Instructions For Form 706 - 2016 Page 40
ADVERTISEMENT
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54Section 2014(g) provides that for credits
on items 21 and 22 of Part
tax on prior transfers, it will be
for foreign death taxes, each U.S.
5—Recapitulation.
necessary to complete Schedule Q
possession is deemed a foreign
before completing Schedule P.) For
Item 3. Enter the value of the property
country.
examples of computation of credits
situated in the foreign country that is
under the treaties, see the applicable
subjected to the foreign taxes and
Convert death taxes paid to the
regulations.
included in the gross estate, less those
foreign country into U.S. dollars by
portions of the deductions taken on
Computation of credit in cases
using the rate of exchange in effect at
Schedules M and O that are attributable
where property is situated outside
the time each payment of foreign tax is
to the property.
both countries or deemed situated
made.
within both countries. See the
Item 4. Subtract any credit claimed on
If a credit is claimed for any foreign
appropriate treaty for details.
line 15 for federal gift taxes on pre-1977
death tax that is later recovered, see
gifts (section 2012) from line 12 of Part
Regulations section 20.2016-1 for the
Schedule Q—Credit for
2—Tax Computation, and enter the
notice required within 30 days.
Tax on Prior Transfers
balance at item 4 of Schedule P.
Limitation Period
Credit Under Treaties
General
The credit for foreign death taxes is
If you are reporting any items on this
Complete Schedule Q and file it with the
limited to those taxes that were actually
return based on the provisions of a
return if you claim a credit on Part
paid and for which a credit was claimed
death tax treaty, you may have to attach
2—Tax Computation, line 14.
within the later of 4 years after the filing
a statement to this return disclosing the
of the estate tax return, before the date
The term transferee means the
return position that is treaty based. See
of expiration of any extension of time for
decedent for whose estate this return is
Regulations section 301.6114-1 for
payment of the federal estate tax, or 60
filed. If the transferee received property
details.
days after a final decision of the Tax
from a transferor who died within 10
Court on a timely filed petition for a
In general. If the provisions of a treaty
years before, or 2 years after, the
redetermination of a deficiency.
apply to the estate of a U.S. citizen or
transferee, a credit is allowable on this
resident, a credit is authorized for
Credit Under the Statute
return for all or part of the federal estate
payment of the foreign death tax or
tax paid by the transferor's estate for the
For the credit allowed by the statute, the
taxes specified in the treaty. Treaties
transfer. There is no requirement that
question of whether particular property
with death tax conventions are in effect
the property be identified in the estate of
is situated in the foreign country
with the following countries: Australia,
the transferee or that it exist on the date
imposing the tax is determined by the
Austria, Canada, Denmark, Finland,
of the transferee's death. It is sufficient
same principles that would apply in
France, Germany, Greece, Ireland, Italy,
for the allowance of the credit that the
determining whether similar property of
Japan, Netherlands, Norway, South
transfer of the property was subjected to
a nonresident not a U.S. citizen is
Africa, Switzerland, and the United
federal estate tax in the estate of the
situated within the United States for
Kingdom.
transferor and that the specified period
purposes of the federal estate tax. See
A credit claimed under a treaty is in
of time has not elapsed. A credit may be
the instructions for Form 706-NA.
general figured on Schedule P in the
allowed for property received as the
Computation of Credit Under
same manner as the credit is figured
result of the exercise or nonexercise of
the Statute
under the statute with the following
a power of appointment when the
principal exceptions:
property is included in the gross estate
Item 1. Enter the amount of the estate,
The situs rules contained in the treaty
of the donee of the power.
inheritance, legacy, and succession
apply in determining whether property
taxes paid to the foreign country and its
was situated in the foreign country;
If the transferee was the transferor's
possessions or political subdivisions,
The credit may be allowed only for
surviving spouse, no credit is allowed
attributable to property that is:
payment of the death tax or taxes
for property received from the transferor
Situated in that country,
specified in the treaty (but see the
to the extent that a marital deduction
Subjected to these taxes, and
instructions earlier for credit under the
was allowed to the transferor's estate for
Included in the gross estate.
statute for death taxes paid to each
the property. There is no credit for tax
The amount entered at item 1 should
political subdivision or possession of the
on prior transfers for federal gift taxes
not include any tax paid to the foreign
treaty country that are not directly or
paid in connection with the transfer of
country for property not situated in that
indirectly creditable under the treaty);
the property to the transferee.
country and should not include any tax
If specifically provided, the credit is
paid to the foreign country for property
If you are claiming a credit for tax on
proportionately shared for the tax
not included in the gross estate. If only a
prior transfers on Form 706-NA, you
applicable to property situated outside
part of the property subjected to foreign
should first complete and attach Part
both countries, or that was deemed in
taxes is both situated in the foreign
5—Recapitulation from Form 706 before
some instances situated within both
country and included in the gross
figuring the credit on Schedule Q from
countries; and
estate, it will be necessary to determine
Form 706.
The amount entered at item 4 of
the portion of the taxes attributable to
Schedule P is the amount shown on
that part of the property. Also, attach the
Section 2056(d)(3) contains specific
line 12 of Part 2—Tax Computation, less
computation of the amount entered at
rules for allowing a credit for certain
the total of the credits claimed for
item 1.
transfers to a spouse who was not a
federal gift taxes on pre-1977 gifts
U.S. citizen where the property passed
(section 2012) and for tax on prior
Item 2. Enter the value of the gross
outright to the spouse, or to a qualified
transfers (line 14 of Part 2—Tax
estate, less the total of the deductions
domestic trust.
Computation). (If a credit is claimed for
-40-
Part Instructions
ADVERTISEMENT
0 votes
Related Articles
Related forms
Related Categories
Parent category: Financial