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the income tax return because of the

gross estate, indicate the schedule and

the decedent was

state the ratio of the

percentage limitations.

item number where you reported the

employed at the time of

decedent’s contribution

property. If the claim represents a joint

Debts of the Decedent

death and an annuity as to the total purchase

and separate liability, give full facts and

described in Definitions, price of the annuity.

List under “Debts of the Decedent” only

explain the financial responsibility of the

Annuity, Example 4 on

valid debts the decedent owed at the time

co-obligor.

page 15, became

of death. List any indebtedness secured

payable to any

Property and income taxes. The

by a mortgage or other lien on property of

beneficiary because the

deduction for property taxes is limited to

the gross estate under the heading

beneficiary survived the

the taxes accrued before the date of the

“Mortgages and Liens.” If the amount of

decedent,

decedent’s death. Federal taxes on

the debt is disputed or the subject of

income received during the decedent’s

litigation, deduct only the amount the

lifetime are deductible, but taxes on

an annuity under an

state the ratio of the

estate concedes to be a valid claim. Enter

individual retirement

amount paid for the

income received after death are not

the amount in contest in the column

account or annuity

individual retirement

deductible.

provided.

became payable to any

account or annuity that

Keep all vouchers or original records

beneficiary because that was not allowable as an

Generally, if the claim against the

for inspection by the IRS.

beneficiary survived the income tax deduction

estate is based on a promise or

decedent and is payable under section 219 (other

Allowable death taxes. If you elect to

agreement, the deduction is limited to the

to the beneficiary for life than a rollover

take a deduction under section 2053(d)

extent that the liability was contracted

or for at least 36 months contribution) to the total

rather than a credit under section 2014,

bona fide and for an adequate and full

following the decedent’s amount paid for the

the deduction is subject to the limitations

consideration in money or money’s worth.

death,

account or annuity.

described in section 2053(d) and its

However, any enforceable claim based on

regulations. If you have difficulty figuring

a promise or agreement of the decedent

the annuity is payable

the description should

the deduction, you may request a

to make a contribution or gift (such as a

out of a trust or other

be sufficiently complete

computation of it. Send your request

pledge or a subscription) to or for the use

fund,

to fully identify it.

within a reasonable amount of time before

of a charitable, public, religious, etc.,

the due date of the return to the

organization is deductible to the extent

the annuity is payable

include the duration of

Commissioner of Internal Revenue,

that the deduction would be allowed as a

for a term of years,

the term and the date

Washington, DC 20224. Attach to your

bequest under the statute that applies.

on which it began.

request a copy of the will and relevant

Certain claims of a former spouse

documents, a statement showing the

against the estate based on the

distribution of the estate under the

the annuity is payable

include the date of birth

relinquishment of marital rights are

for the life of a person

of that person.

decedent’s will, and a computation of the

deductible on Schedule K. For these

other than the decedent,

state or foreign death tax showing any

claims to be deductible, all of the

amount payable by a charitable

following conditions must be met.

•

organization.

the annuity is wholly or

enter the amount

The decedent and the decedent’s

partially excluded from

excluded under

Mortgages and Liens

spouse must have entered into a written

the gross estate,

“Description” and

agreement relative to their marital and

List under “Mortgages and Liens” only

explain how you

property rights.

computed the exclusion.

obligations secured by mortgages or

•

The decedent and the spouse must

other liens on property that you included

have been divorced before the decedent’s

in the gross estate at its full value or at a

death and the divorce must have

Instructions for Schedule

value that was undiminished by the

occurred within the 3-year period

amount of the mortgage or lien. If the debt

J. Funeral Expenses and

beginning on the date 1 year before the

is enforceable against other property of

agreement was entered into. It is not

Expenses Incurred in

the estate not subject to the mortgage or

required that the agreement be approved

lien, or if the decedent was personally

Administering Property

by the divorce decree.

liable for the debt, you must include the

•

The property or interest transferred

full value of the property subject to the

Subject to Claims

under the agreement must be transferred

mortgage or lien in the gross estate under

See the reverse side of Schedule J on

to the decedent’s spouse in settlement of

the appropriate schedule and may deduct

Form 706.

the spouse’s marital rights.

the mortgage or lien on the property on

You may not deduct a claim made

this schedule.

Instructions for Schedule

against the estate by a remainderman

However, if the decedent’s estate is

relating to section 2044 property. Section

K. Debts of the Decedent

not liable, include in the gross estate only

2044 property is described in the

the value of the equity of redemption (or

and Mortgages and Liens

instructions to line 6 of Part 4, General

the value of the property less the amount

Information.

You must complete and attach Schedule

of the debt), and do not deduct any

K if you claimed deductions on either item

Include in this schedule notes

portion of the indebtedness on this

14 or item 15 of Part 5, Recapitulation.

unsecured by mortgage or other lien and

schedule.

give full details, including:

Income vs. estate tax deduction.

Notes and other obligations secured

•

Name of payee,

Taxes, interest, and business expenses

by the deposit of collateral, such as

•

Face and unpaid balance,

accrued at the date of the decedent’s

stocks, bonds, etc., also should be listed

•

Date and term of note,

death are deductible both on Schedule K

under “Mortgages and Liens.”

•

Interest rate, and

and as deductions in respect of the

•

Description

Date to which interest was paid before

decedent on the income tax return of the

death.

estate.

Include under the “Description” column

the particular schedule and item number

Include the exact nature of the claim

If you choose to deduct medical

as well as the name of the creditor. If the

where the property subject to the

expenses of the decedent only on the

mortgage or lien is reported in the gross

claim is for services performed over a

estate tax return, they are fully deductible

period of time, state the period covered

estate.

as claims against the estate. If, however,

by the claim. Example: Edison Electric

they are claimed on the decedent’s final

Include the name and address of the

Illuminating Co., for electric service during

income tax return under section 213(c),

mortgagee, payee, or obligee, and the

December 2004, $150.

they may not also be claimed on the

date and term of the mortgage, note, or

estate tax return. In this case, you also

If the amount of the claim is the unpaid

other agreement by which the debt was

may not deduct on the estate tax return

balance due on a contract for the

established. Also include the face

any amounts that were not deductible on

purchase of any property included in the

amount, the unpaid balance, the rate of

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Instructions for Schedules

Instructions For Form 706 - United States Estate (And Generation-Skipping Transfer) Tax Return - 2005 Page 17

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