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Part 3—Elections by the Executor Note. 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 706. See the instructions for Part 6—Portability of Deceased Spousal Unused Exclusion, later, and sections 2010(c)(4) and (c)(5). Line 1. Alternate Valuation 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 2032, 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 elect special-use valuation (line 2) in addition to alternate valuation. 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. Elect alternate valuation by checking “Yes” on line 1 and filing Form 706. You may make a protective alternate valuation election by checking “Yes” on line 1, writing the word “protective,” and filing Form 706 using regular values. Once made, the election may not be revoked. The election may be made on a late-filed Form 706, provided it is not filed later than 1 year after the due date (including extensions actually granted). Relief under Regulations sections 301.9100-1 and 301.9100-3 may be available to make an alternate valuation election or a protective alternate valuation election, provided a Form 706 is filed no later than 1 year after the due date of the return (including extensions actually granted). 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 the decedent's death or on the date of its distribution, sale, exchange, or other disposition, whichever occurs first. However, you may change the date of death value to account for any change in value that is not due to a “mere lapse of time” on the date of its distribution, sale, exchange, or other disposition. The property included in the alternate valuation and valued as of 6 months after the date of the decedent's death, TIP 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. Interest. 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. 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. Dividends. 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. On Schedules A through I, you must show the following. 1. What property is included in the gross estate on the date of the decedent's death. 2. 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. (These two items should be entered in the “Description” column of each schedule. Briefly explain the status or disposition governing the alternate valuation date, such as “Not disposed of within 6 months following death,” “Distributed,” “Sold,” “Bond paid on maturity,” etc. In this same column, describe each item of principal and includible income.) 3. The date of death value, entered in the appropriate value column with items of principal and includible income shown separately. 4. The alternate value, entered in the appropriate value column with items of principal and includible income shown separately. (In the case of any interest or estate, the value of which is affected by lapse of time, such as patents, leaseholds, estates for the life of another, or remainder interests, the value shown under the heading “Alternate value” must be the adjusted value, for example, the value as of the date of death with an adjustment reflecting any difference in its value as of the later date not due to lapse of time.) Note. If any property on Schedules A through I is being valued pursuant to the special rule of Regulations section 20.2010-2(a)(7)(ii), values for those assets are not required to be reported on the schedule. See Part 5—Recapitulation, line 10, later. 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 Instructions for Form 706 (Rev. 09-2022) -11-