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appropriate to allocate additional

WORKSHEET (inclusion ratio for

You may enter a transfer on Part 3

only if the will or trust instrument

exemption amounts to the property.

trust):

directs, by specific reference, that the

See the instructions for line 10 below.

1 Total estate and gift tax value of

GST tax is not to be paid from the

all of the property interests that

transferred property interests.

To avoid application of the

passed to the trust . . . . . . . . . .

Part 2, Line 3. Enter zero on this line

deemed allocation rules, Form

2 Estate taxes, state death taxes,

unless the will or trust instrument

and other charges actually

706 and Schedule R should be

CAUTION

specifies that the GST taxes will be

recovered from the trust . . . . . .

filed to allocate the exemption to trusts

paid by property other than that

3 GST taxes imposed on direct

that may later have taxable

constituting the transfer (as described

skips to skip persons other than

terminations or distributions under

this trust and borne by the

above). Enter on line 3 the total of the

section 2612 even if the form is not

property transferred to this trust

GST taxes shown on Part 3 and

required to be filed to report estate or

4 GST taxes actually recovered

Schedule(s) R-1 that are payable out of

GST tax.

from this trust (from Schedule R,

the property interests shown on Part 2,

Part 2, line 8 or Schedule R-1,

line 1.

line 6) . . . . . . . . . . . . . . . . . . .

Line 9, column C. Enter the GST

Part 2, Line 6. Do not enter more than

5 Add lines 2 through 4 . . . . . . . .

exemption included on lines 2 through

the amount on line 5. Additional

6 Subtract line 5 from line 1 . . . . .

6 of Part 1 of Schedule R, and

allocations may be made using Part 1.

7 Add columns C and D of line 9 . .

discussed above, that was allocated to

8 Divide line 7 by line 6 . . . . . . . .

Part 3, Line 3. See the instructions to

the trust.

9 Trust’s inclusion ratio. Subtract

Part 2, line 3 above. Enter only the total

line 8 from 1.000 . . . . . . . . . . .

of the GST taxes shown on

Line 9, column D. Allocate the

Schedule(s) R-1 that are payable out of

amount on line 8 of Part 1 of Schedule

the property interests shown on Part 3,

Line 10. Special-use allocation. For

R in line 9, column D. This amount may

line 1.

skip persons who receive an interest in

be allocated to transfers into trusts that

section 2032A special-use property,

Part 3, Line 6. See the instructions to

are not otherwise reported on Form

you may allocate more GST exemption

Part 2, line 6 above.

706. For example, the line 8 amount

than the direct skip amount to reduce

How To Complete Schedule

may be allocated to an inter vivos trust

the additional GST tax that would be

due when the interest is later disposed

established by the decedent during his

R-1

of or qualified use ceases. See

or her lifetime and not included in the

Filing due date. Enter the due date of

Schedule A-1 of this Form 706 for more

gross estate. This allocation is made by

Schedule R, Form 706. You must send

details about this additional GST tax.

identifying the trust on line 9 and

the copies of Schedule R-1 to the

making an allocation to it using column

Enter on line 10 the total additional

fiduciary by this date.

D. If the trust is not included in the

GST exemption available to allocate to

Line 4. Do not enter more than the

gross estate, value the trust as of the

all skip persons who received any

amount on line 3. If you wish to allocate

date of death. You should inform the

interest in section 2032A property.

an additional GST exemption, you must

Attach a special-use allocation

trustee of each trust listed on line 9 of

use Schedule R, Part 1. Making an

schedule listing each such skip person

the total GST exemption you allocated

entry on line 4 constitutes a Notice of

and the amount of the GST exemption

to the trust. The trustee will need this

Allocation of the decedent’s GST

allocated to that person.

information to compute the GST tax on

exemption to the trust.

future distributions and terminations.

If you do not allocate the GST

Line 6. If the property interests

exemption, it will be automatically

entered on line 1 will not bear the GST

Line 9, column E. Trust’s

allocated under the deemed allocation

tax, multiply line 6 by 45% (.45).

at death rules. To the extent any

inclusion ratio. The trustee must

Signature. The executor(s) must sign

amount is not so allocated, it will be

know the trust’s inclusion ratio to figure

Schedule R-1 in the same manner as

automatically allocated to the earliest

the trust’s GST tax for future

Form 706. See Signature and

disposition or cessation that is subject

distributions and terminations. You are

Verification on page 2.

to the GST tax. Under certain

not required to inform the trustee of the

circumstances, post-death events may

Filing Schedule R-1. Attach to Form

inclusion ratio and may not have

cause the decedent to be treated as a

706 one copy of each Schedule R-1

enough information to compute it.

transferor for purposes of Chapter 13.

that you prepare. Send two copies of

Therefore, you are not required to

each Schedule R-1 to the fiduciary.

Line 10 may be used to set aside an

make an entry in column E. However,

exemption amount for such an event.

column E and the worksheet below are

Schedule U—Qualified

You must attach a schedule listing each

provided to assist you in computing the

such event and the amount of

Conservation Easement

inclusion ratio for the trustee if you wish

exemption allocated to that event.

to do so.

Exclusion

Parts 2 and 3

You should inform the trustee of the

Use Part 2 to compute the GST tax on

If at the time of the contribution

amount of the GST exemption you

transfers in which the property interests

of the conservation easement,

allocated to the trust. Line 9, columns C

transferred are to bear the GST tax on

the value of the easement, the

CAUTION

and D may be used to compute this

the transfers. Use Part 3 to report the

value of the land subject to the

amount for each trust.

GST tax on transfers in which the

easement, or the value of any retained

property interests transferred do not

development right, was different than

bear the GST tax on the transfers.

This worksheet will compute an

the estate tax value, you must complete

accurate inclusion ratio only if the

a separate computation in addition to

Section 2603(b) requires that unless

completing Schedule U.

decedent was the only settlor of the

the governing instrument provides

trust. You should use a separate

otherwise, the GST tax is to be charged

Use a copy of Schedule U as a

worksheet for each trust (or separate

to the property constituting the transfer.

worksheet for this separate

share of a trust that is treated as a

Therefore, you will usually enter all of

computation. Complete lines 4 through

separate trust).

the direct skips on Part 2.

14 of the worksheet Schedule U.

-27-

Instructions for Schedules

Instructions For Form 706 - United States Estate (And Generation-Skipping Transfer) Tax Return - 2008 Page 27

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