Instructions for Form 706 - Introductory Material


Prior Revisions of Form 706 For Decedents Dying Use Revision of Form 706 Dated After and Before December 31, 1998 January 1, 2001 July 1999 December 31, 2000 January 1, 2002 November 2001 December 31, 2001 January 1, 2003 August 2002 December 31, 2002 January 1, 2004 August 2003 December 31, 2003 January 1, 2005 August 2004 December 31, 2004 January 1, 2006 August 2005 December 31, 2005 January 1, 2007 October 2006 December 31, 2006 January 1, 2008 September 2007 December 31, 2007 January 1, 2009 August 2008 December 31, 2008 January 1, 2010 September 2009 December 31, 2009 January 1, 2011 July 2011 December 31, 2010 January 1, 2012 August 2011 December 31, 2011 January 1, 2013 August 2012 December 31, 2012 January 1, 2014 August 2013

Future Developments

For the latest information about developments related to Form 706 and its instructions, such as legislation enacted after they were published, go to www.irs.gov/form706.

What's New

Various dollar amounts and limitations in the Form 706 are indexed for inflation. For decedents dying in 2014, the following amounts are applicable:

  • The basic exclusion amount is $5,340,000.

  • The ceiling on special-use valuation is $1,090,000.

  • The amount used in figuring the 2% portion of estate tax payable in installments is $1,450,000.

The IRS will publish amounts for future years in annual revenue procedures.

On June 26, 2013, the United States Supreme Court held that Section 3 of the Defense of Marriage Act, which said that the terms “marriage” and “spouse” only apply to heterosexual couples, was unconstitutional. (United States v. Windsor, 570 U.S. 12 (2013)). The ruling impacts a number of federal laws, including those governing the reporting and collection of federal taxes. For federal tax purposes, the IRS recognizes same-sex marriages that are valid in the state where they were entered into, regardless of the married couple’s residence. See Rev. Rul. 2013–17, 2013–38 I.R.B. 201, available at http://www.irs.gov/pub/irs-irbs/irb13-38.pdf. If you believe the new law may affect your estate or gift tax liability or filing requirement, please continue to monitor IRS.gov for additional guidance on the application of Windsor.

Reminders

  • Executors must provide documentation of their status.

  • The credit for transfers made by lifetime gift has been reunified with the credit against transfers made at death. The applicable credit amount for 2014 is $2,081,800 (based on the basic exclusion amount of $5,340,000). This does not include any applicable credit resulting from DSUE amount received from a predeceased spouse.

    • Portability of Deceased Spousal Unused Exclusion

      1. Line 7 Worksheet in the instructions has been expanded to include the calculation for cumulative lifetime gifts on which tax was paid or payable. This amount is used in Section C of Part 6–Portability of Deceased Spousal Unused Exclusion (DSUE).

      2. Part 6—Portability of Deceased Spousal Unused Exclusion (DSUE) was added to Form 706. The only action required to elect portability of the DSUE amount, if any, is to file a timely and complete Form 706. In this Part, taxpayers can opt out of electing to transfer any DSUE amount to a surviving spouse, calculate the amount of DSUE to be transferred in the event of an election, and/or account for any DSUE amount received from predeceased spouse(s).

      3. Line 9 of Part 2—Tax Computation was replaced with lines 9a through 9d to calculate the applicable exclusion amount and applicable credit amount (formerly unified credit amount), factoring in any DSUE amount received from a predeceased spouse.

      4. Executors of estates who are not required to file Form 706 under section 6018(a) but who are filing to elect portability of DSUE amount to the surviving spouse are not required to report the value of certain property eligible for the marital deduction under section 2056 or 2056A or the charitable deduction under section 2055 under the special rule of Reg. section 20.2010–2T(a)(7)(ii). However, the value of those assets must be estimated and included in the total value of the gross estate. The special rule does not apply to assets whose valuation is required for eligibility under section 2032, 2032A, 2652(a)(3), 6166 or other provision of the Code or Regulations.

  • A timely and complete Form 706 must be filed by the executor of any estate who intends to transfer the DSUE amount to the decedent's surviving spouse, regardless of the amount of the gross estate. See instructions for Part 6—Portability of Deceased Spousal Unused Exclusion, later.

  • Filing a timely and complete Form 706 with a DSUE amount will be considered an election to transfer the DSUE amount to the surviving spouse. An executor of an estate who files a Form 706 that does not elect to transfer the DSUE amount to the surviving spouse must affirmatively opt out of portability. See Part 6—Portability of Deceased Spousal Unused Exclusion, Section A.


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