Form 706 filing deadline and extensions

[sdtaxman]

Is anyone aware if you can get a second extension to file the 706. There will be no tax as the estate is going to trust to the extent of unified credit and balance to the spouse. We are having trouble getting appraisal values on some assets and they will be auctioned off approx. 3 months after the extended due date of the 706. I was hoping to have a way to file a second extension and use the auction value as the date of death value since appraisal seems to be unlikely.

Any suggestions or ideas would be greatly appreciated.

[Burke]

Do the assets of the estate exceed the unified credit deduction and other deductions which would be taken on the 706?

[sdtaxman]

Do the assets of the estate exceed the unified credit deduction and other deductions which would be taken on the 706?

No they do not. The spousal beneficiary will receive anything that would generate a taxable estate.

[Burke]

In your first post, you indicated an amount up to the unified credit would be going into a trust, with the spouse receiving "the balance." This indicates the estate exceeds the unified credit. The 706 is based on the entire estate, including real property, life insurance, annuities, etc before any testamentary trust is established. Which means no 706 is necessary if the estate is under $5.2M
unless you are filing to establish the DSUE?

[sdtaxman]

Sorry, I didn't follow the first question. The total estate net of deductions will be approx $7.0 million. The way I read it is we need to file the return even though there will be the unified credit amount going to the trust and the balance passing to the spouse and therefore no federal estate tax owed.

[Burke]

Yes, that is correct. You can then later amend the 706 if anything changes. So there will be no unused credit to carry to the spouse, in this case.

[Roland Slugg]

Well, the executor can apply for an additional extension, but it may or may not be granted. The instructions to F-4768 are contradictory on this matter. First they say that an additional extension is only available if the executor is out of the country, but then they say, or imply, that an additional extension may be granted if adequate cause can be shown. I wouldn't chance it. Do everything you can to see that the F-706 is filed on time.

Remember, too, that "on time" means within 9 months after the DOD, plus an additional 6 months if a timely extension was filed. Also, the DSUE transfer election must be made on a timely filed return, including the 6-month extension, but NOT an additional extension should one be obtained.