Form 706 (Draft) - United States Estate (And Generation-Skipping Transfer) Tax Return - 2016 Page 50
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55For an example of an agreement
will be claimed for the contribution by
each Schedule PC must be included
containing some of the same terms, see
any person or entity.
with Form 706.
Part 3 of Schedule A-1 (Form 706).
Note. Filing a section 2053 protective
Line 16
claim for refund on Schedule PC will not
Line 10
Reduce the value of the land by the
suspend the IRS’ review and
Enter the total value of the qualified
amount of any acquisition indebtedness
examination of Form 706, nor will it
conservation easements on which the
on the land at the date of the decedent's
delay the issuance of a closing letter for
exclusion is based. This could include
death. Acquisition indebtedness
the estate.
DRAFT AS OF
easements granted by the decedent (or
includes the unpaid amount of:
Initial Notice of Claim
someone other than the decedent) prior
Any indebtedness incurred by the
to the decedent's death, easements
donor in acquiring the property;
The first Schedule PC to be filed is the
granted by the decedent that take effect
Any indebtedness incurred before the
initial notice of protective claim for
at death, easements granted by the
acquisition if the indebtedness would
refund. The estate will receive a written
executor after the decedent's death, or
not have been incurred but for the
acknowledgment of receipt of the claim
June 16, 2016
some combination of these.
acquisition;
from the IRS. If the acknowledgment is
not received within 180 days of filing the
Any indebtedness incurred after the
Use the value of the easement
protective claim for refund on
acquisition if the indebtedness would
as of the date of death, even if
!
Schedule PC, the fiduciary should
not have been incurred but for the
the easement was granted prior
contact the IRS at (866) 699-4083 to
acquisition and the incurrence of the
CAUTION
to the date of death. But, if the value of
inquire about the receipt and processing
indebtedness was reasonably
the easement was different at the time
of the claim. A certified mail receipt or
foreseeable at the time of the
the easement was contributed than at
other evidence of delivery is not
acquisition; and
the date of death, see the Caution at the
sufficient to confirm receipt and
The extension, renewal, or
beginning of the Schedule U
processing of the protective claim for
refinancing of acquisition indebtedness.
Instructions.
refund.
Schedule PC—Protective
Note. The written acknowledgment of
Explain how this value was
Claim for Refund
receipt does not constitute a
determined and attach copies of any
A protective claim for refund preserves
determination that all requirements for a
appraisals. Normally, the appropriate
the estate’s right to a refund of tax paid
valid protective claim for refund have
way to value a conservation easement
on any amount included in the gross
been met.
is to determine the FMV of the land both
estate which would be deductible under
before and after the granting of the
In general, the claim will not be
section 2053 but has not been paid or
easement, with the difference being the
subject to substantive review until the
otherwise will not meet the requirements
value of the easement.
amount of the claim has been
of section 2053 until after the limitations
established. However, a claim can be
period for filing the claim has passed.
Reduce the reported value of the
disallowed at the time of filing. For
See section 6511(a).
easement by the amount of any
example, the claim for refund will be
consideration received for the
Only use Schedule PC for
rejected if:
easement. If the date of death value of
section 2053 protective claims
The claim was not timely filed;
!
the easement is different from the value
for refund being filed with Form
The claim was not filed by the
CAUTION
at the time the consideration was
706. If the initial notice of the protective
fiduciary or other person with authority
received, reduce the value of the
claim for refund is being submitted after
to act on behalf of the estate;
easement by the same proportion that
Form 706 has been filed, use Form 843,
The acknowledgment of the penalties
the consideration received bears to the
Claim for Refund and Request for
of perjury statement (on page 1 of Form
value of the easement at the time it was
Abatement, to file the claim.
706) was not signed; or,
granted. For example, assume the value
The claim is not adequately
of the easement at the time it was
Schedule PC may be used to file a
described.
granted was $100,000 and $10,000 was
section 2053 protective claim for refund
If the IRS does not raise such a
received in consideration for the
by estates of decedents who died after
defect when the claim is filed, it will not
easement. If the easement was worth
December 31, 2011. It will also be used
be precluded from doing so in the later
$150,000 at the date of death, you must
to inform the IRS when the contingency
substantive review.
reduce the value of the easement by
leading to the protective claim for refund
$15,000 ($10,000/$100,000 ×
is resolved and the refund due the
The estate may be given an
$150,000) and report the value of the
estate is finalized. The estate must
opportunity to cure any defects in the
easement on line 10 as $135,000.
indicate whether the Schedule PC being
initial notice by filing a corrected and
filed is the initial notice of protective
signed protective claim for refund before
claim for refund, notice of partial claim
Line 15
the expiration of the limitations period in
for refund, or notice of the final
section 6511(a) or within 45 days of
If a charitable contribution deduction for
resolution of the claim for refund.
notice of the defect, whichever is later.
this land has been taken on
Schedule O, enter the amount of the
Related Ancillary Expenses
Because each separate claim or
deduction here. If the easement was
expense requires a separate
If a Section 2053 protective claim for
granted after the decedent's death, a
Schedule PC, more than one
refund has been adequately identified
contribution deduction may be taken on
Schedule PC may be included with
on Schedule PC, the IRS will presume
Schedule O, if it otherwise qualifies, as
Form 706, if applicable. Two copies of
that the claim includes certain expenses
long as no income tax deduction was or
related to resolving, defending or
Part Instructions
-49-
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