Table of Contents
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Use this revision of Form 706 only for the estates of decedents who died in calendar year 2011.
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The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (Act) included several provisions affecting the 2011 Form 706. They are:
a. Estates, generation-skipping transfers (GST), and lifetime gifts all have a maximum tax rate of 35%.
b. The credit for transfers made by gift is reunified with the credit for transfers made at death. Both will receive a combined unified credit of $1,730,800 (basic exclusion amount of $5,000,000) under section 2010.
c. The applicable exclusion amount now may consist of a basic exclusion amount of $5,000,000 and, in the case of a surviving spouse, the unused exclusion amount of a predeceased spouse (who died after December 31, 2010). A timely and complete Form 706 filed for the predeceased spouse's estate is required, even if there is no tax due, to allow the surviving spouse to use the last predeceased spouse's unused exclusion amount. See instructions for Part 2—Tax Computation, line 9 and Part 4—General Information, line 3 and line 4.
d. If the estate chooses not to allow the surviving spouse to take into account, for estate and gift tax purposes, the decedent's unused exclusion amount, then do one of the following: attach a statement to the Form 706 indicating that the estate is not making the election under section 2010(c)(5) or enter “No Election Under Section 2010(c)(5)” across the top of the first page of Form 706.
e. Prior gifts must be calculated at the rate in effect at the decedent's date of death. See Worksheet TG —Taxable Gifts Reconciliation, Line 4 Worksheet, and Line 7 Worksheet (Unified Credit Allowable for Prior Periods), below.
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Various dollar amounts and limitations in the Form 706 are indexed for inflation. For decedents dying in 2011, the following amounts are applicable:
a. The ceiling on special-use valuation is $1,020,000.
b. The amount used in figuring the 2% portion of estate tax payable in installments is $1,360,000.
The IRS will publish amounts for future years in annual revenue procedures.-
Executors must provide documentation of their status.
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The IRS has created a page on IRS.gov for information about Form 706 and its instructions, at www.irs.gov/form706. Information about any future developments affecting Form 706 (such as legislation enacted after we release it) will be posted on that page.
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