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                                                                                              Department of the Treasury
Instructions for                                                                              Internal Revenue Service

Form 706-GS(D)
(Rev. September 2016)
Generation-Skipping Transfer Tax Return for Distributions

Section references are to the Internal    for Automatic Extension of Time To         less of the actual value of the 
Revenue Code unless otherwise noted.      File Certain Business Income Tax,          property.
                                          Information, and Other Returns. The 
Future Developments                       extension is automatic, so you do not      Interest will be charged on taxes 
For the latest information about          have to sign the form or provide a         not paid by their due date, even if an 
developments related to Form              reason for your request. You must file     extension of time to file is granted. 
706-GS(D) and its instructions, such      Form 7004 on or before the regular         Interest is also charged on any 
as legislation enacted after they were    due date of Form 706-GS(D). See            additions to tax imposed by section 
published, go to www.irs.gov/             Form 7004 for more information.            6651 from the due date of the return 
form706gsd.                                                                          (including any extensions) until the 
                                          Where To File                              addition to tax is paid.
General Instructions                      File Form 706-GS(D) at the following       Return preparer.     The Small 
                                          address:                                   Business and Work Opportunity Tax 
Purpose of Form                                                                      Act of 2007 extended return preparer 
Form 706-GS(D) is used by a skip          Department of the Treasury                 penalties to all tax return preparers. 
person distributee to calculate and       Internal Revenue Service                   Return preparers who prepare any 
report the tax due on distributions       Cincinnati, OH 45999                       return or claim for refund which 
from a trust that are subject to the                                                 reflects an understatement of tax 
generation-skipping transfer (GST)        Penalties and Interest                     liability due to an unreasonable 
tax.                                      Section 6651 provides penalties for        position are subject to a penalty equal 
                                          both late filing and late payment          to the greater of $1,000 or 50% of the 
Who Must File                             unless there is reasonable cause for       income derived (or to be derived) for 
In general, any skip person who           the delay. The law also provides           the preparation of each such return. 
receives a taxable distribution from a    penalties for willful attempts to evade    Return preparers who prepare a 
trust must file Form 706-GS(D).           payment of tax.                            return or claim for refund which 
Trustees are required to report                                                      reflects an understatement of tax 
taxable distributions to skip person      A return is late when it is filed after    liability due to willful or reckless 
distributees on Form 706-GS(D-1),         the due date, including extensions.        conduct, are subject to a penalty of 
Notification of Distribution From a       The late filing penalty will not be        $5,000 or 75% of the income derived 
Generation-Skipping Trust.                imposed if the taxpayer can show that      (or income to be derived), whichever 
                                          the failure to file a timely return is due is greater, for the preparation of each 
If you receive a Form 706-GS(D-1)         to reasonable cause.                       such return. See sections 6694(a) and 
and the inclusion ratio found on Part II, Reasonable cause determinations.           6694(b), the related regulations, and 
line 3, column d, is zero for all         If you receive a notice about penalties    Ann. 2009-15, 2009-11 I.R.B. 687 
distributions, you do not need to file    and interest after you file Form           (available at www.irs.gov/ pub/irs-irbs/
Form 706-GS(D). If you are required       706-GS(D), send us an explanation          irb09-11.pdf) for more information.
to file Form 706-GS(D), you do not        and we will determine if you meet 
have to include any distributions that    reasonable cause criteria. Do not          Signature
have an inclusion ratio of zero.          attach an explanation when you file        Either the distributee or an authorized 
                                          Form 706-GS(D). Explanations               representative must sign Form 
When To File                              attached to the return at the time of      706-GS(D).
The generation-skipping transfer tax      filing will not be considered.             If you fill in your own return, leave 
on distributions is figured and 
reported on a calendar year basis,        Section 6662 provides a penalty for        the Paid Preparer Use Only space 
regardless of your income tax             underpayment of GST taxes which            blank. If someone prepares your 
accounting period. Generally, you         exceeds $5,000, if the underpayment        return and does not charge you, that 
must file Form 706-GS(D) on or after      is due to a valuation understatement.      person should not sign the return.
January 1 but not later than April 15 of  A substantial valuation under-             Generally, anyone who is paid to 
the year following the calendar year      statement occurs when the reported         prepare the return must sign the 
when the distributions were made.         value of property listed on Form           return in the space provided and fill in 
                                          706-GS(D) is 65% or less of the actual     the Paid Preparer Use Only area. See 
If you are not able to file the return    value of the property. A gross             section 7701(a)(36)(B) for exceptions.
by the due date, you may request an       valuation understatement occurs 
automatic 6-month extension of time       when the reported value of property        In addition to signing and 
to file by filing Form 7004, Application  listed on Form 706-GS(D) is 40% or         completing the required information, 

Oct 21, 2016                                       Cat. No. 10828G

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the paid preparer must give a copy of If you need more space than is basis of net worth, earnings, earning
the completed return to the provided in Part II, attach an additional and dividend capacity, and other
distributee. sheet of the same size and use the relevant factors. For such stock,
same format that is used in Part II. attach balance sheets, particularly the
Note. A paid preparer may sign Make sure that the total tentative one nearest the date of the
original or amended returns by rubber transfers from the continuation sheet distribution, and statements of net
stamp, mechanical device, or are included on line 3 of Part II. earnings or operating results and
computer software program. dividends paid for each of the 5
Column b preceding years.
In column b, use the same item
Specific Instructions number that was used for the Reduce the reported value of real
corresponding distribution on Form estate by the amount of any
Part I 706-GS(D-1). If you receive outstanding lien against the property
Line 1a distributions from more than one trust, on the date of distribution. Attach
If the skip person distributee is a trust, you may need to repeat item copies of any such liens. Explain how
enter the name of the trust here. numbers. the reported values were determined
and attach copies of any appraisals.
Line 1b Column c
For skip person distributees who are There may be instances when the For more information, see the
individuals, enter the distributee's trustee has either not completed Instructions for Form 706, United
social security number (SSN) here columns e (value) and f (tentative States Estate (and Generation-
and leave line 1c blank. If the skip transfer) of Form 706-GS(D-1) or Skipping Transfer) Tax Return. You
person distributee is a trust, see the when you disagree with the amounts can get the Instructions for Form 706,
instructions for line 1c. Do not enter a the trustee entered. If this occurs, and other IRS forms and publications,
number on both line 1b and line 1c. attach a statement to this return by calling 1-800-TAX-FORMS or by
showing what you think are the visiting IRS.gov.
Line 1c correct amounts and how you figured
If the skip person distributee is a trust, them. Part III
enter the trust's employer To figure the tentative transfer Line 4
identification number (EIN) and leave (column c of this form), multiply the You may deduct any adjusted
line 1b blank. Do not enter a number applicable inclusion ratio from Form allowable expenses incurred in
on both line 1b and line 1c. 706-GS(D-1), Part II, column d by the connection with the preparation of this
Line 2a value of the distribution. Use the Form 706-GS(D) or any other
following guidelines to determine the expenses incurred in connection with
If the skip person distributee is a trust,
value of the distribution. the determination, collection, or
enter the trustee's name here. If the
refund of the GST tax reported or
skip person distributee is a minor or is The value of a distribution is its fair
which should have been reported on
under some disability that precludes market value on the date of
this return from the amount of the
the individual from filing the return, distribution. Fair market value (FMV)
distribution you received.
enter the name of the person who is is the price at which the property
legally responsible for conducting the would change hands between a Adjusted allowable expenses are
affairs of the distributee, such as a willing buyer and a willing seller, when equal to the total allowable expenses
parent or guardian. Also, include the neither is forced to buy or to sell, and multiplied by the inclusion ratio. If you
title or relationship to the distributee. both have reasonable knowledge of have more than one inclusion ratio in
all the relevant facts. FMV may not be Part II, column d, of Form 706-GS
Line 2b determined by a forced sale price nor (D-1), prorate the total expense
Enter the address at which you wish by the sale price of the item in a among the inclusion ratios based on
to receive correspondence from the market other than that in which the the relative value of each distribution
IRS regarding this return. If there is an item is most commonly sold to the made at the various inclusion ratios.
entry on line 2a, the address entered public. The location of the item must
here will normally be that of the be taken into account whenever You may deduct an expense even
person listed on line 2a, rather than appropriate. though it has not been paid at the time
the individual or trust listed on line 1a. the return is filed as long as the
Determine the value of the property amount of the expense is clearly
Part II distributed as of the date of the ascertainable at that time. If an
distribution. The date of distribution is
Report all the taxable distributions additional allowable expense is
listed in Form 706-GS(D-1), Part II,
with inclusion ratios greater than zero incurred after the return is filed, file
column c.
that you received during the year. The Form 843, Claim for Refund and
trustee will report these distributions Reduce the value of any property Request for Abatement, to claim a
to you on Form 706-GS(D-1). Attach a being reported in Part II by the amount refund.
copy of each Form 706-GS(D-1) you of any consideration provided by the Example. The following example
received during the year to this return. distributee. illustrates the rules above.
You should also keep a copy for your Value the stock of close You listed three distributions in Part
records. corporations or inactive stock on the II of Form 706-GS(D). The value of the

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first distribution is $10,000 and has an                   Line 6                                                      Table of Maximum Tax Rates
inclusion ratio of .25. The value of the                   Enter, using the table below, the 
second distribution is $20,000 and EPS File Name: 10828g01             Size: Width = 14.0 picas, Depth = 7 picasThe 
                                                           applicable rate in effect at the time the 
has an inclusion ratio of .33. The                         generation-skipping distribution                        If the generation-skipping  maximum 
value of the third distribution is                         occurred.                                               transfer occurred                         tax rate is
$30,000 and has an inclusion ratio 
of .50. You received the completed                         Line 9                                                  After December 31, 2002, but               49%
                                                                                                                   before January 1, 2004            . .
return from the preparer along with the  Make your check payable to the 
bill for the preparer's fee on April 14                    “United States Treasury.” Please write                  After December 31, 2003, but               48%
and filed the return on April 15. You                      your SSN (or EIN), the year, and                        before January 1, 2005            . .
paid the preparer's $200 fee on April                      “Form 706-GS(D)” on the check to 
                                                                                                                   After December 31, 2004, but               47%
20. The adjusted allowable expense                         assist us in posting it to the proper                                                     . .
                                                                                                                   before January 1, 2006
you should report on line 4 of Part III is                 account. Enclose, but do not attach, 
$80, calculated as follows.                                the payment with Form 706-GS(D).                        After December 31, 2005, but               46%
$10,000                                                                                                            before January 1, 2007            . .
        200 = 33.33  .25 = 8 (rounded)
$60,000
$20,000                                                                                                            After December 31, 2006, but               45%
        200 = 66.67  .33 = 22 (rounded)
$60,000                                                                                                            before January 1, 2010            . .
$30,000                                                                                                            After December 31, 2009, but              0%
        200 = 100  .50   = 50
$60,000                                                                                                            before January 1, 2011            . .
Adjusted allowable expense =80                                                                                     After December 31, 2010, but              35%
                                                                                                                   before January 1, 2013            . .
                                                                                                                   After December 31,                        40%
                                                                                                                   2012      . . . . . . . . . . . . . .

Privacy Act and Paperwork Reduction Act Notice.                        We ask for the information on this form to carry out the Internal 
Revenue laws of the United States. We need it to figure and collect the right amount of tax. Subtitle B, Estate and Gift 
Taxes, of the Internal Revenue Code imposes a tax on certain distributions from a trust to a skip person; section 6109 
requires you to provide your identification number. This form is used to figure the amount of the taxes that you owe. 
Failure to provide this information in a timely manner, or providing false or fraudulent information, may subject you to 
penalties. We may disclose this information to the Department of Justice for civil and criminal litigation, and to cities, 
states, the District of Columbia, and U.S. commonwealths and possessions for use in administering their tax laws. We 
may also disclose this information to other countries under a tax treaty, to federal and state agencies to enforce federal 
nontax criminal laws, or to federal law enforcement and intelligence agencies to combat terrorism.
You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act 
unless the form displays a valid OMB control number. Books or records relating to a form or its instructions must be 
retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax 
returns and return information are confidential, as required by section 6103.
The time needed to complete and file this form will vary depending on individual circumstances. The average 
estimated time is:

Recordkeeping. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 min.
Learning about the law or the form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             13 min.
Preparing the form. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  18 min.
Copying, assembling, and sending the form to the IRS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                            20 min.

If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler, 
we would be happy to hear from you. You can send us comments from http://www.irs.gov/formspubs/. Click on “More 
Information” and then on “Comment on Tax Forms and Publications.” Or you can also send your comments to the 
Internal Revenue Service, Tax Forms and Publications Division, 1111 Constitution Ave. NW, IR-6526, Washington, DC 
20224. Do not send the form to this address. Instead, see Where to File.

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