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amount is a hypothetical figure used to

the amount figured by the following

You may elect special-use valuation

calculate the estate tax.

formula:

(line 2) in addition to alternate

valuation.

Special treatment of split gifts.

Gross estate tax minus (the sum

of the state death taxes and

These special rules apply only if:

You may not elect alternate

•

unified credit)

Value of

valuation unless the election will

The decedent’s spouse predeceased

included

decrease both the value of the gross

the decedent;

Value of gross estate minus (the

gift

•

The decedent’s spouse made gifts

estate and the sum (reduced by

sum of the deductions for

charitable, public, and similar

allowable credits) of the estate and

that were “split” with the decedent

gifts and bequests and marital

GST taxes payable by reason of the

under the rules of section 2513;

deduction)

•

decedent’s death for the property

The decedent was the “consenting

includible in the decedent’s gross

spouse” for those split gifts, as that

When taking the credit for pre-1977

term is used on Form 709; and

estate.

federal gift taxes:

•

The split gifts were included in the

•

You elect alternate valuation by

Include the credit in the amount on

decedent’s spouse’s gross estate under

checking “Yes” on line 1 and filing Form

line 15 and

section 2035.

•

706. You may make a protective

Identify and enter the amount of the

alternate valuation election by checking

credit you are taking on the dotted line

If all four conditions above are met,

“Yes” on line 1, writing the word

to the left of the entry space for line 15

do not include these gifts on line 4 of

“protective,” and filing Form 706 using

on page 1 of Form 706 with a notation,

the Tax Computation and do not

regular values.

“section 2012 credit.”

include the gift taxes payable on these

gifts on line 7 of the Tax Computation.

Once made, the election may not be

For more information, see the

These adjustments are incorporated

revoked. The election may be made on

regulations under section 2012. This

into the worksheets.

a late-filed Form 706 provided it is not

computation may be made using Form

filed later than 1 year after the due date

4808. Attach a copy of a completed

Line 9. Maximum Unified

(including extensions actually granted).

Form 4808 or the computation of the

Credit (applicable credit

Relief under sections 301.9100-1 and

credit. Also, attach all available copies

301.9100-3 may be available to make

amount)

of Forms 709 filed by the decedent to

an alternate valuation election or a

help verify the amounts entered on

The applicable credit amount (formerly

protective alternate valuation election,

lines 4 and 7, and the amount of credit

the unified credit) is $1,730,800 for the

provided a Form 706 is filed no later

taken (on line 15) for pre-1977 federal

estates of decedents dying in 2010.

than 1 year after the due date of the

gift taxes.

The amount of the credit cannot exceed

return (including extensions actually

the amount of estate tax imposed.

Canadian marital credit. In addition

granted).

to using line 15 to report credit for

Line 10. Adjustment to

If you elect alternate valuation, value

federal gift taxes on pre-1977 gifts, you

the property that is included in the

Unified Credit (applicable

may also use line 15 to claim the

gross estate as of the applicable dates

credit amount)

Canadian marital credit, where

as follows:

applicable.

•

If the decedent made gifts (including

Any property distributed, sold,

gifts made by the decedent’s spouse

When taking the marital credit under

exchanged, or otherwise disposed of or

and treated as made by the decedent

the 1995 Canadian Protocol:

separated or passed from the gross

•

by reason of gift splitting) after

Include the credit in the amount on

estate by any method within 6 months

September 8, 1976, and before

line 15 and

after the decedent’s death is valued on

•

January 1, 1977, for which the

Identify and enter the amount of the

the date of distribution, sale, exchange,

decedent claimed a specific exemption,

credit you are taking on the dotted line

or other disposition, whichever occurs

the unified credit (applicable credit

to the left of the entry space for line 15

first. Value this property on the date it

amount) on this estate tax return must

on page 1 of Form 706 with a notation,

ceases to form a part of the gross

be reduced. The reduction is figured by

“Canadian marital credit.”

estate; for example, on the date the title

entering 20% of the specific exemption

passes as the result of its sale,

Also, attach a statement to the return

claimed for these gifts.

exchange, or other disposition.

that refers to the treaty, waives QDOT

•

Any property not distributed, sold,

Note. The specific exemption was

rights, and shows the computation of

exchanged, or otherwise disposed of

allowed by section 2521 for gifts made

the marital credit. See the 1995

within the 6-month period is valued on

before January 1, 1977.

Canadian income tax treaty protocol for

the date 6 months after the date of the

details on computing the credit.

If the decedent did not make any

decedent’s death.

•

gifts between September 8, 1976, and

Any property, interest, or estate that

January 1, 1977, or if the decedent

is “affected by mere lapse of time” is

Part 3—Elections by the

made gifts during that period but did not

valued as of the date of decedent’s

claim the specific exemption, enter

death or on the date of its distribution,

Executor

zero.

sale, exchange, or other disposition,

whichever occurs first. However, you

Line 15. Total Credits

Line 1. Alternate Valuation

may change the date of death value to

Generally, line 15 is used to report the

account for any change in value that is

See the example showing the

total of credit for foreign death taxes

not due to a “mere lapse of time” on the

use of Schedule B where the

TIP

(line 13) and credit for tax on prior

date of its distribution, sale, exchange,

alternate valuation is adopted.

transfers (line 14).

or other disposition.

However, you may also use line 15

Unless you elect at the time you file

The property included in the

to report credit taken for federal gift

the return to adopt alternate valuation

alternate valuation and valued as of 6

taxes imposed by Chapter 12 of the

as authorized by section 2032, you

months after the date of the decedent’s

Code, and the corresponding provisions

must value all property included in the

death, or as of some intermediate date

of prior laws, on certain transfers the

gross estate on the date of the

(as described above) is the property

decedent made before January 1,

decedent’s death. Alternate valuation

included in the gross estate on the date

1977, that are included in the gross

cannot be applied to only a part of the

of the decedent’s death. Therefore, you

estate. The credit cannot be more than

property.

must first determine what property was

-7-

Part Instructions

Instructions For Form 706 - United States Estate (And Generation-Skipping Transfer) Tax Return - 2011 Page 7

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