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You may not elect alternate

name. Describe other deductions fully

See section 2518 for the rules

valuation unless the election will

and identify any particular property to

governing disclaimers of interests

decrease both the value of the gross

which they relate.

in property.

estate and the net estate tax due after

Line 7. You may take a deduction on

Line 2. The amount on line 2 is the

application of all allowable credits.

line 7 for death taxes (estate,

total value of the assets included in the

inheritance, legacy, or succession

Qualified Conservation

entire gross estate that were located

taxes) you paid to any state or the

outside the United States. If you claim

Easement Exclusion

District of Columbia on property listed in

deductions on line 5 of Schedule B, you

Under section 2031(c), you may elect to

Schedule A. To calculate the deduction

must also document the amount you

exclude a portion of the value of land

for state death taxes, use the formula

enter on line 2. See the first paragraph

that is subject to a qualified

below. Enter the result on line 7.

under Schedule B above.

conservation easement. You make the

election by attaching Schedule U of

If you elected the alternate valuation

Total value of assets

Form 706 with all the required

in the gross estate subject

date for property listed on Schedule A,

to state death taxes

Total state

information. To elect the exclusion, you

use it also for the assets reported on

death taxes

must include on Schedule A:

line 2. Otherwise, value the amounts as

Gross estate located in the

paid

of the date of death.

U.S. (line 1 of Schedule B)

1. The decedent’s interest in the

land that is subject to the exclusion and

Line 4. You may deduct the following

Generally, you must claim this

2. Exclude the applicable value of

items whether or not they were incurred

deduction within 4 years of filing the

the land (amount from line 20,

or paid in the United States:

return. However, see section 2058(b)

Schedule U) that is subject to the

•

Funeral expenses;

for exceptions and periods of

easement on Schedule A.

•

Administration expenses;

limitations.

•

Claims against the estate;

You must make the election on a

•

For the deduction to be allowed, you

Unpaid mortgages and other liens;

timely filed Form 706-NA, including

must file a certificate signed by the

and

extensions. For more information, see

•

appropriate official of the taxing state.

Uncompensated losses that were

the Instructions for Form 706.

The certificate should show:

incurred during settlement of the estate

•

The total tax charged,

Canadian Small Estate Relief

and that arose from theft or from

•

Any discount allowed,

casualties, such as fires, storms, or

If you are claiming a small estate

•

Any penalties and interest imposed,

shipwrecks.

exemption (worldwide estate of a

•

The tax actually paid, and

Canadian resident decedent not more

•

You may deduct only that part of a

Each payment date.

than $1.2 million) from tax on U.S.

debt or mortgage that was contracted in

If possible, attach the certificate to

securities or certain other U.S. situs

good faith and for full value in money or

this return; otherwise, please file it as

property, under the 1995 Protocol to

money’s worth. You may deduct

soon as possible.

the Canadian income tax treaty, do not

mortgages only if you included the full

list the exempt assets on Schedule A.

value of the mortgaged property in the

If you later recover any of the state

Instead, list those assets and their

total gross estate on line 3. Do not

tax for which you claim this deduction,

values in a statement attached to the

deduct tax on income received after

you must notify the IRS at the following

return specifying that you are relying on

death or property taxes accrued after

address within 30 days of receiving any

the treaty. To determine initially

death. See Line 7 below for details on

refund of state taxes.

whether the small estate exemption

deducting death taxes.

Department of the Treasury

applies, however, you must include the

Internal Revenue Service Center

On line 4, show the total of these

exempt assets in the value of the entire

Cincinnati, OH 45999

deductible items. In general, the total is

gross estate, wherever located, on lines

limited to the amount on line 3.

2 and 3 of Schedule B.

Part II. Tax Computation

Line 6. Use line 6 to enter the

Schedule B. Taxable Estate

Line 4 and Line 5. To determine the

following deductions.

tentative tax on the amount on line 2 (to

Charitable deduction. Unless a

For the line 5 deduction to be

be entered on line 4) and the tentative

treaty allows otherwise, you may take a

allowed, you must complete

tax on the amount on line 3 (to be

charitable deduction only if the transfer

lines 1 through 4 and document

CAUTION

entered on line 5), use Table A in the

was to a domestic entity or for use in

the amounts you include on lines 2

version of the Instructions for Form 706

the United States as described in the

and 4.

that corresponds to the decedent’s date

Instructions for Form 706.

To document the line 2 amount,

of death.

attach a certified copy of the foreign

Attach Schedule O of Form 706. If

Line 7. Enter the unified credit. The

death tax return; or if none was filed, a

you claim the deduction under a treaty,

unified credit is allowed for the smaller

certified copy of the estate inventory

specify the applicable treaty and attach

of the line 6 amount or the maximum

and the schedule of debts and charges

a computation of the deduction.

unified credit. In general, the maximum

that were filed with the foreign probate

unified credit is $13,000.

Marital deduction. Unless a treaty

court or as part of the estate’s

allows otherwise, you may only take a

For a citizen of a U.S. possession

administration proceedings.

marital deduction if the surviving

(section 2209), the maximum unified

Supplement these documents with

spouse is a U.S. citizen or if the

credit is the greater of:

attachments if they do not set forth the

•

property passes to a qualified domestic

$13,000 or

entire gross estate outside the United

•

trust (QDOT) described in section

The product of $46,800 times a

States. If more proof is needed, you will

2056A and an election is made on

fraction.

be notified.

Schedule M of Form 706.

To document the line 4 amount,

The numerator of the fraction is the

attach an itemized schedule. For each

Attach Schedule M of Form 706, and

part of the gross estate located in the

expense or claim, specify the nature

a statement showing your computation

United States (line 1 of Schedule B),

and amount and give the creditor’s

of the marital deduction.

and the denominator is the entire gross

-4-

Instructions For Form 706-Na - United States Estate (And Generation-Skipping Transfer) Tax Return - 2007 Page 4

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