How to Complete Part 5 of Estate Form 706
6 of 8 in Series: The Essentials of Completing the Estate Tax Return (Form 706)
Part 5 of Form 706 is used to summarize the gross estate by carrying forward the asset totals from individual Schedules A through I and the deductions from Schedules J through U. This summarizing process is called recapitulation. The probate inventory (which lists all of the assets that the decedent owned outright) can be a helpful resource for completing many of the parts and schedules on Form 706.
On line 17 of Part 5, enter the amount of allowable deductions, which is most likely the same amount as line 16. One exception: instances where the line 16 amount is greater than the value of the property subject to claims. In this case, enter either the value of the property subject to claims or the amount actually paid at the time you file the return, whichever is greater.
Unfortunately, you’re not allowed to take a deduction for an amount you’re not required to pay (because you don’t have enough property to pay it), unless you actually do pay that amount before filing the return.
Be sure to pay all deductible amounts that you aren’t paying from property subject to claims before you file the return so that you can deduct them.
If you’re dealing with a larger estate, the probate inventory is a wonderful place to start compiling a list of the assets that need to be included on the 706. The inventory lists all the assets the decedent owned outright, including any real estate.
Of course, the 706 also includes assets owned jointly, life insurance payments, and assets held in certain trusts, but the inventory often includes smaller items, like household furnishings, that you may otherwise forget.