Instructions For Form 706 - 2016 Page 27
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54business, a limited liability company, or
return or on a gift tax return, Form 709.
IF. . .
AND . . .
THEN . . .
stock in a closely-held corporation,
The election is available for transfers
attach a statement that lists the item
made and decedents dying after
the decedent
at the time of
for purposes
number from Schedule F and identifies
December 31, 1981. List such property
made a
the transfer,
of sections
the total effective discount taken (that is,
on Schedule F.
transfer from a
the transfer
2035 and
trust,
was from a
2038, treat the
XX.XX%) on such interest.
If this election was made and the
portion of the
transfer as
surviving spouse retained his or her
trust that was
made directly
Example of effective discount:
interest in the QTIP property at death,
owned by the
by the
grantor under
decedent.
the full value of the QTIP property is
section 676
includible in his or her estate, even
a Pro-rata value of limited liability
(other than by
company (before any discounts)
$100.00
though the qualifying income interest
reason of
terminated at death. It is valued as of
b Minus: 10% discounts for lack of
section
the date of the surviving spouse's death,
control
(10.00)
672(e)) by
or alternate valuation date, if applicable.
reason of a
c Marketable minority interest value
Do not reduce the value by any annual
power in the
(as if freely traded minority interest
exclusion that may have applied to the
grantor,
value)
$90.00
transfer creating the interest.
Any such
d Minus: 15% discount for lack of
transfer within
The value of such property included
marketability
(13.50)
the annual gift
in the surviving spouse's gross estate is
tax exclusion
e Non-marketable minority interest
treated as passing from the surviving
is not
value
$76.50
spouse. It therefore qualifies for the
includible in
the gross
charitable and marital deductions on the
Calculation of effective discount:
estate.
surviving spouse's estate tax return if it
meets the other requirements for those
deductions.
(a minus e) divided by a = effective discount
1. Certain gift taxes (section
($100.00 - $76.50) ÷ $100.00 = 23.50%
For additional details, see
2035(b)). Enter at item A of Schedule G
Regulations section 20.2044-1.
the total value of the gift taxes that were
Note. The amount of discounts are
paid by the decedent or the estate on
Schedule G—Transfers
based on the factors pertaining to a
gifts made by the decedent or the
specific interest and those discounts
During Decedent's Life
decedent's spouse within 3 years of
shown in the example are for
death.
If any assets to which the
demonstration purposes only.
The date of the gift, not the date of
special rule of Regulations
!
If you answered “Yes,” to line 11b for
payment of the gift tax, determines
section 20.2010-2(a)(7)(ii)
any transfer(s) described in (1) through
CAUTION
whether a gift tax paid is included in the
applies are reported on this schedule,
(5) in the Schedule G instructions (and
gross estate under this rule. Therefore,
do not enter any value in the last three
made by the decedent), attach a
you should carefully examine the Forms
columns. See instructions for line 10 of
statement to Schedule G which lists
709 filed by the decedent and the
Part 5–Recapitulation for information on
the item number from that schedule and
decedent's spouse to determine what
how to estimate and report the value of
identifies the total effective discount
part of the total gift taxes reported on
these assets.
taken (that is, XX.XX%) on such
them was attributable to gifts made
Complete Schedule G and file it with
transfer(s).
within 3 years of death.
the return if the decedent made any of
Line 1. If the decedent owned at the
For example, if the decedent died on
the transfers described in (1) through (5)
date of death works of art or items with
July 10, 2016, you should examine gift
later, or if you answered “Yes,” to
collectible value (for example, jewelry,
tax returns for 2016, 2015, 2014, and
question 12 or 13a of Part 4—General
furs, silverware, books, statuary, vases,
2013. However, the gift taxes on the
Information.
oriental rugs, coin or stamp collections),
2013 return that are attributable to gifts
check the “Yes,” box on line 1 and
made on or before July 10, 2013, are
Report the following types of
provide full details. If any item or
not included in the gross estate.
transfers on this schedule:
collection of similar items is valued at
Explain how you figured the
more than $3,000, attach an appraisal
includible gift taxes if the entire gift taxes
by an expert under oath and the
shown on any Form 709 filed for gifts
required statement regarding the
made within 3 years of death are not
appraiser's qualifications (see
included in the gross estate. Also attach
Regulations section 20.2031-6(b)).
copies of any relevant gift tax returns
filed by the decedent's spouse for gifts
Decedent Who Was a
made within 3 years of death.
Surviving Spouse
2. Other transfers within 3 years
If the decedent was a surviving spouse,
of death (section 2035(a)). These
he or she may have received qualified
transfers include only the following:
terminable interest property (QTIP) from
Any transfer by the decedent with
the predeceased spouse for which the
respect to a life insurance policy within 3
marital deduction was elected either on
years of death; or
the predeceased spouse's estate tax
Part Instructions
-27-
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