Instructions For Form 706 - 2016 Page 11
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54Any property, interest, or estate that
items should be entered in the
additional statements. You must file
is affected by mere lapse of time is
“Description” column of each schedule.
Schedule A-1 and its required
valued as of the date of decedent's
Briefly explain the status or disposition
attachments with Form 706 for this
death or on the date of its distribution,
governing the alternate valuation date,
election to be valid. You may make the
sale, exchange, or other disposition,
such as: “Not disposed of within 6
election on a late-filed return so long as
whichever occurs first. However, you
months following death, ”“Distributed,”
it is the first return filed.
may change the date of death value to
“Sold,” “Bond paid on maturity,” etc. In
The total value of the property valued
account for any change in value that is
this same column, describe each item of
under section 2032A may not be
not due to a “mere lapse of time” on the
principal and includible income);
decreased from FMV by more than
date of its distribution, sale, exchange,
3. The date of death value, entered
$1,110,000 for decedents dying in
or other disposition.
in the appropriate value column with
2016.
items of principal and includible income
The property included in the alternate
Real property may qualify for the
shown separately; and
valuation and valued as of 6 months
section 2032A election if:
after the date of the decedent's death,
4. The alternate value, entered in
1. The decedent was a U.S. citizen
or as of some intermediate date (as
the appropriate value column with items
or resident at the time of death;
described above) is the property
of principal and includible income
2. The real property is located in the
included in the gross estate on the date
shown separately. (In the case of any
United States;
of the decedent's death. Therefore, you
interest or estate, the value of which is
must first determine what property was
3. At the decedent's death, the real
affected by lapse of time, such as
part of the gross estate at the
property was used by the decedent or a
patents, leaseholds, estates for the life
decedent's death.
family member for farming or in a trade
of another, or remainder interests, the
or business, or was rented for such use
value shown under the heading
Interest. Interest accrued to the date of
by either the surviving spouse or a lineal
“Alternate value” must be the adjusted
the decedent's death on bonds, notes,
descendant of the decedent to a family
value; for example, the value as of the
and other interest-bearing obligations is
member on a net cash basis;
date of death with an adjustment
property of the gross estate on the date
reflecting any difference in its value as
4. The real property was acquired
of death and is included in the alternate
of the later date not due to lapse of
from or passed from the decedent to a
valuation.
time.)
qualified heir of the decedent;
Rent. Rent accrued to the date of the
5. The real property was owned and
decedent's death on leased real or
Note. If any property on Schedules A
used in a qualified manner by the
personal property is property of the
through I is being valued pursuant to the
decedent or a member of the
gross estate on the date of death and is
special rule of Regulations section
decedent's family during 5 of the 8 years
included in the alternate valuation.
20.2010-2(a)(7)(ii), values for those
before the decedent's death;
assets are not required to be reported
Dividends. Outstanding dividends that
6. There was material participation
on the Schedule. See Part
were declared to stockholders of record
by the decedent or a member of the
5—Recapitulation, line 10.
on or before the date of the decedent's
decedent's family during 5 of the 8 years
Distributions, sales, exchanges, and
death are considered property of the
before the decedent's death; and
other dispositions of the property within
gross estate on the date of death, and
7. The property meets the following
the 6-month period after the decedent's
are included in the alternate valuation.
percentage requirements:
death must be supported by evidence. If
Ordinary dividends declared to
the court issued an order of distribution
a. At least 50% of the adjusted
stockholders of record after the date of
during that period, you must submit a
value of the gross estate must consist of
the decedent's death are not included in
certified copy of the order as part of the
the adjusted value of real or personal
the gross estate on the date of death
evidence. The IRS may require you to
property that was being used as a farm
and are not eligible for alternate
submit additional evidence, if
or in a closely-held business and that
valuation. However, if dividends are
necessary.
was acquired from, or passed from, the
declared to stockholders of record after
the date of the decedent's death so that
decedent to a qualified heir of the
If the alternate valuation method is
the shares of stock at the later valuation
decedent, and
used, the values of life estates,
date do not reasonably represent the
b. At least 25% of the adjusted
remainders, and similar interests are
same property at the date of the
value of the gross estate must consist of
figured using the age of the recipient on
decedent's death, include those
the adjusted value of qualified farm or
the date of the decedent's death and the
dividends (except dividends paid from
closely-held business real property.
value of the property on the alternate
earnings of the corporation after the
valuation date.
For this purpose, adjusted value is
date of the decedent's death) in the
Line 2. Special-Use Valuation of
the value of property determined without
alternate valuation.
regard to its special-use value. The
Section 2032A
On Schedules A through I, you must
value is reduced for unpaid mortgages
show:
In general. Under section 2032A, you
on the property or any indebtedness
1. What property is included in the
may elect to value certain farm and
against the property, if the full value of
gross estate on the date of the
closely held business real property at its
the decedent's interest in the property
decedent's death;
farm or business use value rather than
(not reduced by such mortgage or
its FMV. Both special-use valuation and
indebtedness) is included in the value of
2. What property was distributed,
alternate valuation may be elected.
the gross estate. The adjusted value of
sold, exchanged, or otherwise disposed
the qualified real and personal property
of within the 6-month period after the
To elect special-use valuation, check
used in different businesses may be
decedent's death, and the dates of
“Yes,” on line 2 and complete and
these distributions, etc. (These two
attach Schedule A-1 and its required
Part Instructions
-11-
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