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Line 7 Worksheet — Gift Tax on Gifts Made After 1976

Calendar year or

Total taxable gifts for

calendar quarter

prior periods (from Form

709, Tax Computation,

Taxable gifts for this

Unused unified credit

Tax payable using

Tax payable for this

line 2)

period (from Form 709,

(applicable credit amount)

Table A

period (subtract col.

Tax Computation, line 1)

for this period

Total pre-1977 taxable

(see below)

e from col. d)

(see below)

gifts. Enter the amount

from line 1, Worksheet

Total gift taxes payable on gifts made after 1976 (combine the amounts in column f) . . . . . . . . . . . . . . . . . . . . . . . . .

Gift taxes paid by the decedent on gifts that qualify for “special treatment.” Enter the amount from line 2, column e,

Worksheet TG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Subtract line 2 from line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Gift tax paid by decedent’s spouse on split gifts included on Schedule G. Enter the amount from line 2, column f,

Worksheet TG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Add lines 3 and 4. Enter here and on line 7 of the Tax Computation of Form 706 . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Columns b and c. In addition to gifts reported on Form 709, you must include in these columns any taxable gifts in excess of the annual exclusion

that were not reported on Form 709.

Column d. To figure the “tax payable” for this column, you must use Table A in these instructions, as it applies to the year of the decedent’s death

rather than to the year the gifts were actually made. To compute the entry for column d, you should figure the “tax payable” on the amount in column

b and subtract it from the “tax payable” on the amounts in columns b and c added together. Enter the difference in column d.

“Tax payable” as used here is a hypothetical amount and does not necessarily reflect tax actually paid. Figure “tax payable” only on gifts made

after 1976. Do not include any tax paid or payable on gifts made before 1977.

To calculate the tax, enter the amount for the appropriate year from column c of the worksheet on line 1 of the Tax Computation of the Form 709.

Enter the amount from column b on line 2 of the Tax Computation. Complete the Tax Computation through the tax due before any reduction for the

unified credit (applicable credit amount) and enter that amount in column d, above.

Column e. To figure the unused unified credit, (applicable credit amount), use the unified credit (applicable credit amount) in effect for the year the

gift was made. This amount should be on line 12 of the Tax Computation of the Form 709 filed for the gift.

Otherwise, send it as soon after you file

under a power of attorney) but for which

Line 9—Unified Credit

the return as possible.

no Forms 709 were filed. You must make

(applicable credit amount)

a reasonable inquiry as to the existence

The applicable credit amount (formerly

of any such gifts. The annual exclusion

Line 6

the unified credit), is $555,800 for the

for 1977 through 1981 was $3,000 per

To figure the tentative tax on the amount

estates of decedents dying in 2005. The

donee per year, $10,000 for years 1981

on line 5, use Table A on page 4.

amount of the credit cannot exceed the

through 2001, and $11,000 for years after

amount of estate tax imposed.

Lines 4 and 7

2001.

Three worksheets are provided to help

Note. In figuring the line 7 amount, do

Line 10—Adjustment to Unified

you compute the entries for these lines.

not include any tax paid or payable on

Credit (applicable credit

You need not file these worksheets with

gifts made before 1977. The line 7

amount)

your return but should keep them for your

amount is a hypothetical figure used to

records. Worksheet TG — Taxable Gifts

calculate the estate tax.

If the decedent made gifts (including gifts

Reconciliation, on page 4, allows you to

made by the decedent’s spouse and

Special treatment of split gifts. These

reconcile the decedent’s lifetime taxable

treated as made by the decedent by

special rules apply only if:

gifts to compute totals that will be used for

•

reason of gift splitting) after September 8,

The decedent’s spouse predeceased

the line 4 worksheet on page 4 and the

1976, and before January 1, 1977, for

the decedent;

line 7 worksheet above.

which the decedent claimed a specific

•

The decedent’s spouse made gifts that

You must get all of the decedent’s gift

exemption, the unified credit (applicable

were “split” with the decedent under the

tax returns (Form 709, United States Gift

credit amount) on this estate tax return

rules of section 2513;

(and Generation-Skipping Transfer) Tax

•

must be reduced. The reduction is figured

The decedent was the “consenting

Return) before you complete Worksheet

by entering 20% of the specific exemption

spouse” for those split gifts, as that term

TG. The amounts you will enter on

claimed for these gifts.

is used on Form 709; and

Worksheet TG can usually be derived

•

The split gifts were included in the

from these returns as filed. However, if

Note. The specific exemption was

decedent’s spouse’s gross estate under

any of the returns were audited by the

allowed by section 2521 for gifts made

section 2035.

IRS, you should use the amounts that

before January 1, 1977.

were finally determined as a result of the

If all four conditions above are met, do

audits.

If the decedent did not make any gifts

not include these gifts on line 4 of the Tax

between September 8, 1976, and January

In addition, you must include in column

Computation and do not include the gift

1, 1977, or if the decedent made gifts

b of Worksheet TG any gifts in excess of

taxes payable on these gifts on line 7 of

during that period but did not claim the

the annual exclusion made by the

the Tax Computation. These adjustments

specific exemption, enter zero.

decedent (or on behalf of the decedent

are incorporated into the worksheets.

-5-

Part Instructions

Instructions For Form 706 - United States Estate (And Generation-Skipping Transfer) Tax Return - 2005 Page 5

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