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The anticipated amount of the credit Item 3. Enter the value of the property both countries or deemed situated may be figured on the return, but the situated in the foreign country that is within both countries. See the credit cannot finally be allowed until the subjected to the foreign taxes and appropriate treaty for details. foreign tax has been paid and a Form included in the gross estate, less those 706-CE evidencing payment is filed. portions of the deductions taken on Schedule Q—Credit for Section 2014(g) provides that for Schedules M and O that are Tax on Prior Transfers credits for foreign death taxes, each attributable to the property. U.S. possession is deemed a foreign Item 4. Subtract any credit claimed on General country. line 15 for federal gift taxes on You must complete Schedule Q and file Convert death taxes paid to the pre-1977 gifts (section 2012) from line it with the return if you claim a credit on foreign country into U.S. dollars by 12 of Part 2—Tax Computation, and Part 2—Tax Computation, line 14. using the rate of exchange in effect at enter the balance at item 4 of the time each payment of foreign tax is Schedule P. The term “transferee” means the made. decedent for whose estate this return is Credit Under Treaties filed. If the transferee received property If a credit is claimed for any foreign If you are reporting any items on this from a transferor who died within 10 death tax that is later recovered, see return based on the provisions of a years before, or 2 years after, the Regulations section 20.2016-1 for the death tax treaty, you may have to transferee, a credit is allowable on this notice required within 30 days. attach a statement to this return return for all or part of the federal estate Limitation Period disclosing the return position that is tax paid by the transferor’s estate for treaty based. See Regulations section the transfer. There is no requirement The credit for foreign death taxes is 301.6114-1 for details. that the property be identified in the limited to those taxes that were actually estate of the transferee or that it exist paid and for which a credit was claimed In general. If the provisions of a treaty on the date of the transferee’s death. It within the later of the 4 years after the apply to the estate of a U.S. citizen or is sufficient for the allowance of the filing of the estate tax return, or before resident, a credit is authorized for credit that the transfer of the property the date of expiration of any extension payment of the foreign death tax or was subjected to federal estate tax in of time for payment of the federal taxes specified in the treaty. Treaties the estate of the transferor and that the estate tax, or 60 days after a final with death tax conventions are in effect specified period of time has not decision of the Tax Court on a timely with the following countries: Australia, elapsed. A credit may be allowed for filed petition for a redetermination of a Austria, Canada, Denmark, Finland, property received as the result of the deficiency. France, Germany, Greece, Ireland, exercise or nonexercise of a power of Italy, Japan, Netherlands, Norway, Credit Under the Statute appointment when the property is South Africa, Switzerland, and the included in the gross estate of the For the credit allowed by the statute, United Kingdom. donee of the power. the question of whether particular A credit claimed under a treaty is in property is situated in the foreign If the transferee was the transferor’s general figured on Schedule P in the country imposing the tax is determined surviving spouse, no credit is allowed same manner as the credit is figured by the same principles that would apply for property received from the transferor under the statute with the following in determining whether similar property to the extent that a marital deduction principal exceptions: of a nonresident not a U.S. citizen is was allowed to the transferor’s estate • The situs rules contained in the treaty situated within the United States for for the property. There is no credit for apply in determining whether property purposes of the federal estate tax. See tax on prior transfers for federal gift was situated in the foreign country; the instructions for Form 706-NA. taxes paid in connection with the • The credit may be allowed only for transfer of the property to the payment of the death tax or taxes Computation of Credit Under transferee. specified in the treaty (but see the the Statute If you are claiming a credit for tax on instructions above for credit under the prior transfers on Form 706-NA, you statute for death taxes paid to each Item 1. Enter the amount of the estate, should first complete and attach Part political subdivision or possession of inheritance, legacy, and succession 5—Recapitulation from Form 706 the treaty country that are not directly taxes paid to the foreign country and its before figuring the credit on Schedule or indirectly creditable under the treaty); possessions or political subdivisions, Q from Form 706. • If specifically provided, the credit is attributable to property that is: proportionately shared for the tax • Situated in that country, Section 2056(d)(3) contains specific applicable to property situated outside • Subjected to these taxes, and rules for allowing a credit for certain both countries, or that was deemed in • Included in the gross estate. transfers to a spouse who was not a some instances situated within both The amount entered at item 1 should U.S. citizen where the property passed countries; and not include any tax paid to the foreign outright to the spouse, or to a qualified • The amount entered at item 4 of country for property not situated in that domestic trust. Schedule P is the amount shown on country and should not include any tax line 12 of Part 2—Tax Computation, paid to the foreign country for property Property less the total of the credits claimed for not included in the gross estate. If only The term “property” includes any federal gift taxes on pre-1977 gifts a part of the property subjected to interest (legal or equitable) of which the (section 2012) and for tax on prior foreign taxes is both situated in the transferee received the beneficial transfers (line 14 of Part 2—Tax foreign country and included in the ownership. The transferee is Computation). (If a credit is claimed for gross estate, it will be necessary to considered the beneficial owner of tax on prior transfers, it will be determine the portion of the taxes property over which the transferee necessary to complete Schedule Q attributable to that part of the property. received a general power of before completing Schedule P.) For Also, attach the computation of the appointment. Property does not include examples of computation of credits amount entered at item 1. interests to which the transferee under the treaties, see the applicable Item 2. Enter the value of the gross received only a bare legal title, such as regulations. estate, less the total of the deductions that of a trustee. Neither does it include on items 20 and 21 of Part Computation of credit in cases an interest in property over which the 5—Recapitulation. where property is situated outside transferee received a power of -32- Part Instructions