What IRS Form 706 (2015) Is For
IRS Form 706 (2015) is the United States Estate (and Generation-Skipping Transfer) Tax Return used to calculate and report estate taxes on a decedent’s estate. It determines the fair market value of assets owned at the date of death and applies the federal estate tax to property transferred to heirs, trusts, or beneficiaries. The form also reports the generation-skipping transfer tax for property passed to grandchildren or other skip persons.
Executors must file an estate tax return if the gross estate, plus taxable gifts, exceeded the 2015 basic exclusion amount of $5,430,000 or if they wish to elect portability for a surviving spouse. The Internal Revenue Service uses Form 706 to verify compliance, assess estate tax liability, and record elections that affect the surviving spouse’s future exemption.
For a detailed breakdown of filing requirements, eligibility rules, and step-by-step instructions, see our comprehensive IRS Form 706 (2015): Late & Amended Filing Guide.
When You’d Use Form 706 (2015)
Executors use Form 706 (2015) for late or amended estate tax returns. Late filing often happens when the filing threshold was met years after the decedent’s death or when the portability election was missed. Amended returns are filed to correct valuations, claim additional deductions, or adjust estate tax liability after an IRS review.
Common reasons to file or amend include:
- Missing the original estate tax return deadline
- Discovering unreported taxable gifts or newly appraised assets owned
- Correcting fair market value errors or deductions
- Electing portability for a surviving spouse
- Updating estate documentation after litigation involving property or valuation
Late or amended returns can affect estate tax payments and refund eligibility. Executors must adhere to the three-year statute of limitations for refund claims and ensure that any estimated payment is correctly credited to the corresponding tax year.
Key Rules or Details for 2015
The 2015 tax year included several specific estate tax provisions and thresholds that affected filing requirements and eligibility for exemptions. Executors handling estates for decedents dying in 2015 must follow these year-specific rules to ensure proper valuation, reporting, and calculation of the federal estate tax.
- The estate tax exemption, or basic exclusion amount, was $5,430,000 for decedents dying in 2015, with an applicable credit of $2,117,800.
- Estates exceeding this threshold were subject to federal estate tax at graduated tax rates of up to 40 percent.
- Family farms and family businesses could qualify for a special-use valuation reduction of up to $1,100,000 under specific IRS conditions.
- Married couples and surviving spouses could elect portability to transfer any unused exemption between spouses.
- The annual gift tax exclusion for 2015 was $14,000 per donee, and lifetime gifts counted toward the combined federal estate and gift tax exemption.
For more resources on filing or understanding prior-year IRS forms, visit our guide on Estate, Gift, and Trust Forms.
Step-by-Step (High Level)
Gather relevant documents
- Obtain the death certificate and legal documents, including the will and any trust instruments.
- Secure professional appraisals establishing the fair market value of all real and personal property as of the date of death.
- Retrieve all filed gift tax returns (Form 709) and the decedent’s prior federal tax filings for cross-reference.
- Compile records of lifetime gifts, charitable giving, and ownership interests in businesses or closely held entities.
- Gather supporting documentation for debts, medical expenses, administration costs, and any other deductible liabilities.
Complete the correct form
Use Form 706 (Rev. August 2015) to apply all year-specific rules. Include every schedule related to transfer taxes, qualified charity deductions, or partially included assets.
Calculate the taxable estate
Determine the gross estate by including all property acquired by the decedent. Subtract deductions for debts, estate administration expenses, and qualified charity transfers to determine the taxable estate, which is used to compute estate tax owed.
Verify credits and exemptions
Apply the basic exclusion amount and credits for gift taxes paid on taxable gifts. Confirm whether a portability election applies to carry over any unused exemption of a predeceased spouse.
File and pay
Sign the return, attach all required schedules, and submit it to the Internal Revenue Service Center in Cincinnati, OH 45999. Ensure timely estate tax payment to avoid interest and penalties on unpaid tax liability.
Retain records
Keep copies of the estate tax return, appraisals, and proof of mailing. These are essential for later IRS audits, obtaining a closing letter, or processing estate tax refund claims.
Common Mistakes and How to Avoid Them
- Using the wrong version of IRS Form 706: Use the correct 2015 form for accurate exemption and credit calculations.
- Filing the return late: File on time to preserve portability and avoid penalties.
- Inaccurate asset valuations: Provide fair market value appraisals for all property.
- Omitting lifetime gifts: Include all taxable gifts and gift taxes paid.
- Missing required documents: Attach all necessary schedules and supporting records.
- Using unqualified appraisers: Hire qualified appraisers for business interests and farms.
- Ignoring IRS guidance: Review IRS instructions or consult a tax advisor to prevent errors.
Accurate calculations, on-time payments, and complete information help taxpayers avoid penalties and interest.
What Happens After You File
Once the IRS receives the federal estate tax return, processing typically takes six to nine months. The executor will receive an acknowledgment or notice of tax deficiency. If additional estate tax owed is identified, the estate must make prompt payment or request an installment agreement for closely held business interests.
The IRS generally has three years to audit the return and assess additional tax liability. Executors may request a closing letter confirming that the estate’s tax matters are resolved after about nine months. Keep all correspondence and proof of estate tax payment for estate administration purposes.
FAQs
Who must file IRS Form 706 (2015)?
An executor must file an estate tax return if the decedent’s gross estate, plus adjusted taxable gifts, exceeds the basic exclusion amount of $5,430,000 or if portability is elected for a surviving spouse under federal estate tax rules.
What assets are included in the taxable estate?
The taxable estate includes all assets owned at the date of death, such as real property, personal property, business interests, and gifts made during a person's lifetime. Each item must be valued at its fair market value for federal estate tax purposes.
Can I amend a previously filed estate tax return?
Yes, executors may amend an estate tax return to correct errors in fair market value, report additional taxable gifts, or adjust deductions. The Internal Revenue Service must receive the amended return within the statute of limitations period.
What is the purpose of the portability election?
The portability election allows a surviving spouse to use any unused exemption from the deceased spouse’s estate. This election must be made on a timely filed federal estate tax return, even if no estate tax is owed.
How are gift taxes and estate taxes related?
Gift taxes and estate taxes share a unified credit under the Internal Revenue Code. Lifetime gifts reduce the remaining estate tax exemption available at death, and both are reported for federal estate tax and gift tax purposes.
