Instructions for Form 706 (2017) Checklist
This checklist is a structured preparation and review guide for completing Form 706 (Rev.
August 2017) for estates of United States citizens or United States residents who died after
December 31, 2016. It focuses on filing requirements, schedule accuracy, handling of portability elections, and generation-skipping transfer reporting under applicable federal law.
The guide is designed to support estate management and timely filing while aligning with
Internal Revenue Service instructions. It also helps reduce errors in estate tax liability calculations that commonly delay processing or trigger follow-up correspondence, including account transcript reviews and estate tax closing letter requests.
Scope and What This Return Covers
Form 706 is used to report the gross estate, compute the federal estate tax, and determine whether the generation-skipping transfer tax applies to transfers included in the taxable estate.
It also allows the executor to make elections that affect estate tax exclusion amounts, even when no tax due is ultimately owed.
This version of the estate tax return applies only to decedents who were United States citizens or United States residents at death. Estates of non-resident aliens generally fall under Form
706-NA and follow separate filing requirements and transfer tax rules.
Before You Start: Filing Requirements and Timing
Before preparation begins, confirm whether Form 706 must be filed based on the filing threshold for the year of death, which considers the gross estate and adjusted taxable gifts. Filing is also required when making a portability election, regardless of whether the estate tax exemption is exceeded.
Form 706 is generally due nine months after the date of death, and timely filing is critical to preserve elections and reduce penalties. If additional time is needed, Form 4768 may be used to request an extension of time to file and, when applicable, an extension to pay.
Ten-Step Preparation and Filing Checklist
Step 1: Verify decedent and executor identification
Confirm the decedent’s full legal name, Social Security number, date of birth, date of death, and domicile to ensure correct estate classification under federal estate tax rules. Executor
information, including authority documentation, should be reviewed carefully to avoid signature or authorization defects.
Also, confirm whether an extension was requested using Form 4768 and ensure the appropriate indicator is marked on the return. This step supports accurate filing requirements and prevents processing delays tied to missing identification data.
Step 2: Build the gross estate inventory
Assemble a complete inventory of all property interests includible in the gross estate, ensuring each asset is reported once and assigned to the correct schedule. Assets commonly include real estate, financial accounts, business interests, annuities, life insurance, and retained interests under applicable IRC Section provisions.
Each asset should be supported by documentation that reflects its ownership, valuation, and classification. Fair market value must be determined consistently across the return to support accurate estate tax exclusion and transfer tax calculations.
Step 3: Report assets on Schedules A through I
Schedules A through I are used to report different asset categories, including real estate, stocks and bonds, cash, insurance, joint property, miscellaneous property, lifetime transfers, powers of appointment, and annuities. Correct schedule placement is essential to avoid IRS correspondence and TC 421 processing issues.
Supporting records such as appraisals, broker statements, insurance forms, and trust documents should align with the amounts reported. A working asset register helps reconcile totals and supports later account transcript or IRS transfer certificate requests.
Step 4: Record deductions using the correct schedules
Deductions must be reported on the schedule that corresponds to their legal category, rather than being grouped. Funeral and certain administrative expenses are reported on Schedule J, while debts, mortgages, and liens are reported on Schedule K.
Expenses related to property not subject to claims are reported on Schedule L, marital deductions on Schedule M, and charitable deductions on Schedule O. Proper categorization helps prevent estate tax lien disputes and reduces the likelihood of adjustment notices.
Step 5: Determine marital status and portability election
Confirm marital status at death and collect surviving spouse information when applicable. If portability is desired, ensure the return is timely filed, and the portability election section is completed correctly.
The portability election allows the transfer of unused estate tax exemption to a surviving spouse under the American Taxpayer Relief Act of 2012. Opting out requires an affirmative statement on the return, and improper handling can permanently forfeit the election.
Step 6: Evaluate GST exposure and trust transfers
Review whether the estate includes direct skips or trust terminations that trigger the generation-skipping transfer tax. When applicable, complete Schedule G for includible lifetime transfers and Schedule R or Schedule R-1 for GST tax computations and exemption allocations.
Schedule G should not be treated as a general list of recent gifts, but only as a reporting mechanism for transfers includible under specific IRC Section rules. Proper documentation supports accurate Generation Skipping Transfer reporting and reduces audit risk.
Step 7: Attach valuation support and appraisals
Attach appraisals and valuation reports actually used to determine reported values, especially for real estate, closely held businesses, and unique assets. Valuation methods should be consistent with fair market value standards under federal law.
Narratives, exhibits, and conclusions must align with schedule entries and recapitulation totals.
Inconsistent valuation support is a common cause of the service’s time delays and follow-up requests.
Step 8: Complete charitable and representative sections
If claiming a charitable deduction, complete Schedule O with the required recipient details and transfer descriptions. Only provide information required by the form and retain additional support in the preparation file.
The executor and representative sections should be reviewed for completeness, including signature authority and preparer information, when applicable. Proper completion supports the issuance of an estate tax closing letter or tax closing letter when requested.
Step 9: Compute tax and plan payment or extension
Complete the tax computation section, applying credits, estate tax exclusion amounts, and any generation-skipping transfer tax due. Confirm calculations reconcile with gross estate totals and deduction schedules.
If tax is owed, plan payment by the due date to minimize interest and penalties. Extensions requested through Form 4768 do not automatically suspend interest accrual on unpaid 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 and file using current IRS guidance
Before filing, confirm all schedules, attachments, and signatures are present and properly ordered. Verify the correct version of Form 706 is used and that supporting documents are clearly labeled.
Use the Internal Revenue Service “where to file” guidance for forms beginning with the number seven, rather than state-based rules. Retain proof of mailing, tracking ID information, and a complete copy of the filed return.
Form-Specific Limitations
Form 706 (Rev. August 2017) applies only to estates of United States citizens or residents and should not be used for non-resident aliens. Estates incorrectly filed on the wrong return often face processing delays and correspondence.
The effectiveness of a portability election depends on timely filing and accurate completion, not on the surviving spouse's citizenship. Professional advice may be appropriate when estate planning structures or trust arrangements complicate filing positions.
Quick Accuracy Reminders
Mortgages and debts belong on Schedule K, not Schedule J, and charitable or marital deductions should never appear on debt schedules. Schedule G should not be described as all transfers within three years, but only includible transfers under the Code.
Always rely on current filing requirements and IRS guidance rather than assumptions from prior years or informal sources. Accurate preparation supports efficient processing and reduces exposure to estate tax adjustments.
If you’re missing tax documents or want to ensure the numbers you enter match IRS records, we can help.
