Estate Tax Division 800 Freeway Drive North Columbus, OH 43229-5404 1 (800) 977-7711 OHIO ESTATE TAX RETURN AND INSTRUCTIONS For dates of death January 1, 2001–December 31, 2001. 2002 © American LegalNet, Inc. Revised 1/01 For completing the Ohio Estate Tax Return for estates with dates of death January 1, 2001–December 31, 2001 please review the following: First: Read the General Information Section located on pages 18 and 19 for instructions. Then: Complete only the applicable schedules of the return which are on pages 4 through 17. When you are finished: First: Check your computation. Then: Follow the instructions in the General Information Section, page 18, for where to file and pay. Note: Estates with dates of death PRIOR to January 1, 2001 must file an Ohio Estate Tax Form 2, Revised 3/2000. For further information, please contact the Estate Tax Division’s Toll-Free Information and Assistance Line at 1 (800) 977-7711 ( Ohio Relay Service 1 (800) 750-0750 ) 2002 © American LegalNet, Inc. Ohio Estate Tax Return for all Resident Filings for Dates of Death January 1, 2001–December 31, 2001 Estate Tax Form 2 (Rev. 1/01) File in Duplicate with the Probate Court Check one: c Taxable c Nontaxable Estate of: Decedent’s last name Decedent’s first name and initial Date of death Date of birth Cause of death Occupation Decedent retired yes c Address of decedent at time of death (number and street, city, state and zip code) County in Ohio in which Probate Court located, where will probated or estate administered no c Decedent’s social security number Case number Tax Computation 1. Total Gross Estate (from page 2) 2. Total Deductions $ (from page 2) $ ( ) 3. Net Taxable Estate (line 1 minus line 2) $ 4. Tentative Tax based on line 3 (use table on page 2) $ 5. Less: Estate Tax Credit $ ( 6,600.00 ) 6. Tax (line 4 minus line 5) $ 7. Less: Previous Payments $ ( ) 8. Balance due (if amount on line 7 is less than tax amount on line 6, enter difference as balance due) $ 9. Overpayment (if amount on line 7 is greater than tax amount on line 6, enter difference as a refund) $ ( ) Executor/Administrator Waiver to Receive Correspondence I/we do not wish to receive further correspondence from the Ohio Department of Taxation regarding this estate, and hereby authorize all such communication to be directed only to the estate’s legal representative named below. Signature of Executor/Administrator Declaration Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct and complete. Declaration of preparer other than the deceased’s personal representative or person in possession of property is based on all information of which preparer has any knowledge. Name of Attorney representing the estate Address (number and street, city, state and zip code) Telephone number Name of Executor/Administrator(s) Address (number and street, city, state and zip code) Telephone number Signature of Executor/Administrator(s) Date Filed with Probate Court Date Signature of Preparer Distribution of Subdivision’s Share of Tax (Section 5731.48 and 5731.50 O.R.C.) Percentage Date Date Received by Ohio Department of Taxation City, Village or Township -12002 © American LegalNet, Inc. Recapitulation of Assets Schedule Value at Date of Death Alternate Value A Real Property ............................................. $ ______________________ $ _____________________ B C Stocks and Bonds ...................................... Mortgages, Notes and Cash ....................... ______________________ ______________________ _____________________ _____________________ D E Insurance ................................................... See Schedule E, Part I .............................. ______________________ ______________________ _____________________ _____________________ F Joint and Survivorship Property, Part II ..... Other Miscellaneous Property .................... ______________________ ______________________ _____________________ _____________________ G H Transfers During Lifetime .......................... Powers of Appointment .............................. ______________________ ______________________ _____________________ _____________________ I Annuities, Pensions, Retirement Plans ...... ______________________ _____________________ Total Gross Estate (enter on Line 1, Page 1) ............ $ ______________________ $ _____________________ Recapitulation of Deductions Amount Schedule J Debts and Administration Expenses ................................................................ $ _____________________ K Charitable Bequests ......................................................................................... ____________________ L Marital Deduction .............................................................................................. ____________________ T Qualified Family-Owned Business Interest Deduction ....................................... ____________________ Total Deductions (enter on Line 2, Page 1) ........................................................ $ _____________________ Elections by the Executor Please check the “yes” or “no” box for each question. (See explanation of elections on pages 20 and 21.) Yes No 1. Do you elect alternate valuation? Section 5731.01(A) and (D) O.R.C. ................................................ 2. Do you elect qualified farm property valuation? Section 5731.011 O.R.C. ..................................... 3. Do you elect to claim a marital deduction for qualified terminable interest property (QTIP)? Section 5731.15(B)(2) O.R.C. ............................................................................................................ 4. Do you elect to claim a deduction for a qualified family-owned business interest? Section 5731.20 O.R.C. .................................................................................................................... Tax Table Net Taxable Estate (from Line 3, Page 1) Tax Rate Not over $ 40,000 2% of taxable estate Over $ 40,000 but not over $100,000 $ 800 + 3% of excess over $ 40,000 Over $100,000 but not over $200,000 $ 2,600 + 4% of excess over $100,000 Over $200,000 but not over $300,000 $ 6,600 + 5% of excess over $200,000 Over $300,000 but not over $500,000 $11,600 + 6% of excess over $300,000 Over $500,000 $23,600 + 7% of excess over $500,000 -22002 © American LegalNet, Inc. Information Yes No 1. Did the decedent die testate? ........................................................................................................... If “yes,” please attach a copy of the will. 2. During the decedent’s lifetime, were there any trusts created (by the decedent or others for the decedent)? If “yes,” please attach a copy of the trust. 3. Were any disclaimers filed or elections to take against the will made? ............................................ If “yes,” please attach copies of the disclaimer or election. 4. Have federal gift tax returns ever been filed? ....................................................................................... If “yes,” please attach copies of the returns. 5. Was a federal estate tax return required?......................................................................................... If “yes,” please attach pages 1, 2, and 3 of Federal Form 706. 6. Marital Status of the decedent at time of death: c c c c c c c Married Name of Surviving Spouse (if applicable ) ___________________________________ Social Security Number of Surviving Spouse ________________________________ Single Legally Separated Divorced Widowed Name of Deceased Spouse _____________________________________ Social Security Number of Deceased Spouse _____________________________________ Date of Death of Deceased Spouse _____________________________________ Case Number of Deceased Spouse’s Estate _____________________________________ County of Deceased Spouse’s Estate _____________________________________ Yes No 7. If widow or widower, was a qualified terminable interest property (QTIP) deduction elected in the predeceased spouse’s estate? ................................................................................... If “yes,” please read information below and complete Schedule F, page 10. Section 5731.131 O.R.C. requires the estate to include property in which the decedent had an income interest for life for which a marital deduction was allowed with respect to the transfer of that property under any of the following: a. Section 5731.15(A)(1) O.R.C. (for dates of death on or before June 30, 1993) b. Section 5731.15(B) O.R.C. (for dates of death on or after July 1, 1993) c. Section 2523(f) I.R.C. (lifetime QTIP gift tax election) d. Where the decedent’s predeceased spouse was not a resident of the State of Ohio but was permitted a marital deduction under Section 2056(b)(7) I.R.C. -32002 © American LegalNet, Inc. Estate of: Schedule A – Real Estate (Jointly owned property must be listed on Schedule E) List any interest in real estate that the decedent owned or had contracted to purchase. Only probate real estate held in the decedent’s name alone or held by the decedent as a tenant in common is reported on Schedule A. Item number For real estate held by decedent as a tenant in common, submit the deed or other appropriate documentation indicating proof of decedent’s fractional interest. If a qualified farm property valuation election is made, please submit documentation as noted on page 20. Qualified farm value Description Value at date of death 1. Total (also enter on Recapitulation of Assets, page 2) Schedule A -4- 2002 © American LegalNet, Inc. Estate of: Schedule B – Stocks and Bonds (Jointly owned property must be listed on Schedule E) Furnish number of shares, whether common or preferred at par value. List the exchange, such as New York Stock Exchange (N.Y.S.E.), American Stock Exchange (A.S.E.), and NASDAQ National Market (O.T.C.). Include any accrued dividends due as sepa- rate items. List all bonds including local, state and U.S. Government. Include total face amount, obligor, kind and rate of interest, date of maturity, interest due dates plus accrued interest to date of death. Did the decedent, at the time of death, own any interest in an unincorporated business or any stock in an inactive or closely held corporation? If yes, please provide the valuation method on an attached sheet. All partnership and sole proprietorship interests should be listed under Schedule F. Item number Alternate valuation date Description Alternate value Yes Value at date of death 1. Total (also enter on Recapitulation of Assets, page 2) Schedule B -5- No 2002 © American LegalNet, Inc. Estate of: Schedule C – Mortgages, Notes and Cash (Jointly owned property must be listed on Schedule E) List the date of death value for all types of deposits in which the decedent had an interest including all accrued interest, P.O.D.’s, trustee deposits, cash and Certificates of Deposit. Mortgages and Promissory Notes: List face value and unpaid balance, execution and maturity dates, name of maker, description of property mortgaged and interest dates and rates. Bank Accounts: List name of banking institution, account number and balance at date of death (including accrued interest). Land Contracts: List name of vendee, execution date, sale price and unpaid balance, interest rate and description of property. Item number Alternate valuation date Description Alternate value Value at date of death 1. Total (also enter on Recapitulation of Assets, page 2) Schedule C -6- 2002 © American LegalNet, Inc. Estate of: Schedule D – Insurance (Jointly owned property must be listed on Schedule E) Insurance on the life of the decedent payable to a beneficiary other than the estate, is not includible for Ohio estate tax purposes. Insurance payable to the estate and insurance contracts, such as a matured endowItem number ment or supplemental contract wherein the insurance or risk feature ceased prior to death, are includible for Ohio estate tax purposes. Value at date of death Description 1. Total (also enter on Recapitulation of Assets, page 2) Schedule D -7- 2002 © American LegalNet, Inc. Estate of: Schedule E – Joint & Survivorship Assets (Section 5731.10 O.R.C.) Part I – Interests held by the Decedent and Spouse as the Only Joint Tenants Include only one-half (1/2) of the total value without regard to actual contribution by each spouse (for other joint interests, please complete Part II on the following page). Item number Alternate valuation date Description Alternate value Value at date of death 1. Total (also enter on Recapitulation of Assets, page 2) Schedule E, Part I -8- 2002 © American LegalNet, Inc. Estate of: Schedule E – Joint & Survivorship Assets (Section 5731.10 O.R.C.) Part II – All Other Joint Interests The full value of the joint property is presumed to be part of the gross estate, but the presumption may be overcome if it is established that a part of the property originally belonged to or was contributed by the other co-tenant(s). Supporting documentation should be attached if the estate claims the decedent held only a partial interest. Name For joint accounts held between spouses and any additional parties, subtract any contribution by those parties and report the balance at one-half (1/2) value. State the name, relationship and address of each surviving co-tenant. Relationship City and State A. B. C. D. Item number Enter letter for co-tenant 1. A. Percentage includible Description Alternate value Value at date of death Total (also enter on Recapitulation of Assets, page 2) Schedule E, Part II -9- 2002 © American LegalNet, Inc. Estate of: Schedule F – Miscellaneous Property (Jointly owned property must be listed on Schedule E) All property not reported on any other schedule is reported on this schedule. Include partnership interests, sole proprietorship or other business interests with supporting information for valuation including goodwill. Also include claims of decedent, rights, royalties, reversionary or remainder interests, tax refunds, judgments, unpaid wages, household goods, personal effects, automobiles, trailers, farm products, machinery, stored and/ Item number or growing crops and collections (such as coins and stamps). Qualified terminable interest property (QTIP) is included in the estate of a surviving spouse when either a full or partial QTIP deduction was previously allowed on the estate or gift tax return of the first spouse to die. Alternate valuation date Description Alternate value Value at date of death 1. Total (also enter on Recapitulation of Assets, page 2) Schedule F - 10 2002 © American LegalNet, Inc. Estate of: Schedule G – Transfers during Decedent’s Life 1. 2. Transfers in Contemplation of Death (Section 5731.05 O.R.C.) Any transfer in excess of $10,000 per year per donee made by the decedent within three years of death for less than adequate consideration is presumed to be in contemplation of death and is includible in the Ohio gross estate, unless proof to the contrary can be provided. Interests which do not qualify as present interests for the federal gift tax $10,000 exclusion will not qualify for the Ohio $10,000 exclusion. Transfers made between spouses should not be included in the gross estate, but should be listed for informational purposes only. Transfers with Retained Enjoyment (Section 5731.06 O.R.C.) The value of the gross estate shall include the value of any property or interest herein that the decedent transferred for less than adequate consideration and in which the decedent retained (a) the income or right to possession and enjoyment until the decedent’s death or (b) the right, either alone or in conjunction with any person, to designate the person(s) who shall Item number enjoy the property or income therefrom. 3. Transfers with Reversionary Interest Retained (Section 5731.07 O.R.C.) The value of the gross estate shall include the value of any transfer of property or interest therein made by the decedent for less than adequate consideration where (a) the possession or enjoyment can be obtained by the other person only by surviving the decedent and (b) the decedent retained a reversionary interest by express terms of the instrument which had a value as of the date of death in excess of 5% of the value of property transferred. 4. Transfers Subject to Change (Section 5731.08 O.R.C.) Any property or interest therein transferred by the decedent without adequate consideration where the enjoyment on the date of death was subject to any change through the exercise of a power by the decedent alone or in conjunction with any person to alter, amend, revoke or terminate is includible in the value of the gross estate. Alternate valuation date Description Alternate value Value at date of death 1. Total (also enter on Recapitulation of Assets, page 2) Schedule G - 11 - 2002 © American LegalNet, Inc. Estate of: Schedule H – Powers of Appointment (Jointly owned property must be listed on Schedule E.) The value of the gross estate shall include any property over which the decedent had at any time exercised or released a general power by a disposition (or Item number a general power not exercised at death) which, if it were a transfer by the decedent, would have been includible in the estate. Alternate valuation date Description Alternate value Value at date of death 1. Total (also enter on Recapitulation of Assets, page 2) Schedule H - 12 - 2002 © American LegalNet, Inc. Estate of: Schedule I – Annuities, Pensions, Retirement and Other Employer Death Benefit Plans (Jointly owned property must be listed on Schedule E) All annuity interests held by the decedent must be shown. List payments under commercial annuity contracts, IRA’s, or similar contracts, all employer bonus plans, deferred compensation contracts and employer death benefit plans, unless specifically excluded under Section 5731.09(A) or (C). Effective for dates of death on or after March 7, 1997, and to the extent documentation is provided, the value of the gross estate shall not include that portion of an annuity or other death benItem number efit plan contributed by decedent’s employer. Teachers Insurance and Annuity Association (TIAA) and College Retirement Equity Fund (CREF) benefits are not exempt from taxation. These funds do not fall into the same category as the State Teachers Retirement System, therefore must be included under this schedule. For further information, please refer to E.T. Bulletin 1, revised 3/97. Description Value at date of death Calculation of Annuity(s) 1. Total (also enter on Recapitulation of Assets, page 2) Schedule I - 13 2002 © American LegalNet, Inc. Estate of: Schedule J – Debts and Administration expenses (The deductions must reflect the interest held by decedent) Include only those debts which are outstanding as of the date of death, but only to the percentage attributable to the decedent. If the decedent owned credit life insurance on an asset listed in the gross estate, claims equaling the insurance proceeds are not an allowable deduction. Name all creditors and describe nature of the claim. List only attorney and fiduciary fees which have been or actually will be paid. Income taxes on Item number income received after date of death and real and personal property taxes not accrued before date of death are not deductible. Only administration expenses and debts which may be claimed on both the Federal Forms 706 and 1041 will be allowed to be claimed on both the Ohio Estate Tax Return and the Ohio Estate Income Tax Return, pursuant to Section 5747.01(S)(8) O.R.C. and I.R.C. Reg. Section 1.642(g). Item Amount 1. Total (also enter on Recapitulation of Deductions, page 2) Schedule J - 14 - 2002 © American LegalNet, Inc. Estate of: Schedule K – Charitable Deduction If the charitable character of the organization is not obvious by its name, attach a copy of the exemption letter received by the organization from the I.R.S., stating that bequests to the organization are exempt for federal estate tax purposes. Note that Ohio law differs from federal law in two aspects: (1) there are no unitrust requirements for an Ohio charitable deduction; and (2) if federal and state death taxes are payable out of the amount of property passing to the charity, the amount of the deduction is not reduced by such taxes. For charitable deductions other than specific bequests, please attach a copy of the computation showing how the value of the charitable deduction was determined. Name and address of beneficiary Character of institution Amount Total (also enter on Recapitulation of Deductions, page 2) Schedule K - 15 - 2002 © American LegalNet, Inc. Estate of: Schedule L – Marital Deduction Reconciliation 1. 2. 3. Enter the total of Schedule M, Part I (property interests passing outright to the surviving spouse which are NOT subject to a QTIP election) .................... $ __________________ Enter the total of Schedule M, Part II (property interests passing to the surviving spouse for which a QTIP election was made) ................................... $ __________________ Add lines 1 and 2 and enter total here and on Recapitulation of Deductions, Schedule L, page 2 ........................................................................................... $ __________________ Schedule M – Bequests to Surviving Spouse Part I – Property Interests which are Not Subject to a QTIP Election Complete this schedule indicating the assets passing to the surviving spouse. (Note: Itemization is not necessary where spouse receives entire estate outright.) If provision has not been made by the decedent’s will for the debts and expenses of administration, the Item number spouse’s interest in the residue could be reduced for these expenses. Qualified Terminable Interest Property (QTIP) Deduction – If you elect a QTIP deduction under Section 5731.15 O.R.C., you must list on Part II of Schedule M all of the property for which you are making the election. Value Description of net property interests passing to the surviving spouse 1. Total value of Schedule M, Part I (also enter on Schedule L, line 1, page 16) Schedule M, Part I - 16 - 2002 © American LegalNet, Inc. Estate of: Schedule M – Bequests to Surviving Spouse Part II – Property Interests which are Subject to a QTIP Election Election to Deduct Qualified Terminable Interest Property under Section 5731.15(B) O.R.C. – If a trust (or other property) meets the requirements of qualified terminable interest property and a. qualified terminable interest property. b. The trust or other property is listed on Schedule M, Part II, in whole or in part, then unless the executor specifically identifies the trust (all or a fractional portion or percentage) or other property to be excluded from the election, the executor shall be deemed to have made an election to have such trust (or other property) treated as Item number If less than the entire value of the trust (or other property) included in the gross estate is entered as a deduction under Schedule M, Part II, the estate shall be considered to have made an election only as to a fraction of the trust (or other property). The numerator of this fraction is equal to the amount of the trust (or other property) deducted on Schedule M, Part II. The denominator is equal to the total value of the trust (or other property). Description of property interests passing to the surviving spouse (describe portion of trust for which allocation is made) Value 1. Total value of Schedule M, Part II (also enter on Schedule L, line 2, page 16) Schedule M, Part II - 17 - 2002 © American LegalNet, Inc. General Information When an Estate Tax Return is Required (Section 5731.21) Estates with a gross value over $200,000 are required to file an ET Form 2. Executors and administrators are responsible for filing the estate tax return. Returns are not required to be filed for gross estates with a value of $200,000 or less. However, if the estate consists of real estate and has a value of $200,000 or less, an ET Form 22 should be filed with probate court to expedite the release of the real estate lien. What Estate Tax Form is Required to be Completed (Section 5731.21) If the date of death was prior to January 1, 2001, Ohio Estate Tax Return, Revised 3/2000, is required to be filed. If the date of death was on or after January 1, 2001, Ohio Estate Tax Return, Revised 1/2001, is required to be filed. When and Where to File (Section 5731.21) Returns are required to be filed within nine months from decedent’s date of death. All filings must be made in duplicate with the probate court where will is probated or estate is administered. When and Where to Pay (Tax and Interest) (Section 5731.23) Interest begins to accrue at variable rates nine months from decedent’s date of death. The county auditor will calculate any interest owing. Tax and interest are paid at the county auditor’s office, with the check drawn to the order of the county treasurer. Extension of Time to File (Section 5731.21) Estates of decedents with a date of death on or after January 1, 2000 are granted an automatic six-month extension, allowing them a total of 15 months to file the estate tax return. Any additional six-month extensions must be requested in writing directly to the Estate Tax Division on ET Form 24 before the due date of the return. Interest on any estate tax due will be calculated from nine months from date of death regardless if the estate utilizes the automatic or additional extensions. To stop the accrual of interest, an estimated payment of tax may be made. (See explanation of estimated payments on page 19). Extension of Time to Pay (Section 5731.25) Estates of decedents with a date of death on or after July 24, 1986 may request to extend the time for payment of tax for undue hardship. Specific examples of undue hardship are listed in the Ohio Revised Code and include, but are not limited to, the following: (1) insufficient liquid funds despite efforts to convert assets to cash; (2) a substantial portion of the assets of the gross estate consisting of rights to receive payments in the future; and (3) the inability to accurately determine the size of the gross estate because a substantial portion of the decedent’s assets is subject to litigation. The estate must request this extension on the ET Form 41, no later than forty-five (45) days prior to the due date of the estate tax return. This form must be filed directly with the Estate Tax Division. Additional extensions must be filed not less than thirty (30) days before the expiration of the previous extension. Each extension is granted for no more than one year per request. Additional extensions may be granted annually up to a maximum of fourteen years. For further information, please refer to ET Bulletin 3A. - 18 - 2002 © American LegalNet, Inc. Estimated Payments (Section 5731.23) An estimated payment can be made prior to the filing of the estate tax return, by using an ET Form 17. This payment will stop the accrual of interest on the amount of tax paid. Estimated payments are collected in the same manner as stated on page 18 in When and Where to Pay. If the tax ultimately assessed is more than the estimated payment, interest on the excess will accrue nine months from decedent’s date of death. If the tax ultimately assessed is less than the estimated payment, the estate may be eligible for a refund. Penalties (Section 5731.22) Failure to timely file the estate tax return (determined with regard to any extension approved) results in a penalty assessment. The penalty is five (5) percent per month or any fraction of a month, not to exceed twenty-five (25) percent of the tax as finally determined. Interest does not accrue on penalty assessments. NonResident Estates (Section 5731.19) The estate of a nonresident decedent must file ET Forms 2 and 4 if the decedent owned the following types of property: real property situated in Ohio; tangible personal property having an actual situs in Ohio; and intangible personal property employed in carrying on a business within Ohio (unless exempted under Section 5731.34). The filing requirements are the same as for a resident decedent, except the return may be filed directly with the county probate court where the Ohio property is located. Additional Tax (Sections 5731.18, 5731.19 and 5731.24) An additional tax is due when the Federal state death tax credit exceeds the Ohio tax paid. If an estate (resident or nonresident) falls into the Federal estate tax category, ET Forms 3 or 3N (Additional Tax Returns) may be required to be filed. The return and payment are due sixty (60) days after the date of the final determination of the Federal estate tax liability (closing letter or equivalent as issued by the I.R.S.). The additional tax shall be paid, without notice or demand by the Tax Commissioner, with the return, and shall be filed and paid in the same manner as the estate tax, except that interest begins to accrue sixty (60) days after the date of the final determination of the Federal estate tax liability. Distribution of Tax (Sections 5731.48 and 5731.50) For dates of death January 1, 2001–December 31, 2001, seventy (70) percent of the tax is distributed to the municipal corporation, village or township in which the tax originates and thirty (30) percent to the State of Ohio. Marital Deduction (Section 5731.15) A marital deduction may be taken for certain property interests that pass from the decedent to the surviving spouse. Property interests that should be listed include the following: (1) survivor of tenancy by the entirety or joint tenancy; (2) appointee under decedent’s exercise of a power; (3) statutory interests passing to a spouse as a result of a right of election to take against the will; and (4) bequests from decedent pursuant to will. Property interests that should not be listed include: (1) property that does not pass from decedent to surviving spouse; (2) qualified terminable interests for which QTIP election is not made; and (3) property which has been disclaimed by a surviving spouse under Section 1339.68 O.R.C. - 19 - 2002 © American LegalNet, Inc. Explanation of Elections Alternate Valuation Date (Section 5731.01(A) and (D) O.R.C.) The gross estate may be valued on the decedent’s date of death or on an alternate valuation date. The alternate valuation date is six months from date of death unless the property item is sold, disposed of or distributed within that six months. The executor must make an election by checking “yes” in the Elections Section of the return. This election is mutually exclusive of the federal election. However, it must be elected within one year and nine months from the date of decedent’s death or within one year from any extensions granted by the Tax Commissioner. Once made, this election is irrevocable. If alternate valuation is elected, please list both date of death values and alternate values, and the alternate valuation date on the applicable schedules. Qualified Farm Property Valuation (Section 5731.011 O.R.C.) The estate may elect Qualified Farm Property Valuation for determining the value of farm property as an alternative to its fair market value. To have qualified farm property valued at this special valuation, certain conditions must be met.* This election must be made on a timely filed return determined with regard to any approved extensions of time to file. 2. To help expedite the audit, please attach the following: If the qualified farm property valuation is elected, use the qualified farm property value column in Schedule A or identify the qualified property under Schedule E or G. __________ *Please refer to ET Bulletin 5. 1. A complete ET Form 34 and 34A; 3. 4. Most recent county auditor real estate property record; Current Agricultural Use Valuation (CAUV) cards (from county auditor); Fair market value appraisal (broken down into one acre homesite, improvements and bare land only). Qualified Terminable Interest Property (QTIP) (Section 5731.15 O.R.C.) The Qualified Terminable Interest Property (QTIP) election allows certain life estates held for the surviving spouse to qualify for the marital deduction. Once the election is made, it is irrevocable. This election must be made on a timely filed return determined with regard to any approved extensions of time to file. The requirements for QTIP are the following: 1. 2. 3. Surviving spouse must receive all the income for life payable annually or at more frequent intervals; and No one can have a power to appoint the property to any person other than the surviving spouse during surviving spouse’s life; and The executor must make an election by checking “yes” in the Elections Section of the return. The executor may make a partial QTIP election only if it is in the form of a fraction or percentage of available QTIP property. The specific interest should be clearly identified as QTIP. The surviving spouse’s estate must include all QTIP property claimed in the first spouse’s estate, to the extent not consumed or given away, at the value on the date of death of the surviving spouse. - 20 2002 © American LegalNet, Inc. Explanation of Elections Qualified Family-Owned Business Interest Deduction (Section 5731.20 O.R.C.) Effective for estates of decedents dying on or after January 1, 2001, Section 5731.20 allows a deduction for qualified family-owned business interests. For a qualifying estate, the maximum deduction allowed cannot exceed $675,000. To claim the deduction, the executor must make a Section 5731.20 election (see page 2, Elections by the Executor, item 4) and attach completed Federal Form 706, Schedule T (Qualified FamilyOwned Business Interest Deduction) and federally requested statements to the Ohio Estate Tax Return. In addition, each person in being having an interest in the property must sign a written agreement consenting to the application of the ten-year additional (recapture) tax. The deduction for the value of the qualifying business interest is claimed under Recapitulation of Deductions, page 2, of the Ohio return. Section 5731.20 incorporates by way of statutory referencing all dispositive language contained in Section 2057 of the Internal Revenue Code. Every definition and term used in Section 2057 such as “adjusted value of the qualified family-owned business interest,” “qualified heir,” “member of the family,” “material participation,” “applicable percentage,” and “adjusted tax difference” will have the same meaning and effect for purposes of Section 5731.20, unless otherwise provided. For Ohio, if an estate qualifies, the election to claim the deduction can be made even if no federal return is required to be filed. Where a federal return is required to be filed, the election can be made for Ohio, even if not made federally. All qualified heirs shall be deemed to have met the Ohio requirement of consenting to the additional (recapture) tax by signing the agreement contained in the Federal Form 706, Schedule T. When applicable, the tax plus statutory interest will be due no later than the first day of the seventh month following the event causing the imposition of the additional (recapture) tax. For further information, please contact the Estate Tax Division’s Toll-Free Information and Assistance Line at 1 (800) 977-7711 or Visit our Website at www.state.oh.us/tax/ 2002 © American LegalNet, Inc. - 21 -