Who Must File Gross Estate 4. Adj Taxable Gifts Total Not Required $5,430,000. Yes Required * 2014: 01/01/2015 5,430,000 5,430,001

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1 1 Who Must File Gross Estate 4. Adj Taxable Gifts Total > 5,430, ,430,001 $5,430,000 1 t Required Also excluded: Portability-only 706 GST Election/Allocation Protective 706 Filing (a)(2) Required * 2014: 2015: 2016: $5,340,000 $5,430,000 $5,450,000 Date of death Basic Exclusion* 01/01/2015 5,430, (a)(1)

2 2 Asset Increases Estate Tax Liability ("Basis Consistency") 16. Fed Est Tax > 0 Assets Increase Estate Tax Liability Does Asset Have Corresponding Marit/Charit Deduct Is Asset Household or Personal Effect? (b) (Sch A, Col C = "N") Asset Increases Estate Tax Liability Asset Does t Increase Estate Tax Liability Reportable on Schedule A (Sch A, Col C = "N") Is Asset Worth $3,000 (Sch A, Col C = "Y") Asset Subject to "Basis Consistency" Rules Asset t Subject to "Basis Consistency" Rules t Reportable on Sched A per exclusion in (b)(2) (a)(1) (b)

3 3 Estate Tax Value Is Asset Basis Affected by Any of These Post-Death Events? Did Estate Elect Alt Val? Report DOD Value Depreciation Amortization Sale, Exchange, or Other Disposition 643(e)(3) Election to Recognize Gain/Loss on Distribution to Benys Report ALT Value Use Adjusted Basis as Estate Tax Value Show basis adjustment separately from final value shown in Estate Tax Value Column E (a)(2)

4 4 Final Value Does value meet any of the following? Reported on 706 for which assessment period expired (and not timely contested by IRS) Determined by IRS once assessment period expired (and not timely contested by taxpayer) Determined in an agreement that is binding on all parties Determined by a court Use That Value (c)(1)

5 5 After-Discovered or Omitted Property Has 706 Period of Limitations/ Assessment Expired? File Supplemental 706 Schedules A Basis of After-Discovered Property in Hands of Beneficiary = (c)(3)

6 6 What Property to Include Does property consist of any of the following? Cash (1) IRD Tangible $3,000 Sold (2) This property is excluded Report Other Property on Schedule A Do not report this excluded property on Schedule A. (1) Other than coins or paper bills with numismatic value (2) Or otherwise disposed of in a transaction in which capital gain or loss is recognized (b)

7 7 Beneficiary Defined Is person any of the following: Recipient Life Tenant Remainderman Contingent Beneficiary Action Required Report on (c)(1)

8 8 Beneficiary t an Individual Is Person An Individual? Furnish Schedule A to: Executor of Subseq Estate Trustee of Trust Business Entity Furnish Sch A to Beneficiary (c)(2)

9 9 Beneficiary t Determined Has Executor determined what property will be used to satisfy interests of each beneficiary? Prepare Schedule A Accordingly Example Apple Estate Tax Value $100,000 "Duplicate Reporting" Report on Schedule A 100% of the property that Executor *could* use to satisfy beneficiaries' interests * Beny A 100,000 Apple Inc Beny B 100,000 Apple Inc Beny C 100,000 Apple Inc Beny A 40,000 Apple Inc Fractional Int 40% Beny B 35,000 Apple Inc Fractional Int 35% Beny C 25,000 Apple Inc Fractional Int 25% * Instructions: should file Proposed Regulations: may file Proposed Regulations probably supersede the earlier Instructions (b)(3)

10 10 Beneficiary t Located Did Executor Locate Beneficiary? Explain on Schedule A Executor's Efforts to: Locate Beneficiary Satisfy Obligation of Due Diligence Prepare Sched A Accordingly Did Executor Subsequently Locate Beneficiary? File/Furnish Supplemental /Sch A Based on Substitute Beneficiary File/Furnish Supplemental /Schedule A Listing Located Beneficiary (c)(4)

11 11 When to File Was 706 Filed After July 2015? Required Was 706 Filed On/Before 02/29/2016? /Sched A Due 03/31/ Was Filed On/After 03/01/2016 /Sched A due within 30 days of earlier of: 706 due date (incl ext) 706 filing date extension for filing Form is currently available, (d)

12 12 Supplemental Filing Did any of the following occur? New property discovered Property value changed Change in identity of beneficiary to whom property is to be distributed, because of: Death Disclaimer Bankruptcy Beneficiary located (or not) Other circumstances Action Required File a supplemental with the IRS within 30 days of change Furnish a supplemental Schedule A to each affected beneficiary Report only changes on Form and Schedule A (e)

13 13 Subsequent Transfers Transferee Related Was property transferred by initial recipient to related transferee? Recipient/Transferor: Files /Sch A w/ IRS Furnishes Sch A to transferee Action Required Does transfer occur before final value determined under (c)? Action Required Recipient/Transferor: Furnishes Sched A to executor based on value reported on estate tax return Has value become final Executor provides supplemental Sched A to Transferee showing the final value Further Action Required (f)