ProSeries Frequently Asked Questions

Form 706, Line 7 Worksheet, Line 1 May Be Incorrect

Products Affected:

ProSeries/706
ProSeries Express/706

Situation

In the previous release of ProSeries/706 and ProSeries Express/706 (version 2006.00), on the Form 706 Line 7 Worksheet, Gift Tax on Gifts Made After 1976, the program applied the Estate Applicable Exemption Amount rather than the Gift Applicable Exemption Amount for gift years 2004, 2005, and 2006 in column e, Unused unified credit.

As a result:

The amount on Form 706, Part 2, line 7, Total gift tax payable with respect to gifts made by the decedent after December 31, 1976, might be understated, and
The amount on Form 706, Part 2, line 8, Gross estate tax, might be overstated.

Beginning in 2004, the gift and estate applicable exclusion amounts have differed. Essentially, unlike the estate tax, the gift tax has not been repealed. Since 2004, the applicable exclusion amount for gift tax purposes has remained at $1 million with a related unified credit amount of $345,800 through 2009 and $330,800 after 2009.

To determine if Form 706, Line 7 Worksheet, Gift Tax on Gifts Made After 1976, line 1, Total gift taxes payable on gifts made after 1976, is understated by use of the greater (incorrect) Estate Applicable Exemption Amount, sum the smaller of column d or column e for each gift (each row). If the accumulated total is greater than $345,800, an adjustment must be made to line 1, Total gift taxes payable on gifts made after 1976, at the bottom of the Line 7 Worksheet, Gift Tax on Gifts Made After 1976.

Workaround

On the Line 7 Worksheet, override line 1 and increase line 1 by the amount (as explained above) in excess of $345,800.

This situation has been reported to our development team.

Last updated: 06/06/2007