| Instructions for Form 706 |
2003 Tax Year |
General Instructions
This is archived information that pertains only to the 2003 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.
The executor of a decedent's estate uses Form 706 to figure the estate tax imposed by Chapter 11 of the Internal Revenue Code.
This tax is levied
on the entire taxable estate, not just on the share received by a particular beneficiary. Form 706 is also used to compute
the generation-skipping
transfer (GST) tax imposed by Chapter 13 on direct skips (transfers to skip persons of interests in property included in the
decedent's gross estate).
B. Which Estates Must File
For decedents dying in 2003 Form 706 must be filed by the executor for the estate of every U.S. citizen or resident whose
gross estate, plus
adjusted taxable gifts and specific exemption, is more than $1,000,000.
To determine whether you must file a return for the estate, add:
- The adjusted taxable gifts (under section 2001(b)) made by the decedent after December 31, 1976;
- The total specific exemption allowed under section 2521 (as in effect before its repeal by the Tax Reform Act of 1976) for
gifts made by the
decedent after September 8, 1976; and
- The decedent's gross estate valued at the date of death.
The gross estate includes all property in which the decedent had an interest (including real property outside the United States).
It also includes:
- Certain transfers made during the decedent's life without an adequate and full consideration in money or money's worth;
- Annuities;
- The includible portion of joint estates with right of survivorship (see the instructions on the back of Schedule E);
- The includible portion of tenancies by the entirety (see the instructions on the back of Schedule E);
- Certain life insurance proceeds (even though payable to beneficiaries other than the estate) (see the instructions on the
back of Schedule
D);
- Property over which the decedent possessed a general power of appointment;
- Dower or curtesy (or statutory estate) of the surviving spouse;
- Community property to the extent of the decedent's interest as defined by applicable law.
For more specific information, see the instructions for Schedules A through I.
U. S. Citizens or Residents; Nonresident Noncitizens
File Form 706 for the estates of decedents who were either U.S. citizens or U.S. residents at the time of death. For estate
tax purposes, a
resident is someone who had a domicile in the United States at the time of death. A person acquires a domicile by living in
a place for even a brief
period of time, as long as the person had no intention of moving from that place.
File Form 706-NA, United States Estate (and Generation-Skipping Transfer) Tax Return, Estate of nonresident not a citizen of the United
States, for the estates of nonresident alien decedents (decedents who were neither U.S. citizens nor residents at the time
of death).
Residents of U. S. Possessions
All references to citizens of the United States are subject to the provisions of sections 2208 and 2209, relating to decedents
who were U.S.
citizens and residents of a U.S. possession on the date of death. If such a decedent became a U.S. citizen only because of
his or her connection with
a possession, then the decedent is considered a nonresident alien decedent for estate tax purposes, and you should file Form
706-NA. If such a
decedent became a U.S. citizen wholly independently of his or her connection with a possession, then the decedent is considered
a U.S. citizen for
estate tax purposes, and you should file Form 706.
The term “executor” means the executor, personal representative, or administrator of the decedent's estate. If none of these is appointed,
qualified, and acting in the United States, every person in actual or constructive possession of any property of the decedent
is considered an
executor and must file a return.
You must file Form 706 to report estate and/or generation-skipping transfer tax within 9 months after the date of the decedent's
death unless you
receive an extension of time to file. Use Form 4768, Application for Extension of Time To File a Return and/or Pay U.S. Estate (and
Generation-Skipping Transfer) Taxes, to apply for an extension of time to file. If you received an extension, attach a copy
of it to Form 706.
Private delivery services.
You can use certain private delivery services designated by the IRS to meet the “ timely mailing as timely filing/paying” rule for tax returns
and payments. The most recent list of designated private delivery services was published by the IRS in September 2002. The
list includes only the
following:
- Airborne Express (Airborne): Overnight Air Express Service, Next Afternoon Service, Second Day Service.
- DHL Worldwide Express (DHL): DHL “Same Day” Service, DHL USA Overnight.
- Federal Express (FedEx): FedEx Priority Overnight, FedEx Standard Overnight, FedEx 2 Day, FedEx International Priority, FedEx
International
First.
- United Parcel Service (UPS): UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A.M., UPS Worldwide
Express Plus,
and UPS Worldwide Express.
The private delivery service can tell you how to get written proof of the mailing date.
E. Where To File File Form 706 at the Internal Revenue Service Center listed below.
| If the decedent was at death a . . . |
Then the address is:
Internal Revenue Service Center
|
| U.S. citizen residing in the U.S. or a resident alien |
Cincinnati, OH 45999 |
| Nonresident U.S. citizen
|
Philadelphia, PA 19255, USA |
The estate and GST taxes are due within 9 months after the date of the decedent's death unless an extension of time for payment
has been granted,
or unless you have properly elected under section 6166 to pay in installments, or under section 6163 to postpone the part
of the tax attributable to a
reversionary or remainder interest. These elections are made by checking lines 3 and 4 (respectively) of Part 3, Elections
by the Executor, and
attaching the required statements.
If the tax paid with the return is different from the balance due as figured on the return, explain the difference in an attached
statement. If you
have made prior payments to IRS or redeemed certain marketable United States Treasury bonds to pay the estate tax (see the
last paragraph of the
instructions to Schedule B), attach a statement to Form 706 including these facts. If an extension of time to pay has been
granted, attach a copy of
the approved Form 4768 to Form 706.
Paying by check.
Make the check payable to the United States Treasury. Please write the decedent's name, social security number, and
“ Form 706” on the check to
assist us in posting it to the proper account.
G. Signature and Verification
If there is more than one executor, all listed executors must verify and sign the return. All executors are responsible for the return
as filed and are liable for penalties provided for erroneous or false returns.
If two or more persons are liable for filing the return, they should all join together in filing one complete return. However,
if they are unable
to join in making one complete return, each is required to file a return disclosing all the information the person has in
the case, including the name
of every person holding an interest in the property and a full description of the property. If the appointed, qualified, and
acting executor is unable
to make a complete return, then every person holding an interest in the property must, on notice from the IRS, make a return
regarding that interest.
The executor who files the return must, in every case, sign the declaration on page 1 under penalties of perjury. If the return
is prepared by
someone other than the person who is filing the return, the preparer must also sign at the bottom of page 1.
If you find that you must change something on a return that has already been filed, you should file another Form 706 and write
“Supplemental
Information” across the top of page 1 of the form. If you have already been notified that the return has been selected for examination,
you should
provide the additional information directly to the office conducting the examination.
I. Supplemental Documents
You must attach the death certificate to the return.
If the decedent was a citizen or resident and died testate, attach a certified copy of the will to the return. If you cannot
obtain a certified
copy, attach a copy of the will and an explanation of why it is not certified. Other supplemental documents may be required
as explained below.
Examples include Forms 712, 709, 709-A, and 706-CE, trust and power of appointment instruments, death certificate, and state
certification of payment
of death taxes. If you do not file these documents with the return, the processing of the return will be delayed.
If the decedent was a U.S. citizen but not a resident of the United States, you must attach the following documents to the
return:
- A copy of the inventory of property and the schedule of liabilities, claims against the estate, and expenses of administration
filed with
the foreign court of probate jurisdiction, certified by a proper official of the court;
- A copy of the return filed under the foreign inheritance, estate, legacy, succession tax, or other death tax act, certified
by a proper
official of the foreign tax department, if the estate is subject to such a foreign tax; and
- If the decedent died testate, a certified copy of the will.
J. Rounding Off to Whole Dollars
You may show the money items on the return and accompanying schedules as whole-dollar amounts. To do so, drop any amount less
than 50 cents and
increase any amount from 50 cents through 99 cents to the next higher dollar.
Late filing and late payment.
Section 6651 provides for penalties for both late filing and for late payment unless there is reasonable cause for
the delay. The law also provides
for penalties for willful attempts to evade payment of tax. The late filing penalty will not be imposed if the taxpayer can
show that the failure to
file a timely return is due to reasonable cause. Executors filing late (after the due date, including extensions) should attach
an explanation to the
return to show reasonable cause.
Valuation understatement.
Section 6662 provides a 20% penalty for the underpayment of estate tax that exceeds $5,000 when the underpayment is
attributable to valuation
understatements. A valuation understatement occurs when the value of property reported on Form 706 is 50% or less of the actual
value of the property.
This penalty increases to 40% if there is a gross valuation understatement. A gross valuation understatement occurs if any property on
the return is valued at 25% or less of the value determined to be correct.
These penalties also apply to late filing, late payment, and underpayment of GST taxes.
L. Obtaining Forms and Publications To File or Use
Personal computer.
You can access the IRS web site 24 hours a day, 7 days a week at www.irs.gov to:
- Download forms, instructions, and publications.
- See answers to frequently asked tax questions.
- Search publications on-line by topic or keyword.
- Send us comments or request help via email.
- Sign up to receive local and national tax news by email.
You can also reach us using file transfer protocol at ftp.irs.gov.
CD-ROM.
Order Pub. 1796, Federal Tax Products on CD-ROM, and get:
- Current year forms, instructions, and publications.
- Prior year forms, instructions and publications.
- Frequently requested tax forms that may be filled in electronically, printed out for submission, and saved for recordkeeping.
- The Internal Revenue Bulletin.
Buy the CD-ROM on the Internet at www.irs.gov/cdorders from the National Technical Information Service (NTIS), or call
1-877-CDFORMS (1-877-233-6767) toll-free to buy the CD-ROM. (Prices may differ at these two locations.)
By phone and in person.
You can order forms and publications 24 hours a day, 7 days a week, by calling 1-800-TAX-FORM (1-800-829-3676). You can also get most
forms and publications at your local IRS office.
Forms and Publications to file or use.
- Forms: The title for forms to file or use are given within these instructions.
- Publications:
| Publication 910. Guide to Free Tax Services
|
| Publication 559. Survivors, Executors, and Administrators
|
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