Instructions For Form 706-A - United States Additional Estate Tax Return

Department of the Treasury

Instructions for Form 706-A

Internal Revenue Service

(Rev. February 2008)

United States Additional Estate Tax Return

To report dispositions or cessations of qualified use under section 2032A of the Internal Revenue Code

Section references are to the Internal

When To File and Pay

Penalties

Revenue Code unless otherwise noted.

File Form 706-A and pay any additional

Return preparer. The Small Business

taxes due within 6 months after the

and Work Opportunity Tax Act of 2007

taxable disposition or cessation of the

What’s New

extends the application of return

qualified use unless an extension of

preparer penalties to preparers of

•

time has been granted.

On page 1 of Form 706-A, we have

estate tax returns. Under the amended

added a new line 7 to Part I and a new

provision and transitional relief provided

Use Form 4768, Application for

line 20 to Part II. Check the box on line

by Notice 2008-13, 2008-3 I.R.B. 282,

Extension of Time To File a Return

estate tax return preparers who prepare

7 of Part I to indicate that the qualified

and/or Pay U.S. Estate (and

any return or claim for refund which

heir is making an election to increase

Generation-Skipping Transfer) Taxes,

reflects an understatement of tax

the basis of specially valued property.

to apply for an automatic extension of

liability due to willful or reckless conduct

Report on line 20 of Part II the amount

time to file. Check the “Form 706-A”

are subject to a penalty of $5,000 or

of interest being paid. For more

box in Part II of Form 4768.

50% of the income derived (or income

information, see Basis, Election to

to be derived), whichever is greater, for

increase basis on page 2.

Make the check or money order

the preparation of each such return.

•

payable to the “United States Treasury”

The Small Business and Work

See section 6694 and Notice 2008-13

and write “Form 706-A” and the

Opportunity Tax Act of 2007, P.L.

for more details.

qualified heir’s social security number

110-28, extends the application of

on the check or money order.

return preparer penalties to preparers

Definitions

of estate tax returns. See Penalties,

If you are making an election to

Return preparer below for more

Specially valued property. The term

increase basis, see Basis on page 2 for

information.

“specially valued property” means farm

information on paying interest.

or closely held business property that

the executor elected to value at actual

Where To File

use rather than fair market value. The

executor makes the election on Form

File Form 706-A at the following

General Instructions

706, United States Estate (and

address:

Generation-Skipping Transfer) Tax

Department of the Treasury

Return, filed for the decedent. Specially

Purpose of Form

Internal Revenue Service Center

valued property refers to the qualified

Cincinnati, OH 45999

An heir must use Form 706-A to report

real property described in section

the additional estate tax imposed by

2032A and includes qualified real

section 2032A(c) for an early

property owned indirectly, such as

Statute of Limitations

disposition of specially valued property

interests in certain partnerships,

The additional estate tax may be

or for an early cessation of a qualified

corporations, and trusts as described in

assessed until 3 years after the IRS

use of specially valued property.

section 2032A. If special valuation was

receives notice that the qualified heir

elected on Form 706, each qualified

disposed of the specially valued

heir consented in writing to his or her

The recapture tax is limited to the tax

property or ceased to use it for the

personal liability for the additional

savings attributable to the property

qualified use.

estate tax attributable to his or her

actually disposed of (or for which

interest in the specially valued property.

qualified use ceased) rather than to the

However, if the property was

tax savings attributable to all the

disposed of in an involuntary

Qualified heir. The term “qualified

specially valued property received by

conversion or in an exchange, the tax

heir” means, for any property, a

the heir.

may be assessed up to 3 years after

member of the decedent’s family who

the IRS receives notice that the

acquired the property (or to whom the

property was replaced or will not be

Who Must File

property passes) from the decedent. If

replaced. See section 2032A(f) for

a qualified heir disposes of any interest

The qualified heir must file Form 706-A

details.

in qualified real property to any member

if there was any taxable event (see

of his or her family, that member shall

Taxable Events below) with respect to

thereafter be treated as the qualified

Lien

the specially valued property even if no

heir for the interest.

tax is ultimately due. Further, the

If the estate elected special-use

qualified heir must file Form 706-A if

valuation, section 6324B establishes a

Taxable Events

there was any involuntary conversion or

special lien against the specially valued

exchange of the specially valued

property equal to the adjusted tax

The qualified heir causes a taxable

property even if the conversion or

difference attributable to the

event by disposing of any interest in the

exchange is nontaxable.

special-use valuation.

specially valued property or ceasing to

Cat. No. 10142D

Instructions For Form 706-A - United States Additional Estate Tax Return - 2008

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