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                                                                                                        Department of the Treasury
                                                                                                        Internal Revenue Service
Instructions for

Form 706-GS(D-1)

(Rev. November 2021)

Use with the October 2008 revision of Form 706-GS(D-1)
Notification of Distribution From a Generation-Skipping Trust

Section references are to the Internal Revenue Trusts                                        A distribution is not considered a 
Code unless otherwise noted.                                                               taxable distribution if, had it been made 
                                               Nonexplicit trusts.   An arrangement        while an individual was alive, it would 
Future Developments                            that has substantially the same effect as   have been a nontaxable gift because of 
For the latest information about               a trust will be treated as a trust even     section 2503(e) (relating to transfers 
developments related to Form                   though it is not an explicit trust.         made for certain educational or medical 
706-GS(D-1) and its instructions, such         Examples of such arrangements are           expenses).
as legislation enacted after they were         insurance and annuity contracts, 
published, go to IRS.gov/Form706-              arrangements involving life estates and       Also, a distribution (or any portion 
GS(D-1).                                       remainders, and estates for years.          thereof) is not a taxable distribution to 
                                                                                           the extent that:
                                                 In general, a transfer of property in 
                                               which the identity of the transferee is     • The property distributed was 
                                                                                           previously subject to GST tax and
General Instructions                           conditioned on the occurrence of an 
                                               event is a transfer in trust. However, this • The distributee in the prior distribution 
                                                                                           is assigned to a generation the same as 
Purpose of Form                                rule does not apply to a testamentary 
                                                                                           or lower than the distributee in the 
A trustee uses Form 706-GS(D-1) to             trust if the event is to occur within 6 
                                                                                           current distribution.
report certain distributions from a trust      months of the transferor's date of death.
that are subject to the generation-                                                          This rule does not apply if the 
skipping transfer (GST) tax and to               Nonexplicit trusts do not include 
provide the skip person distributee with       decedents' estates.                         transfers have the effect of avoiding 
                                                                                           GST tax for any transfer.
information needed to figure the tax due         In the case of a nonexplicit trust, the 
on the distribution.                           person in actual or constructive            Exceptions
                                               possession of the property involved is      Irrevocable trusts.  The GST tax does 
Who Must File                                  considered the trustee and is liable for    not apply to any distribution from a trust 
In general, the trustee of any trust that      filing Form 706-GS(D-1).                    that was irrevocable on September 25, 
makes a taxable distribution must file a         If you are filing this return for a       1985. Any trust in existence on 
Form 706-GS(D-1) for each skip                 nonexplicit trust, see Line 2a. Trust's     September 25, 1985, will be considered 
person. See Distributions Subject to           Employer Identification Number.             irrevocable unless:
GST Tax, later, for a discussion of what       Separate trusts.  You must treat the        • On September 25, 1985, the value of 
constitutes a taxable distribution. The        following as separate trusts:               the trust could have been included in 
trustee must file a return for each skip       • Portions of a trust that are attributable the settlor's gross estate for federal 
person even if the inclusion ratio             to transfers from different transferors     estate tax purposes by reason of 
applicable to the distribution is zero.        and                                         section 2038 if the settlor had died on 
See Column d. Inclusion Ratio.                 • Substantially separate and                September 25, 1985, or
                                               independent shares of different             • Regarding a policy of life insurance 
When to File                                   beneficiaries in a trust.                   that is treated as a trust under section 
                                                                                           2652(b), the insured was an owner on 
The trustee must file Copy A of Form             You must report such separate trusts      September 25, 1985, and this would 
706-GS(D-1) with the IRS and send              under different item numbers in column      have caused the insurance proceeds to 
Copy B to the distributee by April 15th of     a of line 3, even if they have the same     be included in the insured's gross estate 
the year following the calendar year           inclusion ratios.                           for federal estate tax purposes if the 
when the distribution was made. If the 
due date falls on a Saturday, Sunday, or                                                   insured had died on September 25, 
                                               Distributions Subject to 
legal holiday, file on the next business                                                   1985.
day.                                           GST Tax                                       For more information, see 
                                               In general, all taxable distributions are   Regulations section 26.2601-1(b).
Where To File                                  subject to the GST tax. A taxable 
The trustee must send Copy A of Form           distribution is any distribution from a     Trusts containing qualified termina-
706-GS(D-1) to the following address:          trust to a skip person (other than a        ble interest property. If an irrevocable 
                                               taxable termination or a direct skip).      trust in existence on September 25, 
                                                                                           1985, holds qualified terminable interest 
   Department of the Treasury                    If any GST tax imposed on a               property (QTIP) (as defined in section 
   Internal Revenue Service Center             distribution is paid out of the trust from  2056(b)(7)) as a result of an election 
   Stop 824G                                   which the distribution was made, the        under section 2056(b)(7) or 2523(f), the 
   7940 Kentucky Drive                         amount of tax paid by the trust is also a   trust may elect to be treated for 
   Florence, KY 41042-2915                     taxable distribution.                       purposes of the GST tax as if the QTIP 

Sep 09, 2021                                             Cat. No. 10926L

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election had not been made. Thus, decimal places (for example, Transition Rule in Case of
transfers from such a trust will not be “0.00001”). Mental Disability
subject to the GST tax.
Transition Rule for Revocable If the settlor was under a disability on
Additions to irrevocable trusts. To Trusts October 22, 1986, the GST tax may not
the extent that a distribution from a trust apply. See Regulations section
is from an addition to an irrevocable The GST tax will not apply to any
trust made after September 25, 1985, distributions from a revocable trust, 26.2601-1(b)(3) for a definition of the
such distribution is subject to the GST provided: term “mental disability” and details on
the application of this rule.
tax. Additions include constructive 1. The trust was executed before
additions described in Regulations October 22, 1986; Exceptions to Additions Rule
section 26.2601-1(b)(1)(v). 2. The trust as it existed on October Do not treat as an addition to a trust any
For purposes of figuring the inclusion 21, 1986, was not amended after addition that is made pursuant to an
ratio (defined later), use only the value October 21, 1986, in any way that instrument or arrangement that is
of the total additions made to the trust created or increased the amount of a covered by the rules discussed earlier
after September 25, 1985. generation-skipping transfer; under Transition Rule for Revocable
Distributions from trusts to which 3. Except as provided later, no Trusts and Transition Rule in Case of
additions have been made. As addition was made to the trust; and Mental Disability. This also applies to
inter vivos transfers if the same property
described earlier, when an addition is 4. The settlor died before January 1, would have been added to the trust by
made after September 25, 1985, to an 1987. such an instrument. For examples
irrevocable trust, only the portion of the illustrating this rule, see Regulations
A revocable trust is any trust that on
trust resulting from the addition is section 26.2601-1(b)(4)(ii).
October 22, 1986, was not an
subject to the GST tax. For distributions,
irrevocable trust (as defined earlier) and
this portion is the product of the Definitions
would not have been an irrevocable
allocation fraction and the value of the
trust had it been created before
property distributed (including Skip persons. For GST tax purposes,
September 25, 1985.
accumulated income and appreciation skip person means:
on that property). The instructions under Trusts 1. A natural person assigned to a
The allocation fraction is a fraction, containing qualified terminable interest generation that is two or more
the numerator of which is the value of property apply also to revocable trusts generations below the settlor's
the addition as of the date it was made covered by these transition rules. generation, or
(regardless of whether it was subject to Amendments to revocable trusts. An 2. A trust that meets the following
gift or estate tax, but reduced by the amendment to a revocable trust in conditions:
amount of federal or state estate or gift existence on October 21, 1986, will not a. All interests in the trust are held
tax imposed and paid by the trust). The be considered to result in the creation of by skip persons, or
denominator of the fraction is the fair or an increase in the amount of a b. No person holds an interest in the
market value of the entire trust generation-skipping transfer where: trust, and at no time after the transfer to
immediately after the addition, less any • The amendment is administrative or the trust may a distribution be made to a
trust amount that is similar to expenses, clarifying in nature; or non-skip person.
indebtedness, or taxes that would be • It is designed to perfect a marital or
allowable as a deduction under section charitable deduction for an existing Non-skip person. A non-skip person is
2053, and further reduced by the same transfer, and it only incidentally any person who is not a skip person.
amount that the numerator was reduced increases the amount transferred to a
by to reflect federal or state estate or gift skip person. Generation assignment. A generation
taxes paid by the trust. is determined along family lines as
Addition to revocable trusts. If an follows:
When there is more than one addition (including a constructive
addition, the allocation fraction is addition) to a revocable trust is made 1. Where the beneficiary is a lineal
revised after each addition. The after October 21, 1986, and before the descendant of a grandparent of the
numerator of the revised fraction is the death of the settlor, all subsequent transferor (for example, the donor's
sum of: distributions from the trust will be cousin, niece, nephew, etc.), the
1. The value of the trust subject to subject to the GST tax, provided the number of generations between the
the GST tax immediately before the last other requirements of taxability are met. transferor and the descendant is
addition and For settlors dying before January 1, determined by subtracting the number
2. The amount of the latest addition. 1987, any addition made to a revocable of generations between the grandparent
trust after the death of the settlor will be and the transferor from the number of
The denominator of the revised treated as if made to an irrevocable generations between the grandparent
fraction is the total value of the entire trust. and the descendant.
trust immediately after the latest 2. Where the beneficiary is the lineal
addition. If the addition results from a See Regulations section
generation-skipping transfer, reduce the 26.2601-1(b)(2)(vii) for examples descendant of a grandparent of a
numerator and denominator by the demonstrating the operation of these spouse (or former spouse) of the
amount of any GST tax imposed on the rules. transferor, the number of generations
between the transferor and the
transfer and recovered from the trust. descendant is determined by
Round off the allocation fraction to five subtracting the number of generations
between the grandparent and the

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spouse (or former spouse) from the great-grandchildren who are lineal If someone prepares your return and
number of generations between the descendants of the deceased does not charge you, that person should
grandparent and the descendant. grandchild are considered your not sign the return. Generally, anyone
3. For this purpose, a relationship grandchildren for purposes of the GST who is paid to prepare your return must
by adoption is considered a blood tax. sign it in the space indicated.
relationship. A relationship by half-blood This rule also governs generation
is considered a relationship by whole assignment for other lineal Specific Instructions
blood. descendants. For example, if property is
4. The spouse or former spouse of a transferred to an individual who is a
Part I—General
transferor or lineal descendant is descendant of a parent of the transferor,
considered to belong to the same and that individual's parent (who is a Information
generation as the transferor or lineal lineal descendant of the parent of the Line 1a. Skip Person
descendant, as the case may be. transferor) is deceased at the time the
transfer is subject to gift or estate tax, Distributee's Identifying
A person who is not assigned to a then for purposes of generation Number
generation according to the rules above assignment, the individual is treated as Enter the social security number of an
is assigned to a generation based on his if he or she is a member of the individual distributee. (If the number is
or her birth date as follows. generation that is one generation below unknown or the individual has no
1. A person who was born not more the lower of: number, indicate “unknown” or “none.”)
than 12 / years after the transferor is in 1 2 • The transferor's generation or If the distributee is a trust, enter the
the transferor's generation. • The generation assignment of the trust's employer identification number
2. A person born more than 12 /1 2 youngest living ancestor of the (EIN).
years, but not more than 37 / years, 1 2 individual, who is also a descendant of
after the transferor is in the first the parent of the transferor. Line 2a. Trust's Employer
generation younger than the transferor. The same rules apply to the Identification Number
3. Similar rules apply for a new generation assignment of any Enter the EIN of the trust from which the
generation every 25 years. descendant of the individual. distribution was made.
This rule does not apply to a transfer A nonexplicit trust as described
If more than one of the rules for to an individual who is not a lineal under Who Must File must have an EIN
assigning generations applies to a descendant of the transferor if the that is separate from any other entity's
beneficiary, the beneficiary is generally transferor has any living lineal EIN and that will be used only by the
assigned to the youngest of the descendants. nonexplicit trust.
generations that apply.
If any transfer of property to a trust
If an entity such as a partnership, would have been a direct skip except for A trust or nonexplicit trust that does
corporation, trust, or estate has an this generation assignment rule, then not have an EIN should apply for one on
interest in the property, each individual the rule also applies to transfers from Form SS-4, Application for Employer
who has a beneficial interest in the the trust attributable to such property. Identification Number. You can get
entity is treated as having an interest in Form SS-4, and other IRS tax forms and
the property. The individual is then Ninety-day rule. For purposes of publications, by visiting IRS.gov/Forms.
assigned to a generation using the rules determining if an individual's parent is
described above. deceased at the time of a testamentary Send Form SS-4 to the address
Governmental entities and certain transfer, an individual's parent who dies listed under Where To File. If the EIN
charitable organizations are assigned to no later than 90 days after a transfer has not been received by the filing time
the transferor's generation. Distributions occurring by reason of the death of the for the GST form, write “Applied for” on
to them will never be transferor is treated as having line 2a.
generation-skipping transfers. predeceased the transferor. The 90-day
rule applies to transfers occurring on or Part II—Distributions
Generation assignment where inter- after July 18, 2005. See Regulations Report all taxable distributions made
vening parent is deceased. If you section 26.2651-1 for more information. during the year from the trust listed on
made a gift or bequest to your line 2 to the skip person distributee
grandchild and at the time you made the Multiple skips. If after a
gift or bequest, the grandchild's parent generation-skipping transfer the listed on line 1. Report a distribution
(who is your or your spouse's or your property transferred is held in trust, then even if its inclusion ratio is zero.
former spouse's child) is deceased, for the purpose of determining the Column a. Item No.
then for purposes of generation taxability of subsequent distributions
assignment, your grandchild will be from the trust involving that property, the Assign consecutive numbers to each
considered to be your child rather than settlor of the property is assigned to the distribution made during the year.
your grandchild. Your grandchild's first generation above the highest Different items of property having
children will be treated as your generation of any person who has an different inclusion ratios must be listed
grandchildren rather than your interest in the trust immediately after the separately in Part II. Include under a
great-grandchildren. initial transfer. single item number any properties
having the same inclusion ratio even if
This rule is also applied to your lineal they were distributed at different times.
Signature
descendants below the level of An exception to this is distributions from
grandchild. For example, if your The trustee, or an authorized “separate trusts” as that term was
grandchild is deceased, your representative of the trustee, must sign defined earlier. You must report
Form 706-GS(D-1). distributions from such separate trusts

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under different item numbers even if        Applicable fraction.         The applicable  Once made, allocations are 
they have the same inclusion ratio.         fraction is a fraction, the numerator of     irrevocable.
Column b. Description of                    which is the amount of the GST               Allocation of the GST exemption is 
                                            exemption allocated to the trust. The        made by the settlor on Form 709, United 
Property                                    denominator of the fraction is:              States Gift (and Generation-Skipping 
Real estate.  Describe the real estate in   1. The value of the property                 Transfer) Tax Return, and/or Form 706, 
enough detail so that the IRS can easily    transferred to the trust, minus              United States Estate (and 
locate it for inspection and valuation.                                                  Generation-Skipping Transfer) Tax 
                                            2. The sum of:
For each parcel of real estate, report the                                               Return, by the executor of the settlor's 
location and, if the parcel is improved,    a. Any federal estate tax or state           estate. Therefore, you should obtain 
describe the improvements. For city or      death tax actually recovered from the        information regarding the allocation of 
town property, report the street number,    trust attributable to the property and       the exemption to this trust from the 
ward, subdivision, block and lot, etc. For  b. Any charitable deduction allowed          settlor or the executor of the settlor's 
rural property, report the township,        under section 2055 or 2522 with respect      estate, as applicable.
range, landmarks, etc.                      to the property.                             If the settlor's entire GST exemption 
Stocks and bonds.    For stocks, give:      Round the applicable fraction to at          is not allocated by the due date 
• Number of shares;                         least the nearest one-thousandth (for        (including extensions) of the settlor's 
• Whether common or preferred;              example, “0.001”).                           estate tax return, the exemption is 
• Issue;                                                                                 automatically allocated under the rules 
• Par value where needed for                Numerator (GST exemption).       Every       of section 2632.
valuation;                                  individual settlor is allowed a lifetime 
• Price per share;                          GST exemption to be allocated against        Transfers subject to an estate tax in-
• Exact name of corporation;                property that the individual has             clusion period.  If a transferor made an 
• Principal exchange upon which sold,       transferred. For generation-skipping         inter vivos transfer, and the property 
if listed on an exchange; and               transfers made through 1998, the             transferred would have been includible 
• CUSIP number.                             exemption was $1 million. The GST            in the transferor's estate if he or she had 
                                            exemption amounts thereafter are as          died immediately after the transfer 
  For bonds, give:                          follows:                                     (other than by reason of the transferor 
• Quantity and denomination;                                                             dying within 3 years of making the gift), 
• Name of obligor;                          Year                             Amount      for purposes of determining the 
• Date of maturity;                         1999 . . . . . . . . . . . . . . $1,010,000  inclusion ratio, an allocation of GST 
• Interest rate;                            2000 . . . . . . . . . . . . . . $1,030,000  exemption will only become effective at 
• Interest due date;                        2001 . . . . . . . . . . . . . . $1,060,000  the close of the estate tax inclusion 
• Principal exchange, if listed on an       2002 . . . . . . . . . . . . . . $1,100,000  period (ETIP).
exchange; and                               2003 . . . . . . . . . . . . . . $1,120,000  The value of the property for the 
• CUSIP number.                             2004 and 2005  . . . . . . . .   $1,500,000  purpose of figuring the inclusion ratio is 
  If the stock or bond is unlisted, show    2006–2008 . . . . . . . . . .    $2,000,000  the estate tax value if the property is 
the company's principal business office.    2009 . . . . . . . . . . . . . . $3,500,000  included in the transferor's gross estate, 
  The CUSIP (Committee on Uniform           2010 and 2011  . . . . . . . .   $5,000,000  or its value at the close of the ETIP.
Security Identification Procedure)          2012 . . . . . . . . . . . . . . $5,120,000  The ETIP closes at the earliest of:
number is a nine-digit number that is       2013 . . . . . . . . . . . . . . $5,250,000
                                                                                         1. The time the transferred property 
assigned to all stocks and bonds traded     2014 . . . . . . . . . . . . . . $5,340,000
                                                                                         would no longer be includible in the 
on major exchanges and many unlisted        2015 . . . . . . . . . . . . . . $5,430,000
                                                                                         settlor's estate,
securities. Usually the CUSIP number is     2016 . . . . . . . . . . . . . . $5,450,000
printed on the face of the stock            2017 . . . . . . . . . . . . . . $5,490,000  2. The date of a generation-
certificate. If the CUSIP number is not     2018 . . . . . . . . . . . . . . $11,180,000 skipping transfer of the property, or
printed on the certificate, it may be       2019 . . . . . . . . . . . . . . $11,400,000 3. The date of death of the settlor.
obtained through the company's              2020 . . . . . . . . . . . . . . $11,580,000
transfer agent.                             2021 . . . . . . . . . . . . . . $11,700,000 Denominator (valuation of trust as-
                                                                                         sets). In general, the value to be used 
Other personal property. Any                                                             in the applicable fraction is the gift tax 
personal property distributed must be                                                    value for an inter vivos transfer as long 
described in enough detail that the IRS             A valid Deceased Spousal 
                                                                                         as the allocation of the GST exemption 
can value it.                               !       Unused Exclusion Amount              was made on a timely filed gift tax 
                                            CAUTION (“DSUE ” or portability) election 
Column d. Inclusion Ratio                   by an executor of a deceased spouse's        return. The value of a testamentary 
Note. The trustee must provide the          estate does not apply to or impact GST       transfer is generally the estate tax value.
inclusion ratio for every distribution.     tax exemption.                               If the allocation of the exemption to 
All distributions, or any part of a single                                               an inter vivos transfer, made before 
                                            For existing trusts, transferors may 
distribution, that have different inclusion                                              January 1, 2001, is not made on a 
                                            allocate the additional GST exemption 
ratios must be listed as separate items                                                  timely filed gift tax return, the value for 
                                            amount attributable to section 2631(c) 
in column a.                                                                             purposes of the applicable fraction is 
                                            increases if they otherwise qualify under    the value of the property transferred at 
  The inclusion ratio is the excess of 1    the existing rules for late allocations. For the time the allocation is filed with the 
over the applicable fraction determined     more information, see section 2632 and       IRS.
for the trust from which the distribution   Multiple transfers into a trust, later.
was made.

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Qualified terminable interest attributable to such property) and any
property. For qualified terminable charitable deduction allowed with Paperwork Reduction Act Notice.
interest property (QTIP) that is included respect to such property and We ask for the information on this form
to carry out the Internal Revenue laws of
in the estate of the surviving spouse of 2. The value of all property in the the United States. You are required to
the settlor because of section 2044, trust immediately before the current give us the information. We need it to
unless a special QTIP election has been transfer. ensure that you are complying with
made under section 2652(a)(3), the
these laws and to allow us to figure and
surviving spouse is considered the Charitable lead annuity trusts. For collect the right amount of tax.
transferor under section 2652(a) for distributions from a charitable lead
GST purposes, and the value is the annuity trust, the numerator of the You are not required to provide the
estate tax value in the estate of the applicable fraction is the adjusted GST information requested on a form that is
surviving spouse. exemption as defined below. The subject to the Paperwork Reduction Act
A special QTIP election allows denominator is the value of the trust unless the form displays a valid OMB
property for which a QTIP election was immediately after termination of the control number. Books or records
made for estate or gift tax purposes to charitable lead annuity. relating to a form or its instructions must
be treated for GST tax purposes as if The adjusted GST exemption is the be retained as long as their contents
this QTIP election had not been made. If sum of: may become material in the
the special QTIP election has been 1. The exemption allocated to the administration of any Internal Revenue
made, the predeceased settlor spouse trust and law. Generally, tax returns and return
is the transferor and the value is that information are confidential, as required
spouse's estate or gift tax value under 2. Interest on the exemption by section 6103.
the rules described above. Either the determined at the interest rate used to
settlor spouse or the executor of the figure the estate or gift deduction for the The time needed to complete and file
settlor spouse's estate must make the charitable lead annuity and for the this form will vary depending on
special QTIP election. actual period of the charitable lead individual circumstances. The estimated
annuity. average time is:
ETIP. If an individual could not make
a timely allocation of exemption In the case of a late allocation, the Recordkeeping. . . . . 1 hr., 33 min.
because of an ETIP, the value of the amount of interest accrued prior to the
property for the purpose of computing date of allocation is zero. Learning about the
law or the form. . . 1 hr., 46 min.
the inclusion ratio is the estate tax value Column e. Value
if the property is includible in the Preparing the
Enter the value of the property
transferor's gross estate. If the property form. . . . . . . . . . . 42 min.
distributed from the trust at the time of
is not includible in the transferor's gross
distribution.
estate, the property is valued at the Copying,
close of the ETIP, provided that the GST assembling, and
exemption is allocated on a timely filed Part III—Trust Information sending the form
to the IRS. . . . . . . 20 min.
gift tax return for the calendar year in Line 4
which the ETIP closes.
An arrangement that has substantially
Multiple transfers into a trust. When the same effect as a trust will be treated
a transfer is made to a pre-existing trust, as a trust even though it is not an We welcome your comments about
the applicable fraction must be explicit trust. Examples of such these instructions and your suggestions
recomputed. The numerator of the new arrangements are insurance and for future editions. You can send us
fraction is the sum of: annuity contracts, arrangements comments through IRS.gov/
1. The exemption allocated to the involving life estates and remainders, FormsComments. Or, you can write to
current transfer and and estates for years. Nonexplicit trusts the Internal Revenue Service, Tax
do not include decedent's estates. Forms and Publications, 1111
2. The nontax portion of the trust Constitution Ave. NW, IR-6526,
immediately before the current transfer In the case of a nonexplicit trust, the Washington, DC 20224.
(the product of the applicable fraction trustee is the person in actual or
and the value of all of the property in the constructive possession of the property Although we can't respond
trust immediately before the current involved. individually to each comment received,
transfer). we do appreciate your feedback and will
Line 5 consider your comments as we revise
The denominator of the new fraction
is the sum of: Whenever property is transferred into a our tax forms, instructions, and
pre-existing trust, the inclusion ratio publications. Do not send the tax form to
1. The value of the current transfer must be refigured. See Multiple this address. Instead, see Where To
(minus any federal estate tax or state transfers into a trust for the rule on how File.
death tax actually paid by the trust to refigure the inclusion ratio.

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