Instructions For Form 706-Qdt - Department Of The Treasury (Page 2 of 6) in pdf

following the date of death. You must

penalties provided for erroneous or

to using only one or two of the

also report on that return all reportable

false returns.

arrangements.

distributions made during the calendar

The trustee/designated filer who files

Assets of $2 Million or Less

year in which the surviving spouse died.

the return must, in every case, sign the

This rule may result in a return being

If the estate tax value of the assets

declaration on page 1 under penalties

due before April 15. For example, if the

passing to the QDOT is $2 million or

of perjury. If you pay someone to

surviving spouse died on June 12,

less (determined without regard to any

prepare the return, that person must

2006, Form 706-QDT would be due

indebtedness), the trust instrument

also sign the return at the bottom of

March 12, 2007, and must include all

must require that the trust meet at least

page 1.

reportable distributions made during

one of the following conditions at all

2006.

Supplemental

times during the term of the QDOT:

•

That no more than 35% of the fair

If the trust ceases to qualify as a

Documents

market value of trust assets,

QDOT, you must file Form 706-QDT

determined annually on the last day of

You must attach a copy of the trust

within 9 months of the date on which

the taxable year of the trust, will consist

instrument to the first Form 706-QDT

the trust ceased to qualify. You must

of real property located outside the

filed for the trust. You do not need to

include on that return any reportable

United States; or

attach a copy of the trust to any

distributions made during the calendar

•

That the trust will meet the

subsequent filings of Form 706-QDT.

year of the failure to qualify.

requirements described above for

If you are filing the return due to the

Use Form 4768 to apply for an

QDOTs with assets in excess of

death of the surviving spouse, attach a

automatic 6-month extension of time to

$2 million.

copy of the death certificate.

file Form 706-QDT. Check the “Form

For this purpose, if more than one

706-QDT” box in Part II of Form 4768.

Penalties

QDOT is established for the benefit of

Note. An extension of time to file does

the surviving spouse, the value of all of

Section 6651 provides penalties for

not extend the time to pay the tax.

the QDOTs is aggregated in

both late filing and for late payment

determining whether the $2 million

unless there is reasonable cause for

Where To File

threshold is exceeded.

the delay. The law also provides

File Form 706-QDT at the following

penalties for willful attempts to evade

Personal Residence

address:

payment of tax.

For the purpose of (1) figuring the $2

Section 6662 provides penalties for

Internal Revenue Service Center

million threshold, and (2) determining

underpayment of estate taxes which

Cincinnati, OH 45999

the amount of any bond or letter of

exceed $5,000 that are attributable to

credit, the executor of the decedent’s

valuation understatements. See

Paying the Tax

estate can elect to exclude up to

sections 6662(g) and (h) for more

$600,000 in value of real property that

Generally, the QDOT estate tax is due

details.

meets the following requirements:

by April 15 of the year following the

•

It is used by or held for the use of the

calendar year in which taxable

Security for Payment of

surviving spouse as a personal

distributions were made. However, if

the Tax

residence,

the surviving spouse died during the

•

It is owned directly by the QDOT, and

year or if the trust ceased to qualify as

•

It passed or was treated as passing

a QDOT during the year, the tax on

Assets in Excess of $2

to the QDOT under the rules for the

those events and on any taxable

Million

marital deduction when the surviving

distributions occurring during that

If the estate tax value of the assets

spouse is not a U.S. citizen (section

calendar year is due within 9 months

passing to the QDOT exceeds $2

2056(d)(2)(B)).

following the date of death or the failure

million (determined without regard to

to qualify.

The $600,000 can include the value

any indebtedness), the trust instrument

of any related furnishings.

If the QDOT qualifies, you may elect

must require that the trust meet at least

under section 6166 to pay the tax in

Either election may have been made

one of the following conditions at all

installments. You may make either a

by the executor on the estate tax return

times during the term of the QDOT:

protective or final election by checking

•

for the decedent’s estate. The election

At least one U.S. trustee must be a

“Yes” on line 3 of Part II — Elections by

to exclude the personal residence

bank as defined in section 581,

the Trustee/Designated Filer, and

•

amount from the amount of the bond or

The U.S. trustee must furnish a bond

attaching the required statements. See

letter of credit can also be made

in favor of the Internal Revenue Service

the instructions under Line 3.

prospectively by the U.S. trustee by

in an amount equal to 65% of the fair

Installment Payments on page 4 for

attaching a statement to Form 706-QDT

market value of the trust assets, or

•

additional information.

claiming the exclusion. You can also

The U.S. trustee must furnish an

cancel this election whether made by

irrevocable letter of credit issued by a

Make the check payable to “United

the executor or by a trustee, by

bank in an amount equal to 65% of the

States Treasury.” Write the surviving

attaching such a statement to Form

fair market value of the trust assets.

spouse’s social security number (or

706-QDT.

individual taxpayer identification

The trust instrument may also meet

number (ITIN), if applicable) and “Form

this requirement by specific reference

Filing a Bond or Letter of

706-QDT” on the check to assist us in

to the applicable paragraph of

Credit

posting it to the proper account.

Regulations section 20.2056A-2(d).

If the bond or letter of credit

The QDOT may alternate between

Signature

arrangement is selected, the executor

any of these arrangements provided

must have filed the bond or letter of

If the trustee is filing the return and

that one of the arrangements is

credit with the Form 706 or 706-NA on

there is more than one trustee listed, all

operative at any given time. The QDOT

which the QDOT election is made.

listed trustees must verify and sign the

may give the trustee the discretion to

return. All trustees are responsible for

use any one of the security

The U.S. trustee must provide a

the return as filed and are liable for

arrangements, or may limit the trustee

written statement with the bond or letter

-2-

Instructions For Form 706-Qdt - Department Of The Treasury Page 2

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