Form 706 (2018) Estate Tax Return Filing Checklist

Checklist

This United States Estate (and Generation-Skipping Transfer) Tax Return checklist explains how an estate executor generally completes IRS Form 706 for decedents dying in 2016. The filing process centers on identifying the gross estate, documenting fair market value, applying deductions and elections, and determining any federal estate tax and GST tax due under the

Internal Revenue Code.

This estate tax return checklist is limited to estate taxes and generation-skipping transfer rules under chapters 11 and 13, rather than income tax topics. Items tied to the Tax Cuts and Jobs

Act, later exemption amount updates, or later-year return redesigns should not be applied to a

2016 filing.

Before starting: confirm whether the Estate tax return is

required

Form 706 is generally required when the gross estate, adjusted taxable gifts, and any applicable exclusions exceed the filing threshold for the year of death. A filing may also be required to make a portability election, which allows the transfer of a deceased spouse's unused exclusion to a surviving spouse, even if no tax is due.

For a 2016 death, the Basic Exclusion Amount is $5,450,000, and the federal estate tax exemption should be evaluated using 2016 rules rather than the current exemption limit. When the decedent was not a U.S. citizen or U.S. resident, Form 706-NA may apply instead of IRS

Form 706.

Ten-step checklist for IRS Form 706 (2016)

1. Step 1: Collect core records and build the estate inventory

   Gather legal documents and financial records needed to identify property transferred at death, including statements for bank, brokerage, and any foreign bank or brokerage account held by the decedent. Include real estate records, business documents, a trust agreement if applicable, prior gift tax filings such as Form 709, and beneficiary designations for retirement plans and insurance.

   Build an inventory that groups asset types by ownership and inclusion rules, such as outright property, jointly owned assets, trust-held property, and assets subject to retained interests, such

   as a life estate. This inventory supports accuracy and reduces gaps that can delay processing by the Internal Revenue Service.

2. Step 2: Determine the includible property and select the valuation date

   Identify assets includible in the taxable estate under transfer tax rules, including potential inclusion under life transfer provisions that may align with Schedule G reporting. Confirm whether the return will use date-of-death valuation or an elected alternate valuation method, if eligibility and requirements are met.

   Each reported amount should reflect fair market value, with supporting documentation that matches the asset type, often through appraisal for real estate and closely held entities.

   Consistent documentation also helps with income tax basis planning for beneficiaries after the estate settlement.

3. Step 3: Complete Schedule A through Schedule F for gross estate property

   Report real estate on Schedule A and securities on Schedule B, using clear descriptions and value support that match the valuation date selected. Use Schedule C for cash and receivables, and use Schedule E and Schedule F for jointly held and miscellaneous property based on the instructions for those schedules.

   Use Schedule D for life insurance proceeds when includible, supported by a life insurance policy review and a life insurance statement, such as Form 712 when required. Life insurance policy ownership and incidents of ownership should be reviewed to confirm whether life insurance proceeds are includible in the gross estate.

4. Step 4: Report lifetime transfers that must be included in the gross estate

   Use Schedule G to report transfer of property during life that must be pulled back into the gross estate, including items that may align with Internal Revenue Code inclusion principles. This review should not rely only on prior Form 709 records, since taxable gifts may have been made but not reported.

   A complete review supports accurate transfer tax computation and helps confirm the correct exemption amount usage. When uncertainty exists, tax practitioners often recommend professional advice to evaluate transfer tax exposure and related forms.

5. Step 5: Report powers of appointment on Schedule H

   Use Schedule H when the decedent held a reportable power of appointment over property, often arising under a trust agreement. The schedule should describe the power, the affected property, and why the power triggers inclusion in the taxable estate.

   Schedule H should not be used for estate debts or administration expenses, since those items belong on deduction schedules. Clear separation of schedules prevents misclassification that can raise tax liability questions during review.

6. Step 6: Report annuity interests on Schedule I

   Use Schedule I to report annuity interests held at death when the arrangement meets the annuity reporting framework on IRS Form 706. This often includes contracts that pay a stream of benefits, rather than general account balances that do not meet the schedule definition.

   Retirement benefits should be evaluated for correct placement because misreporting can distort the gross estate and the tax due calculation. Accurate reporting also helps align beneficiary reporting and income tax basis records after administration.

7. Step 7: Claim funeral and administration expenses on Schedule J

   Use Schedule J to claim funeral costs and administration expenses incurred in managing property subject to claims. These expenses may include fees paid to a legal professional, appraisal costs tied to estate management, and tax preparation support from a tax professional.

   Each claimed invoice and proof of payment should support the expense, and the amounts should be reasonable under estate administration standards. Duplicating expenses across schedules can cause processing delays and confusion in later correspondence.

8. Step 8: Claim debts, mortgages, and liens on Schedule K

   Use Schedule K to report valid debts owed at death, mortgages, and liens tied to includible property. Documentation should show that the obligation existed at death and that it reflects enforceable tax obligations or legal issues under estate administration.

   Items should not be counted twice, as both deductions and reductions in asset value, since that can distort the taxable estate. A careful review also helps identify estate tax lien concerns and ensures debts are addressed consistently.

9. Step 9: Apply Schedule L losses and Schedules M and O deductions

   Use Schedule L for qualifying losses during administration and expenses tied to property not subject to claims. These entries often require careful allocation because they differ from

   Schedule J treatment and may affect the final taxable estate computation.

   Use Schedule M for the marital deduction when property passes to a surviving spouse in a qualifying form, including QTIP trusts or other structures when relevant. Use Schedule O for charitable transfers, and ensure totals reconcile across schedules and the main tax computation.

• Full IRS transcript retrieval (Wage & Income + Account)
• Professional tax form review
• Preparation & filing support
• Tax relief options if you owe the IRS

10. Step 10: Final assembly, signatures, and timely filing

    Confirm the return includes all required pages, schedules, and related forms, including

    Schedule R-1 when applicable and any GST exemption allocation pages. The estate executor should verify identifying items such as an Employer Identification Number and complete the signature block to avoid avoidable processing delays.

    The filing deadline is generally nine months after the date of death, and Form 4768 may be used to request an extension when needed. Filing addresses and delivery rules must follow the

    Form 706 instructions, and completion should be thorough enough to support later requests, such as an estate tax closing letter or a tax closing letter.

    Practical final review for form for accuracy

    Confirm schedule names match their intended use, including Schedule D for life insurance proceeds, Schedule G for includible lifetime transfers, and Schedule I for annuities. GST tax reporting should be limited to what Form 706 covers, including direct skips under section 2612 and any required GST computations reflected on Schedule R-1.

    If an estate portability election is intended, the Portability Filing should be completed and submitted by the filing deadline, since the DSUE Amount depends on timely filing. When relief is sought, procedures may involve guidance from Revenue Procedure 2017 or later updates, such as Revenue Procedure 2022-32, and may require professional advice to confirm eligibility and document requirements.

    Notes on special situations and related requests

    When the decedent was neither a U.S. citizen nor a U.S. resident, Form 706-NA is generally used, and different rules may apply. Specific administrative requests, including account transcript retrieval, Form 4506-T usage, IRS transfer certificate needs, or transfer certificate filing requirements, may arise depending on estate assets and foreign holdings.

    If additional IRS communications occur, tracking identifiers such as a pay.gov tracking ID or internal markers like TC 421 may appear in estate correspondence. Complex disputes may require tax practitioners to review legal authorities, such as United States v. Windsor, Estate of

    Sower v. Comm'r, or other cited examples, while keeping the estate tax return focused on accurate reporting and substantiation.

    If you’re missing tax documents or want to ensure the numbers you enter match IRS records, we can help.