Paperwork Reduction Act Notice.
We ask for the information on this form to carry out the Internal
Revenue laws of the United States. You are required to give us the
information. We need it to ensure that you are complying with these
laws and to allow us to figure and collect the right amount of tax.
You are not required to provide the information requested on a form
that is subject to the Paperwork Reduction Act unless the form
displays a valid OMB control number. Books or records relating to a
form or its instructions must be retained as long as their contents
may become material in the administration of any Internal Revenue law.
Generally, tax returns and return information are confidential as
required by section 6103.
The time needed to complete and file this form will vary depending
on individual circumstances. The estimated average time is:
Recordkeeping
|
1 hr., 38 min.
|
Learning about the law or the form
|
41 min.
|
Preparing the form
|
1 hr., 58 min.
|
Copying, assembling, and sending the form to the IRS
|
55 min.
|
If you have comments concerning the accuracy of these time
estimates or suggestions for making this form simpler, we would be
happy to hear from you. You can write to the Tax Forms Committee,
Western Area Distribution Center, Rancho Cordova, CA 95743-0001.
DO NOT send the tax form to this address. Instead, see
Where To File on page 1.
Form 706.
In order to complete this return, you must obtain Form 706,
United States Estate (and Generation-Skipping Transfer) Tax
Return, and its separate instructions. You must attach schedules from
Form 706 if you intend to claim a marital deduction, a charitable
deduction, a qualified conservation easement exclusion or a credit for
tax on prior transfers, or if you answer Yes to question 5, 7,
8, 9, or 11 in Part III. You will need the instructions to Form 706 to
explain how to value stocks and bonds. Make sure that you obtain the
revision of Form 706 that is applicable for the date of the decedent's
death.
General Instructions
Purpose of Form
Form 706-NA is used to compute estate and generation-skipping
transfer (GST) tax liability for nonresident alien decedents. The
estate tax is imposed on the transfer of the decedent's taxable estate
rather than on the receipt of any part of it.
For information about transfer certificates for U.S. assets, write
to the Internal Revenue Service, Estate Tax Group, 950 L'Enfant Plaza,
SW, Washington, DC 20024.
Definitions
The following terms are used often in these instructions:
- The United States means the 50 states and the
District of Columbia.
- A nonresident alien decedent means a decedent who
is neither domiciled in nor a citizen of the United States at the time
of death. For purposes of this form, a citizen of a U.S. possession is
not a U.S. citizen.
- A U.S. expatriate generally is one who lost U.S.
citizenship within 10 years before the date of death, and for whom a
principle purpose in doing so was to avoid U.S. taxes. This also
applies to certain long-term residents (as defined in section 877(e))
of the United States who lost residency on or after February 6, 1995.
If the decedent's average annual net income tax liability or net worth
exceeds certain limits, the decedent is presumed to have a principle
purpose of avoiding U.S. taxes (section 877(a)). The executor has the
burden of proving otherwise. Be sure to see the instructions for and
then to answer Question 6 of Part III.
Who Must File
The executor must file Form 706-NA if the date of death value of
the decedent's gross estate located in the United States under
Internal Revenue Code situs rules exceeds the filing limit. The filing
limit is $60,000 reduced by the sum of: (1) the gift tax
specific exemption (section 2521) allowed with respect to gifts made
between September 9, 1976, and December 31, 1976, inclusive, and
(2) the total taxable gifts made after December 1976, that
are not included in the gross estate.
The executor is the personal representative, executor,
executrix, administrator, or administratrix of the deceased person's
estate. If no executor is appointed, qualified, and acting in the
United States, every person in actual or constructive possession of
any of the decedent's property must file a return. If more than one
person must file, it is preferable that they join in filing one
complete return. Otherwise, each must file as complete a return as
possible, including a full description of the property and each
person's name who holds an interest in it.
When To File
File Form 706-NA within 9 months after the date of death unless an
extension of time to file was granted. In that case, attach a copy of
the approved Form 4768, Application for Extension of Time
To File a Return and/or Pay U.S. Estate (and Generation-Skipping
Transfer) Tax.
Where To File
Send Form 706-NA to the Internal Revenue Service Center,
Philadelphia, PA 19255.
Penalties
The law provides for penalties for both late filing of returns and
late payment of tax unless there is reasonable cause for the delay.
There are also penalties for valuation understatements that cause an
underpayment of tax and for a willful attempt to evade or defeat
payment of tax.
Death Tax Treaties
Death tax treaties (or, for Canada, an income tax treaty protocol
with death tax provisions) are in effect with the following countries:
Australia
|
Italy
|
Austria
|
Japan
|
Canada
|
Netherlands
|
Denmark
|
Norway
|
Finland
|
Republic of South Africa
|
France
|
Sweden
|
Germany
|
Switzerland
|
Greece
|
United Kingdom
|
Ireland
|
|
If you are reporting any items on this return based on the
provisions of a death tax treaty or protocol, you may have to attach a
statement to this return disclosing the return position that is treaty
based. See Regulations section 301.6114-1 for details.
Specific Instructions
Attachments
If the decedent died testate, attach a certified copy of the will
to Form 706-NA. If you are unable to obtain a certified copy, attach a
copy of the will and explain why it could not be certified.
For closely held or inactive corporate stock, attach the balance
sheets, particularly the one nearest the valuation date, and
statements of the net earnings or operating results and dividends paid
for each of the 5 preceding years. Attach any other documents, such as
appraisal lists, needed for explanation. Also attach copies of all
available U.S. gift tax returns the decedent filed. Other documents
may be required as explained in these instructions.
Attach an English translation to all documents in other languages.
How To Complete Form 706-NA
First, enter the decedent's name and the other information called
for in Part I. Then answer all of the questions in Part III.
The estate tax is imposed on the decedent's gross estate in the
United States, reduced by allowable deductions. Compute the gross
estate in the United States on Schedule A. Reduce the Schedule A total
by the allowable deductions to derive the taxable estate on Schedule
B, and figure the tax due using the Tax Computation schedule (Part
II).
Part III - General Information
Question 6a.
If you answer Yes, please attach a statement listing the
citizenship of the decedent's parents; whether the decedent became a
U.S. citizen through a naturalization proceeding in the United States;
and when the decedent lost U.S. citizenship or residency.
Question 6b.
If you answer Yes, but maintain that avoiding U.S. taxes was
not a principle purpose for the decedent's loss of citizenship or
residency, attach documents to sustain your position. See
Definitions on page 1.
Question 9.
A general power of appointment means any power of appointment
exercisable in favor of the decedent, the decedent's estate, the
decedent's creditors, or the creditors of the decedent's estate, and
includes the right of a beneficiary to appropriate or consume the
principal of a trust. For a complete definition, see section 2041.
Schedule A
Before you complete Schedule A, you must determine what assets are
included in the decedent's entire gross estate, wherever located.
However, list on Schedule A only those assets included in the entire
gross estate that are located in the United States. (Enter the total
value of assets located outside the United States on line 2 of
Schedule B.)
The entire gross estate is figured the same way for a
nonresident alien decedent as for a U.S. citizen or resident. It
consists of all property the decedent beneficially owned, wherever
located, and includes the following property interests:
- Generally, the full value of property the decedent owned at
the time of death as a joint tenant with right of survivorship (but if
the surviving spouse is a U.S. citizen, then only half the value of
property held by the decedent and surviving spouse either as joint
tenants with right of survivorship or as tenants by the entirety). For
exceptions, see the instructions on the reverse side of Schedule E,
Form 706.
- Property the decedent and a surviving spouse owned as
community property to the extent of the decedent's interest in the
property under applicable state, possession, or foreign law.
- A surviving spouse's dower or curtesy interest and all
substitute interests created by statute.
- Proceeds of insurance on the decedent's life, generally
including proceeds receivable by beneficiaries other than the
estate.
- Several kinds of transfers the decedent made before
death.
- Property in which the decedent either held a general power
of appointment at the time of death, or used or released this power in
certain ways before death.
- Certain annuities to surviving beneficiaries.
For additional information concerning joint tenancies, tenancies by
the entirety, annuities, life insurance, transfers during life, and
powers of appointment, see the Instructions for Form 706.
Enter on Schedule A all of the assets that meet both the
following tests:
- They are included in the entire gross estate
and
- They are located in the United States.
Unless a treaty provides otherwise (see Death Tax Treaties
on page 1) use the following rules to determine whether assets are
located in the United States:
- Real estate and tangible personal property are located in
the United States if they are physically located there. An exception
is made for works of art imported into the United States solely for
public exhibition.
- No matter where stock certificates are physically located,
stock of corporations organized in or under U.S. law is property
located in the United States, and all other corporate stock is
property located outside the United States.
- Proceeds of insurance policies on the decedent's life are
property located outside the United States.
- Debt obligations are generally property located in the
United States if they are debts of a U.S. citizen or resident, a
domestic partnership or corporation, a domestic estate or trust, the
United States, a state or state's political subdivision, or the
District of Columbia.
- The following debt obligations are generally treated as
located outside the United States:
- Debt obligations (whether registered or unregistered) issued
after July 18, 1984 if the interest on them would be eligible for the
exemption from tax under section 871(h)(1) were such interest received
by the decedent at the time of his death. However, if the debt earns
contingent interest, some or all of it may be considered property
located in the United States (section 2105(b)).
- A debt obligation of a domestic corporation if the interest
from it (had it been received at the time of death) would have been
treated as income from outside the United States because the
corporation derived less than 20% of its gross income from sources in
the United States during its 3 tax years before the decedent's death
(section 861(a)(1)(A)).
- Certain short-term original issue discount debt obligations.
See section 2105(b)(4) for details.
- The following deposits are treated as located outside the
United States if they are not effectively connected with
conducting a trade or business within the United States:
- A deposit with a U.S. bank or a U.S. banking branch of a
foreign corporation.
- A deposit or withdrawable account with a savings and loan
association chartered and supervised under Federal or state
law.
- An amount held by a U.S. insurance company under an
agreement to pay interest.
- A deposit in a foreign branch of a U.S. bank.
If an asset is included in the total gross estate because the
decedent owned it at the time of death, apply these location rules as
of the date of the decedent's death. However, if an asset is included
in the decedent's total gross estate under one of the transfer
provisions (sections 2035, 2036, 2037, and 2038), it is treated as
located in the United States if it fulfills these rules either at the
time of the transfer or at the time of death. For example, if an item
of tangible personal property was physically located in the United
States on the date of a section 2038 transfer but had been moved
outside the United States at the time of the decedent's death, the
item would be considered still located in the United States and should
be listed on Schedule A.
Describe the property on Schedule A in enough detail to enable the
IRS to identify it. To determine the fair market value of stocks and
bonds, use the rules in the instructions for Schedule B of Form 706.
In descriptions of stock, include:
- The corporation's name;
- The number of shares;
- Whether common or preferred (if preferred, what
issue);
- The par value (when needed for identification);
- 9-digit CUSIP number; and
- The quotation at which reported.
Give the main exchange for listed stock; for unlisted stock,
give the post office address of the main business office of the
corporation, the state in which incorporated, and the incorporation
date.
In bond descriptions, include:
- The quantity and denomination;
- Obligor's name;
- Maturity date;
- Interest rate;
- Each date when interest is payable;
- 9-digit CUSIP number; and
- Series number (if more than one issue).
Give the exchange where the bond is listed; if it is
unlisted, give the corporation's main business office.
If you are required to file Schedule E, G, or H from Form 706, you
need not enter the assets reported on those schedules on Schedule A of
this Form 706-NA. Instead, attach the schedules to Form 706-NA, in
column (b) enter Total from Schedule _ _ _ _ _, Form 706, and
enter the total values from the attached schedules in either column
(d) or (e).
If the decedent was a U.S. expatriate, the decedent is treated as
owning a prorated share of the U.S. property held by a foreign
corporation in which he or she directly owned at least 10% of the
voting stock and, with related interests, controlled over 50% of it
(section 2107(b)).
Property valuation date.
Generally, property must be valued as of the date of death. Columns
(c) and (d) do not apply in this case, and you may use the space to
expand descriptions from column (b).
However, you may elect to use the alternate valuation date. To make
this election, check the Yes box at the beginning of Schedule
A. If you do so, the election applies to all property, and you will
need to complete each column in Schedule A. Under this election, any
property distributed, sold, exchanged, or otherwise disposed of within
6 months after the decedent's death is valued as of the date of the
disposition. Any property not disposed of during that period is valued
as of the date 6 months after the decedent's death.
You may not elect alternate valuation unless the election will
decrease both the value of the gross estate and the net estate tax due
after application of all allowable credits.
Qualified Conservation Easement Exclusion
Under section 2031(c), you may elect to exclude a portion of the
value of land that is subject to a qualified conservation easement.
You make the election by attaching Schedule U of Form 706 with all the
required information. To elect the exclusion, you must include on
Schedule A:
- The decedents interest in the land that is subject to the
exclusion, and
- Exclude the applicable value of the land (amount from line
21, Schedule U) that is subject to the easement on Schedule A.
You must make the election on a timely filed Form 706-NA,
including extensions. For more information, see the Instructions for
Form 706.
Canadian Small Estate Relief
If you are claiming a small estate exemption (worldwide estate of a
Canadian resident decedent not more than $1.2 million) from tax on
U.S. securities or certain other U.S. situs property, under the 1995
Protocol to the Canadian income tax treaty, do not list the exempt
assets on Schedule A. List those assets and their values in a
statement attached to the return specifying that you are relying on
the treaty. To determine initially whether the small estate exemption
applies, however, you must include the exempt assets in the value of
the entire gross estate wherever located on lines 2 and 3 of Schedule
B.
Schedule B
For the line 5 deduction to be allowed, you must complete
lines 1-4 and document the amounts you include on lines 2 and
4.
To document the line 2 amount, attach a certified copy of the
foreign death tax return; or if none was filed, a certified copy of
the estate inventory and the schedule of debts and charges that were
filed with the foreign probate court or as part of the estate's
administration proceedings. Supplement these documents with
attachments if they do not set forth the entire gross estate outside
the United States. If more proof is needed, you will be notified.
To support the line 4 amount, attach an itemized schedule. For each
expense or claim, specify the nature and amount and give the
creditor's name. Describe other deductions fully and identify any
particular property to which they relate.
Line 2.
The amount on line 2 is the total value of the assets included in
the entire gross estate that were located outside the United States.
If you claim deductions on line 5 of Schedule B, you must also
document the amount you enter on line 2. See the first paragraph under
Schedule B, above. If you elected the alternate valuation date for
property listed on Schedule A, use it also for the assets reported on
line 2. Otherwise, value the amounts as of the date of death.
Line 4.
You may deduct the following items whether or not they were
incurred or paid in the United States: funeral expenses;
administration expenses; claims against the estate; unpaid mortgages
and other liens; and uncompensated losses that were incurred during
settlement of the estate and that arose from theft or from casualties
such as fires, storms, or shipwrecks. You may deduct only that part of
a debt or mortgage that was contracted in good faith and for full
value in money or money's worth. You may deduct mortgages only if you
included the full value of the mortgaged property in the total gross
estate on line 3. Do not deduct death taxes, tax on income received
after death, or property taxes accrued after death.
On line 4, show the total of these deductible items. In general,
the total is limited to the amount on line 3.
Line 6.
Use line 6 to enter the following deductions:
- Charitable deduction. Unless a treaty allows
otherwise, you may take a charitable deduction only if the transfer
was to a domestic entity or for use in the United States as described
in the Instructions for Form 706. Attach Schedule O of Form 706. If
you claim the deduction under a treaty, specify the applicable treaty
and attach a computation of the deduction.
- Marital deduction. Unless a treaty allows
otherwise, you may only take a marital deduction if the surviving
spouse is a U.S. citizen or if the property passes to a qualified
domestic trust (QDOT) described in section 2056A and an election is
made on Schedule M of Form 706. Attach Schedule M of Form 706, and a
statement showing your computation of the marital deduction.
See section 2518 for the rules governing disclaimers of interests
in property.
Part II - Tax Computation
Line 4.
Use the chart and tax table below to determine the tentative tax.
Enter the tentative tax on line 4, Part II.
IF the amount on line 3 of Part II is...
|
THEN, figure the tentative tax on line 3 using the...
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$10 million or less
|
Tax table below.
|
More than $10 million
|
Worksheet on page 4.
|
Line 5.
Use the chart and tax table below to determine the tentative tax.
Enter the tentative tax on line 5, Part II.
IF the amount on line 2 of Part II is...
|
THEN, figure the tentative tax on line 2 using the...
|
$10 million or less
|
Tax table below.
|
More than $10 million
|
Worksheet on page 4.
|
Column A Taxable amount over
|
Column B Taxable amount not over
|
Column C Tax on amount in column A
|
Column D Rate of tax on excess over amount in column A
|
|
|
|
Percent
|
0
|
$10,000
|
0
|
18
|
$10,000
|
20,000
|
$1,800
|
20
|
20,000
|
40,000
|
3,800
|
22
|
40,000
|
60,000
|
8,200
|
24
|
60,000
|
80,000
|
13,000
|
26
|
80,000
|
100,000
|
18,200
|
28
|
100,000
|
150,000
|
23,800
|
30
|
150,000
|
250,000
|
38,800
|
32
|
250,000
|
500,000
|
70,800
|
34
|
500,000
|
750,000
|
155,800
|
37
|
750,000
|
1,000,000
|
248,300
|
39
|
1,000,000
|
1,250,000
|
345,800
|
41
|
1,250,000
|
1,500,000
|
448,300
|
43
|
1,500,000
|
2,000,000
|
555,800
|
45
|
2,000,000
|
2,500,000
|
780,800
|
49
|
2,500,000
|
3,000,000
|
1,025,800
|
53
|
3,000,000
|
- - - -
|
1,290,800
|
55
|
Worksheets for Lines 4 and 5
Line 7.
Enter the unified credit. The unified credit is allowed for the
smaller of the line 6 amount or the maximum unified credit. In
general, the maximum unified credit is $13,000. For a citizen of a
U.S. possession (section 2209) the maximum unified credit is the
greater of: (a) $13,000, or (b) the product of
$46,800 times a fraction. The numerator of the fraction is the part of
the gross estate located in the United States (line 1 of Schedule B),
and the denominator is the entire gross estate wherever located (line
3 of Schedule B). If the unified credit is affected by a treaty, see
section 2102(c)(3)(A). (At the time this form went to print, treaties
with Australia, Canada, Finland, Greece, Italy, Japan, Norway, and
Switzerland contained provisions to which section 2102(c)(3)(A)
applies.)
Any amount previously allowed as a unified credit against the gift
tax will reduce, dollar for dollar, the unified credit allowed the
estate (section 2102(c)(3)(B)).
Line 9.
You may take a credit for part of the death or inheritance taxes
you paid to a state or the District of Columbia on property listed in
Schedule A. Generally, you must claim this credit within 4 years of
filing the return. To find your allowed credit, use Table B in the
Form 706 instructions to figure the supposed credit that would be
allowable on the entire line 1 amount (reduced by $60,000). Your
allowed credit cannot be more than this supposed credit multiplied by
a fraction. The numerator of the fraction is the value of the property
you include in Schedule A and on which you paid the state tax, and the
denominator is the value of all the property you report in Schedule A.
Enter on line 9 the smaller of this amount or the taxes you actually
paid.
For the credit to be allowed, you must file a certificate signed by
the appropriate official of the taxing state. The certificate should
show the total tax charged; any discount allowed; any penalties and
interest imposed; the tax actually paid; and each payment date. If
possible, attach the certificate to this return; otherwise, please
file it as soon as possible. See Regulations section 20.2011-1(c)(2)
for more information about the certificate.
If you later recover any of the state tax for which you claim this
credit, notify the Internal Revenue Service Center, Philadelphia, PA
19255 within 30 days of receiving any refund of state taxes.
Line 11.
Use line 11 to enter the following credits:
- Credit for Federal gift taxes. See sections 2102
and 2012. Attach computation of credit.
- Canadian marital credit. In addition to the
unified credit, a nonrefundable marital credit may be allowed if all
applicable elections are made. The credit amount is generally limited
to the lesser of:
- The unified credit allowed to the estate (before reduction
for any gift tax unified credit), and
- The amount of estate tax that would otherwise be imposed by
the United States on the transfer of qualifying property to the
surviving spouse.
See the Canadian income tax treaty protocol for details on
computing the credit. Also, attach a computation of the credit and on
the dotted line to the left of the line 11 entry, write Canadian
marital credit.
Line 15.
If you answered Yes to Question 11 of Part III, you must
complete and attach Schedules R and/or R-1 from Form 706.
For the purposes of Form 706-NA, the GST tax is imposed only on
transfers of interests in property that are part of the gross estate
in the United States. Therefore, when completing Schedules R and/or
R-1, you should enter only transfers of interests in property that you
listed on Schedule A of Form 706-NA. Otherwise, complete Schedules R
and/or R-1 according to their instructions and enter the total GST tax
from Schedule R on line 15.
For details, see Regulations section 26.2663-2.
Lines 17-18.
Attach an explanatory statement if earlier payments were made to
the Internal Revenue Service or if payment is made by certain U.S.
Treasury bonds that were issued before March 4, 1971, and redeemed at
any Federal Reserve bank, the office of the Treasurer of the United
States, or the Bureau of Public Debt. For details, see Rev. Proc.
69-18, 1969-2 C.B. 300.
Line 20.
Pay the balance due within 9 months after the decedent's death
unless an extension of time to pay was granted. In that case, attach a
copy of the approved Form 4768 to Form 706-NA. Make the check or money
order payable to the United States Treasury for the face value
in U.S. dollars.
Signature.
Form 706-NA must be signed. Each executor must verify and sign it.
If another person prepares Form 706-NA for the executor, the preparer
must also sign. The executor may use Form 2848, Power of
Attorney and Declaration of Representative, to authorize another
person to act for him or her before the Internal Revenue Service.
First
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