Form 706-NA (2017): Nonresident Estate Tax Checklist
Purpose and scope
This combined reference guide addresses two distinct federal filing contexts that frequently arise in estate administration and trust distributions. It covers estate tax compliance for a decedent who is a non-resident of the United States and GST tax compliance for taxable distributions, alongside related filing mechanics that often overlap in practice.
The guide is intended for estate management teams, tax professionals, and estate planning attorneys who need a clean, form-accurate framework. It reflects federal transfer tax principles under the Internal Revenue Code and Treasury Regulations, without importing income tax concepts where they do not apply.
Section One
United States Estate (and Generation-Skipping Transfer) Tax Return — Estate of a
Non-Resident Not a Citizen (Form 706-NA)
2017-Oriented Reference Checklist
Purpose and scope
This section explains how to prepare Form 706-NA for a decedent who was a non-resident of the United States and not a U.S. citizen at death. The filing applies when U.S. situs property creates exposure to U.S. estate tax under federal estate tax law.
The analysis focuses on U.S. assets included in the gross estate, while recognizing that worldwide asset values may be required for allocation limits, treaty positions, or deduction calculations. International estate planning, death tax treaties, and transfer taxes often shape reporting outcomes.
Ten-step checklist (2017 filing workflow)
Step 1: Confirm NRNC status and filing requirements
Confirm the decedent was not a U.S. citizen and did not satisfy the green card test or U.S.
domicile standards at death. Gather identifying details, date of death, executor authority, and confirm filing threshold exposure under federal estate taxes.
Evaluate treaty relief, immigrant visa history, or covered expatriates considerations where relevant. Proper classification directly affects estate tax inclusion, tax credits, and compliance with filing deadlines.
Step 2: Identify U.S. situs property and excluded assets
Inventory assets with potential U.S. situations, including U.S. real estate, tangible personal property, and U.S. securities. Separately identify excluded property, such as qualifying bank deposits or assets treated as non-U.S. situs.
Maintain clear documentation distinguishing includible gross estate assets from excluded items.
Accurate classification reduces estate tax liability and supports defensible tax compliance positions.
Step 3: Gather ownership and valuation documentation
Collect deeds, brokerage statements, appraisals, loan agreements, and records supporting debt obligations tied to U.S. assets. Fair market value should reflect date-of-death valuation unless alternate valuation rules apply.
Where proportional deductions or treaty limits apply, retain worldwide asset data supporting allocation formulas. This documentation supports charitable deduction claims and treaty-based adjustments.
Step 4: Schedule A — Residential and other U.S. real estate
Report U.S. residential property and other real estate interests using fair market value. Retain appraisal support and documentation for mortgages, liens, or estate tax lien exposure.
Ensure valuation methods align with Treasury Regulations and IRS guidance. Proper reporting supports later requests for an estate tax closing letter.
Step 5: Schedule B — U.S. securities and investment holdings
The report includes U.S. securities with documentation showing issuer location and ownership form. Retain statements confirming U.S. situs classification.
Avoid misclassifying foreign securities held through U.S. accounts. Situs is determined by statute, not custodial location.
Step 6: Schedule C — Cash, notes, and receivables
The report includes notes receivable and qualifying cash items after classification. Exclude bank deposits treated as non-U.S.-situated property where permitted by law.
Maintain evidence of the obligor's location and payment terms. Correct treatment affects gross estate totals and filing accuracy.
Step 7: Schedule D — Life insurance analysis
Determine whether life insurance proceeds are includible based on incidents of ownership.
Collect policy contracts, beneficiary designations, and ownership records.
Life insurance policies held through trust instruments require careful analysis. Incorrect inclusion can materially affect estate tax exposure.
Step 8: Schedule E — Jointly owned property
Apply consideration-furnished rules to jointly owned property, including joint tenants with right of survivorship. Substantiate ownership shares using tracing records and agreements.
Do not assume full inclusion without evidence. Proper allocation can significantly reduce estate tax liability.
Step 9: Deductions, credits, and treaty limitations
Evaluate deductions subject to NRNC limitations, including charitable deductions, administration expenses, and debt obligations. Treaty provisions may modify allowable deductions or credits.
Worldwide values may be required for proportional limits. Maintain clear computation schedules supporting positions taken.
Step 10: Filing, signatures, and post-filing steps
Assemble the estate tax return with all required schedules, sign, and file by the nine-month filing deadline unless extended using Form 4768. Timely filing preserves procedural rights and credits.
After filing, monitor IRS correspondence and retain records for an IRS transfer certificate, TC
421 processing, or an estate tax closing letter.
Section Two
Generation-Skipping Transfer Tax Return for Taxable Distributions — 2017 Corrected Filing
Checklist
Purpose and scope
This section addresses GST tax compliance for taxable distributions received by a skip person from a trust. It applies to calendar-year reporting and focuses on GST concepts rather than income tax mechanics.
The guidance assumes familiarity with trust arrangements, inclusion ratio concepts, and generation-skipping transfer tax rules. It excludes taxable terminations and direct skip events handled on separate returns.
Ten-step checklist (2017 filing workflow)
Step 1: Confirm the taxable distribution event
Confirm a distribution occurred during the calendar year and was made to a skip person. Verify the event is not a taxable termination or direct skip.
Correct classification determines the applicable return and filing party. Misclassification leads to incorrect tax reporting.
Step 2: Confirm skip person status
Document the recipient’s generation assignment and relationship to the transferor. Retain trust provisions affecting distribution rights and timing.
If the recipient is not a skip person, GST tax does not apply. Proper status determination is foundational.
Step 3: Gather identifying information
Prepare accurate identifying information for the skip person, trust, and trustee. Ensure consistency with trustee-provided notices.
Accurate identification supports reconciliation and reduces IRS processing issues.
Step 4: Obtain trustee distribution notices
Collect trustee-issued GST distribution notices for the year. These documents typically provide information on the inclusion ratio.
Ensure each taxable distribution has corresponding trustee support. Missing notices should be resolved before computation.
Step 5: Identify all taxable distributions
List all distributions received during the year with dates, amounts, and trust sources. Track distributions by trust or severed share if applicable.
The characterization of income versus principal does not control the GST treatment. Focus on distribution status and inclusion ratio.
Step 6: Confirm inclusion ratio
Determine the inclusion ratio applicable to each distribution using trustee-provided data.
Confirm any GST exemption allocations affecting trust status.
An inclusion ratio of zero eliminates GST tax exposure. This determination must be documented.
Step 7: Determine the GST taxable amount
Compute the taxable amount under GST rules using the distribution value and inclusion ratio framework. Maintain clean workpapers supporting the calculation.
Avoid substituting income tax concepts such as DNI. GST mechanics operate independently.
Step 8: Apply the correct GST applicable rate
Apply the GST applicable rate derived from federal estate tax rates and the inclusion ratio—document rate selection clearly in workpapers.
Do not confuse GST rates with interest rates such as AFR. Use only GST-specific rate concepts.
Step 9: Assemble attachments and finalize
Prepare the filing package with the completed return, trustee notices, and computation schedules. Ensure internal consistency across all documents.
Avoid attaching schedules that are not part of the actual form structure. Follow year-specific form instructions.
- Full IRS transcript retrieval (Wage & Income + Account)
- Professional tax form review
- Preparation & filing support
- Tax relief options if you owe the IRS
Step 10: Sign, file, and retain records
Ensure the skipper or an authorized representative signs the return. File using the current IRS address guidance applicable to the return type.
Retain copies and supporting documentation permanently. GST records often affect future trust distributions.
Closing guidance
This combined checklist is intended as a technical reference for federal transfer tax compliance involving NRNC estates and GST taxable distributions. It does not replace professional advice, treaty analysis, or fact-specific legal review.
Given the regulatory complexity of estate tax, generation-skipping transfer tax, and cross-border estate planning, consultation with qualified tax professionals and estate planning attorneys is strongly recommended before filing.
If you’re missing tax documents or want to ensure the numbers you enter match IRS records, we can help.
