Rev. August 2019
This document outlines the steps to file a protective claim for refund under IRS Form 706 Schedule PC for an estate. It includes instructions on what information is needed, how to complete each part of the form, and when to file. The form is used to preserve the estate's right to claim a refund based on the amount of an unresolved claim or expense that may not become deductible under section 2053 until after the limitation period ends.
Portability of DSUE amount is elected in Part 6, Section C.
Form 706 must be filed within 9 months after the date of death. If the estate tax owed is less than $2.6 million (indexed for inflation), the due date is October 15th, with an automatic extension until January 15th. For estates over this amount, a separate Form 706, Federal Estate Tax Return, must be filed within 9 months after the date of death.
All required schedules must be completed and attached to the return, including Schedule F (Estate Tax Return), Schedule D (Information about Transfers of Property Received from a Decedent), and any applicable Schedules R, R-1, or U.
Information required includes: name, SSN, address, executor or administrator name, and surviving spouse information if applicable.
Attachments include: death certificate, certified copy of the will, appraisals, copies of all trust documents where the decedent was a grantor or a beneficiary, Form 2848 or 8821 (if applicable), copy of any Form(s) 709 filed by the decedent, Line 7 Worksheet (if applicable), and Form 712 (if any policies of life insurance are included on the return).
The Applicable Credit Amount is the total amount that can be excluded from an estate for federal estate tax purposes. It is based on the decedent's relationship to the surviving spouse and any children or grandchildren (e.g., a married couple could have a total of $22,400,000 in 2021). If the estate includes assets that are not included in this amount, such as non-probate assets, estate taxes may be owed on any excess amount.
There are several taxable gift amounts in Form 706. These include the Annual Exclusion Amount ($15,000 per recipient in 2021), the Lifetime Exemption (indexed for inflation and $11.7 million in 2021), and the Unified Credit (up to $1.36 million in 2021). The Total Lifetime Gifts cannot exceed this amount, or estate taxes may be owed on any excess amount.
There are several valuation rules in Form 706. These include the Special-Use Valuation (for certain qualified conservation easements), the Automatic Valuation Modifier (for certain family-owned businesses and farms), and various rule sets for transfers between spouses, transfers due to death, and certain terminable interests.
Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, is a form used to report the estate of a deceased person to the Internal Revenue Service (IRS). It is used to calculate any federal estate tax owed and to determine if any generation-skipping transfer (GST) tax is due.
The Unified Credit is the total amount that can be excluded from an estate for federal estate tax purposes. It is adjusted annually for inflation and was $1.36 million in 2021. If the decedent's lifetime gifts exceed this amount, the estate may owe estate tax on the excess amount. However, there is a marital deduction of up to $1.36 million (indexed for inflation) that can be used by a surviving spouse, reducing or eliminating estate taxes owed.
Form 706 is one of Tax forms that are documents used to report information related to taxes to the relevant tax authority. There are various types of tax forms, including federal, state, and local tax forms, which can vary depending on the taxpayer's circumstances and location.
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