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The credit may be allowed only for

computing the credit on Schedule Q from

Period of

payment of the death tax or taxes

Form 706.

Time

Not

Percent

Exceeding

Allowable

specified in the treaty (but see the

instructions above for credit under the

Section 2056(d)(3) contains specific

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2 years

100

statute for death taxes paid to each

rules for allowing a credit for certain

2 years

4 years

political subdivision or possession of the

transfers to a spouse who was not a U.S.

4 years

6 years

treaty country that are not directly or

citizen where the property passed outright

6 years

8 years

indirectly creditable under the treaty);

to the spouse, or to a “qualified domestic

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8 years

10 years

If specifically provided, the credit is

trust.”

10 years

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none

proportionately shared for the tax

applicable to property situated outside

Property

both countries, or that was deemed in

How To Compute the Credit

some instances situated within both

The term “property” includes any interest

A Worksheet for Schedule Q is provided

countries; and

(legal or equitable) of which the

on page 28 of these instructions to allow

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The amount entered at item 4 of

transferee received the beneficial

you to compute the limits before

Schedule P is the amount shown on line

ownership. The transferee is considered

completing Schedule Q. Transfer the

12 of Part 2, Tax Computation, less the

the beneficial owner of property over

appropriate amounts from the worksheet

total of the credits claimed for federal gift

which the transferee received a general

to Schedule Q as indicated on the

taxes on pre-1977 gifts (section 2012)

power of appointment. Property does not

schedule. You do not need to file the

and for tax on prior transfers (line 14 of

include interests to which the transferee

worksheet with your Form 706, but should

the Tax Computation). (If a credit is

received only a bare legal title, such as

keep it for your records.

claimed for tax on prior transfers, it will be

that of a trustee. Neither does it include

Cases involving transfers from two or

necessary to complete Schedule Q before

an interest in property over which the

more transferors. Part I of the

completing Schedule P.) For examples of

transferee received a power of

worksheet and Schedule Q enable you to

computation of credits under the treaties,

appointment that is not a general power

compute the credit for as many as three

see the applicable regulations.

of appointment. In addition to interests in

transferors. The number of transferors is

Computation of credit in cases where

which the transferee received the

irrelevant to Part II of the worksheet. If

property is situated outside both

complete ownership, the credit may be

you are computing the credit for more

countries or deemed situated within

allowed for annuities, life estates, terms

than three transferors, use more than one

both countries. See the appropriate

for years, remainder interests (whether

worksheet and Schedule Q, Part I, and

treaty for details.

contingent or vested), and any other

combine the totals for the appropriate

interest that is less than the complete

lines.

Instructions for Schedule

ownership of the property, to the extent

Section 2032A additional tax. If the

that the transferee became the beneficial

Q. Credit for Tax on Prior

transferor’s estate elected special use

owner of the interest.

valuation and the additional estate tax of

Transfers

section 2032A(c) was imposed at any

time up to 2 years after the death of the

Maximum Amount of the Credit

General

decedent for whom you are filing this

The maximum amount of the credit is the

You must complete Schedule Q and file it

return, check the box on Schedule Q. On

smaller of:

with the return if you claim a credit on

lines 1 and 9 of the worksheet, include

Part 2 — Tax Computation, line 14.

1. The amount of the estate tax of the

the property subject to the additional

transferor’s estate attributable to the

estate tax at its FMV rather than its

The term “transferee” means the

transferred property, or

special use value. On line 10 of the

decedent for whose estate this return is

worksheet, include the additional estate

filed. If the transferee received property

2. The amount by which:

tax paid as a federal estate tax paid.

from a transferor who died within 10 years

a. An estate tax on the transferee’s

before, or 2 years after, the transferee, a

estate determined without the credit for

How To Complete the Schedule

credit is allowable on this return for all or

tax on prior transfers, exceeds

Q Worksheet

part of the federal estate tax paid by the

b. An estate tax on the transferee’s

Most of the information to complete Part I

transferor’s estate with respect to the

estate determined by excluding from the

of the worksheet should be obtained from

transfer. There is no requirement that the

gross estate the net value of the transfer.

the transferor’s Form 706.

property be identified in the estate of the

transferee or that it exist on the date of

Line 5. Enter on line 5 the applicable

If credit for a particular foreign death tax

the transferee’s death. It is sufficient for

marital deduction claimed for the

may be taken under either the statute or a

the allowance of the credit that the

transferor’s estate (from the transferor’s

death duty convention, and on this return

transfer of the property was subjected to

Form 706).

the credit actually is taken under the

federal estate tax in the estate of the

convention, then no credit for that foreign

Lines 10 through 18. Enter on these

transferor and that the specified period of

death tax may be taken into consideration

lines the appropriate taxes paid by the

time has not elapsed. A credit may be

in computing estate tax (a) or estate tax

transferor’s estate.

allowed with respect to property received

(b), above.

If the transferor’s estate elected to pay

as the result of the exercise or

the federal estate tax in installments,

nonexercise of a power of appointment

enter on line 10 only the total of the

Percent Allowable

when the property is included in the gross

installments that have actually been paid

estate of the donee of the power.

Where transferee predeceased the

at the time you file this Form 706. See

transferor. If not more than 2 years

If the transferee was the transferor’s

Rev. Rul. 83-15, 1983-1 C.B. 224, for

elapsed between the dates of death, the

surviving spouse, no credit is allowed for

more details. Do not include as estate tax

credit allowed is 100% of the maximum

property received from the transferor to

any tax attributable to section 4980A,

the extent that a marital deduction was

amount. If more than 2 years elapsed

before its repeal by the Taxpayer Relief

between the dates of death, no credit is

allowed to the transferor’s estate for the

Act of 1997.

property. There is no credit for tax on

allowed.

Line 21. Add lines 11 (allowable unified

prior transfers for federal gift taxes paid in

credit) and 13 (foreign death taxes credit)

connection with the transfer of the

Where transferor predeceased the

of Part 2 — Tax Computation to the

property to the transferee.

transferee. The percent of the maximum

amount of any credit taken (on line 15) for

If you are claiming a credit for tax on

amount that is allowed as a credit

federal gift taxes on pre-1977 gifts

depends on the number of years that

prior transfers on Form 706-NA, you

(section 2012). Subtract this total from

should first complete and attach the

elapsed between dates of death. It is

Part 2 — Tax Computation, line 8. Enter

Recapitulation from Form 706 before

determined using the following table:

the result on line 21 of the worksheet.

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Instructions for Schedules

Instructions For Form 706 - United States Estate (And Generation-Skipping Transfer) Tax Return - 2005 Page 20

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