Part II. All other joint interests. All joint interests that

were not entered in Part I must be entered in Part II.

For each item of property, enter the appropriate letter A, B, C, etc., from line 6a to indicate the name and address of the surviving co-tenant.

Under column (iii), Description, describe the property as required in the instructions for Schedules A, B, C, and F of Form 706 for the type of property involved.

Under column (v), Percentage includible, enter the percentage of the total value of the property included in the gross estate.

Generally, you must include the full value of the jointly owned property in the gross estate. However, the full value should not be included if you can show that a part of the property originally belonged to the other tenant(s) and was never received or acquired by the other tenant(s) from the decedent for less than adequate and full consideration in money or money’s worth. Full value of jointly owned property also does not have to be included in the gross estate if you can show that any part of the property was acquired with consideration originally belonging to the surviving joint tenant(s). In this case, you may exclude from the value of the property an amount proportionate to the consideration furnished by the other tenant(s). Relinquishing or promising to relinquish dower, curtesy, or statutory estate created instead of dower or curtesy, or other marital rights in the decedent’s property or estate is not consideration in money or money’s worth. See the Schedule A (Form 706) instructions for the value to show for real property that is subject to a mortgage.

Caution: If any assets to which the special rule of Regulations section 20.2010-2(a)(7)(ii) applies are reported on this schedule, do not enter any value in the last three columns. See the instructions for Part V, Item 10, for information on how to estimate and report the value of these assets.

You must complete Schedule F (Form 706) and file it with the return. On Schedule F (Form 706), list all items that must be included in the gross estate that are not reported on any other schedule, including:

• Debts due the decedent (other than notes and mortgages included on Schedule C (Form 706));

• Interests in business;

• Any interest in an Archer medical savings account (MSA) or health savings account (HSA), unless such interest passes to the surviving spouse;

• Insurance on the life of another (obtain and attach Form 712, for each policy) (see Note below);

• Section 2044 property (see Decedent Who Was a Surviving Spouse , later);

• Claims (including the value of the decedent’s interest in a claim for refund of income taxes or the amount of the refund actually received);

• Rights;

• Digital assets are any digital representations of value that are recorded on a cryptographically secured distributed ledger or any similar technology. For example, digital assets include nonfungible tokens (NFTs) and virtual currencies, such as cryptocurrencies and stablecoins. If a particular asset has the characteristics of a digital asset, it will be treated as a digital asset for federal transfer tax purposes;

• Royalties;

• Leaseholds;

• Judgments;

• Reversionary or remainder interests;

• Shares in trust funds (attach a copy of the trust instrument);

• Household goods and personal effects, including wearing apparel;

• Farm products and growing crops;

• Livestock;

• Farm machinery; and

• Automobiles.

If the property was acquired by the decedent and another person or persons by gift, bequest, devise, or inheritance as joint tenants, and their interests are not otherwise specified by law, include only that part of the

32 Instructions for Form 706 (Rev. 7-2026)

Note (for single premium or paid-up policies). In certain situations (for example, where the surrender value of the policy exceeds its replacement cost), the true economic value of the policy will be greater than the amount shown on Form 712, line 59. In these situations, report the full economic value of the policy on Schedule F (Form 706). See Rev. Rul. 78-137, 1978-1 C.B. 280, for details.

Interests. If the decedent owned any interest in a partnership or unincorporated business, attach a statement of assets and liabilities for the valuation date and for the 5 years before the valuation date. Also, attach statements of the net earnings for the same 5 years. Be sure to include the EIN of the entity. You must account for goodwill in the valuation. In general, furnish the same information and follow the methods used to value close corporations. See the instructions for Schedule B (Form 706). All partnership interests should be reported on Schedule F (Form 706) unless the partnership interest is jointly owned. Jointly owned partnership interests should be reported on Schedule E (Form 706).

If real estate is owned by a sole proprietorship, it should be reported on Schedule F (Form 706) and not on Schedule A (Form 706). Describe the real estate with the same detail required for Schedule A (Form 706).

Valuation discounts. If you answered “Yes” to Form 706, Part IV, line 11b, for any interest in a partnership, an unincorporated business, an LLC, or stock in a closely held corporation, attach a statement that lists the line number and item number from Schedule F (Form 706) and identifies the total effective discount taken (that is, XX.XX%) on such interest.

Example of effective discount:

Calculation of effective discount:

( a minus e ) divided by a = effective discount

($100.00 - $76.50) ÷ $100.00 = 23.50%

Note: The amount of discounts are based on the factors pertaining to a specific interest and those discounts shown in the example are for demonstration purposes only.

If you answered “Yes” to Form 706, Part IV, line 11b, for any transfer(s) described in (1) through (5) in the Schedule G (Form 706) instructions (and made by the decedent), attach a statement to Schedule G (Form 706) that lists the line number and item number from that schedule and identifies the total effective discount taken (that is, XX.XX%) on such transfer(s).

Line 1. If the decedent owned at the date of death works of art or items with collectible value (for example, jewelry, furs, silverware, books, statuary, vases, oriental rugs, coin or stamp collections), check the “Yes” box on line 1 and provide full details on line 4. If any item or collection of similar items is valued at more than $3,000, attach an appraisal by an expert under oath and the required statement regarding the appraiser’s qualifications (see Regulations section 20.2031-6(b)).

Decedent Who Was a Surviving Spouse If the decedent was a surviving spouse, the decedent may have received qualified terminable interest property (QTIP) from the predeceased spouse for which the marital deduction was elected either on the predeceased spouse’s estate tax return or on a gift tax return, Form 709. The election is available for transfers made and decedents dying after December 31, 1981. List such property on Schedule F (Form 706).

If this election was made and the surviving spouse retained interest in the QTIP property at death, the full value of the QTIP property is includible in the estate, even though the qualifying income interest terminated at death. It is valued as of the date of the surviving spouse’s death, or alternate valuation date, if applicable. Do not reduce the value by any annual exclusion that may have applied to the transfer creating the interest.

The value of such property included in the surviving spouse’s gross estate is treated as passing from the surviving spouse. It therefore qualifies for the charitable and marital deductions on the surviving spouse’s estate tax return if it meets the other requirements for those deductions.

For additional details, see Regulations section 20.2044-1.

Caution: If any assets to which the special rule of Regulations section 20.2010-2(a)(7)(ii) applies are reported on this schedule, do not enter any value in the last three columns. See the instructions for Part V, Item 10, for information on how to estimate and report the value of these assets.

Complete Schedule G (Form 706) and file it with the return if the decedent made any of the transfers described in (1) through (5) later, or if you answered “Yes” to Form 706, Part IV, lines 12 or 13a.

Report the following types of transfers on this schedule.

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Interests or rights. Section 2036 applies to the following retained interests or rights.

• For insurance on the life of another using the instructions for Schedule F (Form 706) (attach Form 712); and

• For sections 2036, 2037, and 2038 transfers, using paragraphs (3), (4), and (5) of these instructions.

3. Transfers with retained life estate (section 2036). These are transfers by the decedent in which the decedent retained an interest in the transferred property. The transfer can be in trust or otherwise, but excludes bona fide sales for adequate and full consideration.

1. Certain gift taxes (section 2035(b)). Enter on Schedule G (Form 706), line 4, the total value of the gift taxes that were paid by the decedent or the estate on gifts made by the decedent or the decedent’s spouse within 3 years of death.

• The right to income from the transferred property.

• The right to the possession or enjoyment of the property.

• The right, either alone or with any person, to designate the persons who shall receive the income from, possess, or enjoy the property.

The date of the gift, not the date of payment of the gift tax, determines whether a gift tax paid is included in the gross estate under this rule. Therefore, you should carefully examine the Forms 709 filed by the decedent and the decedent’s spouse to determine what part of the total gift taxes reported on them was attributable to gifts made within 3 years of death.

For example, if the decedent died on July 10, 2026, you should examine gift tax returns for 2026, 2025, 2024, and 2023. However, the gift taxes on the 2023 return that are attributable to gifts made on or before July 10, 2023, are not included in the gross estate.

Retained annuity, unitrust, and other income interests in trusts. If a decedent transferred property into a trust and retained or reserved the right to use the property, or the right to an annuity, unitrust, or other interest in such trust for the property for the decedent’s life, any period not ascertainable without reference to the decedent’s death, or for a period that does not, in fact, end before the decedent’s death, then the decedent’s right to use the property or the retained annuity, unitrust, or other interest (whether payable from income and/or principal) is the retention of the possession or enjoyment of, or the right to the income from the property for purposes of section 2036. See Regulations section 20.2036-1(c)(2). Retained voting rights. Transfers with a retained life estate also include transfers of stock in a controlled corporation made after June 22, 1976, if the decedent retained or acquired voting rights in the stock. If the decedent retained direct or indirect voting rights in a controlled corporation, the decedent is considered to have retained enjoyment of the transferred property. A corporation is a controlled corporation if the decedent owned (actually or constructively) or had the right (either alone or with any other person) to vote at least 20% of the total combined voting power of all classes of stock. See section 2036(b)(2). If these voting rights ceased or were relinquished within 3 years of the decedent’s death, the corporate interests are included in the gross estate as if the decedent had actually retained the voting rights until death.

The amount includible in the gross estate is the value of the transferred property at the time of the decedent’s death. If the decedent kept or reserved an interest or right to only a part of the transferred property, the amount includible in the gross estate is a corresponding part of the entire value of the property.

A retained life estate does not have to be legally enforceable. What matters is that a substantial economic benefit was retained. For example, if a parent transferred the home title to one’s child, but

Explain how you figured the includible gift taxes if the entire gift taxes shown on any Form 709 filed for gifts made within 3 years of death are not included in the gross estate. Also attach copies of any relevant gift tax returns filed by the decedent’s spouse, with “Exhibit to Estate Tax Return” entered across the top of the first page of each, for gifts made within 3 years of death.

2. Other transfers within 3 years of death (section 2035(a)). These transfers include only the following.

• Any transfer by the decedent with respect to a life insurance policy within 3 years of death.

• Any transfer within 3 years of death of a retained section 2036 life estate, section 2037 reversionary interest, or section 2038 power to revoke, etc., if the property subject to the life estate, interest, or power would have been included in the gross estate had the decedent continued to possess the life estate, interest, or power until death. These transfers are reported on Schedule G (Form 706), regardless of whether a gift tax return was required to be filed for them when they were made. However, the amount includible and the information required to be shown for the transfers are determined:

  • For insurance on the life of the decedent using the instructions for Schedule D (Form 706) (attach Form 712);

34 Instructions for Form 706 (Rev. 7-2026)

with the informal understanding that the parent was to continue living there until the parent’s death, the value of the home would be includible in the parent’s estate even if the agreement would not have been legally enforceable.

4. Transfers taking effect at death (section 2037). A transfer that takes effect at the decedent’s death is one under which possession or enjoyment can be obtained only by surviving the decedent. A transfer is not treated as one that takes effect at the decedent’s death unless the decedent retained a reversionary interest (defined later) in the property that immediately before the decedent’s death had a value of more than 5% of the value of the transferred property. If the transfer was made before October 8, 1949, the reversionary interest must have arisen by the express terms of the instrument of transfer.

A reversionary interest is, generally, any right under which the transferred property will or may be returned to the decedent or the decedent’s estate. It also includes the possibility that the transferred property may become subject to a power of disposition by the decedent. It does not matter if the right arises by the express terms of the instrument of transfer or by operation of law. For this purpose, reversionary interest does not include the possibility that the income alone from the property may return to the decedent or become subject to the decedent’s power of disposition.

5. Revocable transfers (section 2038). The gross estate includes the value of any transferred property that was subject to the decedent’s power to alter, amend, revoke, or terminate the transfer at the time of the decedent’s death. A decedent’s power to change beneficiaries and to increase any beneficiary’s enjoyment of the property are examples of this.

It does not matter whether the power was reserved at the time of the transfer, whether it arose by operation of law, or whether it was later created or conferred. The rule applies regardless of the source from which the power was acquired, and regardless of whether the power was exercisable by the decedent alone or with any person (and regardless of whether that person had a substantial adverse interest in the transferred property).

The capacity in which the decedent could use a power has no bearing. If the decedent gave property in trust and was the trustee with the power to revoke the trust, the property would be included in the decedent’s gross estate. For transfers or additions to an irrevocable trust after October 28, 1979, the transferred property is includible if the decedent reserved the power to remove the trustee at will and appoint another trustee.

If the decedent relinquished within 3 years of death any of the includible powers described above, figure the gross estate as if the decedent had actually retained the powers until death.

For more detailed information on which transfers are includible in the gross estate, see Regulations section 20.2038-1.

Special Valuation Rules for Certain Lifetime Transfers Sections 2701 through 2704 provide rules for valuing certain transfers to family members.

Section 2701 deals with the transfer of an interest in a corporation or partnership while retaining certain distribution rights, or a liquidation, put, call, or conversion right.

Section 2702 deals with the transfer of an interest in a trust while retaining any interest other than a qualified interest. In general, a qualified interest is a right to receive certain distributions from the trust at least annually, or a noncontingent remainder interest if all of the other interests in the trust are distribution rights specified in section 2702.

Section 2703 provides rules for the valuation of property transferred to a family member but subject to an option, agreement, or other right to acquire or use the property at less than FMV. It also applies to transfers subject to restrictions on the right to sell or use the property.

Finally, section 2704 provides that in certain cases, the lapse of a voting or liquidation right in a family-owned corporation or partnership will result in a deemed transfer.

These rules have potential consequences for the valuation of property in an estate. If the decedent (or any member of the decedent’s family) was involved in any such transactions, see sections 2701 through 2704 and the related regulations for additional details.

How To Complete Schedule G (Form 706) All transfers (other than outright transfers not in trust and bona fide sales) made by the decedent at any time during life must be reported on Schedule G (Form 706), regardless of whether you believe the transfers are subject to tax. If the decedent made any transfers not described in these instructions, the transfers should not be shown on Schedule G (Form 706). Instead, attach a statement describing these transfers by listing:

• The date of the transfer,

• The amount or value of the transferred property, and

• The type of transfer.

Complete the schedule for each transfer that is included in the gross estate under sections 2035(a), 2036, 2037, and 2038, as described in the instructions for Schedule G (Form 706).

Under column (i), Item number, number each transfer consecutively beginning with “1.”

Under column (ii), Description, list the name of the transferee and the date of the transfer, and give a complete description of the property.

Transfers included in the gross estate should be valued on the date of the decedent’s death under column (vi), or, if alternate valuation is elected, according to section 2032, under column (v).

Only the part of the transferred property that is subject to the decedent’s power is included in the gross estate.

Instructions for Form 706 (Rev. 7-2026) 35

If only part of the property transferred meets the terms of section 2035(a), 2036, 2037, or 2038, then only a corresponding part of the value of the property should be included in the value of the gross estate. If the transferee makes additions or improvements to the property, the increased value of the property at the valuation date should not be included on Schedule G (Form 706). However, if only a part of the value of the property is included, enter the value of the whole under column (ii), Description, and explain what part was included.

Attachments

If a transfer, by trust or otherwise, was made by a written instrument, attach a copy of the instrument to Schedule G (Form 706). If the copy of the instrument is of public record, it should be certified; if not of public record, the copy should be verified.

Caution: If any assets to which the special rule of Regulations section 20.2010-2(a)(7)(ii) applies are reported on this schedule, do not enter any value in the last three columns. See the instructions for Part V, Item 10, for information on how to estimate and report the value of these assets.

Complete Schedule H (Form 706) and file it with the return if you answered “Yes” to Form 706, Part IV, line 14.

On Schedule H (Form 706), include the following in the gross estate.

• The value of property for which the decedent possessed a general power of appointment (defined later) on the date of the decedent’s death.

• The value of property for which the decedent possessed a general power of appointment that the decedent exercised or released before death by disposing of it in such a way that if it were a transfer of property owned by the decedent, the property would be includible in the decedent’s gross estate as a transfer with a retained life estate, a transfer taking effect at death, or a revocable transfer.

With the above exceptions, property subject to a power of appointment is not includible in the gross estate if the decedent released the power completely and the decedent held no interest in or control over the property.

If the failure to exercise a general power of appointment results in a lapse of the power, the lapse is treated as a release only to the extent that the value of the property that could have been appointed by the exercise of the lapsed power is more than the greater of $5,000 or 5% of the total value, at the time of the lapse, of the assets out of which, or the proceeds of which, the exercise of the lapsed power could have been satisfied.

Powers of Appointment A power of appointment determines who will own or enjoy the property subject to the power and when they will own or enjoy it. The power must be created by someone other than the decedent. It does not include a power created or held on property transferred by the decedent.

A power of appointment includes all powers that are, in substance and effect, powers of appointment regardless of how they are identified and regardless of local property laws. For example, if a settlor transfers property in trust for the life of the settlor’s spouse, with a power in the spouse to appropriate or consume the principal of the trust, the spouse has a power of appointment.

Some powers do not in themselves constitute a power of appointment. For example, a power to amend only administrative provisions of a trust that cannot substantially affect the beneficial enjoyment of the trust property or income is not a power of appointment. A power to manage, invest, or control assets, or to allocate receipts and disbursements, when exercised only in a fiduciary capacity, is not a power of appointment.

General power of appointment. A general power of appointment is a power that is exercisable in favor of the decedent, the decedent’s estate, the decedent’s creditors, or the creditors of the decedent’s estate, except the following.

1. A power to consume, invade, or appropriate property for the benefit of the decedent that is limited by an ascertainable standard relating to health, education, support, or maintenance of the decedent.

2. A power exercisable by the decedent only in conjunction with:

a. The creator of the power; or

b. A person who has a substantial interest in the

property subject to the power, which is adverse to the exercise of the power in favor of the decedent.

A part of a power is considered a general power of appointment if the power:

1. May only be exercised by the decedent in conjunction with another person, and

2. Is also exercisable in favor of the other person (in addition to being exercisable in favor of the decedent, the decedent’s creditors, the decedent’s estate, or the creditors of the decedent’s estate).

When there is a partial power, figure the amount included in the gross estate by dividing the value of the property by the number of persons (including the decedent) in favor of whom the power is exercisable.

Date power was created. Generally, a power of appointment created by will is considered created on the date of the testator’s death.

A power of appointment created by an inter vivos instrument is considered created on the date the instrument takes effect. If the holder of a power exercises it by creating a second power, the second power is considered as created at the time of the exercise of the first.

Attachments If the decedent ever possessed a power of appointment, attach a certified or verified copy of the instrument granting the power and a certified or verified copy of any instrument by which the power was exercised or released. You must file these copies even if you contend that the

36 Instructions for Form 706 (Rev. 7-2026)

power was not a general power of appointment, and that the property is not otherwise includible in the gross estate.

Caution: If any assets to which the special rule of Regulations section 20.2010-2(a)(7)(ii) applies are reported on this schedule, do not enter any value in the last three columns. See the instructions for Part V, Item 10, for information on how to estimate and report the value of these assets.

Complete Schedule l (Form 706) and file it with the return if you answered “Yes” to Form 706, Part IV, line 16.

Enter on Schedule I (Form 706) every annuity that meets all of the conditions under General, later, and every annuity described in paragraphs (a) through (h) of Annuities Under Approved Plans , later, even if the annuities are wholly or partially excluded from the gross estate.

For a discussion regarding the QTIP treatment of certain joint and survivor annuities, see the instructions for Schedule M (Form 706), line 3.

General These rules apply to all types of annuities, including pension plans, individual retirement arrangements (IRAs), purchased commercial annuities, and private annuities.

In general, you must include in the gross estate all or part of the value of any annuity that meets the following requirements.

• It is receivable by a beneficiary following the death of the decedent and by reason of surviving the decedent.

• The annuity is under a contract or agreement entered into after March 3, 1931.

• The annuity was payable to the decedent (or the decedent possessed the right to receive the annuity), either alone or in conjunction with another, for the decedent’s life or for any period not ascertainable without reference to the decedent’s death or for any period that did not in fact end before the decedent’s death.

• The contract or agreement is not a policy of insurance on the life of the decedent.

Note: A private annuity is an annuity issued by a party not engaged in the business of writing annuity contracts, typically a junior generation family member or a family trust.

An annuity contract that provides periodic payments to a person for life and ceases at the person’s death is not includible in the gross estate. Social security benefits are not includible in the gross estate even if the surviving spouse receives benefits.

An annuity or other payment that is not includible in the decedent’s or the survivor’s gross estate as an annuity may still be includible under some other applicable provision of the law. For example, see Powers of Appointment and the instructions for Schedule G—Transfers During the Decedent’s Lifetime , earlier. See also Regulations section 20.2039-1(e).

If the decedent retired before January 1, 1985, see Annuities Under Approved Plans , later, for rules that allow the exclusion of part or all of certain annuities.

Part Includible

If the decedent contributed only part of the purchase price of the contract or agreement, include in the gross estate only that part of the value of the annuity receivable by the surviving beneficiary that the decedent’s contribution to the purchase price of the annuity or agreement bears to the total purchase price.

For example, if the value of the survivor’s annuity was $20,000 and the decedent had contributed 75% of the purchase price of the contract, the amount includible is $15,000 (75% (0.75) × $20,000).

Except as provided under Annuities Under Approved Plans , later, contributions made by the decedent’s employer to the purchase price of the contract or agreement are considered made by the decedent if they were made by the employer because of the decedent’s employment. For more information, see section 2039(b).

Definitions

Annuity. An annuity consists of one or more payments extending over any period of time. The payments may be equal or unequal, conditional or unconditional, periodic or sporadic.

Examples. The following are examples of contracts (but not necessarily the only forms of contracts) for annuities that must be included in the gross estate.

1. A contract under which the decedent immediately before death was receiving or was entitled to receive, for the duration of life, an annuity with payments to continue after death to a designated beneficiary, if surviving the decedent.

2. A contract under which the decedent immediately before death was receiving or was entitled to receive, together with another person, an annuity payable to the decedent and the other person for their joint lives, with payments to continue to the survivor following the death of either.

3. A contract or agreement entered into by the decedent and employer under which the decedent immediately before death and following retirement was receiving, or was entitled to receive, an annuity payable to the decedent for life. After the decedent’s death, if survived by a designated beneficiary, the annuity was payable to the beneficiary with payments either fixed by contract or subject to an option or election exercised or exercisable by the decedent. However, see Annuities Under Approved Plans, later.

4. A contract or agreement entered into by the decedent and the decedent’s employer under which at the decedent’s death, before retirement, or before the expiration of a stated period of time, an annuity was payable to a designated beneficiary, if surviving the decedent. However, see Annuities Under Approved Plans , later.

Instructions for Form 706 (Rev. 7-2026) 37

5. A contract or agreement under which the decedent immediately before death was receiving, or was entitled to receive, an annuity for a stated period of time, with the annuity to continue to a designated beneficiary, surviving the decedent, upon the decedent’s death and before the expiration of that period of time.

6. An annuity contract or other arrangement providing for a series of substantially equal periodic payments to be made to a beneficiary for life or over a period of at least 36 months after the date of the decedent’s death under an individual retirement account, annuity, or bond as described in section 2039(e) (before its repeal by P.L. 98-369).

Payable to the decedent. An annuity or other payment was payable to the decedent if, at the time of death, the decedent was in fact receiving an annuity or other payment, with or without an enforceable right to have the payments continued.

Right to receive an annuity. The decedent had the right to receive an annuity or other payment if, immediately before death, the decedent had an enforceable right to receive payments at some time in the future, whether or not at the time of death the decedent had a present right to receive payments.

Annuities Under Approved Plans The following rules relate to whether part or all of an otherwise includible annuity may be excluded. These rules have been repealed and apply only if the decedent either:

• On December 31, 1984, was both a participant in the plan and in pay status (for example, had received at least one benefit payment on or before December 31, 1984) and had irrevocably elected the form of the benefit before July 18, 1984; or

• Had separated from service before January 1, 1985, and did not change the form of benefit before death.

The amount excluded cannot exceed $100,000 unless either of the following conditions is met.

• On December 31, 1982, the decedent was both a participant in the plan and in pay status (for example, had received at least one benefit payment on or before December 31, 1982) and the decedent irrevocably elected the form of the benefit before January 1, 1983.

• The decedent separated from service before January 1, 1983, and did not change the form of benefit before death.

Approved Plans

Approved plans may be separated into two categories.

• Pension, profit-sharing, stock bonus, and other similar plans.

• IRAs and retirement bonds.

Different exclusion rules apply to the two categories of plans.

Pension, etc., plans. The following plans are approved plans for the exclusion rules.

a. An employees’ trust (or a contract purchased by an employees’ trust) forming part of a pension, stock bonus, or profit-sharing plan that met all the requirements of section 401(a), either at the time of the decedent’s separation from employment (whether by death or otherwise) or at the time of the termination of the plan (if earlier).

b. A retirement annuity contract purchased by the employer (but not by an employees’ trust) under a plan that, at the time of the decedent’s separation from employment (by death or otherwise), or at the time of the termination of the plan (if earlier), was a plan described in section 403(a).

c. A retirement annuity contract purchased for an employee by an employer that is an organization referred to in section 170(b)(1)(A)(ii) or (vi), or that is a religious organization (other than a trust), and that is exempt from tax under section 501(a).

d. Chapter 73 of title 10 of the United States Code. e. A bond purchase plan described in section 405 (before its repeal by P.L. 98-369, effective for obligations issued after December 31, 1983).

Exclusion rules for pension, etc., plans. If an annuity under an approved plan described in (a) through (e) above is receivable by a beneficiary other than the executor and the decedent made no contributions under the plan toward the cost, no part of the value of the annuity, subject to the $100,000 limitation (if applicable), is includible in the gross estate.

If the decedent made a contribution under a plan described in (a) through (e) above toward the cost, include in the gross estate on this schedule that proportion of the value of the annuity that the amount of the decedent’s contribution under the plan bears to the total amount of all contributions under the plan. The remaining value of the annuity is excludable from the gross estate subject to the $100,000 limitation (if applicable). For the rules to determine whether the decedent made contributions to the plan, see Regulations section 20.2039-1(c).

IRAs and retirement bonds. The following plans are approved plans for the exclusion rules.

f. An individual retirement account described in section 408(a). g. An individual retirement annuity described in section 408(b). h. A retirement bond described in section 409(a) (before its repeal by P.L. 98-369).

Exclusion rules for IRAs and retirement bonds. These plans are approved plans only if they provide for a series of substantially equal periodic payments made to a beneficiary for life, or over a period of at least 36 months after the date of the decedent’s death.

Subject to the $100,000 limitation (if applicable), if an annuity under a “plan” described in (f) through (h) above is receivable by a beneficiary other than the executor, the entire value of the annuity is excludable from the gross estate even if the decedent made a contribution under the plan.

However, if any payment to or for an account or annuity described in paragraph (f), (g), or (h) earlier was not

38 Instructions for Form 706 (Rev. 7-2026)

allowable as an income tax deduction under section 219 (and was not a rollover contribution, as described in section 2039(e) before its repeal by P.L. 98-369), include in the gross estate on this schedule that proportion of the value of the annuity which the amount not allowable as a deduction under section 219 and not a rollover contribution bears to the total amount paid to or for such account or annuity. For more information, see Regulations section 20.2039-5.

Rules applicable to all approved plans. The following rules apply to all approved plans described in paragraphs (a) through (h), earlier.

If any part of an annuity under a plan described in (a) through (h), earlier, is receivable by the executor, it is generally includible in the gross estate to the extent that it is receivable by the executor in that capacity. In general, the annuity is receivable by the executor if it is to be paid to the executor or if there is an agreement (expressed or implied) that it will be applied by the beneficiary for the benefit of the estate (such as in discharge of the estate’s liability for death taxes or debts of the decedent, etc.) or that its distribution will be governed to any extent by the terms of the decedent’s will or the laws of descent and distribution.

If data available to you does not indicate whether the plan satisfies the requirements of section 401(a), 403(a), 408(a), 408(b), or 409(a), you may obtain that information from the IRS office where the employer’s principal place of business is located.

Line 1. Lump-Sum Distribution Election

portion, if any, attributable to the employee-decedent’s contributions is always includible. Also, you may not figure the gross estate in accordance with this election unless you check “Yes” on line 1 and attach the names, addresses, and identifying numbers of the recipients of the lump-sum distributions. See Regulations section 20.2039-4(d)(2).

How To Complete Schedule I (Form 706) In describing an annuity, give the name and address of the

Note: The following rules have been repealed and apply only if the decedent:

• On December 31, 1984, was both a participant in the plan and in pay status (for example, had received at least one benefit payment on or before December 31, 1984) and had irrevocably elected the form of the benefit before July 18, 1984; or

• Had separated from service before January 1, 1985, and did not change the form of benefit before death.

Generally, the entire amount of any lump-sum distribution is included in the decedent’s gross estate. However, under this special rule, all or part of a lump-sum distribution from a qualified (approved) plan will be excluded if the lump-sum distribution is included in the recipient’s income for income tax purposes.

If the decedent was born before 1936, the recipient may be eligible to elect special 10-year averaging rules (under repealed section 402(e)) and capital gain treatment (under repealed section 402(a)(2)) in figuring the income tax on the distribution. For more information, see Pub. 575, Pension and Annuity Income. If this option is available, the estate tax exclusion cannot be claimed unless the recipient elects to forego the 10-year averaging and capital gain treatment in figuring the income tax on the distribution. The recipient elects to forego this treatment by treating the distribution as taxable on the recipient’s income tax return, as described in Regulations section 20.2039-4(d). The election is irrevocable.

The amount excluded from the gross estate is the portion attributable to the employer contributions. The

Instructions for Form 706 (Rev. 7-2026) 39

Caution: Use Schedule PC (Form 706) to make a protective claim for refund for expenses that are not currently deductible under section 2053. For such a claim, report the expense on Schedule J (Form 706) but without a value in the last column.

General. Complete and file Schedule J (Form 706) if you claim a deduction on Form 706, Part V, item 14.

On Schedule J (Form 706), itemize funeral expenses and expenses incurred in administering property subject to claims. List the names and addresses of persons to whom the expenses are payable and describe the nature of the expense. Do not list expenses incurred in administering property not subject to claims on this schedule. List them on Schedule L (Form 706) instead.

The deduction is limited to the amount paid for these expenses that is allowable under local law but may not exceed:

1. The value of property subject to claims included in the gross estate, plus

2. The amount paid out of property included in the gross estate but not subject to claims. This amount must actually be paid by the due date of the estate tax return.

The applicable local law under which the estate is being administered determines which property is and is not subject to claims. If under local law a particular property interest included in the gross estate would bear the burden for the payment of the expenses, then the property is considered property subject to claims.

Unlike certain claims against the estate for debts of the decedent (see the instructions for Schedule K (Form 706)), you cannot deduct expenses incurred in administering property subject to claims on both the estate tax return and the estate’s income tax return. If you choose to deduct them on the estate tax return, you cannot deduct them on a Form 1041, U.S. Income Tax Return for Estates and Trusts, filed for the estate. Funeral expenses are only deductible on the estate tax return.

Funeral expenses. Itemize funeral expenses on line 2. List the funeral expense amount in column (iii). Deduct from the expenses any amounts that were reimbursed, such as death benefits payable by the SSA or the Veterans Administration. List the deductible amount of each expense in column (iv).

Executors’ commissions. When you file the return, you may deduct commissions that have actually been paid to you or that you expect will be paid on line 6a. Do not deduct commissions if none will be collected. If the amount of the commissions has not been fixed by decree

of the proper court, the deduction will be allowed on the final examination of the return, provided that:

• The Chief, Estate and Gift/Excise Tax Examination, is reasonably satisfied that the commissions claimed will be paid;

• The amount entered as a deduction is within the amount allowable by the laws of the jurisdiction where the estate is being administered; and

• It is in accordance with the usually accepted practice in that jurisdiction for estates of similar size and character.

If you have not been paid the commissions claimed at the time of the final examination of the return, you must support the amount you deducted with an affidavit or statement signed under the penalties of perjury that the amount has been agreed upon and will be paid.

You may not deduct a bequest or devise made to you instead of commissions. If, however, the decedent fixed by will the compensation payable to you for services to be rendered in the administration of the estate, you may deduct this amount to the extent it is not more than the compensation allowable by the local law or practice.

Do not deduct on this schedule amounts paid as trustees’ commissions whether received by you acting in the capacity of a trustee or by a separate trustee. If such amounts were paid in administering property not subject to claims, deduct them on Schedule L (Form 706).

Note: Executors’ commissions are taxable income to the executors. Therefore, be sure to include them as income on your individual income tax return.

Attorney fees. Enter the amount of attorney fees that have actually been paid or that you reasonably expect to be paid on line 6b. If, on the final examination of the return, the fees claimed have not been awarded by the proper court and paid, the deduction will be allowed, provided the Chief, Estate and Gift/Excise Tax Examination, is reasonably satisfied that the amount claimed will be paid and that it does not exceed a reasonable payment for the services performed, taking into account the size and character of the estate and the local law and practice. If the fees claimed have not been paid at the time of final examination of the return, the amount deducted must be supported by an affidavit, or statement signed under penalties of perjury, by the executor or the attorney stating that the amount has been agreed upon and will be paid.

Do not deduct attorney fees incidental to litigation incurred by the beneficiaries. These expenses are charged against the beneficiaries personally and are not administration expenses authorized by the Code.

Interest expense. Interest expenses incurred after the decedent’s death are generally allowed as a deduction if they are reasonable, necessary to the administration of the estate, and allowable under local law.

Interest incurred as the result of a federal estate tax deficiency is a deductible administrative expense. Penalties on estate tax deficiencies are not deductible even if they are allowable under local law.

40 Instructions for Form 706 (Rev. 7-2026)

Note: If you elect to pay the tax in installments under section 6166, you may not deduct the interest payable on the installments.

Miscellaneous expenses. Miscellaneous administration expenses necessarily incurred in preserving and distributing the estate are deductible on line 8. These expenses include appraiser’s and accountant’s fees, certain court costs, and costs of storing or maintaining assets of the estate.

The expenses of selling assets are deductible only if the sale is necessary to pay the decedent’s debts, the expenses of administration, or taxes, or to preserve the estate or carry out distribution.

Caution: Use Schedule PC (Form 706) to make a protective claim for refund for expenses that are not currently deductible under section 2053. For such a claim, report the expense on Schedule K (Form 706) but without a value in the last column.

You must complete and attach Schedule K (Form 706) if you claimed deductions on Form 706, Part V, item 15 or item 16.

Income vs. estate tax deduction. Taxes, interest, and business expenses accrued at the date of the decedent’s death are deductible both on Schedule K (Form 706) and as deductions in respect of the decedent on the income tax return of the estate.

If you choose to deduct medical expenses of the decedent only on the estate tax return, they are fully deductible as claims against the estate. If, however, they are claimed on the decedent’s final income tax return under section 213(c), they may also not be claimed on the estate tax return. In this case, you may also not deduct on the estate tax return any amounts that were not deductible on the income tax return because of the percentage limitations.

Debts of the Decedent List under Part I, Debts of the Decedent, only valid debts the decedent owed at the time of death. List any indebtedness secured by a mortgage or other lien on property of the gross estate under Part II, Mortgages and Liens. If the amount of the debt is disputed or the subject of litigation, deduct only the amount the estate concedes to be a valid claim.

Generally, if the claim against the estate is based on a promise or agreement, the deduction is limited to the extent that the liability was contracted bona fide and for an adequate and full consideration in money or money’s worth. However, any enforceable claim based on a promise or agreement of the decedent to make a contribution or gift (such as a pledge or a subscription) to or for the use of a charitable, public, religious, etc., organization is deductible to the extent that the deduction would be allowed as a bequest under the statute that applies.

Certain claims of a former spouse against the estate based on the relinquishment of marital rights are

deductible on Schedule K (Form 706). For these claims to be deductible, all of the following conditions must be met.

• The decedent and the decedent’s spouse must have entered into a written agreement relative to their marital and property rights.

• The decedent and the spouse must have been divorced before the decedent’s death and the divorce must have occurred within the 3-year period beginning on the date 1 year before the agreement was entered into. It is not required that the agreement be approved by the divorce decree.

• The property or interest transferred under the agreement must be transferred to the decedent’s spouse in settlement of the spouse’s marital rights.

You may not deduct a claim made against the estate by a remainderman relating to section 2044 property. Section 2044 property is described in the instructions for Part IV, line 7.

Include in this schedule notes unsecured by mortgage or other lien and give full details, including:

• Name of payee,

• Face and unpaid balance,

• Date and term of note,

• Interest rate, and

• Date to which interest was paid before death.

Include the exact nature of the claim as well as the name of the creditor. If the claim is for services performed over a period of time, state the period covered by the claim.

Example. Electric Illuminating Co., for electric service during December 2025, $150.

If the amount of the claim is the unpaid balance due on a contract for the purchase of any property included in the gross estate, indicate the schedule, line number, and item number where you reported the property. If the claim represents a joint and separate liability, give full facts and explain the financial responsibility of the co-obligor.

Property and income taxes. The deduction for property taxes is limited to the taxes accrued before the date of the decedent’s death. Federal taxes on income received during the decedent’s lifetime are deductible, but taxes on income received after death are not deductible.

Keep all vouchers or original records for inspection by the IRS.

Allowable death taxes. If you elect to take a deduction for foreign death taxes under section 2053(d) rather than a credit under section 2014, the deduction is subject to the limitations described in section 2053(d) and its regulations.

Mortgages and Liens Under Part II, Mortgages and Liens, list only obligations secured by mortgages or other liens on property included in the gross estate at its full value or at a value that was undiminished by the amount of the mortgage or lien. If the debt is enforceable against other property of the estate not subject to the mortgage or lien, or if the decedent was personally liable for the debt, include the full value of the property subject to the mortgage or lien in the gross estate

Instructions for Form 706 (Rev. 7-2026) 41

under the appropriate schedule and deduct the mortgage or lien on the property on this schedule.

However, if the decedent’s estate is not liable, include in the gross estate only the value of the equity of redemption (or the value of the property less the amount of the debt), and do not deduct any portion of the indebtedness on this schedule.

Notes and other obligations secured by the deposit of collateral, such as stocks, bonds, etc., should also be listed under Part II, Mortgages and Liens.

Description Include under column (ii), Description, the particular schedule, line number, and item number where the property subject to the mortgage or lien is reported in the gross estate.

Include the name and address of the mortgagee, payee, or obligee, and the date and term of the mortgage, note, or other agreement by which the debt was established. Also include the face amount, the unpaid balance, the rate of interest, and the date to which the interest was paid before the decedent’s death.

Caution: Use Schedule PC (Form 706) to make a protective claim for refund for expenses that are not currently deductible under section 2053. For such a claim, report the expense on Schedule L (Form 706) but without a value in the last column.

Complete Schedule L (Form 706) and file it with the return if you claim deductions on Form 706, Part V, item 19 or item 20.

Net Losses During Administration You may deduct only those losses from thefts, fires, storms, shipwrecks, or other casualties that occurred during the settlement of the estate in Part I. Deduct only the amount not reimbursed by insurance or otherwise.

Describe in detail the loss sustained and the cause. If you received insurance or other compensation for the loss, state the amount collected. Identify the property for which you are claiming the loss by indicating the schedule, line number, and item number where the property is included in the gross estate.

If you elect alternate valuation, do not deduct the amount by which you reduced the value of an item to include it in the gross estate.

Do not deduct losses claimed as a deduction on a federal income tax return or depreciation in the value of securities or other property.

Expenses Incurred in Administering Property Not Subject to Claims You may deduct expenses incurred in administering property that is included in the gross estate but that

is not subject to claims in Part II. Only deduct these expenses if they were paid before the section 6501 period of limitations for assessment expired.

The expenses deductible on this schedule are usually expenses incurred in the administration of a trust established by the decedent before death. They may also be incurred in the collection of other assets or the transfer or clearance of title to other property included in the decedent’s gross estate for estate tax purposes, but not included in the decedent’s probate estate.

The expenses deductible on this schedule are limited to those that are the result of settling the decedent’s interest in the property or of vesting good title to the property in the beneficiaries. Expenses incurred on behalf of the transferees (except those described earlier) are not deductible. Examples of deductible and nondeductible expenses are provided in Regulations section 20.2053-8(d).

List the names and addresses of the persons to whom each expense was payable and the nature of the expense. Identify the property for which the expense was incurred by indicating the schedule, line number, and item number where the property is included in the gross estate. If you do not know the exact amount of the expense, you may deduct an estimate, provided that the amount may be verified with reasonable certainty and will be paid before the period of limitations for assessment (referred to earlier) expires. Keep all vouchers and receipts for inspection by the IRS.

Caution: If any assets to which the special rule of Regulations section 20.2010-2(a)(7)(ii) applies are reported on this schedule, do not enter any value in the last column. See the instructions for Part V, Item 23, for information on how to estimate and report the value of these assets.

General You must complete Schedule M (Form 706) and file it with the return if you claim a deduction on Form 706, Part V, item 21.

The marital deduction is authorized by section 2056 for certain property interests that pass from the decedent to the surviving spouse. You may claim the deduction only for property interests that are included in the decedent’s gross estate (Schedules A through I of Form 706).

Note: The marital deduction is generally not allowed if the surviving spouse is not a U.S. citizen. The marital deduction is allowed for property passing to such a surviving spouse in a QDOT or if such property is transferred or irrevocably assigned to such a trust before the estate tax return is filed. The executor must elect QDOT status on the return. See the instructions that follow for details on the election.

42 Instructions for Form 706 (Rev. 7-2026)

Example—Listing Property Interests on Schedule M (Form 706)

8 Enter all other property passing to the surviving spouse not listed on line 4.

Property Interests That You May List on Schedule M (Form 706) Generally, you may list on Schedule M (Form 706) all property interests that pass from the decedent to the surviving spouse and are included in the gross estate. However, do not list any Nondeductible terminable interests (described later) on Schedule M (Form 706) unless you are making a QTIP election. The property for which you make this election must be included on Schedule M (Form 706). See Qualified terminable interest property, later.

For the rules on common disaster and survival for a limited period, see section 2056(b)(3).

You may list on Schedule M (Form 706) only those interests that the surviving spouse takes:

1. As the decedent’s legatee, devisee, heir, or donee;

2. As the decedent’s surviving tenant by the entirety or joint tenant;

3. As an appointee under the decedent’s exercise of a power or as a taker in default at the decedent’s nonexercise of a power;

4. As a beneficiary of insurance on the decedent’s life;

5. As the surviving spouse taking under dower or curtesy (or similar statutory interest); and

6. As a transferee of a transfer made by the decedent at any time.

Property Interests That You May Not List on Schedule M (Form 706) Do not list the following on Schedule M (Form 706).

1. The value of any property that does not pass from the decedent to the surviving spouse.

2. Property interests that are not included in the decedent’s gross estate.

3. The full value of a property interest for which a deduction was claimed on Schedules J through L of Form 706. The value of the property interest should be reduced by the deductions claimed with respect to it.

4. The full value of a property interest that passes to the surviving spouse subject to a mortgage or other encumbrance or an obligation of the surviving spouse. Include on Schedule M (Form 706) only the net value of the interest after reducing it by the amount of the mortgage or other debt.

5. Nondeductible terminable interests (described later).

6. Any property interest disclaimed by the surviving spouse.

Terminable Interests Certain interests in property passing from a decedent to a surviving spouse are referred to as terminable interests. These are interests that will terminate or fail after the passage of time, or on the occurrence or nonoccurrence of a designated event. Examples are life estates, annuities, estates for terms of years, and patents.

The ownership of a bond, note, or other contractual obligation, which when discharged would not have the effect of an annuity for life or for a term, is not considered a terminable interest.

Nondeductible terminable interests. Unless you are making a QTIP election, do not enter a terminable interest on Schedule M (Form 706) if:

1. Another interest in the same property passed from the decedent to some other person for less than adequate and full consideration in money or money’s worth; and

2. By reason of its passing, the other person or that person’s heirs may enjoy part of the property after the termination of the surviving spouse’s interest.

This rule applies even though the interest that passes from the decedent to a person other than the surviving spouse is not included in the gross estate and regardless of when the interest passes. The rule also applies regardless of whether the surviving spouse’s interest and the other person’s interest pass from the decedent at the same time.

Property interests that are considered to pass to a person other than the surviving spouse are any property interest that (a) passes under a decedent’s will or intestacy; (b) was transferred by a decedent during life; or (c) is held by or passed on to any person as a

Instructions for Form 706 (Rev. 7-2026) 43

decedent’s joint tenant, as appointee under a decedent’s exercise of a power, as taker in default at a decedent’s release or nonexercise of a power, or as a beneficiary of insurance on the decedent’s life. See Regulations section 20.2056(c)-3. For example, a spouse was devised real property for life, from the decedent, with remainder to the children. The life interest that passed to the spouse does not qualify for the marital deduction because it will terminate at the spouse’s death and the children will thereafter possess or enjoy the property.

However, if the decedent purchased a joint and survivor annuity for themselves and the spouse who survived them, the value of the survivor’s annuity, to the extent that it is included in the gross estate, qualifies for the marital deduction because even though the interest will terminate on the spouse’s death, no one else will possess or enjoy any part of the property.

The marital deduction is not allowed for an interest that the decedent directed the executor or a trustee to convert, after death, into a terminable interest for the surviving spouse. The marital deduction is not allowed for such an interest even if there was no interest in the property passing to another person and even if the terminable interest would otherwise have been deductible under the exceptions described later for life estates, life insurance, and annuity payments with powers of appointment. For more information, see Regulations section 20.2056(b)-1(f) and Regulations section 20.2056(b)-1(g), Example (7) .

If any property interest passing from the decedent to the surviving spouse may be paid or otherwise satisfied out of any of a group of assets, the value of the property interest is, for the entry on Schedule M (Form 706), reduced by the value of any asset or assets that, if passing from the decedent to the surviving spouse, would be nondeductible terminable interests. Examples of property interests that may be paid or otherwise satisfied out of any of a group of assets are a bequest of the residue of the decedent’s estate, or of a share of the residue, and a cash legacy payable out of the general estate.

Example. A decedent bequeathed $100,000 to the surviving spouse. The general estate includes a term for years (valued at $10,000 in determining the value of the gross estate) in an office building, which interest was retained by the decedent under a deed of the building by gift to the decedent’s child. Accordingly, the value of the specific bequest entered on Schedule M (Form 706) is $90,000.

Life estate with power of appointment in the surviv­ ing spouse. A property interest, whether or not in trust, will be treated as passing to the surviving spouse, and will not be treated as a nondeductible terminable interest if the following five conditions apply.

1. The surviving spouse is entitled for life to all of the income from the entire interest.

2. The income is payable annually or at more frequent intervals.

3. The surviving spouse has the power, exercisable in favor of the surviving spouse or the estate of the surviving spouse, to appoint the entire interest.

4. The power is exercisable by the surviving spouse alone and (whether exercisable by will or during life) is exercisable by the surviving spouse in all events.

5. No part of the entire interest is subject to a power in any other person to appoint any part to any person other than the surviving spouse (or the surviving spouse’s legal representative or relative if the surviving spouse is disabled; see Regulations section 20.2056(b)-5(a) and Rev. Rul. 85-35, 1985-1 C.B. 328).

If these five conditions are satisfied only for a specific portion of the entire interest, see Regulations sections 20.2056(b)-5(b) and -5(c) to determine the amount of the marital deduction.

Life insurance, endowment, or annuity payments, with power of appointment in surviving spouse. A property interest consisting of the entire proceeds under a life insurance, endowment, or annuity contract is treated as passing from the decedent to the surviving spouse, and will not be treated as a nondeductible terminable interest if the following five conditions apply.

1. The surviving spouse is entitled to receive the proceeds in installments, or is entitled to interest on them, with all amounts payable during the life of the spouse, payable only to the surviving spouse.

2. The installment or interest payments are payable annually or more frequently, beginning not later than 13 months after the decedent’s death.

3. The surviving spouse has the power, exercisable in favor of the surviving spouse or of the estate of the surviving spouse, to appoint all amounts payable under the contract.

4. The power of appointment is exercisable by the surviving spouse alone and (whether exercisable by will or during life) is exercisable by the surviving spouse in all events.

5. No part of the amount payable under the contract is subject to a power in any other person to appoint any part to any person other than the surviving spouse.

If these five conditions are satisfied only for a specific portion of the proceeds, see Regulations section 20.2056(b)-6(b) to determine the amount of the marital deduction.

Charitable remainder trusts. An interest in a charitable remainder trust will not be treated as a nondeductible terminable interest if:

1. The interest in the trust passes from the decedent to the surviving spouse, and

2. The surviving spouse is the only beneficiary of the trust other than charitable organizations described in section 170(c).

A charitable remainder trust is either a charitable remainder annuity trust or a charitable remainder unitrust. See section 664 for descriptions of these trusts.

44 Instructions for Form 706 (Rev. 7-2026)

Election To Deduct Qualified Terminable Interest Property (QTIP) You may elect to claim a marital deduction for QTIP or property interests. You make the QTIP election simply by listing the QTIP on line 4 of Schedule M (Form 706) and inserting its value. You are presumed to have made the QTIP election if you list the property and insert its value on Schedule M (Form 706). If you make this election, the surviving spouse’s gross estate will include the value of the QTIP. See the instructions for Form 706, Part IV, line 7, for more details. The election is irrevocable.

If you file a Form 706 in which you do not make this election, you may not file a supplemental return to make the election unless you file the supplemental return on or before the due date for filing the original Form 706.

The effect of the election is that the property (interest) will be treated as passing to the surviving spouse and will not be treated as a nondeductible terminable interest. All of the other marital deduction requirements must still be satisfied before you may make this election. For example, you may not make this election for property or property interests that are not included in the decedent’s gross estate.

Qualified terminable interest property. Qualified terminable interest property (QTIP) is property (a) that passes from the decedent, (b) in which the surviving spouse has a qualifying income interest for life, and (c) for which election under section 2056(b)(7) has been made.

The surviving spouse has a qualifying income interest for life if the surviving spouse is entitled to all of the income from the property payable annually or at more frequent intervals, or has a usufruct interest for life in the property, and during the surviving spouse’s lifetime no person has a power to appoint any part of the property to any person other than the surviving spouse. An annuity is treated as an income interest regardless of whether the property from which the annuity is payable can be separately identified.

Regulations sections 20.2044-1 and 20.2056(b)-7(d) (3) state that an interest in property is eligible for QTIP treatment if the income interest is contingent upon the executor’s election even if that portion of the property for which no election is made will pass to or for the benefit of beneficiaries other than the surviving spouse.

The QTIP election may be made for all or any part of QTIP. A partial election must relate to a fractional or percentile share of the property so that the elective part will reflect its proportionate share of the increase or decline in the whole of the property when applying section 2044 or 2519. Thus, if the interest of the surviving spouse in a trust (or other property in which the spouse has a qualified life estate) is QTIP, you may make an election for a part of the trust (or other property) only if the election relates to a defined fraction or percentage of the entire trust (or other property). The fraction or percentage may be defined by means of a formula.

Election to deduct QTIP under section 2056(b)(7). If a trust (or other property) meets the requirements of QTIP under section 2056(b)(7), and

Note: For trusts created by an instrument executed before November 5, 1990, items 1 and 2 above will be treated as met if the trust instrument requires that all trustees be individuals who are citizens of the United States or domestic corporations.

You make the QDOT election simply by listing the QDOT or the entire value of the trust property on Schedule M (Form 706) and deducting its value. You are presumed to have made the QDOT election if you list the trust or trust property and insert its value on Schedule M (Form 706). Once made, the election is irrevocable.

If an election is made to deduct QDOT property under section 2056A(d), provide the following information for each QDOT on an attachment to this schedule.

1. The name and address of every trustee.

2. A description of each transfer passing from the decedent that is the source of the property to be placed in trust.

3. The EIN for the trust.

4. The trust or other property is listed on Schedule M (Form 706); and

5. The value of the trust (or other property) is entered in whole or in part as a deduction on Schedule M (Form 706),

then unless the executor specifically identifies the trust (all or a fractional portion or percentage) or other property to be excluded from the election, the executor shall be deemed to have made an election to have such trust (or other property) treated as QTIP under section 2056(b)(7).

If less than the entire value of the trust (or other property) that the executor has included in the gross estate is entered as a deduction on Schedule M (Form 706), the executor shall be considered to have made an election only as to a fraction of the trust (or other property). The numerator of this fraction is equal to the amount of the trust (or other property) deducted on Schedule M (Form 706). The denominator is equal to the total value of the trust (or other property).

Qualified Domestic Trust (QDOT) Election The marital deduction is allowed for transfers to a surviving spouse who is not a U.S. citizen only if the property passes to the surviving spouse in a QDOT or if such property is transferred or irrevocably assigned to a QDOT before the decedent’s estate tax return is filed.

A QDOT is any trust:

1. That requires at least one trustee to be either a citizen of the United States or a domestic corporation,

2. That requires that no distribution of corpus from the trust can be made unless such a trustee has the right to withhold from the distribution the tax imposed on the QDOT,

3. That meets the requirements of any applicable regulations, and

4. For which the executor has made an election on the estate tax return of the decedent.

Instructions for Form 706 (Rev. 7-2026) 45

The election must be made for an entire QDOT trust. In listing a trust for which you are making a QDOT election, unless you specifically identify the trust as not subject to the election, the election will be considered made for the entire trust.

The determination of whether a trust qualifies as a QDOT will be made as of the date the decedent’s Form 706 is filed. If, however, judicial proceedings are brought before the Form 706’s due date (including extensions) to have the trust revised to meet the QDOT requirements, then the determination will not be made until the court-ordered changes to the trust are made.

Election to deduct qualified domestic trust property under section 2056A. If a trust meets the requirement of a QDOT under section 2056A(a), the return is filed no later than 1 year after the time prescribed by law (including extensions), and the entire value of the trust or trust property is listed and entered as a deduction on Schedule M (Form 706), then unless the executor specifically identifies the trust to be excluded from the election, the executor shall be deemed to have made an election to have the entire trust treated as QDOT property.

Note: For trusts with assets in excess of $2 million, see Regulations section 20.2056A-2(d) for additional requirements to ensure collection of the section 2056A estate tax.

How to Complete Schedule M (Form 706)

Line 1

If property passes to the surviving spouse as the result of a qualified disclaimer, check “Yes” and attach a copy of the written disclaimer required by section 2518(b).

Line 3

Section 2056(b)(7)(C)(ii) creates an automatic QTIP election for certain joint and survivor annuities that are includible in the estate under section 2039. To qualify, only the surviving spouse can have the right to receive payments before the death of the surviving spouse.

The executor can elect out of QTIP treatment, by checking the “Yes” box on line 3. Once made, the election is irrevocable. If there is more than one such joint and survivor annuity, you are not required to make the election for all of them.

If you elect out of QTIP treatment by checking “Yes” on line 3, you cannot deduct the amount of the annuity on Schedule M (Form 706). If you do not elect out, you must list the joint and survivor annuities on Schedule M (Form 706).

Line 4

List each property interest included in the gross estate that passes from the decedent to the surviving spouse and for which a marital deduction is claimed. This includes otherwise nondeductible terminable interest property for which you are making a QTIP election. Number each item in sequence in column (i), and describe each item

in detail in column (ii). Describe the instrument (including any clause or paragraph number) or provision of law under which each item passed to the surviving spouse. Indicate the schedule, line number, and item number of each asset.

In listing otherwise nondeductible property for which you are making a QTIP election, unless you specifically identify a fractional portion of the trust or other property as not subject to the election, the election will be considered made for the entire interest.

Enter the value of each interest before taking into account the federal estate tax or any other death tax. The valuation dates used in determining the value of the gross estate also apply on Schedule M (Form 706).

If Schedule M (Form 706) includes a bequest of the residue or a part of the residue of the decedent’s estate, attach a copy of the computation showing how the value of the residue was determined. Include a statement showing the following.

• The value of all property that is included in the decedent’s gross estate (Schedules A through I of Form 706) but is not a part of the decedent’s probate estate, such as lifetime transfers, jointly owned property that passed to the survivor on the decedent’s death, and the insurance payable to specific beneficiaries.

• The values of all specific and general legacies or devises, with reference to the applicable clause or paragraph of the decedent’s will or codicil. (If legacies are made to each member of a class, for example, $1,000 to each of the decedent’s employees, only the number in each class and the total value of property received by them need be furnished.)

• The dates of birth of all persons, the length of whose lives may affect the value of the residuary interest passing to the surviving spouse.

• Any other important information such as that relating to any claim to any part of the estate not arising under the will.

Lines 13a, 13b, 13c

The total of the values listed on Schedule M (Form 706) must be reduced by the amount of the federal estate tax, the federal GST tax, and the amount of state or other death and GST taxes paid out of the property interest involved. If you enter an amount for state or other death or GST taxes on line 13b or 13c, identify the taxes and attach your computation of them.

Attachments

If you list property interests passing by the decedent’s will on Schedule M (Form 706), attach a certified copy of the order admitting the will to probate. If, when you file the return, the court of probate jurisdiction has entered any decree interpreting the will or any of its provisions affecting any of the interests listed on Schedule M (Form 706), or has entered any order of distribution, attach a copy of the decree or order. In addition, the IRS may

46 Instructions for Form 706 (Rev. 7-2026)

request other evidence to support the marital deduction claimed.

Caution: If any assets to which the special rule of Regulations section 20.2010-2(a)(7)(ii) applies are reported on this schedule, do not enter any value in the last column. See the instructions for Part V, Item 23, for information on how to estimate and report the value of these assets.

General You must complete Schedule O (Form 706) and file it with the return if you claim a deduction on Form 706, Part V, item 22.

You can claim the charitable deduction allowed under section 2055 for the value of property in the decedent’s gross estate that was transferred by the decedent during life or by will to or for the use of any of the following.

• The United States, a state, a political subdivision of a state, or the District of Columbia for exclusively public purposes.

• Any corporation or association organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, including the encouragement of art, or to foster national or international amateur sports competition (but only if none of its activities involve providing athletic facilities or equipment, unless the organization is a qualified amateur sports organization) and the prevention of cruelty to children and animals. No part of the net earnings may benefit any private individual and no substantial activity may be undertaken to carry on propaganda or otherwise attempt to influence legislation or participate in any political campaign on behalf of any candidate for public office.

• A trustee or a fraternal society, order, or association operating under the lodge system if the transferred property is to be used exclusively for religious, charitable, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals. No substantial activity may be undertaken to carry on propaganda or otherwise attempt to influence legislation, or participate in any political campaign on behalf of any candidate for public office.

• Any veterans organization incorporated by an Act of Congress or any of its departments, local chapters, or posts, for which none of the net earnings benefits any private individual.

• Employee stock ownership plans if the transfer qualifies as a qualified gratuitous transfer of qualified employer securities within the meaning provided in section 664(g).

For this purpose, certain Indian tribal governments are treated as states and transfers to them qualify as deductible charitable contributions. See section 7871 and Rev. Proc. 2008-55, 2008-39 I.R.B. 768, available at Rev. Proc. 2008-55, as modified and supplemented by subsequent revenue procedures, for a list of qualifying Indian tribal governments.

You may also claim a charitable contribution deduction for a qualifying conservation easement granted after the decedent’s death under the provisions of section 2031(c) (9).

The charitable deduction is allowed for amounts that are transferred to charitable organizations as a result of either a qualified disclaimer (see Line 2, later) or the complete termination of a power to consume, invade, or appropriate property for the benefit of an individual. It does not matter whether termination occurs because of the death of the individual or in any other way. The termination must occur within the period of time (including extensions) for filing the decedent’s estate tax return and before the power has been exercised.

The deduction is limited to the amount actually available for charitable uses. Therefore, if under the terms of a will or the provisions of local law or for any other reason, the federal estate tax, the federal GST tax, or any other estate, GST, succession, legacy, or inheritance tax is payable in whole or in part out of any bequest, legacy, or devise that would otherwise be allowed as a charitable deduction, the amount you may deduct is the amount of the bequest, legacy, or devise reduced by the total amount of the taxes.

If you elected to make installment payments of the estate tax and the interest is payable out of property transferred to charity, you must reduce the charitable deduction by an estimate of the maximum amount of interest that will be paid on the deferred tax.

For split-interest trusts or pooled income funds, only the figure that is passing to the charity should be entered in column (iv), Amount. Do not enter the entire amount that passes to the trust or fund.

If you are deducting the value of the residue or a part of the residue passing to charity under the decedent’s will, attach a copy of the computation showing how you determined the value, including any reduction for the taxes described earlier.

Also include the following.

• A statement that shows the values of all specific and general legacies or devises for both charitable and noncharitable uses. For each legacy or devise, indicate the paragraph or section of the decedent’s will or codicil that applies. If legacies are made to each member of a class (for example, $1,000 to each of the decedent’s employees), show only the number of each class and the total value of property they received.

• The dates of birth of all life tenants or annuitants, the length of whose lives may affect the value of the interest passing to charity under the decedent’s will.

• A statement showing the value of all property that is included in the decedent’s gross estate but does not pass under the will, such as transfers, jointly owned property that passed to the survivor on the decedent’s death, and insurance payable to specific beneficiaries.

• Any agreements with charitable beneficiaries, whether entered before or after the date of death of the decedent.

• Verification of the sale or purchase of property that is the subject of a charitable deduction.

Instructions for Form 706 (Rev. 7-2026) 47

• Any other important information such as that relating to any claim, not arising under the will, to any part of the estate (that is, a spouse claiming dower or curtesy, or similar rights).

Line 2. Qualified Disclaimer The charitable deduction is allowed for amounts that are transferred to charitable organizations as a result of a qualified disclaimer. To be a qualified disclaimer, a refusal to accept an interest in property must meet the conditions of section 2518. These are explained in Regulations sections 25.2518-1 through 25.2518-3. If property passes to a charitable beneficiary as the result of a qualified disclaimer, check the “Yes” box on line 2 and attach a copy of the written disclaimer required by section 2518(b).

Attachments If the charitable transfer was made by will, attach a certified copy of the order admitting the will to probate, in addition to the copy of the will. If the charitable transfer was made by any other written instrument, attach a copy. If the instrument is of record, the copy should be certified; if not, the copy should be verified.

Value The valuation dates used in determining the value of the gross estate also apply on Schedule O (Form 706).

General If you claim a credit on Form 706, Part II, line 13, complete Schedule P (Form 706) and file it with the return. Attach Form(s) 706-CE to Form 706 to support any credit you claim.

If the foreign government refuses to certify Form 706-CE, file it directly with the IRS as instructed on the Form 706-CE. See Form 706-CE for instructions on how to complete the form and a description of the items that must be attached to the form when the foreign government refuses to certify it.

The credit for foreign death taxes is allowable only if the decedent was a citizen or resident of the United States. However, see section 2053(d) and the related regulations for exceptions and limitations if the executor has elected, in certain cases, to deduct these taxes from the value of the gross estate. For a resident not a citizen, who was a citizen or subject of a foreign country for which the President has issued a proclamation under section 2014(h), the credit is allowable only if the country of which the decedent was a national allows a similar credit to decedents who were U.S. citizens residing in that country.

The credit is authorized either by statute or by treaty. If a credit is authorized by a treaty, whichever of the following is the most beneficial to the estate is allowed.

• The credit figured under the treaty.

• The credit figured under the statute.

• The credit figured under the treaty, plus the credit figured under the statute for death taxes paid to each political subdivision or possession of the treaty

The amount entered on line 6 should not include any tax paid to the foreign country for property not situated in that country and should not include any tax paid to the foreign country for property not included in the gross estate. If only a part of the property subjected to foreign taxes is both situated in the foreign country and included in the gross estate, it will be necessary to determine the portion of the taxes attributable to that part of the property.

country that are not directly or indirectly creditable under the treaty.

Under the statute, the credit is authorized for all death taxes (national and local) imposed in the foreign country. Whether local taxes are the basis for a credit under a treaty depends upon the provisions of the particular treaty.

If a credit for death taxes paid in more than one foreign country is allowable, a separate computation of the credit must be made for each foreign country. Attach a separate Schedule P (Form 706) for each foreign country.

The total credit allowable for any property, whether subjected to tax by one or more than one foreign country, is limited to the amount of the federal estate tax attributable to the property. The anticipated amount of the credit may be figured on the return, but the credit cannot finally be allowed until the foreign tax has been paid and a Form 706-CE evidencing payment is filed. Section 2014(g) provides that for credits for foreign death taxes, each U.S. territory is deemed a foreign country.

Convert death taxes paid to the foreign country into U.S. dollars by using the rate of exchange in effect at the time each payment of foreign tax is made.

If a credit is claimed for any foreign death tax that is later recovered, see Regulations section 20.2016-1 for the notice required within 30 days.

Limitation Period The credit for foreign death taxes is limited to those taxes that were actually paid and for which a credit was claimed within the later of 4 years after the filing of the estate tax return, before the date of expiration of any extension of time for payment of the federal estate tax, or 60 days after a final decision of the Tax Court on a timely filed petition for a redetermination of a deficiency.

Credit Under the Statute For the credit allowed by the statute, the question of whether particular property is situated in the foreign country imposing the tax is determined by the same principles that would apply in determining whether similar property of a nonresident not a U.S. citizen is situated within the United States for purposes of the federal estate tax. See the Instructions for Form 706-NA.

Computation of Credit Under the Statute

Line 6. Enter the amount of the estate, inheritance, legacy, and succession taxes paid to the foreign country and its possessions or political subdivisions, attributable to property that is:

• Situated in that country,

• Subjected to these taxes, and

• Included in the gross estate.

48 Instructions for Form 706 (Rev. 7-2026)

Also, attach the computation of the amount entered on line 6.

Line 7. Enter the value of the gross estate, less the total of the deductions from Form 706, Part V, items 21 and 22.

Line 8. Enter the value of the property situated in the foreign country that is subjected to the foreign taxes and included in the gross estate, less those portions of the deductions taken on Schedules M and O of Form 706 that are attributable to the property.

Line 9. Subtract Form 706, Part II, line 15 from Form 706, Part II, line 12. Enter the balance on Schedule P (Form 706), line 9.

Credit Under Treaties If you are reporting any items on this return based on the provisions of a death tax treaty, 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.

In general. If the provisions of a treaty apply to the estate of a U.S. citizen or resident, a credit is authorized for payment of the foreign death tax or taxes specified in the treaty. Treaties with death tax conventions are in effect with the following countries: Australia, Austria, Canada, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, the Netherlands, South Africa, Switzerland, and the United Kingdom.

A credit claimed under a treaty is in general figured on Schedule P (Form 706) in the same manner as the credit is figured under the statute with the following principal exceptions.

• The situs rules contained in the treaty apply in determining whether property was situated in the foreign country.

• The credit may be allowed only for payment of the death tax or taxes specified in the treaty (but see the instructions earlier for credit under the statute for death taxes paid to each political subdivision or possession of the treaty country that are not directly or indirectly creditable under the treaty).

• If specifically provided, the credit is proportionately shared for the tax applicable to property situated outside both countries, or that was deemed in some instances situated within both countries.

• The amount entered on line 9 of Schedule P (Form

706. is the amount shown on Form 706, Part II, line 12, less the total of the credits claimed for federal gift taxes on pre-1977 gifts (section 2012) (Form 706, Part II, line 15) and for tax on prior transfers (Form 706, Part II, line 14). (If a credit is claimed for tax on prior transfers, it will be necessary to complete Schedule Q (Form 706) before completing Schedule P (Form 706).) For examples of computations of credits under the treaties, see the applicable regulations.

General Complete Schedule Q (Form 706) and file it with the return if you claim a credit on Form 706, Part II, line 14.

The term “transferee” means the decedent for whose estate this return is filed. If the transferee received property from a transferor who died within 10 years before or 2 years after the transferee, a credit is allowable on this return for all or part of the federal estate tax paid by the transferor’s estate for the transfer. There is no requirement that the property be identified in the estate of the transferee or that it exist on the date of the transferee’s death. It is sufficient for the allowance of the credit that the transfer of the property was subjected to federal estate tax in the estate of the transferor and that the specified period of time has not elapsed. A credit may be allowed for property received as the result of the exercise or nonexercise of a power of appointment when the property is included in the gross estate of the donee of the power.

If the transferee was the transferor’s surviving spouse, no credit is allowed for property received from the transferor to the extent that a marital deduction was allowed to the transferor’s estate for the property. There is no credit for tax on prior transfers for federal gift taxes paid in connection with the transfer of the property to the transferee.

If you are claiming a credit for tax on prior transfers on Form 706-NA, you should first complete and attach Form 706, Part V—Recapitulation, before figuring the credit on Schedule Q (Form 706).

Section 2056(d)(3) contains specific rules for allowing a credit for certain transfers to a spouse who was not a U.S. citizen where the property passed outright to the spouse, or to a QDOT.

Property The term “property” includes any interest (legal or equitable) of which the transferee received the beneficial ownership. The transferee is considered the beneficial owner of property over which the transferee received a general power of appointment. Property does not include interests to which the transferee received only a bare legal title, such as that of a trustee. Neither does it include an interest in property over which the transferee received a power of appointment that is not a general power of appointment. In addition to interests in which the transferee received the complete ownership, the credit may be allowed for annuities, life estates, terms for years, remainder interests (whether contingent or vested), and any other interest that is less than the complete ownership of the property to the extent that the transferee became the beneficial owner of the interest.

Maximum Amount of the Credit The maximum amount of the credit is the smaller of:

1. The amount of the estate tax of the transferor’s estate attributable to the transferred property, or

Note: For computation of credit, in cases where property is situated outside both countries or deemed situated within both countries, see the appropriate treaty for details.

Instructions for Form 706 (Rev. 7-2026) 49

2. The amount by which:

a. An estate tax on the transferee’s estate

determined without the credit for tax on prior transfers exceeds

b. An estate tax on the transferee’s estate

determined by excluding from the gross estate the net value of the transfer.

If credit for a particular foreign death tax may be taken under either the statute or a death duty convention, and on this return the credit actually is taken under the convention, then no credit for that foreign death tax may be taken into consideration in figuring estate tax (2a) or estate tax (2b) above.

Percent Allowable

Where transferee predeceased the transferor. If not more than 2 years elapsed between the dates of death, the credit allowed is 100% of the maximum amount. If more than 2 years elapsed between the dates of death, no credit is allowed.

Where transferor predeceased the transferee. The percent of the maximum amount that is allowed as a credit depends on the number of years that elapsed between dates of death. It is determined using the following table.

Period of time

exceeding Not exceeding

Percent allowable

• • • • • 2 years 100

2 years 4 years 80 4 years 6 years 60 6 years 8 years 40 8 years 10 years 20 10 years - - - - - none

How To Figure the Credit A worksheet for Schedule Q (Form 706) is provided to allow you to figure the limits before completing Schedule Q (Form 706). Transfer the appropriate amounts from the worksheet to Schedule Q (Form 706) as indicated on the schedule. You do not need to file the worksheet with Form 706, but keep it for your records.

Cases involving transfers from two or more trans­ ferors. Part I of the worksheet and Schedule Q (Form 706) enable you to figure the credit for as many as three transferors. The number of transferors is irrelevant to Part

II of the worksheet. If you are figuring the credit for more than three transferors, use more than one worksheet and Schedule Q (Form 706), Part I, and combine the totals for the appropriate lines.

Section 2032A additional tax. If the transferor’s estate elected special-use valuation and the additional estate tax of section 2032A(c) was imposed at any time up to 2 years after the death of the decedent for whom you are filing this return, check the box on Schedule Q (Form 706). On lines 1 and 9 of the worksheet, include the property subject to the additional estate tax at its FMV rather than its special-use value. On line 10 of the worksheet, include the additional estate tax paid as a federal estate tax paid.

How To Complete the Schedule Q (Form 706) Worksheet Most of the information to complete Part I of the worksheet should be obtained from the transferor’s Form 706.

Line 5. Enter on line 5 the applicable marital deduction claimed for the transferor’s estate (from the transferor’s Form 706).

Lines 10 through 18. Enter on these lines the appropriate taxes paid by the transferor’s estate.

If the transferor’s estate elected to pay the federal estate tax in installments, enter on line 10 only the total of the installments that have actually been paid at the time you file this Form 706. See Rev. Rul. 83-15, 1983-1 C.B. 224, for more details.

Line 21. Add the following lines.

• Form 706, Part II, line 11 (allowable applicable credit).

• Form 706, Part II, line 13 (foreign death taxes credit).

• Form 706, Part II, line 15 (credit for pre-1977 federal gift taxes under section 2012).

Subtract this total from Form 706, Part II, line 8 (gross estate tax). Enter the result on line 21 of the worksheet.

Line 26. If you figured the marital deduction using the unlimited marital deduction in effect for decedents dying after 1981, for purposes of determining the marital deduction for the reduced gross estate, see Rev. Rul. 90-2, 1990-1 C.B. 169. To determine the reduced adjusted gross estate, subtract the amount on line 25 of the worksheet from the amount on line 24 of the worksheet. If community property is included in the amount on line 24 of the worksheet, figure the reduced adjusted gross estate using the rules of Regulations section 20.2056(c)-2 and Rev. Rul. 76-311, 1976-2 C.B. 261.

50 Instructions for Form 706 (Rev. 7-2026)

Worksheet for Schedule Q (Form 706)—Credit for Tax on Prior Transfers

Instructions for Form 706 (Rev. 7-2026) 51