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In this example, alternate valuation is adopted; the date of death is January 1, 2010

Item

Description

Alternate

Value at

Number

Valuation

Value

date of

Date

death

House and lot, 1921 William Street, NW, Washington, DC (lot 6, square 481). Rent of

7/1/10

$535,000

$550,000

$8,100 due at the end of each quarter, February 1, May 1, August 1, and November

1. Value based on appraisal, copy of which is attached. Not disposed of with 6

months of date of death . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Rent due on item 1 for quarter ending November 1, 2009, but not collected until

2/1/10

8,100

February 1, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Rent accrued on Item 1 for November and December 2009, collected on February 1,

2/1/10

5,400

2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

House and lot, 304 Jefferson Street, Alexandria, VA (lot 18, square 40). Rent of

5/1/10

369,000

375,000

$1,800 payable monthly. Value based on appraisal, copy of which is attached.

Property exchanged for farm on May 1, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Rent due on Item 2 for December 2009, but not collected until February 1, 2010 . . . .

2/1/10

1,800

Schedule A-1—Section

decedent owned or had contracted to

Election as described in Regulations

purchase. Number each parcel in the

section 20.2032A-8(b).

2032A Valuation

left-hand column.

Part 2. Notice of Election

The election to value certain farm and

Describe the real estate in enough

closely held business property at its

detail so that the IRS can easily locate

Line 10. Because the special-use

special-use value is made by checking

it for inspection and valuation. For each

valuation election creates a potential

“Yes” on Form 706, Part 3 — Elections

parcel of real estate, report the area

tax liability for the recapture tax of

by the Executor, line 2. Schedule A-1 is

and, if the parcel is improved, describe

section 2032A(c), you must list each

used to report the additional information

the improvements. For city or town

person who receives an interest in the

that must be submitted to support this

property, report the street and number,

specially valued property on Schedule

election. In order to make a valid

ward, subdivision, block and lot, etc.

A-1. If there are more than eight

election, you must complete Schedule

For rural property, report the township,

persons who receive interests, use an

A-1 and attach all of the required

range, landmarks, etc.

additional sheet that follows the format

statements and appraisals.

of line 10. In the columns “Fair market

If any item of real estate is subject to

For definitions and additional

value” and “Special-use value,” you

a mortgage for which the decedent’s

information concerning special-use

should enter the total respective values

estate is liable, that is, if the

valuation, see section 2032A and the

of all the specially valued property

indebtedness may be charged against

related regulations.

interests received by each person.

other property of the estate that is not

subject to that mortgage, or if the

Part 1. Type of Election

GST Tax Savings

decedent was personally liable for that

Estate and GST tax elections. If you

mortgage, you must report the full value

To compute the additional GST tax due

elect special-use valuation for the

of the property in the value column.

upon disposition (or cessation of

estate tax, you must also elect

Enter the amount of the mortgage

qualified use) of the property, each

special-use valuation for the

under “Description” on this schedule.

“skip person” (as defined in the

The unpaid amount of the mortgage

Generation-Skipping Transfer (GST)

instructions to Schedule R) who

tax and vice versa.

may be deducted on Schedule K.

receives an interest in the specially

valued property must know the total

You must value each specific

If the decedent’s estate is not liable

GST tax savings on all of the interests

property interest at the same value for

for the amount of the mortgage, report

in specially valued property received.

GST tax purposes that you value it at

only the value of the equity of

This GST tax savings is the difference

for estate tax purposes.

redemption (or value of the property

between the total GST tax that was

less the indebtedness) in the value

Protective election. To make the

imposed on all of the interests in

column as part of the gross estate. Do

protective election described in the

specially valued property received by

not enter any amount less than zero.

separate instructions for Part

the skip person valued at their

Do not deduct the amount of

3 — Elections by the Executor, line 2,

special-use value and the total GST tax

indebtedness on Schedule K.

you must check this box, enter the

that would have been imposed on the

decedent’s name and social security

same interests received by the skip

Also list on Schedule A real property

number in the spaces provided at the

person had they been valued at their

the decedent contracted to purchase.

top of Schedule A-1, and complete Part

FMV.

Report the full value of the property and

2. Notice of Election, line 1 and lines 3

not the equity in the value column.

and 4, column A. For purposes of the

Because the GST tax depends on

Deduct the unpaid part of the purchase

the executor’s allocation of the GST

protective election, list on line 3 all of

price on Schedule K.

the real property that passes to the

exemption and the grandchild

Report the value of real estate

exclusion, the skip person who receives

qualified heirs even though some of the

without reducing it for homestead or

the interests is unable to compute this

property will be shown on line 2 when

other exemption, or the value of dower,

the additional notice of election is

GST tax savings. Therefore, for each

curtesy, or a statutory estate created

skip person who receives an interest in

subsequently filed. You need not

instead of dower or curtesy.

specially valued property, you must

complete columns B through D of lines

3 and 4. You need not complete any

attach worksheets showing the total

Explain how the reported values

GST tax savings attributable to all of

other line entries on Schedule A-1.

were determined and attach copies of

Completing Schedule A-1 as described

that person’s interests in specially

any appraisals.

above constitutes a Notice of Protective

valued property.

-14-

Part Instructions

Instructions For Form 706 - United States Estate (And Generation-Skipping Transfer) Tax Return - 2011 Page 14

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