IRS Issues Revised Form 706

Last month the IRS released a newly revised Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, and Instructions to Form 706. The new form is to be used for estates of decedents dying after December 31, 2006 and before January 1, 2008, and reflects changes in law as well as indexing changes.

According to the instructions, the following items are new:

Use of the revision is only for the estates of decedents dying in calendar year 2007.
The maximum tax rate for the estates of decedents dying in 2007 has decreased to 45%.
The Small Business and Work Opportunity Tax Act of 2007, P.L.110-28, extends the application of income tax return preparer penalties to all tax return preparers, including estate tax return preparers.
The decedent’s authority over certain financial accounts in a foreign country must be reported on Part 4 – General Information.
Various dollar amounts and limitations are indexed for inflation, and the following amounts have increased:

The ceiling on special-use valuation is $940,000, and
The amount used in computing the 2% portion of estate tax payable in installments is $1,250,000.

Beginning with the estates of decedent’s dying and generation-skipping transfers occurring after December 31, 2003, the generation-skipping transfer (GST) exemption is equal to the applicable exclusion amount. ($2,000,000 for 2007).

Visit the IRS website at www.irs.gov and look under Forms and Publications.

Source: Internal Revenue Service, Form 706 (United States Estate / and Generation-Skipping Transfer Tax Return) and Instructions for Form 706, Forms and Publications – September 28, 2007.