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• Slope of the land. • For livestock operations, the carrying capacity of the land. • For timbered land, whether the timber is comparable. • 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. • 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. Effective interest rate. See Tables 1 and 2 of Rev. Rul. 2021-15, 2021-35 I.R.B. 331, available at Rev. Rul. 2021-15, for the average annual effective interest rates in effect for 2021. Net share rental. 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. Valuing a real property interest in a closely held business. Use this method to determine the special-use valuation for qualifying real property used in a trade or business other than farming. You may also use this method for qualifying farm property if there is no comparable land or if you elect to use it. Under this method, the following factors are considered. • 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. • Any other factor that fairly values the farm or closely held business value of the property. Making the Election Include the words “Section 2032A valuation” in the “Description” column of any Form 706 schedule if section 2032A property is included in the decedent's gross estate. An election under section 2032A 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 2032A(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 2032A(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 2032A 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 2032A 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. Protective Election 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 2032A. To make a protective election, check “Yes” on line 2 and complete Schedule A-1 according to the instructions for Protective election, later. If you make a protective election, complete the initial Form 706 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 4768 in adequate time before the due date of the return. See the Instructions for Form 4768. If the estate qualifies for special-use valuation based on the values as finally determined, you must file an amended Form 706 (with a complete section 2032A election) within 60 days after the date of this determination. Prepare the amended return using special-use values under the rules of section 2032A, complete Schedule A-1, and attach all of the required statements. Additional Information For definitions and additional information, see section 2032A and the related regulations. Line 3. Section 6166 Installment Payments If the gross estate includes an interest in a closely held business, you may be Instructions for Form 706 (Rev. 09-2021) -13-