Instructions For Form 706 - 2016 Page 2
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54Improvement Act of 2015 (Public Law
resulting from DSUE amount received
spouse must affirmatively opt out of
114-41) was enacted. Section 2004 of
from a predeceased spouse.
portability. See Part 6—Portability of
the Act requires that certain estates
Portability of Deceased Spousal
Deceased Spousal Unused Exclusion,
report, both to the IRS and the recipient,
Unused Exclusion
Section A.
the estate tax value of each asset
1. Line 7 Worksheet in the
General Instructions
included in the gross estate within 30
instructions has been expanded to
days of filing Form 706 or earlier if the
include the calculation for cumulative
return is filed late. It also requires that
Purpose of Form
lifetime gifts on which tax was paid or
the basis of certain assets when sold or
payable. This amount is used in
The executor of a decedent's estate
otherwise disposed of must be
Section C of Part 6–Portability of
uses Form 706 to figure the estate tax
consistent with the basis (estate tax
Deceased Spousal Unused Exclusion
imposed by Chapter 11 of the Internal
value) of the asset when it was received
(DSUE).
Revenue Code. This tax is levied on the
by the beneficiary. Any estate required
2. Part 6—Portability of Deceased
entire taxable estate and not just on the
to file Form 706 under 6018(a) or
Spousal Unused Exclusion (DSUE) was
share received by a particular
6018(b) must also file Form 8971,
added to Form 706. The only action
beneficiary. Form 706 is also used to
Information Regarding Beneficiaries
required to elect portability of the DSUE
figure the generation-skipping transfer
Acquiring Property From a Decedent, to
amount, if any, is to file a timely and
(GST) tax imposed by Chapter 13 on
satisfy the new consistent basis
complete Form 706. In this Part,
direct skips (transfers to skip persons of
reporting requirement. Additional
taxpayers can opt out of electing to
interests in property included in the
guidance and other information
transfer any DSUE amount to a
decedent's gross estate).
regarding consistent basis reporting are
surviving spouse, calculate the amount
being developed. If you believe the new
Which Estates Must File
of DSUE to be transferred in the event
requirements impact this estate or its
of an election, and/or account for any
For decedents who died in 2016, Form
beneficiaries, please check
DSUE amount received from
706 must be filed by the executor of the
for additional
predeceased spouse(s).
estate of every U.S. citizen or resident:
information.
3. Line 9 of Part 2—Tax
a. Whose gross estate, plus
Closing letter procedure. Effective for
Computation was replaced with lines 9a
adjusted taxable gifts and specific
all estate tax returns filed on or after
through 9d to calculate the applicable
exemption, is more than
June 1, 2015, closing letters will not be
exclusion amount and applicable credit
$5,450,000; or,
issued unless requested by the
amount (formerly unified credit amount),
b. Whose executor elects to transfer
executor of the estate or the designated
factoring in any DSUE amount received
the DSUE amount to the surviving
power of attorney. To allow time for
from a predeceased spouse.
spouse, regardless of the size of the
processing, please wait at least four
decedent's gross estate. See
4. Executors of estates who are not
months after filing Form 706 to request
instructions for Part 6—Portability of
required to file Form 706 under section
a closing letter.
Deceased Spousal Unused
6018(a) but who are filing to elect
Exclusion and sections 2010(c)(4)
portability of DSUE amount to the
Instead of an estate tax closing letter,
and (c)(5).
surviving spouse are not required to
the executor of the estate may request
report the value of certain property
an account transcript, which reflects
To determine whether you must file a
eligible for the marital deduction under
transactions including the acceptance of
return for the estate under test “a”
section 2056 or 2056A or the charitable
Form 706 and the completion of an
above, add:
deduction under section 2055 under the
examination. Account transcripts are
special rule of Regulations section
1. The adjusted taxable gifts (as
available online to registered tax
20.2010-2(a)(7)(ii). However, the value
defined in section 2503) made by the
professionals using the Transcript
of those assets must be estimated and
decedent after December 31, 1976;
Delivery System (TDS) or to authorized
included in the total value of the gross
2. The total specific exemption
representatives making requests using
estate. The special rule does not apply
allowed under section 2521 (as in effect
Form 4506-T. Specific instructions are
to assets whose valuation is required for
before its repeal by the Tax Reform Act
available for requesting online
eligibility under section 2032, 2032A,
of 1976) for gifts made by the decedent
transcripts using the TDS or hardcopy
2652(a)(3), 6166 or other provision of
after September 8, 1976; and
transcripts using Form 4506 T at
the Code or Regulations.
Transcripts in Lieu of Estate Tax Closing
3. The decedent's gross estate
A timely and complete Form 706
Letters. For questions about estate tax
valued as of the date of death.
must be filed by the executor of any
closing letter requests, call (866)
estate who intends to transfer the DSUE
Gross Estate
699-4083 or see the
Frequently Asked
amount to the decedent's surviving
Questions on Estate Tax
at IRS.gov.
The gross estate includes all property in
spouse, regardless of the amount of the
which the decedent had an interest
gross estate. See instructions for Part
Reminders
(including real property outside the
6—Portability of Deceased Spousal
United States). It also includes:
Executors must provide
Unused Exclusion, later.
Certain transfers made during the
documentation of their status.
Filing a timely and complete Form
decedent's life without an adequate and
The credit for transfers made by
706 with a DSUE amount will be
full consideration in money or money's
lifetime gift is reunified with the credit
considered an election to transfer the
worth,
against transfers made at death. The
DSUE amount to the surviving spouse.
Annuities,
applicable credit amount for 2016 is
An executor of an estate who files a
The includible portion of joint estates
$2,125,800 (based on the basic
Form 706 that does not elect to transfer
with right of survivorship (see
exclusion amount of $5,450,000). This
the DSUE amount to the surviving
instructions for Schedule E),
does not include any applicable credit
-2-
General Instructions
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