Looking for a Form 706 Templates? Download it for free!

allocations are deemed to have been

that may later have taxable

WORKSHEET (inclusion ratio):

made in the following order:

terminations or distributions under

1 Total estate and gift tax value of

section 2612 even if the form is not

1. To inter vivos direct skips and

all of the property interests that

required to be filed to report estate or

2. Beginning with transfers made

passed to the trust . . . . . . . . . .

GST tax.

after December 31, 2000, to lifetime

2 Estate taxes, state death taxes,

Line 9, column C. Enter the GST

transfers to certain trusts, by the

and other charges actually

decedent, that constituted indirect skips

exemption included on lines 2 through

recovered from the trust . . . . . .

6 of Part 1 of Schedule R, and

that were subject to the gift tax.

3 GST taxes imposed on direct

discussed above, that was allocated to

skips to skip persons other than

For more information, see section

the trust.

this trust and borne by the

2632.

property transferred to this trust

Line 9, column D. Allocate the

4 GST taxes actually recovered

Line 3. Make an entry on this line if

amount on line 8 of Part 1 of Schedule

from this trust (from Schedule R,

you are filing Form(s) 709 for the

R in line 9, column D. This amount may

Part 2, line 8 or Schedule R-1,

decedent and wish to allocate any

be allocated to transfers into trusts that

line 6) . . . . . . . . . . . . . . . . . . .

exemption.

are not otherwise reported on Form

5 Add lines 2 through 4 . . . . . . . .

Lines 4, 5, and 6. These lines

706. For example, the line 8 amount

6 Subtract line 5 from line 1 . . . . .

may be allocated to an inter vivos trust

represent your allocation of the GST

7 Add columns C and D of line 9 . .

exemption to direct skips made by

established by the decedent during his

8 Divide line 7 by line 6 . . . . . . . .

reason of the decedent’s death.

or her lifetime and not included in the

9 Trust’s inclusion ratio. Subtract

Complete Parts 2 and 3 and Schedule

gross estate. This allocation is made by

line 8 from 1.000 . . . . . . . . . . .

R-1 before completing these lines.

identifying the trust on line 9 and

making an allocation to it using column

Line 9. Line 9 is used to allocate the

Line 10. Special-use allocation. For

D. If the trust is not included in the

remaining unused GST exemption

skip persons who receive an interest in

gross estate, value the trust as of the

(from line 8) and to help you compute

section 2032A special-use property,

date of death. You should inform the

the trust’s inclusion ratio. Line 9 is a

you may allocate more GST exemption

trustee of each trust listed on line 9 of

Notice of Allocation for allocating the

than the direct skip amount to reduce

the total GST exemption you allocated

GST exemption to trusts as to which

the additional GST tax that would be

to the trust. The trustee will need this

the decedent is the transferor and from

due when the interest is later disposed

information to compute the GST tax on

which a generation-skipping transfer

of or qualified use ceases. See

future distributions and terminations.

could occur after the decedent’s death.

Schedule A-1, above, for more details

Line 9, column E. Trust’s

If line 9 is not completed, the

about this additional GST tax.

inclusion ratio. The trustee must

deemed allocation at death rules will

know the trust’s inclusion ratio to figure

Enter on line 10 the total additional

apply to allocate the decedent’s

the trust’s GST tax for future

GST exemption available to allocate to

remaining unused GST exemption, first

distributions and terminations. You are

all skip persons who received any

to property that is the subject of a direct

not required to inform the trustee of the

interest in section 2032A property.

skip occurring at the decedent’s death,

inclusion ratio and may not have

Attach a special-use allocation

and then to trusts as to which the

enough information to compute it.

schedule listing each such skip person

decedent is the transferor. If you wish

Therefore, you are not required to

and the amount of the GST exemption

to avoid the application of the deemed

make an entry in column E. However,

allocated to that person.

allocation rules, you should enter on

column E and the worksheet below are

line 9 every trust (except certain trusts

If you do not allocate the GST

provided to assist you in computing the

entered on Schedule R-1, as described

exemption, it will be automatically

inclusion ratio for the trustee if you wish

below) to which you wish to allocate

allocated under the deemed allocation

to do so.

any part of the decedent’s GST

at death rules. To the extent any

exemption. Unless you enter a trust on

You should inform the trustee of the

amount is not so allocated, it will be

amount of the GST exemption you

line 9, the unused GST exemption will

automatically allocated to the earliest

be allocated to it under the deemed

allocated to the trust. Line 9, columns C

disposition or cessation that is subject

allocation rules.

and D may be used to compute this

to the GST tax. Under certain

amount for each trust.

If a trust is entered on Schedule R-1,

circumstances, post-death events may

the amount you entered on line 4 of

Note. This worksheet will compute an

cause the decedent to be treated as a

Schedule R-1 serves as a Notice of

accurate inclusion ratio only if the

transferor for purposes of Chapter 13.

Allocation and you need not enter the

decedent was the only settlor of the

Line 10 may be used to set aside an

trust on line 9 unless you wish to

trust. You should use a separate

exemption amount for such an event.

allocate more than the Schedule R-1,

worksheet for each trust (or separate

You must attach a schedule listing each

line 4 amount to the trust. However,

share of a trust that is treated as a

such event and the amount of

you must enter the trust on line 9 if you

separate trust).

exemption allocated to that event.

wish to allocate any of the unused GST

exemption amount to it. Such an

Parts 2 and 3

additional allocation would not ordinarily

Use Part 2 to compute the GST tax on

be appropriate in the case of a trust

transfers in which the property interests

entered on Schedule R-1 when the

transferred are to bear the GST tax on

trust property passes outright (rather

the transfers. Use Part 3 to report the

than to another trust) at the decedent’s

GST tax on transfers in which the

death. However, where section 2032A

property interests transferred do not

property is involved, it may be

bear the GST tax on the transfers.

appropriate to allocate additional

exemption amounts to the property.

Section 2603(b) requires that unless

See the instructions for line 10 below.

the governing instrument provides

To avoid application of the

otherwise, the GST tax is to be charged

deemed allocation rules, Form

to the property constituting the transfer.

706 and Schedule R should be

Therefore, you will usually enter all of

CAUTION

filed to allocate the exemption to trusts

the direct skips on Part 2.

-37-

Part Instructions

Instructions For Form 706 - United States Estate (And Generation-Skipping Transfer) Tax Return - 2011 Page 37

Related Articles

Related forms

Related Categories