Instructions For Form 706 - 2016 Page 49
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54For an example of an agreement
will be claimed for the contribution by
Note. Filing a section 2053 protective
containing some of the same terms, see
any person or entity.
claim for refund on Schedule PC will not
Part 3 of Schedule A-1 (Form 706).
suspend the IRS’ review and
examination of Form 706, nor will it
Line 16
delay the issuance of a closing letter for
Line 10
Reduce the value of the land by the
the estate.
Enter the total value of the qualified
amount of any acquisition indebtedness
Initial Notice of Claim
conservation easements on which the
on the land at the date of the decedent's
exclusion is based. This could include
death. Acquisition indebtedness
The first Schedule PC to be filed is the
easements granted by the decedent (or
includes the unpaid amount of:
initial notice of protective claim for
someone other than the decedent) prior
Any indebtedness incurred by the
refund. The estate will receive a written
to the decedent's death, easements
donor in acquiring the property;
acknowledgment of receipt of the claim
granted by the decedent that take effect
Any indebtedness incurred before the
from the IRS. If the acknowledgment is
at death, easements granted by the
acquisition if the indebtedness would
not received within 180 days of filing the
executor after the decedent's death, or
not have been incurred but for the
protective claim for refund on
some combination of these.
acquisition;
Schedule PC, the fiduciary should
Any indebtedness incurred after the
contact the IRS at (866) 699-4083 to
Use the value of the easement
acquisition if the indebtedness would
inquire about the receipt and processing
as of the date of death, even if
!
not have been incurred but for the
of the claim. A certified mail receipt or
the easement was granted prior
acquisition and the incurrence of the
CAUTION
other evidence of delivery is not
to the date of death. But, if the value of
indebtedness was reasonably
sufficient to confirm receipt and
the easement was different at the time
foreseeable at the time of the
processing of the protective claim for
the easement was contributed than at
acquisition; and
refund.
the date of death, see the Caution at the
The extension, renewal, or
beginning of the Schedule U
refinancing of acquisition indebtedness.
Note. The written acknowledgment of
Instructions.
receipt does not constitute a
Schedule PC—Protective
determination that all requirements for a
Claim for Refund
Explain how this value was
valid protective claim for refund have
determined and attach copies of any
been met.
A protective claim for refund preserves
appraisals. Normally, the appropriate
In general, the claim will not be
the estate’s right to a refund of tax paid
way to value a conservation easement
subject to substantive review until the
on any amount included in the gross
is to determine the FMV of the land both
amount of the claim has been
estate which would be deductible under
before and after the granting of the
established. However, a claim can be
section 2053 but has not been paid or
easement, with the difference being the
disallowed at the time of filing. For
otherwise will not meet the requirements
value of the easement.
example, the claim for refund will be
of section 2053 until after the limitations
period for filing the claim has passed.
rejected if:
Reduce the reported value of the
The claim was not timely filed;
See section 6511(a).
easement by the amount of any
The claim was not filed by the
Only use Schedule PC for
consideration received for the
fiduciary or other person with authority
section 2053 protective claims
easement. If the date of death value of
!
to act on behalf of the estate;
for refund being filed with Form
the easement is different from the value
The acknowledgment of the penalties
CAUTION
706. If the initial notice of the protective
at the time the consideration was
of perjury statement (on page 1 of Form
claim for refund is being submitted after
received, reduce the value of the
706) was not signed; or,
Form 706 has been filed, use Form 843,
easement by the same proportion that
The claim is not adequately
Claim for Refund and Request for
the consideration received bears to the
described.
Abatement, to file the claim.
value of the easement at the time it was
If the IRS does not raise such a
granted. For example, assume the value
Schedule PC may be used to file a
defect when the claim is filed, it will not
of the easement at the time it was
section 2053 protective claim for refund
be precluded from doing so in the later
granted was $100,000 and $10,000 was
by estates of decedents who died after
substantive review.
received in consideration for the
December 31, 2011. It will also be used
easement. If the easement was worth
The estate may be given an
to inform the IRS when the contingency
$150,000 at the date of death, you must
opportunity to cure any defects in the
leading to the protective claim for refund
reduce the value of the easement by
initial notice by filing a corrected and
is resolved and the refund due the
$15,000 ($10,000/$100,000 ×
signed protective claim for refund before
estate is finalized. The estate must
$150,000) and report the value of the
the expiration of the limitations period in
indicate whether the Schedule PC being
easement on line 10 as $135,000.
section 6511(a) or within 45 days of
filed is the initial notice of protective
notice of the defect, whichever is later.
claim for refund, notice of partial claim
Line 15
Related Ancillary Expenses
for refund, or notice of the final
If a charitable contribution deduction for
resolution of the claim for refund.
If a Section 2053 protective claim for
this land has been taken on
Because each separate claim or
refund has been adequately identified
Schedule O, enter the amount of the
expense requires a separate
on Schedule PC, the IRS will presume
deduction here. If the easement was
Schedule PC, more than one
that the claim includes certain expenses
granted after the decedent's death, a
Schedule PC may be included with
related to resolving, defending or
contribution deduction may be taken on
Form 706, if applicable. Two copies of
satisfying the claim. These ancillary
Schedule O, if it otherwise qualifies, as
each Schedule PC must be included
expenses may include attorneys’ fees,
long as no income tax deduction was or
with Form 706.
court costs, appraisal fees, and
Part Instructions
-49-
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