If a gift was made within three years of the date of death and meets one of the four IRC provisions listed below, the gifts are added back into the value of the gross estate (reported on the appropriate schedule).
The IRC provisions are:
- 26 U.S.C. § 2036 - Transfers with retained life estate;
- 26 U.S.C. § 2037 - Transfers taking effect at death;
- 26 U.S.C. § 2038 - Revocable transfers; or
- 26 U.S.C. § 2042 - Proceeds of life insurance.
If a gift was made beyond three years of the date of death or does not meet one of the four IRC provisions listed above, the gifts are added back in on the Taxable Gifts line of the Federal Form 706 (or the Washington Estate Tax Return when filing thresholds differ and a federal return is not required to be filed).