Where on Form 706 do you report margin debit for a revocable trust's brokerage account?

Thanks for your answer! I have a similar situation but my brother (who's the executor) is arguing that since it was a revocable trust, the rules might be different. Does it matter that the margin account was inside a revocable trust rather than directly owned by the decedent?

No, the revocable trust doesn't change where you report the debt. For estate tax purposes, assets in a revocable trust are included in the gross estate under IRC Section 2038, and the corresponding debts secured by those assets are deductible just as if they were owned directly by the decedent. The key factor here is that the debt is secured by assets included in the gross estate. Schedule K is the correct place to report any debt secured by property in the estate, regardless of whether that property was held in a revocable trust or owned directly.

How accurate is this taxr.ai service? I'm handling my aunt's estate and have a bunch of complex investment accounts with margin loans and options. Would it recognize all those different types of securities and debts?

I'm skeptical about these AI tax tools. How does it handle unusual situations or edge cases? Like what if the margin loan was used to buy property outside the brokerage account? Does it catch those nuances?

For complex investment accounts, it was surprisingly thorough. It correctly categorized every security type in my mom's portfolio including some partnership interests and restricted stock. It even flagged some assets that had special valuation considerations. As for unusual situations, it actually does warn you about potentially complex scenarios. In my case, it noted that if margin loan proceeds were used for purposes unrelated to the securities (like buying a vacation home), then part of the loan might need different treatment. So it does catch those nuances and prompts you to investigate further.

How does this Claimyr thing actually work? I'm confused. Does it just call the IRS for you? Why would that be faster than me calling myself?

Sounds like BS to me. I've been dealing with the IRS for years and there's no magic way to skip their hold times. They're understaffed and overwhelmed, especially the Estate & Gift division. I'll believe this works when pigs fly.

It doesn't call for you - it uses a system that monitors the IRS phone lines and calls repeatedly until it gets through. Then it calls your phone and connects you directly to the IRS agent. It's basically doing the holding for you. The reason it's faster is that their system can make hundreds of call attempts in parallel, which individual callers can't do. I was skeptical too until I tried it. And they only charge you if they actually connect you to an agent.

Does the same apply to the securities in the account? Do I need the exact value as of date of death or can I use the statement that covers that date?

Yes, absolutely the same applies to the securities. You need the exact fair market value as of the date of death for all securities. Most brokerages can provide you with a date-of-death valuation statement if you request it specifically for estate purposes. If the death occurred on a weekend or holiday when markets were closed, you'll need to use the closing prices from the last trading day. Don't rely on the monthly statement - those values won't be accurate for estate tax purposes unless the date of death happened to fall exactly on the statement date.

Neither TurboTax nor H&R Block handle Form 706. Estate tax returns are pretty specialized and complicated. There's some professional software like Lacerte and UltraTax that have 706 modules, but they're expensive and designed for professionals. Unless the estate is very simple, this might not be the place to cut corners - mistakes on a 706 can be costly.

This is incredibly helpful! I'm just starting to work on my father's Form 706 and his trust had a margin account too. I hadn't thought about requesting a formal "date of death valuation" letter - I was just going to use the monthly statement. How long did it take the brokerage to provide that documentation? I'm worried about timing since I know there are deadlines for filing the 706.

@Romeo Quest Most brokerages can provide the date of death valuation letter within 5-10 business days if you specifically request it for estate tax purposes. Some larger firms like Fidelity or Schwab have dedicated estate services departments that can turn it around even faster. I d'recommend calling them ASAP and explaining that you need it for Form 706 preparation. They re'familiar with this request and understand the time sensitivity. In my experience with my grandmother s'estate, they provided both the securities valuation and the exact margin debt balance including (accrued interest in) one comprehensive letter, which made the Schedule G and Schedule K entries much easier. Also remember that Form 706 is due 9 months after death with (possible 6-month extension ,)so you should have some time, but don t'wait too long since there might be other complex assets to value as well.