Final answer:
Form 706 is used for reporting estate taxes, while Form 1041 is used for reporting income taxes of an estate or trust.
Step-by-step explanation:
The main difference between Form 706 and Form 1041 is the purpose for which they are used. Form 706, also known as the U.S. Estate (and Generation-Skipping Transfer) Tax Return, is used to report and pay estate taxes upon the death of an individual. It is filed by the executor or administrator of the deceased person's estate.
On the other hand, Form 1041, also known as the U.S. Income Tax Return for Estates and Trusts, is used to report the income, deductions, and credits of an estate or trust. It is filed by the fiduciary of the estate or trust.
While both forms involve reporting financial information related to estates, Form 706 focuses on estate taxes, while Form 1041 focuses on income taxes.