The Gift Tax Return (Form 709) and the Estate Tax Return (Form 706) document your estate planning and provide the “Paper Trail” for the IRS and state departments of revenue. Most of the estate planning techniques must be reported on these tax returns. Proper disclosures on Form 709 may be a critical part of gift-based planning; Form 706 may be required where estates exceed (or approach) the exclusion amount and/or for election of portability.
Executor of a decedent’s estate uses Form 706 to figure the estate tax imposed by Chapter 11 of the Internal Revenue Code. Form 706 is also used to compute the generation-skipping transfer (GST) tax imposed by Chapter 13 on direct skips
