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Line 3 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. Line 4 Enter on this line the gross value at which the land was reported on the applicable asset schedule on this Form 706. 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. Note. If the value of the land reported on line 4 was different at the time the easement was contributed from that reported on Form 706, see the Caution at the beginning of the Schedule U instructions. Line 5 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. Note. If the value of the easement reported on line 5 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. Line 7 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. Note. If the value of the retained development rights reported on line 7 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. 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 all of the following information and terms. 1. A statement that the agreement is made under section 2031(c)(5). 2. 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, TIN, relationship to the decedent, and a description of their interest. 3. 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). 4. A description of the retained development right that is to be extinguished. 5. A clear statement of consent that is binding on all parties under applicable local law: a. To take whatever action is necessary to permanently extinguish the retained development rights listed in the agreement; and b. To be personally liable for additional taxes under section 2031(c)(5)(C) if this agreement is not implemented by the earlier of:

• The date that is 2 years after the date of the decedent's death, or

• The date of sale of the land subject to the qualified conservation easement. 6. 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. All parties to the agreement must sign the agreement. For an example of an agreement containing some of the same terms, see Part 3 of Schedule A-1. Line 10 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. For example, assume the value of the easement at the time it was granted was $100,000 and $10,000 was received in consideration for the easement. If the easement was worth $150,000 at the date of death, you must reduce the value of the easement by $15,000 ($10,000/$100,000 × $150,000) and report the value of the easement on line 10 as $135,000. CAUTION ! -52- Instructions for Form 706 (Rev. 09-2022)