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Instructions for

Department of the Treasury

Internal Revenue Service

Form 706-GS(D-1)

(Rev. January 2007)

Notification of Distribution From a Generation-Skipping Trust

Section references are to the Internal

If any GST tax imposed on a

Where To File

distribution is paid out of the trust from

Revenue Code unless otherwise noted.

The trustee must send Copy A of Form

which the distribution was made, the

706-GS(D-1) to the following address:

amount of tax paid by the trust is also a

What’s New

taxable distribution.

Internal Revenue Service Center

A distribution is not considered a

Cincinnati, OH 45999

•

The trustee must file Form

taxable distribution if, had it been made

706-GS(D-1) at the Cincinnati Service

Trusts

inter vivos by an individual, it would

Center, regardless of whether the

have been a nontaxable gift because of

Nonexplicit trusts. An arrangement

settlor is (or was at death) a resident

section 2503(e) (relating to transfers

that has substantially the same effect

U.S. citizen, resident alien, nonresident

made for certain educational or medical

as a trust will be treated as a trust even

U.S. citizen, or nonresident alien. See

expenses).

though it is not an explicit trust.

Where To File below for the address.

Also, a distribution (or any portion

Examples of such arrangements are

•

New regulations relating to the

thereof) is not a taxable distribution to

insurance and annuity contracts,

predeceased parent rule have

the extent that:

arrangements involving life estates and

•

amended the rules used to determine

The property distributed was

remainders, and estates for years.

an individual’s generation assignment

previously subject to GST tax and

•

for certain transfers occurring on or

In general, a transfer of property in

The distributee in the prior

after July 18, 2005. See Ninety-day rule

which the identity of the transferee is

distribution is assigned to a generation

on page 3 for more information.

conditioned on the occurrence of an

the same as or lower than the

event is a transfer in trust. This rule

distributee in the current distribution.

does not apply to a testamentary trust,

This rule does not apply if the

however, if the event is to occur within

transfers have the effect of avoiding

6 months of the transferor’s date of

General Instructions

GST tax for any transfer.

death.

Exceptions

Nonexplicit trusts do not include

Purpose of Form

decedents’ estates.

Irrevocable trusts. The GST tax does

A trustee uses Form 706-GS(D-1) to

In the case of a nonexplicit trust, the

not apply to any distribution from a trust

report certain distributions from a trust

person in actual or constructive

that was irrevocable on September 25,

that are subject to the generation-

possession of the property involved is

1985. Any trust in existence on

skipping transfer (GST) tax and to

considered the trustee and is liable for

September 25, 1985, will be considered

provide the skip person distributee with

filing Form 706-GS(D-1).

irrevocable unless:

•

information needed to figure the tax

On September 25, 1985, the settlor

If you are filing this return for a

due on the distribution.

held a power with respect to such trust

nonexplicit trust, see Line 2a. Trust’s

that would have caused the value of the

Employer Identification Number on

Who Must File

trust to be included in the settlor’s gross

page 3.

estate for federal estate tax purposes

In general, the trustee of any trust that

Separate trusts. You must treat the

by reason of section 2038 if the settlor

makes a taxable distribution must file a

following as separate trusts:

had died on September 25, 1985, or

Form 706-GS(D-1) for each skip

•

Portions of a trust that are

Regarding a policy of life insurance

person. See Distributions Subject to

attributable to transfers from different

that is treated as a trust under section

GST Tax below for a discussion of what

transferors and

2652(b), the insured possessed an

constitutes a taxable distribution. The

•

Substantially separate and

incident of ownership on September 25,

trustee must file a return for each skip

independent shares of different

1985, that would have caused the

person even if the inclusion ratio

beneficiaries in a trust.

insurance proceeds to be included in

applicable to the distribution is zero.

the insured’s gross estate for federal

See Column d. Inclusion Ratio on

You must report such separate trusts

estate tax purposes if the insured had

page 4.

under different item numbers in column

died on September 25, 1985.

a of line 3, even if they have the same

For more information, see

inclusion ratios.

When To File

Regulations section 26.2601-1(b).

Distributions Subject to

Generally, the trustee must file Copy A

Trusts containing qualified

of Form 706-GS(D-1) with the IRS and

terminable interest property. If an

GST Tax

send Copy B to the distributee by April

irrevocable trust in existence on

15th of the year following the calendar

In general, all taxable distributions are

September 25, 1985, holds qualified

year when the distribution was made. If

subject to the GST tax. A taxable

terminable interest property (QTIP) (as

the due date falls on a Saturday,

distribution is any distribution from a

defined in section 2056(b)(7)) as a

Sunday, or legal holiday, file on the

trust to a skip person (other than a

result of an election under section

next business day.

taxable termination or a direct skip).

2056(b)(7) or 2523(f), the trust will be

Cat. No. 10926L

Form 706-Gs(D-1) - 2007 - Instructions For Skip Person Distributee - Department Of The Treasury - Internal Revenue Service Page 2

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