Looking for a Form 706 Templates? Download it for free!

claim as a deduction is the lesser of the

2008, the annual exclusion for gifts of

of prior laws, on certain transfers the

state inheritance tax liability discharged

present interests is $12,000 per donee.

decedent made before January 1,

or the fair market value of the property

1977, that are included in the gross

Note. In figuring the line 7 amount, do

on the date of the transfer. For more

estate. The credit cannot be more than

not include any tax paid or payable on

information on the application of such

the amount figured by the following

gifts made before 1977. The line 7

transfers, see the principles discussed

formula:

amount is a hypothetical figure used to

in Rev. Rul. 86-117, 1986-2 C.B. 157,

calculate the estate tax.

Gross estate tax minus (the sum

prior to the repeal of section 2011.

of the state death taxes and

Special treatment of split gifts.

unified credit)

Value of

You should send the following

These special rules apply only if:

included

•

evidence to the IRS:

The decedent’s spouse predeceased

Value of gross estate minus (the

gift

sum of the deductions for

the decedent;

1. Certificate of the proper officer of

•

charitable, public, and similar

The decedent’s spouse made gifts

the taxing state, or the District of

gifts and bequests and marital

that were “split” with the decedent

Columbia, showing the:

deduction)

under the rules of section 2513;

a. Total amount of tax imposed

•

The decedent was the “consenting

When taking the credit for pre-1977

(before adding interest and penalties

spouse” for those split gifts, as that

federal gift taxes:

and before allowing discount),

•

term is used on Form 709; and

Include the credit in the amount on

b. Amount of discount allowed,

•

The split gifts were included in the

line 15 and

c. Amount of penalties and interest

•

decedent’s spouse’s gross estate under

Identify and enter the amount of the

imposed or charged,

section 2035.

credit you are taking on the dotted line

d. Total amount actually paid in

to the left of the entry space for line 15

If all four conditions above are met,

cash, and

on page 1 of Form 706 with a notation

do not include these gifts on line 4 of

e. Date of payment.

“section 2012 credit.”

the Tax Computation and do not

2. Any additional proof the IRS

include the gift taxes payable on these

For more information, see the

specifically requests.

gifts on line 7 of the Tax Computation.

regulations under section 2012. This

You should file the evidence

These adjustments are incorporated

computation may be made using Form

requested above with the return if

into the worksheets.

4808, Computation of Credit for Gift

possible. Otherwise, send it as soon

Tax. Attach a copy of a completed

after you file the return as possible.

Line 9. Maximum Unified

Form 4808 or the computation of the

Credit (applicable credit

credit. Also, attach all available copies

Line 6

of Forms 709 filed by the decedent to

amount)

To figure the tentative tax on the

help verify the amounts entered on

The applicable credit amount (formerly

amount on line 5, use Table A on

lines 4 and 7, and the amount of credit

the unified credit), is $780,800 for the

page 4.

taken (on line 15) for pre-1977 federal

estates of decedents dying in 2008.

gift taxes.

The amount of the credit cannot exceed

Lines 4 and 7

Canadian marital credit. In addition

the amount of estate tax imposed.

Three worksheets are provided to help

to using line 15 to report credit for

you compute the entries for these lines.

Line 10. Adjustment to

federal gift taxes on pre-1977 gifts, you

You need not file these worksheets with

may also use line 15 to claim the

Unified Credit (applicable

your return but should keep them for

Canadian marital credit, where

credit amount)

your records. Worksheet TG — Taxable

applicable.

Gifts Reconciliation, on page 4, allows

If the decedent made gifts (including

When taking the marital credit under

you to reconcile the decedent’s lifetime

gifts made by the decedent’s spouse

the 1995 Canadian Protocol:

taxable gifts to compute totals that will

and treated as made by the decedent

•

Include the credit in the amount on

be used for the Line 4 Worksheet on

by reason of gift splitting) after

line 15 and

page 4 and the Line 7 Worksheet on

September 8, 1976, and before

•

Identify and enter the amount of the

page 5.

January 1, 1977, for which the

credit you are taking on the dotted line

decedent claimed a specific exemption,

You must get all of the decedent’s

to the left of the entry space for line 15

the unified credit (applicable credit

gift tax returns (Form 709, United

on page 1 of Form 706 with a notation

amount) on this estate tax return must

States Gift (and Generation-Skipping

“Canadian marital credit.”

be reduced. The reduction is figured by

Transfer) Tax Return) before you

Also, attach a statement to the return

entering 20% of the specific exemption

complete Worksheet TG — Taxable

that refers to the treaty, waives QDOT

claimed for these gifts.

Gifts Reconciliation. The amounts you

rights, and shows the computation of

Note. The specific exemption was

will enter on Worksheet TG can usually

the marital credit. See the 1995

allowed by section 2521 for gifts made

be derived from these returns as filed.

Canadian income tax treaty protocol for

before January 1, 1977.

However, if any of the returns were

details on computing the credit.

audited by the IRS, you should use the

If the decedent did not make any

amounts that were finally determined as

gifts between September 8, 1976, and

a result of the audits.

January 1, 1977, or if the decedent

Part 3—Elections by the

made gifts during that period but did not

In addition, you must include in

Executor (Page 2 of

claim the specific exemption, enter

column b of Worksheet TG any gifts in

zero.

excess of the annual exclusion made

Form 706)

by the decedent (or on behalf of the

Line 15. Total Credits

decedent under a power of attorney)

Line 1. Alternate Valuation

Generally, line 15 is used to report the

but for which no Forms 709 were filed.

total of credit for foreign death taxes

You must make a reasonable inquiry as

(line 13) and credit for tax on prior

See the example on page 14

to the existence of any such gifts. The

TIP

showing the use of Schedule B

transfers (line 14).

annual exclusion for 1977 through 1981

where the alternate valuation is

was $3,000 per donee per year,

However, you may also use line 15

adopted.

$10,000 for years 1981 through 2001,

to report credit taken for federal gift

and $11,000 for years 2002 through

taxes imposed by Chapter 12 of the

Unless you elect at the time you file

2005. For calendar years 2006 through

Code, and the corresponding provisions

the return to adopt alternate valuation

-6-

Part Instructions

Instructions For Form 706 - United States Estate (And Generation-Skipping Transfer) Tax Return - 2008 Page 6

Related Articles

Related forms

Related Categories