Instructions for Form 

706-GS(T)

(Rev. November 2021)

Generation-Skipping Transfer Tax Return for Terminations

Department of the Treasury

Internal Revenue Service

Section references are to the Internal Revenue 

Code unless otherwise noted.

Future Developments

For the latest information about 

developments related to Form 

706-GS(T) and its instructions, such as 

legislation enacted after they were 

published, go to IRS.gov/Form706GST.

What’s New

GST exemption increased. The 

generation skipping tax (GST) 

exemption amount increased for 2021. 

See Numerator. GST exemption., later.

Reminder

For federal tax purposes, marriages of 

couples of the same sex are treated the 

same as marriages of couples of the 

opposite sex. The term “spouse” 

includes an individual married to a 

person of the same sex. However, 

individuals who have entered into a 

registered domestic partnership, civil 

union, or other similar relationship that 

isn’t considered a marriage under state 

law aren’t considered married for 

federal tax purposes. If you believe the 

new law may affect your estate or gift 

tax liability or filing requirement, please 

continue to monitor IRS.gov for 

additional guidance.

General Instructions

Purpose of Form

Form 706-GS(T) is used by a trustee to 

figure and report the tax due from 

certain trust terminations that are 

subject to the generation-skipping 

transfer (GST) tax.

Who Must File

In general, the trustee of any trust that 

has a taxable termination (defined 

below) must file Form 706-GS(T) for the 

tax year in which the termination 

occurred.

When To File

Generally, the trustee must file Form 

706-GS(T) by April 15 of the year 

following the calendar year in which the 

termination occurs. If the due date falls 

on a Saturday, Sunday, or legal holiday, 

file on the next business day.

If you are not able to file the return by 

the due date, you may request an 

extension of time to file by filing Form 

7004, Application for Automatic 

Extension of Time To File Certain 

Business Income Tax, Information, and 

Other Returns. The extension is 

automatic, so you do not have to sign 

the form or provide a reason for your 

request. You must file Form 7004 on or 

before the regular due date of Form 

706-GS(T). See Form 7004 for more 

information.

Where To File

File Form 706-GS(T) at the following 

address.

Department of the Treasury

Internal Revenue Service Center

Kansas City, MO 64999

If using a private delivery service, send 

Form 706-GS(T) to:

Internal Revenue Service

333 W. Pershing Road

Kansas City, MO 64108

Amending Form 706-GS(T) 

The address for filing an amended Form 

706-GS(T) is:

Internal Revenue Service Center

Attn: E&G, Stop 824G

7940 Kentucky Drive

Florence, KY 41042-2915

If using a private delivery service, send 

amended Form 706-GS(T) to:

Internal Revenue Service Center

Attn: E&G, Stop 824G

7940 Kentucky Drive

Florence, KY 41042-2915

Trusts

Nonexplicit trusts. An arrangement 

that has substantially the same effect as 

a trust will be treated as a trust even 

though it is not an explicit trust. 

Examples of such arrangements are 

insurance and annuity contracts, 

arrangements involving life estates and 

remainders, and estates for years.

In general, a transfer of property in 

which the identity of the transferee is 

conditioned on the occurrence of an 

event is a transfer in trust. This rule 

does not apply to a testamentary trust, 

however, if the event is to occur within 6 

months of the transferor's date of death.

Nonexplicit trusts do not include 

decedents' estates.

In the case of a nonexplicit trust, the 

person in actual or constructive 

possession of the property involved is 

considered the trustee and is liable for 

filing Form 706-GS(T).

If you are filing this return for a 

nonexplicit trust, see the instructions for 

line 1b.

Separate trusts. You must treat as 

separate trusts:

• Portions of a trust that are attributable 

to transfers from different transferors, 

and

• Substantially separate and 

independent shares of different 

beneficiaries in a trust.

If you are the trustee for separate 

trusts as described above, you must file 

a single Form 706-GS(T) but separate 

Schedules A for each separate trust, as 

that term is used here.

Terminations Subject to 

GST Tax

A termination may occur by reason of 

death, lapse of time, release of a power, 

or any other means.

In general, all taxable terminations 

are subject to the GST tax. A taxable 

termination is the conclusion of an 

interest in property held in trust unless:

• Immediately after the termination, a 

non-skip person has an interest in the 

property, or

• At no time after the termination may a 

distribution be made from the trust to a 

skip person.

Exceptions

Irrevocable trusts. Except as 

described under Additions to 

Aug 30, 2021 Cat. No. 10829R
irrevocable trusts below, the GST tax 

does not apply to any termination of an 

interest in a trust that was irrevocable on 

September 25, 1985. Any trust in 

existence on September 25, 1985, will 

be considered irrevocable unless:

1. On September 25, 1985, the 

settlor held a power with respect to such 

trust that would have caused the value 

of the trust to be included in the settlor's 

gross estate for federal estate tax 

purposes by reason of section 2038 

(regarding revocable transfers) if the 

settlor had died on September 25, 1985; 

or

2. Regarding a policy of life 

insurance that is treated as a trust under 

section 2652(b), the insured possessed 

an incident of ownership on September 

25, 1985, that would have caused the 

insurance proceeds to be included in 

the insured's gross estate for federal 

estate tax purposes if the insured had 

died on September 25, 1985.

For more information, see 

Regulations section 26.2601-1(b)(i) and 

(ii).

Trusts containing qualified terminable interest property. Irrevocable 

trusts in existence on September 25, 

1985, that hold qualified terminable 

interest property (QTIP) (as defined in 

section 2056(b)(7)) as a result of an 

election under section 2056(b)(7) or 

2523(f), are treated for purposes of the 

GST tax as if the QTIP election had not 

been made. Thus, transfers from such a 

trust will not be subject to the GST tax.

Additions to irrevocable trusts. If an 

addition has been made after 

September 25, 1985, to an irrevocable 

trust, the termination of any interest in 

the trust may be subject in part to the 

GST tax. Additions include constructive 

additions described in Regulations 

section 26.2601-1(b)(1)(v).

Medical and educational exclusion. 

If all of the property to which the 

termination applied has been distributed 

and used for medical or educational 

expenses of the transferee such that if 

the transfer had been made inter vivos 

by an individual, it would not have been 

subject to gift tax by reason of the 

medical and educational exclusion, then 

the termination is not a 

generation-skipping transfer, and you 

do not have to file this form to report the 

termination.

Transition Rule for Revocable 

Trusts

The GST tax will not apply to any 

termination of an interest in a revocable 

trust, provided:

• The trust was executed before 

October 22, 1986;

• The trust as it existed on October 21, 

1986, was not amended after October 

21, 1986, in any way that created or 

increased the amount of a 

generation-skipping transfer;

• Except as provided in Exceptions to 

Additions Rule, later, no additions were 

made to the trust; and

• The settlor died before January 1, 

1987.

A revocable trust is any trust that on 

October 22, 1986, was not an 

irrevocable trust, as defined previously, 

and would not have been an irrevocable 

trust had it been created before 

September 25, 1985.

The instructions under Trusts 

containing qualified terminable interest 

property, previously, apply also to 

revocable trusts covered by these 

transition rules.

Amendments to revocable trusts. An 

amendment to a revocable trust in 

existence on October 21, 1986, will not 

be considered to result in the creation 

of, or an increase in the amount of, a 

generation-skipping transfer where:

• The amendment is administrative or 

clarifying in nature, and it only 

incidentally increases the amount 

transferred to a skip person (defined 

below), or

• It is designed to perfect a marital or 

charitable deduction for an existing 

transfer, and it only incidentally 

increases the amount transferred to a 

skip person (defined later).

See Regulations section 26.2601-1(b)

(2)(vii) for examples demonstrating 

these rules.

Additions to revocable trusts. If an 

addition (including a constructive 

addition) to a revocable trust is made 

after October 21, 1986, and before the 

death of the settlor, all subsequent 

terminations of interests in the trust will 

be subject to the GST tax if the other 

requirements of taxability are met. For 

settlors dying before January 1, 1987, 

any addition made to a revocable trust 

after the death of the settlor will be 

treated as made to an irrevocable trust.

Transition Rule in Case of 

Mental Disability

If the settlor was under a mental 

disability on October 22, 1986, the GST 

tax may not apply. See Regulations 

section 26.2601-1(b)(3) for a definition 

of the term “mental disability” and 

additional details.

Exceptions to Additions Rule

Do not treat as an addition to a trust any 

addition that is made pursuant to an 

instrument or arrangement that is 

covered by the transition rules 

discussed above under Transition Rule 

for Revocable Trusts and Transition 

Rule in Case of Mental Disability. This 

also applies to inter vivos transfers if the 

same property would have been added 

to the trust by such an instrument. For 

examples illustrating this rule, see 

Regulations section 26.2601-1(b)(5)(ii).

Definitions

Skip Persons

For termination purposes, skip person 

means a trust beneficiary who is either:

1. A natural person assigned to a 

generation that is two or more 

generations below the settlor's 

generation, or

2. A trust that meets either of the 

following conditions:

a. All interests in the trust are held 

by skip persons; or

b. No person holds an interest in the 

trust, and at no time after the transfer to 

the trust may a distribution be made to a 

non-skip person.

Interest

A person holds an interest in the trust if, 

at the time the determination is made, 

the person:

1. Has a current right to receive 

income or corpus from the trust;

2. Is a permissible current recipient 

of income or corpus from the trust (other 

than charitable entities); or

3. Is a charitable or other entity 

described in section 2055(a) and the 

trust is a charitable remainder annuity 

trust, a charitable remainder unitrust, or 

a pooled income fund.

Any interest that is created primarily 

to postpone or avoid the GST tax is 

disregarded.

Non-Skip Person

A non-skip person is any person who is 

not a skip person.

Generation Assignment

A generation is determined along family 

lines as follows.

1. Where the beneficiary is a lineal 

descendant of a grandparent of the 

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transferor (for example, the donor's 

cousin, niece, nephew, etc.), the 

number of generations between the 

transferor and the descendant is 

determined by subtracting the number 

of generations between the grandparent 

and the transferor from the number of 

generations between the grandparent 

and the descendant.

2. Where the beneficiary is the lineal 

descendant of a grandparent of a 

spouse (or former spouse) of the 

transferor, the number of generations 

between the transferor and the 

descendant is determined by 

subtracting the number of generations 

between the grandparent and the 

spouse (or former spouse) from the 

number of generations between the 

grandparent and the descendant.

3. For this purpose, a relationship 

by adoption is considered a blood 

relationship. A relationship by half-blood 

is considered a relationship by whole 

blood.

4. The spouse or former spouse of a 

transferor or lineal descendant is 

considered to belong to the same 

generation as the transferor or lineal 

descendant, as the case may be.

A person who is not assigned to a 

generation according to the rules above 

is assigned to a generation based on his 

or her birth date as follows.

1. A person who was born not more 

than 121/2 years after the transferor is in 

the transferor's generation.

2. A person born more than 121/2 

years, but not more than 371/2 years, 

after the transferor is in the first 

generation younger than the transferor.

3. Similar rules apply for a new 

generation every 25 years.

If more than one of the rules for 

assigning generations applies to a 

beneficiary, the beneficiary is generally 

assigned to the youngest of the 

generations that apply.

If an entity such as a partnership, 

corporation, trust, or estate has an 

interest in property, each individual who 

has a beneficial interest in the entity (for 

example, partners, shareholders, and 

beneficiaries) is treated as having an 

interest in the property. The individual is 

then assigned to a generation using the 

rules described above.

Government entities and certain 

charitable organizations are assigned to 

the transferor's generation. 

Terminations in their favor will never be 

generation-skipping transfers.

Generation Assignment Where 

Intervening Parent Is Deceased

If you made a gift or bequest to your 

grandchild and at the time you made the 

gift or bequest, the grandchild's parent 

(who is your or your spouse's or your 

former spouse's child) is deceased, 

then for purposes of generation 

assignment, your grandchild will be 

considered to be your child rather than 

your grandchild. Your grandchild's 

children will be treated as your 

grandchildren rather than your 

great-grandchildren.

This rule governs generation 

assignment of lineal descendants below 

the level of grandchild. For example, if 

your grandchild is deceased, your 

great-grandchildren who are lineal 

descendants of the deceased 

grandchild are considered your 

grandchildren for purposes of the GST 

tax.

This rule also applies to other lineal 

descendants. For example, if property is 

transferred to an individual who is a 

descendant of a parent of the transferor, 

and that individual's parent (who is a 

lineal descendant of the parent of the 

transferor) is deceased at the time the 

transfer is subject to gift or estate tax, 

then for purposes of generation 

assignment, the individual is treated as 

if he or she is a member of the 

generation that is one generation below 

the lower of:

• The transferor's generation; or

• The generation assignment of the 

youngest living ancestor of the 

individual, who is also a descendant of 

the parent of the transferor.

The same rules apply to the 

generation assignment of any 

descendant of the individual.

This rule does not apply to a transfer 

to an individual who is not a lineal 

descendant of the transferor if the 

transferor has any living lineal 

descendants.

If any transfer of property to a trust 

would have been a direct skip except for 

this generation assignment rule, then 

the rule also applies to transfers from 

the trust attributable to such property.

Ninety-day rule. For purposes of 

determining if an individual's parent is 

deceased at the time of a testamentary 

transfer, an individual's parent who dies 

no later than 90 days after a transfer 

occurring by reason of the death of the 

transferor is treated as having 

predeceased the transferor. The 90-day 

rule applies to transfers occurring on or 

after July 18, 2005. See Regulations 

section 26.2651-1(a)(2)(iii).

Multiple Skips

If after a generation-skipping transfer, 

the property transferred is held in trust, 

then for the purpose of determining the 

taxability of subsequent transfers from 

the trust involving that property, the 

transferor of the property is assigned to 

the first generation above the highest 

generation of any person who has an 

interest in the trust immediately after the 

initial transfer.

Penalties and Interest

Section 6651 provides for penalties for 

both late filing and for late payment 

unless there is reasonable cause for the 

delay. The law also provides penalties 

for willful attempts to evade payment of 

tax.

Section 6662 provides penalties for 

underpayments of GST taxes due to 

negligence, intentional disregard of 

rules and regulations, or a substantial or 

gross valuation understatement. A 

substantial valuation understatement 

occurs when the reported value of 

property on Form 706-GS(T) is 65% or 

less of the actual value of the property. 

A gross valuation understatement 

occurs when the reported value of the 

property listed on Form 706-GS(T) is 

40% or less of the actual value of the 

property. No penalty will be assessed if 

the underpayment of GST tax, 

attributable to substantial or gross 

valuation understatement, does not 

exceed $5,000.

Interest will be charged on taxes not 

paid by their due date, even if an 

extension of time to file is granted. 

Interest is also charged on any additions 

to tax imposed by section 6651 from the 

due date of the return (including any 

extensions) until the addition to tax is 

paid.

Return preparer. The Small Business 

and Work Opportunity Act of 2007 

extended return preparer penalties to all 

return preparers. Return preparers who 

prepare any return or claim for refund 

that reflects an understatement of tax 

liability due to an unreasonable position 

are subject to a penalty equal to the 

greater of $1,000 or 50% of the income 

derived (or to be derived) for the 

preparation of each such return. Return 

preparers who prepare a return or claim 

for refund that reflects an 

understatement of tax liability due to 

willful or reckless conduct are subject to 

a penalty of $5,000 or 75% of the 

income derived (or income to be 

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derived), whichever is greater, for the 

preparation of each such return. See 

sections 6694(a) and 6694(b), the 

related regulations, and Ann. 2009-15, 

2009-11 I.R.B. 687 (available at 

IRS.gov/pub/irs-irbs/irb09-11.pdf) for 

more information.

Signature

Form 706-GS(T) must be signed by the 

trustee or by an authorized 

representative.

If you fill in your own return, leave the 

Paid Preparer Use Only space blank. If 

someone prepares your return and does 

not charge you, that person should not 

sign the return.

Generally, anyone who is paid to 

prepare the return must sign the return 

in the space provided and fill in the Paid 

Preparer Use Only area. See section 

7701(a)(36)(B) for exceptions.

In addition to signing and completing 

the required information, the paid 

preparer must give a copy of the 

completed return to the taxpayer.

Note. A paid preparer may sign original 

or amended returns by rubber stamp, 

mechanical device, or computer 

software program.

Specific Instructions

Complete Form 706-GS(T) in the 

following order: Parts I and II, 

Schedule A (through line 4), 

Schedule B, Schedule A (lines 5 

through 10), Part III.

Part I—General 

Information

Line 1b. Trust's Employer 

Identification Number

All trusts filing Form 706-GS(T) must 

have an employer identification number 

(EIN). A nonexplicit trust, defined 

above, must have an EIN that is 

separate from any other entity's EIN and 

that will be used only by the entity in its 

capacity as the nonexplicit trust.

A trust or nonexplicit trust that does 

not have an EIN should apply for one on 

Form SS-4, Application for Employer 

Identification Number. You can get 

Form SS-4, and other IRS tax forms and 

publications, by visiting IRS.gov/Forms.

Send Form SS-4 to the address 

listed under Where To File. If you do not 

receive the EIN by the due date for the 

706-GS(T), write “Applied for” on 

line 1b.

You can also apply for an EIN at 

IRS.gov/EIN.

Part II—Trust Information

Line 4

Whenever property is transferred into a 

pre-existing trust, the inclusion ratio 

must be refigured. See Multiple 

transfers, later, for the rule on how to 

refigure the inclusion ratio.

Line 7

If a qualified terminable interest property 

deduction was taken by the settlor as 

donor spouse or by the executor of a 

deceased settlor's estate for the transfer 

of any property into this trust, the donor 

spouse or the executor, as the case 

may be, may have made an election at 

that time to treat such transfer for the 

purpose of the GST tax as if it was not 

qualified terminable interest property. In 

this case, you must refer to the gift tax 

return (Form 709, United States Gift 

(and Generation-Skipping Transfer) Tax 

Return) of the donor spouse or the 

deceased settlor's estate tax return 

(Form 706, United States Estate (and 

Generation-Skipping Transfer) Tax 

Return) for the information needed to 

figure the inclusion ratio.

Schedule A (Lines 1–4)

Note. If you need more than one 

Schedule A, make copies before 

completing it. Also, make a copy of 

Schedule B for each Schedule A you 

will file. If you need additional space to 

provide all the required information for 

any given schedule, attach a separate 

sheet of the same size to that schedule.

Combine on a single Schedule A all 

terminations from a single trust that 

have the same inclusion ratio (as 

discussed later). However, you must 

complete a separate Schedule A for 

each terminating interest that has a 

different inclusion ratio. Number each 

Schedule A consecutively in the space 

provided at the top.

Line 2

For the purposes of line 2, termination 

means the conclusion (for example, by 

death, lapse of time, or release of 

power, etc.) of an interest in property 

held in trust unless:

• Immediately after the termination, a 

non-skip person has an interest in such 

property; or

• At no time after the termination is it 

possible for a distribution (including 

distributions on termination) to be made 

from the trust to a skip person.

Also, if you are reporting separate 

trusts, defined above, on this Form 

706-GS(T), explain why you are treating 

parts of the trust as separate trusts.

Line 3

You may elect alternate valuation under 

section 2032 for all terminations in the 

same trust that occurred at the same 

time as and as a result of the death of 

an individual. If you elect alternate 

valuation, you must use it to value all 

property included in those terminations.

You may not elect alternate valuation 

unless the election will decrease both 

the total value of the property interests 

that were subject to the termination and 

the total net GST tax due after the 

allowable credit.

Check the box on line 3 of all the 

applicable Schedules A if you elect 

alternate valuation. Once made, the 

election cannot be revoked. You may 

make the election on a late filed Form 

706-GS(T), provided it is not filed later 

than 1 year after the due date (including 

extensions).

If you elect alternate valuation, value 

the property interest that has been 

terminated as follows.

1. Any property distributed or 

otherwise disposed of or separated from 

the trust within 6 months after the 

termination is valued on the date of 

distribution or other disposition. Value 

the property on the date it ceases to 

form a part of the trust; that is, on the 

date the title passes as a result of its 

distribution or other disposition.

2. Any property not distributed or 

otherwise disposed of within 6 months 

following the termination is valued on 

the date 6 months after the termination.

3. Any property or interest that is 

affected by mere lapse of time is valued 

as of the time of termination. However, 

you may change this date of termination 

value to the value as of the date of 

distribution or other disposition to 

account for any change that is not due 

to mere lapse of time.

If the alternate valuation date falls 

after the initial due date of the return, 

you must request an extension to file on 

Form 7004. The extension is automatic, 

so you do not have to sign the form or 

provide a reason for your request. See 

Form 7004 for more information.

Line 4

Terminations of interests in trusts to 

which additions have been made. 

As described earlier, when an addition 

is made to an irrevocable trust after 

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September 25, 1985, only the portion of 

the trust resulting from the addition is 

subject to the GST tax. For terminations, 

this portion is the product of the 

allocation fraction and the value of the 

property subject to the termination 

(including accumulated income and 

appreciation on that property).

The allocation fraction is a fraction, 

the numerator of which is the value of 

the addition as of the date it was made 

(regardless of whether it was subject to 

gift or estate tax). The denominator of 

the fraction is the fair market value of 

the entire trust immediately after the 

addition, less any amount of expenses, 

indebtedness, or taxes that would be 

allowable as a deduction under section 

2053.

When there is more than one 

addition, the allocation fraction must be 

revised after each addition. The 

numerator of the revised fraction is the 

sum of:

• The value of the portion of the trust 

subject to the GST tax immediately 

before the last addition, and

• The amount of the latest addition.

The denominator of the revised 

fraction is the total value of the entire 

trust immediately after the latest 

addition.

If the addition results from a 

generation-skipping transfer, reduce 

both the numerator and denominator by 

the amount of any GST tax imposed on 

the transfer and recovered from the 

trust.

Round off the allocation fraction to 

five decimal places (for example, 

“.00123”).

Column a. Item no. Identify by 

separate item number all property in 

which an interest has terminated during 

the tax year. You may combine under 

the same item number all property that 

has the same termination date, 

valuation date, and unit value, such as 

stocks or bonds. Otherwise, assign a 

separate item number to each article of 

property.

Column b. Description of property. 

Describe each article of property 

assigned an item number as follows.

Real estate. Describe the real 

estate in enough detail so that the IRS 

can easily locate it for inspection and 

valuation. For each parcel of real estate, 

report the area and, if the parcel is 

improved, describe the improvements. 

For city or town property, report the 

street number, ward, subdivision, block 

and lot, etc. For rural property, report 

the township, range, landmarks, etc.

Stocks and bonds. For stocks, 

give:

• Number of shares;

• Whether common or preferred;

• Issue;

• Par value where needed for 

valuation;

• Price per share;

• Exact name of corporation;

• Principal exchange upon which sold, 

if listed on an exchange; and

• CUSIP number.

For bonds, give:

• Quantity and denomination;

• Name of obligor;

• Date of maturity;

• Principal exchange, if listed on an 

exchange;

• Interest rate;

• Interest due date; and

• CUSIP number.

If the stock or bond is unlisted, show 

the company's principal business office.

The CUSIP (Committee on Uniform 

Security Identification Procedure) 

number is a nine-digit number assigned 

to all stocks and bonds traded on major 

exchanges and many unlisted 

securities. Usually, the CUSIP number 

is printed on the face of the stock 

certificate. If the CUSIP number is not 

printed on the certificate, it may be 

obtained through the company's 

transfer agent.

Other personal property. Any 

interest in personal property involved in 

a termination must be described in 

enough detail that the IRS can value it.

Column d. Valuation date. Unless 

you elected alternate valuation by 

checking the box on line 3 of 

Schedule A, the valuation date should 

be the same as the termination date.

Column e. Value. Reduce the value of 

any property being reported on 

Schedule A by the amount of any 

consideration provided by the skip 

person.

Explain how the values reported in 

column e were figured and attach 

copies of any appraisals.

Schedules B(1) and B(2)

To figure the taxable amount for a 

taxable termination, you may deduct 

expenses similar to those deductible 

under section 2053 from the value of the 

property subject to the termination.

Schedule B(1)—General Trust 

Debts, Expenses, and Taxes

Report here only those expenses 

related to the entire trust. Examples of 

such expenses are trustee's fees, 

administrative expenses, financial 

advisor's fees, and accounting fees.

Column a. Item no. Assign an item 

number to each separate expense. 

These will not necessarily correspond 

with the item numbers on Schedule A.

Column b. Description. List the 

names and addresses of persons to 

whom the expenses are payable and 

describe the nature of the expenses.

Column c. Amount. Enter here the 

entire amount of the expense for the tax 

year for which the return is being filed.

Line 2. Figure the percentage of 

expense to allocate to the property 

involved in the termination as follows.

1. Divide the value of the interest 

that has been terminated by the total 

value of the trust at the time of the 

termination; and

2. Multiply the result by a fraction, 

the numerator of which is the number of 

days in the year through the date of the 

termination, and the denominator of 

which is the total number of days in the 

year (or, if the entire trust was 

terminated during the year, the total 

number of days the trust was in 

existence during the year).

If there is more than one termination 

during the year, you must reduce the 

total expense used in the allocation by 

the expense allocated to the prior 

terminations. For example, assume that 

the total administrative expense for the 

year was $1,000 and $300 was 

allocated to the first termination. The 

expense allocated to the second 

termination would be a percentage of 

$700, not of the entire $1,000.

Schedule B(2)—Specific 

Termination-Related Debts, 

Expenses, and Taxes

Report here only those expenses 

related solely to the interest that has 

terminated. Examples of these 

expenses are property tax on real 

estate, the cost of selling property, or 

attorney's fees for defending the title to 

property.

Column a. Item no. Assign an item 

number to each separate expense. This 

will not necessarily correspond with the 

item numbers on Schedule A.

Column b. Description. List the 

names and addresses of persons to 

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whom the expenses are payable and 

describe the nature of the expense. List 

the item number(s) from Schedule A to 

which the expense relates.

Column c. Amount. If the expense 

relates to more property than that 

involved in the termination but less than 

the entire trust, enter in column c only 

the amount attributable to the property 

involved in the termination. Determine 

this amount by multiplying the total 

expense times a fraction. The 

numerator of the fraction is the value of 

the property involved in the termination 

and to which the expense relates. The 

denominator is the total value of the 

property to which the expense relates.

Schedule A (Lines 5–10)

Line 7. Inclusion Ratio

The trustee must figure the inclusion 

ratio for every termination. All 

terminations, or any parts of a single 

termination, that have different inclusion 

ratios must be shown on separate 

Schedules A. Identify the separate 

trusts by Schedule A number when 

showing your inclusion ratio calculation.

The inclusion ratio is the excess of 1 

over the applicable fraction determined 

for the trust in which the termination 

occurred.

Applicable fraction. The applicable 

fraction is a fraction, the numerator of 

which is the amount of the GST 

exemption. The denominator of the 

fraction is:

1. The value of the property 

transferred to the trust, minus

2. The sum of:

a. Any federal estate tax or state 

death tax actually recovered from the 

trust attributable to the property, and

b. Any charitable deduction allowed 

under section 2055 or 2522 with respect 

to the property.

Round the applicable fraction to at 

least the nearest one-thousandth (for 

example, “.001”).

Numerator. GST exemption. Every 

individual settlor is allowed a lifetime 

GST exemption against property that 

the individual has transferred. For 

generation-skipping transfers made 

through 1998, the amount of the 

exemption was $1 million. The GST 

exemption amounts thereafter are as 

follows:

Year of Transfer GST 

Exemption

1999 ............. $1,010,000

2000 ............. $1,030,000

2001 ............. $1,060,000

2002 ............. $1,100,000

2003 ............. $1,120,000

2004 and 2005 ....... $1,500,000

2006, 2007, and 2008 . . $2,000,000

2009 ............. $3,500,000

2010 and 2011 ....... $5,000,000

2012 ............. $5,120,000

2013 ............. $5,250,000

2014 ............. $5,340,000

2015 ............. $5,430,000

2016 ............. $5,450,000

2017 ............. $5,490,000

2018 ............. $11,180,000

2019 ............. $11,400,000

2020 ............. $11,580,000

2021 ............. $11,700,000

A valid Deceased Spousal 

Unused Exclusion Amount 

("DSUE" or portability) election 

by an executor of a deceased spouse's 

estate does not apply to or impact GST 

tax exemption.

For existing trusts, transferors may 

allocate the additional GST exemption 

amount attributable to indexing 

adjustments if they otherwise qualify 

under the existing rules for late 

allocations. For more information, see 

section 2632 and Multiple transfers, 

later.

Once made, allocations are 

irrevocable.

Allocation of the GST exemption is 

made by the settlor on Form 709 or on 

Form 706 by the executor of the settlor's 

estate. Therefore, you should obtain 

information regarding the allocation of 

the exemption to this trust from the 

settlor or the executor of the settlor's 

estate, as applicable.

If the settlor's entire GST exemption 

is not allocated by the due date 

(including extensions) of the settlor's 

estate tax return, the exemption is 

automatically allocated to the settlor's 

generation-skipping transfers under the 

rules of section 2632.

Denominator. Valuation of trust assets. In general, for an inter vivos 

transfer, you should use the gift tax 

value in the denominator of the 

applicable fraction as long as the 

allocation of the GST exemption was 

made on a timely filed gift tax return or 

CAUTION

!

was deemed made under section 

2632(b)(1).

If the allocation of the exemption to 

an inter vivos transfer is not made on a 

timely filed gift tax return and is not 

deemed made under section 2632(b)

(1), the value for purposes of the 

applicable fraction is the value of the 

property transferred at the time the 

allocation under section 2632(a) is filed 

with the IRS.

The value of a testamentary transfer 

is generally the estate tax value.

For qualified terminable interest 

property (QTIP) that is included in the 

estate of the surviving spouse of the 

settlor because of section 2044, if the 

surviving spouse is considered the 

transferor under section 2652(a) for 

GST purposes, the value is the estate 

tax value in the estate of the surviving 

spouse.

A special QTIP election allows 

property for which a QTIP election was 

made for estate or gift tax purposes to 

be treated for GST tax purposes as if 

the QTIP election had not been made. If 

the special QTIP election has been 

made, the predeceased settlor spouse 

is the transferor and the value is that 

spouse's estate or gift tax value under 

the rules described above. The settlor 

spouse or the executor of the 

predeceased settlor spouse's estate 

must have made the special QTIP 

election.

Transfers subject to an estate tax inclusion period. If a transferor made an 

inter vivos transfer, and the property 

transferred would have been includible 

in the transferor's estate if he or she had 

died immediately after the transfer 

(other than by reason of the transferor 

dying within 3 years of making the gift), 

for purposes of determining the 

inclusion ratio, an allocation of GST 

exemption will only become effective at 

the close of the estate tax inclusion 

period (ETIP).

The value of the property for the 

purpose of figuring the inclusion ratio is 

the estate tax value if the property is 

includible in the transferor's gross 

estate. Otherwise, the property is valued 

at the close of the ETIP, provided that 

the GST exemption is allocated on a 

timely filed gift tax return for the 

calendar year in which the ETIP closes.

The ETIP closes at the earliest of:

• The time the transferred property 

would no longer be includible in the 

settlor's estate,

• The date of a generation-skipping 

transfer of the property, or

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• The date of death of the settlor.

If the allocation is not made on a 

timely filed gift tax return, the property is 

valued at the time of the late allocation.

Multiple transfers. When a transfer is 

made to a pre-existing trust, the 

applicable fraction must be refigured. 

The numerator of the new fraction is the 

sum of:

1. The exemption allocated to the 

current transfer, and

2. The nontax portion of the trust 

immediately before the current transfer 

(the product of the applicable fraction 

and the value of all the property in the 

trust immediately before the current 

transfer).

The denominator of the new fraction 

is the sum of:

1. The value of the current transfer 

(minus any federal estate tax or state 

death tax actually paid by the trust 

attributable to such property and any 

charitable deduction allowed for such 

property), and

2. The value (determined under the 

rules described above) of all property in 

the trust immediately before the current 

transfer.

To figure the inclusion ratio, use only 

the value of the total additions made to 

the trust after October 22, 1986.

Charitable lead annuity trusts. For 

termination of an interest in a charitable 

lead annuity trust, the numerator of the 

applicable fraction is the adjusted GST 

exemption as defined below. The 

denominator is the value of the trust 

immediately after the termination of the 

charitable lead annuity interest.

The adjusted GST exemption is the 

sum of:

1. The exemption allocated to the 

trust, and

2. Interest on the exemption 

determined at the interest rate used to 

figure the estate or gift deduction for the 

charitable lead annuity and for the 

actual period of the charitable lead 

annuity.

In the case of a late allocation, the 

amount of interest accrued prior to the 

date of allocation is zero.

Line 8

Enter, from the table below, the 

applicable tax rate at the time the 

generation-skipping transfer occurred.

Table of Maximum Tax Rates

If the generation-skipping 

transfer occurred

The 

maximum 

tax rate is

After December 31, 2002, 

but before January 1, 

2004 ..............

 49%

After December 31, 2003, 

but before January 1, 

2005 ..............

 48%

After December 31, 2004, 

but before January 1, 

2006 ..............

 47%

After December 31, 2005, 

but before January 1, 

2007 ..............

 46%

After December 31, 2006, 

but before January 1, 

2010 ..............

 45%

After December 31, 2009, 

but before January 1, 

2011 ..............

0%

After December 31, 2010, 

but before January 1, 

2013 ..............

35%

After December 31, 

2012 ..............

40%

Part III—Tax Computation

Line 9b

If you have more than six Schedules A 

attached to this form, enter the total 

GST tax from all Schedules A in excess 

of six.

Line 12

Make checks payable to the “United 

States Treasury.” Please write the trust's 

EIN, the year of the transfer, and “Form 

706-GS(T)” on the check to ensure 

posting to the proper account. Enclose, 

but do not attach, the payment with 

Form 706-GS(T).

No checks of $100 million or more 

accepted. The IRS cannot accept a 

single check (including a cashier's 

check) for amounts of $100,000,000 

($100 million) or more. If you're sending 

$100 million or more by check, you'll 

need to spread the payments over two 

or more checks, with each check made 

out for an amount less than $100 

million. The $100 million or more 

amount limit does not apply to other 

methods of payment (such as electronic 

payments), so please consider paying 

by means other than check.

Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue laws of the 

United States. You are required to give us the information. We need it to ensure that you are complying with these laws and to 

allow us to figure and collect the right amount of tax.

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:

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Form Recordkeeping Learning about the law 

or the form

Preparing the form Copying, assembling, 

and sending the form to 

the IRS

706-GS(T) 39 min. 32 min. 32 min. 20 min.

Schedule A 13 min. 13 min. 32 min. 20 min.

Schedule B 13 min. 9 min. 19 min. 20 min.

We welcome your comments about these instructions and your suggestions for future editions. You can send us comments 

through IRS.gov/FormComments. Or, you can write to the Internal Revenue Service, Tax Forms and Publications, 1111 

Constitution Ave. NW, IR-6526, Washington, DC 20224. Although we can't respond individually to each comment received, we 

do appreciate your feedback and will consider your comments as we revise our tax forms, instructions, and publications. Do not 

send tax questions, tax returns, or payments to the above address. Instead, see Where To File, earlier.

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