Form 706 (Draft) - United States Estate (And Generation-Skipping Transfer) Tax Return - 2016 Page 21
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55Schedule A–Example 2
In this example, alternate valuation is adopted; the date of death is January 1, 2016.
Item
Description
Alternate
Alternate
Value at
number
valuation
value
date of
date
death
1
House and lot, 1921 William Street, NW, Washington, DC (lot 6, square 481). Rent of $8,100 due at
7/1/16
$535,000
$550,000
the end of each quarter, February 1, May 1, August 1, and November 1. Value based on appraisal,
DRAFT AS OF
copy of which is attached. Not disposed of within 6 months of date of death
. . . . . . . . . . . . .
Rent due on item 1 for quarter ending November 1, 2015, but not collected until February 1,
2/1/16
8,100
8,100
2016
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rent accrued on Item 1 for November and December 2015, collected on February 1, 2016
2/1/16
5,400
5,400
. . .
2
House and lot, 304 Jefferson Street, Alexandria, VA (lot 18, square 40). Rent of $1,800 payable
5/1/16
369,000
375,000
monthly. Value based on appraisal, copy of which is attached. Property exchanged for farm on May
June 16, 2016
1, 2016
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rent due on Item 2 for December 2015, but not collected until February 1, 2016
2/1/16
1,800
1,800
. . . . . . . . . .
less the indebtedness) in the value
separate instructions for Part
GST tax savings is the difference
column as part of the gross estate. Do
3—Elections by the Executor, line 2,
between the total GST tax that was
not enter any amount less than zero. Do
you must check the box in Part 1. Type
imposed on all interests in specially
not deduct the amount of indebtedness
of Election, enter the decedent's name
valued property received by the skip
on Schedule K.
and social security number in the
person valued at their special-use value
spaces provided at the top of
and the total GST tax that would have
Also list on Schedule A real property
Schedule A-1, and complete Part 2.
been imposed on the same interests
the decedent contracted to purchase.
Notice of Election, line 1 and lines 3 and
received by the skip person had they
Report the full value of the property and
4, column A. For purposes of the
been valued at their FMV.
not the equity in the value column.
protective election, list on line 3 all of the
Deduct the unpaid part of the purchase
Because the GST tax depends on
real property that passes to the qualified
price on Schedule K.
the executor's allocation of the GST
heirs even though some of the property
exemption and the grandchild
Report the value of real estate
will be shown on line 2 when the
exclusion, the skip person who receives
without reducing it for homestead or
additional notice of election is
the interests is unable to figure this GST
other exemption, or the value of dower,
subsequently filed. You need not
tax savings. Therefore, for each skip
curtesy, or a statutory estate created
complete columns B through D of lines
person who receives an interest in
instead of dower or curtesy.
3 and 4. You need not complete any
specially valued property, you must
other line entries on Schedule A-1.
Explain how the reported values
attach a calculation of the total GST tax
Completing Schedule A-1 as described
were determined and attach copies of
savings attributable to that person's
above constitutes a Notice of Protective
any appraisals.
interests in specially valued property.
Election as described in Regulations
Schedule A-1—Section
section 20.2032A-8(b).
How to figure the GST tax savings.
2032A Valuation
Before figuring each skip person's GST
Part 2. Notice of Election
tax savings, complete Schedules R and
The election to value certain farm and
R-1 for the entire estate (using the
Line 10. Because the special-use
closely-held business property at its
valuation election creates a potential tax
special-use values).
special-use value is made by checking
liability for the recapture tax of section
For each skip person, complete two
“Yes,” on Form 706, Part 3—Elections
2032A(c), you must list each person
Schedules R (Parts 2 and 3 only) as
by the Executor, line 2. Schedule A-1 is
who receives an interest in the specially
worksheets, one showing the interests
used to report the additional information
valued property on Schedule A-1. If
in specially valued property received by
that must be submitted to support this
there are more than eight persons who
the skip person at their special-use
election. In order to make a valid
receive interests, use an additional
value and one showing the same
election, you must complete
sheet that follows the format of line 10.
interests at their FMV.
Schedule A-1 and attach all of the
In the columns “Fair market value” and
required statements and appraisals.
If the skip person received interests
“Special-use value,” enter the total
in specially valued property that were
For definitions and additional
respective values of all the specially
shown on Schedule R-1, show these
information concerning special-use
valued property interests received by
interests on the Schedule R, Parts 2 and
valuation, see section 2032A and the
each person.
3 worksheets, as appropriate. Do not
related regulations.
GST Tax Savings
use Schedule R-1 as a worksheet.
Part 1. Type of Election
To figure the additional GST tax due
Completing the special-use value
upon disposition (or cessation of
Estate and GST tax elections. If you
worksheets. On Schedule R, Parts 2
qualified use) of the property, each “skip
elect special-use valuation for the estate
and 3, lines 2 through 4 and 6, enter -0-.
person” (as defined in the instructions to
tax, you must also elect special-use
Completing the fair market value
Schedule R) who receives an interest in
valuation for the Generation-Skipping
worksheets.
the specially valued property must know
Transfer (GST) tax and vice versa.
Schedule R, Parts 2 and 3, lines 2
the total GST tax savings all interests in
Protective election. To make the
and 3, fixed taxes and other charges. If
specially valued property received. The
protective election described in the
valuing the interests at FMV (instead of
-20-
Part Instructions
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