Instructions For Form 706 - United States Estate (And Generation-Skipping Transfer) Tax Return Page 27

statement of assets and liabilities for the

the item number from that schedule and

on how to estimate and report the value

valuation date and for the 5 years before

identifies the total effective discount

of these assets.

the valuation date. Also, attach

taken (that is, XX.XX%) on such

Complete Schedule G and file it with

statements of the net earnings for the

transfer(s).

the return if the decedent made any of

same 5 years. Be sure to include the

Line 1. If the decedent owned at the

the transfers described in (1) through (5)

EIN of the entity. You must account for

date of death works of art or items with

later, or if you answered “Yes,” to

goodwill in the valuation. In general,

collectible value (for example, jewelry,

question 12 or 13a of Part 4—General

furnish the same information and follow

furs, silverware, books, statuary, vases,

Information.

the methods used to value close

oriental rugs, coin or stamp collections),

corporations. See the instructions for

Report the following types of

check the “Yes,” box on line 1 and

Schedule B.

transfers on this schedule.

provide full details. If any item or

All partnership interests should be

collection of similar items is valued at

reported on Schedule F unless the

more than $3,000, attach an appraisal

IF. . .

AND . . .

THEN . . .

partnership interest, itself, is jointly

by an expert under oath and the

the decedent

at the time of

for purposes

owned. Jointly owned partnership

required statement regarding the

made a

the transfer,

of sections

interests should be reported on

appraiser's qualifications (see

transfer from a

the transfer

2035 and

Schedule E.

Regulations section 20.2031-6(b)).

trust,

was from a

2038, treat the

If real estate is owned by a sole

portion of the

transfer as

Decedent Who Was a

proprietorship, it should be reported on

trust that was

made directly

Surviving Spouse

Schedule F and not on Schedule A.

owned by the

by the

grantor under

decedent. Any

Describe the real estate with the same

If the decedent was a surviving spouse,

section 676

such transfer

detail required for Schedule A.

he or she may have received qualified

(other than by

within the

terminable interest property (QTIP) from

Valuation discounts. If you

reason of

annual gift tax

the predeceased spouse for which the

section

exclusion is

answered “Yes,” to Part 4—General

marital deduction was elected either on

672(e)) by

not includible

Information, line 11b for any interest in a

reason of a

in the gross

the predeceased spouse's estate tax

partnership, an unincorporated

power in the

estate.

return or on a gift tax return, Form 709.

business, a limited liability company, or

grantor,

The election is available for transfers

stock in a closely held corporation,

made and decedents dying after

attach a statement that lists the item

December 31, 1981. List such property

number from Schedule F and identifies

on Schedule F.

the total effective discount taken (that is,

1. Certain gift taxes (section

XX.XX%) on such interest.

2035(b)). Enter at item A of Schedule G

If this election was made and the

the total value of the gift taxes that were

surviving spouse retained his or her

Example of effective discount:

paid by the decedent or the estate on

interest in the QTIP property at death,

gifts made by the decedent or the

the full value of the QTIP property is

decedent's spouse within 3 years of

includible in his or her estate, even

a Pro-rata value of limited liability

death.

though the qualifying income interest

company (before any discounts)

$100.00

terminated at death. It is valued as of

The date of the gift, not the date of

b Minus: 10% discounts for lack of

the date of the surviving spouse's death,

payment of the gift tax, determines

control

(10.00)

or alternate valuation date, if applicable.

whether a gift tax paid is included in the

c Marketable minority interest value

Do not reduce the value by any annual

gross estate under this rule. Therefore,

(as if freely traded minority interest

exclusion that may have applied to the

you should carefully examine the Forms

value)

$90.00

transfer creating the interest.

709 filed by the decedent and the

d Minus: 15% discount for lack of

decedent's spouse to determine what

The value of such property included

marketability

(13.50)

part of the total gift taxes reported on

in the surviving spouse's gross estate is

e Non-marketable minority interest

them was attributable to gifts made

treated as passing from the surviving

value

$76.50

within 3 years of death.

spouse. It therefore qualifies for the

For example, if the decedent died on

charitable and marital deductions on the

Calculation of effective discount:

July 10, 2017, you should examine gift

surviving spouse's estate tax return if it

tax returns for 2017, 2016, 2015, and

meets the other requirements for those

2014. However, the gift taxes on the

deductions.

(a minus e) divided by a = effective discount

2014 return that are attributable to gifts

($100.00 - $76.50) ÷ $100.00 = 23.50%

For additional details, see

made on or before July 10, 2014, are

Regulations section 20.2044-1.

not included in the gross estate.

Note. The amount of discounts are

Explain how you figured the

Schedule G—Transfers

based on the factors pertaining to a

includible gift taxes if the entire gift taxes

specific interest and those discounts

During Decedent's Life

shown on any Form 709 filed for gifts

shown in the example are for

made within 3 years of death are not

demonstration purposes only.

If any assets to which the

included in the gross estate. Also attach

special rule of Regulations

copies of any relevant gift tax returns

If you answered “Yes,” to line 11b for

section 20.2010-2(a)(7)(ii)

filed by the decedent's spouse for gifts

CAUTION

any transfer(s) described in (1) through

applies are reported on this schedule,

made within 3 years of death.

(5) in the Schedule G instructions (and

do not enter any value in the last three

made by the decedent), attach a

columns. See instructions for line 10 of

statement to Schedule G which lists

Part 5—Recapitulation for information

Part Instructions

-27-

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