Report assets on the appropriate schedules, including Schedule A for real estate and Schedule
B for stocks and bonds. Schedule C covers cash and notes, while Schedule D reports life insurance proceeds.
Schedules E through I address jointly owned property, miscellaneous assets, lifetime transfers, powers of appointment, and annuities. Each schedule must reflect fair market value using the selected valuation approach.
Step 5: Compute deductions on correct schedules
Claim funeral and administration expenses on Schedule J and debts and liens on Schedule K.
Schedule L reports losses during administration and expenses for property not subject to claims.
Other deduction schedules, including Schedule M for marital deductions and Schedule O for charitable transfers, must be used when applicable. Proper placement affects the computation of estate tax liability.
Step 6: Address marital deduction and QTIP Trust issues
If a marital deduction is claimed, complete Schedule M for qualifying transfers to the decedent’s spouse. Confirm interests qualify under marital deduction rules.
For QTIP Trust elections, ensure the property meets QTIP requirements and that the election is properly made on the return. Incorrect elections can disallow the marital deduction.
Step 7: Evaluate portability election considerations
Determine whether the estate will elect portability to transfer the unused estate and gift tax exclusion amount to the surviving spouse. Portability requires a timely and complete Form 706 filing.
Confirm that the election intent aligns with estate planning goals. Failure to file timely prevents portability regardless of estate size.
Step 8: Compute estate and GST tax
Calculate federal estate tax using the applicable 2011 rate and unified credit structure. Apply
GST exemption and automatic allocation rules when a generation-skipping transfer applies.
Complete Schedule R and Schedule R-1 as required for GST tax computation. Ensure consistency between estate tax and GST tax calculations.
Step 9: Assemble, sign, and prepare for filing
Assemble schedules in the order required by the instructions and attach supporting documentation. Ensure the executor signs the return under penalties of perjury.
Notarization is not required for Form 706. Paid preparer information should be completed when applicable.
- Full IRS transcript retrieval (Wage & Income + Account)
- Professional tax form review
- Preparation & filing support
- Tax relief options if you owe the IRS
Step 10: File timely and confirm mailing details
File Form 706 within nine months of the date of death unless an extension is obtained using
Form 4768. Extensions apply to the filing, not to the payment of tax due.
For 2011 instructions, file with the Internal Revenue Service Center in Cincinnati, Ohio, using the address specified. Retain proof of mailing for records.
Form-Specific Boundaries and Reminders
Form 706 is an estate and transfer tax return and does not reconcile income tax programs or credits. It reflects estate tax law in effect for 2011, including portability and exclusion amount rules.
Nonresident noncitizen estates generally use Form 706-NA instead of Form 706. Carryover basis elections under Section 1022 and Form 8939 apply to certain 2010 decedents, not 2011 filings.
Final Quality-Control Review
Confirm correct form selection, valuation consistency, and proper schedule usage. Verify that deductions are supported, that totals reconcile, and that GST schedules align with estate computations.
Ensure all attachments are included, and the return is signed. A complete review reduces processing delays and supports accurate reporting of estate tax liability.
If you’re missing tax documents or want to ensure the numbers you enter match IRS records, we can help.
