Table of Contents
If the decedent died testate, attach a certified copy of the will to Form 706-NA. If you are unable to obtain a certified copy, attach a copy of the will and explain why it could not be certified.
You must also attach a copy of the decedent's death certificate.
For closely held or inactive corporate stock, attach the balance sheets, particularly the one nearest the valuation date, and statements of the net earnings or operating results and dividends paid for each of the 5 preceding years. Attach any other documents, such as appraisal lists, needed for explanation. Also attach copies of all available U.S. gift tax returns the decedent filed. Other documents may be required as explained in these instructions.
Attach an English translation to all documents in other languages.
First, enter the decedent's name and the other information called for in Part I. For item 2, enter the decedent's social security number (SSN) or individual taxpayer identification number (ITIN), whichever is applicable. Then answer all of the questions in Part III.
The estate tax is imposed on the decedent's gross estate in the United States, reduced by allowable deductions. Compute the gross estate in the United States on Schedule A. Reduce the Schedule A total by the allowable deductions to derive the taxable estate on Schedule B, and figure the tax due using the Tax Computation schedule (Part II).
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The citizenship of the decedent's parents,
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Whether the decedent became a U.S. citizen through a naturalization proceeding in the United States, and
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When the decedent lost U.S. citizenship or residency.
page 1.
Before you complete Schedule A, you must determine what assets are included in the decedent's entire gross estate, wherever
located. However, list on Schedule A only those assets included in the entire gross estate that are located in the United
States. Enter the total value of assets located outside the United States on line 2 of
Schedule B.
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Generally, the full value of property the decedent owned at the time of death as a joint tenant with right of survivorship (but if the surviving spouse is a U.S. citizen, then only half the value of property held by the decedent and surviving spouse either as joint tenants with right of survivorship or as tenants by the entirety). For exceptions, see the instructions on the reverse side of Schedule E, Form 706;
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Property the decedent and a surviving spouse owned as community property to the extent of the decedent's interest in the property under applicable state, possession, or foreign law;
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A surviving spouse's dower or curtesy interest and all substitute interests created by statute;
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Proceeds of insurance on the decedent's life, generally including proceeds receivable by beneficiaries other than the estate;
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Several kinds of transfers the decedent made before death;
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Property in which the decedent either held a general power of appointment at the time of death, or used or released this power in certain ways before
death; and -
Certain annuities to surviving beneficiaries.
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They are included in the entire gross estate and
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They are located in the United States. (See Determining where assets are located below.)
Real estate and tangible personal property are located in the United States if they are physically located there.
Note.
An exception is made for works of art that are owned by a nonresident alien (NA) and are located within the United States if on the date of death (of the NA-owner), the works of art are:
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Imported solely for public exhibition,
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On loan to a non-profit public gallery or museum, and
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On exhibition or en route to or from exhibition.
Generally, no matter where stock certificates are physically located, stock of corporations organized in or under U.S. law is properly located in the United States, and all other corporate stock is property located outside the United States.
For a nonresident alien decedent who died after 2004, a portion of stock in a RIC is treated as property located outside the United States in the proportion of the RIC's qualifying assets in relation to the total assets owned by the RIC at the end of the quarter immediately preceding the decedent's death.
Qualifying assets are assets that, if owned directly by the decedent, would have been:
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Bank deposits and amounts described in section 871(i)(3),
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Portfolio debt obligations,
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Certain original issue discount obligations,
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Debt obligations of a U.S. corporation that are treated as giving rise to foreign source income, and
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Other property not within the United States.
See section 2105(d) for details.
Proceeds of insurance policies on the decedent's life are property located outside the United States.
Debt obligations are generally property located in the United States if they are debts of a U.S. citizen or resident, a domestic partnership or corporation, a domestic estate or trust, the United States, a state or state's political subdivision, or the District of Columbia.
The following debt obligations are generally treated as located outside the United States.
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Debt obligations (whether registered or unregistered) issued after July 18, 1984, if the interest on them would be eligible for tax exemption under section 871(h)(1) had such interest been received by the decedent at the time of his death. However, if the debt earns contingent interest, some or all of it may be considered property in the United States (section 2105(b)).
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A debt obligation of a domestic corporation if the interest from it (had it been received at the time of death) would have been treated as income from outside the United States because the corporation derived less than 20% of its gross income from sources in the United States during its 3 tax years before the decedent's death (section 861(a)(1)(A)).
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Certain short-term original issue discount debt obligations. See section 2105(b)(4) for details.
The following deposits are treated as located outside the United States if they are not effectively connected with conducting a trade or business within the United States:
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A deposit with a U.S. bank or a U.S. banking branch of a foreign corporation,
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A deposit or withdrawable account with a savings and loan association chartered and supervised under federal or state law,
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An amount held by a U.S. insurance company under an agreement to pay interest, and
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A deposit in a foreign branch of a U.S. bank.
If an asset is included in the total gross estate because the decedent owned it at the time of death, apply the above location rules as of the date of the decedent's death. However, if an asset is included in the decedent's total gross estate under one of the transfer provisions (sections 2035, 2036, 2037, and 2038), it is treated as located in the United States if it fulfills these rules either at the time of the transfer or at the time of death.
For example, if an item of tangible personal property was physically located in the United States on the date of a section 2038 transfer but had been moved outside the United States at the time of the decedent's death, the item would be considered still located in the United States and should be listed on Schedule A.
Describe the property on Schedule A in enough detail to enable the IRS to identify it. To determine the fair market value of stocks and bonds, use the rules in the Instructions for Form 706 under Schedule B—Stocks and Bonds.
In descriptions of stock, include:
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The corporation's name;
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The number of shares;
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Whether common or preferred (if preferred, what issue);
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The par value (when needed for identification);
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Nine-digit CUSIP number (defined below); and
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The quotation at which reported.
Give the main exchange for listed stock. For unlisted stock, give the post office address of the main business office of the corporation, the state in which incorporated, and the incorporation date.
In bond descriptions, include:
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The quantity and denomination,
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Obligor's name,
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Maturity date,
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Interest rate,
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Each date when interest is payable,
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Nine-digit CUSIP number, and
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Series number (if more than one issue).
Give the exchange where the bond is listed. If it is unlisted, give the corporation's main business office.
The CUSIP (Committee on Uniform Security Identification Procedure) number is a nine-digit number that is assigned to all stocks and bonds traded on major exchanges and many unlisted securities. Usually the CUSIP number is printed on the face of the stock certificate. If the CUSIP number is not printed on the certificate, it may be obtained through the company's transfer agent.
If you are required to file Schedule E, G, or H from Form 706, you need not enter the assets reported on those schedules on Schedule A of this Form 706-NA. Instead, attach the schedules to Form 706-NA, in column (b) enter “Total from Schedule _ _ _ _ _, Form 706,” and enter the total values from the attached schedules in either column (d) or (e).
If the decedent was a U.S. expatriate, the decedent is treated as owning a prorated share of the U.S. property held by a foreign corporation in which he or she directly owned at least 10% of the voting stock and, with related interests, controlled over 50% of it (section 2107(b)).
Under section 2031(c), you may elect to exclude a portion of the value of land that is subject to a qualified conservation easement. You make the election by attaching Schedule U of Form 706 with all the required information. To elect the exclusion, you must include on Schedule A:
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The decedent's interest in the land that is subject to the exclusion and
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Exclude the applicable value of the land (amount from line 20, Schedule U) that is subject to the easement on Schedule A.
You must make the election on a timely filed Form 706-NA, including extensions. For more information, see the Instructions for Form 706.
If you are claiming a small estate exemption (worldwide estate of a Canadian resident decedent not more than $1.2 million) from tax on U.S. securities or certain other U.S. situs property, under the 1995 Protocol to the Canadian income tax treaty, do not list the exempt assets on Schedule A.
Instead, list those assets and their values in a statement attached to the return specifying that you are relying on the treaty. To determine initially whether the small estate exemption applies, however, you must include the exempt assets in the value of the entire gross estate, wherever located, on lines 2 and 3 of Schedule B.
For the line 5 deduction to be allowed, you must complete lines 1 through 4 and document the amounts you include on lines
2
and 4.
To document the line 2 amount, attach a certified copy of the foreign death tax return; or if none was filed, a certified
copy of the estate inventory and the schedule of debts and charges that were filed with the foreign probate court or as part
of the estate's admin-
istration proceedings. Supplement these documents with attachments if they do not set forth the entire gross estate outside
the United States. If more proof is needed, you will be notified.
To document the line 4 amount, attach an itemized schedule. For each expense or claim, specify the nature and amount and give the creditor's name. Describe other deductions fully and identify any particular property to which they relate.
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Funeral expenses;
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Administration expenses;
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Claims against the estate;
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Unpaid mortgages and other liens; and
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Uncompensated losses that were incurred during settlement of the estate and that arose from theft or from casualties, such as fires, storms, or shipwrecks.
Unless a treaty allows otherwise, you may take a charitable deduction only if the transfer was to a domestic entity or for use in the United States as described in the Instructions for Form 706.
Attach Schedule O of Form 706. If you claim the deduction under a treaty, specify the applicable treaty and attach a computation of the deduction.
Unless a treaty allows otherwise, you may only take a marital deduction if the surviving spouse is a U.S. citizen or if the property passes to a qualified domestic trust (QDOT) described in section 2056A and an election is made on Schedule M of Form 706.
Attach Schedule M of Form 706, and a statement showing your computation of the marital deduction.
See section 2518 for the rules governing disclaimers of interests
in property.
| Total value of assets in the gross estate subject to state death taxes |
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Total state death taxes paid |
| Gross estate located in the U.S. (line 1 of Schedule B) |
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The total tax charged,
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Any discount allowed,
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Any penalties and interest imposed,
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The tax actually paid, and
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Each payment date.
Department of the Treasury
Internal Revenue Service Center
Cincinnati, OH 45999
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$13,000 or
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The product of $46,800 times a fraction.
In addition to the unified credit, a nonrefundable marital credit may be allowed if the executor elects this treaty benefit and waives the benefit of any estate tax marital deduction allowable under U.S. law. The credit amount is generally limited to the lesser of:
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The unified credit allowed to the estate (before reduction for any gift tax unified credit) or
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The amount of estate tax that would otherwise be imposed by the United States on the transfer of qualifying property to the surviving spouse.
If there is more than one executor, all listed executors are responsible for the return. However, it is sufficient for only one of the co-executors to sign the return.
Form 706-NA must be signed. The executor must verify and sign the declaration on page 1 under penalties of perjury. The executor may use Form 2848, Power of Attorney and Declaration of Representative, to authorize another person to act for him or her before the Internal Revenue Service.
Generally, anyone who is paid to prepare the return must sign the return in the space provided and fill in the “Paid Preparer's Use Only” area. See section 7701(a)(36)(B) for exceptions.
In addition to signing and completing the required information, the paid preparer must give a copy of the completed return to the executor.
Note.
A paid preparer may sign original or amended returns by rubber stamp, mechanical device, or computer software program.
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