Fist, I want to thank John Woodford for his very helpful response.
The real estate in question has not been sold,and the appraisals come- not from a real estate appraisers- but from a broker and they include property profiles.
I see more and more estates in the 1 to 2 million range who fall into this bracket mostly because of the inflated value of real estate.When the first spouse dies, the estate may be just under 1 million so the temptation is not to file a 706.But, as John points out, the filing of a 706 may give some assurance that the values will not be challenged later on.
Because the number of these cases ,it would be most useful to discuss the pros and cons of filing vs not filing for small estates.
Thank you.
Tibor Zelig