Form 706 Instructions 2026: Schedules, Portability, Due Dates

Do you have to file? Two doors, one deadline

Form 706 is the return the executor of a U.S. citizen or resident files to figure the federal estate tax and the generation-skipping transfer tax on direct skips. The 2026 instructions open with two tests. Either the gross estate, plus the adjusted taxable gifts made after December 31, 1976, plus the specific exemption allowed for gifts made after September 8, 1976, is more than $15,000,000, or the executor wants the unused exclusion to pass to the surviving spouse. Our estate tax exemption guide has the law behind the $15,000,000 and the IRS return counts; this page is about the form.

Source: Instructions for Form 706 (Rev. July 2026), pages 1-3 and 23, and Rev. Proc. 2022-32, read and saved on October 22, 2026. The “Neither” row is our reading.

The line has moved a lot. The IRS table of filing thresholds by year of death:

Source: IRS, Frequently asked questions on estate taxes, “Am I required to file an estate tax return?” (updated December 22, 2025), read on October 22, 2026. The CSV carries every year from 2011.

Two practical points sit on the first pages of the instructions. The executor has to prove status with documents such as certified copies of wills or court orders, and the instructions are blunt: “Statements by executors attesting to their status are insufficient.” And a return is not processed half-finished: “Returns filed without entries in each field will not be processed.”

Where a rental, an LLC and fund shares go on the form

The form has nine asset schedules, A through I, and the totals flow to Part V of the form (items 1 to 9). Entering zero for an item is not a blank: it is “a statement by the executor, made under penalties of perjury, that the gross estate does not contain any includible assets covered by that item.” A zero also means the schedule need not be filed, except Schedule F.

Source: Instructions for Form 706 (Rev. July 2026), Part IV line 11, Part V items 1 to 12, and the instructions for Schedules A, B, C, E, F, G and U, read and saved on October 22, 2026. Rows marked “our reading” apply the instructions to assets they do not name.

Three things in that table are easy to miss. First, the entity’s EIN: the instructions ask for it on Schedules B, E, F, G, M and O whenever the gross estate includes an interest in a trust, partnership or closely held entity, so the sponsor’s EIN has to be collected from the fund’s statements before the return is prepared. Second, an LLC interest is valued under Treasury Regulation section 20.2031-3 and stock of an inactive or closely held corporation under section 20.2031-2, as Part IV line 11 says, and the five years of financial statements go with the return. Third, if the answer to Part IV line 11b is yes (a discount was taken on an LLC, partnership or closely held stock), a statement with the line and item number and the total effective discount must be attached. The instructions’ own example takes a pro rata value of $100.00 to $90.00 after a 10% lack-of-control discount and to $76.50 after a 15% lack-of-marketability discount, an effective discount of 23.50%. For how the discounts themselves work, see our family limited partnership guide.

Valuing the real estate, with the IRS’s own numbers

The instructions give two worked Schedule A examples for a January 1, 2026 death: two rented houses, one in Washington, DC and one in Alexandria, Virginia, each with rent accrued but not collected.

Source: Instructions for Form 706 (Rev. July 2026), Schedule A examples 1 and 2, page 25. The totals are our arithmetic; the IRS examples print no total.

Rent accrued to the date of death is property of the estate and is listed with the property. The alternate valuation in Example 2 is a choice with conditions: it can be elected only if it lowers both the gross estate and the sum of estate and GST taxes payable, it cannot be applied to part of the property, once made it cannot be revoked, and it can be made on a late-filed return only if that return is filed within 1 year after the due date, extensions included. Property disposed of within 6 months is valued on the date it leaves the estate; everything else on the date 6 months after death.

The mortgage rule moves the number between two schedules without changing the net. In our example of a rental worth $800,000 with a $500,000 mortgage, an estate that is liable for the debt reports $800,000 on Schedule A and deducts $500,000 on Schedule K; an estate that is not liable reports $300,000 on Schedule A and deducts nothing (our arithmetic from the Schedule A and K instructions). Either way $300,000 is the net, but the first presentation shows a larger gross estate, which matters for the filing test and the 35% and 50% tests (our reading).

Valuation is also where the penalties sit. The instructions describe a 20% penalty on an underpayment caused by a substantial valuation understatement, which is a reported value of 65% or less of the actual value, and 40% where the reported value is 40% or less of the actual; no penalty applies if the underpayment attributable does not exceed $5,000. Our step-up in basis guide covers the value the heirs then inherit as their tax basis.

The Part III elections that change what the estate pays

Four yes-or-no boxes on Part III decide timing and value. For a real-estate estate, three are live.

Source: Instructions for Form 706 (Rev. July 2026), Part III, Lines 1 to 4, pages 13-19, and Rev. Proc. 2025-32 section 2.41. Whether an LLC that holds rentals is “carrying on a trade or business” for section 6166 is a question the instructions leave to Rev. Rul. 2006-34.

Section 6166 has a number that the instructions print and that is easy to misread. The interest on the part of the deferred tax up to the “2% portion” is 2%; above it, 45% of the underpayment rate. For a 2026 death the amount added to the basic exclusion to find that portion is $1,940,000, and our arithmetic from Table A gives a tentative tax of $6,721,800 on $16,940,000 less the $5,945,800 basic credit amount, which is $776,000. The instructions print $776,000, but introduce it with the words “For decedents dying in 2025”; the figure only works with the 2026 inputs, so we read it as the 2026 amount.

Portability on Part VI: what the lines compute

Part VI is the page that carries the election. The instructions say that a timely filed and complete Form 706 is required “regardless of the size of the estate,” and that the timely filing of a complete return with a DSUE amount “will be deemed a portability election if there is a surviving spouse.” The choice is not revisable at will: “A portability election is irrevocable, unless an adjustment or amendment to the election is made on a subsequent return filed on or before the due date.” To decline, the executor checks the box in Section A. For a smaller estate that has no filing requirement, not filing avoids the election.

Section C computes the amount. Line 1 is the applicable exclusion amount from Part II line 9d (the basic exclusion amount plus any DSUE the decedent received and any restored exclusion amount); line 2 is lifetime gifts on which gift tax was paid or payable; line 7 is Part II line 5, the taxable estate plus adjusted taxable gifts; line 9 is the basic exclusion amount; and line 10 is the smaller of line 8 (the unused amount) and line 9. Three cases on the 2026 numbers, ignoring expenses and the small adjustment lines:

Source: Form 706 (Rev. August 2025), Part VI Section C, and the Instructions for Form 706, Part VI, with the $15,000,000 basic exclusion amount. The cases are our arithmetic; the line-by-line computation in a real return also uses lines 3 to 6 for adjustments.

For the survivor, only the last deceased spouse counts: “the most recently deceased person who was married to the surviving spouse at the time of that person’s death,” fixed on the day of a taxable gift or at the survivor’s death, and remarriage does not change it. A DSUE from the last deceased spouse is used on a taxable gift before the survivor’s own basic exclusion amount. The IRS may examine the first estate’s return when the survivor applies the DSUE, and the amount can be adjusted or eliminated, though additional tax on the first estate can be assessed only within the section 6501 period. A nonresident surviving spouse who is not a citizen may not take a DSUE into account except as a treaty allows. Our credit shelter and QTIP guide compares portability with a trust.

The estimated-value bands for portability-only returns

When the total of the gross estate and adjusted taxable gifts is less than the basic exclusion amount and the return is only for portability, the executor must still list marital and charitable property on its schedule but enters no value in the last three columns. The best estimate of the total value of those assets goes in, as the band from the table, on both Part V item 10 and item 23. A sample of the 53 bands (the CSV has all of them):

Source: Instructions for Form 706 (Rev. July 2026), Table of Estimated Values, pages 22-23. Above $11,000,000 the bands follow earlier filing thresholds (our observation).

Two limits matter. The estimate has to come from “due diligence” and is subject to penalties of perjury, and the special rule does not apply if the value is needed for sections 2032, 2032A, 2652(a)(3) or 6166 or any other provision. A portability-only estate that wants alternate valuation or an installment election therefore reports real values.

Late elections, and who cannot use them

Rev. Proc. 2022-32 (effective July 8, 2022) lets the executor of an estate that is not required to file under section 6018(a) elect portability on a complete and properly prepared Form 706 filed on or before the fifth annual anniversary of the date of death, with the sentence about the revenue procedure written at the top. It is available only if the decedent was survived by a spouse, died after December 31, 2010 and was a citizen or resident, and only if no return was filed on time. Section 3.03 excludes an estate that was required to file, because for that estate the due date is fixed by statute. The instructions add that an estate which misses the five years may seek relief under Regulations section 301.9100-3, which is the letter ruling route. If the survivor has already made a gift or paid estate tax without the DSUE, the revenue procedure warns that the usual refund limitation in section 6511(a) still runs and a protective claim may be needed.

The calendar

Source: the documents named, read and saved on October 22, 2026. The Form 4768 instructions on irs.gov are the February 2020 edition.

Dates worked from a January 31 and a March 15 death (our arithmetic):

Source: our arithmetic from the Form 706 and Form 4768 instructions and Rev. Proc. 2022-32. A death between January 22 and March 22, 2026 has a nine-month date between October 22 and December 22, 2026, so those estates are inside the next 60 days.

After the return: Form 8971, the closing letter and changes

Form 8971 reports the estate tax value of each asset to the IRS and, on a Schedule A to each beneficiary, so the heirs’ basis is consistent with it. It is separate from Form 706. The instructions say it is not required when the estate tax return is filed solely to elect portability, so a portability-only executor does not send it. A full filer does, and failure carries information-return penalties under sections 6721 and 6722. Our step-up in basis guide explains what a beneficiary does with the Schedule A value.

To change a filed return, the executor files another Form 706, checks the supplemental box on line 13, adds a statement of what changed and attaches a copy of the original. The estate tax closing letter is issued only on a request through Pay.gov. The fee was $67 from October 28, 2021, $56 for requests from May 21, 2025, and becomes $76 for requests received after October 26, 2026 (T.D. 10055: “from $56 to $76”). The IRS also accepts an account transcript in place of the letter.

Who decides, and what to bring

Whether to file only for portability, how to value a rental or an LLC interest, and whether a section 6166 or 2032A election fits are legal and tax decisions. The people who prepare and sign Form 706 are estate-planning attorneys and CPAs who file estate returns; an adviser who looks at the whole estate can help line up those two before the nine-month date.

What a reader can do with this

• Write down the date of death and add 9 months. Apply the rule for a month with no matching day and for weekends, then decide by that date whether to file Form 4768. It adds time to file, not to pay.
• Decide whether the estate has a filing requirement. Add the gross estate, adjusted taxable gifts and specific exemption and compare with $15,000,000. If it is below the line and there is a surviving spouse, the choice is portability or nothing.
• List every asset against the schedule map above. Collect the deed, the appraisal, the mortgage statement, the purchase contract, the entity’s EIN and its five years of financial statements, and the CUSIP or principal business office for each stock.
• Pick the value date early. Alternate valuation needs the six-month value and can lower the number only if it also lowers the tax; ask the preparer to run both before the election is made.
• If you are the surviving spouse, ask for the DSUE. Ask whether the first estate filed, and keep the first estate’s Form 706. A DSUE not elected on time is lost unless the Rev. Proc. 2022-32 window applies.
• If the first death was years ago and the estate was small, check the fifth anniversary now, and whether any gift or estate tax you paid is still inside the refund period.
• Do not skip Schedule F. It must be filed and its questions answered even if it lists nothing.

FAQ

Sources, read and saved on October 22, 2026: Instructions for Form 706 (Rev. July 2026) and Form 706 (Rev. August 2025) (irs.gov/pub/irs-pdf); IRS, About Form 706 (last reviewed October 6, 2026); Instructions for Form 4768 (Rev. February 2020) and Instructions for Form 8971 and Schedule A (Rev. August 2025); Rev. Proc. 2022-32 and Rev. Proc. 2025-32 (irs.gov/pub/irs-drop); IRS, Frequently asked questions on estate taxes (updated December 22, 2025) and Frequently asked questions on the Estate Tax Closing Letter (last reviewed August 19, 2026); IRS notice “Estate tax closing letter fee increased to $76 after October 26, 2026”; T.D. 10055, 91 Fed. Reg. 60801 (September 25, 2026, govinfo.gov). Sums, dates, the Schedule A totals and the portability cases are our arithmetic from those texts; rows marked “our reading” apply the instructions to assets they do not name. This is analysis of public documents, not investment, legal or tax advice.