The following items are frequently asked questions preparers have when filing Form 706 returns in Lacerte.
Calculations and limitations addressed in this article may be impacted by inflation adjustments for the year. To see the IRS annual inflation adjustments for tax year 2021 and 2022 see here.
How can I allocate an asset of the estate to more than one beneficiary without entering the asset twice?
Allocation ratios or amounts can be set up in Screen 34, Beneficiary Allocations by entering a percentage or dollar amount for each beneficiary. Once a ratio or dollar amount has been created, select the ratio number from the dropdown menu on the various asset screens. For instance, an asset assigned to 1 will flow directly to beneficiary number one. When assigned to Ratio 1, this asset will be allocated to the beneficiaries with entries in the field labeled Ratio #1, (.xxx) or dollar amount in Screen 34, Beneficiary Allocations.
How can I get the marital deduction for the portion of the estate that passes to the surviving spouse?
The surviving spouse should be set up in Screen 2, Beneficiary Information. Be sure to check the box Surviving Spouse?. Any assets assigned to that beneficiary will carry to Schedule M automatically and then be deducted from the taxable estate.
How do I make the QTIP election?
The QTIP election is made separately per beneficiary in Screen 2, Beneficiary Information by checking the box QTIP Election?. All assets assigned to this beneficiary will flow to Schedule M and be excluded from the taxable estate. If a ratio is used, the portion going to this beneficiary will be included as QTIP property. If there's a residual amount from the estate flowing to this beneficiary, it'll also be included in Schedule M.
Can I allocate the expenses of the estate to certain beneficiaries?
Yes, by using the same methods referred to in Question 1.
How can I get items to be included in the net residual of the estate?
Any item which is unassigned, either to a beneficiary or an allocation ratio, will wind up in the net residual of the estate. The residual of the estate before death taxes, federal estate taxes, state death taxes or federal GST taxes can be allocated to each beneficiary by percentage. Use Screen 34, Beneficiary Allocations to enter these percentages.
How can I create a header or supplement for a list of items on a particular schedule?
Descriptions entered on almost any schedule can be used as headers. Simply enter 1 in the field labeled Blank=item, 1=remark, 2=supplement. This creates a description, with no item number or dollar amount. Enter 2 in the same field to create a supplement, a line with a description and dollar amount but without an item number. A supplement can be used to enter interest and dividends related to the item preceding it.
Is it possible to move properties or items once they have been entered?
Yes, you can move or copy properties within the same screen or move or copy properties to another input screen in the estate tax program. Use the Cut Property, Copy Property, and Paste Property commands in the Detail menu.
Do gifts from the decedent's previous gift returns need to be included on the estate return?
All taxable gifts from previous gift tax returns should be included. They need to be added to the taxable estate for the calculation of the total transfer tax. See Screen 32, Taxable Gift Worksheets and enter each prior year Form 709. The decedent will get a credit for any previous taxes paid.
How do you get amounts on part 4, line 5 of page 2 of Form 706?
First, beneficiaries must be entered in Screen 2, Beneficiary Information. Second, assets must be allocated to these beneficiaries as described in Question 1.
How do I get input to Part 2 of Schedule E?
Enter a letter of co-tenant in the field labeled Letter of co-tenant to carry information to Part 2 of Schedule E. Note: The co-tenant information must be entered in Screen 14, Schedule E - Jointly Owned Property. Select Co-Tenant Name and Address from the Schedule E section on the left hand navigation window to enter the co-tenants.
How can I input two or more letters of co-tenant for a property in Schedule E?
You're able to type up to 3 letters of co-tenant (ex. ABC) in the same field for that asset. For more than 3 co-tenants you'd need to split the asset, and then re-assign next co-tenants. You're able to type up to 3 letters of co-tenant (ex. ABC) in the same field for that asset. For more than 3 co-tenants you'd need to split the asset, and then re-assign next co-tenants.
My alternate valuation amounts are not showing on Form 706. What's wrong?
You have to elect alternate valuation in Screen 7, Elections by Executor to have the alternate valuation amounts show on the schedules supporting Form 706.
Can an extension of time to pay the tax due with Form 706 be made?
Yes, an extension of time to pay the tax can be made on Form 4768. Use the field 1 = extension to pay granted, 2 = not granted, in Screen 8, Extensions, to indicate if this request for extension to pay has been granted.
The executor has elected to use the alternate valuation method. The federal income tax summary does not show any amounts in the alternate value column after the gross estate section. Why doesn't it show these amounts?
For items with no alternate valuation amount entered, the federal income tax summary will print a zero.
Do I have to enter the decedent's social security number before I get rep access?
Yes, the program looks at the decedent's social security number rather than the estate's federal identification number for rep access.
I have too many assets to distribute by allocating each one to a specific beneficiary. How can I get the correct amounts for each beneficiary on Form 706, page 2, part 4, line 5 without allocating each item?
The client can simply enter the desired amount for each beneficiary in Screen 33, Beneficiary Bequests/Overrides. Note this will not complete the various supporting schedules required by the IRS; it will just get what the client wants on page 2 of the Form 706.
How do I allocate responsibility for paying death taxes to beneficiaries?
On Screen 34, Beneficiary Allocations, for each beneficiary, enter the Percentage of federal estate tax, Percentage of federal GST tax, and Percentage of state estate tax.