1. Form 706 ESTATE Tax Return Presented by:
LEVI M. DILLON, Attorney/cpa Amy E. Ott, attorney/CPA
Bourland, Wall & Wenzel, P.C. The Blum Firm, P.C.
Attorneys at Law Attorneys at Law

2. The Unified Tax System Federal Transfer Taxes Gift Tax Estate Tax
Generation-Skipping Transfer (“GST”) Tax
Who is “Skip Person”
Family and Unrelated Persons
Unified Transfer Tax Credit (Applicable Amount)
Generation-Skipping Transfer Tax Exemption (“GSTTE”)

3. Filing Basics Filing/Tax Payment Deadlines Extension of Time to File
Extension of Time to Pay?
Which Estates Must File
Gross Estate
Adjusted Taxable Gifts
Elective Filing - Portability
Who Must File on behalf of Estate
Who Must Pay

4. Exemption Amounts Estate Tax and GST Tax Exemptions 2017 $5,490,000
2018 – 2025 $11,200,000 (subject to inflation adjustment)
2026 $5,490,000 (exemption reverts back to pre-2017 Jobs Act exemption amounts)
4/4/2019

5. Executor Elections Alternative Valuation Date
Date of Death  6 months later
Special Use Valuations
Purpose
Qualifying Property
6166 Deferral
Qualifying Estate
Postponement of Tax on Reversionary or Remainder Interest
Qualified Terminable Interest Property

6. Valuation Part I – The Big Picture
Importance of Valuation
Standard – Fair Market Value
“The amount at which the property would change hands between a willing buyer and willing seller, when the former is not under any compulsion to buy, and the latter is not under any compulsion to sell, both parties having reasonable knowledge of relevant facts”
Valuation Date
Planning Opportunity
Estate Tax vs. Income Tax

7. Valuation Part I – The Big Picture Continued…
Consideration of Buy-Sell Agreement
IRC § 2703
Discounts Applicable based on Agreement are IGNORED UNLESS
> 50% ownership by unrelated parties OR
Bona-Fide Business Agreement;
Not a testamentary device to transfer property to family for less that full and adequate consideration; AND
Terms are comparable to similar agreements entered into in an arms-length transaction (e.g., industry norms)
Decedent must be restricted in during life

8. Valuation Part II – Method by Asset Class
Real Estate (Schedule A)
Stocks and Bonds (Schedule B)
Mortgages and Notes (Schedule C)
Insurance on Decedent’s Life (Schedule D)
Form 712
Miscellaneous Property (Schedule F)
Business Interests
Artwork
Oil and Gas Royalties
Automobiles
Household Goods and Personal Effects
Other

9. Relating Back to the Form 709
Appropriate disclosure during life reduces risk at death
Questions on Form 706 that relate back to Forms 709 filed during life
Questions 8(a), (b) and (c)
Copies of all Gift Tax Returns filed
Questions 9(a) and (b)
Disclosure of life insurance owned on Decedent’s life and life insurance owned by Decedent on another’s life not included in gross estate
Importance of compliance—e.g., Crummey withdrawal letters, gift and sale documents related to Irrevocable Life Insurance Trust transfers

10. Relating Back to the Form 709 Continued…
Questions on Form 706 that relate back to Forms 709 filed during life continued…
Questions 11(a) and (b)
Closely held business interests that are discounted
Formalities of Company and Partnership Agreements
Payments for personal expenses
Non-pro rata distributions
Assets owned outside of entity
Questions 13(a) – (e)
Trusts created during lifetime
Transfers (by gift or sale) of closely held interests to Intentionally Defective Grantor Trusts
Question 16

11. Formulas & Flexibility
Savings Clauses on Form 706
Bequests and Devises
Marital bequests
QTIP election and funding
DSUE

12. Post-Mortem Planning Differences in Rates – Income Tax vs. Estate Tax
Considerations Bypass Trust Planning
Partition and Exchange Agreement
Appreciating Assets

13. Case Studies