How to Complete Lines 4–8 of Part 4: Estate Form 706

You only began telling the IRS about the decedent in Part 1. Now you really have a chance to fill out the picture in Part 4. The first item under Part 4: General Information on Page 2 of the return is the authorization to receive confidential tax information, act as the estate’s representative before the IRS, and make written or oral presentations on behalf of the estate.

If the return was prepared by an attorney, accountant, or Enrolled Agent, he or she signs it and fills out all the necessary information. Remember, only one such person can be appointed here.

If you want to appoint more than one, or if you want to appoint someone with the power to enter into closing agreements with the IRS regarding the estate and the 706, use Form 2848, Power of Attorney and Declaration of Representative, instead.

  • Line 4: You must complete line 4 regardless of whether the decedent has a surviving spouse. For no spouse, simply enter “none” in line 4a and leave lines 4b and 4c blank. Otherwise, in line 4c, “Amount received,” enter the amount the surviving spouse actually receives. If exact amounts aren’t available, as with future interests, a reasonable estimate (for instance, from actuarial tables) can be used.

  • Line 5: Include all individuals (other than the surviving spouse), trusts, and estates that receive more than $5,000 in benefits from the estate either directly (as an heir, devisee, or legatee) or indirectly (for instance, as beneficiary of an insurance policy). Don’t include charities listed on Schedule O here. Include the following information about each entity:

    • Name.

    • Social Security or (for an estate or trust) taxpayer identification number (TIN) in the column headed “Identifying number.”

    • Relationship to the decedent in the column by that name (for example, “daughter” or “decedent’s revocable trust”).

    • Amount received in the column entitled “Amount.” Enter the amount each person or entity actually receives; if exact amounts aren’t available, use a reasonable estimate.

  • If the space provided isn’t large enough to include all the beneficiaries, create your own schedule based on the one in line 5 and include it as Page 5a to the return, referencing it in the schedule on the return itself.

    Underneath the individual beneficiaries, include a total for everyone who received less than $5,000 apiece and for all unascertainable beneficiaries. The total of all these distributions should approximately equal the gross estate less funeral and administrative expenses, debts and mortgages, charitable bequests, and federal estate and GST taxes.

  • Line 6: Check the appropriate “yes” or “no” box to indicate whether or not the estate is filing a protective claim for refund. If you will be filing a claim, complete and attach two copies of Schedule PC to the return for each claim.

    By filing Schedule PC, you preserve the estate’s right to a refund of estate taxes paid if a claim or expense which is the subject of controversy at the time you file the return later becomes deductible under IRC Section 2053.

  • *Line 7: Check the appropriate box to indicate whether the estate includes any qualified terminable interest property from a prior gift or estate under IRC Section 2044. If it does, show the assets on Schedule F. If the decedent was a surviving spouse, he or she may have received QTIP property for which the marital deduction was taken on either a 706 or a 709 from the predeceased spouse.

    If the decedent still retained an interest in the QTIP property as of death, it’s included in his or her estate even though the interest terminated at his or her death. Chapter 17 explains how to show this info on the return.

  • *Line 8: On line 8a, indicate whether the decedent ever filed gift tax returns, and if so, attach copies as exhibits. On line 8b, list the periods covered by the returns, and on line 8c, list the IRS offices where the gift tax returns were filed.

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