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Line 2. Special-use valuation of

described in Regulations section

gift tax under sections 2001 and 2501,

section 2032A. Under section 2032A,

20.6166-1(d). If you check this line to

respectively, for the year the surviving

you may elect to value certain farm and

make a final election, you should attach

spouse became a citizen and all

closely held business real property at

the notice of election described in

subsequent years and

•

its farm or business use value rather

Regulations section 20.6166-1(b).

To treat any of the decedent’s unified

than its FMV. You may elect both

credit (applicable credit amount) that

In computing the adjusted gross

special-use valuation and alternate

was used to reduce the QDOT tax on

estate under section 6166(b)(6) for

valuation. To elect this valuation, you

taxable distributions as use of the

purposes of determining whether an

must check “Yes” on line 2 and

surviving spouse’s own unified credit for

election may be made under section

complete and attach Schedule A-1 of

purposes of determining the spouse’s

6166, the net amount of any real estate

Form 706 and its required additional

available unified credit under section

in a closely held business must be

statements.

2505 for the year he or she became a

used.

citizen and for all subsequent years.

You must file Schedule A-1 of

For definitions and additional

To make these elections, check

Form 706 and its required

information, see section 6166 and the

“Yes” on line 4.

attachments with Form

related regulations. Also see the Form

CAUTION

706-QDT for this election to be valid.

706 instructions for Part 3 — Elections

Schedule B

by the Executor and Line 3. Section

The total value of the property

6166 Installment Payments for a chart

valued under section 2032A may not be

Part I—General Information

on how to calculate the amount of tax

decreased from FMV by more than

which may be paid in installments

If the trustee is filing the entire return,

$960,000 for decedents dying in 2008.

under section 6166.

the trustee needs to complete only lines

For future years, the IRS will publish

1a and 1b of this part of Schedule B

the amount in an annual revenue

Bond or lien. The IRS may require

(but all of Parts II through VI). When

procedure.

that an estate furnish a surety bond

completing Part I on page 1, enter the

when granting the installment payment

Real property may qualify for the

remaining trustee’s information on lines

election. In the alternative, the executor

section 2032A election if:

2a, 2b, and 2c.

may consent to elect the special lien

1. The real property is located in the

Line 1b. All trusts filing Form

provisions of section 6324A, in lieu of

United States,

706-QDT must have an EIN. A trust

the bond. The IRS will contact you

2. The real property is used for

that does not have an EIN should apply

regarding the specifics of furnishing the

farming or in a trade or business,

for one on Form SS-4, Application for

bond or electing the special lien. The

3. The real property was acquired

Employer Identification Number. You

IRS will make this determination on a

from or passed from the surviving

can get Form SS-4, and other IRS tax

case-by-case basis, and you may be

spouse to a qualified heir of the

forms and publications, by calling

asked to provide additional information.

surviving spouse,

1-800-TAX-FORM (1-800-829-3676)

If you elect the lien provisions,

4. The real property was owned and

or by accessing the IRS website at

section 6324A requires that the lien be

used in a qualified manner by the

placed on property having a value

surviving spouse or a member of the

Send the completed Form SS-4 to

equal to the total deferred tax plus four

surviving spouse’s family for 5 of the 8

the Internal Revenue Service Center

years of interest. The property must be

years before the surviving spouse’s

listed under Where To File on page 2. If

expected to survive the deferral period,

death, and

the EIN has not been received by the

and does not necessarily have to be

5. The qualified property is the

filing time for Form 706-QDT, write

property of the estate. In addition, all of

percentage of the surviving spouse’s

“Applied for” on line 1b.

the persons having an interest in the

gross estate specified in section 2032A.

designated property must consent to

Line 2a. You must enter on this line

For definitions and additional

the creation of this lien on the property

either the name of an individual trustee

information, see section 2032A and the

pledged.

who is a U.S. citizen or a trustee that is

related regulations. Also see the Form

a domestic corporation. If there is more

Line 4. Spousal election. If the

706 instructions for Part 3 — Elections

than one trustee, enter the one to be

surviving spouse has become a U.S.

by the Executor and the instructions for

contacted by the IRS. List the names of

citizen, the QDOT tax will not apply to

Schedule A-1 within the Form 706 itself.

all additional trustees on a sheet of

any distributions made after the

paper attached to this return. Include

Line 3. Installment payments. If the

surviving spouse became a citizen as

the SSN or EIN of all U.S. citizens or

gross estate includes an interest in a

long as either:

•

domestic corporations.

closely held business, you may be able

The surviving spouse had been a

Line 2b. Enter the SSN or EIN, as

to elect to pay part of the estate tax in

U.S. resident at all times after the death

applicable, of the trustee listed on

installments under section 6166.

of the decedent and before becoming a

line 2a.

citizen or

The maximum amount that can be

•

No QDOT tax had been imposed on

paid in installments is that part of the

Part II—Taxable

any distributions prior to the surviving

estate tax that is attributable to the

Distributions From Prior

spouse becoming a citizen.

closely held business. See the separate

Years

Instructions for Form 706, under Line 3.

You should file a final Form

Section 6166 Installment Payments,

706-QDT to notify the IRS that the

Enter here the total of all taxable

“Determine how much of the estate tax

QDOT tax no longer applies for this

distributions that were or should have

may be paid in installments under

reason.

been reported on previously filed Forms

section 6166.” In general, that amount

706-QDT.

If the surviving spouse does not

is the amount of tax that bears the

meet either of the conditions above, the

Part III—Current Taxable

same ratio to the total estate tax that

QDOT tax will still not apply to

Distributions

the value of the closely held business

distributions after he or she becomes a

included in the gross estate bears to

citizen if the surviving spouse elects

Enter here the total amount of corpus

the adjusted gross estate.

both:

distributed during the calendar year or

•

If you check this line to make a

To treat any distributions that were

other period covered by this return and

protective election, you should attach a

subject to QDOT tax as taxable gifts for

before the date of death of the surviving

notice of protective election as

purposes of determining the estate or

spouse. Include as a distribution on this

-4-

Instructions For Form 706-Qdt - U.s. Estate Tax Return For Qualified Domestic Trusts - 2008 Page 4

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