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Line 9, column D. Allocate the

Enter on line 10 the total additional

Line 6. If the property interests entered

amount on line 8 of Part 1 of Schedule R

GST exemption available to allocate to all

on line 1 will not bear the GST tax,

in line 9, column D. This amount may be

skip persons who received any interest in

multiply line 6 by 47% (.47).

allocated to transfers into trusts that are

section 2032A property. Attach a

Signature. The executor(s) must sign

not otherwise reported on Form 706. For

special-use allocation schedule listing

Schedule R-1 in the same manner as

example, the line 8 amount may be

each such skip person and the amount of

Form 706. See Signature and Verification,

allocated to an inter vivos trust

the GST exemption allocated to that

on page 2.

established by the decedent during his or

person.

Filing Schedule R-1. Attach to Form 706

her lifetime and not included in the gross

If you do not allocate the GST

one copy of each Schedule R-1 that you

estate. This allocation is made by

exemption, it will be automatically

prepare. Send two copies of each

identifying the trust on line 9 and making

allocated under the deemed allocation at

Schedule R-1 to the fiduciary.

an allocation to it using column D. If the

death rules. To the extent any amount is

trust is not included in the gross estate,

not so allocated it will be automatically

Schedule U. Qualified

value the trust as of the date of death.

allocated (under regulations to be

You should inform the trustee of each

Conservation Easement

published) to the earliest disposition or

trust listed on line 9 of the total GST

cessation that is subject to the GST tax.

Exclusion

exemption you allocated to the trust. The

Under certain circumstances, post-death

trustee will need this information to

events may cause the decedent to be

If at the time of the contribution of

compute the GST tax on future

treated as a transferor for purposes of

the conservation easement, the

distributions and terminations.

Chapter 13.

value of the easement, the value

Line 9, column E — trust’s inclusion

CAUTION

Line 10 may be used to set aside an

of the land subject to the easement, or

ratio. The trustee must know the trust’s

exemption amount for such an event. You

the value of any retained development

inclusion ratio to figure the trust’s GST tax

must attach a schedule listing each such

right, was different than the estate tax

for future distributions and terminations.

event and the amount of exemption

value, you must complete a separate

You are not required to inform the trustee

allocated to that event.

computation in addition to completing

of the inclusion ratio and may not have

Parts 2 and 3. Use Part 2 to compute the

Schedule U.

enough information to compute it.

GST tax on transfers in which the

Therefore, you are not required to make

Use a copy of Schedule U as a

property interests transferred are to bear

an entry in column E. However, column E

worksheet for this separate computation.

the GST tax on the transfers. Use Part 3

and the worksheet below are provided to

Complete lines 4 through 14 of the

to report the GST tax on transfers in

assist you in computing the inclusion ratio

worksheet Schedule U. However, the

which the property interests transferred

for the trustee if you wish to do so.

value you use on lines 4, 5, 7, and 10, of

do not bear the GST tax on the transfers.

the worksheet is the value for these items

You should inform the trustee of the

Section 2603(b) requires that unless

as of the date of the contribution of the

amount of the GST exemption you

the governing instrument provides

easement, not the estate tax value. If the

allocated to the trust. Line 9, columns C

otherwise, the GST tax is to be charged

date of contribution and the estate tax

and D may be used to compute this

to the property constituting the transfer.

values are the same, you do not need to

amount for each trust.

Therefore, you will usually enter all of the

do a separate computation.

This worksheet will compute an

direct skips on Part 2.

After completing the worksheet, enter

accurate inclusion ratio only if the

You may enter a transfer on Part 3

the amount from line 14 of the worksheet

decedent was the only settlor of the trust.

only if the will or trust instrument directs,

on line 14 of Schedule U. Finish

You should use a separate worksheet for

by specific reference, that the GST tax is

completing Schedule U by entering

each trust (or separate share of a trust

not to be paid from the transferred

amounts on lines 4, 7, and 15 through 20,

that is treated as a separate trust).

property interests.

following the instructions below for those

Part 2 — Line 3. Enter zero on this line

lines. At the top of Schedule U, enter

WORKSHEET (inclusion ratio for

unless the will or trust instrument

‘‘worksheet attached.’’ Attach the

trust):

specifies that the GST taxes will be paid

worksheet to the return.

by property other than that constituting

1 Total estate and gift tax value of all of

Under section 2031(c), you may elect

the transfer (as described above). Enter

the property interests that passed to

to exclude a portion of the value of land

the trust . . . . . . . . . . . . . . . . . . . .

on line 3 the total of the GST taxes shown

that is subject to a qualified conservation

on Part 3 and Schedule(s) R-1 that are

2 Estate taxes, state death taxes, and

easement. You make the election by filing

other charges actually recovered from

payable out of the property interests

Schedule U with all of the required

the trust . . . . . . . . . . . . . . . . . . . .

shown on Part 2, line 1.

information and excluding the applicable

3 GST taxes imposed on direct skips to

Part 2 — Line 6. Do not enter more than

value of the land that is subject to the

skip persons other than this trust and

the amount on line 5. Additional

easement on Part 5, Recapitulation, page

borne by the property transferred to

allocations may be made using Part 1.

3, at item 11. To elect the exclusion, you

this trust . . . . . . . . . . . . . . . . . . . .

must include on Schedule A, B, E, F, G,

Part 3 — Line 3. See the instructions to

4 GST taxes actually recovered from

Part 2, line 3, above. Enter only the total

or H, as appropriate, the decedent’s

this trust (from Schedule R, Part 2,

interest in the land that is subject to the

of the GST taxes shown on Schedule(s)

line 8 or Schedule R-1, line 6) . . . . .

R-1 that are payable out of the property

exclusion. You must make the election on

5 Add lines 2 – 4 . . . . . . . . . . . . . . . .

interests shown on Part 3, line 1.

a timely filed Form 706, including

6 Subtract line 5 from line 1 . . . . . . . .

extensions.

Part 3 — Line 6. See the instructions to

7 Add columns C and D of line 9 . . . . .

Part 2, line 6, above.

8 Divide line 7 by line 6 . . . . . . . . . . .

The exclusion is the lesser of:

•

9 Trust’s inclusion ratio. Subtract line 8

The applicable percentage of the value

How To Complete Schedule R-1

from 1.000 . . . . . . . . . . . . . . . . . .

of land (after certain reductions) subject

Filing due date. Enter the due date of

to a qualified conservation easement, or

•

Schedule R, Form 706. You must send

$500,000.

Line 10 — Special-use allocation.

the copies of Schedule R-1 to the

For skip persons who receive an interest

Once made, the election is irrevocable.

fiduciary by this date.

in section 2032A special-use property,

General Requirements

you may allocate more GST exemption

Line 4. Do not enter more than the

than the direct skip amount to reduce the

amount on line 3. If you wish to allocate

Qualified Land

additional GST tax that would be due

an additional GST exemption, you must

when the interest is later disposed of or

use Schedule R, Part 1. Making an entry

Land may qualify for the exclusion if all of

qualified use ceases. See Schedule A-1

on line 4 constitutes a Notice of Allocation

the following requirements are met.

•

of this Form 706 for more details about

of the decedent’s GST exemption to the

The decedent or a member of the

this additional GST tax.

trust.

decedent’s family must have owned the

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Instructions for Schedules

Instructions For Form 706 - United States Estate (And Generation-Skipping Transfer) Tax Return - 2005 Page 24

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