Instructions For Form 706 - United States Estate (And Generation-Skipping Transfer) Tax Return Page 47
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55Schedule U—Qualified
property interests transferred do not
WORKSHEET (inclusion ratio):
bear the GST tax on the transfers.
Conservation Easement
1 Total estate and gift tax value of
Exclusion
Section 2603(b) requires that unless
all of the property interests that
the governing instrument provides
passed to the trust
. . . . . . .
If at the time of the contribution
otherwise, the GST tax is to be charged
2 Estate taxes, state death taxes,
of the conservation easement,
!
to the property constituting the transfer.
and other charges actually
the value of the easement, the
recovered from the trust
Therefore, you will usually enter all of
. . .
CAUTION
value of the land subject to the
3 GST taxes imposed on direct
the direct skips on Part 2.
easement, or the value of any retained
skips to skip persons other than
development right was different than the
this trust and borne by the
You may enter a transfer on Part 3
property transferred to this
estate tax value, you must complete a
only if the will or trust instrument directs,
trust
separate computation in addition to
. . . . . . . . . . . . . . .
by specific reference, that the GST tax
4 GST taxes actually recovered
completing Schedule U.
is not to be paid from the transferred
from this trust (from Schedule R,
property interests.
Part 2, line 8 or Schedule R-1,
Use a copy of Schedule U as a
line 6)
. . . . . . . . . . . . . .
Part 2, line 3. Enter zero on this line
worksheet for this separate
5 Add lines 2 through 4
. . . . .
unless the will or trust instrument
computation. Complete lines 4 through
6 Subtract line 5 from line 1
. .
specifies that the GST taxes will be paid
14 of the worksheet Schedule U.
7 Add columns C and D of
by property other than that constituting
However, the value you use on lines 4,
line 9
. . . . . . . . . . . . . . .
the transfer (as described above). Enter
5, 7, and 10 of the worksheet is the
8 Divide line 7 by line 6
. . . . .
on line 3 the total of the GST taxes
value for these items as of the date of
9 Trust's inclusion ratio. Subtract
shown on Part 3 and Schedule(s) R-1
the contribution of the easement, not the
line 8 from 1.000
. . . . . . . .
that are payable out of the property
estate tax value. If the date of
interests shown on Part 2, line 1.
contribution and the estate tax values
Line 10. Special-use allocation. For
are the same, you do not need to do a
skip persons who receive an interest in
Part 2, line 6. Do not enter more than
separate computation.
section 2032A special-use property, you
the amount on line 5. Additional
may allocate more GST exemption than
allocations may be made using Part 1.
After completing the worksheet, enter
the direct skip amount to reduce the
the amount from line 14 of the
Part 3, line 3. See the instructions to
additional GST tax that would be due
worksheet on line 14 of Schedule U.
Part 2, line 3 above. Enter only the total
when the interest is later disposed of or
Finish completing Schedule U by
of the GST taxes shown on Schedule(s)
qualified use ceases. See
entering amounts on lines 4, 7, and 15
R-1 that are payable out of the property
Schedule A-1, above, for more details
through 20, following the instructions
interests shown on Part 3, line 1.
about this additional GST tax.
later for those lines. At the top of
Part 3, line 6. See the instructions to
Enter on line 10 the total additional
Schedule U, enter "worksheet
Part 2, line 6 above.
GST exemption available to allocate to
attached." Attach the worksheet to the
all skip persons who received any
How To Complete Schedule R-1
return.
interest in section 2032A property.
Under section 2031(c), you may elect
Filing due date. Enter the due date of
Attach a special-use allocation
to exclude a portion of the value of land
Form 706. You must send the copies of
statement listing each such skip person
that is subject to a qualified
Schedule R-1 to the fiduciary before this
and the amount of the GST exemption
conservation easement. You make the
date.
allocated to that person.
election by filing Schedule U with all of
Line 4. Do not enter more than the
If you do not allocate the GST
the required information and excluding
amount on line 3. If you wish to allocate
exemption, it will be automatically
the applicable value of the land that is
allocated under the deemed allocation
an additional GST exemption, you must
subject to the easement on Part
at death rules. To the extent any amount
use Schedule R, Part 1. Making an entry
5—Recapitulation, at item 12. To elect
is not so allocated, it will be
on line 4 constitutes a Notice of
the exclusion, include on Schedule A, B,
automatically allocated to the earliest
Allocation of the decedent's GST
E, F, G, or H, as appropriate, the
disposition or cessation that is subject
exemption to the trust.
decedent's interest in the land that is
to the GST tax. Under certain
subject to the exclusion. You must make
Line 6. If the property interests entered
the election on a timely filed Form 706,
circumstances, post-death events may
on line 1 will not bear the GST tax,
including extensions.
cause the decedent to be treated as a
multiply line 6 by 40% (0.40).
transferor for purposes of Chapter 13.
The exclusion is the lesser of:
Signature. The executor(s) must sign
Line 10 may be used to set aside an
The applicable percentage of the
Schedule R-1 in the same manner as
exemption amount for such an event.
value of land (after certain reductions)
Form 706. See Signature and
Attach a statement listing each such
subject to a qualified conservation
Verification, above.
event and the amount of exemption
easement, or
allocated to that event.
Filing Schedule R-1. Attach to Form
$500,000.
706 one copy of each Schedule R-1 that
Once made, the election is
you prepare. Send two copies of each
Parts 2 and 3.
irrevocable.
Schedule R-1 to the fiduciary.
Use Part 2 to figure the GST tax on
General Requirements
transfers in which the property interests
transferred are to bear the GST tax on
Qualified Land
the transfers. Use Part 3 to report the
Land may qualify for the exclusion if all
GST tax on transfers in which the
of the following requirements are met.
Part Instructions
-47-
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