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Article #: 19053
Tax Computation
Most of the information printed in Part 2 of the return is calculated from entries made on other screens, as directed by Form 706. For example, the amount for line 13, “Credit for foreign death taxes,” is calculated from the information you enter on screen CE (Form 706-CE), available from the Form 706 Estate Forms tab of the Data Entry Menu.
Flow of Data
The table below displays the screens from which Part 2 amounts are calculated.
Form 706, Tax Computation Fields
| Line & Label | Screen | Additional Information | |
|---|---|---|---|
| Line 1, Total gross estate | PROP, U, various screens from the Deductions section | Amount includes stocks, bonds, annuities, insurance, and property in which the decedent had an interest. See “Gross Estate (Schedules A – I; Schedule U).” | |
| Line 2, Tentative total allowable deductions | PROP and various screens from the Deductions section | See “Gross Estate (Schedules A – I; Schedule U)” and “Deductions (Schedules J – M; Schedule O).” | |
| Line 4, Adjusted taxable gifts | 709 | See “Generation-Skipping Transfer (GST) Tax.” | |
| Line 7, Total gift tax paid | 709 | See “Generation-Skipping Transfer (GST) Tax.” | |
| Line 10, Adjustment to applicable credit amount | 709 | See “Foreign Death Tax (Sch. P; Form 706-CE).” | |
| Line 13, Credit for foreign death taxes | CE | See “Foreign Death Tax (Sch. P; Form 706-CE).” | |
| Line 14, Credit for tax on prior transfers | Q | Calculated from Schedule Q; see “Credit for Tax on Prior Transfers (Sch. Q).” | |
| Line 17, GST taxes payable | R, R2 | Calculated from Schedule R; see “Generation-Skipping Transfer (GST) Tax” for more information. | |
Direct-Entry Amounts
Enter amounts for the following lines directly onto screen 2:
- Line 3b, State death tax deduction — This is the amount of estate, inheritance, legacy, or succession taxes paid as a result of the decedent’s death to any state (including the District of Columbia).
- Line 9a, Basic exclusion amount — This field overrides the amount calculated for line 9a, “Basic exclusion amount,” for Form 706.
- Line 9c, Restored exclusion amount — For more on restoring the exclusion amount, see the first note below.
- Line 19, Prior payments — Enter here any prior payments made of the estate taxes. (See the second note below.)
- Line 19, U.S. Treasury bonds — Enter here any U.S. Treasury bonds redeemed in payment of estate tax. (The executor may not use the treasury bonds to pay generation-skipping transfer taxes.)
Note If a decedent made a taxable gift during the decedent’s lifetime to decedent’s same-sex spouse, and that transfer resulted in a reduction of the decedent’s available applicable exclusion amount, the amount of the applicable exclusion that was reduced can be restored. See IRS instructions for Form 706 and Form 709, Schedule C, to determine the Restored Exclusion Amount.
Note The IRS requires that if the tax paid with the return is different from the balance due, you must explain the difference in an attached statement. If prior payments have been made to the IRS, and an amount is entered on either line 19 field on screen 2, you must explain in an attached statement. To include such statements, go to the SCH screen (accessible from the Supplemental Forms tab), enter a title (such as “Line 19 – Prior Payments”) and then in the large text box, enter an explanation.