In a Form 706-NA, how do I claim an exemption from U.S. estate tax pursuant to a treaty

To claim an exemption from U.S. estate tax pursuant to a treaty on Form 706-NA, follow these steps:

1. Identify the Treaty: Determine the specific treaty and the relevant provisions that provide the exemption. Treaties with death tax conventions are in effect with several countries, including Australia, Canada, Finland, France, Germany, Greece, Italy, Japan, and Switzerland.
2. Attach a Statement: Attach a statement to Form 706-NA indicating that the return position is treaty-based. This statement should specify the applicable treaty and the relevant article or provision that grants the exemption.
3. Provide Computation: Include a computation of the exemption amount. This should detail how the exemption is calculated based on the treaty provisions.
4. Documentation: Attach any necessary documentation to support the claim. This may include a certified copy of the foreign death tax return, estate inventory, schedule of debts and charges, or other relevant documents filed with the foreign probate court or as part of the estate's administration proceedings.
5. Complete Relevant Schedules: If the exemption affects the value of the gross estate or deductions, ensure that the relevant schedules (e.g., Schedule A for assets located in the U.S., Schedule B for assets located outside the U.S.) reflect the treaty-based exemption.
6. Line 2 and Line 4 Documentation: For line 2 (value of assets outside the U.S.) and line 4 (deductible items), attach itemized schedules and supporting documents to substantiate the amounts claimed.
7. Unified Credit: If the unified credit is affected by the treaty, ensure that the computation on line 7 of Form 706-NA reflects the treaty-based adjustments.
8. Marital and Charitable Deductions: If claiming marital or charitable deductions under a treaty, specify the applicable treaty and attach a computation of the deduction. Ensure that the deductions comply with the treaty provisions.

By following these steps and providing the necessary documentation and computations, you can properly claim an exemption from U.S. estate tax pursuant to a treaty on Form 706-NA.

Sources:
Instructions for Form 706-NA (10/2022)
Publication 559 (2023)
§ 2102. Credits against tax
Instructions for Form 706 (09/2023)
Instructions for Form 1040-NR-EZ (2019)
Instructions for Form 1040-NR (2023)
Instructions for Form 706-D (12/2008)