Instructions For Form 706-Qdt (Rev. August 2014) (Page 4 of 7) in pdf

property of all trusts listed on

You must file Schedule A-1 of

the notice of election described in

Schedule A, Part III on the date of the

Form 706 and its required

Regulations section 20.6166-1(b).

surviving spouse's death.

attachments with Form

In computing the adjusted gross

CAUTION

706-QDT for this election to be valid.

estate under section 6166(b)(6) for

Note. You may not elect alternate

purposes of determining whether an

The total value of the property valued

valuation for any property reported on

election may be made under section

under section 2032A may not be

Schedule A, Parts I and II.

6166, the net amount of any real estate

decreased from FMV by more than

You may not elect alternate valuation

in a closely held business must be used.

$1,090,000 for decedents dying in

unless the election will decrease both

For definitions and additional

2014 . For later years, the IRS will

the value of the Schedule A, Part III

information, see section 6166 and the

publish the amount in an annual

property, and the net tax due on the

related regulations. Also see the Form

revenue procedure.

return.

706 instructions for Part 3—Elections by

Real property may qualify for the

A designated filer filing for multiple

the Executor and Line 3. Section 6166

section 2032A election if:

trusts must make this election for all of

Installment Payments for a chart on how

1. The real property is located in the

the Schedule A, Part III property in all of

to calculate the amount of tax which

United States,

the trusts, taken as a whole. The

may be paid in installments under

election cannot be made unless the

2. The real property is used for

section 6166.

requirements are met for all of the

farming or in a trade or business,

Bond or lien. The IRS may require that

property.

3. The real property was acquired

an estate furnish a surety bond when

You elect alternate valuation by

from or passed from the surviving

granting the installment payment

checking “Yes” on line 1 and filing Form

spouse to a qualified heir of the

election. In the alternative, the executor

706-QDT. Once made, the election is

surviving spouse,

may consent to elect the special lien

irrevocable.

provisions of section 6324A, in lieu of

4. The real property was owned and

If you elect alternate valuation, you

the bond. The IRS will contact you

used in a qualified manner by the

must value all of the property to which

regarding the specifics of furnishing the

surviving spouse or a member of the

the election applies as of the applicable

bond or electing the special lien. The

surviving spouse's family for 5 of the 8

date as follows.

years before the surviving spouse's

IRS will make this determination on a

death, and

case-by-case basis, and you may be

1. Any property distributed, sold,

asked to provide additional information.

exchanged, or otherwise disposed of by

5. The qualified property is the

any method within 6 months after the

percentage of the surviving spouse's

If you elect the lien provisions,

surviving spouse's death is valued on

gross estate specified in section 2032A.

section 6324A requires that the lien be

the date of distribution, sale, exchange,

placed on property having a value equal

For definitions and additional

or other disposition, whichever occurs

to the total deferred tax plus four years

information, see section 2032A and the

first. Value the property on the date title

of interest. The property must be

related regulations. Also see the Form

passed as a result of the sale,

expected to survive the deferral period,

706 instructions for Part 3—Elections by

exchange, or other disposition.

and does not necessarily have to be

the Executor and the Instructions for

property of the estate. In addition, all of

2. Any property not distributed, sold,

Schedule A-1 within the Form 706 itself.

the persons having an interest in the

exchanged, or otherwise disposed of

designated property must consent to the

Line 3. Installment payments. If the

within the 6-month period is valued on

creation of this lien on the property

gross estate includes an interest in a

the date 6 months after the date of the

pledged.

closely held business, you may be able

surviving spouse's death.

to elect to pay part of the estate tax in

3. Any property that is “affected by

Line 4. Spousal election. If the

installments under section 6166.

mere lapse of time” is valued as of the

surviving spouse has become a U.S.

The maximum amount that can be

date of the surviving spouse's death.

citizen, the QDOT tax will not apply to

paid in installments is that part of the

However, you may change the date of

any distributions made after the

estate tax that is attributable to the

surviving spouse became a citizen as

death value to account for any change

closely held business. See the separate

long as either:

in value that is not due to “mere lapse of

Instructions for Form 706, under Line 3.

time” on the date of its distribution, sale,

The surviving spouse had been a

Section 6166 Installment Payments,

exchange, or other disposition.

U.S. resident at all times after the death

“Determine how much of the estate tax

of the decedent and before becoming a

For additional details, see Part

may be paid in installments under

citizen, or

3—Elections by the Executor in the

section 6166.” In general, that amount is

No QDOT tax had been imposed on

separate Instructions for Form 706.

the amount of tax that bears the same

any distributions prior to the surviving

ratio to the total estate tax that the value

Line 2. Special-use valuation of sec-

spouse becoming a citizen.

of the closely held business included in

tion 2032A. Under section 2032A, you

You should file a final Form 706-QDT

the gross estate bears to the adjusted

may elect to value certain farm and

to notify the IRS that the QDOT tax no

gross estate.

closely held business real property at its

longer applies for this reason.

farm or business use value rather than

If you check this line to make a

If the surviving spouse does not meet

its FMV. You may elect both special-use

protective election, you should attach a

either of the conditions above, the

valuation and alternate valuation. To

notice of protective election as

QDOT tax will still not apply to

elect this valuation, you must check

described in Regulations section

distributions after he or she becomes a

“Yes” on line 2 and complete and attach

20.6166-1(d). If you check this line to

citizen if the surviving spouse elects

Schedule A-1 of Form 706 and its

make a final election, you should attach

both:

required additional statements.

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Instructions For Form 706-Qdt (Rev. August 2014) Page 4

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