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IRS Form 8971 (Schedule A) – Beneficiary Information Regarding Property Acquired From a Decedent – Inheriting property from a loved one is often bittersweet, but it comes with important tax responsibilities. One key document in this process is IRS Form 8971, particularly its attached Schedule A, which provides critical information about the fair market value (FMV) of assets you receive from a decedent’s estate. This form ensures compliance with the consistent basis reporting rules under Internal Revenue Code (IRC) Section 1014(f), helping beneficiaries like you accurately report the tax basis of inherited property on future returns.

As of August 2025, the IRS has updated the instructions for Form 8971 and Schedule A to reflect minor procedural changes, including an updated mailing address for filings. Understanding this form is essential to avoid penalties and maximize your tax benefits. In this guide, we’ll break down everything you need to know about IRS Form 8971 Schedule A, from its purpose to filing deadlines and common pitfalls.

 

What Is IRS Form 8971 and Schedule A?

IRS Form 8971, titled “Information Regarding Beneficiaries Acquiring Property from a Decedent,” is an informational return filed by the executor of an estate. It reports the final estate tax values of property distributed (or to be distributed) from the estate to the IRS. Attached to it is Schedule A (Form 8971), which serves as a personalized notice to each beneficiary detailing the property they acquired and its estate tax value.

The primary goal of Schedule A is to provide you, the beneficiary, with the “consistent basis” information required by law. This means the tax basis of the property you inherit must match the value reported on the estate’s Form 706 (United States Estate Tax Return) or Form 706-NA (for nonresidents). This value becomes your starting point for calculating capital gains if you sell the asset later.

For example, if you inherit stock valued at $100,000 on the estate tax return, your basis is $100,000—regardless of the property’s original purchase price. Retain your Schedule A indefinitely, as it’s your proof for IRS audits.

Who Needs to File Form 8971 and Furnish Schedule A?

Not every estate requires Form 8971. It’s mandatory only if the executor files Form 706 or 706-NA after July 31, 2015, and the gross estate (plus adjusted taxable gifts) exceeds the federal estate tax exclusion amount—$13.61 million per individual in 2025. Exceptions include estates filing solely for portability elections, protective returns, or allocations without actual tax liability.

The executor (or any co-executor) must:

• File the complete Form 8971 with the IRS, including copies of all Schedules A.
• Furnish one Schedule A to each beneficiary who acquires “reportable property.”

Multiple executors may need to file separate Forms 8971 for the same estate. Beneficiaries don’t file this form themselves but must use the provided Schedule A for their tax records.

What Property Must Be Reported on Schedule A?

Schedule A covers “non-excepted” property acquired from the decedent. This includes assets included in the gross estate and any property with a basis derived from it (e.g., via like-kind exchanges). Reportable items typically encompass:

• Real estate
• Stocks, bonds, and other securities
• Business interests
• Tangible personal property requiring appraisal (e.g., art, jewelry)

Excepted property— which doesn’t require reporting—includes:

• Cash (U.S. dollars, demand deposits, money market funds)
• Life insurance proceeds payable to the beneficiary
• Household effects not needing appraisal
• Property sold by the estate before distribution
• Income in respect of a decedent (e.g., unpaid wages)

Even if all property is excepted, the executor must still file Form 8971 (without Schedules A). Optional Schedules A can be provided for property not yet distributed if the executor anticipates the beneficiary will receive it.

IRS Form 8971 (Schedule A) Download and Printable

Download and print: IRS Form 8971 (Schedule A)

How to Complete Schedule A: Step-by-Step Guide

Schedule A is straightforward but requires precise details from the estate’s Form 706. Here’s a breakdown of its sections based on the August 2025 revision.

Part I: General Information

• Lines 1–2: Enter the decedent’s name and Social Security Number (SSN).
• Lines 3–4: Your name and Taxpayer Identification Number (TIN) as the beneficiary.
• Lines 5–7: Executor’s name, phone, and full address.
• Line 8: Check boxes if this is a supplemental filing, change of beneficiary, or update to other info.

Part II: Information on Property Acquired

Use columns (a)–(h) for each asset:

• (a)–(d): Item number, schedule from Form 706, description (e.g., “100 shares of XYZ Corp. stock”).
• (e): Your percentage interest acquired (e.g., 50% if shared).
• (f): Yes/No if the asset increased the estate’s tax liability.
• (g): Valuation date (alternate date if elected on Form 706).
• (h): Estate tax value in U.S. dollars.

Sum the values on Lines 2–4 for totals. The executor must certify the accuracy and provide this to you—no later than the filing deadline.

Executors: Use the IRS’s accessible PDF version for electronic or printed forms. Beneficiaries: Keep it safe; it’s your key to stepped-up basis under IRC Section 1014(a).

Filing Deadlines and Procedures for Form 8971

Timing is critical to avoid penalties. File Form 8971 and furnish required Schedules A by the earlier of:

• 30 days after the due date (including extensions) for Form 706.
• 30 days after actually filing Form 706.

If the deadline falls on a weekend or holiday, it shifts to the next business day. Mail to the IRS at: Department of the Treasury, Internal Revenue Service, Ogden, UT 84201-0026 (updated August 2025). Electronic filing isn’t available; it’s paper-only, separate from other returns.

Proof of mailing (e.g., certified mail) is recommended for executors.

Supplements and Updates to Form 8971 Schedule A

Life happens—property may be acquired after the initial filing, or values may change (e.g., due to a Form 706 supplement). In these cases:

• For new acquisitions: Furnish Schedule A and file a supplement by January 31 of the following year.
• For changes: Update within 30 days of the information becoming available.

Mark the supplemental checkboxes on Line 8. The duty to update continues until all values are final.

Common Mistakes to Avoid with IRS Form 8971 Schedule A

• Overlooking excepted property: Remember, even cash inheritances might trigger filing if other assets exist.
• Incorrect basis reporting: Beneficiaries using pre-death values instead of Schedule A figures can face audits and penalties up to 40% of underpayments.
• Missing deadlines: Late furnishing can lead to executor penalties of $290 per form per month.
• Not retaining records: Lose your Schedule A? Request a copy from the executor—don’t guess the basis.

Always cross-reference with Form 706 schedules for accuracy.

Frequently Asked Questions (FAQs) About IRS Form 8971 Schedule A

Do I need Schedule A if the estate is below the exemption threshold?

No, if no Form 706 is required, Form 8971 isn’t filed.

What if I’m a nonresident alien beneficiary?

The rules apply similarly, but use Form 706-NA values.

Can Schedule A values be adjusted later?

Only through supplements if facts change; otherwise, they’re final for basis purposes.

Where can I download the latest forms?

Visit IRS.gov/Form8971 for the August 2025 revisions.

Final Thoughts: Stay Compliant and Maximize Your Inheritance

IRS Form 8971 Schedule A bridges the gap between estate settlement and your personal tax obligations, ensuring fair and consistent reporting of inherited property values. By understanding its requirements, you can confidently handle your basis calculations and avoid costly errors. For complex estates, consult a tax professional or estate attorney—especially with 2025’s exclusion amount in play.

For the most current guidance, download the official forms and instructions from the IRS website. Proper planning today saves headaches tomorrow.

This article is for informational purposes only and not tax advice. Always refer to IRS publications for your situation.

 

IRS Form 706 (Schedule PC) – Protective Claim for Refund – In the complex world of estate planning and taxation, protecting your right to a potential refund can make all the difference. If you’re handling an estate tax return for a loved one who passed away after December 31, 2011, IRS Form 706 Schedule PC—officially known as the Protective Claim for Refund—could be a crucial tool. This schedule allows executors to safeguard deductions under section 2053 of the Internal Revenue Code for unresolved claims or expenses that aren’t yet payable, ensuring the estate isn’t shortchanged by time-sensitive deadlines.

Whether you’re navigating funeral costs, administration expenses, or contested debts, a protective claim helps preserve refund rights even when payments are delayed due to litigation or other contingencies. In this comprehensive guide, we’ll break down everything you need to know about IRS Form 706 Schedule PC, from eligibility to step-by-step filing instructions, based on the latest 2025 updates from the IRS.

 

What Is IRS Form 706 Schedule PC?

IRS Form 706 is the United States Estate (and Generation-Skipping Transfer) Tax Return, used to calculate and report federal estate taxes on a decedent’s assets. Schedule PC attaches to this form specifically for protective claims for refund related to section 2053 deductions. These deductions cover expenses like funeral costs, estate administration fees, debts, mortgages, liens, and net losses—but only if they’re not deductible at the time of filing due to unresolved issues.

The purpose of Schedule PC is twofold:

• Preserve refund rights: It locks in the estate’s ability to claim a refund later, once the expense becomes deductible, even after the standard three-year statute of limitations under section 6511(a) expires.
• Notify the IRS of resolutions: It also serves to inform the IRS when a claim is partially or fully resolved, triggering a refund calculation.

This schedule is essential for estates facing uncertainties, such as ongoing lawsuits or delayed payments, preventing the loss of potentially significant tax savings. For decedents dying after December 31, 2011, it’s the go-to form for these scenarios, as outlined in Revenue Procedure 2011-48.

Who Should File Schedule PC (Form 706)?

Not every estate tax return requires Schedule PC, but it’s vital if your situation involves delayed or contingent deductions. You should consider filing if:

• The estate includes unresolved claims or expenses under section 2053, such as:
  • Funeral and administration expenses (reported on Schedule J).
  • Debts, mortgages, or liens (Schedule K).
  • Net losses or non-claim expenses (Schedule L).
• These items can’t be deducted on the initial Form 706 because payment is postponed—e.g., due to litigation, counterclaims, or regulatory contingencies like those in Treas. Reg. § 20.2053-1(d)(4) for ascertainable amounts or § 20.2053-4 for claims under $500,000.
• The decedent died after December 31, 2011, and the protective claim must be filed before the section 6511(a) limitations period ends (typically three years from the Form 706 filing date or two years from tax payment).

The executor or authorized fiduciary files it, but if a different person is handling the claim, attach proof of authority (e.g., letters testamentary or Form 56). Each separate claim or expense needs its own Schedule PC—don’t lump them together.

Ancillary costs, like legal fees, court costs, or appraisals tied to resolving the claim, are automatically included if they qualify under section 2053, without needing separate substantiation.

When to File a Protective Claim for Refund

Timing is everything with IRS deadlines. File Schedule PC with your original Form 706 to avoid complications—separate filings require Form 843 instead. Key triggers include:

• Initial protective claim: When the expense isn’t yet deductible but will likely become so after the limitations period. This preserves your position without immediate payment.
• Partial refund: For recurring or ongoing expenses where only part of the amount is resolved (e.g., interim payments in a multi-year lawsuit).
• Full and final refund: Once the entire claim is settled, notify the IRS within 90 days of payment or resolution to claim the overpaid tax.

Under Rev. Proc. 2011-48, the IRS will acknowledge initial claims within 180 days; if not, contact them at 866-699-4083. Filing doesn’t pause IRS audits or closing letters, so proceed with your return as normal, entering zero in the deduction column on Schedules J, K, or L.

For 2025 filers, note that the revised Schedule PC (dated August 2025) emphasizes clear identification of claims to prevent rejection for inadequate descriptions.

IRS Form 706 (Schedule PC) Download and Printable

Download and Print: IRS Form 706 (Schedule PC)

How to Complete IRS Form 706 Schedule PC: Step-by-Step Guide

Filling out Schedule PC is straightforward but requires precision to avoid rejection. Use the August 2025 version, available on IRS.gov. Here’s a breakdown:

Part I: General Information

• Enter the decedent’s name, Social Security Number, date of death, your details as fiduciary, and the number of Schedules PC attached (Line 7).
• If you’re not the original executor, attach authority documents.

Part II: Claim Information

• Line 9a: Check for an initial protective claim and enter the amount in contest.
• Line 10a: For partial refunds, include the prior filing date and resolved amount.
• Line 11a: For full refunds, detail the final payment.
• Line 12: This is the meat—specify the Form 706 schedule/line (e.g., Schedule J, Line 2 for funeral expenses), claimant details, basis for the claim, reasons for delay (e.g., “Pending litigation in [court]”), current status, any previously deducted amounts, the full deduction now claimed, ancillary expenses (agreed, paid, or estimated), and the resulting tax refund.

Attach supporting docs like pleadings or court filings.

Part III: Other Claims

• List any prior Schedules PC or Forms 843 filed by the estate, including dates and types (protective, partial, or full).

Sign under penalty of perjury. For resolutions, file a supplemental Form 706 or updated Form 843 within 90 days, noting “Notification for Consideration of Section 2053 Protective Claim” and attaching the original.

Pro tip: Report protective expenses on the relevant schedules without values in the final column to signal the IRS they’re contingent.

Key Updates for 2025: What’s New in Schedule PC?

The IRS revised Form 706 and Schedule PC in August 2025 to align with ongoing regulatory tweaks. Highlights include:

• Enhanced guidance on ancillary expenses, presuming their inclusion for qualifying claims.
• Clearer instructions for recurring payments, limiting partial claims to currently resolved amounts.
• Updated contact info and processing timelines, with emphasis on curing defects within 45 days of IRS notice.

These changes streamline filings for estates dealing with post-2011 decedents, but always download the latest PDF from IRS.gov to ensure compliance.

Common Mistakes to Avoid When Filing Schedule PC

Even seasoned estate professionals slip up—don’t let these trip you:

• Vague descriptions: Clearly identify the claim (e.g., “Breach of contract lawsuit by XYZ Creditor for $X”) or risk rejection.
• Missing attachments: Include proof of fiduciary authority and supporting docs.
• Late notifications: Resolve and notify within 90 days, or explain reasonable cause.
• Overlooking ancillaries: Factor in related costs like attorney fees—they’re deductible but must tie back to the claim.
• Using the wrong form: Stick to Schedule PC with Form 706; Form 843 is for standalone claims.

Frequently Asked Questions (FAQs) About Protective Claims for Refund

Can I file Schedule PC after submitting Form 706?

No—attach it initially or use Form 843 for late protective claims. Resolutions can use supplements.

What if my claim is under $500,000?

It still qualifies under Treas. Reg. § 20.2053-4(c), but disclose any prior deductions.

Does filing affect the estate’s audit?

No, it doesn’t suspend IRS review—expect standard processing.

How long does it take to get a refund after resolution?

Once notified, the IRS recomputes the liability; processing varies but can take months.

Final Thoughts: Protect Your Estate’s Tax Position Today

IRS Form 706 Schedule PC is a powerful safeguard for estates facing uncertain deductions, ensuring you don’t forfeit refunds due to timing hurdles. By filing proactively, you comply with section 2053 rules and Revenue Procedure 2011-48, potentially saving thousands in overpaid taxes.

This guide is for informational purposes only and based on 2025 IRS publications—estate tax laws are intricate, so consult a tax professional or estate attorney for personalized advice. Ready to file? Download the forms at IRS.gov and get started.

Disclaimer: This article is not tax advice. Always verify with official IRS resources.

 

IRS Form 706 (Schedule C) – Mortgages, Notes, and Cash – Filing an estate tax return can be a complex process, especially when dealing with diverse assets like debts owed to the decedent or liquid holdings. If you’re an executor or administrator handling a deceased loved one’s estate, IRS Form 706 Schedule C plays a crucial role in reporting mortgages, notes, and cash included in the gross estate. This schedule ensures accurate valuation for federal estate tax purposes, helping avoid penalties and maximize deductions.

In this comprehensive guide, we’ll break down everything you need to know about Schedule C of Form 706, from filing requirements to valuation methods, using the latest 2025 IRS instructions. Whether you’re new to estate planning or refreshing your knowledge, this article covers key details to streamline your tax filing.

 

What Is IRS Form 706 Schedule C?

IRS Form 706 is the United States Estate (and Generation-Skipping Transfer) Tax Return, required for estates exceeding the federal exemption threshold (adjusted annually for inflation). Schedule C – Mortgages, Notes, and Cash specifically lists certain liquid and debt-based assets that form part of the decedent’s gross estate.

According to the IRS, you must complete and attach Schedule C to Form 706 if the gross estate includes any mortgages, notes, or cash. This includes receivables like mortgages payable to the decedent, promissory notes, and even uncollected rents tied to real property. Importantly, these assets are reported at their full fair market value (FMV) without reductions for exemptions like homestead or dower rights.

Unlike other schedules, Schedule C focuses on assets the estate is owed, not debts the estate owes (those go on Schedule K for deductions). For 2025, the form revision date is August 2025, with instructions updated in September 2025—no major structural changes from prior years, but inflation adjustments apply to related sections like deferred interest under § 6166.

Who Needs to File Schedule C?

Not every estate requires Form 706, let alone Schedule C. Here’s a quick overview:

Scenario	Filing Requirement
Gross Estate Value	Over $13.61 million (2025 exemption amount, subject to final IRS confirmation). Portability elections may apply for spouses.
Assets Included	Any mortgages receivable, promissory notes, land sale contracts, cash on hand, or bank deposits.
Exceptions	Skip if no such assets; report life insurance on Schedule D or joint property on Schedule E instead.
Special Rule	For estates qualifying under Reg. § 20.2010-2(a)(7)(ii) (e.g., marital/charitable deductions with gross estate under exclusion), estimate values and report totals on Form 706 Part V only—omit detailed Schedule C entries.

Executors must file Form 706 within nine months of death (extensions available via Form 4768). Retain supporting documents like bank statements for IRS audits.

Key Assets Reported on Schedule C: Mortgages, Notes, and Cash

Schedule C organizes assets into five main categories. List them in this order on the form, providing detailed descriptions in Columns A–E. Use attachments if space is limited.

1. Mortgages

Report mortgages receivable by the decedent (i.e., loans secured by real property where the estate is the lender). Include:

• Face value and unpaid balance.
• Date of the mortgage.
• Maker’s (borrower’s) name and address.
• Description of mortgaged property.
• Maturity date and interest rate.
• Interest payment schedule.

Example: A $50,000 bond and mortgage with an unpaid balance of $17,000, dated January 1, 1992, from J. Doe to R. Roe on premises at 22 Clinton Street, Newark, NJ, due January 1, 2025, with 10% annual interest payable January 1 and July 1.

Do not reduce for unpaid interest—report it separately if accrued.

2. Promissory Notes

Similar to mortgages, list unsecured or secured notes owed to the decedent. Detail face value, unpaid balance, date, payor’s info, maturity, and interest terms. Valuation is typically the outstanding principal plus accrued interest as of the date of death.

3. Contracts by Decedent to Sell Land

For installment sale contracts where the decedent was the seller:

• Purchaser’s name and address.
• Contract date and property description.
• Total sale price, initial payment, and installment schedule.
• Unpaid principal balance and interest rate.

Report the full contract value; deduct any estate liabilities on Schedule K.

4. Cash in Possession of Decedent

Simple yet often overlooked: List currency, checks, or money orders held by the decedent at death. Separate from bank deposits—value at face amount. If foreign currency, convert to USD using the exchange rate on the date of death.

5. Cash in Financial Organizations

Detail all bank accounts, savings, CDs, or similar holdings:

• Institution name and address.
• Amount on deposit.
• Account number and type (e.g., checking, money market).
• Accrued but unpaid interest from last payment to death date.

Pro Tip: Attach copies of statements; the IRS may request them. For uncollected rents (e.g., $8,100 quarterly on a $550,000 property), report as separate cash items.

Valuation Methods for Schedule C Assets

All Schedule C items must be valued at fair market value (FMV) on the date of death—the price a willing buyer and seller would agree upon. For cash, this is straightforward (face value). For mortgages and notes, calculate unpaid principal plus accrued interest, discounted if necessary for collectibility risks (attach appraisals).

Alternate Valuation Election

Elect under § 2032 to value assets six months post-death (if sold/disposed within that window). Check Part III, line 1 of Form 706. This can lower taxes but applies estate-wide—consult a tax professional.

Special Considerations for 2025

• Interest Rates: Use Rev. Rul. 2025-16 for § 6166 deferral calculations (e.g., 2% rate on first $1,900,000 of adjusted taxable estate).
• Estimates for Portability: If eligible, use “due diligence” estimates for qualifying assets; map to Part V Table (items 10/23).
• No log scales or complex formulas needed—stick to IRS FMV guidelines.

• IRS Form 706 (Schedule C) Download and Printable

  Download and Print: IRS Form 706 (Schedule C)

Step-by-Step Guide: How to Complete Schedule C for Form 706

1. Gather Documents: Collect mortgage papers, note agreements, bank statements, and rent ledgers.
2. List Assets: Enter in order on lines 1–5; use Columns A (description), B (alternate value date), C (date of death value), D (alternate value), E (total).
3. Calculate Totals: Sum Column C for Part 5, line 6 of Form 706.
4. Cross-Reference: Link to Schedule A for related real property; deduct liens on Schedule K.
5. Attach and File: Submit with Form 706 electronically or by mail to the IRS Ogden, UT service center.

Common Mistakes to Avoid:

• Reporting payable debts here (use Schedule K).
• Omitting accrued interest.
• Forgetting foreign cash conversions.

Why Accurate Schedule C Reporting Matters in 2025

With the federal estate tax exemption potentially sunsetting post-2025 (under TCJA provisions), precise reporting on Form 706 Schedule C could save thousands in taxes or audits. Overvaluing cash/notes inflates the gross estate; undervaluing invites penalties up to 40%.

For complex estates, consider professional help from CPAs or estate attorneys specializing in IRS compliance.

Frequently Asked Questions (FAQs) About IRS Form 706 Schedule C

What if the estate has no mortgages or notes—do I still file Schedule C?

No, only if cash or these assets exist. Even small bank balances trigger it.

How does Schedule C interact with other Form 706 schedules?

It feeds into the gross estate total (Part 5); liens reduce taxable value via Schedule K.

Are there 2025 updates to Schedule C valuation?

No major changes, but check IRS Pub. 559 for estate tax overviews.

Where can I download the 2025 Form 706 Schedule C?

From IRS.gov—search for “Form 706 Schedule C August 2025.”

For personalized advice, consult a tax advisor. This guide is for informational purposes only and based on IRS resources as of December 2025. Stay compliant and honor your loved one’s legacy.

 

IRS Form 706 (Schedule E) – Jointly Owned Property – When navigating the complexities of estate planning and taxation, jointly owned property often presents unique challenges. For executors and estate administrators, accurately reporting these assets is crucial to avoid IRS audits, penalties, or delays in probate. Enter IRS Form 706 Schedule E, a key component of the United States Estate (and Generation-Skipping Transfer) Tax Return. This schedule specifically addresses jointly owned property, ensuring the decedent’s interest is properly included in the gross estate.

In this comprehensive guide, we’ll break down what Schedule E entails, who needs to file it, how to complete it step by step, and tips for compliance in 2025. Whether you’re an estate professional or a family member stepping into the executor’s role, mastering Schedule E can streamline your Form 706 filing and help preserve tax benefits like portability of the deceased spouse’s unused exclusion (DSUE) amount.

 

What Is IRS Form 706?

Before diving into Schedule E, it’s essential to understand its parent form. Form 706 is the official IRS document used by the executor of a decedent’s estate to calculate federal estate taxes under Chapter 11 of the Internal Revenue Code, as well as generation-skipping transfer (GST) taxes under Chapter 13. It’s required when the gross estate—combined with adjusted taxable gifts and any specific exemptions—exceeds the basic exclusion amount.

For decedents dying in 2025, the basic exclusion amount is $13,990,000, up from prior years due to inflation adjustments. Even if no tax is due, Form 706 must be filed to elect portability, allowing a surviving spouse to use the decedent’s unused exclusion on their own future returns.

Form 706 includes multiple schedules for categorizing assets, deductions, and credits. Schedule E fits into this framework by focusing on jointly owned assets, which could otherwise be overlooked or misvalued.

The Purpose of Schedule E on Form 706

Schedule E: Jointly Owned Property is designed to report the portion of jointly held assets that must be included in the decedent’s gross estate. Joint ownership can take forms like joint tenancy with right of survivorship (JTWROS), tenancy by the entirety, or community property, and it applies to real estate, bank accounts, stocks, partnerships, and more.

Under Internal Revenue Code Section 2040, the full value of jointly owned property isn’t always includible—only the decedent’s attributable interest. Schedule E ensures transparency by requiring detailed disclosures, valuations, and justifications for the includible amount. This prevents underreporting, which could trigger IRS scrutiny, and supports accurate estate tax calculations.

Key assets reported here include:

• Real estate held jointly (cross-reference with Schedule A if fractional interests apply).
• Stocks and bonds (use CUSIP numbers, per Schedule B guidelines).
• Partnership or LLC interests (family limited partnerships often fall here).
• Personal property like vehicles or collectibles.

Failing to file Schedule E when required can invalidate elections, such as special-use valuation under Section 2032A or installment payments under Section 6166 for closely held businesses.

Who Must File Schedule E?

You must complete and attach Schedule E to Form 706 if:

• The decedent owned any jointly held property at death, regardless of whether their interest is fully includible.
• The answer to Part IV, Question 10 on Form 706 is “Yes”: “Did the decedent at the time of death own any property as a joint tenant with right of survivorship in which (a) one or more of the other joint tenants was someone other than the decedent’s spouse, and (b) less than the full value of the property is included on the return as part of the gross estate?”

Even for estates below the filing threshold filing solely for portability, consider reporting jointly owned assets eligible for marital or charitable deductions—though you may leave value columns blank under Reg. section 20.2010-2(a)(7)(ii).

Exceptions: Pure tenancies in common or solely owned partnership interests go on other schedules (e.g., Schedule F). Community property with a surviving spouse may qualify for special rules.

How to Complete Schedule E: Step-by-Step Instructions

Completing Schedule E requires precision in description, valuation, and documentation. Use the fair market value (FMV) as of the date of death (or alternate valuation date, if elected under Section 2032). For 2025 filers, attach appraisals, bank statements, or legal proofs as exhibits.

Part I: Qualified Joint Interests (With Surviving Spouse Only)

This section covers JTWROS or tenancy by the entirety where the decedent and spouse are the only joint tenants (Section 2040(b)(2)).

1. Column (a): Describe the property (e.g., “Residence at 123 Main St., Anytown, USA” or “100 shares XYZ Corp. stock, CUSIP: 123456789”).
2. Column (b): Enter the full FMV at date of death.
3. Column (c): If electing alternate valuation (6 months post-death), enter that value here.
4. Column (d): Leave blank (not applicable for qualified interests).
5. Columns (e) and (f): Enter the full value from Column (b) or (c)—50% is automatically includible for U.S. citizen spouses.

Total on Line 1: Sum Columns (b) and (c); carry 50% of the total to Form 706, Part V, Item 4.

Note: If the spouse is not a U.S. citizen, report in Part II—no special 50% rule applies.

Part II: All Other Joint Interests

For joint ownership with non-spouses (e.g., children, siblings) or non-qualified setups.

1. Column (a): List surviving co-owners’ names and addresses.
2. Column (b): Describe the property, including how title was held.
3. Column (c): Indicate the source of funds (e.g., “Decedent furnished 60%”).
4. Column (d): Enter the percentage includible (e.g., based on contribution; default 100% minus co-tenants’ proven shares).
5. Column (e): Alternate value, if elected.
6. Column (f): FMV at death.
7. Column (g): Multiply Column (f) by Column (d).

Total on Line 2: Sum includible values; carry to Form 706, Part V, Item 4.

Pro Tip: Attach an exhibit proving contributions (e.g., gift tax returns, bank records). Without proof, the IRS presumes 100% includible for gifted joint property.

If more space is needed, use Schedule W (Form 706) or additional statements.

IRS Form 706 (Schedule E) Download and Printable

Download and Print: IRS Form 706 (Schedule E)

Valuation Methods for Jointly Owned Property

Valuation is the cornerstone of Schedule E compliance. Use FMV—what a willing buyer would pay a willing seller—determined by:

• Professional appraisals for real estate or unique assets.
• Quoted market prices for stocks/bonds.
• Regulations sections 20.2031-2 (stocks) or 20.2031-3 (partnerships/LLCs) for business interests.

For alternate valuation (elected on Form 706, Part III), use values 6 months post-death or sale date. Special-use valuation (now on Schedule T) caps reductions at $1,420,000 for 2025, useful for family farms or businesses.

Joint interests in closely held entities may qualify for Section 6166 deferral (up to 14 years) if the decedent held ≥20% interest and ≤45 partners—report fully on Schedule E.

Common Mistakes to Avoid When Filing Schedule E

Even seasoned professionals slip up. Here’s how to sidestep pitfalls:

• Overlooking Documentation: Always attach proofs for non-100% inclusions—failure invites full inclusion.
• Confusing Schedules: Joint stocks go on Schedule E, not B alone; real estate cross-references Schedule A.
• Ignoring Portability Rules: For DSUE elections, report but don’t value deductible joint assets.
• Misclassifying Ownership: Verify title documents—JTWROS differs from tenancy in common.
• Forgetting Extensions: File by 9 months post-death; extend with Form 4768 (up to 6 months).

2025 Updates to Form 706 and Schedule E

The IRS has redesigned Form 706 for 2025, separating schedules into standalone PDFs for easier processing. Schedule E remains structurally similar but benefits from clearer formatting and inflation-indexed limits (e.g., exclusion at $13,990,000). No major rule changes affect jointly owned property, but note the estate tax closing letter fee drop to $56 (effective May 21, 2025) and Rev. Rul. 2025-16 updates on effective interest rates for special valuations.

Starting in 2026, the base exclusion rises to $15,000,000, potentially reducing Schedule E filings—but plan ahead for sunsetting provisions under the Tax Cuts and Jobs Act.

Final Thoughts: Ensuring Compliance for Jointly Owned Assets

Mastering IRS Form 706 Schedule E is vital for accurate estate tax reporting, especially with jointly owned property’s nuances. By detailing ownership, valuing interests correctly, and attaching robust documentation, you minimize risks and maximize deductions.

For personalized advice, consult a tax attorney or CPA familiar with estate law. Download the latest forms and instructions from IRS.gov/Form706. Timely filing not only avoids penalties but preserves legacy protections like portability.

Disclaimer: This article is for informational purposes only and not tax advice. Always refer to official IRS guidance for your situation.

Related Resources

• IRS Instructions for Form 706 (Rev. September 2025)
• Schedule E (Form 706) PDF
• Publication 559: Survivors, Executors, and Administrators

By optimizing your estate filings with tools like Schedule E, you honor the decedent’s wishes while navigating tax obligations seamlessly. Stay informed—estate laws evolve, and compliance today secures peace tomorrow.

 

IRS Form 706 (Schedule L) – Net Losses During Administration and Expenses Incurred In Administering Property Not Subject to Claims – In the complex world of estate tax planning and administration, IRS Form 706—the United States Estate (and Generation-Skipping Transfer) Tax Return—serves as the cornerstone for reporting and calculating federal estate taxes. For decedents dying in 2025, estates exceeding the basic exclusion amount must file this form within nine months of death. Among its many schedules, Schedule L (Form 706) stands out for addressing specific deductions that can significantly reduce the taxable estate: net losses during administration and expenses incurred in administering property not subject to claims.

If you’re an executor, estate administrator, or tax professional navigating Form 706, understanding Schedule L is essential. This guide breaks down its purpose, requirements, and step-by-step completion process, drawing from the official IRS Instructions for Form 706 (Rev. September 2025) and related publications. Proper use of Schedule L can help minimize estate tax liability under Internal Revenue Code (IRC) Section 2053, ensuring compliance while maximizing allowable deductions.

 

What Is IRS Form 706 Schedule L?

Schedule L is a dedicated attachment to Form 706 used to claim deductions for two key categories of estate-related costs and losses:

1. Net Losses During Administration: These are unreimbursed losses occurring after the decedent’s death but before the estate is fully settled, such as from casualties (e.g., fire, storm, theft) or dispositions of estate assets.
2. Expenses Incurred in Administering Property Not Subject to Claims: These cover costs for managing assets included in the gross estate but exempt from general creditor claims, like property passing directly to beneficiaries via trusts or joint tenancy.

Unlike Schedule J (funeral and administration expenses subject to claims) or Schedule K (debts and liens), Schedule L focuses on non-claim-protected items. Deductions here flow to Form 706, Part 5 (Recapitulation), specifically lines 19 (net losses) and 20 (such expenses), reducing the tentative tax under the unified rate schedule.

For 2025 decedents, the basic exclusion amount is inflation-adjusted (see IRS Rev. Proc. 2025-15 for exact figures), but Schedule L deductions apply regardless of whether the estate meets the filing threshold—especially if electing portability of the deceased spousal unused exclusion (DSUE).

Key Tip: Always attach Schedule L if claiming these deductions. Use Schedule W (Form 706) for additional space, and retain supporting documents like invoices, insurance reports, and appraisals for IRS audits.

Purpose of Schedule L: Reducing Taxable Estate Under IRC Section 2053

The primary goal of Schedule L is to allow estates to deduct legitimate post-death losses and administrative costs that diminish the estate’s value without benefiting creditors. This aligns with IRC Section 2053, which permits deductions for expenses “actually and necessarily incurred in the administration of the decedent’s estate.”

• Net Losses: These prevent overvaluation of the estate by accounting for real economic hits during settlement.
• Non-Claim Expenses: These ensure fair taxation of property that bypasses probate, like revocable trusts or life insurance proceeds.

Deductions are limited to amounts paid within the statute of limitations (generally three years after filing Form 706 under IRC Section 6501). Estimates are allowable if verifiable and due before expiration—attach proof. If electing alternate valuation (six months post-death), exclude losses from value reductions.

Failure to report these can lead to penalties, but protective claims via Schedule PC (Form 706) allow future refunds for non-currently deductible items. For 2025 updates, note the redesigned Form 706 schedules for better efficiency, with no specific changes to Schedule L.

Part I: Reporting Net Losses During Administration on Schedule L

Part I of Schedule L captures “net losses” from events like sales at a loss, thefts, fires, storms, shipwrecks, or other casualties during estate administration. Only unreimbursed amounts qualify—subtract insurance recoveries or other compensation.

Eligibility and Exclusions

• Eligible Losses: Must occur after death, affect estate-held property, and be documented (e.g., police reports for theft, appraisals for fire damage).
• Exclusions:
  • Losses reimbursed by insurance.
  • Depreciation or market declines (unless electing alternate valuation—then exclude).
  • Losses claimed on the estate’s income tax return (Form 1041) to avoid double-dipping.
  • Pre-death losses.

Cross-reference the affected property to its listing on Schedules A–U (e.g., real estate on Schedule A).

How to Complete Part I

Use the table format on the form (or attached sheets):

Item No.	Description (Cause, Property ID, Amount Collected)	Value (Date-of-Death or Alternate)
1	[e.g., Fire damage to Schedule A, Item 2 property; $5,000 loss after $2,000 insurance]	$3,000
…	…	…
Total		[Sum to Line 2]

• Line 1: List individual net losses.
• Line 2: Subtotal from form.
• Line 3: Total from attached Schedule(s) W.
• Line 4: Grand total—enter on Form 706, Part 5, Item 19.

Example: If estate real estate (valued at $500,000 on Schedule A) suffers storm damage yielding a $10,000 unreimbursed loss, describe it fully and deduct $10,000 here. IRS examiners verify via bills and policies.

Part II: Expenses Incurred in Administering Property Not Subject to Claims

Part II targets costs for preserving, collecting, or distributing property in the gross estate but not liable for general claims (per Treas. Reg. § 20.2053-8(d)). This includes non-probate assets like trusts or joint property.

What Qualifies as Deductible Expenses?

Deductible items are those “necessarily” tied to estate settlement:

• Trust administration fees (e.g., trustee commissions for revocable trusts).
• Asset collection costs (e.g., legal fees to gather jointly held property).
• Title clearance or transfer expenses (e.g., recording fees for beneficiary vesting).

Nondeductible Examples:

• Beneficiary-specific costs (e.g., their legal fees post-distribution).
• Ongoing maintenance unrelated to settlement.
• Expenses already deducted on Form 1041.

Per Treas. Reg. § 20.2053-8, expenses must be reasonable and supported by vouchers. For protective claims, list without values.

How to Complete Part II

Mirror Part I’s table:

Item No.	Payee Name/Address	Nature of Expense (Property ID)	Value
1	[e.g., ABC Trust Co., 123 Main St.; Trustee fees for Schedule G trust property]	$15,000
…	…	…	…
Total		[Sum to Line 6]

• Lines 1–5: Individual entries.
• Line 6: Subtotal.
• Line 7: Attached totals.
• Line 8: Grand total—enter on Form 706, Part 5, Item 20.

Pro Tip: If expenses relate to estimated asset values under Reg. § 20.2010-2(a)(7)(ii), report but omit values—include in Part 5, Items 10 and 23.

IRS Form 706 (Schedule L) Download and Printable

Download and Print: IRS Form 706 (Schedule L)

Step-by-Step Guide: How to Fill Out Schedule L for 2025 Filings

1. Gather Documents: Collect appraisals, insurance claims, invoices, and probate records. Identify property via Form 706 schedules.
2. Determine Valuation Date: Use date-of-death values unless electing alternate (attach election statement).
3. Complete Tables: Number items sequentially; round to nearest dollar.
4. Calculate Totals: Add lines and transfer to Form 706, Part 5.
5. Attach and File: Include with Form 706 by the due date (extensions via Form 4768). E-file if eligible.
6. Protective Claims: Use Schedule PC for future-deductible items.

For complex estates, consult IRS Publication 559 (Survivors, Executors, and Administrators) or a tax advisor.

Common Mistakes to Avoid When Filing Schedule L

• Double-Dipping: Don’t deduct losses/expenses claimed on Form 1041.
• Inadequate Documentation: IRS audits require proof—keep everything for at least three years.
• Misclassifying Expenses: Use Schedule J for claim-subject items; Schedule L only for non-claim property.
• Ignoring Alternate Valuation: This can disqualify certain loss deductions.
• Overlooking Inflation Adjustments: For 2025, confirm exclusion limits via IRS.gov.

Audits focus on large/unusual items (LUQs), so substantiate claims thoroughly.

2025 Updates and Resources for IRS Form 706 Schedule L

The September 2025 revision of Form 706 includes redesigned schedules for streamlined filing, but Schedule L’s core rules remain unchanged. Key notes:

• Estate tax closing letter fee reduced to $56 (effective May 21, 2025).
• Enhanced electronic payment options.
• No Schedule L-specific inflation adjustments, but general thresholds apply.

Trusted Resources:

• Download Form 706 and Schedule L: IRS.gov/Form706.
• Full Instructions: IRS Instructions for Form 706 (PDF).
• Regulations: Treas. Reg. § 20.2053-3 (losses) and § 20.2053-8 (expenses).
• Pub. 559: Guidance for executors.

For personalized advice, consult a CPA or estate attorney. Filing accurately not only avoids penalties but optimizes your estate’s tax position.

This article is for informational purposes only and not tax advice. Verify with the IRS for your situation.

 

IRS Form 706 (Schedule G) – Transfers During the Decedent’s Lifetime – When navigating the complexities of estate taxes after a loved one’s passing, executors often encounter IRS Form 706—the United States Estate (and Generation-Skipping Transfer) Tax Return. Among its many schedules, Schedule G stands out for its focus on transfers during the decedent’s lifetime that must be included in the gross estate. These lifetime transfers can significantly impact the estate’s taxable value, potentially triggering federal estate taxes if the total exceeds the 2025 basic exclusion amount of $13,990,000.

In this comprehensive guide, we’ll break down what Schedule G entails, why it’s essential for estate tax planning, and how to complete it accurately. Whether you’re an executor, estate planner, or simply researching for future needs, understanding IRS Form 706 Schedule G ensures compliance and minimizes surprises. We’ll draw from the latest IRS instructions (revised September 2025) to provide up-to-date insights.

 

What Is IRS Form 706?

Before diving into Schedule G, a quick overview of the parent form is helpful. Form 706 is filed by the executor of a U.S. citizen or resident decedent’s estate to calculate federal estate taxes under Internal Revenue Code (IRC) Chapter 11. It also computes generation-skipping transfer (GST) taxes on direct skips under Chapter 13.

Key filing requirements for 2025 decedents include:

• Gross estate + adjusted taxable gifts + specific exemption > $13,990,000: Mandatory filing.
• Portability election: File even if below the threshold to transfer the deceased spousal unused exclusion (DSUE) to a surviving spouse.

The form includes multiple schedules for categorizing assets, deductions, and credits. Schedule G (August 2025 revision) specifically addresses lifetime transfers includible in the gross estate, ensuring the IRS captures wealth shifted before death to prevent tax avoidance.

The Purpose of Schedule G on Form 706

Schedule G reports certain transfers during the decedent’s lifetime that the IRS deems part of the gross estate under IRC sections 2035 through 2038 and 2041. These rules prevent decedents from reducing their taxable estate through last-minute or retained-interest gifts.

Why does this matter? Lifetime transfers—like gifting assets to family or funding irrevocable trusts—can qualify for the annual gift tax exclusion ($19,000 per donee in 2025). However, if they involve retained control, enjoyment, or occur too close to death, they’re “pulled back” into the estate via Schedule G. This inclusion affects the unified estate-gift tax calculation, where post-1976 taxable gifts are added to the gross estate to determine the tentative tax base.

Failing to report accurately can lead to penalties, including a 20% accuracy-related penalty under IRC section 6662 for understatements. Proper completion also supports deductions like marital or charitable transfers on other schedules.

What Transfers Must Be Reported on Schedule G?

Not all lifetime gifts trigger inclusion—only those fitting specific IRC criteria. Use Worksheet TG in the Form 706 instructions to tally adjusted taxable gifts (post-1976, exceeding annual exclusions). Here’s a breakdown:

IRC Section	Description	Key Triggers
2035(a)	Transfers within 3 years of death	Revocable transfers, life estates, reversionary interests, or powers that would have been includible if retained until death. Review Forms 709 from the prior 3 years (e.g., for a 2025 death, check 2022–2025).
2035(b)	Gift taxes paid within 3 years	Gift taxes on transfers by the decedent or spouse; attach relevant Forms 709.
2036	Retained life estates or income	Transfers (not sales for full value) where decedent kept income rights, enjoyment, power to designate recipients, annuities, property use, or ≥20% voting rights in a controlled corporation (post-1976).
2037	Transfers taking effect at death	Possession/enjoyment conditional on surviving decedent; reversionary interest >5% actuarial value returning to decedent/estate.
2038	Revocable transfers or powers	Power to alter, revoke, or terminate at death (e.g., trustee powers to change beneficiaries); includes relinquishments within 3 years.
2041	Powers of appointment	General powers exercisable in favor of decedent, estate, or creditors (limited exceptions for health/education standards).

Other reportable items:

• Taxable gifts: Post-1976 gifts over annual exclusions; split gifts under section 2513 (include predeceased spouse’s portion if applicable).
• QTIP/QDOT elections: Qualified terminable interest property or domestic trusts for non-citizen spouses.
• Charitable remainder trusts: If spouse is sole non-charitable beneficiary.
• Life insurance/annuities: Proceeds with retained powers.
• Trust interests: From revocable or controlled trusts; annual exclusions apply but aren’t excludible here.

If a transfer doesn’t fit neatly, attach a statement with details (date, value, description). Report distributions (including Schedule G amounts) on Form 706, Part IV, line 5a.

IRS Form 706 (Schedule G) Download and Printable

Download and Print: IRS Form 706 (Schedule G)

How to Complete Schedule G: Step-by-Step Instructions

The redesigned 2025 Schedule G (attached to Form 706) uses columns for item number, description (CUSIP/EIN if applicable), date of death value, alternate valuation, and gift tax paid. Use Schedule W for additional space.

1. Gather Documents: Collect Forms 709 (last 3+ years), trust agreements, gift deeds, and appraisals. Answer “Yes” to Form 706, Part IV, lines 12 or 13a if applicable.
2. List Transfers: For each item:
   • Description: Detail property (e.g., “Irrevocable trust funded with $500,000 securities, EIN XX-XXXXXXX”).
   • Value: Fair market value (FMV) at death (or alternate date under section 2032); prorate partial interests; deduct encumbrances.
   • Gift Tax: Amount paid/payable by decedent/estate.
3. Complete Worksheet TG: Tally adjusted taxable gifts (line 2, column c for includible amounts).
4. Total and Attach: Sum values; carry to Form 706, Part II. Elect special-use valuation? Complete Schedule T too.
5. Special Rules: For split gifts, note predeceased spouse’s details. Estimate future interests reasonably.

File by the 9th month after death; extend via Form 4768 if needed.

Valuation Methods for Lifetime Transfers

Valuation is critical—use FMV at the transfer date for gifts, but death/alternate date for retained interests.

• Gifts: As on Form 709; apply sections 2701–2704 for family-limited partnerships.
• Retained Interests: Full property value at death, proportional for partial retention.
• Reversions/Powers: Actuarial tables from Rev. Rul. 2025-16 for >5% interests.
• Deductions: Reduce by mortgages, taxes; exclude charitable portions.

Appraisals are recommended for complex assets like real estate or closely held businesses.

Real-World Examples of Schedule G Transfers

• Retained Life Estate (Section 2036): Decedent gifts a vacation home to children but continues living there rent-free. Full FMV ($800,000) is includible, even if “informal.”
• Three-Year Gift (Section 2035): $100,000 cash gift to a grandchild in 2024; decedent dies in 2025. Include if revocable or with retained interest; plus any gift tax paid.
• Revocable Trust (Section 2038): Decedent funds an irrevocable trust but retains trustee power to revoke beneficiary designations. Entire trust value ($2M) pulls back.
• Split Gift with Predeceased Spouse: $50,000 gift split 50/50 in 2023; spouse died in 2024. Include decedent’s half plus spouse’s if in spouse’s estate.

These scenarios highlight why early estate planning—beyond simple wills—is vital.

2025 Updates and Key Changes for Form 706 Schedule G

The 2025 revisions emphasize efficiency: Schedules are now separate PDFs, with clearer numbering and portability prompts. No major Schedule G overhauls, but note:

• Inflation Adjustments: Exclusion rises to $13,990,000; annual gift exclusion $19,000.
• Closing Letter Fee: Reduced to $56 (effective May 21, 2025).
• Portability: Easier DSUE elections, but Schedule G gifts still factor into exclusions.
• GST Exemption: Matches estate exclusion at $13,990,000; report direct skips on Schedules R/R-1.

Check IRS.gov/Form706 for drafts and final forms.

Common Mistakes to Avoid When Filing Schedule G

• Overlooking the 3-Year Window: Many forget to review old Forms 709—leading to underreporting.
• Misvaluing Retained Interests: Informal arrangements (e.g., “borrowing” gifted property) count as retention.
• Ignoring Split Gifts: Predeceased spouses’ portions can sneak in unexpectedly.
• No Appraisals: DIY valuations invite audits; use qualified appraisers for FMV.
• Forgetting Attachments: Always include statements for non-standard transfers.

Penalties apply for negligence, so document everything.

Conclusion: Master Schedule G for Smarter Estate Tax Planning

IRS Form 706 Schedule G is more than paperwork—it’s a safeguard against unintended estate tax hikes from lifetime transfers. By reporting retained interests, recent gifts, and revocable powers accurately, executors can streamline filing and optimize deductions. With the 2025 exclusion at $13,990,000, most estates avoid tax, but portability and GST rules make Form 706 worthwhile for many.

Consult a tax professional or estate attorney for personalized advice, especially with trusts or international assets. Download the latest forms and instructions at IRS.gov/Form706 to stay compliant. Proper planning today preserves more for tomorrow—start reviewing those lifetime transfers now.

This article is for informational purposes only and not tax advice. Always refer to official IRS guidance.

 

IRS Form 706 (Schedule A) – Real Estate – When a loved one passes away, navigating the estate tax process can feel overwhelming, especially when it comes to valuing and reporting assets like real estate. IRS Form 706, the United States Estate (and Generation-Skipping Transfer) Tax Return, is the key document executors use to calculate federal estate taxes under Chapter 11 of the Internal Revenue Code. Within this form, Schedule A – Real Estate plays a crucial role for estates that include property such as homes, land, farms, or commercial buildings. If you’re searching for “how to fill out IRS Form 706 Schedule A” or “real estate valuation on Form 706,” this guide breaks it down step by step, using the latest 2025 instructions from the IRS.

Whether your estate exceeds the 2025 basic exclusion amount of $13,990,000 or you’re filing solely to elect portability of the deceased spouse unused exclusion (DSUE), accurate reporting on Schedule A ensures compliance and minimizes IRS scrutiny. Let’s dive into what Schedule A entails, how to complete it, and tips for avoiding common pitfalls.

 

What is IRS Form 706 Schedule A?

Schedule A of Form 706 is dedicated to listing and valuing all real estate owned by the decedent at the time of death or contracted to purchase. This includes fee simple interests, life estates, remainders, or joint tenancies (though jointly held property may also require Schedule E). Real estate encompasses residential homes, rental properties, vacant land, farms, and commercial buildings—both domestic and foreign.

The purpose? To include these assets in the gross estate’s fair market value (FMV), which determines if estate taxes apply. For 2025 decedents, estates below $13,990,000 generally owe no tax, but filing is required for portability or if gifts push the adjusted taxable estate over the threshold. Note: Real estate under sections 2035–2038 (e.g., transfers with retained interests) goes on Schedule G, not A.

In 2025, Form 706 and its schedules underwent a redesign for better efficiency, but Schedule A’s core requirements remain unchanged: detailed descriptions, valuations, and supporting documents.

When Do You Need to File Schedule A with Form 706?

File Schedule A if the gross estate includes any real estate, regardless of value—especially for portability elections. Even if the estate is below the exclusion, report assets eligible for marital or charitable deductions to claim portability properly.

Key triggers:

• Taxable Estates: Gross estate + adjusted taxable gifts > $13,990,000 (2025 threshold).
• Portability: To transfer DSUE to a surviving spouse (extended filing deadline: up to 5 years post-death under Rev. Proc. 2022-32).
• Generation-Skipping Transfer (GST) Tax: If real estate involves direct skips to skip persons.

File Form 706 within 9 months of death (extendable 6 months via Form 4768). Late filings risk penalties, but protective elections for special valuations are allowed.

Step-by-Step Guide: How to Fill Out Schedule A

Completing Schedule A requires precision. Use the August 2025 version (Rev. 9-2025) from IRS.gov. Number each item sequentially, and if space runs short, attach Schedule W or additional sheets.

Step 1: Gather Essential Documents

• Deeds, titles, and legal descriptions.
• Appraisals (required for values over $3,000 or unique properties).
• Mortgage statements (for encumbrances).
• Rental records (for accrued income).
• For farms/businesses: Proof of qualified use under section 2032A.

Step 2: Describe the Property (Column ii)

Provide a detailed description so the IRS can locate and verify it:

• Location: Street address, city, county, state, ZIP; legal details (lot, block, township, range).
• Nature of Interest: Fee simple, life estate, remainder; percentage owned.
• Acquisition: Date and method (purchase, inheritance).
• Encumbrances: Mortgages, liens (note if estate is liable).
• Other: Improvements (e.g., buildings), zoning, comparable sales.

Example: “House and lot at 123 Main St., Anytown, USA (Lot 5, Block 2, Square 10); fee simple; acquired by purchase on January 1, 2010; subject to $100,000 mortgage (estate liable).”

For trusts or entities, attach a statement with the EIN.

Step 3: Value the Property (Columns iii–v)

Report fair market value (FMV) as of the date of death (default) or alternate date (if elected). FMV is the price between a willing buyer and seller, neither compelled.

Column	Description	Key Notes
(iii) Alternate Valuation Date	Enter 6 months post-death (or sale date if earlier). Leave blank unless electing §2032.	Election must reduce gross estate and tax; irrevocable once filed.
(iv) Alternate Value	FMV on alternate date.	Include principal and income separately for rents collected post-death.
(v) Value	Full FMV (date of death or alternate).	– Mortgaged (estate liable): Full value here; deduct debt on Schedule K. – Not liable: Equity (value minus debt, not below $0). – Contracted purchase: Full value; deduct unpaid on Schedule K.

Add Accrued Items: Include unpaid rent or interest as of death (e.g., $5,400 accrued rent).

Attach appraisals explaining the method (e.g., comparable sales, income approach). Discounts (10–25%) may apply for fractional interests; explain and attach support.

Step 4: Handle Special Cases

• Partial Interests: Use actuarial tables in Reg. §20.2031-7 for life estates.
• Portability-Only Filings: Estimate values for deduction-eligible property; no detailed columns needed under Reg. §20.2010-2(a)(7)(ii).
• More Space Needed: Total on attachments and carry to Schedule A.

Step 5: Total and Transfer

Sum columns (iv) and (v); enter on Form 706, Part 5 (Recapitulation), lines 1–9.

IRS Form 706 (Schedule A) Download and Printable

Download and Print: IRS Form 706 (Schedule A)

Special-Use Valuation: Reducing Real Estate Taxes Under Section 2032A

For family farms or closely held business real property, elect special-use valuation to value at actual use (not FMV), potentially saving up to $1,420,000 in 2025. Requirements:

• Used in farming/business for 5 of 8 years pre-death.
• Material participation by decedent/heirs.
• Passes to qualified heir (e.g., family member).

How to Elect:

1. Complete Schedule A at FMV initially.
2. File Schedule T (formerly A-1) with notice, agreement, and worksheets (e.g., gross cash rental method: subtract taxes from rentals, divide by Rev. Rul. 66-70 rate).
3. Protective election: Check “Yes” on Form 706, Part 3, line 2; supplement within 60 days if qualified.

Recapture applies if heirs sell or cease qualified use (file Form 706-A).

Common Mistakes to Avoid When Filing Schedule A

• Inaccurate Descriptions: Vague details lead to IRS inquiries—be specific.
• Valuation Errors: Skipping appraisals or ignoring discounts/understating FMV can trigger 20% penalties under §6662.
• Missing Attachments: Always include appraisals and explanations.
• Alternate Valuation Oversights: Applies estate-wide; ensure it reduces taxes.
• Joint Property Mix-Up: Report on Schedule E if jointly held.

2025 Updates for IRS Form 706 Schedule A

• Inflation Adjustments: Basic exclusion $13,990,000; special-use ceiling $1,420,000; installment tax portion $1,900,000.
• Form Redesign: Streamlined layouts; Schedule T for special-use elections.
• Closing Letter Fee: Reduced to $56 (from $67) for requests after May 21, 2025—request via Pay.gov after 9 months.
• Interest Rates: Use Tables 1–2 from Rev. Rul. 2025-16 for special valuations.

Final Thoughts: Seek Professional Help for Smooth Filing

Mastering IRS Form 706 Schedule A real estate valuation ensures your estate tax return is accurate and timely. With potential penalties for errors, consult a CPA, estate attorney, or appraiser—especially for complex properties or special elections. Download the latest forms and instructions at IRS.gov, and remember: proper documentation is your best defense.

Filing estate taxes honors your loved one’s legacy while securing your family’s future. If you have questions on “Form 706 Schedule A examples” or need personalized advice, professional guidance is invaluable. For more resources, visit the IRS Estate and Gift Tax page.

This article is for informational purposes only and not tax advice. Always refer to official IRS publications for your situation.

 

IRS Form 706 (Schedule M) – Bequests, etc., to Surviving Spouse – In estate planning, preserving wealth for your loved ones is paramount, especially amid the 40% federal estate tax rate on amounts exceeding the 2025 basic exclusion of $13,990,000. For married couples, the unlimited marital deduction under IRC Section 2056 offers a lifeline, allowing transfers to a surviving spouse to pass tax-free—deferring taxes until the second spouse’s death. This is where IRS Form 706 Schedule M comes in: the key schedule on the United States Estate (and Generation-Skipping Transfer) Tax Return for claiming this deduction.

Whether you’re an executor filing Form 706 or an advisor optimizing a client’s plan, mastering Schedule M can slash estate taxes dramatically. In this SEO-optimized guide, we’ll explore its purpose, eligibility, completion steps, and 2025 updates, drawing from the IRS’s September 2025 instructions and Section 2056 regulations. Maximize your marital deduction while ensuring compliance—your family’s financial legacy depends on it.

 

What Is IRS Form 706 Schedule M?

IRS Form 706 calculates federal estate and generation-skipping transfer (GST) taxes for decedents’ estates exceeding the applicable exclusion amount. Schedule M, revised August 2025, is the dedicated attachment for reporting the marital deduction—deducting the value of property interests passing from the decedent to the surviving spouse.

Under Section 2056(a), this unlimited deduction subtracts qualifying transfers from the gross estate (valued on Schedules A–I), reducing the taxable estate without limits. For instance, a $20 million estate leaving $10 million to a U.S. citizen spouse deducts the full $10 million, leaving only $10 million taxable (minus other deductions). It’s irrevocable and applies only to interests included in the gross estate, preventing double taxation across spouses.

Schedule M handles outright transfers, trusts, annuities, and elections like Qualified Terminable Interest Property (QTIP) under Section 2056(b)(7). For non-citizen spouses, it ties into Qualified Domestic Trusts (QDOTs) via Section 2056A. The total from Schedule M flows to Form 706, Part V, line 21.

Who Needs to File Schedule M on Form 706?

Attach Schedule M if claiming any marital deduction on Form 706, required for:

• Taxable estates: Gross estate + adjusted taxable gifts > $13,990,000 (2025 threshold).
• Portability elections: Filing solely to transfer the Deceased Spousal Unused Exclusion (DSUE) amount, even if no tax due—report estimated values for marital assets under Treas. Reg. § 20.2010-2(a)(7)(ii).
• U.S. citizen/resident decedents: With property passing to a surviving spouse.
• Non-citizen spouses: If using a QDOT; otherwise, no deduction without one.

Omit if no deduction is claimed (enter zero on Form 706). Nonresident noncitizens use Form 706-NA, with Schedule M limited to U.S.-situs property. Always verify with IRS Exempt Organizations tools or a tax pro—errors can trigger audits or lost deductions.

Qualifying Property Interests for the Marital Deduction

Section 2056 allows deductions for interests “passing” to the spouse, but terminable interests (e.g., life estates with remainders to others) are nondeductible unless electing QTIP treatment. Key qualifiers:

Eligible Transfers

• Outright bequests: Cash, real estate, stocks, or personal property directly to the spouse via will or trust.
• Joint interests: Surviving joint tenancy or tenancy by the entirety (full value if decedent furnished all consideration).
• Life estates with power: Spouse’s life interest + general power of appointment over the entire interest (exercisable alone, in all events).
• Insurance/annuities: Proceeds payable to spouse; joint/survivor annuities under Section 2039.
• Powers of appointment: Spouse as appointee or taker in default.
• QTIP property: Terminable interests (e.g., income for spouse’s life, remainder to kids) elected as QTIP—full value deductible if spouse gets all income annually/more frequently and has power over the whole.
• QDOT for non-citizens: Property to a trust with U.S. trustee(s), deferring tax on distributions.

Non-Qualifying Interests

• Terminable without QTIP: E.g., life estate where remainder goes to non-spouse, allowing post-termination enjoyment.
• Partial interests from mixed assets: Reduce by nondeductible portions (e.g., $100,000 bequest from $110,000 asset with $10,000 retained for child).
• Foreign spouses without QDOT: No deduction; annual gift exclusion rises to $190,000 in 2025.
• Disclaimers: Only if qualified under Section 2518.

Valuations use fair market value (FMV) at death (or alternate date), reduced by encumbrances, federal/state/GST taxes paid from the interest, and administration expenses. Actuarial values for life estates use Section 7520 tables (per Rev. Rul. 2025-16).

IRS Form 706 (Schedule M) Download and Printable

Download and Print: IRS Form 706 (Schedule M)

Step-by-Step Guide: How to Complete Schedule M

Use the August 2025 Schedule M (standalone PDF). Attach continuation sheets (Schedule W) if needed. Gather: will/trust docs, appraisals, tax computations.

Key Steps

1. Header and Elections:
   • Line 1: Check “Yes” for qualified disclaimer; attach copy.
   • Line 3: For Section 2039 annuities, check “Yes” to elect out of QTIP (irrevocable).
   • Part IV, Line 14: If QDOT, check box and detail trust (name, EIN, trustees, value).
2. Report Property Interests:
   • Line 4: Table for each transfer—(i) Item number; (ii) Description (CUSIP/EIN for securities, will clause); (iii) Value before taxes.
   • For QTIP: List terminable interests; presumed election if deducted.
   • Residue: Attach computation (after non-probate, legacies, taxes).
3. Adjustments:
   • Lines 5–10: Subtotals for real/personal property, annuities, other.
   • Lines 13a–13d: Subtract federal estate/GST (13a), state death/GST (13b–13c) taxes from the interest; net to Line 14.
4. Totals and Transfer:
   • Line 14: Net marital deduction to Form 706, Part V, line 21.
   • Line 15: QTIP value from predeceased spouse (Schedule F).
5. Attachments:
   • Will/certified copy, trusts, disclaimers, QDOT agreements, actuarial computations.

Line/Column	Required Info	Example
Line 4(ii) Description	Asset details, reference	“50% interest in residence at 123 Main St. (Schedule A, Item 1); Will Article III”
Line 4(iii) Value	Pre-tax FMV	“$500,000 (appraised 12/05/2025)”
Line 13a Federal Taxes	Amount paid from interest	“$20,000 estate tax allocation”
Line 14 Total	Net deduction	“$480,000 after taxes”

For partial QTIP: Use formula (deducted amount / total value).

2025 Updates to Form 706 and Schedule M

The IRS redesigned Form 706 in 2025: Schedules now standalone PDFs for easier e-filing. Key inflation adjustments:

• Basic exclusion/DSUE: $13,990,000 (up from $13.61M in 2024).
• GST exemption: Matches at $13,990,000.
• Non-citizen gift exclusion: $190,000 annual.
• Closing letter fee: $56 (down from $67, post-May 21, 2025).
• Section 7520 rates: Updated in Rev. Rul. 2025-16 for valuations.

No Schedule M-specific changes, but portability filers must estimate marital assets. Sunset risk: Post-2025, exemption halves (~$7M, inflation-adjusted), amplifying marital strategies.

Common Mistakes to Avoid on Schedule M

Pitfalls can disallow deductions:

• No QTIP election: Terminable interests default nondeductible—attach statement.
• QDOT oversights: Non-citizen transfers without U.S. trustee/withholding.
• Valuation errors: Forgetting tax reductions or using basis vs. FMV.
• Double-dipping: Deducting same property under Sections 2053/2056.
• Missing attachments: IRS rejects without proof; retain 3+ years.

Audits spike on large deductions—document everything.

Real-World Examples of Schedule M Deductions

• Outright Bequest: $2M cash to spouse (Will Clause 2)—deduct full FMV on Line 4.
• Joint Home: $1M residence (50% decedent’s)—deduct $500,000 (Schedule A cross-ref).
• QTIP Trust: $3M trust (income to spouse, remainder to kids)—elect QTIP; deduct $3M minus $100K taxes = $2.9M.
• QDOT Annuity: $500K to non-citizen spouse’s QDOT—deduct full, defer tax on distributions.
• Life Estate: Spouse (age 65) gets income from $400K property + power—actuarial value ~$200K deductible.

These save ~$1.2M in taxes (40% rate) per $3M deducted.

Final Thoughts: Leverage Schedule M for Tax-Free Spousal Transfers

IRS Form 706 Schedule M empowers couples to defer estate taxes indefinitely via the unlimited marital deduction, complementing 2025’s $13.99M exclusion and portability. Pair with QTIP/QDOT for flexibility, but plan ahead—2026 sunset looms.

Download forms at IRS.gov/Form706; consult a CPA or estate attorney for tailored advice. Secure your legacy today—tax-free transfers build tomorrow’s wealth.

This guide is informational, not advice. Verify with IRS resources for your circumstances.

 

IRS Form 706 (Schedule O) – Charitable, Public, and Similar Gifts and Bequests – In the realm of estate planning, charitable giving isn’t just a noble act—it’s a powerful tool for reducing federal estate taxes. For decedents dying in 2025, where the basic exclusion amount stands at $13,990,000, estates exceeding this threshold face a 40% tax rate on the excess. Enter IRS Form 706 Schedule O, the dedicated schedule for reporting and claiming deductions for charitable, public, and similar gifts and bequests under Internal Revenue Code (IRC) Section 2055. This unlimited deduction can significantly lower your taxable estate, potentially saving your heirs substantial taxes.

Whether you’re an executor navigating Form 706 or an estate planner advising clients, understanding Schedule O is essential. In this comprehensive guide, we’ll break down its purpose, eligibility, step-by-step completion process, and 2025-specific updates. Backed by the latest IRS instructions (revised September 2025), we’ll ensure you’re equipped to maximize these tax benefits while complying with federal rules.

 

What Is IRS Form 706 Schedule O?

IRS Form 706, the United States Estate (and Generation-Skipping Transfer) Tax Return, is filed by the executor of a U.S. citizen or resident’s estate to calculate federal estate taxes on assets transferred at death. Schedule O is a supporting schedule attached to Form 706, specifically designed to document charitable, public, and similar gifts and bequests that qualify for an estate tax deduction.

Under IRC Section 2055, these transfers are deductible from the gross estate without any dollar limit—unlike income tax charitable deductions. The deduction reduces the taxable estate, directly lowering the estate tax liability. For example, if an estate valued at $15 million includes a $2 million bequest to a qualified charity, only $13 million (plus any other deductions) becomes taxable, potentially keeping it under the 2025 exclusion threshold.

Schedule O ensures the IRS can verify that transfers meet strict qualification criteria, such as going to eligible organizations and being irrevocable. It’s particularly relevant for estates involving wills, trusts, or lifetime gifts includible in the gross estate.

Who Needs to File Schedule O on Form 706?

You must complete and attach Schedule O if the decedent’s estate claims any deduction for transfers under Section 2055. This applies to:

• Estates required to file Form 706: When the gross estate plus adjusted taxable gifts exceeds the basic exclusion amount ($13,990,000 for 2025 decedents).
• Portability elections: Even if no tax is due, filing Form 706 to elect portability of the deceased spousal unused exclusion (DSUE) may require Schedule O if charitable deductions are claimed.
• Non-filing estates: Under the special rule in Treas. Reg. § 20.2010-2(a)(7)(ii), portability filers aren’t required to report full values of marital or charitable assets but must estimate them for the gross estate total.

Executors of nonresident noncitizen estates use Form 706-NA and may attach Schedule O, but deductions are limited to U.S.-situs transfers to domestic entities unless a treaty applies. Always consult a tax professional, as errors can trigger audits or disallowed deductions.

Qualifying Gifts and Bequests for Schedule O Deductions

Not every gift to a charity qualifies. Section 2055 requires transfers to be outright, irrevocable, and for public benefit. Here’s what counts:

Eligible Recipients

Deductions are allowed for bequests, devises, legacies, or transfers to:

• Section 170(c) organizations: Charitable, religious, educational, scientific, or literary entities (e.g., 501(c)(3) nonprofits like universities, hospitals, or foundations) that don’t benefit private individuals or engage in substantial lobbying.
• Government entities: The U.S., states, local governments, or the District of Columbia for public purposes.
• Fraternal societies or trustees: Operating exclusively for religious, charitable, etc., purposes.
• Veterans’ organizations: Incorporated by Act of Congress (e.g., American Legion).
• Qualified gratuitous transfers: To employee stock ownership plans (ESOPs).
• Indian tribal governments: Treated as states under Rev. Proc. 2008-55.
• Conservation easements: Post-death grants under Section 2031(c)(9) for qualified real property interests.

Types of Qualifying Transfers

• Outright bequests: Cash, stocks, real estate, or personal property directly to the charity via will or trust.
• Lifetime transfers: Gifts includible in the gross estate (e.g., under Sections 2035–2038).
• Qualified disclaimers: Irrevocable refusals under Section 2518, if filed timely.
• Termination of powers: Releasing a power to invade or consume property for charitable benefit.
• Split-interest trusts: Only the charitable portion (e.g., in charitable remainder trusts) qualifies; report the full value but deduct only the charity’s share.

Non-Qualifying Transfers

• Conditional gifts where charity receives less than the full amount.
• Transfers benefiting private individuals (e.g., family foundations with personal perks).
• Foreign charities, unless a treaty allows (e.g., under the U.S.-Canada treaty).

The deduction is limited to the property’s fair market value (FMV) at the date of death (or alternate valuation date if elected), reduced by any estate, GST, state death, or other taxes payable from the bequest. For installment payments under Section 6166, subtract estimated interest.

IRS Form 706 (Schedule O) Download and Printable

Download and Print: IRS Form 706 (Schedule O)

Step-by-Step Guide: How to Complete Schedule O

Schedule O requires detailed reporting for each qualifying transfer. Use the redesigned 2025 version (Rev. August 2025) for decedents dying after December 31, 2024. If more space is needed, attach Schedule W (Continuation Schedule).

Key Steps

1. Gather Documentation: Collect the will, trust instruments, disclaimers, and appraisals. Verify recipient eligibility via IRS Exempt Organizations Select Check tool.
2. Value the Property: Determine FMV as of the valuation date. For non-cash assets like stock or real estate, obtain professional appraisals.
3. List Each Transfer: Use the table format on Schedule O. For each item:
   • Column (a): Description (e.g., “100 shares of XYZ Corp. stock”).
   • Column (b): Date of gift/bequest.
   • Column (c): Recipient name and address.
   • Column (d): FMV and amount deductible (after reductions).
   • Column (e): Reference to will/trust provision.
   • Column (f): Any conditions or trust details.
4. Handle Special Cases:
   • Residuary bequests: Attach a computation showing the charitable share after specific legacies and taxes.
   • Trusts: Report only the actuarial value passing to charity; include life tenant ages and income projections.
5. Total and Transfer: Sum column (d) on line 8. Enter on Form 706, Part V, line 18 (Recapitulation of Deductions).
6. Attach Supporting Evidence:
   • Certified will copy.
   • Trust agreements.
   • Disclaimer documents.
   • Sale/purchase verifications if applicable.

Column	Required Information	Example
(a) Description	Detailed asset info	“Residence at 123 Main St., valued at $500,000 FMV”
(b) Date	Transfer date	“Date of death: 06/15/2025”
(c) Recipient	Full name/address	“American Red Cross, 431 18th St NW, Washington, DC 20006”
(d) Amount Deductible	FMV minus taxes	“$500,000 minus $20,000 est. state tax = $480,000”
(e) Provision	Will clause reference	“Article V, Clause 2”
(f) Conditions	Restrictions/trust info	“For disaster relief programs only”

2025 Updates to Form 706 and Schedule O

The IRS redesigned Form 706 and its schedules in 2025 for better efficiency, separating schedules into standalone PDFs (no longer bundled with the main form). Key changes include:

• Inflation Adjustments: Basic exclusion rises to $13,990,000; special-use valuation ceiling to $1,420,000.
• Closing Letter Fee: Reduced to $56 (from $67) for requests after May 21, 2025.
• No Schedule O-Specific Changes: Procedures remain consistent, but use the updated layout for attachments.

These tweaks streamline filing but emphasize accurate valuations amid rising estate values.

Common Mistakes to Avoid When Filing Schedule O

Even seasoned executors falter here—avoid these pitfalls:

• Ineligible Recipients: Double-check 501(c)(3) status; donor-advised funds may not qualify if not outright.
• Incomplete Valuations: Forgetting tax reductions or using cost basis instead of FMV.
• Missing Attachments: IRS may disallow deductions without proof.
• Overlooking Trusts: Reporting full trust value instead of just the charitable portion.
• Portability Oversights: Underestimating charitable assets for DSUE calculations.

Audits often target large deductions, so retain records for three years post-filing.

Real-World Examples of Schedule O in Action

• Cash Bequest: A decedent leaves $100,000 to a local library (qualified under Section 170(c)). Deduct the full amount on line 1, reducing the taxable estate by $100,000—no tax on that portion.
• Appreciated Stock: $250,000 in stock (basis $50,000) to a university. Deduct FMV ($250,000); heirs avoid capital gains, and the estate saves ~$100,000 in taxes (at 40% rate).
• Residuary Gift: Estate residue of $5 million, with 20% ($1 million) to charity after $800,000 in specific legacies and taxes. Attach computation; deduct $1 million.
• Charitable Remainder Trust: $300,000 trust pays income to family for life, then to charity. Deduct the present value of the remainder interest (~$150,000, per IRS tables).

These examples illustrate how Schedule O turns philanthropy into tax efficiency.

Final Thoughts: Maximize Your Charitable Legacy with Schedule O

Claiming deductions on IRS Form 706 Schedule O isn’t just about compliance—it’s about honoring the decedent’s wishes while shielding family wealth from estate taxes. With no cap on the deduction and 2025’s higher exclusion, strategic giving via wills or trusts can eliminate tax entirely for many estates.

Ready to file? Download the latest forms from IRS.gov/Form706 and consider professional guidance for complex estates. For personalized advice, consult an estate tax attorney or CPA. Your charitable impact today builds a tax-smart tomorrow.

This article is for informational purposes only and not tax advice. Always refer to official IRS resources for your situation.

 

IRS Form 706 (Schedule J) – Funeral Expenses and Expenses Incurred In Administering Property Subject to Claims – Estate administration often involves significant outlays for final arrangements and settling affairs, but these costs aren’t lost—they can reduce your estate tax liability. IRS Form 706 Schedule J—Funeral Expenses and Expenses Incurred in Administering Property Subject to Claims—allows executors to itemize and deduct these essential expenditures from the gross estate, potentially saving thousands in federal estate taxes for qualifying estates. With the 2025 basic exclusion amount at $13,990,000, only larger estates face taxation, but accurate Schedule J reporting is vital for compliance and portability elections.

As of December 2025, the IRS has streamlined Form 706 with redesigned schedules for easier filing, including separate attachments for Schedule J. This guide draws from official IRS resources to explain Schedule J’s role, eligible deductions, valuation rules, step-by-step completion, real examples, and pitfalls to avoid. Whether you’re an executor navigating a complex estate or a professional advisor, mastering Schedule J ensures deductions are maximized while minimizing audit risks.

 

What Is IRS Form 706 Schedule J?

Schedule J is a key deduction schedule attached to Form 706, the United States Estate (and Generation-Skipping Transfer) Tax Return. It captures two main categories: funeral expenses and administration costs related to property subject to claims—meaning assets available to pay debts, taxes, and administrative fees. These deductions reduce the taxable estate under IRC Section 2053, directly lowering the estate tax rate (up to 40%) applied to amounts over the $13,990,000 exclusion.

Unlike income tax deductions for individuals (where funeral costs are generally nondeductible), estates can claim these on Form 706 if the gross estate exceeds the filing threshold. However, if deducted here, they cannot be claimed on the estate’s income tax return (Form 1041) without a waiver—preventing double-dipping. Schedule J totals flow to Form 706, Part V, line 14, contributing to the overall deductions in the tax computation.

For 2025 decedents, filing is required if the gross estate plus adjusted taxable gifts exceeds $13,990,000, or to elect deceased spousal unused exclusion (DSUE) portability—even for smaller estates. Always attach receipts and evidence; estimates are allowed if exact amounts aren’t yet known, but protective claims via Schedule PC may be needed for contingent expenses.

When Do You Need to File Schedule J?

Complete Schedule J if the estate claims any funeral or administration expenses for property subject to claims. Even if totals are zero, answer the preliminary reimbursement question (line 1) on the schedule. This applies to all Form 706 filers, but it’s especially critical for taxable estates where deductions can slash liabilities.

The Form 706 deadline is nine months after death, extendable six months via Form 4768 (automatic for payment, but not filing). Late deductions risk disallowance, penalties (up to 25% of underpayment), and interest. For portability-only filings, estimate but don’t fully itemize marital/charitable assets under Reg. §20.2010-2(a)(7)(ii). Mail to the IRS per instructions, with Schedule J attached.

Expenses must be “necessary and reasonable” under local law, paid from estate funds, and not reimbursed (e.g., subtract Social Security’s $255 death benefit unless to the spouse).

Types of Deductions on Schedule J

Schedule J divides into funeral expenses (lines 1-5) and administration expenses (lines 6-11), with a total on line 12. Only claim costs for property subject to claims here; non-claim property goes to Schedule L. Here’s a breakdown of common deductible items:

Category	Description and Examples	Reporting Notes
Funeral Expenses	Costs for burial, cremation, memorial services, caskets, plots, monuments, and transportation.	Itemize on line A; subtract reimbursements (e.g., VA benefits). Perpetual care fees included.
Executor Commissions	Fees to the personal representative for managing the estate (e.g., 2-5% of estate value per state law).	Line B; attach Form 4421 declaration. Taxable income to executor.
Attorney and Accountant Fees	Legal/probate costs, tax preparation (Form 706/1041), and accounting services.	Lines C and D; must be court-approved or reasonable. Include final 1040 prep.
Appraisal and Valuation Fees	Professional valuations for real estate, art, businesses, etc., required for Form 706.	Line E; essential for FMV reporting.
Other Administration	Bonds, court filing fees, brokers/auctioneers (if necessary for debts/taxes), insurance during probate, interest on estate loans.	Line F; exclude post-death interest on §6166 installments.
Miscellaneous	Storage/preservation of assets, advertising for creditors, travel for administration.	Use Schedule W if space limited; must be directly tied to claims payment.

These must be itemized with payee details and amounts; totals from continuations (Schedule W) carry over.

How to Value and Substantiate Deductions on Schedule J

Deductions are valued at actual or estimated amounts paid/incurred by the filing date, based on “reasonable” costs under IRC §2053. Attach receipts, invoices, court orders, and Form 4421 for commissions/fees. For unpaid items (e.g., pending attorney bills), estimate conservatively; use Schedule PC for protective claims on contingent expenses without entering a value.

Reimbursements (e.g., insurance, government benefits) reduce deductibility—attach a statement if potential (line 1 “Yes”). Overstatements can trigger 20% accuracy penalties under §6662; under local law, non-allowable items (e.g., excessive luncheons) get disallowed. Retain records for three years post-filing.

Step-by-Step Guide to Completing Schedule J

1. Preliminary Question (Line 1): Check “Yes” if any expense might be reimbursed; attach details.
2. Funeral Expenses (Lines 2-5): List itemized costs on line A (or Schedule W); total on line 5.
3. Administration Expenses (Lines 6-11): Break out executors (B), attorneys (C), accountants (D), appraisers (E), other (F), and miscellaneous; subtotal on line 11.
4. Grand Total (Line 12): Add lines 5 and 11; carry to Form 706, Part V, item 14.
5. Attachments: Include evidence; use Schedule W for extras. Sign Form 706.
6. Review: Ensure no double-dipping with Form 1041; elect via waiver if needed.

For digital filing (e-file available for 2025), use IRS-approved software.

Real-World Examples of Schedule J Deductions

• Funeral Costs: Estate pays $12,000 for casket, service, and plot; receives $255 SSA benefit. Deduct $11,745 on line A.
• Executor and Legal Fees: $20,000 commission (2% of $1M estate) + $15,000 probate attorney. Total $35,000 on lines B/C; attach Form 4421.
• Appraisals and Misc: $3,000 real estate appraisal + $2,500 bond premium. Deduct $5,500 on lines E/F.
• Full Admin Suite: For a $15M estate, total Schedule J: $25,000 funeral (net), $50,000 fees, $10,000 misc = $85,000 deduction, reducing taxable estate by that amount.

These illustrate how itemization supports IRS scrutiny.

Common Mistakes to Avoid on Schedule J

Executors frequently err on Schedule J, inviting audits or disallowances. Key pitfalls:

• Misclassifying Expenses: Claiming non-claim property costs here (use Schedule L instead).
• Forgetting Reimbursements: Not subtracting benefits like SSA/VA payments.
• Double-Dipping: Deducting on both Form 706 and 1041 without waiver.
• Unsubstantiated Claims: Skipping receipts or Form 4421; e.g., vague “luncheon” costs disallowed as non-eulogistic.
• Overestimating: Inflating “reasonable” fees beyond state norms, triggering penalties.

Consult professionals to verify.

Recent Changes and 2025 Updates for Schedule J

The September 2025 Form 706 revision separates schedules into standalone PDFs for efficiency, with Schedule J retaining its structure but benefiting from clearer formatting. The estate tax closing letter fee dropped to $56 (from $67) effective May 21, 2025. No Schedule J-specific overhauls, but inflation adjustments raise the exclusion to $13,990,000 and special-use ceiling to $1,420,000. Enhanced e-filing and portability rules emphasize timely, accurate deductions.

Final Thoughts: Optimize Your Estate with Schedule J

Schedule J transforms funeral and administration burdens into valuable estate tax shields, essential for 2025’s high-exclusion landscape. By itemizing meticulously, executors not only comply but also preserve more for heirs—potentially via DSUE portability. Start with detailed records, estimate wisely, and seek expert guidance for complex cases.

Download the latest at IRS.gov/Form706. Proper Schedule J use honors the decedent while streamlining probate.

This article provides general information, not tax advice. Consult a qualified estate professional for personalized guidance.# IRS Form 706 Schedule J: A Complete Guide to Deducting Funeral Expenses and Administration Costs in 2025

Estate administration often involves significant outlays for final arrangements and settling affairs, but these costs aren’t lost—they can reduce your estate tax liability. IRS Form 706 Schedule J—Funeral Expenses and Expenses Incurred in Administering Property Subject to Claims—allows executors to itemize and deduct these essential expenditures from the gross estate, potentially saving thousands in federal estate taxes for qualifying estates. With the 2025 basic exclusion amount at $13,990,000, only larger estates face taxation, but accurate Schedule J reporting is vital for compliance and portability elections.

As of December 2025, the IRS has streamlined Form 706 with redesigned schedules for easier filing, including separate attachments for Schedule J. This guide draws from official IRS resources to explain Schedule J’s role, eligible deductions, valuation rules, step-by-step completion, real examples, and pitfalls to avoid. Whether you’re an executor navigating a complex estate or a professional advisor, mastering Schedule J ensures deductions are maximized while minimizing audit risks.

What Is IRS Form 706 Schedule J?

Schedule J is a key deduction schedule attached to Form 706, the United States Estate (and Generation-Skipping Transfer) Tax Return. It captures two main categories: funeral expenses and administration costs related to property subject to claims—meaning assets available to pay debts, taxes, and administrative fees. These deductions reduce the taxable estate under IRC Section 2053, directly lowering the estate tax rate (up to 40%) applied to amounts over the $13,990,000 exclusion.

Unlike income tax deductions for individuals (where funeral costs are generally nondeductible), estates can claim these on Form 706 if the gross estate exceeds the filing threshold. However, if deducted here, they cannot be claimed on the estate’s income tax return (Form 1041) without a waiver—preventing double-dipping. Schedule J totals flow to Form 706, Part V, line 14, contributing to the overall deductions in the tax computation.

For 2025 decedents, filing is required if the gross estate plus adjusted taxable gifts exceeds $13,990,000, or to elect deceased spousal unused exclusion (DSUE) portability—even for smaller estates. Always attach receipts and evidence; estimates are allowed if exact amounts aren’t yet known, but protective claims via Schedule PC may be needed for contingent expenses.

When Do You Need to File Schedule J?

Complete Schedule J if the estate claims any funeral or administration expenses for property subject to claims. Even if totals are zero, answer the preliminary reimbursement question (line 1) on the schedule. This applies to all Form 706 filers, but it’s especially critical for taxable estates where deductions can slash liabilities.

The Form 706 deadline is nine months after death, extendable six months via Form 4768 (automatic for payment, but not filing). Late deductions risk disallowance, penalties (up to 25% of underpayment), and interest. For portability-only filings, estimate but don’t fully itemize marital/charitable assets under Reg. §20.2010-2(a)(7)(ii). Mail to the IRS per instructions, with Schedule J attached.

Expenses must be “necessary and reasonable” under local law, paid from estate funds, and not reimbursed (e.g., subtract Social Security’s $255 death benefit unless to the spouse).

Types of Deductions on Schedule J

Schedule J divides into funeral expenses (lines 1-5) and administration expenses (lines 6-11), with a total on line 12. Only claim costs for property subject to claims here; non-claim property goes to Schedule L. Here’s a breakdown of common deductible items:

Category	Description and Examples	Reporting Notes
Funeral Expenses	Costs for burial, cremation, memorial services, caskets, plots, monuments, and transportation.	Itemize on line A; subtract reimbursements (e.g., VA benefits). Perpetual care fees included.
Executor Commissions	Fees to the personal representative for managing the estate (e.g., 2-5% of estate value per state law).	Line B; attach Form 4421 declaration. Taxable income to executor.
Attorney and Accountant Fees	Legal/probate costs, tax preparation (Form 706/1041), and accounting services.	Lines C and D; must be court-approved or reasonable. Include final 1040 prep.
Appraisal and Valuation Fees	Professional valuations for real estate, art, businesses, etc., required for Form 706.	Line E; essential for FMV reporting.
Other Administration	Bonds, court filing fees, brokers/auctioneers (if necessary for debts/taxes), insurance during probate, interest on estate loans.	Line F; exclude post-death interest on §6166 installments.
Miscellaneous	Storage/preservation of assets, advertising for creditors, travel for administration.	Use Schedule W if space limited; must be directly tied to claims payment.

These must be itemized with payee details and amounts; totals from continuations (Schedule W) carry over.

IRS Form 706 (Schedule J) Download and Printable

Download and Print: IRS Form 706 (Schedule J)

How to Value and Substantiate Deductions on Schedule J

Deductions are valued at actual or estimated amounts paid/incurred by the filing date, based on “reasonable” costs under IRC §2053. Attach receipts, invoices, court orders, and Form 4421 for commissions/fees. For unpaid items (e.g., pending attorney bills), estimate conservatively; use Schedule PC for protective claims on contingent expenses without entering a value.

Reimbursements (e.g., insurance, government benefits) reduce deductibility—attach a statement if potential (line 1 “Yes”). Overstatements can trigger 20% accuracy penalties under §6662; under local law, non-allowable items (e.g., excessive luncheons) get disallowed. Retain records for three years post-filing.

Step-by-Step Guide to Completing Schedule J

1. Preliminary Question (Line 1): Check “Yes” if any expense might be reimbursed; attach details.
2. **Funeral Expenses