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same time as and as a part of each

attach the notice of election described in

Identifying number. Enter the SSN of

installment payment of the tax.

Regulations section 20.6166-1(b).

each individual beneficiary listed. If the

number is unknown, or the individual has

Acceleration of payments. If the estate

In computing the adjusted gross estate

no number, please indicate “unknown” or

fails to make payments of tax or interest,

under section 6166(b)(6) to determine

“none.” For trusts and other estates, enter

the Service may terminate the right to

whether an election may be made under

the EIN.

make installment payments and force an

section 6166, the net amount of any real

acceleration of payment of the tax upon

Relationship. For each individual

estate in a closely held business must be

notice and demand.

beneficiary, enter the relationship (if

used.

known) to the decedent by reason of

If any portion of the interest in the

You may also elect to pay GST taxes

blood, marriage, or adoption. For trust or

closely held business which qualifies for

in installments. See section 6166(i).

estate beneficiaries, indicate “TRUST” or

installment payments is distributed, sold,

“ESTATE.”

Line 4—Reversionary or

exchanged, or otherwise disposed of, or

money and other property attributable to

Amount. Enter the amount actually

Remainder Interests

such an interest is withdrawn, and the

distributed (or to be distributed) to each

For details of this election, see section

aggregate of those events equals or

beneficiary including transfers during the

6163 and the related regulations.

exceeds 50% of the value of the interest,

decedent’s life from Schedule G required

then the right to make installment

to be included in the gross estate. The

payments will be terminated, and the

value to be entered need not be exact. A

Instructions for Part 4.

unpaid portion of the tax will be due upon

reasonable estimate is sufficient. For

notice and demand. See section 6166(g).

example, where precise values cannot

General Information

readily be determined, as with certain

Interest computation. A special interest

(Pages 2 and 3 of Form

future interests, a reasonable

rate applies to installment payments. For

approximation should be entered. The

decedents dying in 2005, the interest rate

706)

total of these distributions should

is 2% on the lesser of:

•

approximate the amount of gross estate

$539,900, or

Authorization

•

reduced by funeral and administrative

The amount of the estate tax that is

•

Completing the authorization on page 2

expenses, debts and mortgages,

attributable to the closely held business

of Form 706 will authorize one attorney,

bequests to surviving spouse, charitable

and that is payable in installments.

accountant, or enrolled agent to represent

bequests, and any federal and state

2% portion. The 2% portion is an

the estate and receive confidential tax

estate and GST taxes paid (or payable)

amount equal to the amount of the

information, but will not authorize the

relating to the benefits received by the

tentative estate tax on ($1,000,000 + the

representative to enter into closing

beneficiaries listed on lines 4 and 5.

applicable exclusion amount in effect)

agreements for the estate.

All distributions of less than $5,000 to

•

minus the applicable credit amount in

Note. If you wish to represent the

specific beneficiaries may be included

effect. However, if the amount of estate

estate, you must complete and sign the

with distributions to unascertainable

tax extended under section 6166 is less

authorization.

beneficiaries on the line provided.

•

than the amount computed above, the 2%

If you wish to authorize persons other

portion is the lesser amount.

Line 6—Section 2044 Property

than attorneys, accountants, and enrolled

Inflation adjustment. The $1,000,000

agents, or if you wish to authorize more

If you answered “Yes,” these assets must

amount used to calculate the 2% portion

than one person, to receive confidential

be shown on Schedule F.

is indexed for inflation for the estates of

information or represent the estate, you

Section 2044 property is property for

decedents dying in a calendar year after

must complete and attach Form 2848,

which a previous section 2056(b)(7)

1998. For an estate of a decedent dying

Power of Attorney and Declaration of

election (QTIP election) has been made,

in calendar year 2005, the dollar amount

Representative.

•

or for which a similar gift tax election

used to determine the “2% portion” of the

You must also complete and attach

(section 2523) has been made. For more

estate tax payable in installments under

Form 2848 if you wish to authorize

information, see the instructions on the

section 6166 is $1,170,000.

someone to enter into closing agreements

back of Schedule F.

for the estate. Filing a completed Form

Computation. Interest on the portion

Line 8—Insurance Not Included

2848 with this return may expedite

of the tax in excess of the 2% portion is

processing of the Form 706.

in the Gross Estate

figured at 45% of the annual rate of

•

If you wish only to authorize someone

interest on underpayments. This rate is

If you checked “Yes” for either 8a or 8b,

to inspect and/or receive confidential tax

based on the federal short-term rate and

you must complete and attach Schedule

information (but not to represent you

is announced quarterly by the IRS in the

D and attach a Form 712, Life Insurance

before the IRS), complete and file Form

Internal Revenue Bulletin.

Statement, for each policy and an

8821, Tax Information Authorization.

If you elect installment payments and

explanation of why the policy or its

the estate tax due is more than the

proceeds are not includible in the gross

Line 4

maximum amount to which the 2%

estate.

Complete line 4 whether or not there is a

interest rate applies, each installment

Line 10—Partnership Interests

surviving spouse and whether or not the

payment is deemed to comprise both tax

surviving spouse received any benefits

and Stock in Close

subject to the 2% interest rate and tax

from the estate. If there was no surviving

Corporations

subject to 45% of the regular

spouse on the date of decedent’s death,

underpayment rate. The amount of each

If you answered “Yes” to line 10, you

enter “None” in line 4a and leave lines 4b

installment that is subject to the 2% rate

must include full details for partnerships

and 4c blank. The value entered in line 4c

is the same as the percentage of total tax

and unincorporated businesses on

need not be exact. See the instructions

payable in installments that is subject to

Schedule F (Schedule E if the partnership

for “Amount” under line 5, below.

the 2% rate.

interest is jointly owned). You must

Line 5

include full details for the stock of inactive

The interest paid on installment

or close corporations on Schedule B.

payments is not deductible as an

Name. Enter the name of each individual,

administrative expense of the

Value these interests using the rules of

CAUTION

trust, or estate who received (or will

Regulations section 20.2031-2 (stocks) or

estate.

receive) benefits of $5,000 or more from

20.2031-3 (other business interests).

Making the election. If you check this

the estate directly as an heir, next-of-kin,

line to make a protective election, you

devisee, or legatee; or indirectly (for

A “close corporation” is a corporation

should attach a notice of protective

example, as beneficiary of an annuity or

whose shares are owned by a limited

election as described in Regulations

insurance policy, shareholder of a

number of shareholders. Often, one

section 20.6166-1(d). If you check this

corporation, or partner of a partnership

family holds the entire stock issue. As a

line to make a final election, you should

that is an heir, etc.).

result, little, if any, trading of the stock

-10-

Part Instructions

Instructions For Form 706 - United States Estate (And Generation-Skipping Transfer) Tax Return - 2005 Page 10

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