Form 706 (Rev. August 2014): Estate Tax Filing Checklist
Overview
For decedents dying in 2014, Form 706 incorporates permanent portability of the Deceased Spousal Unused Exclusion (DSUE). The basic exclusion amount is $5,340,000, and the applicable credit is $2,081,800. Filing a timely and complete Form 706 automatically elects portability unless the executor opts out.
Critical 2014 Tax Amounts
Basic Exclusion Amount: $5,340,000
Applicable Credit Amount: $2,081,800
Special-Use Valuation Ceiling: $1,090,000 (Section 2032A)
Section 6166 2% Portion Amount: $1,450,000
Annual Gift Exclusion: $14,000 per donee
GST Exemption: $5,340,000
Top Tax Rate: 40%
Key Structural Changes
Portability Election Simplified
Filing a timely and complete Form 706 with a DSUE amount automatically transfers that amount to the surviving spouse. Executors must affirmatively opt out in Part 6 if they do not wish to elect portability. Estates not required to file may file solely for portability purposes.
Line 9 Restructured for DSUE
Part 2, Line 9 now has four components:
- Line 9a: Basic exclusion amount ($5,340,000)
- Line 9b: DSUE from predeceased spouse
- Line 9c: Total (9a + 9b)
- Line 9d: Applicable credit on line 9c
Filing Requirements
File Form 706 if the gross estate plus adjusted taxable gifts exceeds $5,340,000, or if you elect portability regardless of estate size.
Filing Deadline: Nine months after death. Extensions are available via Form 4768 (automatic six-month extension). The portability election must be filed on time, either within the nine-month deadline or during the extension period.
Payment Deadline: Nine months after death (extensions do not extend payment time).
Valuation Methods
Date-of-Death Valuation
Value all property at fair market value as of the date of death unless alternate valuation is elected.
Alternate Valuation (Section 2032)
Value property as of six months after death. This election must be indicated on line 1 of Part 3. This all-or-nothing election is allowed only if it decreases both the gross estate value and the combined estate and GST taxes. Property disposed of within six months is valued at the disposition date.
Special-Use Valuation (Section 2032A)
Elect on line 2, Part 3, for qualified farm or closely held business real property passing to family members. Requires Schedule T completion—maximum reduction: $1,090,000.
Required Schedules
Schedule A: Real estate
Schedule B: Stocks and bonds
Schedule C: Mortgages, notes, and cash
Schedule D: Life insurance on decedent’s life
Schedule E: Jointly owned property
Schedule F: Other miscellaneous property (always required if applicable)
Schedule G: Lifetime transfers (Sections 2035-2038)
Schedule H: Powers of appointment
Schedule I: Annuities and retirement accounts
Schedule J: Funeral and administration expenses (subject to claims)
Schedule K: Debts, mortgages, and liens
Schedule L: Administration expenses (not subject to claims)
Schedule M: Marital deduction
Schedule O: Charitable deduction
Schedule P: Foreign death tax credit
Schedule Q: Credit for tax on prior transfers
Schedule R: GST tax
Tax Computation
- Calculate taxable estate (gross estate minus deductions)
- Add adjusted taxable gifts made after 1976
- Calculate tentative tax using Table A (18% to 40% rates)
- Subtract tentative tax on prior gifts
- Apply the applicable credit amount
- Apply additional credits (foreign death taxes, prior transfers)
Special Elections
Section 6166 Installment Payments
Available if a closely held business exceeds 35% of the adjusted gross estate. First payment deferred for five years, then up to nine equal annual installments—interest at 2% on the first $1,450,000 of deferred tax.
Section 6163 Deferral
Postpone tax attributable to reversionary or remainder interests until six months after the precedent interest terminates.
QTIP Election
Make on Schedule M for terminable interests passing to the surviving spouse.
QDOT Election
Required for non-citizen surviving spouses to qualify for marital deduction.
GST Tax
GST exemption equals $5,340,000. Allocate on Schedule R to property passing to skip persons—tax rate: 40%.
Ten-Step Filing Checklist
Step 1: Verify Filing Requirements
Confirm gross estate plus adjusted taxable gifts exceeds $5,340,000, or the executor intends to elect portability. Obtain estate EIN via Form SS-4. Obtain decedent’s SSN if needed via Form SS-5. Gather executor documentation (certified will or court order).
Step 2: Inventory Assets and Obtain Valuations
List all assets at death. Obtain appraisals for real estate, valuations for closely held businesses, Form 712 for life insurance, and fair market value documentation for all assets as of the date of death.
Step 3: Compile Gift History
Gather all Forms 709 for post-1976 gifts. Identify unreported taxable gifts exceeding the annual exclusion. Complete Worksheet TG for taxable gifts reconciliation. Calculate adjusted taxable gifts using the Line 4 Worksheet.
Step 4: Determine Valuation Elections
Evaluate alternate valuation (Section 2032) if values declined within six months after death, and the election would decrease both the gross estate and taxes. Evaluate special-use valuation (Section 2032A) for qualified farm or business property. Evaluate Section 6166 if a closely held business exceeds 35% of the adjusted gross estate. Evaluate Section 6163 for reversionary interests.
Step 5: Complete Property Schedules
Complete Schedules A through I with full descriptions and values. Use an alternate valuation date and values only if an election is made. Total each schedule and transfer amounts to Part 5—Recapitulation.
Step 6: Complete Deduction Schedules
Complete Schedules J, K, and L, itemizing all allowable deductions. Transfer totals to Part 5. Calculate the taxable estate (gross estate minus total deductions).
Step 7: Claim Marital and Charitable Deductions
Complete Schedule M for property passing to the surviving spouse. Make a QTIP election for terminable interests if applicable. Make a QDOT election for a non-citizen spouse, if appropriate. Complete Schedule O for charitable bequests. Enter totals on Part 5.
Step 8: Calculate Tax and Apply Applicable Credit
Enter taxable estate on Part 2, line 1. Add adjusted taxable gifts on line 4. Calculate tentative tax on line 6 using Table A. Calculate tentative tax on prior gifts on line 7 using Line 7 Worksheet. Enter the basic exclusion amount ($5,340,000) on line 9a, any DSUE from a predeceased spouse on line 9b, the total on line 9c, and the applicable credit ($2,081,800 or the adjusted amount) on line 9d. Calculate net estate tax.
Step 9: Apply Credits and Calculate GST Tax
Complete Schedule P for a foreign death tax credit, if applicable. Attach Form 706-CE. Complete Schedule Q for prior transfer credit if applicable. Complete Schedule R to allocate the GST exemption ($5,340,000) and calculate any GST tax at a 40% rate.
Step 10: Finalize and File
The executor must sign the return. Attach the death certificate and a certified copy of the will. Attach Form 712 for life insurance, Form 709 for prior gifts, Form 706-CE for foreign taxes, and state death tax payment evidence. Complete Schedule T with qualified heir signatures if you are electing a special-use valuation. File the forms within nine months of the date of death or within the designated extension period, if applicable. Mail to IRS Cincinnati, OH 45999.
Required Attachments
- Death certificate (required)
- Certified copy of will (if testate)
- Form 712 for each life insurance policy
- Form 709 for lifetime taxable gifts
- Form 706-CE for foreign death taxes
- State death tax payment evidence
- Trust instruments and court orders (if referenced)
Penalties
Late Filing/Payment: Section 6651 penalties apply unless reasonable cause is shown.
Valuation Understatement: 20% penalty if the reported value is 65% or less of the actual value. 40% penalty if 40% or less (gross understatement).
Important Reminders
- Filing a timely and complete Form 706 automatically elects portability unless the executor opts out in Part 6.
- Alternative valuation must decrease both the gross estate and the combined estate and GST taxes.
- The maximum special-use valuation reduction is $1,090,000.
- GST exemption ($5,340,000) should be allocated strategically to maximize tax benefits.
- Estate filing solely for portability may use simplified valuations for property passed entirely to the spouse or charity.
- Extensions to the filing do not extend the time to pay taxes.
- All executors are liable for return accuracy, but only one signature is required.
- Form 706 for 2014 provides permanent portability and streamlined DSUE calculations.
Timely filing with accurate valuations, proper elections, and complete documentation ensures tax minimization and preserves benefits for surviving spouses and future generations.
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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.
