Instructions For Form 706 - 2016 Page 34

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Schedule L—Net Losses
deductible on Schedule K. For these
under section 2053(d) rather than a
claims to be deductible, all of the
credit under section 2014, the deduction
During Administration and
following conditions must be met:
is subject to the limitations described in
Expenses Incurred in
The decedent and the decedent's
section 2053(d) and its regulations. If
Administering Property
spouse must have entered into a written
you have difficulty figuring the
agreement relative to their marital and
deduction, you may request a
Not Subject to Claims
property rights.
computation of it. Send your request
The decedent and the spouse must
within a reasonable amount of time
Use Schedule PC to make a
have been divorced before the
before the due date of the return to:
protective claim for refund for
!
decedent's death and the divorce must
expenses which are not
CAUTION
Department of the Treasury
have occurred within the 3-year period
currently deductible under section 2053.
Commissioner of Internal Revenue
beginning on the date 1 year before the
For such a claim, report the expense on
Washington, DC 20224.
agreement was entered into. It is not
Schedule L but without a value in the
required that the agreement be
last column.
approved by the divorce decree.
Complete Schedule L and file it with
The property or interest transferred
Attach to your request a copy of the will
the return if you claim deductions on
under the agreement must be
and relevant documents, a statement
either item 19 or item 20 of Part
transferred to the decedent's spouse in
showing the distribution of the estate
5—Recapitulation.
under the decedent's will, and a
settlement of the spouse's marital rights.
computation of the state or foreign
Net Losses During
You may not deduct a claim made
death tax showing any amount payable
Administration
against the estate by a remainderman
by a charitable organization.
relating to section 2044 property.
You may deduct only those losses from
Mortgages and Liens
Section 2044 property is described in
thefts, fires, storms, shipwrecks, or
the instructions to line 7 in Part
other casualties that occurred during the
Under “Mortgages and Liens” list only
4—General Information.
settlement of the estate. Deduct only the
obligations secured by mortgages or
amount not reimbursed by insurance or
other liens on property included in the
Include in this schedule notes
otherwise.
gross estate at its full value or at a value
unsecured by mortgage or other lien
that was undiminished by the amount of
and give full details, including:
Describe in detail the loss sustained
the mortgage or lien. If the debt is
Name of payee,
and the cause. If you received
enforceable against other property of
Face and unpaid balance,
insurance or other compensation for the
the estate not subject to the mortgage
Date and term of note,
loss, state the amount collected. Identify
or lien, or if the decedent was personally
Interest rate, and
the property for which you are claiming
liable for the debt, include the full value
Date to which interest was paid
the loss by indicating the schedule and
of the property subject to the mortgage
before death.
item number where the property is
or lien in the gross estate under the
included in the gross estate.
Include the exact nature of the claim
appropriate schedule and deduct the
If you elect alternate valuation, do not
as well as the name of the creditor. If the
mortgage or lien on the property on this
deduct the amount by which you
claim is for services performed over a
schedule.
reduced the value of an item to include it
period of time, state the period covered
However, if the decedent's estate is
in the gross estate.
by the claim.
not liable, include in the gross estate
Example. Edison Electric
Do not deduct losses claimed as a
only the value of the equity of
Illuminating Co., for electric service
deduction on a federal income tax return
redemption (or the value of the property
during December 2015, $150.
or depreciation in the value of securities
less the amount of the debt), and do not
or other property.
deduct any portion of the indebtedness
If the amount of the claim is the
Expenses Incurred in
on this schedule.
unpaid balance due on a contract for the
purchase of any property included in the
Administering Property Not
Notes and other obligations secured
gross estate, indicate the schedule and
Subject to Claims
by the deposit of collateral, such as
item number where you reported the
stocks, bonds, etc., also should be
You may deduct expenses incurred in
property. If the claim represents a joint
listed under “Mortgages and Liens.”
administering property that is included
and separate liability, give full facts and
in the gross estate but that is not subject
explain the financial responsibility of the
Description
to claims. Only deduct these expenses
co-obligor.
Include under the “Description” column
if they were paid before the section
Property and income taxes. The
the particular schedule and item number
6501 period of limitations for
deduction for property taxes is limited to
where the property subject to the
assessment expired.
the taxes accrued before the date of the
mortgage or lien is reported in the gross
The expenses deductible on this
decedent's death. Federal taxes on
estate.
schedule are usually expenses incurred
income received during the decedent's
Include the name and address of the
in the administration of a trust
lifetime are deductible, but taxes on
mortgagee, payee, or obligee, and the
established by the decedent before
income received after death are not
date and term of the mortgage, note, or
death. They may also be incurred in the
deductible.
other agreement by which the debt was
collection of other assets or the transfer
Keep all vouchers or original records
established. Also include the face
or clearance of title to other property
for inspection by the IRS.
amount, the unpaid balance, the rate of
included in the decedent's gross estate
Allowable death taxes. If you elect to
interest, and date to which the interest
for estate tax purposes, but not included
take a deduction for foreign death taxes
was paid before the decedent's death.
in the decedent's probate estate.
-34-
Part Instructions

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