Instructions For Schedule T. Qualified Family-Owned Business Interest Deduction And Schedule U. Qualified Conservation Easement Exclusion (Page 2 of 2) in pdf

family-owned business interest relates if the

The proceeds of which were used to pay

interests that you elect to deduct on Schedule

employee has been employed by the trade or

educational or medical expenses of the

business for a period of at least 10 years

decedent, the decedent's spouse, or the

Attach a schedule showing the following:

before the date of the decedent's death.

decedent's dependents.

Identify each trade or business interest from

line 5 for which you are making the section

Interests Acquired From the Decedent

Line 8c

2057 election and the amount being deducted.

Enter the amount of any other indebtedness

An interest in a business is considered to have

Specify the amount, if any, of the interests for

included on line 7 but not on lines 8a or 8b, but

been acquired from or to have passed from the

which you are making the election that is

DO NOT enter more than $10,000.

decedent if one or more of the following apply:

deducted on Schedule M.

The interest is considered to have been

List for each trade or business interest the

Line 11a

acquired from or to have passed from the

type and amount of any taxes paid out of that

Enter on this line the amount of gifts, if any,

decedent under section 1014(b) (relating to

interest.

that were:

basis of property acquired from a decedent).

List for each trade or business interest the

Included on line 4 of Part 2, page 1, Form

The interest is acquired by any person from

type and amount of any other deductions

706;

the estate.

claimed with respect to that interest.

Of qualified family-owned business interests;

The interest is acquired by any person from

If there are no such reductions, enter the

a trust, to the extent the property is includible

From the decedent to members of the

amount from line 10 on line 15.

in the gross estate.

decedent's family other than the decedent's

spouse; and

Schedule U. Qualified

Material Participation

Continuously held by such members of the

Conservation Easement

decedent's family from the date of the gift to the

To make the section 2057 election, either the

date of the decedent's death.

Exclusion

decedent or a member of the decedent's family

must have materially participated in the trade

Line 11b

Under section 2031(c), you may elect to

or business to which the ownership interest

exclude a portion of the value of land that is

relates for at least 5 of the 8 years ending on

Enter the amount, if any, of gifts that would

subject to a qualified conservation easement.

the date of the decedent's death.

have been included on line 11a except that

You make the election by filing Schedule U with

they were excluded under the gift tax annual

The existence of material participation is a

all of the required information and excluding the

exclusion of section 2503(b).

factual determination, and the types of activities

applicable value of the land that is subject to

and financial risks that will support a finding of

the easement on Part 5, Recapitulation, page

Line 13a

material participation will vary with the mode

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

Enter the amount from item 12, Part 5,

of ownership. No single factor is determinative

include on Schedule A, B, E, F, G, or H, as

Recapitulation.

of the presence of material participation, but

appropriate, the decedent's interest in the land

physical work and participation in management

that is subject to the exclusion. You must make

Line 13e

decisions are the principal factors to be

the election on a timely filed Form 706,

considered. Passively collecting rents, salaries,

Enter any amounts (other than qualified

including extensions.

draws, dividends, or other income from the

family-owned business interests and de

For the estates of decedents dying in 1999,

trade or business does not constitute material

minimis amounts) transferred from the

the exclusion is the lesser of:

participation. Neither does merely advancing

decedent to the decedent's spouse

The applicable percentage of the value of

capital and reviewing business plans and

(determined at the time of the transfer) and

land (after certain reductions) subject to a

financial reports each business year.

within 10 years of the date of the decedent's

qualified conservation easement, or

death. At the time this form went to print, the

For more information on material

$200,000.

IRS had not issued guidelines on what

participation, see page 7 of these instructions

constitutes a de minimis amount.

Once made, the election is irrevocable.

and Regulations section 20.2032A-3.

Note: See the Exclusion limitation table on

Line 13f

Specific Instructions

page 24 for exclusion amounts after 1999.

Enter the amount of any other gifts:

Line 4

General Requirements

That are not included on lines 13d or 13e;

If any qualified heir is not a U.S. citizen, the

That were from the decedent;

Qualified Land

ownership interest he or she receives must

That were made within 3 years of the date

pass, be acquired, or be held in a qualified

Land may qualify for the exclusion if all of the

of the decedent's death; and

trust. See section 2057(g) for details. If any

following requirements are met:

That were not both gifts to members of the

qualified heir listed on line 4 is not a U.S.

The decedent or a member of the decedent's

decedent's family and excluded under the

citizen, indicate along with their address

family must have owned the land for the 3-year

annual gift tax exclusion of section 2503(b).

“citizen of _______,” filling in the appropriate

period ending on the date of the decedent's

country.

Line 13h

death.

No later than the date the election is made,

Enter the amounts, if any, from lines 13d, 13e,

Line 5

a qualified conservation easement on the land

or 13f, that are otherwise included in the gross

List on line 5 all qualified family-owned

has been made by the decedent, a member of

estate (e.g., under section 2035).

business interests included in the gross estate,

the decedent's family, the executor of the

even if they will not be included in the

Line 15

decedent's estate, or the trustee of a trust that

deduction because, for example, they pass to

holds the land.

The interests listed on line 5 above are used

the surviving spouse and are deducted on

The land is located:

to qualify the estate for the section 2057

Schedule M rather than Schedule T (see the

deduction. You may choose, however, not to

1. In or within 25 miles of an area that, on

instructions for line 15 below).

deduct on Schedule T all of the trade or

the date of the decedent's death, is a

business interests that are listed on line 5. For

metropolitan area, as defined by the Office of

Line 7

example, if a trade or business interest that is

Management and Budget;

Enter on line 7 the amount, if any, deductible

a qualified family-owned business interest

2. In or within 25 miles of an area that, on

from the gross estate as claims against the

passes to the surviving spouse and you choose

the date of the decedent's death, is a national

estate or indebtedness of the estate reported

to deduct it on Schedule M, you may not

park or wilderness area designated as part of

elsewhere on this Form 706. Do not include

deduct on Schedule T the part of its value

the National Wilderness Preservation System

funeral or administrative expenses on this line.

deducted on Schedule M. Or, you may simply

(unless it has been determined that such land

choose not to include a particular trade or

is not under significant development pressure);

Line 8a

business interest in the section 2057 election.

Enter the amount of any indebtedness that is

Report on line 15 only the value of those

3. In or within 10 miles of an area that, on

both:

trade or business interests listed on line 5 for

the date of the decedent's death, is an Urban

Included on line 7, and

which you are making the section 2057

National Forest, as designated by the Forest

Indebtedness on a residence of the decedent

election.

Service.

that qualifies for the mortgage interest

Also, you must reduce the amount of the

deduction under section 163(h)(3).

Member of Family

Schedule T deduction by the amount of any

Federal estate or GST tax and any state

Members of the decedent's family include the

Line 8b

inheritance taxes paid out of, and any other

decedent's spouse; ancestors; lineal

Enter the amount of any indebtedness:

deductions claimed with respect to, the

descendants of the decedent, of the decedent's

That is included on line 7, and

spouse, and of the parents of the decedent;

Page 23

Instructions for Schedules

Instructions For Schedule T. Qualified Family-Owned Business Interest Deduction And Schedule U. Qualified Conservation Easement Exclusion Page 2

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