Instructions For Form 706 - 2016 Page 47
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54How To Complete Schedule R-1
Attach a special-use allocation
conservation easement. You make the
statement listing each such skip person
election by filing Schedule U with all of
Filing due date. Enter the due date of
and the amount of the GST exemption
the required information and excluding
Form 706. You must send the copies of
allocated to that person.
the applicable value of the land that is
Schedule R-1 to the fiduciary before this
subject to the easement on Part
If you do not allocate the GST
date.
5—Recapitulation, at item 12. To elect
exemption, it will be automatically
the exclusion, include on Schedule A, B,
Line 4. Do not enter more than the
allocated under the deemed allocation
E, F, G, or H, as appropriate, the
amount on line 3. If you wish to allocate
at death rules. To the extent any amount
decedent's interest in the land that is
an additional GST exemption, you must
is not so allocated, it will be
subject to the exclusion. You must make
use Schedule R, Part 1. Making an entry
automatically allocated to the earliest
the election on a timely filed Form 706,
on line 4 constitutes a Notice of
disposition or cessation that is subject
including extensions.
Allocation of the decedent's GST
to the GST tax. Under certain
exemption to the trust.
circumstances, post-death events may
The exclusion is the lesser of:
cause the decedent to be treated as a
The applicable percentage of the
Line 6. If the property interests entered
transferor for purposes of Chapter 13.
value of land (after certain reductions)
on line 1 will not bear the GST tax,
subject to a qualified conservation
Line 10 may be used to set aside an
multiply line 6 by 40% (0.40).
easement or
exemption amount for such an event.
Signature. The executor(s) must sign
$500,000.
Attach a statement listing each such
Schedule R-1 in the same manner as
event and the amount of exemption
Once made, the election is
Form 706. See Signature and
allocated to that event.
irrevocable.
Verification, above.
General Requirements
Filing Schedule R-1. Attach to Form
Parts 2 and 3.
706 one copy of each Schedule R-1 that
Qualified Land
Use Part 2 to figure the GST tax on
you prepare. Send two copies of each
Land may qualify for the exclusion if all
transfers in which the property interests
Schedule R-1 to the fiduciary.
of the following requirements are met:
transferred are to bear the GST tax on
The decedent or a member of the
the transfers. Use Part 3 to report the
Schedule U—Qualified
decedent's family must have owned the
GST tax on transfers in which the
Conservation Easement
land for the 3-year period ending on the
property interests transferred do not
date of the decedent's death.
bear the GST tax on the transfers.
Exclusion
No later than the date the election is
Section 2603(b) requires that unless
If at the time of the contribution
made, a qualified conservation
the governing instrument provides
of the conservation easement,
easement on the land has been made
!
otherwise, the GST tax is to be charged
the value of the easement, the
by the decedent, a member of the
CAUTION
to the property constituting the transfer.
value of the land subject to the
decedent's family, the executor of the
Therefore, you will usually enter all of
easement, or the value of any retained
decedent's estate, or the trustee of a
the direct skips on Part 2.
development right was different than the
trust that holds the land.
estate tax value, you must complete a
The land is located in the United
You may enter a transfer on Part 3
separate computation in addition to
States or one of its possessions.
only if the will or trust instrument directs,
completing Schedule U.
by specific reference, that the GST tax
Member of Family
is not to be paid from the transferred
Use a copy of Schedule U as a
Members of the decedent's family
property interests.
worksheet for this separate
include the decedent's spouse;
computation. Complete lines 4 through
Part 2, Line 3. Enter zero on this line
ancestors; lineal descendants of the
14 of the worksheet Schedule U.
unless the will or trust instrument
decedent, of the decedent's spouse,
However, the value you use on lines 4,
specifies that the GST taxes will be paid
and of the parents of the decedent; and
5, 7, and 10 of the worksheet is the
by property other than that constituting
the spouse of any lineal descendant. A
value for these items as of the date of
the transfer (as described above). Enter
legally adopted child of an individual is
the contribution of the easement, not the
on line 3 the total of the GST taxes
considered a child of the individual by
estate tax value. If the date of
shown on Part 3 and Schedule(s) R-1
blood.
contribution and the estate tax values
that are payable out of the property
are the same, you do not need to do a
interests shown on Part 2, line 1.
Indirect Ownership of Land
separate computation.
Part 2, Line 6. Do not enter more than
The qualified conservation easement
After completing the worksheet, enter
the amount on line 5. Additional
exclusion applies if the land is owned
the amount from line 14 of the
allocations may be made using Part 1.
indirectly through a partnership,
worksheet on line 14 of Schedule U.
Part 3, Line 3. See the instructions to
corporation, or trust, if the decedent
Finish completing Schedule U by
Part 2, line 3 above. Enter only the total
owned (directly or indirectly) at least
entering amounts on lines 4, 7, and 15
of the GST taxes shown on Schedule(s)
30% of the entity. For the rules on
through 20, following the instructions
R-1 that are payable out of the property
determining ownership of an entity, see
later for those lines. At the top of
interests shown on Part 3, line 1.
Ownership rules, later.
Schedule U, enter "worksheet
Part 3, Line 6. See the instructions to
attached." Attach the worksheet to the
Ownership rules. An interest in
Part 2, line 6 above.
return.
property owned, directly or indirectly, by
Under section 2031(c), you may elect
or for a corporation, partnership, or trust
to exclude a portion of the value of land
is considered proportionately owned by
that is subject to a qualified
or for the entity's shareholders, partners,
Part Instructions
-47-
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