Instructions For Form 706 - United States Estate (And Generation-Skipping Transfer) Tax Return Page 14
ADVERTISEMENT
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55If joint or undivided interests (that is,
due date of the return. See the
estate (the gross estate less expenses,
interests as joint tenants or tenants in
instructions for Form 4768.
indebtedness, taxes, and losses –
common) in the same property are
Schedules J, K, and L of Form 706 (do
received from a decedent by qualified
not include any portion of the state
If the estate qualifies for special-use
heirs, an election for one heir's joint or
death tax deduction)).
valuation based on the values as finally
undivided interest need not include any
determined, you must file an amended
Interests in two or more closely held
other heir's interest in the same property
Form 706 (with a complete section
businesses are treated as an interest in
if the electing heir's interest plus other
2032A election) within 60 days after the
a single business if at least 20% of the
property to be specially valued satisfies
date of this determination. Prepare the
total value of each business is included
the requirements of section 2032A(b)(1)
amended return using special-use
in the gross estate. For this purpose,
(B).
values under the rules of section 2032A,
include any interest held by the
complete Schedule A-1, and attach all
surviving spouse that represents the
If successive interests (that is, life
of the required statements.
surviving spouse's interest in a business
estates and remainder interests) are
held jointly with the decedent as
created by a decedent in otherwise
community property or as joint tenants,
Additional information
qualified property, an election under
tenants by the entirety, or tenants in
For definitions and additional
section 2032A is available only for that
common.
information, see section 2032A and the
property (or part) in which qualified heirs
related regulations.
Value. The value used for meeting
of the decedent receive all of the
the percentage requirements is the
successive interests, and such an
Line 3. Section 6166 Installment
same value used for determining the
election must include the interests of all
Payments
gross estate. Therefore, if the estate is
of those heirs.
If the gross estate includes an interest in
valued under alternate valuation or
a closely held business, you may be
special-use valuation, you must use
For example, if a surviving spouse
able to elect to pay part of the estate tax
those values to meet the percentage
receives a life estate in otherwise
in installments under section 6166.
requirements.
qualified property and the spouse's
brother receives a remainder interest in
Transfers before death. Generally,
The maximum amount that can be
fee, no part of the property may be
gifts made before death are not
paid in installments is that part of the
valued under a section 2032A election.
included in the gross estate. However,
estate tax that is attributable to the
the estate must meet the 35%
closely held business; see Determine
Where successive interests in
requirement by both including in and
how much of the estate tax may be paid
specially valued property are created,
excluding from the gross estate any gifts
in installments under section 6166, later.
remainder interests are treated as being
made by the decedent in the 3-year
In general, that amount is the amount of
received by qualified heirs only if the
period ending on the date of death.
tax that bears the same ratio to the total
remainder interests are not contingent
estate tax that the value of the closely
Passive assets. In determining the
on surviving a nonfamily member or are
held business included in the gross
value of a closely held business and
not subject to divestment in favor of a
estate bears to the adjusted gross
whether the 35% requirement is met, do
nonfamily member.
estate.
not include the value of any passive
assets held by the business. A passive
Bond or lien. The IRS may require that
Protective Election
asset is any asset not used in carrying
an estate furnish a surety bond when
You may make a protective election to
on a trade or business. Any asset used
granting the installment payment
specially value qualified real property.
in a qualifying lending and financing
election. In the alternative, the executor
Under this election, whether or not you
business is treated as an asset used in
may consent to elect the special lien
may ultimately use special-use valuation
carrying on a trade or business; see
provisions of section 6324A, in lieu of
depends upon final values (as shown on
section 6166(b)(10) for details. Stock in
the bond. The IRS will contact you
the return determined following
another corporation is a passive asset
regarding the specifics of furnishing the
examination of the return) meeting the
unless the stock is treated as held by
bond or electing the special lien. The
requirements of section 2032A.
the decedent because of the election to
IRS will make this determination on a
treat holding company stock as
case-by-case basis, and you may be
To make a protective election, check
business company stock; see Holding
asked to provide additional information.
“Yes,” on line 2 and complete
company stock, later.
If you elect the lien provisions,
Schedule A-1 according to the
If a corporation owns at least 20% in
section 6324A requires that the lien be
instructions for Protective Election.
value of the voting stock of another
placed on property having a value equal
corporation, or the other corporation
to the total deferred tax plus 4 years of
If you make a protective election,
had no more than 45 shareholders and
interest. The property must be expected
complete the initial Form 706 by valuing
at least 80% of the value of the assets of
to survive the deferral period, and does
all property at its FMV. Do not use
each corporation is attributable to
not necessarily have to be property of
special-use valuation. Usually, this will
assets used in carrying on a trade or
the estate. In addition, all people with an
result in higher estate and GST tax
business, then these corporations will
interest in the designated property must
liabilities than will be ultimately
be treated as a single corporation, and
consent to the creation of this lien.
determined if special-use valuation is
the stock will not be treated as a passive
allowed. The protective election does
Percentage requirements. To qualify
asset. Stock held in the other
not extend the time to pay the taxes
for installment payments, the value of
corporation is not taken into account in
shown on the return. If you wish to
the interest in the closely held business
determining the 80% requirement.
extend the time to pay the taxes, file
that is included in the gross estate must
Form 4768 in adequate time before the
be more than 35% of the adjusted gross
-14-
Part Instructions
ADVERTISEMENT
0 votes
Related Articles
Related forms
Instructions For Form 706 - United States Estate (and Generation-skipping Transfer) Tax Return - 2011
Financial
Instructions For Form 706 - United States Estate (and Generation-skipping Transfer) Tax Return - 2008
Financial
Instructions For Form 706 - United States Estate (and Generation-skipping Transfer) Tax Return - 2005
Financial
Instructions Draft For Form 706-na - United States Estate (and Generation-skipping Transfer) Tax Return Estate Of Nonresident Not A Citizen Of The United States
Financial
Instructions For Form 706-na - United States Estate (and Generation-skipping Transfer) Tax Return - 1999
Financial
Instructions For Form 706-na - United States Estate (and Generation-skipping Transfer) Tax Return - 2007
Financial
Instructions For Form 706-na - United States Estate (and Generation-skipping Transfer) Tax Return - Internal Revenue Service - 2006
Financial
Instructions For Form 706-na - United States Estate (and Generation-skipping Transfer) Tax Return - Internal Revenue Service - 2008
Financial
Related Categories
Parent category: Financial