Form 706 (2016): U.S Estate & GST Tax Return
Checklist
Estate Form 706 is used to report federal estate taxes and certain generation-skipping transfer obligations for decedents who died in 2016. The filing process focuses on valuing asset types, applying deductions and elections, and determining any actual estate tax owed.
This checklist applies only to the estates of individuals who died in 2016. It does not address income tax forms, federal income tax credits, or unrelated tax obligations that fall outside federal estate tax rules.
Before starting: confirm whether an Estate Tax Return is
required
An estate tax return may be required when the gross estate, adjusted taxable gifts, and prior exemptions exceed the federal estate tax exemption for 2016. A filing may also be necessary if the estate executor elects portability for a deceased spouse, even if there is no tax liability.
For 2016, the current exemption limit is $5,450,000, and amounts are not interchangeable with later-year thresholds. Executors should confirm filing requirements early to avoid missed elections and the tax implications of timely filing.
Ten-step checklist for Estate Form 706 (2016)
Step 1: Collect estate records and define reportable assets
Gather all legal documents needed to identify and value estate property, including bank statements, brokerage records, real estate documents, and business interests held at death.
Prior gift tax filings, trust instruments, and any foreign bank or brokerage account records should also be reviewed for inclusion.
Create a working inventory that separates assets owned outright, jointly held property, trust interests, and potential GST-related transfers. This inventory establishes the foundation for accurate reporting and future estate calculations.
Step 2: Identify includible property and select the valuation date
Determine which assets are includible under applicable IRC Sections 2035, 2036, 2037, and
2038. Most estates use date-of-death values, though alternate valuation may apply when eligibility requirements are met.
Each reported value must reflect fair market value and be supported by documentation.
Appraisals are often required for real estate and closely held business interests.
Step 3: Complete property schedules based on asset categories
Report includible assets on the correct schedules, such as Schedule A for real estate and
Schedule B for stocks and bonds. Schedules C, E, F, and D are used when assets meet the definitions assigned to those schedules.
Descriptions should clearly identify ownership, valuation method, and relevant parties.
Consistency across schedules is critical to the form and accuracy of processing.
Step 4: Report lifetime transfers subject to inclusion
Use Schedule G to report transfers made during life that must be included in the gross estate.
This includes certain trusts that are subject to inclusion under federal estate tax rules, even if no
Form 709 was filed.
A meticulous approach is required to identify transfers that may not appear in prior records.
These inclusions directly affect the estate’s tax liability.
Step 5: Report powers of appointment when applicable
Schedule H is used when the decedent held powers of appointment that cause inclusion of property in the estate. These powers may arise from trusts or other legal arrangements involving relevant parties.
Only powers meeting the inclusion criteria should be reported. Schedule H is not used for debts or administrative expenses.
Step 6: Report annuity interests correctly
Schedule I is used to report annuity interests held by the decedent at death. Only arrangements that meet the definition of annuities under estate tax rules should be included.
Retirement accounts should be carefully reviewed to determine their proper treatment.
Misclassification can affect tax advantages and reporting accuracy.
Step 7: Deduct funeral and administration expenses
Schedule J is used to deduct funeral expenses and qualifying administration costs tied to property subject to claims. These expenses often include professional fees paid to a tax professional or legal professional.
Amounts must be appropriately documented and clearly connected to estate settlement activities. Duplicate deductions should be avoided.
Step 8: Deduct debts, mortgages, and liens
Schedule K reports debts owed at death, along with mortgages and liens on includible property.
Each entry must reflect valid obligations existing during the months of death.
Offsets, reimbursements, or related legal issues should be addressed consistently. Accurate reporting helps determine actual estate tax exposure.
Step 9: Apply losses, marital, and charitable deductions
Schedule L is used for qualifying losses during administration and expenses related to property not subject to claims. Schedule M applies the marital deduction for transfers to a surviving spouse that meet statutory requirements.
Schedule O reports qualifying charitable transfers. These deductions reduce taxable estate amounts and may significantly lower federal estate taxes.
- Full IRS transcript retrieval (Wage & Income + Account)
- Professional tax form review
- Preparation & filing support
- Tax relief options if you owe the IRS
Step 10: Assemble, review, and file the return
Confirm all required schedules, supplemental statements, and legal documents are attached, including the death certificate and any Life Insurance Statement or Form 712. The estate executor must complete the signature block and verify the Employer Identification Number.
Form 706 must be filed within nine months of death unless an extension is granted. Filing addresses should follow the instructions and not be based on location or tax preparation platforms.
Practical final review before submission
Confirm that schedules align with their intended purposes, including Schedule G for lifetime transfers and Schedule I for annuities. Verify that GST reporting is limited to applicable GST taxable termination events and direct skips.
Ensure any portability election is completed if intended, even when no tax is due. A careful final review supports compliance, reduces delays, and protects future estate calculations.
Additional considerations and resources
Complex estates often benefit from specialized services that address valuation, legal documents, and compliance requirements. Executors may consult comprehensive solutions
Payment options, including PCI DSS-compliant payment gateway systems and accepted debit card brands, may apply when taxes are owed. Accreditation standards, fee waiver eligibility, and
NM LR2-Form filings should be reviewed when applicable.
If you’re missing tax documents or want to ensure the numbers you enter match IRS records, we can help.
