Estate tax return

[toby]

Do you need to file an estate tax return if the estate is not over 810,000.00

[mastertaxguy]

Another situation where it depends on the facts and circumstances.

Remember for estate tax purposes, the "estate" includes non-probate items such as life insurance payable to designated beneficiaries, joint tenancy property, retirement plan assets payable to designated beneficiaries, transfers (gifts) within three years of death, transfers with retained interests, and so on. (TTB 21-30-31).

Some states may have different filing thresholds than Federal requirements for a 706. New York's threshold, for example, is $1,000,000.00. Some states also have inheritance taxes.

A wise fiduciary does due diligence on assets and claims payable to the decedent, and obtains appraisals of real estate, collections, pricey personal property, etc. as close as possible to the date of death.

If the estate is still below the filing threshold for a federal 706 (estate tax return), $5,250,000.00 for 2013, some practitioners (such as myself) recommend filing a 706 to start a statute of limitations, and to establish value as of date of death of personal and real property. Recall that assets are valued at date of death, not decedent's basis.

You do not state the date of death of decedent. I have filed "late" 706 returns with estates below the filing threshold just to document basis and again, start the SOL. Sometimes IRS tries to assess a penalty, mostly not.

As often is the case, TTB has guidance, Tab 21, especially Pp. 21-30+.

[Lion]

If there is a surviving spouse, you may want to file a return to preserve the portability of the unused portion of the first to die to ultimately be used with the estate/gift tax returns of the second spouse.

[ATSMAN]

Estate Tax returns are very complex and the risk of doing it incorrectly with severe consequences is very high. Unless you have done this before I would recommend referring it to someone more experienced.

I have a client who wanted me to handle his father's estate tax return (divorced from 2nd spouse, with some arrangement for certain properties to be inherited by her, trusts were involved). When I looked at the documents it was beyond my pay grade. I referred him to someone who specialized in that and still have the client for his 1040 return.

So don't bite more than you can chew! It could be very costly if you make a mistake.