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as authorized by section 2032, you

months after the date of the decedent’s

estates for the life of another, or

must value all property included in the

death, or as of some intermediate date

remainder interests, the value shown

gross estate on the date of the

(as described above) is the property

under the heading “Alternate value”

decedent’s death. Alternate valuation

included in the gross estate on the date

must be the adjusted value; for

cannot be applied to only a part of the

of the decedent’s death. Therefore, you

example, the value as of the date of

property.

must first determine what property

death with an adjustment reflecting any

constituted the gross estate at the

difference in its value as of the later

You may elect special-use valuation

decedent’s death.

date not due to lapse of time.)

(line 2) in addition to alternate

valuation.

Interest. Interest accrued to the date

Distributions, sales, exchanges, and

of the decedent’s death on bonds,

You may not elect alternate

other dispositions of the property within

notes, and other interest-bearing

valuation unless the election will

the 6-month period after the decedent’s

obligations is property of the gross

decrease both the value of the gross

death must be supported by evidence.

estate on the date of death and is

estate and the sum (reduced by

If the court issued an order of

included in the alternate valuation.

allowable credits) of the estate and

distribution during that period, you must

GST taxes payable by reason of the

Rent. Rent accrued to the date of the

submit a certified copy of the order as

decedent’s death with respect to the

decedent’s death on leased real or

part of the evidence. The IRS may

property includible in the decedent’s

personal property is property of the

require you to submit additional

gross estate.

gross estate on the date of death and is

evidence, if necessary.

included in the alternate valuation.

You elect alternate valuation by

If the alternate valuation method is

checking “Yes” on line 1 and filing Form

Dividends. Outstanding dividends that

used, the values of life estates,

706. You may make a protective

were declared to stockholders of record

remainders, and similar interests are

alternate valuation election by checking

on or before the date of the decedent’s

figured using the age of the recipient on

“Yes” on line 1, writing the word

death are considered property of the

the date of the decedent’s death and

“protective,” and filing Form 706 using

gross estate on the date of death, and

the value of the property on the

regular values.

are included in the alternate valuation.

alternate valuation date.

Ordinary dividends declared to

Once made, the election may not be

Line 2. Special-Use Valuation

stockholders of record after the date of

revoked. The election may be made on

of Section 2032A

the decedent’s death are not property

a late filed Form 706 provided it is not

of the gross estate on the date of death

filed later than 1 year after the due date

In general. Under section 2032A, you

and are not included in the alternate

(including extensions actually granted).

may elect to value certain farm and

valuation. However, if dividends are

Relief under sections 301.9100-1 and

closely held business real property at

declared to stockholders of record after

301.9100-3 may be available to make

its farm or business use value rather

the date of the decedent’s death so that

an alternate valuation election or a

than its fair market value (FMV). You

the shares of stock at the later

protective alternate valuation election,

may elect both special-use valuation

valuation date do not reasonably

provided a Form 706 is filed no later

and alternate valuation.

represent the same property at the date

than 1 year after the due date of the

To elect this valuation, you must

of the decedent’s death, include those

return (including extensions actually

check “Yes” on line 2 and complete and

dividends (except dividends paid from

granted).

attach Schedule A-1 and its required

earnings of the corporation after the

If you elect alternate valuation, value

additional statements. You must file

date of the decedent’s death) in the

the property that is included in the

Schedule A-1 and its required

alternate valuation.

gross estate as of the applicable dates

attachments with Form 706 for this

as follows.

As part of each Schedule A through

election to be valid. You may make the

•

Any property distributed, sold,

I, you must show:

election on a late filed return so long as

exchanged, or otherwise disposed of or

1. What property is included in the

it is the first return filed.

separated or passed from the gross

gross estate on the date of the

The total value of the property

estate by any method within 6 months

decedent’s death;

valued under section 2032A may not be

after the decedent’s death is valued on

2. What property was distributed,

decreased from FMV by more than

the date of distribution, sale, exchange,

sold, exchanged, or otherwise disposed

$960,000 for decedents dying in 2008.

or other disposition, whichever occurs

of within the 6-month period after the

first. Value this property on the date it

Real property may qualify for the

decedent’s death, and the dates of

ceases to form a part of the gross

section 2032A election if:

these distributions, etc.

estate; for example, on the date the title

(These two items should be entered in

1. The decedent was a U.S. citizen

passes as the result of its sale,

the “Description” column of each

or resident at the time of death;

exchange, or other disposition.

schedule. Briefly explain the status or

2. The real property is located in the

•

Any property not distributed, sold,

disposition governing the alternate

United States;

exchanged, or otherwise disposed of

valuation date, such as: “Not disposed

3. At the decedent’s death, the real

within the 6-month period is valued on

of within 6 months following death,”

property was used by the decedent or a

the date 6 months after the date of the

“Distributed,” “Sold,” “Bond paid on

family member for farming or in a trade

decedent’s death.

maturity,” etc. In this same column,

or business, or was rented for such use

•

Any property, interest, or estate that

describe each item of principal and

by either the surviving spouse or a

is “affected by mere lapse of time” is

includible income);

lineal descendant of the decedent to a

valued as of the date of decedent’s

3. The date of death value, entered

family member on a net cash basis;

death or on the date of its distribution,

in the appropriate value column with

4. The real property was acquired

sale, exchange, or other disposition,

items of principal and includible income

from or passed from the decedent to a

whichever occurs first. However, you

shown separately; and

qualified heir of the decedent;

may change the date of death value to

4. The alternate value, entered in

5. The real property was owned and

account for any change in value that is

the appropriate value column with items

used in a qualified manner by the

not due to a “mere lapse of time” on the

of principal and includible income

decedent or a member of the

date of its distribution, sale, exchange,

shown separately.

decedent’s family during 5 of the 8

or other disposition.

(In the case of any interest or estate,

years before the decedent’s death;

The property included in the

the value of which is affected by lapse

6. There was material participation

alternate valuation and valued as of 6

of time, such as patents, leaseholds,

by the decedent or a member of the

-7-

Part Instructions

Instructions For Form 706 - United States Estate (And Generation-Skipping Transfer) Tax Return - 2008 Page 7

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