Instructions for Form 706-QDT (Rev. April 2000) U.S. Estate Tax Return for Qualified Domestic Trusts Section references are to the Internal Revenue Code unless otherwise noted. Department of the Treasury Internal Revenue Service General Instructions Purpose of Form The trustee or designated filer of a qualified domestic trust (QDOT) uses Form 706-QDT to figure and report the estate tax due on: l  Certain distributions from the QDOT; l  The value of the property remaining in the QDOT on the date of the surviving spouse's death; and l  The corpus portion of certain annuity payments. Under certain circumstances, the trustee/designated filer uses Form 706-QDT to notify the IRS that the trust is exempt from future filing because the surviving spouse has become a U.S. citizen and meets the requirements listed in the instructions for line 4 on page 3. The qualified domestic trust rules apply only in those situations where a decedent's surviving spouse is NOT a U.S. citizen. Who Must File Either the trustee or the designated filer, as explained below, must file Form 706-QDT for any year in which the QDOT has a taxable event (as defined below) or makes a distribution “on account of hardship.” Trustee If the surviving spouse is the beneficiary of only one QDOT, the trustee of that QDOT is liable for filing Form 706-QDT and paying the tax. The trustee must also file Form 706-QDT if the surviving spouse is the beneficiary of more than one QDOT, unless the decedent's executor designated one U.S. trustee as the designated filer. If there is more than one trustee for any single trust, each trustee is liable for filing the return and paying the tax. If there is a designated filer, the trustee must still complete a separate Schedule B of Form 706-QDT for each trust for which he or she is the trustee and provide the completed Schedule B to the designated filer at least 60 days before the due date for filing Form 706-QDT. Designated filer If the surviving spouse is the beneficiary of more than one QDOT from a single decedent, and the decedent's executor has made such a designation, then the designated filer selected by the executor is liable for filing the return and paying the tax for all QDTs. This designation can be made on either the decedent's estate tax return or the first Form 706-QDT that is timely filed. In this case, the trustee of each QDOT is responsible for completing Schedule B of Form 706-QDT for his or her trust and giving it to the designated filer. Definitions Qualified domestic trust A qualified domestic trust is any trust that qualifies for an estate tax marital deduction under section 2056 and also meets all of the following requirements: l  The trust instrument requires that at least one trustee be either a U.S. citizen or a domestic corporation; l  The trust instrument requires that no distribution of corpus from the trust may be made unless that trustee has the right to withhold from the distribution the QDOT tax imposed on the distribution; l  The QDOT election under section 2056A(d) has been made for the trust by the executor of the estate on the decedent's estate tax return; and l  The requirements of all applicable regulations have been met. Taxable event A taxable event is any of the following: l  Any distribution from a QDOT (and certain annuity payments) before the death of the surviving spouse, except: a. Distributions of income to the surviving spouse, and b. Any distributions made to the surviving spouse on account of hardship; l  The death of the surviving spouse; and l  The failure of the trust to qualify as a QDOT. Decedent In these instructions, “decedent” means the grantor of the QDOT on whose estate tax return the executor makes the QDOT election. Surviving spouse In these instructions, surviving spouse means the individual who is both the surviving spouse of the decedent and also the beneficiary of the decedent's QDOT. When To File Form 706-QDT is an annual return. Generally, the return to report distributions is due on or after January 1 but not later than April 15 of the year following any calendar year in which a taxable event occurred or a distribution was made on account of hardship. However, if you are filing the return because of the death of the surviving spouse, you must file it within 9 months following the date of death. You must also report on that return all reportable distributions made during the calendar year in which the surviving spouse died. This rule may result in a return being due before April 15. For example, if the surviving spouse died on June 10, 1999, Form 706-QDT would be due March 10, 2000, and must include all reportable distributions made during 1999. If the trust ceases to qualify as a QDOT, you must file Form 706-QDT within 9 months of the date on which the trust ceased to qualify. You must include on that return any reportable distributions made during the calendar year of the failure to qualify. You can request an extension of time to file Form 706-QDT by writing to the District Director or Service Center for your filing location. You must explain the reason for the delay. Because there is no automatic extension of time to file Form 706-QDT, you must request the extension in sufficient time to allow the IRS to respond before the due date of the return. An extension of time to file does not extend the time to pay the tax. Where To File File Form 706-QDT with the same Internal Revenue Service Center where the Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, or Form 706-NA, United States Estate (and Generation-Skipping Transfer) Tax Return, Estate of nonresident not a citizen of the United States, for the estate of the decedent was filed. Paying the Tax Generally, the QDOT estate tax is due by April 15 of the year following the calendar year in which taxable distributions were Cat. No. 12384F