Form 706 is used when a decedent’s estate must be evaluated under the federal estate and generation-skipping transfer tax system, either because the value of the estate exceeds statutory thresholds or because the filing is required to preserve specific tax positions such as portability. The form does not operate as a single filing event but as a structured process in which the Internal Revenue Service determines what property is included in the gross estate, how that property is valued, which deductions and credits apply, and how the resulting tax position is carried forward.
What role Form 706 plays in the estate tax system
Form 706 functions as the central reporting mechanism through which the estate is translated into a taxable structure. Property interests are first identified and classified, then reduced by allowable debts, expenses, deductions, and exclusions, after which the estate tax and any generation-skipping transfer tax consequences are calculated. This process establishes the estate’s final tax position and determines whether unused exclusions or elections continue to affect surviving parties.
The official definition, statutory purpose, and formal structure of this document are described on the IRS Form 706 document page.
Whether Form 706 is required depends on how the estate fits into the broader tax system at the time of death. The circumstances that trigger filing are explained in detail in when Form 706 is required.
How the filing process is structured
The filing of Form 706 follows a fixed internal sequence. The process begins with identifying all property interests connected to the decedent, which are reported across a series of schedules based on asset type. These values are then adjusted through schedules that account for debts, expenses, marital transfers, charitable transfers, and special statutory exclusions. Only after this sequence is completed does the form produce a final tax outcome.
The procedural flow of this sequence, including how the Internal Revenue Service evaluates each stage, is described in how the Form 706 filing process works.
Property included in the gross estate
The gross estate is not a single category but a collection of distinct property classes, each governed by separate inclusion rules. Real estate, financial assets, jointly owned property, lifetime transfers, annuities, and powers of appointment are each evaluated under different statutory sections. These categories are reported through individual schedules that reflect how the system classifies and values each type of interest.
- Real estate included in the estate
- Stocks, bonds, and marketable securities
- Cash, notes, and similar financial interests
- Life insurance included in the estate
- Jointly owned property
- Other property interests
- Lifetime transfers brought back into the estate
- Powers of appointment
- Annuities and similar interests
Debts, expenses, and reductions of the estate
After property is identified, the estate is adjusted for obligations that reduce its taxable value. These include debts of the decedent, administration expenses, and losses incurred during estate settlement. These adjustments do not operate independently but are applied after asset classification and before final tax computation.
The way these reductions are applied within the Form 706 process is explained in estate expenses and debts under Form 706.
Marital and charitable transfers
Certain transfers remove property from the taxable estate because the system treats them as deferred or exempt under specific statutory rules. Transfers to a surviving spouse and qualifying charitable bequests are evaluated separately because they may affect portability elections, future taxation, or generation-skipping outcomes.
Special exclusions, credits, and GST considerations
In some estates, additional mechanisms apply that modify the tax outcome beyond standard deductions. These include credits for foreign death taxes, credits for tax on prior transfers, conservation easement exclusions, and generation-skipping transfer tax rules. These provisions activate only when specific conditions exist but can significantly affect how the estate is treated.
Amended filings and prior-year considerations
The Form 706 process does not always end with the original filing. Corrections, adjustments, and filings connected to earlier periods can continue to affect the estate’s status after submission. The system provides structured mechanisms for handling these situations.
This page serves as the central reference point for how Form 706 operates as a process. Each linked section explains how a specific stage or scenario fits into the overall estate tax system and how the Internal Revenue Service evaluates the estate as it moves through that process.