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How to compute the GST tax

interest in the property, whether present

for a valid election, use the following

savings. Before computing each skip

or future, or vested or contingent, must

checklist. The checklist is for your use

person’s GST tax savings, you must

enter into the agreement. Included are

only. Do not file it with the return.

complete Schedules R and R-1 for the

owners of remainder and executory

entire estate (using the special-use

interests; the holders of general or

Does the notice of election include

values).

special powers of appointment;

the decedent’s name and social

beneficiaries of a gift over in default of

security number as they appear on

For each skip person, you must

exercise of any such power; joint

the estate tax return?

complete two Schedules R (Parts 2 and

tenants and holders of similar undivided

3 only) as worksheets, one showing the

interests when the decedent held only a

Does the notice of election include

interests in specially valued property

joint or undivided interest in the

the relevant qualified use of the

received by the skip person at their

property or when only an undivided

property to be specially valued?

special-use value and one showing the

interest is specially valued; and trustees

same interests at their FMV.

of trusts and representatives of other

Does the notice of election describe

entities holding title to, or holding any

If the skip person received interests

the items of real property shown on

interests in the property. An heir who

in specially valued property that were

the estate tax return that are to be

has the power under local law to

shown on Schedule R-1, show these

specially valued and identify the

challenge a will and thereby affect

interests on the Schedule R, Parts 2

property by the Form 706 schedule

disposition of the property is not,

and 3 worksheets, as appropriate. Do

and item number?

however, considered to be a person

not use Schedule R-1 as a worksheet.

with an interest in property under

Does the notice of election include

Completing the special-use value

section 2032A solely by reason of that

worksheets. On Schedule R, Parts 2

the FMV of the real property to be

right. Likewise, creditors of an estate

and 3, lines 2 through 4 and 6, enter

specially valued and also include its

are not such persons solely by reason

-0-.

value based on the qualified use

of their status as creditors.

(determined without the adjustments

Completing the fair market value

If any person required to enter into

provided in section 2032A(b)(3)(B))?

worksheets.

the agreement either desires that an

•

Schedule R, Parts 2 and 3, lines 2

agent act for him or her or cannot

Does the notice of election include

and 3, fixed taxes and other charges. If

legally bind himself or herself due to

the adjusted value (as defined in

valuing the interests at their FMV

infancy or other incompetency, or due

section 2032A(b)(3)(B)) of (a) all

(instead of special-use value) causes

to death before the election under

real property that both passes from

any of these taxes and charges to

section 2032A is timely exercised, a

the decedent and is used in a

increase, enter the increased amount

representative authorized by local law

qualified use, without regard to

(only) on these lines and attach an

to bind the person in an agreement of

whether it is to be specially valued,

explanation of the increase. Otherwise,

this nature may sign the agreement on

and (b) all real property to be

enter -0-.

his or her behalf.

•

specially valued?

Schedule R, Parts 2 and 3, line

6 — GST exemption allocation. If you

The IRS will contact the agent

Does the notice of election include

completed Schedule R, Part 1, line 10,

designated in the agreement on all

enter on line 6 the amount shown for

(a) the items of personal property

matters relating to continued

the skip person on the line 10

shown on the estate tax return that

qualification under section 2032A of the

special-use allocation schedule you

pass from the decedent to a

specially valued real property and on all

attached to Schedule R. If you did not

qualified heir and that are used in

matters relating to the special lien

complete Schedule R, Part 1, line 10,

qualified use and (b) the total value

arising under section 6324B. It is the

enter -0- on line 6.

of such personal property adjusted

duty of the agent as attorney-in-fact for

under section 2032A(b)(3)(B)?

the parties with interests in the specially

Total GST tax savings. For each skip

valued property to furnish the IRS with

person, subtract the tax amount on line

Does the notice of election include

any requested information and to notify

10, Part 2 of the special-use value

the adjusted value of the gross

the IRS of any disposition or cessation

worksheet from the tax amount on line

of qualified use of any part of the

estate? (See section

10, Part 2 of the fair market value

property.

2032A(b)(3)(A).)

worksheet. This difference is the skip

person’s total GST tax savings.

Does the notice of election include

Checklist for Section 2032A

Part 3. Agreement to Special

the method used to determine the

Election

special-use value?

Valuation Under Section

2032A

If you are going to make the

Does the notice of election include

special-use valuation election

The agreement to special valuation by

copies of written appraisals of the

on Schedule A-1, please use

CAUTION

persons with an interest in property is

FMV of the real property?

this checklist to ensure that you are

required under section 2032A(a)(1)(B)

providing everything necessary to make

and (d)(2) and must be signed by all

Does the notice of election include a

a valid election.

parties who have any interest in the

statement that the decedent and/or

property being valued based on its

a member of his or her family has

To have a valid special-use valuation

qualified use as of the date of the

owned all of the specially valued

election under section 2032A, you must

decedent’s death.

property for at least 5 years of the 8

file, in addition to the federal estate tax

years immediately preceding the

An interest in property is an interest

return, (a) a notice of election

date of the decedent’s death?

that, as of the date of the decedent’s

(Schedule A-1, Part 2), and (b) a fully

death, can be asserted under

executed agreement (Schedule A-1,

applicable law so as to affect the

Part 3). You must include certain

disposition of the specially valued

information in the notice of election. To

property by the estate. Any person who

ensure that the notice of election

at the decedent’s death has any such

includes all of the information required

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Part Instructions

Instructions For Form 706 - United States Estate (And Generation-Skipping Transfer) Tax Return - 2011 Page 15

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