Estate Tax Return Training for Accountants: Build Form 706 Preparation and Review Readiness

By Vincent Howard, CPA | Managing Partner, Howard, Howard and Hodges | SkillAbility for Accounting Firms

Last updated: August 24, 2026  |  35-minute read

What Is Estate Tax Return Training for Accountants?

Estate tax return training develops an accountant’s ability to convert a decedent’s lifetime ownership, transfers, estate-planning documents, valuations, debts, deductions, elections, gift-tax history, and beneficiary transfers into a complete, supportable, review-ready Form 706 estate and generation-skipping transfer tax return.

That is very different from learning which schedule contains real estate or life insurance.

A review-ready preparer can answer:

• Why is this estate filing?
• Which assets are included in the federal gross estate—even if they never pass through probate?
• Why is only part of a jointly owned asset included?
• Why is a life-insurance policy included or excluded?
• What lifetime transfers must be revisited?
• Which Forms 709 affect adjusted taxable gifts and the applicable credit computation?
• What evidence supports each date-of-death value?
• Could alternate valuation actually be elected?
• Are administration expenses deductible on Form 706, Form 1041, or subject to an election/waiver?
• Does property passing to the surviving spouse qualify for the marital deduction?
• Is a QTIP election being made intentionally?
• Should portability be elected?
• Are there skip persons or GST allocations?
• Is Form 8971 required?
• What has to remain in the estate’s post-filing audit file?

That makes estate-tax preparation an excellent extension of Tax Workpaper Training for Staff Accountants, Professional Skepticism Training, and the Workpaper Review Checklist.

Why Form 706 Is a High-Leverage Staff Development Assignment

Estate tax work forces accountants to integrate:

• Legal documents
• Asset ownership
• valuation
• gift-tax history
• income-tax basis
• life insurance
• trust interests
• closely held businesses
• marital/charitable transfers
• debt and administration claims
• beneficiary reporting
• federal tax computation

I have practiced public accounting since 1990, founded my accounting firm in 1993, and helped grow Howard, Howard and Hodges from three people to approximately 50 staff. Since 2020, I have built SkillAbility around a recurring firm problem: technical knowledge is often trapped in reviewers’ heads instead of turned into a repeatable development system.

Form 706 exposes that problem quickly.

“Prepared two estate tax returns” says almost nothing about readiness.

“Can prove the gross estate, valuation, deduction, election, portability, GST and basis-reporting logic from source evidence” says much more.

Current Estate Tax Facts Staff Should Know in 2026

The current Form 706 revision is August 2025, with instructions revised September 2025. The IRS separately lists the 2026 basic exclusion amount at $15,000,000, compared with $13,990,000 for 2025.

Chart: Federal Basic Exclusion Amount, 2021–2026

Source: IRS estate and gift tax current-development tables. A filing decision also considers adjusted taxable gifts and specific exemption, and portability can require filing regardless of gross-estate size.

The ESTATE READY Framework

E — Determine Whether Form 706 Is Required—or Strategically Important

The filing decision is the first technical workpaper.

For a U.S. citizen or resident decedent, the federal filing requirement generally looks to the decedent’s gross estate at date of death plus adjusted taxable gifts made after 1976 and any applicable specific exemption from the pre-1977 rules.

For 2026 deaths, the IRS lists the basic exclusion amount—and corresponding filing threshold for the standard citizen/resident rule—at $15 million.

But that is not the only reason to file

An estate can be below the mandatory filing threshold and still file Form 706 to elect portability of a deceased spouse’s unused exclusion amount.

Other facts can make estate-tax work important even when no federal estate tax is expected:

• Portability / DSUE
• Generation-skipping transfer allocations or direct skips
• QTIP elections
• QDOT treatment
• Special-use valuation
• Closely held business installment elections
• Consistent-basis reporting
• State estate/inheritance-tax coordination
• Audit-value documentation for significant inherited assets

Train three filing conclusions

For estates below the mandatory filing threshold, Rev. Proc. 2022-32 can provide a simplified late-portability procedure in qualifying cases if the requirements are satisfied and the filing occurs on or before the fifth anniversary of death.

S + T — Build a Complete Gross-Estate Inventory Before Valuation

Probate inventory is not the gross estate.

Many assets can pass outside probate and still be included in the federal gross estate.

Master source request

Depending on the decedent’s affairs, obtain:

• Death certificate
• Will and codicils
• Revocable and irrevocable trusts and amendments
• Probate inventory
• Deeds and title records
• Bank and brokerage statements
• Closely held business records
• Partnership/LLC operating agreements
• Buy-sell agreements
• Stock ledgers
• Retirement plan and annuity contracts
• Life insurance policies and Form 712
• Beneficiary designations
• Loan documents
• Prior Forms 709
• Gift-tax appraisals
• Prior spouse’s Form 706 / DSUE documentation
• Estate-planning transfer documents
• General powers of appointment
• Personal property appraisals
• Real estate appraisals
• Charitable and marital transfer documentation
• Funeral, legal, fiduciary, appraisal, and administration invoices

Create an asset control sheet

Schedules A Through I: Where Property Enters the Gross Estate

Schedule F deserves extra attention

Schedule F is frequently where complex value hides:

• Closely held corporations
• LLC interests
• partnership interests
• art and collectibles
• vehicles
• business receivables
• tax refunds
• intangible rights
• lawsuit claims
• digital assets

If a valuation discount is claimed for a closely held entity or fractional interest, the workpaper should identify:

• Underlying entity value
• ownership percentage
• voting/economic rights
• transfer restrictions
• appraisal method
• discount type
• supporting appraisal
• related-party transactions

A — Valuation Is Evidence, Not a Number Typed Into the Return

Unless alternate valuation is validly elected, Form 706 generally values property at fair market value as of the date of death.

Build a valuation hierarchy

Publicly traded securities

Train staff to use the current Form 706 valuation rules for securities and preserve the price support. Do not substitute the monthly brokerage statement ending balance for date-of-death fair market value without testing the valuation date and methodology.

Real estate

Material real estate should have valuation evidence appropriate to the facts. The return must describe property sufficiently for the IRS to locate and understand it.

Closely held businesses

Business valuation requires more than book equity.

Staff should gather:

• Historical financial statements
• tax returns
• ownership documents
• capitalization table
• buy-sell agreements
• management information
• non-operating assets
• related-party transactions
• appraisal report

The staff role may be to organize and test the appraisal inputs rather than independently perform the valuation.

Personal property

Jewelry, art, collections, vehicles and other tangible assets can require specialist valuation.

Alternate Valuation and Special-Use Valuation Are Elections—not Review Plugs

Section 2032 alternate valuation

Alternate valuation may generally be elected only if it decreases both:

• The value of the gross estate; and
• The sum of estate and GST taxes payable by reason of the decedent’s death, after applicable credits.

The election applies to the estate as a whole. It cannot be used to select only assets that declined in value.

When elected:

• Property disposed of within six months after death is generally valued on the disposition date.
• Property not disposed of within six months is generally valued six months after death.
• Special rules apply to interests affected merely by lapse of time.

Section 2032A special-use valuation

Qualified farm or closely held business real property can qualify for special-use valuation when detailed ownership, use, material-participation, family, and percentage tests are satisfied.

For decedents dying in 2025, the Form 706 instructions list a maximum FMV reduction of $1.42 million.

This is a specialist-level election. Staff should recognize the fact pattern, gather the required evidence, and protect the election deadline.

R — Reconcile Lifetime Gifts Before You Compute Estate Tax

Form 706 Part II does not begin with the estate’s assets. It also incorporates the decedent’s lifetime taxable-gift history.

Obtain every Form 709 you can

Build a gift-tax reconciliation by year showing:

• Taxable gifts
• gift splitting
• annual-exclusion gifts
• DSUE used
• applicable credit used
• gift tax paid or payable
• GST allocations
• gifts later included in the gross estate

Do not assume the prior tax software carryforward is complete.

Adjusted taxable gifts are not simply “total gifts ever made”

The current Form 706 instructions use a dedicated reconciliation because gifts already included in the gross estate and certain other items require adjustments.

The workpaper should tie Form 706 Part II to the underlying Forms 709 and explain any correction to an old gift-tax return.

Review transfers within three years of death

Schedule G can bring certain transfers back into the estate-tax analysis, including:

• Gift tax paid on certain gifts made within three years of death
• Certain transfers of life insurance within three years
• Transfers involving retained life estates, reversionary interests, or revocation powers under the applicable rules

Joint Property, Life Insurance, and Retained Interests: Probate Ownership Is Not Enough

Jointly owned property

Schedule E applies when the decedent held property as a joint tenant with right of survivorship or tenant by the entirety.

Qualified joint interests held only by the decedent and a U.S.-citizen surviving spouse receive special treatment. Other joint interests generally require contribution tracing to establish how much is includible in the gross estate.

Train staff to obtain:

• Deed/title
• date the joint ownership was created
• source of purchase funds
• contribution history
• relationship among co-tenants
• gift-tax history created by the joint ownership

Life insurance

If Form 706 is required and there was insurance on the decedent’s life, Schedule D generally must list the policies even if some proceeds are not included in the gross estate.

Insurance is generally included when:

• Proceeds are receivable by or for the benefit of the estate; or
• The decedent retained incidents of ownership in a policy payable to another beneficiary.

Incidents of ownership can include powers to change the beneficiary, surrender/cancel, assign, pledge, borrow against the policy, or other economic control.

The Form 706 instructions direct executors to obtain Form 712 from the insurer for policies listed on Schedule D.

Insurance transferred shortly before death

A transfer of a life-insurance policy within three years of death can trigger Section 2035 analysis and Schedule G reporting.

Staff should ask:

• Who owned the policy at death?
• Who owned it three years earlier?
• Were ownership rights assigned?
• Did the decedent retain any powers?
• Were premiums paid by the decedent after transfer?
• Was an ILIT involved?

Powers of appointment and retained rights

Schedule H can include property subject to a general power of appointment. Schedule G can include transfers where the decedent retained possession, enjoyment, income rights, revocation powers, or other interests under Sections 2036–2038.

These issues often require legal-document review.

The staff role is to identify the instrument, trace the property and flag the inclusion question—not resolve ambiguous trust law from memory.

T — Test Every Estate-Tax Deduction Against Evidence

Schedule J — funeral and administration expenses

Schedule J reports funeral expenses and expenses incurred in administering property subject to claims.

Examples can include:

• Funeral expenses
• executor commissions
• attorney fees
• accounting fees
• appraisal fees
• court costs
• other administration expenses allowable under the applicable rules

Schedule K — debts and mortgages/liens

Train staff to distinguish:

• Personal liability of the decedent
• estate-enforceable debts
• mortgages reported against full-value assets
• nonrecourse debt where only equity may be included
• contingent or contested claims

Schedule L — administration losses and property not subject to claims

Schedule L can include certain casualty/theft losses during administration and expenses incurred in administering property included in the gross estate but not subject to claims.

Claims and estimated expenses

Some claims may not be finally resolved when Form 706 is due.

The return may require:

• Reasonable-certainty support
• protective claims for refund using Schedule PC
• post-filing monitoring
• supplemental information when the claim is resolved

Coordinate Form 706 and Form 1041 administration deductions

Some estate administration expenses can potentially relate to both estate-tax and fiduciary-income-tax reporting, subject to the applicable election and waiver rules.

The estate-tax team should coordinate with the Form 1041 preparer rather than allowing the same expense to be claimed twice.

See Fiduciary Income Tax Training for Staff Accountants.

E — Marital Deduction, QTIP, QDOT, and Charitable Deductions

Schedule M — marital deduction

The marital deduction can generally apply to qualifying property interests included in the gross estate that pass to a surviving spouse.

Staff should trace each Schedule M item back to:

• The gross-estate schedule where the asset was included
• the will/trust or operation-of-law transfer
• surviving spouse citizenship
• terminable-interest analysis
• QTIP/QDOT treatment where relevant

QTIP election

Qualified terminable interest property can qualify for the marital deduction if the statutory requirements are satisfied and the executor makes the election.

The current instructions provide that listing qualifying property on Schedule M and claiming the deduction generally makes the QTIP election unless the executor specifically excludes a portion.

Once made, the election is generally irrevocable.

Non-U.S.-citizen surviving spouse

The marital deduction is generally not available for property passing to a spouse who is not a U.S. citizen unless the property qualifies through a QDOT or another applicable rule/treaty.

QDOT issues require specialist review.

Schedule O — charitable deduction

Charitable bequests require support for:

• Recipient qualification
• property transferred
• governing-document language
• value
• split-interest restrictions where applicable

Do not treat every bequest to a “foundation,” “church,” or “charity” as automatically deductible without verifying the federal requirements.

Portability: A Form 706 Can Be Valuable Even When No Estate Tax Is Due

Portability allows an executor to transfer a deceased spouse’s unused exclusion—DSUE—to the surviving spouse.

Timely election

Generally, portability is elected by filing a complete, properly prepared Form 706 within nine months after death or within a valid extension.

Simplified valuation rules may apply to certain portability-only estates

The Form 706 instructions contain special valuation reporting rules for certain property that qualifies for the marital or charitable deduction when the estate is below the mandatory filing threshold and files only for portability.

That does not mean the firm can ignore asset completeness.

The executor still needs a defensible gross-estate framework and the return must satisfy the portability rules.

Late portability relief

Rev. Proc. 2022-32 provides a simplified method for certain estates that were not otherwise required to file Form 706 and missed the portability deadline. If all requirements are met, the relief can be used on or before the fifth anniversary of death.

Worked portability scenario

Assume a married decedent dies in 2026 with:

• $8.5 million gross estate
• $1 million adjusted taxable gifts
• surviving U.S.-citizen spouse
• no federal estate tax expected

The standard filing-threshold computation is below the $15 million 2026 basic exclusion amount.

But the executor may still decide to file Form 706 to preserve DSUE for the surviving spouse.

This is an ideal staff-training scenario because it forces the preparer to separate the filing requirement from the portability objective.

Generation-Skipping Transfer Tax: Recognize the Second Transfer-Tax System

Form 706 is also used to compute GST tax on certain direct skips occurring at death.

Schedules R and R-1 are used for GST reporting and allocation.

Staff should identify

• Skip persons
• trusts with skip beneficiaries
• direct skips occurring at death
• prior GST exemption allocations
• automatic allocation history
• GST-exempt and nonexempt trust shares
• QTIP trusts with possible reverse-QTIP election considerations

The goal for a developing preparer is not independent mastery of every GST rule.

The goal is to prevent a GST issue from being discovered after the return is filed.

A — Reproduce the Estate-Tax Computation Before You Trust the Software

The unified transfer-tax computation integrates the taxable estate with adjusted taxable gifts, tentative tax, prior gift-tax calculations, applicable credit, DSUE and other credits.

Simplified 2025 example with no adjusted taxable gifts

Assume a 2025 decedent has:

• $15,500,000 gross estate
• $1,000,000 allowable deductions
• No adjusted taxable gifts
• No DSUE from a prior spouse
• No foreign-tax or prior-transfer credits

The simplified example works because there are no adjusted taxable gifts, DSUE amounts, restored exclusion, state death tax deduction, GST tax, foreign death taxes, credit for prior transfers, or other complications.

Do not confuse filing threshold with taxable estate

The filing threshold looks at gross estate plus adjusted taxable gifts and specific exemption.

Estate tax is calculated after allowable deductions and the full transfer-tax computation.

An estate can be required to file and still owe no tax because of:

• Marital deduction
• charitable deduction
• applicable credit
• DSUE
• other allowable credits

Payment, Extensions, and Section 6166

Form 706 filing extension

Form 706 is generally due nine months after death. Form 4768 can provide an automatic six-month extension of time to file.

The extension-to-file decision should be made early enough to support:

• Valuation completion
• gift-tax history reconstruction
• executor approval
• marital/QTIP decisions
• GST analysis
• payment planning

An extension of time to file is not automatically an extension of time to pay estate tax. Payment relief requires separate analysis.

Section 6166 for closely held businesses

Section 6166 can allow qualifying estates to pay a portion of estate tax attributable to a closely held business in installments.

The current Form 706 instructions require the qualifying business interest to exceed 35% of the adjusted gross estate.

When the election applies, payment of qualified estate tax can generally be deferred for up to five years from the original payment due date, and there can be no more than 10 installment payments. Interest is generally paid annually.

This is a planning/election issue that should be identified before the return deadline.

D — Form 8971 and Consistent-Basis Reporting

Estate-tax preparation does not end when Form 706 is signed.

For certain estates required to file Form 706 under Section 6018, Form 8971 and beneficiary Schedules A report the estate-tax value of property acquired by beneficiaries.

Why this matters

Section 1014(f) can require beneficiaries to use a basis no higher than the estate-tax value reported under the consistent-basis rules, subject to the applicable regulations and exceptions.

That creates a direct bridge:

Current Form 8971 timing

When required, Form 8971 and required beneficiary Schedules A generally must be provided no later than the earlier of:

• 30 days after the date Form 706 is required to be filed, including extensions; or
• 30 days after the date Form 706 is actually filed.

Supplemental reporting can be required if beneficiary/property information changes or a valuation later becomes final.

Not every Form 706 requires Form 8971

Current instructions contain exceptions, including returns filed solely to elect portability, solely for certain GST elections/allocations, or when the estate was not otherwise required to file under Section 6018.

Form 706 Self-Review Checklist Before Manager or Partner Review

• Did I confirm the decedent’s citizenship/residency and whether Form 706 or Form 706-NA is the appropriate return?
• Did I document why the estate is filing: mandatory threshold, portability, GST, election, or another objective?
• Did I verify executor authority, name, TIN, address, and multiple-executor information?
• Did I obtain the will, trusts, codicils, deeds, entity agreements, beneficiary designations, and major estate-planning documents?
• Did I obtain and reconcile all available Forms 709?
• Did I investigate lifetime transfers made within three years of death?
• Did I build a complete asset inventory independent of the probate inventory?
• Does every asset have an ownership conclusion?
• Does every asset have a Form 706 inclusion rule and schedule?
• Does every material asset have date-of-death valuation evidence?
• Did I separately identify accrued interest, declared dividends, rents, claims, tax refunds, and other date-of-death receivables?
• Did I review all life-insurance policies and obtain Form 712 or equivalent evidence?
• Did I test incidents of ownership and policy transfers within three years?
• Did I review joint property for qualified-spousal treatment or contribution tracing?
• Did I review powers of appointment and retained trust interests?
• Did I test any valuation discount against the appraisal and disclosure requirements?
• If alternate valuation is considered, did I test both statutory reduction requirements for the whole estate?
• If Section 2032A is considered, did I identify all ownership/use/material-participation requirements and election attachments?
• Did I support funeral and administration expenses on Schedule J?
• Did I support debts and liens on Schedule K and understand whether assets were reported gross or net?
• Did I support Schedule L losses/expenses?
• Did I coordinate administration deductions with the Form 1041 team?
• Did I trace every Schedule M marital-deduction asset back to the gross estate and governing transfer?
• Was every QTIP/QDOT election intentional and approved?
• Did I support charitable deductions on Schedule O?
• Did I calculate adjusted taxable gifts from the underlying gift-tax history?
• Did I identify DSUE received from a predeceased spouse?
• If portability is being elected, is the return timely or does a specific relief procedure apply?
• Did I review skip persons and prior GST allocations?
• Can I reproduce tentative tax and applicable credit outside the tax software?
• Did I consider foreign death tax or tax-on-prior-transfer credits where relevant?
• Did I reconcile tax payments and Form 4768?
• Did I screen for Section 6166 or other payment deferrals?
• Did I determine whether Form 8971 is required and calendar the due date?
• Did I assemble required appraisals, Forms 712, trusts, gift-tax returns, elections, statements, and Schedule W attachments?
• Did I document unresolved claims, pending valuations, protective refund issues, and post-filing follow-up?

100-Point Form 706 Preparer Readiness Scorecard

Suggested readiness bands

Override the numerical score for a materially incomplete gross estate, unsupported appraisal/discount, missed life-insurance inclusion issue, unreconciled gift-tax history, accidental QTIP election, missed portability deadline, unrecognized GST issue, incorrect foreign status, or basis-reporting failure.

A 30/60/90-Day Estate Tax Return Training Plan

Use Scenario-Based Training for Accountants so staff encounter these decisions in a controlled environment before a nine-month federal filing deadline becomes the first practice attempt.

15 Realistic Form 706 Training Scenarios

1. The estate is below $15 million

A 2026 estate is below the mandatory filing threshold, but the decedent leaves a surviving spouse. The learner must distinguish “not required” from “portability may still justify filing.”

2. The probate inventory misses the revocable trust

The executor hands the preparer a probate inventory that excludes $4 million of trust assets. The learner must build the federal gross-estate inventory independently.

3. The joint brokerage account

A nonspouse joint owner claims to have contributed half the purchase price but provides no evidence. Staff must identify the contribution-tracing issue rather than default to 50% inclusion.

4. The ILIT policy transferred two years before death

The life-insurance policy is owned by an irrevocable trust at death, but the decedent transferred the policy within three years. The learner must identify Schedule D/G and Section 2035 analysis.

5. The appraiser values the LLC at book equity

A closely held business owns appreciated real estate and generates significant cash flow. Staff must recognize that book value is not automatically FMV and request a qualified valuation analysis.

6. The estate wants alternate valuation because one stock fell

One concentrated security declined 50%, but other estate assets increased. The learner must test the whole-estate statutory requirements rather than cherry-pick the declining asset.

7. The executor wants to deduct an estimated lawsuit

A significant claim is disputed and unresolved. Staff must determine the evidence, deduction rules and possible protective claim rather than simply book the attorney’s estimate.

8. The marital trust looks like QTIP

The surviving spouse receives all trust income for life, but the return team has not documented whether a QTIP election should be made. Staff must route the election for intentional approval.

9. The surviving spouse is not a U.S. citizen

A large outright bequest is assumed to qualify for the marital deduction. The learner must recognize the QDOT/treaty issue.

10. The missing gift-tax returns

The decedent made large gifts but copies of old Forms 709 cannot be found. The learner must not enter zero adjusted taxable gifts without reconstruction.

11. The grandchildren’s trust

Property passes to a long-term trust for grandchildren and descendants. The learner identifies GST analysis before finalizing Schedule R.

12. The family business creates liquidity pressure

Most of the estate value is tied to an operating company and the estate lacks cash to pay tax. The learner screens the 35% Section 6166 test and escalates early.

13. The estate files solely for portability

The preparer automatically creates Form 8971 after filing. The learner must test whether the current Form 8971 exception for portability-only filing applies.

14. The beneficiary sells inherited property after a valuation change

The Form 706 value is later adjusted. Staff must recognize that supplemental Form 8971 / Schedule A reporting may be required.

15. The executor asks for the estate-tax closing letter immediately

The learner must understand that an estate tax closing letter is separately requested and current IRS guidance says to wait at least nine months after filing before requesting one.

What CPA Firms Should Measure

Connect these measures to the firm’s broader Staff Accountant Competency Checklist and Accounting Employee Development Plan.

Common Estate Tax Return Training Mistakes

Mistake 1: Start with probate inventory

Nonprobate assets, insurance, trust property, joint property and retained interests can be missed.

Mistake 2: Treat every value as an appraisal question

The preparer first has to determine what interest is included and on what valuation date.

Mistake 3: Use 50% for every joint asset

Contribution and qualified-joint-interest rules differ.

Mistake 4: Ignore old Forms 709

Adjusted taxable gifts and prior credit usage become wrong.

Mistake 5: Assume an ILIT means no estate inclusion

Incidents of ownership and the three-year transfer rule still need review.

Mistake 6: Elect alternate valuation asset by asset

Section 2032 is a whole-estate election with statutory reduction tests.

Mistake 7: Treat Schedule M as clerical

QTIP and QDOT decisions can be irrevocable and materially affect future transfer tax.

Mistake 8: Look only for estate tax due

Portability and GST can make a no-tax return strategically important.

Mistake 9: Forget income-tax coordination

Administration deductions and inherited-basis reporting can affect Form 1041 and beneficiaries.

Mistake 10: End the engagement when Form 706 is mailed/filed

Form 8971, valuation adjustments, protective claims, closing letters and supplemental reporting can remain open.

How SkillAbility Builds Form 706 Preparation and Review Readiness

BASE — Estate-tax execution

Develop:

• Filing-threshold analysis
• executor/entity profile
• gross-estate schedules
• ownership tracing
• basic valuations
• deduction workpapers
• tax computation
• return assembly

MAPS — Estate-tax judgment

Develop:

• Gift-tax history reconciliation
• insurance and retained-interest analysis
• joint-property contribution questions
• valuation evidence challenge
• alternate valuation
• QTIP/portability/GST issue spotting
• executor/client communication
• post-filing handoff

SUMMIT — Review and advisory readiness

Develop managers and future leaders who can:

• Review complex appraisal assumptions
• coordinate with estate counsel and valuation specialists
• control elections
• manage portability/GST strategy
• evaluate liquidity and Section 6166
• coach preparers without reconstructing the return

Frequently Asked Questions About Form 706 Training

What is Form 706?

Form 706 is the U.S. Estate (and Generation-Skipping Transfer) Tax Return used by an executor to compute federal estate tax and certain GST tax on direct skips occurring at death.

What is the 2026 federal estate tax exemption?

The IRS lists the 2026 basic exclusion amount at $15,000,000. The actual filing and tax computation must also consider adjusted taxable gifts, DSUE, restored exclusion and other applicable rules.

What was the 2025 basic exclusion amount?

For decedents dying in 2025, the basic exclusion amount is $13,990,000 and the basic credit amount is $5,541,800.

When is Form 706 due?

Form 706 generally must be filed within nine months after the decedent’s date of death.

How long is the Form 706 extension?

Form 4768 can generally provide an automatic six-month extension of time to file Form 706. Payment rules are separate.

Is Form 706 required only when estate tax is due?

No. An estate can be required to file based on the gross-estate-plus-adjusted-taxable-gifts test even if deductions eliminate tax. A below-threshold estate may also file to elect portability of DSUE.

What is portability?

Portability allows the executor of a deceased spouse’s estate to elect to transfer the decedent’s unused exclusion, called DSUE, to the surviving spouse.

Can portability be elected late?

Rev. Proc. 2022-32 provides a simplified late-election procedure for certain estates that were not otherwise required to file Form 706, if the requirements are satisfied and the procedure is used on or before the fifth anniversary of death.

What assets are reported on Form 706?

The federal gross estate can include real estate, securities, cash and notes, life insurance, jointly owned property, business/personal property, certain lifetime transfers, powers of appointment, annuities and other includible interests. It is broader than the probate estate.

What is alternate valuation?

Section 2032 can allow estate property to be valued six months after death or on an earlier disposition date, but generally only if the election decreases both the gross estate and the applicable estate/GST tax payable. The election applies to the whole estate.

What is a QTIP election?

A QTIP election can allow qualifying terminable-interest property for a surviving spouse to receive the marital deduction when the statutory requirements are met. The election is generally made on Schedule M and is generally irrevocable once made.

What is Form 712?

Form 712 is a life-insurance statement used to provide information for policies included on Form 706 Schedule D. The current Form 706 instructions generally direct the executor to request Form 712 for every policy listed on Schedule D.

How is jointly owned property reported?

Qualified joint interests held only by the decedent and a U.S.-citizen surviving spouse receive special treatment. Other joint property can require contribution tracing to determine how much value is included in the decedent’s gross estate.

What is Section 6166?

Section 6166 can permit installment payment of estate tax attributable to a qualifying closely held business when the value of the qualifying business interest exceeds 35% of the adjusted gross estate and the other requirements are satisfied.

What is Form 8971?

Form 8971 reports estate-tax value information to the IRS and, through beneficiary Schedules A, to recipients of certain property when the consistent-basis reporting rules apply.

When is Form 8971 due?

When required, it generally must be filed and applicable Schedules A furnished by the earlier of 30 days after the Form 706 due date including extensions or 30 days after Form 706 is actually filed.

Does every portability-only Form 706 require Form 8971?

No. Current Form 8971 instructions include an exception when Form 706 is filed solely to elect portability, among other specified exceptions.

How do you know when an accountant is review-ready for Form 706?

A review-ready preparer can establish the filing objective, build a complete federal gross-estate inventory, support valuation and ownership, reconcile Forms 709, identify life-insurance and lifetime-transfer issues, support deductions, recognize portability/QTIP/GST elections, reproduce the tax, assemble attachments, and manage basis reporting and open post-filing items.

Current Research and Authority Resources

• IRS — Instructions for Form 706 (Rev. September 2025)
• IRS — About Form 706
• IRS — Estate Tax
• IRS — What’s New: Estate and Gift Tax
• IRS — Estate Tax FAQs
• IRS — Revenue Procedure 2022-32, Late Portability Relief
• IRS — Form 4768, Estate Tax Extension
• IRS — Instructions for Form 8971 and Schedule A
• IRS — Form 712, Life Insurance Statement
• IRS — Publication 559, Survivors, Executors, and Administrators
• Google Search Central — Optimizing for Generative AI Features

Estate-tax law and valuation are highly fact-specific. Verify year-of-death thresholds, current instructions, gift history, legal ownership, governing documents, elections, state estate/inheritance taxes, valuation standards and other current authority before applying any treatment to a live estate.

The Bottom Line

Estate tax return training should not produce accountants who know which asset goes on Schedule A, B or F.

It should produce preparers who can defend the entire transfer-tax file.

Establish why the estate is filing.

Secure the legal and gift-tax history.

Trace the entire federal gross estate.

Appraise and support the valuation.

Test deductions and liabilities.

Evaluate marital, charitable, portability and GST elections.

Reconcile lifetime taxable gifts.

Control special valuation and payment elections.

Assemble and reproduce the tax.

Deliver the beneficiary basis handoff.

Maintain the post-filing audit file.

That is ESTATE READY.

The staff accountant should know why an asset outside probate can still be in the gross estate.

They should know why an ILIT does not automatically solve a three-year life-insurance transfer issue.

They should know why a joint asset is not always 50% includible.

They should know why one falling stock does not automatically justify alternate valuation.

They should know why Schedule M can create an irrevocable QTIP election.

They should know why a $9 million estate might still file Form 706 for portability.

They should know why grandchildren can create a second transfer-tax system.

They should know why an estate-tax value can become the beneficiary’s basis reporting problem months later.

And they should know when valuation, legal interpretation, GST, QDOT, closely held business or contingent-claim issues belong with a specialist before the return reaches review.

Find the property.
Prove the inclusion.
Support the value.
Control the elections.
Protect the handoff.

Protect Knowledge. Develop People. Scale the Firm.

To preparers who can defend the estate before the reviewer has to reconstruct it,

Vincent Howard, CPA
Managing Partner, Howard, Howard and Hodges
SkillAbility for Accounting Firms

© 2026 SkillAbility for Accounting Firms. This article provides general educational information and does not replace legal, estate-planning, appraisal, fiduciary, federal/state tax, international, GST, financial-planning, or other qualified professional advice.