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The unpaid amount of the mortgage subsequently filed. You need not interests on the Schedule R, Parts 2 may be deducted on Schedule K. complete columns B through D of lines and 3 worksheets, as appropriate. Do 3 and 4. You need not complete any not use Schedule R-1 as a worksheet. If the decedent’s estate is not liable other line entries on Schedule A-1. Completing the special-use value for the amount of the mortgage, report Completing Schedule A-1 as described worksheets. On Schedule R, Parts 2 only the value of the equity of above constitutes a Notice of Protective and 3, lines 2 through 4 and 6, enter redemption (or value of the property Election as described in Regulations -0-. less the indebtedness) in the value section 20.2032A-8(b). column as part of the gross estate. Do Completing the fair market value not enter any amount less than zero. worksheets. Part 2. Notice of Election Do not deduct the amount of • Schedule R, Parts 2 and 3, lines 2 Line 10. Because the special-use indebtedness on Schedule K. and 3, fixed taxes and other charges. If valuation election creates a potential valuing the interests at their FMV Also list on Schedule A real property tax liability for the recapture tax of (instead of special-use value) causes the decedent contracted to purchase. section 2032A(c), you must list each any of these taxes and charges to Report the full value of the property and person who receives an interest in the increase, enter the increased amount not the equity in the value column. specially valued property on Schedule (only) on these lines and attach an Deduct the unpaid part of the purchase A-1. If there are more than eight explanation of the increase. Otherwise, price on Schedule K. persons who receive interests, use an enter -0-. Report the value of real estate additional sheet that follows the format • Schedule R, Parts 2 and 3, line without reducing it for homestead or of line 10. In the columns “Fair market 6—GST exemption allocation. If you other exemption, or the value of dower, value” and “Special-use value,” you completed Schedule R, Part 1, line 10, curtesy, or a statutory estate created should enter the total respective values enter on line 6 the amount shown for instead of dower or curtesy. of all the specially valued property the skip person on the line 10 interests received by each person. Explain how the reported values special-use allocation schedule you were determined and attach copies of attached to Schedule R. If you did not GST Tax Savings any appraisals. complete Schedule R, Part 1, line 10, To figure the additional GST tax due enter -0- on line 6. upon disposition (or cessation of Schedule A-1—Section Total GST tax savings. For each skip qualified use) of the property, each person, subtract the tax amount on line 2032A Valuation “skip person” (as defined in the 10, Part 2 of the special-use value instructions to Schedule R) who The election to value certain farm and worksheet from the tax amount on line receives an interest in the specially closely held business property at its 10, Part 2 of the fair market value valued property must know the total special-use value is made by checking worksheet. This difference is the skip GST tax savings on all of the interests “Yes” on Form 706, Part 3—Elections person’s total GST tax savings. in specially valued property received. by the Executor, line 2. Schedule A-1 is This GST tax savings is the difference used to report the additional information Part 3. Agreement to Special between the total GST tax that was that must be submitted to support this Valuation Under Section imposed on all of the interests in election. In order to make a valid 2032A specially valued property received by election, you must complete Schedule The agreement to special valuation by the skip person valued at their A-1 and attach all of the required persons with an interest in property is special-use value and the total GST tax statements and appraisals. required under section 2032A(a)(1)(B) that would have been imposed on the For definitions and additional and (d)(2) and must be signed by all same interests received by the skip information concerning special-use parties who have any interest in the person had they been valued at their valuation, see section 2032A and the property being valued based on its FMV. related regulations. qualified use as of the date of the Because the GST tax depends on decedent’s death. Part 1. Type of Election the executor’s allocation of the GST An interest in property is an interest exemption and the grandchild Estate and GST tax elections. If you that, as of the date of the decedent’s exclusion, the skip person who receives elect special-use valuation for the death, can be asserted under the interests is unable to figure this estate tax, you must also elect applicable law so as to affect the GST tax savings. Therefore, for each special-use valuation for the disposition of the specially valued skip person who receives an interest in Generation-Skipping Transfer (GST) property by the estate. Any person who specially valued property, you must tax and vice versa. at the decedent’s death has any such attach worksheets showing the total You must value each specific interest in the property, whether present GST tax savings attributable to all of property interest at the same value for or future, or vested or contingent, must that person’s interests in specially GST tax purposes that you value it at enter into the agreement. Included are valued property. for estate tax purposes. owners of remainder and executory How to figure the GST tax savings. Protective election. To make the interests; the holders of general or Before figuring each skip person’s GST protective election described in the special powers of appointment; tax savings, you must complete separate instructions for Part beneficiaries of a gift over in default of Schedules R and R-1 for the entire 3—Elections by the Executor, line 2, exercise of any such power; joint estate (using the special-use values). you must check this box, enter the tenants and holders of similar undivided For each skip person, you must decedent’s name and social security interests when the decedent held only a complete two Schedules R (Parts 2 and number in the spaces provided at the joint or undivided interest in the 3 only) as worksheets, one showing the top of Schedule A-1, and complete Part property or when only an undivided interests in specially valued property 2. Notice of Election, line 1 and lines 3 interest is specially valued; and trustees received by the skip person at their and 4, column A. For purposes of the of trusts and representatives of other special-use value and one showing the protective election, list on line 3 all of entities holding title to, or holding any same interests at their FMV. the real property that passes to the interests in the property. An heir who qualified heirs even though some of the If the skip person received interests has the power under local law to property will be shown on line 2 when in specially valued property that were challenge a will and thereby affect the additional notice of election is shown on Schedule R-1, show these disposition of the property is not, -15- Part Instructions