Instructions For Form 706 - United States Estate (And Generation-Skipping Transfer) Tax Return Page 50
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55Note. The written acknowledgment of
There are two means by which the
testamentary, letters of administration,
receipt does not constitute a
estate may notify the IRS of the
or similar documentation evidencing the
determination that all requirements for a
resolution of the uncertainty that
fiduciary's authority to file the protective
valid protective claim for refund have
deprived the estate of the deduction
claim for refund on behalf of the estate.
been met.
when Form 706 was filed. The estate
Include a copy of Form 56, Notice
may file a supplemental Form 706 with
Concerning Fiduciary Relationship, if it
In general, the claim will not be
an updated Schedule PC and including
has been filed.
subject to substantive review until the
each schedule affected by the
amount of the claim has been
allowance of the deduction under
Part 2. Claim Information
established. However, a claim can be
section 2053. Page 1 of Form 706
For a protective claim for refund to be
disallowed at the time of filing. For
should contain the notation
properly filed and considered, the claim
example, the claim for refund will be
“Supplemental Information—Notification
or expense forming the basis of the
rejected if:
of Consideration of Section 2053
potential section 2053 deduction must
The claim was not timely filed,
Protective Claim(s) for Refund” and
be clearly identified. Using the check
The claim was not filed by the
include the filing date of the initial notice
boxes provided, indicate whether you
fiduciary or other person with authority
of protective claim for refund. A copy of
are filing the initial claim for refund, a
to act on behalf of the estate,
the initial notice of claim also should be
claim for partial refund, or a final claim.
The acknowledgment of the penalties
submitted.
On the chart in Part 2, give the Form
of perjury statement (on page 1 of Form
Alternatively, the estate may notify
706 schedule and item number of the
706) was not signed, or
the IRS by filing an updated Form 843.
claim or expense. List any amounts
The claim is not adequately
Form 843 must contain the notation
claimed under exceptions for
described.
“Notification of Consideration of Section
ascertainable amounts (Regulations
2053 Protective Claim(s) for Refund,”
section 20.2053-1(d)(4)), claims and
If the IRS does not raise such a
including the filing date of the initial
counterclaims in related matters
defect when the claim is filed, it will not
notice of protective claim for refund, on
(Regulations section 20.2053-4(b)), or
be precluded from doing so in the later
page 1. A copy of the initial notice of
claims under $500,000 (Regulations
substantive review.
claim also must be submitted.
section 20.2053-4(c)). Provide all
The estate may be given an
relevant information as described
The estate should notify the IRS of
opportunity to cure any defects in the
including, most importantly, an
resolution within 90 days of the date the
initial notice by filing a corrected and
explanation of the reasons and
claim or expense is paid or the date on
signed protective claim for refund before
contingencies delaying the actual
which the amount of the claim becomes
the expiration of the limitations period in
payment to be made in satisfaction of
certain and no longer subject to
section 6511(a) or within 45 days of
the claim or expense. Complete
contingency, whichever is later.
notice of the defect, whichever is later.
columns E and F only if filing a notice of
Separate notifications must be
partial or final resolution. Show the
Related Ancillary Expenses
submitted for every section 2053
amount of ancillary or related expenses
protective claim for refund that was filed.
If a section 2053 protective claim for
to be included in the claim for refund
refund has been adequately identified
If the final section 2053 claim or
and indicate whether this amount is
on Schedule PC, the IRS will presume
expense involves multiple or recurring
estimated, agreed upon, or has been
that the claim includes certain expenses
payments, the 90-day period begins on
paid. Also show the amount being
related to resolving, defending, or
the date of the last payment. The estate
claimed for refund.
satisfying the claim. These ancillary
also may notify the IRS (not more than
expenses may include attorneys’ fees,
annually) as payments are being made
Note. If you made partial claims for a
court costs, appraisal fees, and
and possibly qualify for a partial refund
recurring expense, the amount
accounting fees. The estate is not
based on the amounts paid through the
presently claimed as a deduction under
required to separately identify or
date of the notice.
section 2053 will only include the
substantiate these expenses; however,
amount presently claimed, not the
Specific Instructions
each expense must meet the
cumulative amount.
requirements of section 2053 to be
Part 1. General Information
deductible.
Part 3. Other Schedules PC and
Complete Part 1 by providing
Notice of Final Resolution of
information that is correct and complete
Forms 843 Filed by the Estate
as of the time Schedule PC is filed. If
Claim
On the chart in Part 3, provide
filing an updated Schedule PC with a
information on other protective claims
When an expense that was the subject
supplemental Form 706 or as notice of
for refund that have been previously
of a section 2053 protective claim for
final resolution of the protective claim for
filed on behalf of the estate (if any),
refund is finally determined, the estate
refund, be sure to update the
whether on other Schedules PC or on
must notify the IRS that the claim for
information from the original filing to
Form 843. When the initial claim for
refund is ready for consideration. The
ensure that it is accurate. Be particularly
refund is filed, only information from
notification should provide facts and
careful to verify that contact information
Form(s) 843 need be included in Part 3.
evidence substantiating the deduction
(addresses and telephone numbers)
However, when filing a partial or final
under section 2053 and the resulting
and the reason for filing Schedule PC
claim for refund, complete Part 3 by
recomputation of the estate tax liability.
are indicated correctly. If the fiduciary is
including the status of all claims filed by
A separate notice of final resolution
different from the executor identified on
or on behalf of the estate, including
must be filed with the IRS for each
page 1 of Form 706 or has changed
those filed on other Schedules PC with
resolved section 2053 protective claim
since the initial notice of protective claim
Form 706. For each such claim, give the
for refund.
for refund was filed, attach letters
-50-
Part Instructions
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