Form 706-NA (2014): Nonresident Estate Tax Checklist
Purpose And Scope
Form 706-NA is filed for a nonresident noncitizen decedent, reporting U.S.-situs assets and calculating any federal estate tax due based on those includible holdings under U.S. rules. This checklist focuses on 2014 filing mechanics, U.S. estate tax scope limits, and the transfer tax framework that applies to non-resident aliens.
Generation-skipping transfer reporting may apply to this return if the facts give rise to GST. Still,
GST is not the distinguishing feature between nonresident returns and domestic filings. The main differences are the U.S.-situs property rule and deduction apportionment based on the
U.S. gross estate rather than the worldwide gross estate.
Key Concepts To Apply Before Preparation
U.S.-Situs Property And The Gross Estate
Only property treated as U.S. situs assets is generally included in the gross estate for this filing, such as U.S. real property and specific tangible personal property located in the United States.
The situs determination is often the highest-risk area, so internal workpapers should explain why each item is included or excluded.
Foreign assets are generally excluded from the U.S. gross estate for this return, but worldwide values can still affect deduction calculations. This is why the valuation file should track both the includible U.S. estate and the worldwide estate, even when most assets sit outside the United
States estate tax base.
Marital Deduction, Citizenship, And Qualified Domestic Trust
A marital deduction can depend on the surviving spouse’s citizenship, and a qualified domestic trust may be needed when the spouse is not a U.S. citizen. When QDOT is relevant, the trust documentation should be complete and consistent with the Internal Revenue Code requirements for the marital deduction to apply.
QDOT is not the default tool when the spouse is a U.S. citizen, and it should not be described as a universal requirement. Treaty-based results may change outcomes, so tax treaties and technical explanations, including an applicable UK tax convention, should be reviewed when the decedent had treaty connections.
Deductions And Apportionment
Deductions should not be limited to expenses that “relate to” U.S.-situs property, because the nonresident regime generally applies an apportionment concept. The deductible portion is commonly determined by the ratio of the U.S. gross estate to the worldwide gross estate, subject to substantiation and return requirements.
This proportional approach is central to nonresident estate taxes and should be supported with a clear worksheet. The file should also preserve invoices and debt obligations to support the deduction schedules used from the 2014 instructions set.
Ten-Step Checklist For Tax Year 2014
Step 1: Confirm Status And Authority
Confirm the decedent was not domiciled in the United States and was not a U.S. citizen at death, and keep documentation supporting domiciliary status. Confirm the executor’s authority and gather identity data needed for the tax return, including any SSN or ITIN if available.
Step 2: Inventory U.S.-Situs Assets
Create an inventory of U.S. situs assets, including real property and tangible personal property physically located in the United States. Record ownership form, location, and internal notes supporting situs classification for each property transfer entry.
Step 3: Establish Fair Market Value Support
Determine fair market value as of the date of death for each includible U.S. asset, using appraisals or market statements when needed. If an alternate valuation approach is considered, document the election basis and apply it consistently across included assets.
Step 4: Complete U.S. Gross Estate Reporting
Report only includible U.S.-situs items in the gross estate and avoid bringing in foreign assets as if the return were worldwide in scope. Reconcile schedule subtotals to the summary totals so the U.S. estate tax base is internally consistent.
Step 5: Review Marital Deduction And QDOT Exposure
Confirm the surviving spouse’s citizenship status as of death and document how that affects the marital deduction. If a qualified domestic trust is required, maintain the trust instrument and the facts supporting QDOT treatment under the Internal Revenue Code.
Step 6: Attach Correct Asset Schedules
Use the appropriate asset schedules to classify the includible U.S. property, and ensure descriptions match the valuation documents in the file. Keep schedule totals aligned to the U.S.
gross estate figure and avoid duplicating the same asset on multiple schedules.
Step 7: Place Deductions On The Right Schedules
Use Schedule J for funeral expenses and administration expenses for property subject to claims, and keep supporting invoices and engagement letters. Use Schedule K for debts of the decedent and mortgages and liens, and use Schedule L for net losses during administration and expenses for property not subject to claims.
Step 8: Apply The Apportionment Calculation
Compute the worldwide gross estate total and the U.S. gross estate total to support the deduction ratio used for apportionment. Apply the ratio to deductible items and keep a clean worksheet that can be reviewed alongside an account transcript request if needed later.
Step 9: Review Includible Transfers And Gift Tax Links
Evaluate whether any transfers are includible under retained-interest or similar rules, and confirm whether any gift tax paid within three years requires inclusion under the applicable authority. If prior gift tax filings exist, keep copies of Form 709 and related documentation in the file to support transfer tax analysis.
- Full IRS transcript retrieval (Wage & Income + Account)
- Professional tax form review
- Preparation & filing support
- Tax relief options if you owe the IRS
Step 10: File, Extend, And Preserve Proof
Confirm signing requirements and assemble the complete package with schedules, valuation support, and any treaty position disclosure if relevant, including Form 8833 when required. If more time is needed, file Form 4768 timely, retain proof of mailing, and consider later requests such as Form 4506-T for an account transcript or a user fee process tied to a tax closing letter.
Form-Specific Limitations
Form 706-NA applies only to U.S.-situs assets owned by a nonresident, not a citizen, even though worldwide values may still be needed for deduction calculations. It is a transfer tax return under Internal Revenue Service rules and should not rely on income tax concepts or unrelated
IRS forms.
Deductions are generally limited to the ratio of U.S. assets to the worldwide gross estate, which can reduce the allowable amounts. Marital deduction claims are restricted for a noncitizen surviving spouse unless a Qualified Domestic Trust applies, and extensions must be filed using
Form 4768 in accordance with the 2014 instructions.
If you’re missing tax documents or want to ensure the numbers you enter match IRS records, we can help.
