Form 706-NA (2015): Nonresident Estate Tax Checklist
Form 706-NA is used to compute U.S. estate tax and, when applicable, generation-skipping transfer tax for a decedent who was neither domiciled in nor a citizen of the United States at death. Estate tax domicile and citizenship control this classification and do not follow income tax residency labels.
Although the return focuses on U.S.-situated property, preparation requires identifying the decedent’s worldwide gross estate and reporting required totals for non-U.S. assets. Situs determinations must follow the governing rules and may be modified by estate or gift tax treaties.
Ten-Step Checklist for Form 706-NA (2015 Context)
Step 1: Confirm the correct return type and filing threshold
Confirm the decedent was a nonresident, not a citizen of the United States, for estate tax purposes, and that Form 706-NA applies rather than a citizen or resident estate tax return.
Confirm whether filing is required by comparing the U.S.-situated asset value and any needed additions to the applicable filing threshold under the instructions.
Identify any estate or gift tax treaty that may apply as early as possible and document the basis for treaty reliance. Treaty analysis should be treated as part of the initial filing determination because treaty rules can change situs results and estate tax liability.
Step 2: Build a worldwide gross estate inventory before isolating U.S. situs
property
Assemble a complete worldwide inventory of the decedent’s property interests to establish the gross estate baseline. This inventory supports the required reporting of total assets located outside the United States and prevents omissions when evaluating U.S. situs categories.
Organize documentation for both U.S. and non-U.S. assets, including appraisals, account statements, deeds, and estate administration records. Maintain support for foreign asset totals even when those assets are not listed item by item on U.S. schedules.
Step 3: Complete decedent and executor identification accurately
Enter the decedent’s legal name, date of death, and country of citizenship consistently across the return and attachments. Identify estate tax domicile using the required facts-and-circumstances approach rather than substituting income tax residency labels.
Identify the executor or administrator and confirm authority to act for the estate. If a U.S. tax identification number is unavailable, follow the form instructions for the identification field rather than inserting a placeholder statement that conflicts with return mechanics.
Step 4: Determine U.S. situs using category-specific rules and treaty
guidance
Classify each asset under U.S. situs rules rather than relying on physical location shortcuts for intangibles. Real estate and tangible personal property are typically U.S.-situs if physically located in the United States, while corporate stock, deposits, and debt follow distinct situs standards.
Confirm whether a treaty modifies situs treatment for particular asset types, including shares, debt, or bank deposits. Keep a written situs memo showing asset type, situs conclusion, and the treaty or statutory basis used for each conclusion.
Step 5: Report only U.S.-situated assets on the U.S. gross estate schedules
List on the U.S. gross estate schedules only those items determined to be U.S.-situated after
Step 4: . Do not itemize non-U.S. assets on U.S. situs schedules unless the instructions
specifically require a different presentation.
Report the total value of assets located outside the United States in the location required by the return. Ensure the U.S.-situs listings and the foreign asset total reconcile to the worldwide inventory created in Step 2.
Step 6: Document valuation using the correct valuation date and support
Value U.S.-situs assets using date-of-death fair market value unless a permitted alternate valuation election is made. When using alternate valuation, apply it consistently and retain documentation supporting the election and the resulting values.
Retain qualified appraisal support for U.S. real estate and hard-to-value property where appropriate. Retain brokerage pricing data and account statements that match the valuation method used for securities and financial assets.
Step 7: Apply deductions cautiously, recognizing limitations and treaty
effects
Claim only deductions allowed under the Form 706-NA framework and support each item with documentation tied to estate administration. Administration expenses, claims, mortgages, and certain losses may be deductible but are often limited and should not be treated as automatically fully deductible.
Evaluate marital and charitable deductions under the applicable rules and treaty provisions rather than using blanket disallowance language. The marital deduction may apply if a U.S.
citizen surviving spouse is involved or if property passes through a qualified domestic trust, and charitable deductions depend on the donee and qualifying use rules.
Step 8: Compute estate tax and address credits and treaty adjustments
Compute the taxable estate using the U.S.-situated gross estate minus allowable deductions and apply the correct year-of-death rate schedule. Avoid importing estate tax computations intended for U.S. citizen estates, since unified credit and related benefits can differ for nonresident estates.
If a treaty position affects credit or computation, prepare a clear disclosure statement and treaty-based calculation. Keep workpapers showing how the treaty modifies situs, deductions, or the mechanics of credits, and how the result affects the tax due.
Step 9: Perform GST review and complete GST schedules only when
applicable
Confirm whether the generation-skipping transfer tax applies by reviewing transfers to skip persons that involve property included in the U.S. gross estate portion of the return. Limit GST reporting to the extent the transfer is subject to U.S. estate or gift tax principles for nonresident estates.
Complete the required GST schedules only when the facts support GST applicability. Avoid simplifying GST analysis into a purely location-based rule without tying the conclusion to the governing transfer tax framework.
- Full IRS transcript retrieval (Wage & Income + Account)
- Professional tax form review
- Preparation & filing support
- Tax relief options if you owe the IRS
Step 10: Final assembly, extension handling, and filing execution
Confirm filing deadlines and obtain an extension by filing Form 4768 on time when additional time to file is needed. Treat an extension of time to file as an extension of time to file rather than an automatic extension of time to pay, and document payment planning separately.
Verify the executor's signature, attach required supporting documents, and include translations and treaty disclosures when needed. Use current IRS filing guidance for the correct address and private delivery service rules, and retain proof of mailing and a complete copy of the final package.
Closing Notes
Form 706-NA preparation is often affected by estate or gift tax treaties, situs classification rules, and the quality of the documentation. A structured inventory-to-situs workflow reduces errors and supports consistent reporting.
When a return involves significant U.S. real estate, complex intangible holdings, treaty positions, or disputes among beneficiaries acquiring property, review by a tax professional or legal professional experienced in international estate taxation can improve accuracy and reduce compliance risk.
If you’re missing tax documents or want to ensure the numbers you enter match IRS records, we can help.
