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the trust’s GST tax for future circumstances, post-death events may Filing Schedule R-1. Attach to Form distributions and terminations. You are cause the decedent to be treated as a 706 one copy of each Schedule R-1 not required to inform the trustee of the transferor for purposes of Chapter 13. that you prepare. Send two copies of inclusion ratio and may not have each Schedule R-1 to the fiduciary. Line 10 may be used to set aside an enough information to figure it. exemption amount for such an event. Therefore, you are not required to Schedule U—Qualified You must attach a schedule listing each make an entry in column E. However, such event and the amount of Conservation Easement column E and the worksheet below are exemption allocated to that event. provided to assist you in figuring the Exclusion Parts 2 and 3 inclusion ratio for the trustee if you wish to do so. Use Part 2 to figure the GST tax on If at the time of the contribution transfers in which the property interests You should inform the trustee of the of the conservation easement, transferred are to bear the GST tax on amount of the GST exemption you the value of the easement, the CAUTION ! the transfers. Use Part 3 to report the allocated to the trust. Line 9, columns C value of the land subject to the GST tax on transfers in which the and D may be used to figure this easement, or the value of any retained property interests transferred do not amount for each trust. development right was different than bear the GST tax on the transfers. the estate tax value, you must complete Note. This worksheet will figure an a separate computation in addition to Section 2603(b) requires that unless accurate inclusion ratio only if the completing Schedule U. the governing instrument provides decedent was the only settlor of the otherwise, the GST tax is to be charged Use a copy of Schedule U as a trust. You should use a separate to the property constituting the transfer. worksheet for this separate worksheet for each trust (or separate Therefore, you will usually enter all of computation. Complete lines 4 through share of a trust that is treated as a the direct skips on Part 2. 14 of the worksheet Schedule U. separate trust). You may enter a transfer on Part 3 However, the value you use on lines 4, only if the will or trust instrument 5, 7, and 10 of the worksheet is the WORKSHEET (inclusion ratio): directs, by specific reference, that the value for these items as of the date of 1 Total estate and gift tax value of GST tax is not to be paid from the the contribution of the easement, not all of the property interests that transferred property interests. the estate tax value. If the date of passed to the trust . . . . . . . . . . contribution and the estate tax values Part 2, Line 3. Enter zero on this line 2 Estate taxes, state death taxes, are the same, you do not need to do a unless the will or trust instrument and other charges actually separate computation. specifies that the GST taxes will be recovered from the trust . . . . . . paid by property other than that After completing the worksheet, 3 GST taxes imposed on direct constituting the transfer (as described skips to skip persons other than enter the amount from line 14 of the this trust and borne by the above). Enter on line 3 the total of the worksheet on line 14 of Schedule U. property transferred to this trust GST taxes shown on Part 3 and Finish completing Schedule U by 4 GST taxes actually recovered Schedule(s) R-1 that are payable out of entering amounts on lines 4, 7, and 15 from this trust (from Schedule R, the property interests shown on Part 2, through 20, following the instructions Part 2, line 8 or Schedule R-1, line 1. below for those lines. At the top of line 6) . . . . . . . . . . . . . . . . . . . Schedule U, enter ‘‘worksheet Part 2, Line 6. Do not enter more than 5 Add lines 2 through 4 . . . . . . . . attached.’’ Attach the worksheet to the the amount on line 5. Additional 6 Subtract line 5 from line 1 . . . . . return. allocations may be made using Part 1. 7 Add columns C and D of line 9 . . 8 Divide line 7 by line 6 . . . . . . . . Under section 2031(c), you may Part 3, Line 3. See the instructions to 9 Trust’s inclusion ratio. Subtract elect to exclude a portion of the value Part 2, line 3 above. Enter only the total line 8 from 1.000 . . . . . . . . . . . of land that is subject to a qualified of the GST taxes shown on conservation easement. You make the Schedule(s) R-1 that are payable out of election by filing Schedule U with all of the property interests shown on Part 3, Line 10. Special-use allocation. For the required information and excluding line 1. skip persons who receive an interest in the applicable value of the land that is section 2032A special-use property, Part 3, Line 6. See the instructions to subject to the easement on Part you may allocate more GST exemption Part 2, line 6 above. 5—Recapitulation, page 3, at item 11. than the direct skip amount to reduce To elect the exclusion, you must the additional GST tax that would be How To Complete Schedule include on Schedule A, B, E, F, G, or H, due when the interest is later disposed R-1 as appropriate, the decedent’s interest of or qualified use ceases. See in the land that is subject to the Filing due date. Enter the due date of Schedule A-1, above, for more details exclusion. You must make the election Form 706. You must send the copies of about this additional GST tax. on a timely filed Form 706, including Schedule R-1 to the fiduciary before Enter on line 10 the total additional extensions. this date. GST exemption available to allocate to Line 4. Do not enter more than the The exclusion is the lesser of: all skip persons who received any amount on line 3. If you wish to allocate • The applicable percentage of the interest in section 2032A property. an additional GST exemption, you must value of land (after certain reductions) Attach a special-use allocation use Schedule R, Part 1. Making an subject to a qualified conservation schedule listing each such skip person entry on line 4 constitutes a Notice of easement or and the amount of the GST exemption Allocation of the decedent’s GST • $500,000. allocated to that person. exemption to the trust. Once made, the election is If you do not allocate the GST Line 6. If the property interests irrevocable. exemption, it will be automatically entered on line 1 will not bear the GST allocated under the deemed allocation tax, multiply line 6 by 35% (0.35). General Requirements at death rules. To the extent any amount is not so allocated, it will be Signature. The executor(s) must sign Qualified Land automatically allocated to the earliest Schedule R-1 in the same manner as disposition or cessation that is subject Form 706. See Signature and Land may qualify for the exclusion if all to the GST tax. Under certain Verification. of the following requirements are met: -38- Part Instructions