You must file the first four pages of Form and all required schedules.

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File Schedules A through I, as appropriate, to support the entries in items 1 through 9 of Part 5—Recapitulation. Make sure to complete the required pages and schedules in their entirety.

Returns filed without entries in each field will not be processed. Enter the total of all attachments, Continuation Schedules, etc. Enter the social security number SSN assigned specifically to the decedent. You cannot use the SSN assigned to the decedent's spouse. If the decedent did not have an SSN, the executor should obtain one for the decedent by filing Form SS-5, with a local Social Security Administration office.

If there is more than one executor, enter the name of the executor to be contacted by the IRS and see line 6d. Check here if there is more than one executor. On an attached statement, provide the names, addresses, telephone numbers, and SSNs of any executor other than the one named on line 6a. If the estate is estimating the value of assets under the special rule of Regulations section In general, the estate tax is figured by applying the unified rates shown in Table A to the total of transfers both during life and at death, and then subtracting the gift taxes, as refigured based on the date of death rates.

See Worksheet TG, Line 4 Worksheet, and Line 7 Worksheet. You may take a deduction on line 3b for estate, inheritance, legacy, or succession taxes paid on any property included in the gross estate as the result of the decedent's death to any state or the District of Columbia. You may claim an anticipated amount of deduction and figure the federal estate tax on the return before the state death taxes have been paid.

However, the deduction cannot be finally allowed unless you pay the state death taxes and claim the deduction within 4 years after the return is filed, or later see section b if:. You file a claim for refund or credit of an overpayment which extends the deadline for claiming the deduction. File the evidence requested above with the return, if possible. Otherwise, send it as soon as possible after the return is filed. To figure the tentative tax on the amount on line 5, use Table A—Unified Rate Schedule, above, and put the result on this line.

Three worksheets are provided to help you figure the entries for these lines. Worksheet TG—Taxable Gifts Reconciliation allows you to reconcile the decedent's lifetime taxable gifts to figure totals that will be used for the Line 4 Worksheet and the Line 7 Worksheet. You must have all of the decedent's gift tax returns Forms before completing Worksheet TG—Taxable Gifts Reconciliation.

The amounts needed for Worksheet TG can usually be found on the filed returns that were subject to tax. However, if any of the returns were audited by the IRS, use the amounts that were finally determined as a result of the audits. In addition, you must make a reasonable effort to discover any gifts in excess of the annual exclusion made by the decedent or on behalf of the decedent under a power of attorney for which no Forms were filed.

Include the value of such gifts in column b of Worksheet TG. The applicable credit amount is allowable credit against estate and gift taxes. It is calculated by determining the tentative tax on the applicable exclusion amount , which is the amount that can be transferred before an estate tax liability will be incurred.

The basic exclusion amount. The deceased spousal unused exclusion amount DSUE. If the decedent had a spouse who died after December 31, , whose estate did not use all of its applicable exclusion against gift or estate tax liability, a DSUE amount may be available for use by the decedent's estate. If the predeceased spouse died in , the DSUE amount was calculated and attached to his or her Form If the predeceased spouse died in or after, this amount is found in Part 6, Section C of the Form filed by the estate of the decedent's predeceased spouse.

The amount to be entered on line 9b is calculated in Part 6, Section D. If the decedent made gifts including gifts made by the decedent's spouse and treated as made by the decedent by reason of gift splitting after September 8, , and before January 1, , for which the decedent claimed a specific exemption, the applicable credit amount on this estate tax return must be reduced. If the decedent did not make any gifts between September 8, , and January 1, , or if the decedent made gifts during that period but did not claim the specific exemption, enter zero.

Generally, line 15 is used to report the total of credit for foreign death taxes line 13 and credit for tax on prior transfers line However, you may also use line 15 to report credit taken for federal gift taxes imposed by Chapter 12 of the Code, and the corresponding provisions of prior laws, on certain transfers the decedent made before January 1, , that are included in the gross estate.

The credit cannot be more than the amount figured by the following formula:. For more information, see the regulations under section This computation may be made using Form Attach a copy of a completed Form or the computation of the credit.

Also, attach all available copies of Forms filed by the decedent to help verify the amounts entered on lines 4 and 7, and the amount of credit taken on line 15 for pre federal gift taxes. The election to allow the decedent's surviving spouse to use the decedent's unused exclusion amount is made by filing a timely and complete Form See instructions for Part 6—Portability of Deceased Spousal Unused Exclusion , later, and sections c 4 and c 5.

See the example showing the use of Schedule B where the alternate valuation is adopted. Unless you elect at the time the return is filed to adopt alternate valuation as authorized by section , value all property included in the gross estate as of the date of the decedent's death.

Alternate valuation cannot be applied to only a part of the property. You may not elect alternate valuation unless the election will decrease both the value of the gross estate and the sum reduced by allowable credits of the estate and GST taxes payable by reason of the decedent's death for the property includible in the decedent's gross estate. Once made, the election may not be revoked. The election may be made on a late-filed Form provided it is not filed later than 1 year after the due date including extensions actually granted.

Relief under Regulations sections If alternate valuation is elected, value the property included in the gross estate as of the following dates as applicable:. Any property distributed, sold, exchanged, or otherwise disposed of or separated or passed from the gross estate by any method within 6 months after the decedent's death is valued on the date of distribution, sale, exchange, or other disposition.

Value this property on the date it ceases to be a part of the gross estate; for example, on the date the title passes as the result of its sale, exchange, or other disposition.

Any property not distributed, sold, exchanged, or otherwise disposed of within the 6-month period is valued as of 6 months after the date of the decedent's death.

Any property, interest, or estate that is affected by mere lapse of time is valued as of the date of decedent's death or on the date of its distribution, sale, exchange, or other disposition, whichever occurs first. The property included in the alternate valuation and valued as of 6 months after the date of the decedent's death, or as of some intermediate date as described above is the property included in the gross estate on the date of the decedent's death.

Therefore, you must first determine what property was part of the gross estate at the decedent's death. What property was distributed, sold, exchanged, or otherwise disposed of within the 6-month period after the decedent's death, and the dates of these distributions, etc. Briefly explain the status or disposition governing the alternate valuation date, such as: In this same column, describe each item of principal and includible income ;.

The date of death value, entered in the appropriate value column with items of principal and includible income shown separately; and. The alternate value, entered in the appropriate value column with items of principal and includible income shown separately.

If any property on Schedules A through I is being valued pursuant to the special rule of Regulations section See Part 5—Recapitulation, line Distributions, sales, exchanges, and other dispositions of the property within the 6-month period after the decedent's death must be supported by evidence.

If the court issued an order of distribution during that period, you must submit a certified copy of the order as part of the evidence. The IRS may require you to submit additional evidence, if necessary. If the alternate valuation method is used, the values of life estates, remainders, and similar interests are figured using the age of the recipient on the date of the decedent's death and the value of the property on the alternate valuation date.

At the decedent's death, the real property was used by the decedent or a family member for farming or in a trade or business, or was rented for such use by either the surviving spouse or a lineal descendant of the decedent to a family member on a net cash basis;.

The real property was acquired from or passed from the decedent to a qualified heir of the decedent;. The real property was owned and used in a qualified manner by the decedent or a member of the decedent's family during 5 of the 8 years before the decedent's death;.

There was material participation by the decedent or a member of the decedent's family during 5 of the 8 years before the decedent's death; and.

The property is considered to have been acquired from or to have passed from the decedent under section b relating to basis of property acquired from a decedent ;. The property is acquired by any person from a trust, to the extent the property is includible in the gross estate.

The lineal descendant child, stepchild, grandchild, etc. To elect special-use valuation, either the decedent or a member of his or her family must have materially participated in the operation of the farm or other business for at least 5 of the 8 years ending on the date of the decedent's death. The existence of material participation is a factual determination. Passively collecting rents, salaries, draws, dividends, or other income from the farm or other business is not sufficient for material participation, nor is merely advancing capital and reviewing a crop plan and financial reports each season or business year.

In determining whether the required participation has occurred, disregard brief periods that is, 30 days or less during which there was no material participation, as long as such periods were both preceded and followed by substantial periods more than days during which there was uninterrupted material participation.

The primary method of valuing special-use property that is used for farming purposes is the annual gross cash rental method. If comparable gross cash rentals are not available, you can substitute comparable average annual net share rentals. If neither of these is available, or if you so elect, you can use the method for valuing real property in a closely-held business. Subtract the average annual state and local real estate taxes on actual tracts of comparable real property from the average annual gross cash rental for that same comparable property and.

Divide the result in 1 by the average annual effective interest rate charged for all new Federal Land Bank loans.

See Effective interest rate, later. Generally, gross cash rental is the total amount of cash received in a calendar year for the use of actual tracts of comparable farm real property in the same locality as the property being specially valued.

You may not use:. The rental must have resulted from an arm's-length transaction and the amount of rent may not be reduced by the amount of any expenses or liabilities associated with the farm operation or the lease. Comparable property must be situated in the same locality as the qualified real property as determined by generally accepted real property valuation rules. The determination of comparability is based on a number of factors, none of which carries more weight than the others.

It is often necessary to value land in segments where there are different uses or land characteristics included in the specially valued land. Whether the property as a whole is unified or segmented. If segmented, the availability of the means necessary for movement among the different sections;. Number, types, and conditions of all buildings and other fixed improvements located on the properties and their location as it affects efficient management, use, and value of the property; and.

Availability and type of transportation facilities in terms of costs and of proximity of the properties to local markets. You must specifically identify on the return the property being used as comparable property.

Use the type of descriptions used to list real property on Schedule A. See Tables 1 and 2 of Rev. You may use average annual net share rental from comparable land only if there is no comparable land from which average annual gross cash rental can be determined. Net share rental is the difference between the gross value of produce received by the lessor from the comparable land and the cash operating expenses other than real estate taxes of growing the produce that, under the lease, are paid by the lessor.

The production of the produce must be the business purpose of the farming operation. For this purpose, produce includes livestock. The gross value of the produce is generally the gross amount received if the produce was disposed of in an arm's-length transaction within the period established by the Department of Agriculture for its price support program. Otherwise, the value is the weighted average price for which the produce sold on the closest national or regional commodities market.

The value is figured for the date or dates on which the lessor received or constructively received the produce. The capitalization of income that the property can be expected to yield for farming or for closely-held business purposes over a reasonable period of time with prudent management and traditional cropping patterns for the area, taking into account soil capacity, terrain configuration, and similar factors;.

The capitalization of the fair rental value of the land for farming or for closely-held business purposes;. The assessed land values in a state that provides a differential or use value assessment law for farmland or closely-held business;. Comparable sales of other farm or closely-held business land in the same geographical area far enough removed from a metropolitan or resort area so that nonagricultural use is not a significant factor in the sales price; and. An election under section A need not include all the property in an estate that is eligible for special-use valuation, but sufficient property to satisfy the threshold requirements of section A b 1 B must be specially valued under the election.

If joint or undivided interests that is, interests as joint tenants or tenants in common in the same property are received from a decedent by qualified heirs, an election for one heir's joint or undivided interest need not include any other heir's interest in the same property if the electing heir's interest plus other property to be specially valued satisfies the requirements of section A b 1 B.

If successive interests that is, life estates and remainder interests are created by a decedent in otherwise qualified property, an election under section A is available only for that property or part in which qualified heirs of the decedent receive all of the successive interests, and such an election must include the interests of all of those heirs. For example, if a surviving spouse receives a life estate in otherwise qualified property and the spouse's brother receives a remainder interest in fee, no part of the property may be valued under a section A election.

Where successive interests in specially valued property are created, remainder interests are treated as being received by qualified heirs only if the remainder interests are not contingent on surviving a nonfamily member or are not subject to divestment in favor of a nonfamily member.

You may make a protective election to specially value qualified real property. Under this election, whether or not you may ultimately use special-use valuation depends upon final values as shown on the return determined following examination of the return meeting the requirements of section A. If you make a protective election, complete the initial Form by valuing all property at its FMV. Do not use special-use valuation. Usually, this will result in higher estate and GST tax liabilities than will be ultimately determined if special-use valuation is allowed.

The protective election does not extend the time to pay the taxes shown on the return. If you wish to extend the time to pay the taxes, file Form in adequate time before the due date of the return.

See the instructions for Form If the estate qualifies for special-use valuation based on the values as finally determined, you must file an amended Form with a complete section A election within 60 days after the date of this determination. Prepare the amended return using special-use values under the rules of section A, complete Schedule A-1, and attach all of the required statements.

If the gross estate includes an interest in a closely-held business, you may be able to elect to pay part of the estate tax in installments under section The maximum amount that can be paid in installments is that part of the estate tax that is attributable to the closely-held business; see Determine how much of the estate tax may be paid in installments under section , later.

In general, that amount is the amount of tax that bears the same ratio to the total estate tax that the value of the closely-held business included in the gross estate bears to the adjusted gross estate.

The value used for meeting the percentage requirements is the same value used for determining the gross estate. Therefore, if the estate is valued under alternate valuation or special-use valuation, you must use those values to meet the percentage requirements.

Generally, gifts made before death are not included in the gross estate. A passive asset is any asset not used in carrying on a trade or business. Any asset used in a qualifying lending and financing business is treated as an asset used in carrying on a trade or business; see section b 10 for details.

Stock in another corporation is a passive asset unless the stock is treated as held by the decedent because of the election to treat holding company stock as business company stock; see Holding company stock , later. The executor may elect to treat as business company stock the portion of any holding company stock that represents direct ownership or indirect ownership through one or more other holding companies in a business company. A holding company is a corporation holding stock in another corporation.

A business company is a corporation carrying on a trade or business. In general, this election applies only to stock that is not readily tradable. However, the election can be made if the business company stock is readily tradable, as long as all of the stock of each holding company is not readily tradable. If the executor makes this election, the first installment payment is due when the estate tax return is filed.

The 5-year deferral for payment of the tax, as discussed later under Time for payment, does not apply. Also, if the business company stock is readily tradable, as explained above, the tax must be paid in five installments. The amount of the estate tax that is attributable to the closely-held business and that is payable in installments. This rate is based on the federal short-term rate and is announced quarterly by the IRS in the Internal Revenue Bulletin.

The interest paid on installment payments is not deductible as an administrative expense of the estate. The properties shown on the estate tax return that are the closely-held business interest identified by schedule and item number ; and. The facts that formed the basis for the executor's conclusion that the estate qualifies for payment of the estate tax in installments.

Completing the authorization will authorize one attorney, accountant, or enrolled agent to represent the estate and receive confidential tax information, but will not authorize the representative to enter into closing agreements for the estate. If you would like to authorize your representative to enter into agreements or perform other designated acts on behalf of the estate, you must file Form with Form If you intend for the representative to represent the estate before the IRS, he or she must complete and sign this authorization.

Enter the marital status of the decedent at the time of death by checking the appropriate box on line 3a. If the decedent was married at the time of death, complete line 4. If the decedent had one or more prior marriages, complete line 3b by providing the name and SSN of each former spouse, the date s the marriage ended, and specify whether the marriage ended by annulment, divorce decree, or death of spouse.

If the prior marriage ended in death and the predeceased spouse died after December 31, , complete Part 6 — Portability of Deceased Spousal Unused Exclusion, Section D if the estate of the predeceased spouse elected to allow the decedent to use any unused exclusion amount.

For more information, see section c 4 and related regulations. Complete line 4 whether or not there is a surviving spouse and whether or not the surviving spouse received any benefits from the estate. The value entered in line 4c need not be exact.

Do not include any DSUE amount transferred to the surviving spouse in the total entered on line 4c. Two copies of each Schedule PC must be filed with the return. A protective claim for refund may be filed when there is an unresolved claim or expense that will not be deductible under section before the expiration of the period of limitation under section a.

To preserve the estate's right to a refund once the claim or expense has been finally determined, the protective claim must be filed before the end of the limitations period. For more information on how to file a protective claim for refund with this Form , see the instructions for Schedule PC, later.

Section property is property for which a previous section b 7 election QTIP election has been made, or for which a similar gift tax election section has been made. For more information, see the instructions for Schedule F, later. Also include full details for fractional interests in real estate on Schedule A and for stock of inactive or close corporations on Schedule B. Value these interests using the rules of Regulations section A close corporation is a corporation whose shares are owned by a limited number of shareholders.

Often, one family holds the entire stock issue. As a result, little, if any, trading of the stock takes place. There is, therefore, no established market for the stock, and those sales that do occur are at irregular intervals and seldom reflect all the elements of a representative transaction as defined by FMV.

If estimating the value of one or more assets pursuant to the special rule of Regulations section Total the estimated values for those assets and follow the instructions for item Schedules A, B, and C, if the gross estate includes any 1 Real Estate, 2 Stocks and Bonds, or 3 Mortgages, Notes, and Cash, respectively;. The special rule does not apply if the valuation of the asset is needed to determine the estate's eligibility for the provisions of sections , A, a 3 , , or any other provision of the Code or Regulations.

As applies to all other values reported on Form , estimates of the value of property subject to the special rule of Regulations section Section of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of authorized estates of decedents dying after December 31, , to elect to transfer any unused exclusion to the surviving spouse.

The amount received by the surviving spouse is called the deceased spousal unused exclusion , or DSUE, amount. A nonresident surviving spouse who is not a citizen of the United States may not take into account the DSUE amount of a deceased spouse, except to the extent allowed by treaty with his or her country of citizenship. The identity of the last deceased spouse is determined as of the day a taxable gift is made, or in the case of a transfer at death, the date of the surviving spouse's death.

The identity of the last deceased spouse is not impacted by whether the decedent's estate elected portability or whether the last deceased spouse had any DSUE amount available. Remarriage also does not affect the designation of the last deceased spouse and does not prevent the surviving spouse from applying the DSUE amount to taxable transfers. A surviving spouse may use the DSUE amount of the last deceased spouse to offset the tax on any taxable transfer made after the deceased spouse's death.

A surviving spouse who has more than one predeceased spouse is not precluded from using the DSUE amount of each spouse in succession. A surviving spouse may not use the sum of DSUE amounts from multiple predeceased spouses at one time nor may the DSUE amount of a predeceased spouse be applied after the death of a subsequent spouse.

A timely-filed and complete Form is required to elect portability of the DSUE amount to a surviving spouse. The filing requirement applies to all estates of decedents choosing to elect portability of the DSUE amount, regardless of the size of the estate.

A timely-filed return is one that is filed on or before the due date of the return, including extensions. The timely filing of a complete Form with DSUE will be deemed a portability election if there is a surviving spouse. A portability election is irrevocable, unless an adjustment or amendment to the election is made on a subsequent return filed on or before the due date. Under Regulations section If there is no executor, see Regulations section If an estate files a Form but does not wish to make the portability election, the executor can opt out of the portability election by checking the box indicated in Section A of this Part.

If no return is required under section a , not filing Form will avoid making the election. The DSUE amount is the lesser of A the basic exclusion amount in effect on the date of death of the decedent whose DSUE is being computed, or B the decedent's applicable exclusion amount less the amount on line 5 of Part 2—Tax Computation on the Form for the estate of the decedent.

Amounts on which gift taxes were paid are excluded from adjusted taxable gifts for the purpose of this computation.

When a surviving spouse applies the DSUE amount to a lifetime gift or bequest at death, the IRS may examine any return of a predeceased spouse whose executor elected portability to verify the allowable DSUE amount. The DSUE amount may be adjusted or eliminated as a result of the examination; however, the IRS may only make an assessment of additional tax on the return of the predeceased spouse within the applicable limitations period under section The regulations provide that executors of estates who are not otherwise required to file Form under section a do not have to report the value of certain property qualifying for the marital or charitable deduction.

For such property, the executor may estimate the value in good faith and with the due diligence to be afforded all assets includible in the gross estate. The amount reported on Form will correspond to a range of dollar values and will be included in the value of the gross estate shown on line 1 of Part 2-Tax Computation. See instructions for lines 10 and 23 of Part 5-Recapitulation , above, for more details.

If a surviving spouse who is not a citizen of the United States becomes a citizen and the section A tax no longer applies to the assets of the QDOT, as of the date the surviving spouse becomes a U.

See Regulations sections If any assets to which the special rule of Regulations section See instructions for line 10 of Part 5—Recapitulation for information on how to estimate and report the value of these assets.

If the total gross estate contains any real estate, complete Schedule A and file it with the return. On Schedule A, list real estate the decedent owned or had contracted to purchase. Number each parcel in the left-hand column. Describe the real estate in enough detail so that the IRS can easily locate it for inspection and valuation. For each parcel of real estate, report the area and, if the parcel is improved, describe the improvements.

For city or town property, report the street and number, ward, subdivision, block and lot, etc. For rural property, report the township, range, landmarks, etc. If any item of real estate is subject to a mortgage for which the decedent's estate is liable, that is, if the indebtedness may be charged against other property of the estate that is not subject to that mortgage, or if the decedent was personally liable for that mortgage, you must report the full value of the property in the value column.

The unpaid amount of the mortgage may be deducted on Schedule K. Do not enter any amount less than zero. Do not deduct the amount of indebtedness on Schedule K. Also list on Schedule A real property the decedent contracted to purchase.

Report the full value of the property and not the equity in the value column. Deduct the unpaid part of the purchase price on Schedule K. Report the value of real estate without reducing it for homestead or other exemption, or the value of dower, curtesy, or a statutory estate created instead of dower or curtesy.

Schedule A-1 is used to report the additional information that must be submitted to support this election. In order to make a valid election, you must complete Schedule A-1 and attach all of the required statements and appraisals. For definitions and additional information concerning special-use valuation, see section A and the related regulations. The GST tax savings is the difference between the total GST tax that was imposed on all interests in specially valued property received by the skip person valued at their special-use value and the total GST tax that would have been imposed on the same interests received by the skip person had they been valued at their FMV.

Because the GST tax depends on the executor's allocation of the GST exemption and the grandchild exclusion, the skip person who receives the interests is unable to figure this GST tax savings. Therefore, for each skip person who receives an interest in specially valued property, you must attach a calculation of the total GST tax savings attributable to that person's interests in specially valued property. Completing the fair market value worksheets.

Schedule R, Parts 2 and 3, lines 2 and 3, fixed taxes and other charges. If valuing the interests at FMV instead of special-use value causes any of these taxes and charges to increase, enter the increased amount only on these lines and attach an explanation of the increase. Schedule R, Parts 2 and 3, line 6—GST exemption allocation. If you completed Schedule R, Part 1, line 10, enter on line 6 the amount shown for the skip person on the line 10 special-use allocation schedule you attached to Schedule R.

If you did not complete Schedule R, Part 1, line 10, enter on line 6. The agreement to special valuation is required under sections A a 1 B and d 2 and must be signed by all parties who have any interest in the property being valued based on its qualified use as of the date of the decedent's death.

An interest in property is an interest that, as of the date of the decedent's death, can be asserted under applicable law so as to affect the disposition of the specially valued property by the estate. Any person who at the decedent's death has any such interest in the property, whether present, future, vested, or contingent, must enter into the agreement. Included are owners of remainder and executory interests; the holders of general or special powers of appointment; beneficiaries of a gift over in default of exercise of any such power; joint tenants and holders of similar undivided interests when the decedent held only a joint or undivided interest in the property or when only an undivided interest is specially valued; and trustees of trusts and representatives of other entities holding title to or any interests in the property.

An heir who has the power under local law to challenge a will and thereby affect disposition of the property is not, however, considered to be a person with an interest in property under section A solely by reason of that right.

Likewise, creditors of an estate are not such persons solely by reason of their status as creditors. If any person required to enter into the agreement either desires that an agent act for him or her or cannot legally bind himself or herself due to infancy or other incompetency, or due to death before the election under section A is timely exercised, a representative authorized by local law to bind the person in an agreement of this nature may sign the agreement on his or her behalf.

The IRS will contact the agent designated in the agreement on all matters relating to continued qualification under section A of the specially valued real property and on all matters relating to the special lien arising under section B.

It is the duty of the agent as attorney-in-fact for the parties with interests in the specially valued property to furnish the IRS with any requested information and to notify the IRS of any disposition or cessation of qualified use of any part of the property. When making the special-use valuation election on Schedule A-1, please use this checklist to ensure that you are providing everything necessary to make a valid election.

To have a valid special-use valuation election under section A, you must file, in addition to the federal estate tax return, a a notice of election Schedule A-1, Part 2 , and b a fully executed agreement Schedule A-1, Part 3.

You must include certain information in the notice of election. To ensure that the notice of election includes all of the information required for a valid election, use the following checklist. The checklist is for your use only. Do not file it with the return. Any election made under section A will not be valid unless a properly executed agreement Schedule A-1, Part 3 is filed with the estate tax return.

To ensure that the agreement satisfies the requirements for a valid election, use the following checklist:. Before completing Schedule B, see the examples illustrating the alternate valuation dates being adopted and not being adopted, later.

If the total gross estate contains any stocks or bonds, you must complete Schedule B and file it with the return. On Schedule B, list the stocks and bonds included in the decedent's gross estate. Number each item in the left-hand column. Unless specifically exempted by an estate tax provision of the Code, bonds that are exempt from federal income tax are not exempt from estate tax.

You should list these bonds on Schedule B. Indicate as a separate item dividends that have not been collected at death and are payable to the decedent or the estate because the decedent was a stockholder of record on the date of death. However, if the stock is being traded on an exchange and is selling ex-dividend on the date of the decedent's death, do not include the amount of the dividend as a separate item.

Instead, add it to the ex-dividend quotation in determining the FMV of the stock on the date of the decedent's death. Dividends declared on shares of stock before the death of the decedent but payable to stockholders of record on a date after the decedent's death are not includible in the gross estate for federal estate tax purposes and should not be listed here.

If the gross estate includes any interest in a trust, partnership, or closely-held entity, provide the employer identification number EIN of the entity in the description column on Schedules B, E, F, G, M, and O. You must also provide the EIN of an estate if any in the description column on the above-noted schedules, where applicable. The CUSIP Committee on Uniform Security Identification Procedure number is a nine-digit number that is assigned to all stocks and bonds traded on major exchanges and many unlisted securities.

Usually, the CUSIP number is printed on the face of the stock certificate. If you do not have a stock certificate, the CUSIP may be found on the broker's or custodian's statement or by contacting the company's transfer agent.

List the FMV of the stocks or bonds. The FMV of a stock or bond whether listed or unlisted is the mean between the highest and lowest selling prices quoted on the valuation date.

If only the closing selling prices are available, then the FMV is the mean between the quoted closing selling price on the valuation date and on the trading day before the valuation date. Find the mean between the highest and lowest selling prices on the nearest trading date before and the nearest trading date after the valuation date. Both trading dates must be reasonably close to the valuation date. Add or subtract whichever applies the prorated part of the difference to or from the mean price figured for the nearest trading date before the valuation date.

If no actual sales were made reasonably close to the valuation date, make the same computation using the mean between the bona fide bid and asked prices instead of sales prices.

If actual sales prices or bona fide bid and asked prices are available within a reasonable period of time before the valuation date but not after the valuation date, or vice versa, use the mean between the highest and lowest sales prices or bid and asked prices as the FMV.

For example, assume that sales of stock nearest the valuation date June 15 occurred 2 trading days before June 13 and 3 trading days after June Apply the rules in the section regulations to determine the value of inactive stock and stock in close corporations.

Attach to Schedule B complete financial and other data used to determine value, including balance sheets particularly the one nearest to the valuation date and statements of the net earnings or operating results and dividends paid for each of the 5 years immediately before the valuation date.

Securities reported as of no value, of nominal value, or obsolete should be listed last. Include the address of the company and the state and date of the incorporation. If the security was listed on more than one stock exchange, use either the records of the exchange where the security is principally traded or the composite listing of combined exchanges, if available, in a publication of general circulation.

In valuing listed stocks and bonds, you should carefully check accurate records to obtain values for the applicable valuation date. If you get quotations from brokers, or evidence of the sale of securities from the officers of the issuing companies, attach to the schedule copies of the letters furnishing these quotations or evidence of sale.

Mortgages and notes payable to the decedent at the time of death. Do not list mortgages and notes payable by the decedent on Schedule C.

If these are deductible, list them on Schedule K. If you are required to file Form and there was any insurance on the decedent's life, whether or not included in the gross estate, you must complete Schedule D and file it with the return.

Insurance on the decedent's life receivable by beneficiaries other than the estate, as described below. An interest in an insurance policy is considered a reversionary interest if, for example, the proceeds become payable to the insured's estate or payable as the insured directs if the beneficiary dies before the insured. You must list every insurance policy on the life of the decedent, whether or not it is included in the gross estate. For every life insurance policy listed on the schedule, request a statement on Form , Life Insurance Statement, from the company that issued the policy.

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Attach the Form to Schedule D. If the policy proceeds are paid in one sum, enter the net proceeds received from Form , line 24 in the value and alternate value columns of Schedule D. If the policy proceeds are not paid in one sum, enter the value of the proceeds as of the date of the decedent's death from Form , line If part or all of the policy proceeds are not included in the gross estate, explain why they were not included.

If you are required to file Form , complete Schedule E and file it with the return if the decedent owned any joint property at the time of death, whether or not the decedent's interest is includible in the gross estate. Enter on this schedule all property of whatever kind or character, whether real estate, personal property, or bank accounts, in which the decedent held at the time of death an interest either as a joint tenant with right to survivorship or as a tenant by the entirety.

Do not list on this schedule property that the decedent held as a tenant in common, but report the value of the interest on Schedule A if real estate, or on the appropriate schedule if personal property.

Similarly, community property held by the decedent and spouse should be reported on the appropriate Schedules A through I. The decedent's interest in a partnership should not be entered on this schedule unless the partnership interest itself is jointly-owned.

Joint tenants with right of survivorship if the decedent and the decedent's spouse are the only joint tenants. You cannot claim the special treatment under section b for property held jointly by a decedent and a surviving spouse who is not a U. Report these joint interests on Part 2 of Schedule E, not Part 1. On Schedule F, list all items that must be included in the gross estate that are not reported on any other schedule, including:.

Any interest in an Archer medical savings account MSA or health savings account HSA , unless such interest passes to the surviving spouse; and.

In certain situations for example, where the surrender value of the policy exceeds its replacement cost , the true economic value of the policy will be greater than the amount shown on line 59 of Form In these situations, report the full economic value of the policy on Schedule F. Section property see Decedent Who Was a Surviving Spouse, later ;.

Claims including the value of the decedent's interest in a claim for refund of income taxes or the amount of the refund actually received ;. Example of effective discount: Calculation of effective discount: The amount of discounts are based on the factors pertaining to a specific interest and those discounts shown in the example are for demonstration purposes only.

If the decedent was a surviving spouse, he or she may have received qualified terminable interest property QTIP from the predeceased spouse for which the marital deduction was elected either on the predeceased spouse's estate tax return or on a gift tax return, Form The election is available for transfers made and decedents dying after December 31, List such property on Schedule F.

If this election was made and the surviving spouse retained his or her interest in the QTIP property at death, the full value of the QTIP property is includible in his or her estate, even though the qualifying income interest terminated at death.

It is valued as of the date of the surviving spouse's death, or alternate valuation date, if applicable. Do not reduce the value by any annual exclusion that may have applied to the transfer creating the interest.

The value of such property included in the surviving spouse's gross estate is treated as passing from the surviving spouse. It therefore qualifies for the charitable and marital deductions on the surviving spouse's estate tax return if it meets the other requirements for those deductions.

Certain gift taxes section b. Enter at item A of Schedule G the total value of the gift taxes that were paid by the decedent or the estate on gifts made by the decedent or the decedent's spouse within 3 years of death. The date of the gift, not the date of payment of the gift tax, determines whether a gift tax paid is included in the gross estate under this rule. Therefore, you should carefully examine the Forms filed by the decedent and the decedent's spouse to determine what part of the total gift taxes reported on them was attributable to gifts made within 3 years of death.

For example, if the decedent died on July 10, , you should examine gift tax returns for , , , and However, the gift taxes on the return that are attributable to gifts made on or before July 10, , are not included in the gross estate. Explain how you figured the includible gift taxes if the entire gift taxes shown on any Form filed for gifts made within 3 years of death are not included in the gross estate.

Also attach copies of any relevant gift tax returns filed by the decedent's spouse for gifts made within 3 years of death. Other transfers within 3 years of death section a. These transfers include only the following:. Any transfer within 3 years of death of a retained section life estate, section reversionary interest, or section power to revoke, etc.

These transfers are reported on Schedule G, regardless of whether a gift tax return was required to be filed for them when they were made. However, the amount includible and the information required to be shown for the transfers are determined:.

For insurance on the life of the decedent using the instructions to Schedule D attach Forms ;. For insurance on the life of another using the instructions to Schedule F attach Forms ; and. For sections , , and transfers, using paragraphs 3 , 4 , and 5 of these instructions.

Transfers with retained life estate section These are transfers by the decedent in which the decedent retained an interest in the transferred property. The transfer can be in trust or otherwise, but excludes bona fide sales for adequate and full consideration. Section applies to the following retained interests or rights:. The right, either alone or with any person, to designate the persons who shall receive the income from, possess, or enjoy, the property. Retained annuity, unitrust, and other income interests in trusts.

See Regulations section Transfers with a retained life estate also include transfers of stock in a controlled corporation made after June 22, , if the decedent retained or acquired voting rights in the stock. If the decedent retained direct or indirect voting rights in a controlled corporation, the decedent is considered to have retained enjoyment of the transferred property.

See section b 2. If these voting rights ceased or were relinquished within 3 years of the decedent's death, the corporate interests are included in the gross estate as if the decedent had actually retained the voting rights until death.

The amount includible in the gross estate is the value of the transferred property at the time of the decedent's death. If the decedent kept or reserved an interest or right to only a part of the transferred property, the amount includible in the gross estate is a corresponding part of the entire value of the property. A retained life estate does not have to be legally enforceable.

What matters is that a substantial economic benefit was retained. For example, if a mother transferred title to her home to her daughter but with the informal understanding that she was to continue living there until her death, the value of the home would be includible in the mother's estate even if the agreement would not have been legally enforceable.

Transfers taking effect at death section A transfer that takes effect at the decedent's death is one under which possession or enjoyment can be obtained only by surviving the decedent.

If the transfer was made before October 8, , the reversionary interest must have arisen by the express terms of the instrument of transfer. A reversionary interest is, generally, any right under which the transferred property will or may be returned to the decedent or the decedent's estate. It also includes the possibility that the transferred property may become subject to a power of disposition by the decedent.

It does not matter if the right arises by the express terms of the instrument of transfer or by operation of law. For this purpose, reversionary interest does not include the possibility that the income alone from the property may return to the decedent or become subject to the decedent's power of disposition.

Revocable transfers section The gross estate includes the value of any transferred property which was subject to the decedent's power to alter, amend, revoke, or terminate the transfer at the time of the decedent's death.

A decedent's power to change beneficiaries and to increase any beneficiary's enjoyment of the property are examples of this. It does not matter whether the power was reserved at the time of the transfer, whether it arose by operation of law, or whether it was later created or conferred. The rule applies regardless of the source from which the power was acquired, and regardless of whether the power was exercisable by the decedent alone or with any person and regardless of whether that person had a substantial adverse interest in the transferred property.

The capacity in which the decedent could use a power has no bearing. If the decedent gave property in trust and was the trustee with the power to revoke the trust, the property would be included in his or her gross estate. For transfers or additions to an irrevocable trust after October 28, , the transferred property is includible if the decedent reserved the power to remove the trustee at will and appoint another trustee.

If the decedent relinquished within 3 years of death any of the includible powers described above, figure the gross estate as if the decedent had actually retained the powers until death. Only the part of the transferred property that is subject to the decedent's power is included in the gross estate. For more detailed information on which transfers are includible in the gross estate, see Regulations section Section deals with the transfer of an interest in a corporation or partnership while retaining certain distribution rights, or a liquidation, put, call, or conversion right.

Section deals with the transfer of an interest in a trust while retaining any interest other than a qualified interest. In general, a qualified interest is a right to receive certain distributions from the trust at least annually, or a noncontingent remainder interest if all of the other interests in the trust are distribution rights specified in section Section provides rules for the valuation of property transferred to a family member but subject to an option, agreement, or other right to acquire or use the property at less than FMV.

It also applies to transfers subject to restrictions on the right to sell or use the property. Finally, section provides that in certain cases, the lapse of a voting or liquidation right in a family-owned corporation or partnership will result in a deemed transfer. These rules have potential consequences for the valuation of property in an estate. If the decedent or any member of his or her family was involved in any such transactions, see sections through and the related regulations for additional details.

All transfers other than outright transfers not in trust and bona fide sales made by the decedent at any time during life must be reported on Schedule G, regardless of whether you believe the transfers are subject to tax. If the decedent made any transfers not described in these instructions, the transfers should not be shown on Schedule G. Instead, attach a statement describing these transfers by listing:.

Complete the schedule for each transfer that is included in the gross estate under sections a , , , and as described in the Instructions for Schedule G.

Transfers included in the gross estate should be valued on the date of the decedent's death or, if alternate valuation is elected, according to section If only part of the property transferred meets the terms of section a , , , or , then only a corresponding part of the value of the property should be included in the value of the gross estate.

If the transferee makes additions or improvements to the property, the increased value of the property at the valuation date should not be included on Schedule G. The value of property for which the decedent possessed a general power of appointment defined later on the date of his or her death and. The value of property for which the decedent possessed a general power of appointment that he or she exercised or released before death by disposing of it in such a way that if it were a transfer of property owned by the decedent, the property would be includible in the decedent's gross estate as a transfer with a retained life estate, a transfer taking effect at death, or a revocable transfer.

With the above exceptions, property subject to a power of appointment is not includible in the gross estate if the decedent released the power completely and the decedent held no interest in or control over the property.

A power of appointment determines who will own or enjoy the property subject to the power and when they will own or enjoy it. The power must be created by someone other than the decedent. It does not include a power created or held on property transferred by the decedent. A power of appointment includes all powers which are, in substance and effect, powers of appointment regardless of how they are identified and regardless of local property laws. For example, if a settlor transfers property in trust for the life of his wife, with a power in the wife to appropriate or consume the principal of the trust, the wife has a power of appointment.

Some powers do not in themselves constitute a power of appointment. For example, a power to amend only administrative provisions of a trust that cannot substantially affect the beneficial enjoyment of the trust property or income is not a power of appointment. A power to manage, invest, or control assets, or to allocate receipts and disbursements, when exercised only in a fiduciary capacity, is not a power of appointment.

A power to consume, invade, or appropriate property for the benefit of the decedent that is limited by an ascertainable standard relating to health, education, support, or maintenance of the decedent. Is also exercisable in favor of the other person in addition to being exercisable in favor of the decedent, the decedent's creditors, the decedent's estate, or the creditors of the decedent's estate.

If the decedent ever possessed a power of appointment, attach a certified or verified copy of the instrument granting the power and a certified or verified copy of any instrument by which the power was exercised or released. You must file these copies even if you contend that the power was not a general power of appointment, and that the property is not otherwise includible in the gross estate.

Enter on Schedule I every annuity that meets all of the conditions under General, later, and every annuity described in paragraphs a through h of Annuities Under Approved Plans, even if the annuities are wholly or partially excluded from the gross estate. For a discussion regarding the QTIP treatment of certain joint and survivor annuities, see the Schedule M, line 3 instructions. These rules apply to all types of annuities, including pension plans, individual retirement arrangements, purchased commercial annuities, and private annuities.

In general, you must include in the gross estate all or part of the value of any annuity that meets the following requirements:. It is receivable by a beneficiary following the death of the decedent and by reason of surviving the decedent;. The annuity was payable to the decedent or the decedent possessed the right to receive the annuity either alone or in conjunction with another, for the decedent's life or for any period not ascertainable without reference to the decedent's death or for any period that did not in fact end before the decedent's death; and.

A private annuity is an annuity issued by a party not engaged in the business of writing annuity contracts, typically a junior generation family member or a family trust. An annuity contract that provides periodic payments to a person for life and ceases at the person's death is not includible in the gross estate. Social security benefits are not includible in the gross estate even if the surviving spouse receives benefits.

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An annuity or other payment that is not includible in the decedent's or the survivor's gross estate as an annuity may still be includible under some other applicable provision of the law. For example, see Powers of Appointment and the instructions for Schedule G—Transfers During Decedent's Life , earlier. See also Regulations section If the decedent retired before January 1, , see Annuities Under Approved Plans, later, for rules that allow the exclusion of part or all of certain annuities.

If the decedent contributed only part of the purchase price of the contract or agreement, include in the gross estate only that part of the value of the annuity receivable by the surviving beneficiary that the decedent's contribution to the purchase price of the annuity or agreement bears to the total purchase price. Except as provided under Annuities Under Approved Plans, contributions made by the decedent's employer to the purchase price of the contract or agreement are considered made by the decedent if they were made by the employer because of the decedent's employment.

For more information, see section b. The following are examples of contracts but not necessarily the only forms of contracts for annuities that must be included in the gross estate:. A contract under which the decedent immediately before death was receiving or was entitled to receive, for the duration of life, an annuity with payments to continue after death to a designated beneficiary, if surviving the decedent. A contract under which the decedent immediately before death was receiving or was entitled to receive, together with another person, an annuity payable to the decedent and the other person for their joint lives, with payments to continue to the survivor following the death of either.

A contract or agreement entered into by the decedent and employer under which the decedent immediately before death and following retirement was receiving, or was entitled to receive, an annuity payable to the decedent for life.

After the decedent's death, if survived by a designated beneficiary, the annuity was payable to the beneficiary with payments either fixed by contract or subject to an option or election exercised or exercisable by the decedent. However, see Annuities Under Approved Plans, later. A contract or agreement entered into by the decedent and the decedent's employer under which at the decedent's death, before retirement, or before the expiration of a stated period of time, an annuity was payable to a designated beneficiary, if surviving the decedent.

A contract or agreement under which the decedent immediately before death was receiving, or was entitled to receive, an annuity for a stated period of time, with the annuity to continue to a designated beneficiary, surviving the decedent, upon the decedent's death and before the expiration of that period of time. An annuity contract or other arrangement providing for a series of substantially equal periodic payments to be made to a beneficiary for life or over a period of at least 36 months after the date of the decedent's death under an individual retirement account, annuity, or bond as described in section e before its repeal by P.

The following rules relate to whether part or all of an otherwise includible annuity may be excluded. These rules have been repealed and apply only if the decedent either:. On December 31, , was both a participant in the plan and in pay status for example, had received at least one benefit payment on or before December 31, and had irrevocably elected the form of the benefit before July 18, , or. Had separated from service before January 1, , and did not change the form of benefit before death.

On December 31, , the decedent was both a participant in the plan and in pay status for example, had received at least one benefit payment on or before December 31, and the decedent irrevocably elected the form of the benefit before January 1, , or.

The decedent separated from service before January 1, , and did not change the form of benefit before death. If the decedent made a contribution under a plan described in a through e above toward the cost, include in the gross estate on this schedule that proportion of the value of the annuity which the amount of the decedent's contribution under the plan bears to the total amount of all contributions under the plan.

For the rules to determine whether the decedent made contributions to the plan, see Regulations section These plans are approved plans only if they provide for a series of substantially equal periodic payments made to a beneficiary for life, or over a period of at least 36 months after the date of the decedent's death. However, if any payment to or for an account or annuity described in paragraph f , g , or h earlier was not allowable as an income tax deduction under section and was not a rollover contribution as described in section e before its repeal by P.

For more information, see Regulations section Generally, the entire amount of any lump sum distribution is included in the decedent's gross estate. However, under this special rule, all or part of a lump sum distribution from a qualified approved plan will be excluded if the lump sum distribution is included in the recipient's income for income tax purposes. For more information, see Pub. The recipient elects to forego this treatment by treating the distribution as taxable on his or her income tax return as described in Regulations section The election is irrevocable.

The amount excluded from the gross estate is the portion attributable to the employer contributions. The portion, if any, attributable to the employee-decedent's contributions is always includible.

In describing an annuity, give the name and address of the grantor of the annuity. Specify if the annuity is under an approved plan. Use Schedule PC to make a protective claim for refund for expenses which are not currently deductible under section For such a claim, report the expense on Schedule J but without a value in the last column.

The amount paid out of property included in the gross estate but not subject to claims. This amount must actually be paid by the due date of the estate tax return. The Chief, Estate and Gift Tax Examinations, is reasonably satisfied that the commissions claimed will be paid;. The amount entered as a deduction is within the amount allowable by the laws of the jurisdiction where the estate is being administered; and.

It is in accordance with the usually accepted practice in that jurisdiction for estates of similar size and character. Executors' commissions are taxable income to the executors. Therefore, be sure to include them as income on your individual income tax return.

If you elect to pay the tax in installments under section , you may not deduct the interest payable on the installments. For such a claim, report the expense on Schedule K but without a value in the last column.

You must complete and attach Schedule K if you claimed deductions on either item 15 or item 16 of Part 5—Recapitulation. Generally, if the claim against the estate is based on a promise or agreement, the deduction is limited to the extent that the liability was contracted bona fide and for an adequate and full consideration in money or money's worth.

However, any enforceable claim based on a promise or agreement of the decedent to make a contribution or gift such as a pledge or a subscription to or for the use of a charitable, public, religious, etc. Certain claims of a former spouse against the estate based on the relinquishment of marital rights are deductible on Schedule K.

For these claims to be deductible, all of the following conditions must be met:. The decedent and the decedent's spouse must have entered into a written agreement relative to their marital and property rights.

The decedent and the spouse must have been divorced before the decedent's death and the divorce must have occurred within the 3-year period beginning on the date 1 year before the agreement was entered into. It is not required that the agreement be approved by the divorce decree. The property or interest transferred under the agreement must be transferred to the decedent's spouse in settlement of the spouse's marital rights.

You may not deduct a claim made against the estate by a remainderman relating to section property. Section property is described in the instructions to line 7 in Part 4—General Information. Include in this schedule notes unsecured by mortgage or other lien and give full details, including:. Include the exact nature of the claim as well as the name of the creditor. If the claim is for services performed over a period of time, state the period covered by the claim.

If the amount of the claim is the unpaid balance due on a contract for the purchase of any property included in the gross estate, indicate the schedule and item number where you reported the property. If the claim represents a joint and separate liability, give full facts and explain the financial responsibility of the co-obligor.

If the debt is enforceable against other property of the estate not subject to the mortgage or lien, or if the decedent was personally liable for the debt, include the full value of the property subject to the mortgage or lien in the gross estate under the appropriate schedule and deduct the mortgage or lien on the property on this schedule.

However, if the decedent's estate is not liable, include in the gross estate only the value of the equity of redemption or the value of the property less the amount of the debt , and do not deduct any portion of the indebtedness on this schedule.

Notes and other obligations secured by the deposit of collateral, such as stocks, bonds, etc. Include the name and address of the mortgagee, payee, or obligee, and the date and term of the mortgage, note, or other agreement by which the debt was established. Also include the face amount, the unpaid balance, the rate of interest, and date to which the interest was paid before the decedent's death.

For such a claim, report the expense on Schedule L but without a value in the last column. Complete Schedule L and file it with the return if you claim deductions on either item 19 or item 20 of Part 5—Recapitulation. You may deduct only those losses from thefts, fires, storms, shipwrecks, or other casualties that occurred during the settlement of the estate. Deduct only the amount not reimbursed by insurance or otherwise. Describe in detail the loss sustained and the cause. If you received insurance or other compensation for the loss, state the amount collected.

Identify the property for which you are claiming the loss by indicating the schedule and item number where the property is included in the gross estate. If you elect alternate valuation, do not deduct the amount by which you reduced the value of an item to include it in the gross estate.

Do not deduct losses claimed as a deduction on a federal income tax return or depreciation in the value of securities or other property. You may deduct expenses incurred in administering property that is included in the gross estate but that is not subject to claims.

Only deduct these expenses if they were paid before the section period of limitations for assessment expired. The expenses deductible on this schedule are usually expenses incurred in the administration of a trust established by the decedent before death. They may also be incurred in the collection of other assets or the transfer or clearance of title to other property included in the decedent's gross estate for estate tax purposes, but not included in the decedent's probate estate.

The expenses deductible on this schedule are limited to those that are the result of settling the decedent's interest in the property or of vesting good title to the property in the beneficiaries. Expenses incurred on behalf of the transferees except those described earlier are not deductible. Examples of deductible and nondeductible expenses are provided in Regulations section List the names and addresses of the persons to whom each expense was payable and the nature of the expense.

Identify the property for which the expense was incurred by indicating the schedule and item number where the property is included in the gross estate. If you do not know the exact amount of the expense, you may deduct an estimate, provided that the amount may be verified with reasonable certainty and will be paid before the period of limitations for assessment referred to earlier expires. Keep all vouchers and receipts for inspection by the IRS.

See instructions for line 23 of Part 5—Recapitulation for information on how to estimate and report the value of these assets. You must complete Schedule M and file it with the return if you claim a deduction on Part 5—Recapitulation, item The marital deduction is authorized by section for certain property interests that pass from the decedent to the surviving spouse.

You may claim the deduction only for property interests that are included in the decedent's gross estate Schedules A through I. The marital deduction is generally not allowed if the surviving spouse is not a U.

The marital deduction is allowed for property passing to such a surviving spouse in a qualified domestic trust QDOT or if such property is transferred or irrevocably assigned to such a trust before the estate tax return is filed. The executor must elect QDOT status on the return. See the instructions that follow for details on the election.

Generally, you may list on Schedule M all property interests that pass from the decedent to the surviving spouse and are included in the gross estate. However, do not list any nondeductible terminable interests described later on Schedule M unless you are making a QTIP election.

The property for which you make this election must be included on Schedule M. See Qualified terminable interest property, later. As an appointee under the decedent's exercise of a power or as a taker in default at the decedent's nonexercise of a power;. The full value of a property interest for which a deduction was claimed on Schedules J through L. The value of the property interest should be reduced by the deductions claimed with respect to it;. The full value of a property interest that passes to the surviving spouse subject to a mortgage or other encumbrance or an obligation of the surviving spouse.

Include on Schedule M only the net value of the interest after reducing it by the amount of the mortgage or other debt;. Certain interests in property passing from a decedent to a surviving spouse are referred to as terminable interests.

These are interests that will terminate or fail after the passage of time, or on the occurrence or nonoccurrence of a designated event. The ownership of a bond, note, or other contractual obligation, which when discharged would not have the effect of an annuity for life or for a term, is not considered a terminable interest. Another interest in the same property passed from the decedent to some other person for less than adequate and full consideration in money or money's worth; and.

By reason of its passing, the other person or that person's heirs may enjoy part of the property after the termination of the surviving spouse's interest. The surviving spouse is the only beneficiary of the trust other than charitable organizations described in section c. You may elect to claim a marital deduction for qualified terminable interest property or property interests. You make the QTIP election simply by listing the qualified terminable interest property on Part A of Schedule M and inserting its value.

You are presumed to have made the QTIP election if you list the property and insert its value on Schedule M. If you make this election, the surviving spouse's gross estate will include the value of the qualified terminable interest property.

See the instructions for Part 4—General Information, line 7, for more details. If you file a Form in which you do not make this election, you may not file an amended return to make the election unless you file the amended return on or before the due date for filing the original Form The effect of the election is that the property interest will be treated as passing to the surviving spouse and will not be treated as a nondeductible terminable interest. All of the other marital deduction requirements must still be satisfied before you may make this election.

For example, you may not make this election for property or property interests that are not included in the decedent's gross estate. The value of the trust or other property is entered in whole or in part as a deduction on Schedule M,. The marital deduction is allowed for transfers to a surviving spouse who is not a U.

That requires at least one trustee to be either a citizen of the United States or a domestic corporation;. That requires that no distribution of corpus from the trust can be made unless such a trustee has the right to withhold from the distribution the tax imposed on the QDOT;. For trusts created by an instrument executed before November 5, , paragraphs 1 and 2 above will be treated as met if the trust instrument requires that all trustees be individuals who are citizens of the United States or domestic corporations.

You make the QDOT election simply by listing the qualified domestic trust or the entire value of the trust property on Schedule M and deducting its value. You are presumed to have made the QDOT election if you list the trust or trust property and insert its value on Schedule M. Once made, the election is irrevocable. If an election is made to deduct qualified domestic trust property under section A d , provide the following information for each qualified domestic trust on an attachment to this schedule:.

A description of each transfer passing from the decedent that is the source of the property to be placed in trust; and. The election must be made for an entire QDOT trust.

In listing a trust for which you are making a QDOT election, unless you specifically identify the trust as not subject to the election, the election will be considered made for the entire trust.

The determination of whether a trust qualifies as a QDOT will be made as of the date the decedent's Form is filed. If, however, judicial proceedings are brought before the Form 's due date including extensions to have the trust revised to meet the QDOT requirements, then the determination will not be made until the court-ordered changes to the trust are made.

Section b 7 C ii creates an automatic QTIP election for certain joint and survivor annuities that are includible in the estate under section To qualify, only the surviving spouse can have the right to receive payments before the death of the surviving spouse. If there is more than one such joint and survivor annuity, you are not required to make the election for all of them.

If you do not elect out, you must list the joint and survivor annuities on Schedule M. List each property interest included in the gross estate that passes from the decedent to the surviving spouse and for which a marital deduction is claimed. This includes otherwise nondeductible terminable interest property for which you are making a QTIP election. Number each item in sequence and describe each item in detail.

Describe the instrument including any clause or paragraph number or provision of law under which each item passed to the surviving spouse. Indicate the schedule and item number of each asset. In listing otherwise nondeductible property for which you are making a QTIP election, unless you specifically identify a fractional portion of the trust or other property as not subject to the election, the election will be considered made for the entire interest.

Enter the value of each interest before taking into account the federal estate tax or any other death tax. The valuation dates used in determining the value of the gross estate apply also on Schedule M. If Schedule M includes a bequest of the residue or a part of the residue of the decedent's estate, attach a copy of the computation showing how the value of the residue was determined. Include a statement showing:. The value of all property that is included in the decedent's gross estate Schedules A through I but is not a part of the decedent's probate estate, such as lifetime transfers, jointly-owned property that passed to the survivor on decedent's death, and the insurance payable to specific beneficiaries;.

The values of all specific and general legacies or devises, with reference to the applicable clause or paragraph of the decedent's will or codicil. The date of birth of all persons, the length of whose lives may affect the value of the residuary interest passing to the surviving spouse; and.

Any other important information such as that relating to any claim to any part of the estate not arising under the will. You must complete Schedule O and file it with the return if you claim a deduction on item 22 of Part 5—Recapitulation. You can claim the charitable deduction allowed under section for the value of property in the decedent's gross estate that was transferred by the decedent during life or by will to or for the use of any of the following:.

The United States, a state, a political subdivision of a state, or the District of Columbia, for exclusively public purposes;. Any corporation or association organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, including the encouragement of art, or to foster national or international amateur sports competition but only if none of its activities involve providing athletic facilities or equipment, unless the organization is a qualified amateur sports organization and the prevention of cruelty to children and animals.

No part of the net earnings may benefit any private individual and no substantial activity may be undertaken to carry on propaganda, or otherwise attempt to influence legislation or participate in any political campaign on behalf of any candidate for public office;. A trustee or a fraternal society, order or association operating under the lodge system, if the transferred property is to be used exclusively for religious, charitable, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals.

No substantial activity may be undertaken to carry on propaganda or otherwise attempt to influence legislation, or participate in any political campaign on behalf of any candidate for public office;. Any veterans organization incorporated by an Act of Congress or any of its departments, local chapters, or posts, for which none of the net earnings benefits any private individual; or.

Employee stock ownership plans, if the transfer qualifies as a qualified gratuitous transfer of qualified employer securities within the meaning provided in section g. For this purpose, certain Indian tribal governments are treated as states and transfers to them qualify as deductible charitable contributions.

See section and Rev. You may also claim a charitable contribution deduction for a qualifying conservation easement granted after the decedent's death under the provisions of section c 9. The charitable deduction is allowed for amounts that are transferred to charitable organizations as a result of either a qualified disclaimer see Line 2. Qualified Disclaimer, later or the complete termination of a power to consume, invade, or appropriate property for the benefit of an individual.

It does not matter whether termination occurs because of the death of the individual or in any other way. The termination must occur within the period of time including extensions for filing the decedent's estate tax return and before the power has been exercised. The deduction is limited to the amount actually available for charitable uses. Therefore, if under the terms of a will or the provisions of local law, or for any other reason, the federal estate tax, the federal GST tax, or any other estate, GST, succession, legacy, or inheritance tax is payable in whole or in part out of any bequest, legacy, or devise that would otherwise be allowed as a charitable deduction, the amount you may deduct is the amount of the bequest, legacy, or devise reduced by the total amount of the taxes.

If you elected to make installment payments of the estate tax, and the interest is payable out of property transferred to charity, you must reduce the charitable deduction by an estimate of the maximum amount of interest that will be paid on the deferred tax. Do not enter the entire amount that passes to the trust or fund. If you are deducting the value of the residue or a part of the residue passing to charity under the decedent's will, attach a copy of the computation showing how you determined the value, including any reduction for the taxes described earlier.

A statement that shows the values of all specific and general legacies or devises for both charitable and noncharitable uses. For each legacy or devise, indicate the paragraph or section of the decedent's will or codicil that applies. The date of birth of all life tenants or annuitants, the length of whose lives may affect the value of the interest passing to charity under the decedent's will;.

A statement showing the value of all property that is included in the decedent's gross estate but does not pass under the will, such as transfers, jointly-owned property that passed to the survivor on decedent's death, and insurance payable to specific beneficiaries;. Any agreements with charitable beneficiaries, whether entered before or after date of death of the decedent;.

Verification of the sale or purchase of property that is the subject of a charitable deduction; and. Any other important information such as that relating to any claim, not arising under the will, to any part of the estate that is, a spouse claiming dower or curtesy, or similar rights.

The charitable deduction is allowed for amounts that are transferred to charitable organizations as a result of a qualified disclaimer. To be a qualified disclaimer , a refusal to accept an interest in property must meet the conditions of section These are explained in Regulations sections If the charitable transfer was made by will, attach a certified copy of the order admitting the will to probate, in addition to the copy of the will.

If the charitable transfer was made by any other written instrument, attach a copy. If the instrument is of record, the copy should be certified; if not, the copy should be verified. If you claim a credit on line 13 of Part 2—Tax Computation, complete Schedule P and file it with the return. Attach Form s CE to Form to support any credit you claim. If the foreign government refuses to certify Form CE, file it directly with the IRS as instructed on the Form CE.

See Form CE for instructions on how to complete the form and a description of the items that must be attached to the form when the foreign government refuses to certify it. The credit for foreign death taxes is allowable only if the decedent was a citizen or resident of the United States. However, see section d and the related regulations for exceptions and limitations if the executor has elected, in certain cases, to deduct these taxes from the value of the gross estate.

For a resident, not a citizen, who was a citizen or subject of a foreign country for which the President has issued a proclamation under section h , the credit is allowable only if the country of which the decedent was a national allows a similar credit to decedents who were U.

The credit is authorized either by statute or by treaty. If a credit is authorized by a treaty, whichever of the following is the most beneficial to the estate is allowed:.

The credit figured under the treaty, plus the credit figured under the statute for death taxes paid to each political subdivision or possession of the treaty country that are not directly or indirectly creditable under the treaty.

Under the statute, the credit is authorized for all death taxes national and local imposed in the foreign country. Whether local taxes are the basis for a credit under a treaty depends upon the provisions of the particular treaty. If a credit for death taxes paid in more than one foreign country is allowable, a separate computation of the credit must be made for each foreign country.

The copies of Schedule P on which the additional computations are made should be attached to the copy of Schedule P provided in the return. The total credit allowable for any property, whether subjected to tax by one or more than one foreign country, is limited to the amount of the federal estate tax attributable to the property. The anticipated amount of the credit may be figured on the return, but the credit cannot finally be allowed until the foreign tax has been paid and a Form CE evidencing payment is filed.

Section g provides that for credits for foreign death taxes, each U. Convert death taxes paid to the foreign country into U.

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If a credit is claimed for any foreign death tax that is later recovered, see Regulations section The credit for foreign death taxes is limited to those taxes that were actually paid and for which a credit was claimed within the later of 4 years after the filing of the estate tax return, before the date of expiration of any extension of time for payment of the federal estate tax, or 60 days after a final decision of the Tax Court on a timely filed petition for a redetermination of a deficiency.

For the credit allowed by the statute, the question of whether particular property is situated in the foreign country imposing the tax is determined by the same principles that would apply in determining whether similar property of a nonresident not a U.

See the instructions for Form NA. If you are reporting any items on this return based on the provisions of a death tax treaty, you may have to attach a statement to this return disclosing the return position that is treaty based. The situs rules contained in the treaty apply in determining whether property was situated in the foreign country;. The credit may be allowed only for payment of the death tax or taxes specified in the treaty but see the instructions earlier for credit under the statute for death taxes paid to each political subdivision or possession of the treaty country that are not directly or indirectly creditable under the treaty ;.

If specifically provided, the credit is proportionately shared for the tax applicable to property situated outside both countries, or that was deemed in some instances situated within both countries; and. The amount entered at item 4 of Schedule P is the amount shown on line 12 of Part 2—Tax Computation, less the total of the credits claimed for federal gift taxes on pre gifts section and for tax on prior transfers line 14 of Part 2—Tax Computation.

If a credit is claimed for tax on prior transfers, it will be necessary to complete Schedule Q before completing Schedule P. For examples of computation of credits under the treaties, see the applicable regulations. Complete Schedule Q and file it with the return if you claim a credit on Part 2—Tax Computation, line The term transferee means the decedent for whose estate this return is filed.

If the transferee received property from a transferor who died within 10 years before, or 2 years after, the transferee, a credit is allowable on this return for all or part of the federal estate tax paid by the transferor's estate for the transfer. There is no requirement that the property be identified in the estate of the transferee or that it exist on the date of the transferee's death.

It is sufficient for the allowance of the credit that the transfer of the property was subjected to federal estate tax in the estate of the transferor and that the specified period of time has not elapsed. A credit may be allowed for property received as the result of the exercise or nonexercise of a power of appointment when the property is included in the gross estate of the donee of the power. If the transferee was the transferor's surviving spouse, no credit is allowed for property received from the transferor to the extent that a marital deduction was allowed to the transferor's estate for the property.

There is no credit for tax on prior transfers for federal gift taxes paid in connection with the transfer of the property to the transferee. If you are claiming a credit for tax on prior transfers on Form NA, you should first complete and attach Part 5—Recapitulation from Form before figuring the credit on Schedule Q from Form Section d 3 contains specific rules for allowing a credit for certain transfers to a spouse who was not a U.

The term property includes any interest legal or equitable of which the transferee received the beneficial ownership. The transferee is considered the beneficial owner of property over which the transferee received a general power of appointment. Property does not include interests to which the transferee received only a bare legal title, such as that of a trustee. Neither does it include an interest in property over which the transferee received a power of appointment that is not a general power of appointment.

In addition to interests in which the transferee received the complete ownership, the credit may be allowed for annuities, life estates, terms for years, remainder interests whether contingent or vested , and any other interest that is less than the complete ownership of the property, to the extent that the transferee became the beneficial owner of the interest. The amount of the estate tax of the transferor's estate attributable to the transferred property or.

An estate tax on the transferee's estate determined without the credit for tax on prior transfers exceeds. An estate tax on the transferee's estate determined by excluding from the gross estate the net value of the transfer. If credit for a particular foreign death tax may be taken under either the statute or a death duty convention, and on this return the credit actually is taken under the convention, then no credit for that foreign death tax may be taken into consideration in figuring estate tax a or estate tax b , above.

A worksheet for Schedule Q is provided to allow you to figure the limits before completing Schedule Q. Transfer the appropriate amounts from the worksheet to Schedule Q as indicated on the schedule. You do not need to file the worksheet with Form , but keep it for your records. Most of the information to complete Part I of the worksheet should be obtained from the transferor's Form Schedule R is used to figure the generation-skipping transfer GST tax that is payable by the estate.

Schedule R-1 is used to figure the GST tax that is payable by certain trusts that are includible in the gross estate. The GST tax reported on Form is imposed only on direct skips occurring at death. Unlike the estate tax, which is imposed on the value of the entire taxable estate regardless of who receives it, the GST tax is imposed only on the value of interests in property, wherever located, that actually pass to certain transferees, who are referred to as skip persons defined later.

For purposes of Form , the property interests transferred must be includible in the gross estate before they are subject to the GST tax. Therefore, the first step in figuring the GST tax liability is to determine the property interests includible in the gross estate by completing Schedules A through I of Form The second step is to determine who the skip persons are.

To do this, assign each transferee to a generation and determine whether each transferee is a natural person or a trust for GST purposes. See section and Regulations section The third step is to determine which skip persons are transferees of interests in property. If the skip person is a natural person, anything transferred is an interest in property.

If the skip person is a trust, make this determination using the rules under Interest in property, later. These first three steps are described in detail under the main heading, Determining Which Transfers Are Direct Skips, later. The fourth step is to determine whether to enter the transfer on Schedule R or on Schedule R See the rules under the main heading, Dividing Direct Skips Between Schedules R and R The fifth step is to complete Schedules R and R-1 using the How To Complete instructions for each schedule.

The GST tax will not apply to any transfer under a trust that was irrevocable on September 25, , but only to the extent that the transfer was not made out of corpus added to the trust after September 25, An addition to the corpus after that date will cause a proportionate part of future income and appreciation to be subject to the GST tax.

If, on October 22, , the decedent was under a mental disability to change the disposition of his or her property and did not regain the competence to dispose of property before death, the GST tax will not apply to any property included in the gross estate other than property transferred on behalf of the decedent during life and after October 21, The GST tax will also not apply to any transfer under a trust to the extent that the trust consists of property included in the gross estate other than property transferred on behalf of the decedent during life and after October 21, Under a mental disability means the decedent lacked the competence to execute an instrument governing the disposition of his or her property, regardless of whether there was an adjudication of incompetence or an appointment of any other person charged with the care of the person or property of the transferor.

If the decedent had been adjudged mentally incompetent, a copy of the judgment or decree must be filed with this return. If the decedent had not been adjudged mentally incompetent, the executor must file with the return a certification from a qualified physician stating that in his opinion the decedent had been mentally incompetent at all times on and after October 22, , and that the decedent had not regained the competence to modify or revoke the terms of the trust or will prior to his death or a statement as to why no such certification may be obtained from a physician.

Where the beneficiary is a lineal descendant of a grandparent of the decedent that is, the decedent's cousin, niece, nephew, etc. Where the beneficiary is a lineal descendant of a grandparent of a spouse or former spouse of the decedent, the number of generations between the decedent and the beneficiary is determined by subtracting the number of generations between the grandparent and the spouse or former spouse from the number of generations between the grandparent and the beneficiary.

A person who at any time was married to a person described in 1 or 2 above is assigned to the generation of that person. A person who at any time was married to the decedent is assigned to the decedent's generation.

A person who is not assigned to a generation according to 1 , 2 , 3 , or 4 above is assigned to a generation based on his or her birth date, as follows:.

A special rule may apply in the case of the death of a parent of the transferee. For terminations, distributions, and transfers after December 31, , the existing rule that applied to grandchildren of the decedent has been extended to apply to other lineal descendants.

If property is transferred to an individual who is a descendant of a parent of the transferor, and that individual's parent who is a lineal descendant of the parent of the transferor is deceased at the time the transfer is subject to gift or estate tax, then for purposes of generation assignment, the individual is treated as if he or she is a member of the generation that is one generation below the lower of:.

The generation assignment of the youngest living ancestor of the individual, who is also a descendant of the parent of the transferor. This rule does not apply to a transfer to an individual who is not a lineal descendant of the transferor if the transferor has any living lineal descendants.

If any transfer of property to a trust would have been a direct skip except for this generation assignment rule, then the rule also applies to transfers from the trust attributable to such property. For purposes of determining if an individual's parent is deceased at the time of a testamentary transfer, an individual's parent who dies no later than 90 days after a transfer occurring by reason of the death of the transferor is treated as having predeceased the transferor.

The day rule applies to transfers occurring on or after July 18, Charitable organizations and trusts described in sections a 2 and b 2 are assigned to the decedent's generation.

Transfers to such organizations are therefore not subject to the GST tax. Transfers to or in the form of charitable remainder annuity trusts, charitable remainder unitrusts, and pooled income funds are not considered made to skip persons and, therefore, are not direct skips even if all of the life beneficiaries are skip persons. Under the will, the decedent's house is transferred to the decedent's daughter for her life with the remainder passing to her children.

The interest in the property transferred the present right to use the house is transferred to a non-skip person the decedent's daughter. Therefore, the trust is not a skip person because there is an interest in the transferred property that is held by a non-skip person. The transfer is not a direct skip. This transfer is a direct skip that is not made in trust and should be shown on Schedule R. The will establishes a trust that is required to accumulate income for 10 years and then pay its income to the decedent's grandchildren for the rest of their lives and, upon their deaths, distribute the corpus to the decedent's great-grandchildren.

Because the trust has no current beneficiaries, there are no present interests in the property transferred to the trust.

All of the persons to whom the trust can make future distributions including distributions upon the termination of interests in property held in trust are skip persons for example, the decedent's grandchildren and great-grandchildren. Therefore, the trust itself is a skip person and you should show the transfer on Schedule R.

The will establishes a trust that is to pay all of its income to the decedent's grandchildren for 10 years. At the end of 10 years, the corpus is to be distributed to the decedent's children.

All of the present interests in this trust are held by skip persons. Therefore, the trust is a skip person and you should show this transfer on Schedule R. You should show the estate tax value of all the property transferred to the trust even though the trust has some ultimate beneficiaries who are non-skip persons.

Report all generation-skipping transfers on Schedule R unless the rules below specifically provide that they are to be reported on Schedule R Under section a 2 , the GST tax on direct skips from a trust as defined for GST tax purposes is to be paid by the trustee and not by the estate.

Schedule R-1 serves as a notification from the executor to the trustee that a GST tax is due. For a direct skip to be reportable on Schedule R-1, the trust must be includible in the decedent's gross estate. If the decedent was a surviving spouse receiving benefits for his or her lifetime from a marital deduction power of appointment or QTIP trust created by the decedent's spouse, then transfers caused by reason of the decedent's death from that trust to skip persons are direct skips required to be reported on Schedule R Similarly, if property in a trust as defined for GST tax purposes is included in the decedent's gross estate under sections , , , , , , or and such property is, by reason of the decedent's death, transferred to skip persons, the transfers are direct skips required to be reported on Schedule R Part 1, line 6 of both Parts 2 and 3, and line 4 of Schedule R-1 are used to allocate the decedent's GST exemption.

Once made, the allocation is irrevocable. You are not required to allocate all of the decedent's GST exemption. However, the portion of the exemption that you do not allocate will be allocated by the IRS under the deemed allocation of unused GST exemption rules of section e. The exemption amounts for through are as follows:.

The amount of each increase can only be allocated to transfers made or appreciation that occurred during or after the year of the increase. The following example shows the application of this rule:. Beginning with transfers made after December 31, , to lifetime transfers to certain trusts, by the decedent, that constituted indirect skips that were subject to the gift tax. Enter the GST exemption, included on lines 2 through 6 of Part 1 of Schedule R discussed above , that was allocated to the trust.

Allocate the amount on line 8 of Part 1 of Schedule R in line 9, column D. This amount may be allocated to transfers into trusts that are not otherwise reported on Form For example, the line 8 amount may be allocated to an inter vivos trust established by the decedent during his or her lifetime and not included in the gross estate.

This allocation is made by identifying the trust on line 9 and making an allocation to it using column D. If the trust is not included in the gross estate, value the trust as of the date of death. Inform the trustee of each trust listed on line 9 of the total GST exemption you allocated to the trust. The trustee will need this information to figure the GST tax on future distributions and terminations. The trustee must know the trust's inclusion ratio to figure the trust's GST tax for future distributions and terminations.

You are not required to inform the trustee of the inclusion ratio and may not have enough information to figure it. Therefore, you are not required to make an entry in column E. However, column E and the worksheet later are provided to assist you in figuring the inclusion ratio for the trustee if you wish to do so.

Inform the trustee of the amount of the GST exemption you allocated to the trust. Line 9, columns C and D may be used to figure this amount for each trust. This worksheet will figure an accurate inclusion ratio only if the decedent was the only settlor of the trust. Use a separate worksheet for each trust or separate share of a trust that is treated as a separate trust. Use Part 2 to figure the GST tax on transfers in which the property interests transferred are to bear the GST tax on the transfers.

Use Part 3 to report the GST tax on transfers in which the property interests transferred do not bear the GST tax on the transfers. Section b requires that unless the governing instrument provides otherwise, the GST tax is to be charged to the property constituting the transfer.

Therefore, you will usually enter all of the direct skips on Part 2. You may enter a transfer on Part 3 only if the will or trust instrument directs, by specific reference, that the GST tax is not to be paid from the transferred property interests. If at the time of the contribution of the conservation easement, the value of the easement, the value of the land subject to the easement, or the value of any retained development right was different than the estate tax value, you must complete a separate computation in addition to completing Schedule U.

Use a copy of Schedule U as a worksheet for this separate computation. Complete lines 4 through 14 of the worksheet Schedule U. However, the value you use on lines 4, 5, 7, and 10 of the worksheet is the value for these items as of the date of the contribution of the easement, not the estate tax value. If the date of contribution and the estate tax values are the same, you do not need to do a separate computation.

After completing the worksheet, enter the amount from line 14 of the worksheet on line 14 of Schedule U. Finish completing Schedule U by entering amounts on lines 4, 7, and 15 through 20, following the instructions later for those lines. At the top of Schedule U, enter "worksheet attached. Under section c , you may elect to exclude a portion of the value of land that is subject to a qualified conservation easement. You make the election by filing Schedule U with all of the required information and excluding the applicable value of the land that is subject to the easement on Part 5—Recapitulation, at item To elect the exclusion, include on Schedule A, B, E, F, G, or H, as appropriate, the decedent's interest in the land that is subject to the exclusion.

You must make the election on a timely filed Form , including extensions. The applicable percentage of the value of land after certain reductions subject to a qualified conservation easement or. The decedent or a member of the decedent's family must have owned the land for the 3-year period ending on the date of the decedent's death. No later than the date the election is made, a qualified conservation easement on the land has been made by the decedent, a member of the decedent's family, the executor of the decedent's estate, or the trustee of a trust that holds the land.

Members of the decedent's family include the decedent's spouse; ancestors; lineal descendants of the decedent, of the decedent's spouse, and of the parents of the decedent; and the spouse of any lineal descendant. A legally adopted child of an individual is considered a child of the individual by blood. For the rules on determining ownership of an entity, see Ownership rules, later.

A qualified conservation easement is one that would qualify as a qualified conservation contribution under section h. It must be a contribution:. A restriction granted in perpetuity on the use that may be made of the real property.

The restriction must include a prohibition on more than a de minimis use for commercial recreational activity. Corporations and any community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition, or for the prevention of cruelty to children or animals, without net earnings benefitting any individual shareholder and without activity with the purpose of influencing legislation or political campaigning, which.

Receives more than one-third of its support from gifts, contributions, membership fees, or receipts from sales, admissions fees, or performance of services, or. The protection of a relatively natural habitat of fish, wildlife, or plants, or a similar ecosystem; or. The preservation of open space including farmland and forest land where such preservation is for the scenic enjoyment of the general public, or under a clearly delineated federal, state, or local conservation policy and will yield a significant public benefit.

If the land is reported as one or more item numbers on a Form schedule, simply list the schedule and item numbers. If the land subject to the easement is only part of an item, however, list the schedule and item number and describe the part subject to the easement. See the Instructions for Schedule A — Real Estate for information on how to describe the land.

Using the general rules for describing real estate, provide enough information so the IRS can value the easement. Give the date the easement was granted and by whom it was granted. Enter on this line the gross value at which the land was reported on the applicable asset schedule on this Form Do not reduce the value by the amount of any mortgage outstanding.

Report the estate tax value even if the easement was granted by the decedent or someone other than the decedent prior to the decedent's death. The amount on line 5 should be the date of death value of any qualifying conservation easements granted prior to the decedent's death, whether granted by the decedent or someone other than the decedent, for which the exclusion is being elected.

You must reduce the land value by the value of any development rights retained by the donor in the conveyance of the easement. A development right is any right to use the land for any commercial purpose that is not subordinate to or directly supportive of the use of the land as a farm for farming purposes.

You do not have to make this reduction if everyone with an interest in the land regardless of whether in possession agrees to permanently extinguish the retained development right. The agreement must be filed with this return and must include the following information and terms:. A list of all persons in being holding an interest in the land that is subject to the qualified conservation easement.

Include each person's name, address, tax identifying number, relationship to the decedent, and a description of their interest;. The items of real property shown on the estate tax return that are subject to the qualified conservation easement identified by schedule and item number ;.

To take whatever action is necessary to permanently extinguish the retained development rights listed in the agreement and. To be personally liable for additional taxes under section c 5 C if this agreement is not implemented by the earlier of:. A statement that in the event this agreement is not timely implemented, that they will report the additional tax on whatever return is required by the IRS and will file the return and pay the additional tax by the last day of the 6th month following the applicable date described above.

For an example of an agreement containing some of the same terms, see Part 3 of Schedule A-1 Form Enter the total value of the qualified conservation easements on which the exclusion is based. This could include easements granted by the decedent or someone other than the decedent prior to the decedent's death, easements granted by the decedent that take effect at death, easements granted by the executor after the decedent's death, or some combination of these.

Use the value of the easement as of the date of death, even if the easement was granted prior to the date of death. But, if the value of the easement was different at the time the easement was contributed than at the date of death, see the Caution at the beginning of the Schedule U Instructions.

Explain how this value was determined and attach copies of any appraisals. Normally, the appropriate way to value a conservation easement is to determine the FMV of the land both before and after the granting of the easement, with the difference being the value of the easement.

Reduce the reported value of the easement by the amount of any consideration received for the easement. If the date of death value of the easement is different from the value at the time the consideration was received, reduce the value of the easement by the same proportion that the consideration received bears to the value of the easement at the time it was granted.

If a charitable contribution deduction for this land has been taken on Schedule O, enter the amount of the deduction here. If the easement was granted after the decedent's death, a contribution deduction may be taken on Schedule O, if it otherwise qualifies, as long as no income tax deduction was or will be claimed for the contribution by any person or entity.

Reduce the value of the land by the amount of any acquisition indebtedness on the land at the date of the decedent's death. Acquisition indebtedness includes the unpaid amount of:. Any indebtedness incurred before the acquisition if the indebtedness would not have been incurred but for the acquisition;.

Any indebtedness incurred after the acquisition if the indebtedness would not have been incurred but for the acquisition and the incurrence of the indebtedness was reasonably foreseeable at the time of the acquisition; and. See section a. Only use Schedule PC for section protective claims for refund being filed with Form If the initial notice of the protective claim for refund is being submitted after Form has been filed, use Form , Claim for Refund and Request for Abatement, to file the claim.

Schedule PC may be used to file a section protective claim for refund by estates of decedents who died after December 31, It will also be used to inform the IRS when the contingency leading to the protective claim for refund is resolved and the refund due the estate is finalized.

The estate must indicate whether the Schedule PC being filed is the initial notice of protective claim for refund, notice of partial claim for refund, or notice of the final resolution of the claim for refund. Because each separate claim or expense requires a separate Schedule PC, more than one Schedule PC may be included with Form , if applicable.

Two copies of each Schedule PC must be included with Form The first Schedule PC to be filed is the initial notice of protective claim for refund. The estate will receive a written acknowledgment of receipt of the claim from the IRS. If the acknowledgment is not received within days of filing the protective claim for refund on Schedule PC, the fiduciary should contact the IRS at to inquire about the receipt and processing of the claim. A certified mail receipt or other evidence of delivery is not sufficient to confirm receipt and processing of the protective claim for refund.

The written acknowledgment of receipt does not constitute a determination that all requirements for a valid protective claim for refund have been met. In general, the claim will not be subject to substantive review until the amount of the claim has been established. However, a claim can be disallowed at the time of filing. For example, the claim for refund will be rejected if:.

The claim was not filed by the fiduciary or other person with authority to act on behalf of the estate;. The acknowledgment of the penalties of perjury statement on page 1 of Form was not signed; or,. If the IRS does not raise such a defect when the claim is filed, it will not be precluded from doing so in the later substantive review. The estate may be given an opportunity to cure any defects in the initial notice by filing a corrected and signed protective claim for refund before the expiration of the limitations period in section a or within 45 days of notice of the defect, whichever is later.

If a Section protective claim for refund has been adequately identified on Schedule PC, the IRS will presume that the claim includes certain expenses related to resolving, defending or satisfying the claim. The estate is not required to separately identify or substantiate these expenses; however, each expense must meet the requirements of section to be deductible. When an expense that was the subject of a section protective claim for refund is finally determined, the estate must notify the IRS that the claim for refund is ready for consideration.

The notification should provide facts and evidence substantiating the deduction under section and the resulting recomputation of the estate tax liability. A separate notice of final resolution must be filed with the IRS for each resolved section protective claim for refund. There are two means by which the estate may notify the IRS of the resolution of the uncertainty that deprived the estate of the deduction when Form was filed.

The estate may file a supplemental Form with an updated Schedule PC and including each schedule affected by the allowance of the deduction under section A copy of the initial notice of claim should also be submitted.

Alternatively, the estate may notify the IRS by filing an updated Form , Claim for Refund and Request for Abatement. A copy of the initial notice of claim must also be submitted. The estate should notify the IRS of resolution within 90 days of the date the claim or expense is paid or the date on which the amount of the claim becomes certain and no longer subject to contingency, whichever is later. Separate notifications must be submitted for every section protective claim for refund that was filed.

If the final section claim or expense involves multiple or recurring payments, the day period begins on the date of the last payment. The estate may also notify the IRS not more than annually as payments are being made and possibly qualify for a partial refund based on the amounts paid through the date of the notice.

Complete Part 1 by providing information that is correct and complete as of the time Schedule PC is filed. If filing an updated Schedule PC with a supplemental Form or as notice of final resolution of the protective claim for refund, be sure to update the information from the original filing to ensure that it is accurate. Be particularly careful to verify that contact information addresses and telephone numbers and the reason for filing Schedule PC are indicated correctly.

If the fiduciary is different from the executor identified on page 1 of Form or has changed since the initial notice of protective claim for refund was filed, attach letters testamentary, letters of administration, or similar documentation evidencing the fiduciary's authority to file the protective claim for refund on behalf of the estate. Include a copy of Form 56, Notice Concerning Fiduciary Relationship, if it has been filed.

For a protective claim for refund to be properly filed and considered, the claim or expense forming the basis of the potential deduction must be clearly identified.

Using the check boxes provided, indicate whether you are filing the initial claim for refund, a claim for partial refund or a final claim. On the chart in Part 2, give the Form schedule and item number of the claim or expense. List any amounts claimed under exceptions for ascertainable amounts Regulations section Provide all relevant information as described including, most importantly, an explanation of the reasons and contingencies delaying the actual payment to be made in satisfaction of the claim or expense.

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Complete columns E and F only if filing a notice of partial or final resolution. Show the amount of ancillary or related expenses to be included in the claim for refund and indicate whether this amount is estimated, agreed upon, or has been paid.

Also show the amount being claimed for refund.

If you made partial claims for a recurring expense, the amount presently claimed as a deduction under section will only include the amount presently claimed, not the cumulative amount. On the chart in Part 3, provide information on other protective claims for refund that have been previously filed on behalf of the estate if any , whether on other Schedules PC or on Form When the initial claim for refund is filed, only information from Form s need be included in Part 3.

However, when filing a partial or final claim for refund, complete Part 3 by including the status of all claims filed by or on behalf of the estate, including those filed on other Schedules PC with Form For each such claim, give the place of filing, date of filing and amount of the claim. When you need to list more assets or deductions than you have room for on one of the main schedules, use the Continuation Schedule at the end of Form It provides a uniform format for listing additional assets from Schedules A through I and additional deductions from Schedules J, K, L, M, and O.

Use a separate Continuation Schedule for each main schedule you are continuing.

Do not combine assets or deductions from different schedules on one Continuation Schedule. Enter the letter of the schedule you are continuing in the space at the top of the Continuation Schedule. Use the Unit value column only if continuing Schedule B, E, or G.

For all other schedules, use this space to continue the description. Carry the total from the Continuation Schedules forward to the appropriate line on the main schedule. Subscriptions IRS Guidewire IRS Newswire QuickAlerts e-News for Tax Professionals IRS Tax Tips More. Table of Contents Part 1—Decedent and Executor Line 2 Line 6a.

Name of Executor Line 6b. Executor's Address Line 6c. Executor's Social Security Number Line 6d. Multiple Executors Line Special Rule Part 2—Tax Computation Line 1 Line 3b. State Death Tax Deduction Line 6 Lines 4 and 7 Lines 9a through 9d. Applicable Credit Amount formerly Unified Credit Amount Line Adjustment to Applicable Credit Line Total Credits Part 3—Elections by the Executor Line 1. Alternate Valuation Line 2. Special-Use Valuation of Section A Line 3.

Section Installment Payments Line 4. Reversionary or Remainder Interests Part 4—General Information Authorization Line 3 Line 4 Line 5 Line 6. Protective Claim for Refund Line 7. Section Property Line 9. Insurance Not Included in the Gross Estate Line Partnership Interests and Stock in Close Corporations Line Foreign Accounts Part 5—Recapitulation Gross Estate—Items 1 through 11 Exclusion — Item 12 Deductions — Items 14 through 23 Part 6—Portability of Deceased Spousal Unused Exclusion DSUE Last Deceased Spouse Limitation Making the Election Opting Out Computing the DSUE Amount Special Rule Where Value of Certain Property Not Required to Be Reported on Form Specific Instructions Schedule A—Real Estate Schedule A-1—Section A Valuation Part 1.

Type of Election Part 2. Notice of Election GST Tax Savings Part 3. Agreement to Special Valuation Under Section A Checklist for Section A Election Schedule B—Stocks and Bonds Description Valuation Schedule C—Mortgages, Notes, and Cash Schedule D—Insurance on the Decedent's Life Completing the Schedule Schedule E—Jointly Owned Property Schedule F—Other Miscellaneous Property You must complete Schedule F and file it with the return.

Decedent Who Was a Surviving Spouse Schedule G—Transfers During Decedent's Life Special Valuation Rules for Certain Lifetime Transfers How To Complete Schedule G Schedule H—Powers of Appointment Powers of Appointment Attachments Schedule I—Annuities General Annuities Under Approved Plans Line A. Lump Sum Distribution Election How To Complete Schedule I Schedule J—Funeral Expenses and Expenses Incurred in Administering Property Subject to Claims Schedule K—Debts of the Decedent and Mortgages and Liens Debts of the Decedent Mortgages and Liens Description Schedule L—Net Losses During Administration and Expenses Incurred in Administering Property Not Subject to Claims Net Losses During Administration Expenses Incurred in Administering Property Not Subject to Claims Schedule M—Bequests, etc.

Qualified Disclaimer Attachments Value Schedule P—Credit for Foreign Death Taxes General Limitation Period Credit Under the Statute Computation of Credit Under the Statute Credit Under Treaties Schedule Q—Credit for Tax on Prior Transfers General Property Maximum Amount of the Credit Percent Allowable How To Figure the Credit How To Complete the Schedule Q Worksheet Schedules R and R-1 —Generation-Skipping Transfer Tax Introduction and Overview Determining Which Transfers Are Direct Skips Dividing Direct Skips Between Schedules R and R-1 How To Complete Schedules R and R-1 How To Complete Schedule R How To Complete Schedule R-1 Schedule U—Qualified Conservation Easement Exclusion General Requirements Specific Instructions Schedule PC—Protective Claim for Refund Initial Notice of Claim Related Ancillary Expenses Notice of Final Resolution of Claim Specific Instructions Continuation Schedule.

Include the estimated value of the asset in the totals entered on lines 10 and 23 of Part 5— Recapitulation. Form has 31 numbered pages. Total the items listed on the schedule and its attachments, Continuation Schedules, etc.

Enter the total, or totals, for each schedule on page 3, Part 5—Recapitulation. When you complete the return, staple all the required pages together in the proper order. Part 1—Decedent and Executor.

Executor's Social Security Number. You must complete Part 2—Tax Computation. Table A — Unified Rate Schedule. State Death Tax Deduction. A petition is filed with the Tax Court of the United States, You have an extension of time to pay, or You file a claim for refund or credit of an overpayment which extends the deadline for claiming the deduction.

The deduction is not subject to dollar limits. If you make a section election to pay the federal estate tax in installments and make a similar election to pay the state death tax in installments, see section b for exceptions and periods of limitation. If you transfer property other than cash to the state in payment of state inheritance taxes, the amount you may claim as a deduction is the lesser of the state inheritance tax liability discharged or the fair market value FMV of the property on the date of the transfer.

For more information on the application of such transfers, see the principles discussed in Rev. Send the following evidence to the IRS: Certificate of the proper officer of the taxing state, or the District of Columbia, showing the: Total amount of tax imposed before adding interest and penalties and before allowing discount , Amount of discount allowed, Amount of penalties and interest imposed or charged, Total amount actually paid in cash, and Date of payment.

Lines 4 and 7. Worksheet TG and Line 4 Worksheet. This image is too large to be displayed in the current screen. Please click the link to view the image. Line 7 Worksheet — Submit a copy with Form Enter amount from Worksheet TG, line 2, col. Enter here and on Part 2—Tax Computation, line 7. Enter this amount on line 3, Section C, Part 6 of Form sum of amounts in Row r.

For annual returns, enter the tax period as YYYY. For quarterly returns enter tax period as YYYY—Q. Enter amount from Row d of the previous column. Enter amount from Row f of the previous column. Calculate the applicable credit on the amount in row j , using Table A — Unified Rate Schedule, and enter here. For each column in row k , subtract 20 percent of any amount allowed as a specific exemption for gifts made after September 8, , and before January 1, Taxable Gift Amount Table. Column A Column B Column C Column D Amount in Row p Line 7 Worksheet over Amount in Row p Line 7 Worksheet not over How to complete line 7 worksheet.

Beginning with the earliest year in which the taxable gifts were made, enter the tax period of prior gifts. If you filed returns for gifts made after , enter the calendar year in Row a as YYYY.

If you filed returns for gifts made after and before , enter the calendar quarters in Row a as YYYY-Q. Enter all taxable gifts made in the specified year.

Enter all pre gifts on the pre column. Enter the amount from Row d of the previous column. Enter the sum of Row b and Row c from the current column. Enter the amount from Row f of the previous column. Enter the tax based on the amount in Row d of the current column using Table A — Unified Rate Schedule, earlier. Subtract the amount in Row e from the amount in Row f for the current column.

Complete this row only if a DSUE amount was received from predeceased spouse s and was applied to lifetime gifts. See line 2 of Schedule C on the Form filed for the year listed in Row a for the amount to be entered in this row. Enter the applicable amount from the Table of Basic Exclusion Amounts. Enter the sum of Rows h and Row i. Calculate the applicable credit on the amount in Row j using Table A — Unified Rate Schedule, and enter here.

Add the amounts in Row l and Row n from the previous column. Subtract the amount in Row l from the amount in Row k to determine the amount of any available credit.

Enter result in Row m. Enter the lesser of the amounts in Row g or Row m. Subtract the amount in Row n from the amount in Row g for the current column. Subtract the amount in Row o from the amount in Row f for the current column. Enter the Cumulative Taxable Gift amount based on the amount in Row p using the Taxable Gift Amount Table. If Row o is greater than zero in the applicable period, subtract Row q from Row d.

If Row o is not greater than zero, enter Repeat for each year in which taxable gifts were made. In figuring the line 7 amount, do not include any tax paid or payable on gifts made before The line 7 amount is a hypothetical figure used to calculate the estate tax.

Special treatment of split gifts. These special rules apply only if: Lines 9a through 9d. Applicable Credit Amount formerly Unified Credit Amount. Adjustment to Applicable Credit. The specific exemption was allowed by section for gifts made before January 1, In addition to using line 15 to report credit for federal gift taxes on pre gifts, you may also use line 15 to claim the Canadian marital credit, where applicable. When taking the marital credit under the Canadian Protocol: Part 3—Elections by the Executor.

Interest accrued to the date of the decedent's death on bonds, notes, and other interest-bearing obligations is property of the gross estate on the date of death and is included in the alternate valuation. Rent accrued to the date of the decedent's death on leased real or personal property is property of the gross estate on the date of death and is included in the alternate valuation.

Outstanding dividends that were declared to stockholders of record on or before the date of the decedent's death are considered property of the gross estate on the date of death, and are included in the alternate valuation. Ordinary dividends declared to stockholders of record after the date of the decedent's death are not included in the gross estate on the date of death and are not eligible for alternate valuation.

However, if dividends are declared to stockholders of record after the date of the decedent's death so that the shares of stock at the later valuation date do not reasonably represent the same property at the date of the decedent's death, include those dividends except dividends paid from earnings of the corporation after the date of the decedent's death in the alternate valuation.