Instructions For Form 706-Gs(D) (Page 2 of 3) in pdf

line 1b blank. Do not enter a number

applicable inclusion ratio from Part II,

adjusted allowable expenses incurred

on both line 1b and line 1c.

column d, of Form 706-GS(D-1) by

in connection with the preparation of

the value of the distribution. Use the

this Form 706-GS(D) or any other

Line 2a

following guidelines to determine the

expenses incurred in connection with

If the skip person distributee is a

value of the distribution. See the

the determination, collection, or

trust, enter the trustee’s name here. If

instructions for Form 706, United

refund of the GST tax reported or

the skip person distributee is a minor

States Estate (and Generation-

which should have been reported on

or is under some disability that

Skipping Transfer) Tax Return, for

this return.

precludes the individual from filing the

more information. You can get Form

return, enter the name of the person

706, and other IRS forms and

Adjusted allowable expenses are

who is legally responsible for

publications, by calling

equal to the total allowable expenses

conducting the affairs of the

1-800-TAX-FORM (1-800-829-3676)

multiplied by the inclusion ratio. If you

distributee, such as a parent or

or by accessing the IRS website at

have more than one inclusion ratio in

guardian. Also, include the title or

Part II, column d, of Form

relationship to the distributee.

706-GS(D-1), prorate the total

You must determine the value of

expense among the inclusion ratios

Line 2b

the property distributed as of the date

based on the relative value of each

of the distribution. The date of

Enter the address at which you wish

distribution made at the various

distribution is listed in Part II, column

to receive correspondence from the

inclusion ratios.

c, of Form 706-GS(D-1).

IRS regarding this return. If there is

an entry on line 2a, the address

The value of a distribution is its fair

You may deduct an expense even

entered here will normally be that of

market value on the date of

though it has not been paid at the

the person listed on line 2a, rather

distribution. Fair market value is the

time the return is filed as long as the

than the individual or trust listed on

price at which the property would

amount of the expense is clearly

line 1a.

change hands between a willing

ascertainable at that time. If an

buyer and a willing seller, when

Part II

additional allowable expense is

neither is forced to buy or to sell, and

incurred after the return is filed, file

Report all the taxable distributions

both have reasonable knowledge of

Form 843, Claim for Refund and

with inclusion ratios greater than zero

all the relevant facts. Fair market

Request for Abatement, to claim

that you received during the year.

value may not be determined by a

a refund.

The trustee will report these

forced sale price, nor by the sale

distributions to you on Form

price of the item in a market other

Example. The following example

706-GS(D-1). Attach to this return a

than that in which the item is most

illustrates the rules above.

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

commonly sold to the public. The

received during the year. You should

location of the item must be taken

You listed three distributions in

also keep a copy for your records.

into account whenever appropriate.

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

If you need more space than is

of the first distribution is $10,000 and

Reduce the value of any property

provided in Part II, attach an

has an inclusion ratio of .25. The

being reported in Part II by the

additional sheet of the same size and

value of the second distribution is

amount of any consideration provided

use the same format that is used in

$20,000 and has an inclusion ratio of

by the distributee.

Part II. Make sure that the total

.33. The value of the third distribution

tentative transfers from the

Stock of close corporations or

is $30,000 and has an inclusion ratio

continuation sheet are included on

inactive stock must be valued on the

of .50. You received the completed

line 3 of Part II.

basis of net worth, earnings, earning

return from the preparer along with

Column b

and dividend capacity, and other

the bill for the preparer’s fee on April

relevant factors. For such stock,

14 and filed the return on April 15.

In column b, use the same item

attach balance sheets, particularly the

You paid the preparer’s $200 fee on

number that was used for the

one nearest the date of the

April 20. The adjusted allowable

corresponding distribution on Form

distribution, and statements of net

expense you should report on line 4

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

earnings or operating results and

of Part III is $80, calculated

distributions from more than one

dividends paid for each of the 5

as follows.

trust, you may need to repeat item

preceding years.

numbers.

$10,000

200 = 33.33

.25 = 8 (rounded)

$60,000

Reduce the reported value of real

Column c

estate by the amount of any

$20,000

There may be instances when the

200 = 66.67

.33 = 22 (rounded)

outstanding lien against the property

$60,000

trustee has either not completed

on the date of distribution. Attach

$30,000

columns e (value) and f (tentative

200 = 100

.50

= 50

copies of any such liens. Explain how

$60,000

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

the reported values were determined

when you disagree with the amounts

Adjusted allowable expense

= 80

and attach copies of any appraisals.

the trustee entered. If this occurs,

attach a statement to this return

Part III

Line 6

showing what you think are the

correct amounts and how you

Enter, using the table on page 3, the

Line 4

figured them.

maximum federal estate tax rate in

effect at the time the generation-

To figure the tentative transfer

You may deduct from the amount of

skipping distribution occurred.

(column c of this form), multiply the

the distribution you received any

-2-

Instructions For Form 706-Gs(D) Page 2

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