Form 706 Tax Year 2019 Comprehensive Compliance Guide
Why 2019 Form 706 Is Unique
The 2019 Form 706 reflects the continued implementation of the Tax Cuts and Jobs Act, maintaining the doubled basic exclusion amount of $11,400,000 that was first introduced for decedents dying in 2018. This exclusion represents a significant increase from the $5,490,000 threshold that applied to decedents in 2017, effectively exempting the vast majority of estates from federal estate tax liability.
For 2019, the basic credit amount corresponding to this exclusion is $4,505,800, calculated using the unified rate schedule. The portability of deceased spousal unused exclusion amounts remains a central feature, allowing surviving spouses to utilize any unused portion of their deceased spouse’s exclusion amount by timely filing Form 706. The special-use valuation ceiling under Section 2031A is set at $1,160,000 for qualified real property used in farming or closely held business operations. The threshold amount for calculating the 2 percent portion of deferred estate tax under Section 6166 installment payments is $1,550,000.
The 2019 revision incorporates administrative improvements, including new filing addresses effective July 1, 2019, with regular returns filed in Kansas City, Missouri, and amended returns filed in Florence, Kentucky. Schedule R-1 became a separate form starting in 2019, requiring executors to obtain and file it separately from Form 706 when reporting generation-skipping transfer tax on direct skips.
Year-Specific Programs Applicable to 2019 Form 706
Portability Election
The portability of the deceased spousal unused exclusion amount is available for all decedents who die in 2019. To elect portability, the executor must file a timely Form 706 within nine months of the decedent’s death, or within the six-month extension period if Form 4768 was timely filed. Executors who do not have a filing requirement based solely on estate size may still file Form 706 to make the portability election, allowing the surviving spouse to add the unused exclusion to their own lifetime exemption.
Estates that missed the initial filing deadline may qualify for late portability relief under Revenue Procedure 2017-34, which permits filing on or before the second anniversary of the decedent’s death. Any estate seeking relief beyond these deadlines may request private letter ruling relief under Treasury Regulations section 301.9100-3.
Special-Use Valuation
Section 2032A's special-use valuation remains available for qualified real property used for farming or closely held business purposes. The 2019 ceiling on the reduction in value is $1,160,000. To elect special-use valuation, the executor must complete Schedule A-1, obtain signed agreements from all qualified heirs accepting personal liability for recapture tax, provide material participation affidavits, and demonstrate that the property satisfies all statutory requirements. The election must be made on a timely filed Form 706 and is irrevocable after the due date.
Section 6166 Installment Payments
Estates with closely held business interests exceeding 35 percent of the adjusted gross estate may elect to defer and pay estate tax attributable to the business interest in installments over 14 years. Interest on the first $1,550,000 of deferred tax is charged at a rate of only 2 percent, with the balance bearing interest at 45 percent of the regular underpayment rate. The election is made by checking the appropriate box on Part 3 of Form 706 and providing the required supporting documentation.
Ten-Step Compliance Checklist for 2019 Form 706
Step 1: Confirm Filing Requirement
Determine whether the estate must file Form 706 by calculating whether the decedent’s gross estate plus adjusted taxable gifts exceeds $11,400,000. Filing is also required if the executor elects to transfer the deceased spouse's unused exclusion to a surviving spouse, regardless of estate size. U.S. citizens or residents dying in 2019 use Form 706; nonresident aliens use Form 706-NA.
Step 2: Verify Decedent Information and Complete Part 1
Gather essential documentation, including the death certificate and certified copy of the will if the decedent died testate. Complete Part 1 with the decedent’s full legal name, Social Security number, date of birth, date of death, and domicile. Confirm the decedent was a U.S. citizen or resident at death. Provide complete executor information, including name, address, phone number, and Social Security number or employer identification number.
Step 3: Obtain the Estate Employer Identification Number
File Form SS-4 with the IRS to obtain an employer identification number for the estate. This EIN is required for all estate tax filings and cannot be the decedent’s Social Security number. The EIN is used throughout Form 706 and on all supporting schedules and documents.
Step 4: Compile Complete Asset Documentation
Assemble comprehensive documentation for all property interests held by the decedent at death. Obtain professional appraisals for real estate and closely held business interests. Gather account statements showing date-of-death values for securities, bank accounts, and investment accounts. Collect information about life insurance policies on Form 712 for each policy on the decedent’s life—document all jointly owned property, transfers during life, powers of appointment, and annuities.
Step 5: Complete Property Schedules for Part 5 Recapitulation Items 1-9
Prepare Schedule A for real estate, Schedule B for stocks and bonds, Schedule C for mortgages, notes and cash, Schedule D for insurance on the decedent’s life, Schedule E for jointly owned property, Schedule F for other miscellaneous property, Schedule G for lifetime transfers, Schedule H for powers of appointment, and Schedule I for annuities as applicable to the estate. Schedule F must be completed and filed with all returns, even if no assets are reported on it. Number each item on every schedule and provide complete descriptions and valuations for each item.
Step 6: Consider the Alternate Valuation Election
Evaluate whether alternate valuation would benefit the estate by reducing both the gross estate value and the combined estate and generation-skipping transfer taxes. Alternate valuation must be elected on Part 3, Line 1, and applies to all property in the gross estate. Property is valued as of six months after death, or the date of distribution or sale if earlier. Once made, the election is irrevocable. Do not elect alternate valuation unless both the gross estate and total tax liability decrease.
Step 7: Calculate Total Gross Estate on Part 5, Item 13
Total all schedule amounts for items 1 through 10 of Part 5 to determine the gross estate before exclusions. If claiming a qualified conservation easement exclusion under section 2031(c), complete Schedule U and enter the exclusion on item 12. Subtract the exclusion from item 11 to arrive at the total gross estate less exclusion on item 13, which carries forward to Part 2, line 1 for tax computation.
Step 8: Complete All Applicable Deduction Schedules for Part 5 Items 14-24
Prepare Schedule J reporting funeral expenses and administration expenses subject to claims, Schedule K listing debts of the decedent and mortgages or liens, Schedule L showing net losses during administration and costs not subject to claims, Schedule M detailing bequests to the surviving spouse qualifying for marital deduction, and Schedule O listing charitable gifts and bequests. State death taxes paid are deducted on line 3b of Part 2. Enter each schedule total on the corresponding Part 5 item and total all deductions on item 24.
Step 9: Complete Part 2 Tax Computation Using 2019 Thresholds
Enter total gross estate less exclusion on line 1 and total allowable deductions on line 2 to calculate taxable estate on line 3c. Add adjusted taxable gifts made after December 31, 1976, on line 4. Apply Table A unified rate schedule to compute the tentative tax on line 6. Subtract gift taxes paid on post-1976 gifts to arrive at the tentative estate tax on line 8.
Calculate the applicable credit amount on line 9e using the basic exclusion of $11,400,000 plus any deceased spousal unused exclusion amount, which produces a maximum credit of $4,505,800 before adjustments. Apply all allowable credits to determine net estate tax payable.
Step 10: Complete Part 6 Portability if Surviving Spouse Exists
If the decedent had a surviving spouse at death, complete Part 6 to either elect portability or opt out of the election. Portability is automatic if a timely return is filed unless the executor affirmatively opts out. Calculate the deceased spouse's unused exclusion amount in Part 6, Section C, by subtracting the applicable exclusion amount used from the total applicable exclusion amount available.
For estates filing solely to elect portability where the gross estate does not exceed $11,400,000, identify all assets, but values may be omitted from the last three columns of schedules under the special rule. The executor must sign the return under penalties of perjury, and if a paid preparer is used, the preparer must sign and include their preparer tax identification number.
2019 Form 706 Filing Requirements Summary
Form 706 for decedents dying in 2019 must be filed within nine months of the date of death with the Department of the Treasury, Internal Revenue Service, Kansas City, MO 64999. A six-month extension is available by filing Form 4768 promptly before the original due date.
The first four pages of Form 706, along with all applicable schedules, must be filed together, containing complete entries in all required fields. Attach the death certificate, certified copy of the will, all Form 712 life insurance statements, supporting appraisals and valuations, and documentation for any special elections. Estate and generation-skipping transfer taxes are due nine months after death unless an extension or installment payment election applies under section 6166 or section 6163.
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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.
