2003 Estate Tax Returns
An estate tax return (Form 706) is required to be filed if the gross market value of the assets owned by the decedent, plus the total of taxable gifts made during his/her lifetime, exceeds the lifetime exclusion amount for the year of death (currently one million dollars). That in no way means that there will be any tax due because that is calculated on the net estate, after subtracting liens, final expenses, and charitable bequests. It is often advisable to file a 706 even when not legally required in order to formally establish values of assets passed on to heirs, as well as to start the statute of limitations running for any possible challenge by IRS.

It used to be that IRS wouldn't revise the estate tax return form (706) for several years at a time. Now, with the almost yearly changes in the exemption amounts, IRS has been issuing new revisions of the form for each year. The 2002 form was released in August, 2002.

The normal due date for the 706 is nine months after the person passed away. For those who died in January, that nine months is almost here, and the 2003 version of the 706 has yet to be released. According to the official IRS schedule of releases dates, the 2003 706 is supposed to be available October 7, 2003. My experience with these schedules is that they are as reliable as an appointment with Bill Clinton, who is never on time to a meeting.

A draft of the 2003 706 was posted by IRS back in July.

There are often times when closing up an estate, including the filing of all tax returns, is a rush priority. If you can't wait for the official release of the new form (IRS is notorious for missing these scheduled release dates) and need to close up an estate ASAP, you can go ahead and use the 2002 version. You just need to manually make any changes that would affect the tax calculations between years. I have had to do that on a number of occasions, and IRS has never had a problem with it.

If the nine months are up before the new form is released, or if you just need more time to get everything together, you can also file for a six month extension on Form 4768, sending in a payment for any expected tax.
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 9/07/2003 01:21:00 PM Send this post: