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You may claim an anticipated amount of deduction and figure the federal estate tax on the return before the state death taxes have been paid. However, the deduction cannot be finally allowed unless you pay the state death taxes and claim the deduction within 4 years after the return is filed, or later (see section 2058(b)) if: • A petition is filed with the Tax Court of the United States, • You have an extension of time to pay, or • You file a claim for refund or credit of an overpayment which extends the deadline for claiming the deduction. Note. The deduction is not subject to dollar limits. If you make a section 6166 election to pay the federal estate tax in installments and make a similar election to pay the state death tax in installments, see section 2058(b) for exceptions and periods of limitation. If you transfer property other than cash to the state in payment of state inheritance taxes, the amount you may claim as a deduction is the lesser of the state inheritance tax liability discharged or the fair market value (FMV) of the property on the date of the transfer. For more information on the application of such transfers, see the principles discussed in Rev. Rul. 86-117, 1986-2 C.B. 157, prior to the repeal of section 2011. Send the following evidence to the IRS. 1. Certificate of the proper officer of the taxing state, or the District of Columbia, showing the following. a. Total amount of tax imposed (before adding interest and penalties and before allowing discount). b. Amount of discount allowed. c. Amount of penalties and interest imposed or charged. d. Total amount actually paid in cash. e. Date of payment. 2. Any additional proof the IRS specifically requests. File the evidence requested above with the return, if possible. Otherwise, send it as soon as possible after the return is filed. Line 6 To figure the tentative tax on the amount on line 5, use Table A—Unified Rate Schedule and put the result on this line. Lines 4 and 7 Three worksheets are provided to help you figure the entries for these lines. Worksheet TG—Taxable Gifts Reconciliation allows you to reconcile the decedent's lifetime taxable gifts to figure totals that will be used for the Line 4 Worksheet and the Line 7 Worksheet. You must have all of the decedent's gift tax returns (Forms 709) before completing Worksheet TG—Taxable Gifts Reconciliation. The amounts needed for Worksheet TG can usually be found on the filed returns that were subject to tax. However, if any of the returns were audited by the IRS, use the amounts that were finally determined as a result of the audits. In addition, you must make a reasonable effort to discover any gifts in excess of the annual exclusion made by the decedent (or on behalf of the decedent under a power of attorney) for which no Forms 709 were filed. Include the value of such gifts in column b of Worksheet TG. The annual exclusion per donee is as follows. Period Annual Exclusion Amount Per Donee 1977 through 1981 $3,000 1981 through 2001 $10,000 2002 through 2005 $11,000 2006 through 2008 $12,000 2009 through 2012 $13,000 2013 through 2017 $14,000 2018 through 2021 $15,000 -6- Instructions for Form 706 (Rev. 09-2021)