Instructions for

Form 706-GS(D)

(Rev. June 2019)

Generation-Skipping Transfer Tax Return for Distributions

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(D) and its instructions, such 

as legislation enacted after they were 

published, go to IRS.gov/

Form706GSD.

What’s New

New filing address. Effective July 1, 

2019, Form 706-GS(D) will be filed in 

Kansas City, Missouri. See Where To 

File, later.

General Instructions

Purpose of Form

Form 706-GS(D) is used by a skip 

person distributee to calculate and 

report the tax due on distributions 

from a trust that are subject to the 

generation-skipping transfer (GST) 

tax.

Who Must File

In general, any skip person who 

receives a taxable distribution from a 

trust must file Form 706-GS(D). 

Trustees are required to report 

taxable distributions to skip person 

distributees on Form 706-GS(D-1), 

Notification of Distribution From a 

Generation-Skipping Trust.

If you receive a Form 706-GS(D-1) 

and the inclusion ratio found on Part II, 

line 3, column d, is zero for all 

distributions, you do not need to file 

Form 706-GS(D). If you are required 

to file Form 706-GS(D), you do not 

have to include any distributions that 

have an inclusion ratio of zero.

When To File

The GST tax on distributions is figured 

and reported on a calendar year 

basis, regardless of your income tax 

accounting period. Generally, you 

must file Form 706-GS(D) on or after 

January 1 but not later than April 15 of 

the year following the calendar year 

when the distributions were made.

If you are not able to file the return 

by the due date, you may request an 

automatic 6-month 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(D). See 

Form 7004 for more information.

Private delivery services (PDSs). 

You can use certain PDSs designated 

by the IRS to meet the "timely mailing 

as timely filing/paying" rule for tax 

returns and payments. Go to IRS.gov/

PDS for the current list of designated 

services.

The PDS can tell you how to get 

written proof of the mailing date.

For the IRS mailing address to use 

if you’re using a PDS, go to IRS.gov/

PDSStreetAddresses.

PDSs can’t deliver items to 

P.O. boxes. You must use the 

U.S. Postal Service to mail 

any item to an IRS P.O. box address.

Where To File

On or before June 30, 2019, file Form 

706-GS(D) at the following address:

Department of the Treasury

Internal Revenue Service Center

Cincinnati, OH 45999

If using a PDS, use this address.

Internal Revenue Submission 

Processing Center

201 West Rivercenter Blvd.

Covington, KY 41011

After June 30, 2019, file Form 

706-GS(D) at the following address:

CAUTION

!

Department of the Treasury

Internal Revenue Service Center

Kansas City, MO 64999

If using a PDS, use this address.

Internal Revenue Submission 

Processing Center

333 W. Pershing

Kansas City, MO 64108

Penalties and Interest

Section 6651 provides penalties for 

both late filing and late payment 

unless there is reasonable cause for 

the delay. The law also provides 

penalties for willful attempts to evade 

payment of tax.

A return is late when it is filed after 

the due date, including extensions. 

The late filing penalty will not be 

imposed if the taxpayer can show that 

the failure to file a timely return is due 

to reasonable cause.

Reasonable cause determinations. 

If you receive a notice about penalties 

and interest after you file Form 

706-GS(D), send us an explanation 

and we will determine if you meet 

reasonable cause criteria. Do not 

attach an explanation when you file 

Form 706-GS(D). Explanations 

attached to the return at the time of 

filing will not be considered.

Section 6662 provides a penalty for 

underpayment of GST taxes which 

exceeds $5,000, if the underpayment 

is due to a valuation understatement. 

A substantial valuation understatement occurs when the reported 

value of property listed on Form 

706-GS(D) is 65% or less of the actual 

value of the property. A gross 

valuation understatement occurs 

when the reported value of property 

listed on Form 706-GS(D) is 40% or 

less of the actual value of the 

property.

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 

January 15, 2019 Cat. No. 10828G
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. Estate tax return 

preparers who prepare any return or 

claim for refund which 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. Estate tax return 

preparers who prepare a return or 

claim for refund which 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 

derived), whichever is greater, for the 

preparation of each such return. See 

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

related regulations, and 

Announcement 2009-15, 2009-11 

I.R.B. 687 (available at IRS.gov/pub/

irs-irbs/irb09-11.pdf), for more 

information.

Signature

Either the distributee or an authorized 

representative must sign Form 

706-GS(D).

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 

distributee.

Note. A paid preparer may sign 

original or amended returns by rubber 

stamp, mechanical device, or 

computer software program.

Specific Instructions

Part I

Line 1a

If the skip person distributee is a trust, 

enter the name of the trust here.

Line 1b

For skip person distributees who are 

individuals, enter the distributee's 

social security number (SSN) here 

and leave line 1c blank. If the skip 

person distributee is a trust, see the 

instructions for line 1c. Do not enter a 

number on both line 1b and line 1c.

Line 1c

If the skip person distributee is a trust, 

enter the trust's employer 

identification number (EIN) and leave 

line 1b blank. Do not enter a number 

on both line 1b and line 1c.

Line 2a

If the skip person distributee is a trust, 

enter the trustee's name here. If the 

skip person distributee is a minor or is 

under some disability that precludes 

the individual from filing the return, 

enter the name of the person who is 

legally responsible for conducting the 

affairs of the distributee, such as a 

parent or guardian. Also, include the 

title or relationship to the distributee.

Line 2b

Enter the address at which you wish 

to receive correspondence from the 

IRS regarding this return. If there is an 

entry on line 2a, the address entered 

here will normally be that of the 

person listed on line 2a, rather than 

the individual or trust listed on line 1a.

Part II

Report all the taxable distributions 

with inclusion ratios greater than zero 

that you received during the year. The 

trustee will report these distributions 

to you on Form 706-GS(D-1). Attach a 

copy of each Form 706-GS(D-1) you 

received during the year to this return. 

You should also keep a copy for your 

records.

If you need more space than is 

provided in Part II, attach an additional 

sheet of the same size and use the 

same format that is used in Part II. 

Make sure that the total tentative 

transfers from the continuation sheet 

are included on line 3 of Part II.

Column b

In column b, use the same item 

number that was used for the 

corresponding distribution on Form 

706-GS(D-1). If you receive 

distributions from more than one trust, 

you may need to repeat item 

numbers.

Column c

There may be instances when the 

trustee has either not completed 

columns e (value) and f (tentative 

transfer) of Form 706-GS(D-1) or 

when you disagree with the amounts 

the trustee entered. If this occurs, 

attach a statement to this return 

showing what you think are the 

correct amounts and how you figured 

them.

To figure the tentative transfer 

(column c of this form), multiply the 

applicable inclusion ratio from Form 

706-GS(D-1), Part II, column d, by the 

value of the distribution. Use the 

following guidelines to determine the 

value of the distribution.

The value of a distribution is its fair 

market value on the date of 

distribution. Fair market value (FMV) 

is the price at which the property 

would change hands between a 

willing buyer and a willing seller when 

neither is forced to buy or to sell, and 

both have reasonable knowledge of 

all the relevant facts. FMV may not be 

determined by a forced sale price nor 

by the sale price of the item in a 

market other than that in which the 

item is most commonly sold to the 

public. The location of the item must 

be taken into account whenever 

appropriate.

Determine the value of the property 

distributed as of the date of the 

distribution. The date of distribution is 

listed in Form 706-GS(D-1), Part II, 

column c.

Reduce the value of any property 

being reported in Part II by the amount 

of any consideration provided by the 

distributee.

Value the stock of close 

corporations or inactive stock on the 

basis of net worth, earnings, earning 

and dividend capacity, and other 

relevant factors. For such stock, 

attach balance sheets, particularly the 

one nearest the date of the 

distribution, and statements of net 

earnings or operating results and 

dividends paid for each of the 5 

preceding years.

Reduce the reported value of real 

estate by the amount of any 

outstanding lien against the property 

on the date of distribution. Attach 

copies of any such liens. Explain how 

the reported values were determined 

and attach copies of any appraisals.

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For more information, see the 

Instructions for Form 706, United 

States Estate (and GenerationSkipping Transfer) Tax Return. You 

can get the Instructions for Form 706, 

and other IRS forms and publications, 

by calling 800-TAX-FORM or by 

visiting IRS.gov.

Part III

Line 4

You may deduct any adjusted 

allowable expenses incurred in 

connection with the preparation of this 

Form 706-GS(D) or any other 

expenses incurred in connection with 

the determination, collection, or 

refund of the GST tax reported or 

which should have been reported on 

this return from the amount of the 

distribution you received.

Adjusted allowable expenses are 

equal to the total allowable expenses 

multiplied by the inclusion ratio. If you 

have more than one inclusion ratio in 

Part II, column d, of Form 706-GS

(D-1), prorate the total expense 

among the inclusion ratios based on 

the relative value of each distribution 

made at the various inclusion ratios.

You may deduct an expense even 

though it has not been paid at the time 

the return is filed as long as the 

amount of the expense is clearly 

ascertainable at that time. If an 

additional allowable expense is 

incurred after the return is filed, file 

Form 843, Claim for Refund and 

Request for Abatement, to claim a 

refund.

Example. The following example 

illustrates the rules above.

You listed three distributions in Part 

II of Form 706-GS(D). The value of the 

first distribution is $10,000 and has an 

inclusion ratio of 0.25. The value of 

the second distribution is $20,000 and 

has an inclusion ratio of 0.33. The 

value of the third distribution is 

$30,000 and has an inclusion ratio of 

0.50. You received the completed 

return from the preparer along with the 

bill for the preparer's fee on April 14 

and filed the return on April 15. You 

paid the preparer's $200 fee on April 

20. The adjusted allowable expense 

you should report on line 4 of Part III is 

$80, calculated as follows.

$60,000

$10,000

× 200 = 33.33 × 0.25 = 8 (rounded)

$60,000

$20,000

× 200 = 66.67 × 0.33 = 22 (rounded)

Adjusted allowable expense

$30,000

× 200 = 100 × 0.50 = 50

= 80

$60,000

Line 6

Enter, using the table below, the 

applicable rate in effect at the time the 

generation-skipping distribution 

occurred.

Line 9

Make your check payable to “United 

States Treasury.” Please write your 

SSN (or EIN), the year, and “Form 

706-GS(D)” on the check to assist us 

in posting it to the proper account. 

Enclose, but do not attach, the 

payment with Form 706-GS(D).

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%

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 

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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 IRS.gov/FormComments. Or you can write to the 

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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, earlier.

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