Tab 
le 6--Qualifications for Federal estate tax special use valuation (1) 
10. 
Heli 
12. 
(1) 
Decedent must have been a U.S. citizen. 
Property must be located in the United States. 
Property must pass to a qualified heir (member of the family) .(2) 
Property must have been owned by the decedent and/or a member of the decedent's family for a least 5 of the last 8 years 
immediately before the decedent's death. 
During at least 5 years of such ownership, the property must have been used for farming or a closely-held business purpose, 
which includes timber growing, by the decedent or a member of the decedent's family. 
The decedent, or a member of the decedent's family, must have had an equity interest in the forestry operation at the time of death 
and for 5 or more of the last 8 years before death. 
The decedent and/or a family member must have materially participated in the operation of the business for at least 5 years 
during the 8-year period ending on the earliest of: (1) the date of the decedent's death; (2) the date on which the decedent 
became disabled provided disability continued until date of death; or (3) the date on which the decedent began receiving social 
security retirement benefits provided the benefit continued until the date of death. 
All use valuations taken together (forest land and timber, farms, and other qualifying property) cannot reduce the fair market 
value of the gross estate by more than $750,000. 
The total property (both real and personal) qualifying for special use valuation must constitute, at fair market value, at least 50 
percent of the adjusted value of the decedent's gross estate (gross estate less secured debts). 
At least 25 percent of the adjusted value of the decedent's gross estate must be qualified real property and passed from the 
decedent to a qualified heir. 
An agreement of use valuation must be signed by all persons who have inherited an interest in the forest land and filed with the 
estate tax return. The election can be made on a late return as long as it is the first return filed. 
For the agreement to remain valid, the following requirements must be met for 10 years after the death of the decedent (the 
10-year period may be extended to 12 years if the full 2-year grace period is utilized): 
© Ownership must continue solely within the decedent's family unless there is an involuntary conversion or like-kind exchange. 
o Atleast one member of the decedent's family must materially participate in management of the property during 5 of every 8 
years. A less stringent "active management" test is substituted for "material participation" for surviving spouses and certain 
other classes of heirs. 
o The property must be used and managed for the qualifying use, and the qualified heir must maintain an equity interest in it. 
Internal Revenue Code 2032A. 
(2) The term "member of the family" includes: 
116 
(1) Ancestors of the decedent; 
(2) Spouse of the decedent; 
(3) Lineal descendents of the decedent, of the decedent's spouse, or of the decedent's parents; and 
(4) The spouse of any lineal descendent in (3) above. 
