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Include in this schedule notes

schedule and may deduct the mortgage

Expenses Incurred in

unsecured by mortgage or other lien

or lien on the property on this schedule.

Administering Property Not

and give full details, including:

•

However, if the decedent’s estate is

Subject to Claims

Name of payee,

•

not liable, include in the gross estate

Face and unpaid balance,

You may deduct expenses incurred in

•

only the value of the equity of

Date and term of note,

administering property that is included

•

redemption (or the value of the property

Interest rate, and

in the gross estate but that is not

•

less the amount of the debt), and do

Date to which interest was paid

subject to claims. You may only deduct

not deduct any portion of the

before death.

these expenses if they were paid

indebtedness on this schedule.

before the section 6501 period of

Include the exact nature of the claim

limitations for assessment expired.

Notes and other obligations secured

as well as the name of the creditor. If

by the deposit of collateral, such as

the claim is for services performed over

The expenses deductible on this

stocks, bonds, etc., also should be

a period of time, state the period

schedule are usually expenses incurred

listed under “Mortgages and Liens.”

covered by the claim.

in the administration of a trust

established by the decedent before

Example. Edison Electric

Description

death. They may also be incurred in the

Illuminating Co., for electric service

collection of other assets or the transfer

during December 2007, $150.

Include under the “Description” column

or clearance of title to other property

the particular schedule and item

If the amount of the claim is the

included in the decedent’s gross estate

number where the property subject to

unpaid balance due on a contract for

for estate tax purposes, but not

the mortgage or lien is reported in the

the purchase of any property included

included in the decedent’s probate

gross estate.

in the gross estate, indicate the

estate.

schedule and item number where you

Include the name and address of the

The expenses deductible on this

reported the property. If the claim

mortgagee, payee, or obligee, and the

schedule are limited to those that are

represents a joint and separate liability,

date and term of the mortgage, note, or

the result of settling the decedent’s

give full facts and explain the financial

other agreement by which the debt was

interest in the property or of vesting

responsibility of the co-obligor.

established. Also include the face

good title to the property in the

Property and income taxes. The

amount, the unpaid balance, the rate of

beneficiaries. Expenses incurred on

deduction for property taxes is limited to

interest, and date to which the interest

behalf of the transferees (except those

the taxes accrued before the date of

was paid before the decedent’s death.

described above) are not deductible.

the decedent’s death. Federal taxes on

Examples of deductible and

income received during the decedent’s

Schedule L—Net Losses

nondeductible expenses are provided in

lifetime are deductible, but taxes on

Regulations section 20.2053-8.

During Administration

income received after death are not

List the names and addresses of the

deductible.

and Expenses Incurred

persons to whom each expense was

Keep all vouchers or original records

payable and the nature of the expense.

in Administering

for inspection by the IRS.

Identify the property for which the

Allowable death taxes. If you elect to

Property Not Subject to

expense was incurred by indicating the

take a deduction under section 2053(d)

schedule and item number where the

Claims

rather than a credit under section 2014,

property is included in the gross estate.

the deduction is subject to the

If you do not know the exact amount of

You must complete Schedule L and

limitations described in section 2053(d)

the expense, you may deduct an

file it with the return if you claim

and its regulations. If you have difficulty

estimate, provided that the amount may

deductions on either item 18 or item 19

figuring the deduction, you may request

be verified with reasonable certainty

of Part 5 — Recapitulation.

a computation of it. Send your request

and will be paid before the period of

within a reasonable amount of time

limitations for assessment (referred to

Net Losses During

before the due date of the return to the

above) expires. Keep all vouchers and

Administration

Department of the Treasury,

receipts for inspection by the Internal

Commissioner of Internal Revenue,

You may deduct only those losses from

Revenue Service.

Washington, DC 20224. Attach to your

thefts, fires, storms, shipwrecks, or

request a copy of the will and relevant

Schedule M—Bequests,

other casualties that occurred during

documents, a statement showing the

the settlement of the estate. You may

etc., to Surviving Spouse

distribution of the estate under the

deduct only the amount not reimbursed

decedent’s will, and a computation of

by insurance or otherwise.

(Marital Deduction)

the state or foreign death tax showing

Describe in detail the loss sustained

See the Form 706 itself for these

any amount payable by a charitable

and the cause. If you received

organization.

instructions.

insurance or other compensation for the

Mortgages and Liens

loss, state the amount collected.

Schedule O—Charitable,

Identify the property for which you are

List under “Mortgages and Liens” only

Public, and Similar Gifts

claiming the loss by indicating the

obligations secured by mortgages or

particular schedule and item number

other liens on property that you

and Bequests

where the property is included in the

included in the gross estate at its full

gross estate.

value or at a value that was

General

undiminished by the amount of the

If you elect alternate valuation, do

You must complete Schedule O and file

mortgage or lien. If the debt is

not deduct the amount by which you

it with the return if you claim a

enforceable against other property of

reduced the value of an item to include

deduction on item 21 of Part

the estate not subject to the mortgage

it in the gross estate.

5 — Recapitulation.

or lien, or if the decedent was

personally liable for the debt, you must

Do not deduct losses claimed as a

You can claim the charitable

include the full value of the property

deduction on a federal income tax

deduction allowed under section 2055

subject to the mortgage or lien in the

return or depreciation in the value of

for the value of property in the

gross estate under the appropriate

securities or other property.

decedent’s gross estate that was

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Instructions for Schedules

Instructions For Form 706 - United States Estate (And Generation-Skipping Transfer) Tax Return - 2008 Page 20

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