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that is subject to a qualified

enter on line 2. See the first paragraph

Total value of assets

in the gross estate subject

conservation easement. You make the

under Schedule B above.

to state death taxes

Total state

election by attaching Schedule U of

If you elected the alternate valuation

death taxes

Form 706 with all the required

Gross estate located in the

date for property listed on Schedule A,

paid

information. To elect the exclusion, you

U.S. (line 1 of Schedule B)

use it also for the assets reported on

must include on Schedule A:

line 2. Otherwise, value the amounts as

Generally, you must claim this

1. The decedent’s interest in the

of the date of death.

deduction within 4 years of filing the

land that is subject to the exclusion and

Line 4. You may deduct the following

return. However, see section 2058(b)

2. Exclude the applicable value of

items whether or not they were incurred

for exceptions and periods of

the land (amount from line 20,

or paid in the United States:

limitations.

Schedule U) that is subject to the

•

Funeral expenses;

•

easement on Schedule A.

For the deduction to be allowed, you

Administration expenses;

•

must file a certificate signed by the

Claims against the estate;

You must make the election on a

•

appropriate official of the taxing state.

Unpaid mortgages and other liens;

timely filed Form 706-NA, including

The certificate should show:

and

extensions. For more information, see

•

The total tax charged,

Uncompensated losses that were

the Instructions for Form 706.

•

Any discount allowed,

incurred during settlement of the estate

•

Any penalties and interest imposed,

and that arose from theft or from

Canadian Small Estate Relief

•

The tax actually paid, and

casualties, such as fires, storms, or

If you are claiming a small estate

•

Each payment date.

shipwrecks.

exemption (worldwide estate of a

You may deduct only that part of a

Canadian resident decedent not more

If possible, attach the certificate to

debt or mortgage that was contracted in

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

this return; otherwise, please file it as

good faith and for full value in money or

securities or certain other U.S. situs

soon as possible.

money’s worth. You may deduct

property, under the 1995 Protocol to

If you later recover any of the state

mortgages only if you included the full

the Canadian income tax treaty, do not

tax for which you claim this deduction,

value of the mortgaged property in the

list the exempt assets on Schedule A.

you must notify the IRS at the following

total gross estate on line 3. Do not

Instead, list those assets and their

address within 30 days of receiving any

deduct tax on income received after

values in a statement attached to the

refund of state taxes.

death or property taxes accrued after

return specifying that you are relying on

death. See Line 7 below for details on

Department of the Treasury

the treaty. To determine initially

deducting death taxes.

Internal Revenue Service Center

whether the small estate exemption

On line 4, show the total of these

Cincinnati, OH 45999

applies, however, you must include the

deductible items. In general, the total is

exempt assets in the value of the entire

Part II. Tax Computation

limited to the amount on line 3.

gross estate, wherever located, on lines

2 and 3 of Schedule B.

Line 6. Use line 6 to enter the

Line 4 and Line 5. To determine the

following deductions.

tentative tax on the amount on line 2 (to

Schedule B. Taxable Estate

Charitable deduction. Unless a

be entered on line 4) and the tentative

treaty allows otherwise, you may take a

tax on the amount on line 3 (to be

For the line 5 deduction to be

charitable deduction only if the transfer

entered on line 5), use Table A in the

allowed, you must complete

was to a domestic entity or for use in

version of the Instructions for Form 706

lines 1 through 4 and document

CAUTION

the United States as described in the

that corresponds to the decedent’s date

the amounts you include on lines 2

Instructions for Form 706.

of death.

and 4.

Attach Schedule O of Form 706. If

Line 7. Enter the unified credit. The

To document the line 2 amount,

you claim the deduction under a treaty,

unified credit is allowed for the smaller

attach a certified copy of the foreign

specify the applicable treaty and attach

of the line 6 amount or the maximum

death tax return; or if none was filed, a

a computation of the deduction.

unified credit. In general, the maximum

certified copy of the estate inventory

Marital deduction. Unless a treaty

unified credit is $13,000.

and the schedule of debts and charges

allows otherwise, you may only take a

that were filed with the foreign probate

For a citizen of a U.S. possession

marital deduction if the surviving

court or as part of the estate’s admin-

(section 2209), the maximum unified

spouse is a U.S. citizen or if the

istration proceedings. Supplement

credit is the greater of:

property passes to a qualified domestic

these documents with attachments if

•

$13,000 or

trust (QDOT) described in section

they do not set forth the entire gross

•

The product of $46,800 times a

2056A and an election is made on

estate outside the United States. If

fraction.

Schedule M of Form 706.

more proof is needed, you will be

notified.

Attach Schedule M of Form 706, and

The numerator of the fraction is the

a statement showing your computation

part of the gross estate located in the

To document the line 4 amount,

United States (line 1 of Schedule B),

of the marital deduction.

attach an itemized schedule. For each

and the denominator is the entire gross

expense or claim, specify the nature

See section 2518 for the rules

estate wherever located (line 3 of

and amount and give the creditor’s

governing disclaimers of interests

Schedule B).

name. Describe other deductions fully

in property.

and identify any particular property to

Line 7. You may take a deduction on

If the unified credit is affected by a

which they relate.

line 7 for death taxes (estate,

treaty, see section 2102(b)(3)(A). (At

Line 2. The amount on line 2 is the

inheritance, legacy, or succession

the time this form went to print, treaties

total value of the assets included in the

taxes) you paid to any state or the

with Australia, Canada, Finland,

entire gross estate that were located

District of Columbia on property listed in

France, Germany, Greece, Italy, Japan,

outside the United States. If you claim

Schedule A. To calculate the deduction

Norway, and Switzerland contained

deductions on line 5 of Schedule B, you

for state death taxes, use the formula

provisions to which section

must also document the amount you

below. Enter the result on line 7.

2102(b)(3)(A) applies.)

-4-

Instructions For Form 706-Na - United States Estate (And Generation-Skipping Transfer) Tax Return - Internal Revenue Service - 2008 Page 4

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