Form 706 (Draft) - United States Estate (And Generation-Skipping Transfer) Tax Return - 2016 Page 48
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55How To Complete Schedule R-1
Attach a special-use allocation
conservation easement. You make the
statement listing each such skip person
election by filing Schedule U with all of
Filing due date. Enter the due date of
and the amount of the GST exemption
the required information and excluding
Form 706. You must send the copies of
allocated to that person.
the applicable value of the land that is
Schedule R-1 to the fiduciary before this
subject to the easement on Part
If you do not allocate the GST
date.
5—Recapitulation, at item 12. To elect
exemption, it will be automatically
the exclusion, include on Schedule A, B,
Line 4. Do not enter more than the
allocated under the deemed allocation
E, F, G, or H, as appropriate, the
amount on line 3. If you wish to allocate
at death rules. To the extent any amount
DRAFT AS OF
decedent's interest in the land that is
an additional GST exemption, you must
is not so allocated, it will be
subject to the exclusion. You must make
use Schedule R, Part 1. Making an entry
automatically allocated to the earliest
the election on a timely filed Form 706,
on line 4 constitutes a Notice of
disposition or cessation that is subject
including extensions.
Allocation of the decedent's GST
to the GST tax. Under certain
exemption to the trust.
circumstances, post-death events may
The exclusion is the lesser of:
cause the decedent to be treated as a
Line 6. If the property interests entered
The applicable percentage of the
June 16, 2016
transferor for purposes of Chapter 13.
on line 1 will not bear the GST tax,
value of land (after certain reductions)
Line 10 may be used to set aside an
multiply line 6 by 40% (0.40).
subject to a qualified conservation
exemption amount for such an event.
easement or
Signature. The executor(s) must sign
Attach a statement listing each such
$500,000.
Schedule R-1 in the same manner as
event and the amount of exemption
Form 706. See Signature and
Once made, the election is
allocated to that event.
Verification, above.
irrevocable.
Filing Schedule R-1. Attach to Form
Parts 2 and 3.
General Requirements
706 one copy of each Schedule R-1 that
Use Part 2 to figure the GST tax on
Qualified Land
you prepare. Send two copies of each
transfers in which the property interests
Schedule R-1 to the fiduciary.
Land may qualify for the exclusion if all
transferred are to bear the GST tax on
of the following requirements are met:
the transfers. Use Part 3 to report the
Schedule U—Qualified
The decedent or a member of the
GST tax on transfers in which the
Conservation Easement
decedent's family must have owned the
property interests transferred do not
land for the 3-year period ending on the
bear the GST tax on the transfers.
Exclusion
date of the decedent's death.
Section 2603(b) requires that unless
No later than the date the election is
If at the time of the contribution
the governing instrument provides
made, a qualified conservation
of the conservation easement,
!
otherwise, the GST tax is to be charged
easement on the land has been made
the value of the easement, the
CAUTION
to the property constituting the transfer.
by the decedent, a member of the
value of the land subject to the
Therefore, you will usually enter all of
decedent's family, the executor of the
easement, or the value of any retained
the direct skips on Part 2.
decedent's estate, or the trustee of a
development right was different than the
trust that holds the land.
estate tax value, you must complete a
You may enter a transfer on Part 3
separate computation in addition to
The land is located in the United
only if the will or trust instrument directs,
States or one of its possessions.
completing Schedule U.
by specific reference, that the GST tax
is not to be paid from the transferred
Use a copy of Schedule U as a
Member of Family
property interests.
worksheet for this separate
Members of the decedent's family
computation. Complete lines 4 through
Part 2, Line 3. Enter zero on this line
include the decedent's spouse;
14 of the worksheet Schedule U.
unless the will or trust instrument
ancestors; lineal descendants of the
However, the value you use on lines 4,
specifies that the GST taxes will be paid
decedent, of the decedent's spouse,
5, 7, and 10 of the worksheet is the
by property other than that constituting
and of the parents of the decedent; and
value for these items as of the date of
the transfer (as described above). Enter
the spouse of any lineal descendant. A
the contribution of the easement, not the
on line 3 the total of the GST taxes
legally adopted child of an individual is
estate tax value. If the date of
shown on Part 3 and Schedule(s) R-1
considered a child of the individual by
contribution and the estate tax values
that are payable out of the property
blood.
are the same, you do not need to do a
interests shown on Part 2, line 1.
separate computation.
Part 2, Line 6. Do not enter more than
Indirect Ownership of Land
After completing the worksheet, enter
the amount on line 5. Additional
The qualified conservation easement
the amount from line 14 of the
allocations may be made using Part 1.
exclusion applies if the land is owned
worksheet on line 14 of Schedule U.
Part 3, Line 3. See the instructions to
indirectly through a partnership,
Finish completing Schedule U by
Part 2, line 3 above. Enter only the total
corporation, or trust, if the decedent
entering amounts on lines 4, 7, and 15
of the GST taxes shown on Schedule(s)
owned (directly or indirectly) at least
through 20, following the instructions
R-1 that are payable out of the property
30% of the entity. For the rules on
later for those lines. At the top of
interests shown on Part 3, line 1.
determining ownership of an entity, see
Schedule U, enter "worksheet
Ownership rules, later.
attached." Attach the worksheet to the
Part 3, Line 6. See the instructions to
return.
Part 2, line 6 above.
Ownership rules. An interest in
Under section 2031(c), you may elect
property owned, directly or indirectly, by
to exclude a portion of the value of land
or for a corporation, partnership, or trust
that is subject to a qualified
is considered proportionately owned by
Part Instructions
-47-
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