Instructions For Form M706 - Estate Tax - Minnesota Department Of Revenue

General Information

(continued)

Reporting Federal Changes

If you received a closing letter, submit a

Claims for refund must be filed within 3½

copy to the department so the estate’s file

years from the due date for filing the return,

If the IRS changes or audits the estate’s

can be closed.

plus any extension of time granted for fil-

federal tax or you amend the federal return,

ing the return but only if filed within the

you must file an amended Minnesota estate

(M.S. 289A.38, subd. 7)

extended time. (M.S. 289A.40, subd. 1)

tax return with the department. The amended

If you fail to report the federal changes

Minnesota estate tax return is due no later

The estate will be paid interest on the

within 180 days as required, a 10 percent

than 180 days after you are notified of the

amount refunded. (M.S. 289A.56, subd. 3)

penalty will be assessed on any additional

federal changes or the date you filed the

tax. (M.S. 289A.60, subd. 24)

Income Tax Return for Estates

amended federal return.

If the estate’s assets generate $600 or more

Refund of Minnesota Tax

You must file an amended Minnesota estate

of Minnesota gross income, you must file

tax return even if the changes do not require

If you overpaid tax or the circumstances of

Form M2, Income Tax Return for Estates

you to amend the federal return. Complete

the estate have changed since the Minnesota

and Trusts, with the department.

a new Form M706 with the appropriate

estate tax return was filed and you believe

amended information, and check the box at

all or a portion of the tax already paid should

Form M2 corresponds to the federal Form

the top of the form to indicate that it is an

be refunded, complete a new Form M706

1041, United States Income Tax Return for

amended return. You must attach to your

Estates and Trusts, and is due April 15 or the

and check the box to show it is an amended

Form M706, a complete copy of the estate’s

return. Be sure to enter on line 14 any tax,

15th day of the fourth month following the

amended federal return or the correction

penalty and interest you’ve already paid.

end of the tax year.

notice you received from the IRS.

On line 19 enter the refund amount. (M.S.

289A.50, subd. 1)

Line Instructions

You Must First Complete

Executor(s)

from date of death) is not available. The

alternative value cannot be elected federally

Federal Form 706

Enter the name, address and Social Security

since there will not be a federal tax using

number of the appointed executor in the

You will need your federal return to

date of death value. Minnesota only allows

designated area on Form M706.

complete Form M706.

alternative valuation if it is elected federally.

If more than one executor was appointed by

Elections. Elections provided by the Internal

In accordance with changes made during

the Probate Court or Probate Registrar, you

Revenue Code are only available for Min-

the 2017 Minnesota legislative session, the

must attach a separate sheet of paper listing

nesota purposes if the estate files a federal

Minnesota estate tax exclusion and filing

all of the other appointed executors’ names,

estate tax return and makes the election at

requirement will be raised incrementally

addresses and Social Security numbers.

the federal level. These elections include

over the next four years.

the special land use valuation election (IRC

All appointed executors must sign the com-

If you are not required to file a federal estate

section 2032A) and qualified domestic trust

pleted Form M706.

tax return, you must obtain and complete a

election (IRC section 2056A).

2017 federal Form 706 and instructions to

Lines 1–13

A copy of the IRS closing letter must be

correctly determine your Minnesota estate

provided for all estates that claim a federal

tax. You must attach a copy of this complet-

Line 1

election before a Minnesota closing letter

ed federal return and all supporting sched-

Enter the value from the federal Form 706

will be issued.

ules when you file your Form M706.

line(3)(a).

Deductions. Deductions for administra-

Qualified Terminable Interest Property

If the federal taxable estate includes a

tive expenses can only be claimed on the

(QTIP). Minnesota recognizes a federal QTIP

covered retirement plan (PERA) exempt

Minnesota estate tax return if the expenses

election only if it was made on a federally

from state estate tax under M.S. 356.401,

are not claimed as a deduction on any of the

filed 2017 Form 706. Minnesota allows a

exclude the value of the covered retirement

estate’s federal fiduciary income tax returns.

Minnesota-only QTIP election for qualify-

plan from the M706 Line1 and provide an

(M.S. 291.03)

ing property. This election is claimed by

attachment identifying the federal schedule

completing Worksheet A on the M706 form

Qualified Small Business and

and item number(s) of any qualifying

page 3 and inserting a value onto Line 7

plan(s).

Farm Property Deduction

of the M706 form page 1. NOTE: The

Minnesota-only QTIP election does not

If the estate is electing to claim the qualified

include amounts deducted pursuant to a

small business and farm property deduction,

federal QTIP election.

complete and attach Schedule M706Q, and

check the box above line 1. (M.S. 291.005,

Valuation. If the estate does not have a

subd. 1 and 291.03, subd. 1)

federal filing requirement, the estate must

use the date of death values of assets since

alternative value (value of asset six months

Continued

Instructions For Form M706 - Estate Tax - Minnesota Department Of Revenue - 2017 Page 4

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