GroundSkill
Compute the gross estate, taxable estate, unified-credit rules, and joint-property inclusion
Most estates never owe estate tax, yet every executor still faces the same first question: add up everything the decedent held an interest in, subtract what the law lets the estate deduct, and test the total against the filing threshold. This lesson builds that computation in order: what counts in the gross estate, how deductions reach the taxable estate, and when the total forces a Form 706 return with the unified credit in play.
The gross estate is the starting total: everything the decedent had an interest in at death, wherever it sits. The list reaches beyond outright ownership to annuities, the includible portion of joint holdings, certain life insurance proceeds even when a beneficiary other than the estate collects, property subject to a general power of appointment, and the decedent's share of community property. Lifetime transfers for less than full consideration can also be included again. Jointly owned property with someone other than a spouse follows a contribution rule: the full value goes in unless the surviving co-tenant can show that part of the property originally belonged to them and was never received from the decedent for less than full consideration, in which case only the decedent's furnished share stays in. Property the decedent held jointly with a spouse is simpler: one-half of its value is included, no matter who paid for it. Where joint owners received the property as a gift or inheritance without set shares, each owner's share is the full value divided by the number of owners. Build this total before thinking about deductions; every later computation starts here.
Mara died owning a condo worth $500,000, holding stock worth $200,000, and owning an annuity contract worth $120,000. Her gross estate opens with \(500{,}000 + 200{,}000 + 120{,}000 = 820{,}000\), or $820,000, because each item is property or a contract interest she held. A car she had sold outright two years earlier for full value stays out, since she held no interest in it at death.
Form 706 Instructions Page 2
The gross estate includes all property in which the decedent had an interest (including property outside the United States). It also includes: • Certain transfers made during the decedent’s life without an adequate and full consideration in money or money’s worth, • Annuities, • The includible portion of joint estates with right of survivorship (see the instructions for Schedule E (Form 706)), • The includible portion of tenancies by the entirety (see the instructions for Schedule E (Form 706)), • Certain life insurance proceeds (even though payable to beneficiaries other than the estate) (see the instructions for Schedule D (Form 706)), • Digital assets (see the instructions for Schedule F (Form 706)), • Property over which the decedent possessed a general power of appointment, • Dower or curtesy (or statutory estate) of the surviving spouse, and • Community property to the extent of the decedent’s interest as defined by applicable law.View on the source
Form 706 Instructions Page 32
Generally, you must include the full value of the jointly owned property in the gross estate. However, the full value should not be included if you can show that a part of the property originally belonged to the other tenant(s) and was never received or acquired by the other tenant(s) from the decedent for less than adequate and full consideration in money or money’s worth. Full value of jointly owned property also does not have to be included in the gross estate if you can show that any part of the property was acquired with consideration originally belonging to the surviving joint tenant(s).View on the source
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Qualified joint interest. One-half of the value of property owned by a decedent and spouse as tenants by the entirety, or as joint tenants with right of survivorship if the decedent and spouse are the only joint tenants, is included in the decedent's gross estate. This is true regardless of how much each contributed toward the purchase price.View on the source
Form 706 Instructions Page 32
If the property was acquired by the decedent and another person or persons by gift, bequest, devise, or inheritance as joint tenants, and their interests are not otherwise specified by law, include only that part of the value of the property that is figured by dividing the full value of the property by the number of joint tenants.View on the source
Mara died in 2026 owning a $400,000 brokerage account in her name alone. She and her brother owned a cabin worth $300,000 as joint tenants with right of survivorship; Mara furnished $200,000 of the purchase price from her own funds and her brother furnished $100,000, with no gifts between them. Six years before death she made a completed $200,000 cash gift with no retained interest. Which of the following is correct regarding her gross estate?
The taxable estate is the gross estate after the allowable deductions come off. The recurring deductions are funeral expenses paid out of the estate, debts the decedent owed at death, the marital deduction for property passing to the surviving spouse, and the charitable deduction for property passing to qualifying recipients. Claim each deduction once, on the return it belongs to, and keep gifts and bequests to non-spouse individuals out of the deduction column.
An estate shows a $1,900,000 gross estate, $15,000 of funeral costs paid from estate funds, $45,000 of credit-card and medical debts owed at death, and a $600,000 outright bequest to the surviving spouse. The taxable estate is \(1{,}900{,}000 - 15{,}000 - 45{,}000 - 600{,}000 = 1{,}240{,}000\), or $1,240,000. The $300,000 bequest to the decedent's brother reduces no line: it passes to a non-spouse individual and generates no marital deduction.
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The taxable estate is the gross estate less allowable deductions.View on the source
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Taxable estate. The allowable deductions used in determining the taxable estate include: Filing requirement. The following table lists the filing requirements for estates of decedents dying after 2011. • Funeral expenses paid out of the estate,View on the source
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Taxable estate. The allowable deductions used in determining the taxable estate include: Filing requirement. The following table lists the filing requirements for estates of decedents dying after 2011. • Funeral expenses paid out of the estate, • Debts the decedent owed at the time of death,View on the source
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Taxable estate. The allowable deductions used in determining the taxable estate include: Filing requirement. The following table lists the filing requirements for estates of decedents dying after 2011. • Funeral expenses paid out of the estate, • Debts the decedent owed at the time of death, • The marital deduction (generally, the value of the property that passes from the estate to the surviving spouse),View on the source
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• The charitable deduction (generally, the value of the property that passes from the decedent's estate to the United States, any state, a political subdivision of aView on the source
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state, the District of Columbia, or a qualifying charity for exclusively charitable purposes)View on the source
An executor with a $6,000,000 gross estate asks which item may be subtracted to reach the taxable estate. Which of the following is correct?
Filing turns on a sum the executor must build: adjusted taxable gifts made after 1976, plus any pre-1977 specific exemption, plus the gross estate at death. Where that sum tops the basic exclusion amount, the estate files. For decedents who died in 2026 the basic exclusion amount is $15,000,000, paired with a basic credit amount of $5,945,800; for 2025 decedents the basic exclusion amount was $13,990,000, so the year of death sets the threshold. The unified credit (the applicable credit) then offsets the estate tax: the tentative tax is figured on the combined amount — the taxable estate with the line 4 adjusted taxable gifts added back — and reduced by gift taxes payable and the applicable credit, so lifetime taxable gifts and the death-time estate share one combined exclusion. A small estate can still file to elect portability of the unused exclusion to the surviving spouse. The tax itself is levied on the entire taxable estate rather than on any one beneficiary's share.
Theo died in 2026 with a $14,200,000 gross estate and $1,100,000 of post-1976 adjusted taxable gifts. The filing total is \(14{,}200{,}000 + 1{,}100{,}000 = 15{,}300{,}000\), or $15,300,000, which clears $15,000,000, so the executor files Form 706. On the return the tentative tax is figured on the taxable estate with the $1,100,000 of adjusted taxable gifts added back, then reduced by gift taxes payable and the applicable credit; any credit unused against gift tax remains available against the estate tax, which is why the return reconciles lifetime and death transfers together.
Form 706 Instructions Page 1
Which Estates Must File For decedents who died in 2026, Form 706 must be filed by the executor of the estate of every U.S. citizen or resident: 1. Whose gross estate, plus adjusted taxable gifts and specific exemption, is more than $15,000,000; or 2. Whose executor elects to transfer the deceased spousal unused exclusion (DSUE) amount to the surviving spouse, regardless of the size of the decedent’s gross estate. See the instructions for Part VI—Portability of Deceased Spousal Unused Exclusion (DSUE), later, and sections 2010(c)(4) and (c)(5).View on the source
Form 706 Instructions Page 2
To determine whether you must file a return for the estate under 1 above, add: • The adjusted taxable gifts (as defined in section 2503) made by the decedent after December 31, 1976; • The total specific exemption allowed under section 2521 (as in effect before its repeal by the Tax Reform Act of 1976) for gifts made by the decedent after September 8, 1976; and • The decedent’s gross estate valued as of the date of death.View on the source
Form 706 Instructions Page 1
The basic exclusion amount is $15,000,000.View on the source
Form 706 Instructions Page 1
The basic credit amount is $5,945,800.View on the source
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For 2025, the basic exclusion amount is $13,990,000.View on the source
Form 706 Instructions Page 10
Adjusted taxable gifts. Subtract line 4 from line 1. Enter here and on Form 706, Part II, line 4View on the source
Form 706 Instructions Page 7
To figure the tentative tax on the amount on line 5, use Table A—Unified Rate Schedule and put the result on this line.View on the source
Form 706 Instructions Page 10
In figuring the line 7 amount, do not include any tax paid or payable on gifts made before 1977. The line 7 amount is a hypothetical figure used to figure the estate tax.View on the source
Form 706 Instructions Page 1
This tax is levied on the entire taxable estate and not just on the share received by a particular beneficiary.View on the source
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Applying the applicable credit to estate tax. Basically, any applicable credit not used to eliminate gift tax can be used to eliminate or reduce estate tax. However, to determine the applicable credit available for use against the estate tax, you must complete Form 706.View on the source
A 2026 decedent had a $13,800,000 gross estate, $1,500,000 of adjusted taxable gifts, and no pre-1977 specific exemption. Which of the following is correct regarding the Form 706 filing requirement?
The course asks you questions like these as you learn, brings back the ones you miss, and ends with full-length practice exams.
See the course Or take the free 12-question checkGroundSkill is independently produced and is not affiliated with or endorsed by the IRS. Sources last checked 2026-09-14. Exam preparation, not tax advice.