Estate Tax Addendum 3 — Qualified Family-Owned Business Interests (QFOBI)

# preamble

To request this document in an alternate format, please complete the form dor.wa.gov/AccessibilityRequest or call 360-705-6705. Teletype (TTY) users please dial 711. REV 85 0050Ad3 (4/22/26) Pag e 1 of 10 Form 85 0050 Ad3 Audit - Estate Tax PO Box 47474 Olympia WA 98504-7474 Qualified Family-Owned Business Interests For deaths occurring January 1, 2014 and after. (Submit only if applicable; see instructions below) Part 1 - Decedent information: 1. First: 2. Middle: 3. Last: 4. Social Security number: Part 2 - Qualified family-owned business interests (QFOBI) requirements: Complete Part 2 to determine if the e state meets the QFOBI requirements. You must answer "yes" or "no" to each question. If you answer "no" for any of the questions, the estate is not eligible to claim the QFOBI deduction (do not complete rest of the form). Question Yes or no? 1. Is the QFOBI included in the decedent's tentative taxable estate on the estate tax return (Part 2 - Tax Computation, Line 3)? Yes No 2. During the eight-year period ending on the date of the death of the decedent, have there been: • Periods aggregating five years or more during which such business interests were owned by the decedent or a member of the decedent's family, AND • Was there material participation in the operation of the trade or business by the decedent or a member of the decedent's family? Y es No 3. Is the QFOBI acquired by or passed to qualified heir(s) from the decedent? At least one of the qualified heirs must continue the trade or business for three years from the date of death of the decedent or an additional tax will be due. Yes No 4. Was the decedent a citizen or resident of the United States at the time of his or her death? Yes No 5. Is the value of the QFOBI $6,000,000 or less (See Part 3, Line 2 below)? Yes No If all questions above are answered "yes" continue completing the rest of the form. Submit this form and a detailed statement/letter explaining how the decedent's estate qualifies for the QFOBI deduction. • Define how the decedent, or a member of the decedent's family, materially participated in the trade or business. • Explain exactly what type of trade or business is involved. • Define what five-year period applies during the eight years preceding the decedent's death. • If the relationship is not clear in Part 5 below, explain how each qualified heir is related to the decedent.

REV 85 0050Ad3 (4/22/26) Pag e 2 of 10 Part 3 - Qualified family-owned business interests deduction calculation: 1. Decedent's Tentative Taxable Estate from the estate tax return (Part 2 - Tax Computation, Line 3) 1. 2. QFOBI assets (including any QFOBI assets deductible on Addendum # 2 - Property Used for Farming): Schedule/item Brief description Fair market value at valuation date On farm addendum? Yes No Yes No Yes No Yes No Subtotal from sheets attached to this addendum, if any: Total value of QFOBI assets 2. 3. If eligible for the farm deduction, enter the farm deduction (Addendum # 2, Part 3, Line 7.) If not eligible for the farm deduction, enter zero. 3. 4. If any of the QFOBI assets from Line 2 are included in the farm deduction listed on Line 3, enter the QFOBI assets amount included in the farm deduction here. If no assets included in the farm deduction, enter zero. 4. 5. Enter the lesser of QFOBI assets not included in the farm deduction (Line 2 less Line 4) or the maximum applicable deduction amount (see table in instructions below). 5. 6. Adjusted tentative taxable estate for determining the QFOBI deduction (Line 1 less Lines 3 and 5.) 6. 7. Percentage of adjusted tentative taxable estate : (Line 2 divided by Line 6). 7. If Line 7 equals 0.50 or less (50% or less), STOP , the estate is not eligible to take the QFOBI deduction. Do not enter a value on the estate tax return (Part 2 - Tax Computation, Line 4b) or on Line 8 below. If the Line 7 calculation exceeds 0.50, you may continue on to Line 8. 8. Allowable QFOBI deduction amount: If Line 7 exceeds 0.50 and all questions in Part 2 are answered "yes," enter the amount from Line 5. You are eligible for the QFOBI deduction; take this amount to the estate tax return (Part 2 - Tax Computation, Line 4b). 8. Part 4 - Executor: I agree and attest to the following: • I am the executor of the decedent's estate. • Each and every qualified heir who acquired the QFOBI, completed and signed the agreement on the following page. • Under penalty of law, I declare that, to the best of my knowledge and belief, this addendum is true, correct, and complete. Signature of executor: _____________________________ Phone: Date:

REV 85 0050Ad3 (4/22/26) P age 3 of 10 Part 5 - Qualified heir(s) requirements Question Yes or no? 1. Are each of the heirs who acquired the QFOBI from the decedent, a member of the decedent's family or an active employee (employee must have been employed for the last 10 years prior to the date of death)? Yes No 2. Does at least one of the qualified heirs from Question 1, agree to materially participate in the QFOBI for three years after the date of death of the decedent? Yes No 3. Do the qualified heir(s) from Question 1, agree to not dispose of the QFOBI (other than to qualified family members) and keep the principal place of business of the QFOBI in the United States for three years after the date of death of the decedent? Yes No 4. Are the qualified heir(s) from Question 1, United States citizens and do they agree to maintain their citizenship for three years after the date of death of the decedent? Yes No If all questions above are answered "yes" continue completing the rest of the form. If one heir cannot answer all questions as "yes", try recalculating the entire form above with the remaining heirs' share of the QFOBI. The addendum can then be submitted and QFOBI deducted, if the remaining QFOBI still qualifies without that heir's portion included. List the name of each qualified heir, their relationship to the decedent, the schedule and item number where the QFOBI is reported for the portion they are receiving, and the fair market value of the portion of QFOBI received by each heir (the total amount listed below should match the amount reported on Part 3, Line 5 above.) Attach additional sheets, if necessary. If the heir's relationship to the decedent is not directly related (someone who is not a spouse or child of the decedent), then within the detailed statement regarding how the estate qualifies for the deduction, include how the heir is related to the decedent. Qualified heir name Relationship to the decedent Schedule/item number Fair market value received

REV 85 0050Ad3 (4/22/26) P age 4 of 10 Part 6 - Qualified heir(s): Every person signing below agrees and attests to the following: • I am a "qualified heir" as provided by RCW 83.100.048. • Every qualified heir who acquired the QFOBI is listed below. • I understand that if I, or one of the other qualified heirs, fails to materially participate in the QFOBI, if I dispose of any portion of the QFOBI (other than by a disposition to a family member), or if I lose my United States citizenship during the three-year period following decedent's death, I am personally responsible for filing and paying the additional tax equal to the amount that would have been due if the QFOBI deduction had not been taken for my portion received. Note: The filing and payment due date is no later than six months from the date of the disqualifying cessation or disposition. Interest is due on the payment and accrues from the original decedent's due date through the payment date. Under penalty of law, I declare that, to the best of my knowledge and belief, this addendum is true, correct, and complete. Type or print in ink (attach additional sheets, if necessary) 1. First name: 2. M.I.: 3. Last name: 4. Social Security number: 5. Mailing address: 6. City: 7. State: 8. Zip code: 9. Signature of qualified heir: 10. Date signed: 11. Phone: -------------------------------------------------------------------------------------------------------------------------------------------- 1. First name: 2. M.I.: 3. Last name: 4. Social Security number: 5. Mailing address: 6. City: 7. State: 8. Zip code: 9. Signature of qualified heir: 10. Date signed: 11. Phone: -------------------------------------------------------------------------------------------------------------------------------------------- 1. First name: 2. M.I.: 3. Last name: 4. Social Security number: 5. Mailing address: 6. City: 7. State: 8. Zip code: 9. Signature of qualified heir: 10. Date signed: 11. Phone: -------------------------------------------------------------------------------------------------------------------------------------------- 1. First name: 2. M.I.: 3. Last name: 4. Social Security number: 5. Mailing address: 6. City: 7. State: 8. Zip code: 9. Signature of qualified heir: 10. Date signed: 11. Phone:

REV 85 0050Ad3 (4/22/26) P age 5 of 10 Addendum # 3 - Qualified family-owned business interests information Who must file This addendum must be completed and filed with the Washington State Estate and Transfer Tax Return if the decedent died on or after January 1, 2014, and the estate is eligible for the qualified family-owned business interests (QFOBI) deduction. Applicable laws and rules The applicable laws and rules are Revised Code of Washington (RCW) 83.100.048, Washington Administrative Code (WAC) 458-57-175, and Internal Revenue Code (IRC) §2057 including the corresponding IRC Treasury Regulations. The references to the IRC are as it existed on December 31, 2003. These instructions contain a general overview; see the applicable laws and rules for complete details. Qualified family-owned business interests In general, the term "qualified family-owned business interest" means either: • An interest as a proprietor in a trade or business carried on as a proprietorship, or • An interest in an entity carrying on a trade or business, if at least: • 50% of such entity is owned (directly or indirectly) by the decedent or members of the decedent's family. • 70% of such entity is so owned by members of two families and at least 30% of such entity is so owned by the decedent or members of the decedent's family. • 90% of such entity is so owned by members of three families and at least 30% of such entity is so owned by the decedent or a member of the decedent's family. Limitations on QFOBI An interest does not qualify for QFOBI if the trade or business's principal place of business is located outside of the United States. An interest does not qualify for QFOBI if the trade or business's stock is readily tradable on an established securities market or secondary market at any time within three years of the date of decedent's death. There are several other limitations not listed here. Rules of ownership For ownership of an interest in a trade or business not carried on as a proprietorship, the following rules, along with others not listed here, apply to the ownership of the entity. Ownership of a corporation shall be determined by the holding of stock possessing the appropriate percentage of the total combined voting power of all classes of stock entitled to vote and the appropriate percentage of the total value of shares of all classes of stock. Ownership of a partnership shall be determined by the owning of the appropriate percentage of the capital interest in such partnership. A trust can have ownership only if the individual (decedent or members of the decedent's family) has a present interest in such trust. What can be deducted The QFOBI can be deducted as long as the requirements are met. This deduction is in addition to the applicable exclusion amount. The deduction amount is limited to the lesser of the QFOBI or a maximum applicable deduction amount (see further below for current amount). Any amount of QFOBI already included in the farm deduction, may not be deducted under QFOBI. QFOBI in a closely-held partnership, corporation, or trust can qualify for the deduction as long as all requirements are met. A qualified heir to the QFOBI is required to repay the tax savings if they do not continue to meet certain requirements of the trade or business as it relates to the QFOBI. What is the applicable deduction amount The QFOBI has a maximum allowed applicable deduction amount based on statute. For estates with decedent's dates of death (DOD) on or after January 1, 2014, through June 30, 2025, the amount is set at $2,500,000. For estates with decedent's DOD on or after July 1, 2025, through December 31, 2025,

REV 85 0050Ad3 (4/22/26) P age 6 of 10 the amount is set at $3,000,000. For estates with decedent's DOD on or after January 1, 2026, through December 31, 2026 the amount was calculated using a consumer price index (CPI) for the Seattle metropolitan area and was determined to be $3,076,000. Starting with 2027, and each year after that, a calculation would be done at the end of the preceding year using the most recent October Seattle-Tacoma- Bremerton CPI. This CPI no longer exists, therefore the maximum allowed applicable deduction amount will be frozen at $3,076,000, until such time the legislature alters the definition of the CPI calculation. What are the requirements The following requirements must be met to be eligible for the QFOBI deduction: • During the eight-year period ending on the date of the decedent's death, there have been periods aggregating five years or more during which such interests were owned by the decedent or a member of the decedent's family and there was material participation by the decedent or a member of the decedent's family in the operation of the trade or business to which such interests relate. • The QFOBI is acquired by or passed to any qualified heir from the decedent. • On the date of death, the decedent was a citizen or resident of the United States. • The QFOBI is $6,000,000 or less. • The QFOBI must exceed 50% of the decedent's Washington taxable estate (without regard to the deduction for the applicable exclusion amount). Who qualifies as a member of the family A "member of the decedent's family" refers only to a decedent's ancestor, spouse, state registered domestic partner, lineal descendant, spouse's lineal descendant, state registered domestic partner's lineal descendant, parent's lineal descendant, or spouse of a lineal descendant. A "member of the qualified heir's family" refers only to the qualified heir's ancestor, spouse, state registered domestic partner, lineal descendant, spouse's lineal descendant, state registered domestic partner's lineal descendant, parent's lineal descendant, or spouse of a lineal descendant. A legally adopted child of an individual is considered a child of an individual by blood. What is material participation The decedent or a member of the decedent's family (the individual) is generally considered to materially participate if the individual works on a continuous and substantial basis in the operation of the trade or business to which the QFOBI relates. This generally means the individual works at least 500 hours per year in the trade or business, no one else works more hours than the individual in the operation of the trade or business, and no one else receives compensation for managing the operation (an agent or trustee does not qualify). The individual should be the one making a substantial number of the management decisions. For further clarification, refer to the material participation requirements described in section 2032A(e) (6) of the Internal Revenue Code (IRC). The IRC states that material participation shall be determined in a manner similar to the manner explained in IRC section 1402(a)(1) relating to net earnings from selfemployment. Section 1402 defines net earnings from self-employment as the gross income derived by an individual from any trade or business carried on by such individual. This income specifically excludes rentals from real estate and from personal property leased with the real estate unless such rentals are received in the course of a trade or business as a real estate dealer. See the Internal Revenue Code for more details. Who is a qualified heir A "qualified heir" refers to a member of the decedent's family who acquires the QFOBI or the QFOBI is passed to from the decedent. If a qualified heir disposes of any interest in a QFOBI to any member of the qualified heir's family, such member is treated as the qualified heir. A qualified heir includes any active employee of the trade or business to which the QFOBI relates if such employee has been employed by such trade or business for a period of at least 10 years before the date of the decedent's death.

REV 85 0050Ad3 (4/22/26) Pag e 7 of 10 What are the qualified heirs requirements The following requirements must continue to be met for three years after the date of the decedent's death; if not, an additional estate tax is imposed on the qualified heir: • At least one of the qualified heirs must continue to materially participate in the operation of the trade or business to which the QFOBI relates. • The qualified heir cannot dispose of any portion of the QFOBI to anyone other than one of the following: • A member of the qualified heir's family. • A person with an ownership interest in the QFOBI. • Through a qualified conservation contribution. • The principal place of business for the QFOBI must remain in the United States. • The qualified heir must maintain United States citizenship. The three-year period does not refer to ending on a calendar year. The three-year period starts on the date of the decedent's death and ends three years later. For example, if a decedent died on March 29, 2024, the qualified heir(s) must meet all the requirements listed above until March 28, 2027. Additional tax due by qualified heir When the qualified heir requirements are not met within t he three-year period starting on t he date of t he decedent 's death, the qualified heir is persona lly liable for additional tax due. The amount of additional tax due is the t ax savings a mount that would have bee n due if the QFOBI deduction ha d not been a llowed. If more than one qualified heir received QFOBI , any heir that no longer is qualified will owe the additional tax due in a prorated portion of the ta x savings based on the dis tribution of t he QFOBI to all the qualified heirs. The due date of the additional tax is six months after the taxable event occurs. Any additional tax due is a lien on the in terest in the trade or business as it relates to the QF OBI. Interest accrues on the additional tax due from the day nine mon ths after the da te of the decedent 's death through the payment date. -------------------------------------------------------------------------------------------------------------------------------------------- Addendum # 3 - Qualified family-owned business interests instructions

# Part 1 - Decedent information

Items 1-4 - Decedent's information Enter the decedent 's full name a nd social security numbe r. The last name field can include a suffix.

# Part 2 - Qualified family-owned business interests requirements

Check the appropriate box for each question. The estate can only take the QFOBI deduction if all questions are answered "yes." If any question is answered "no," the estate may not take the QFOBI deduction; do not complete or submit the addendum with your estate tax filing. If all questions are answered "yes , " a separate statement fully detailing how the estate qualifies must be submitted along with the completed form. Line 1 - QFOBI included Check the "yes" box if the QFOBI being deducted is included in the de cedent 's tentative taxable estate. Check the "no" box if the QFOBI is not included in the decedent 's tentative t axable estate. Line 2 - Five-year aggregate ownership and material participation Check the "yes" box if during the eight-year period ending on the da te of decedent 's death, the re have been periods aggregating five or more years during which interest in the trade or business was owned and there was material participation by t he decedent or a member of the decedent 's family. Check the "no" box if the interest in the tr ade or business wa s not owned or there w as not material participation for an aggregate of five years or more during the eight-year period ending on the da te of decedent 's death.

REV 85 0050Ad3 (4/22/26) Pag e 8 of 10 Line 3 - Qualified heir Check the "yes" box if the QFOBI passes to or is acquired by a qualified heir. Check the "no" box if the QFOBI does not pass to or is not acquired by a qualified heir. A qualified heir is any member of the decedent's family ("member of decedent's family" is defined on page 6 of these instructions). Line 4 - Decedent citizenship Check the "yes" box if the decedent was a citizen or resident of the United States on the date of death. Check the "no" box if the decedent was not a citizen or resident of United States on the date of death. Line 5 - QFOBI amount After completing part 3, line 2 check the appropriate box. Check the "yes" box if the total amount of QFOBI adds up to $6,000,000 or less. Check the "no" box if the total amount of QFOBI adds up to more than $6,000,000.

# Part 3 - Qualified family-owned business interests deduction calculation

Line 1 - Tentative taxable estate Enter the decedent's tentative taxable estate from the Washington estate tax return. This amount can be found on the estate tax return (Part 2 - Tax Computation, line 3). Line 2 - QFOBI assets List each QFOBI asset included in the gross estate that meets the requirements from page 6 of these instructions. Identify the QFOBI assets by schedule and item number from the estate tax return (Schedules A through I). Give a brief description of the QFOBI asset (a full description should already be included on the appropriate schedules). Enter the fair market value as reported on the schedule. If using alternate value, report the alternate value rather than the date of death value. Do not include any QFOBI assets that are not included on the decedent's estate tax return. Mark the last column "yes" if the asset is included on addendum # 2 - property used for farming. Mark the last column "no" if the asset is not included on addendum # 2 - property used for farming. If there are more QFOBI assets than lines on the addendum, attach a sheet with similar format to continue the listing of QFOBI assets; bring the total forward to the subtotal line. Enter the sum of all QFOBI assets listed on the addendum and any attached sheets on line 2. If line 2 adds up to $6,000,000 or less, answer line 5 on part 2 as "yes." If line 2 adds up to more than $6,000,000, answer line 5 on part 2 with "no," the estate does not qualify for the QFOBI deduction; do not complete or submit the addendum. Line 3 - Farm deduction Enter the eligible farm deduction amount. This amount can be found on either addendum # 2 - property used for farming (part 3, line 7) or if entered, on the Washington estate tax return (Part 2 - Tax Computation, line 4a). If not eligible for the farm deduction enter zero. Line 4 - QFOBI included on farm deduction Enter the total amount of assets that were marked "yes" on the line 2 table. These are the assets that have already been included as part of the farm deduction calculation. Any assets deductible under the farm deduction may not be included in the QFOBI deduction. If no assets are included in the farm deduction enter zero. Line 5 - Tentative deductible QFOBI assets Enter the lesser of the QFOBI assets not included in the farm deduction (line 2 less line 4) or the amount of the maximum applicable deduction amount shown in the table below based on the decedent's date of death. The QFOBI deduction may not exceed the applicable deduction amount.

REV 85 0050Ad3 (4/22/26) Pag e 9 of 10 Date of death of decedent Applicable deduction amount 1/1/2014 to 6/30/2025 $2,500,000 7/1/2025 to 12/31/2025 $3,000,000 1/1/2026 and after $3,076,000 Line 6 - Adjusted tentative taxable estate Enter the result of line 1 less lines 3 and 5. This is the adjusted tentative t axable estate f or determining whether the QFOBI exceeds the 50% of Washington taxable estate r equirement. Line 7 - Percentage of adjusted tentative taxable estate Enter the result of line 2 divided by line 6. If line 7 is 0.50 or less the estate does not qualify for the QF OBI deduction. Do not complete or submit this addendum. If line 7 exceeds 0.50 the estate is eligible t o take the QFOBI deduction. Line 8 - Allowable QFOBI deduction amount If all lines of part 2 are answered "yes" and line 7 exceeds 0.50, then you may enter the amount from line 5 on this line. The eligible amount can now be carried forwa rd to the tax calculation of the Washington estate tax return (Part 2 - Tax Computation, line 4b).

# Part 4 - Executor agreement and attestation

Executor signature The executor, on behalf of the es tate, must read and a gree to the statements listed, then sign, provide a contact telephone number and date this addendum.

# Part 5 - Qualified heir requirements

Check the appropriate box for each question. An heir is considered "qualified" if all quest ions on lines 1 through 4 are answered "yes." The answer must be "yes" for each qualified heir. If any question is answered "no," the estate may not take the QFOBI deduction; do not complete or submit the form with your estate tax filing. If an heir is not "qualified", review the form to determine if the estate can qualify without that heirs portion included. Line 1 - Qualified heir(s) Check the "yes" box if the QFOBI passes to or is acquired by qualified heirs. Check the "no" box if the QFOBI does not pass to or is not acquired by qualified heirs. A qualified heir is any member of the decedent 's family ("member of decedent 's family" is defined on page 6 of these instructions) or a ten-year active employee of the tr ade or business. Line 2 - Qualified heir will continue material participation Check the "yes" box if at least one qualified heir agrees to materially participate in the QFOBI for three years from the date of the decedent's death. Check the "no" box if none of the qualified heirs agree to materially participate in the QFOBI for three years from the date of the decedent's death. Line 3 - Qualified heir(s) will follow requirements Check the "yes" box if each qualified heir agrees not to dispose (see exceptions on page 6) of their portion of the QFOBI and all heirs agree to keep the principal place of the tr ade or business in the United States for three years from the date of the decede nt's death. Check the "no" box if any qualified heir will dispose (to unqualified person) of any portion of the QFOBI or if any heir(s) does not agree to keep the principal place of trade or business in the United States for three years from the da te of the decedent 's death. A qualified heir may dispose of the QFOBI to another qualified heir as explained on page 6 above.

REV 85 0050Ad3 (4/22/26) Pag e 10 of 10 Line 4 - Qualified heir(s) citizenship Check the "yes" box if each qualified heir agrees they are a United States citizen and to maintain his or her United States citizenship or comply with IRC §877(e)(1). Check the "no" box if any qualified heir is not a United States citizen or does not agree to maintain his or her United States citizenship or comply with IRC §877(e)(1). Along with citizenship, the qualified heir must have a physical presence in the United States of 30 days or more per year. Check the "no" box if an heir will be in the United States for 29 or fewer days during any of the three years following the date of the decedent's death. List qualified heir(s) that received QFOBI Enter the name of each qualified heir, his or her relationship to the decedent, the schedule and item number the asset is reported on the Washington estate tax return, and the fair market value of the asset or portion of asset received by each qualified heir. If all of the QFOBI is received by one qualified heir, it is not necessary to list all of the assets again. Enter the name, relationship, and "see page 1 for list" (for the schedule/item number field) and fair market value. Part 6 - Qualified heir(s) agreement and attestation Qualified heir(s) signature Each qualified heir must read and agree to the requirements' questions listed. Each qualified heir must complete lines 1-11 in full. The qualified heir(s) will be contacted periodically to verify they are still in compliance with the requirements to ensure they are not liable for additional tax. A final release for the decedent's estate will not be issued until the three-year period has lapsed and it has been verified the qualified heir(s) have met their requirements. Filing requirements Attach the completed addendum to the end of the Washington estate tax return (after the applicable schedules) when filing by mail. Documents to include The following documents, if applicable, should be filed with the addendum: • Documents showing continuous ownership and ownership percentage: • Corporate charter. • Partnership agreement. • Property tax statements. • Last three years of federal income tax returns, schedules and attachments. • Statement fully explaining how the estate qualifies for the QFOBI deduction.