Thank you for using Just Answers. this is true. A prior law had taken that benefit away, which resulted in a new protocol being written and signed into law in 2004.
You can read a discription of the writing of the protocol and the changes that pertain to your situation.
NOTE: this is a result of the tax treaty between the U.S. and France.
that is something I will have to research and get back to you on.
the instructions for completing the form would imply that you would simply fill it out as if she were othewise entitled. SECTION M would not work in this case, becasue this proeprty was not contained as a qualified domestic trust. (QDRO).
I am thinking she has to submit a form W-8??? with the document in order to calim tax treaty benefits.
I am checking on that for you and will get back to you.
According the Internal Revenue Service, use schedule M to indicate that she is not a u.s. citizen and that her country is France.
The IRS automatically checks for treaty treatment.
There is no need to seperately request the treaty benefits. That is the purpose of that spot in schedule M.
It would be prudent, because IRS agents sometimes make mistakes, to include a cover letter such as:
Please accept this estate tax return form 706. Please not the surviving spouse is a French Citizen as indicated in schedule M.
It is my understanding that an existing tax treaty between the U.S. and France preserves the marital deduction for non u.s. citizens of france.
You are welcome, and thanks for your comments.
these are complicated issues, and legal presendence is ongoing. These matters of treaties are always open to interpretation.
We read them and think, this is the way it should be, only to find out the IRS may pull something from obscurity to make a different claim.
This is how things end up in tax court.
You are correct that in the end it matters how the IRS interprets things. But,in the end you have a right to appeal.
If the IRS rules against you, be sure to let me know. They shoudl include a letter telling how you can appeal. If not I will give you some instruction on that.