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the land (regardless of whether in

All parties to the agreement must

granted was $100,000 and $10,000

possession) agrees to permanently

sign the agreement.

was received in consideration for the

extinguish the retained development

easement. If the easement was worth

For an example of an agreement

right. The agreement must be filed with

$150,000 at the date of death, you

containing some of the same terms,

this return and must include the

must reduce the value of the easement

see Schedule A-1 (Form 706).

by $15,000 ($10,000/$100,000 ×

following information and terms:

Line 10

$150,000) and report the value of the

1. A statement that the agreement

easement on line 10 as $135,000.

is made under section 2031(c)(5);

Enter the total value of the qualified

2. A list of all persons in being

conservation easements on which the

Line 15

holding an interest in the land that is

exclusion is based. This could include

If a charitable contribution deduction for

subject to the qualified conservation

easements granted by the decedent (or

this land has been taken on Schedule

easement. Include each person’s

someone other than the decedent) prior

O, enter the amount of the deduction

name, address, tax identifying number,

to the decedent’s death, easements

here. If the easement was granted after

relationship to the decedent, and a

granted by the decedent that take effect

the decedent’s death, a contribution

description of their interest;

at death, easements granted by the

deduction may be taken on Schedule

3. The items of real property shown

executor after the decedent’s death, or

O, if it otherwise qualifies, as long as no

on the estate tax return that are subject

some combination of these.

income tax deduction was or will be

to the qualified conservation easement

Use the value of the easement

claimed for the contribution by any

(identified by schedule and item

as of the date of death, even if

person or entity.

number);

the easement was granted prior

CAUTION

4. A description of the retained

Line 16

to the date of death. But, if the value of

development right that is to be

the easement was different at the time

You must reduce the value of the land

extinguished;

the easement was contributed than at

by the amount of any acquisition

5. A clear statement of consent that

the date of death, see the Caution at

indebtedness on the land at the date of

is binding on all parties under

the beginning of the Schedule U

the decedent’s death. Acquisition

applicable local law:

Instructions.

indebtedness includes the unpaid

a. To take whatever action is

amount of:

Explain how this value was

necessary to permanently extinguish

•

Any indebtedness incurred by the

determined and attach copies of any

the retained development rights listed in

donor in acquiring the property;

appraisals. Normally, the appropriate

the agreement and

•

Any indebtedness incurred before the

way to value a conservation easement

b. To be personally liable for

acquisition if the indebtedness would

is to determine the FMV of the land

additional taxes under section

not have been incurred but for the

both before and after the granting of the

2031(c)(5)(C) if this agreement is not

acquisition;

easement, with the difference being the

implemented by the earlier of:

•

Any indebtedness incurred after the

value of the easement.

•

The date that is 2 years after the

acquisition if the indebtedness would

date of the decedent’s death or

You must reduce the reported value

not have been incurred but for the

•

The date of sale of the land subject

of the easement by the amount of any

acquisition and the incurrence of the

to the qualified conservation

consideration received for the

indebtedness was reasonably

easement,

easement. If the date of death value of

foreseeable at the time of the

6. A statement that in the event this

the easement is different from the value

acquisition; and

•

agreement is not timely implemented,

at the time the consideration was

The extension, renewal, or

that they will report the additional tax on

received, you must reduce the value of

refinancing of acquisition indebtedness.

whatever return is required by the IRS

the easement by the same proportion

and will file the return and pay the

that the consideration received bears to

Continuation Schedule

additional tax by the last day of the 6th

the value of the easement at the time it

month following the applicable date

was granted. For example, assume the

See instructions for Continuation

described above.

value of the easement at the time it was

Schedule on Form 706 itself.

-29-

Instructions For Form 706 - United States Estate (And Generation-Skipping Transfer) Tax Return - 2008 Page 29

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