Instructions For Form 706-Gs(T) - 2006 (Page 3 of 6) in pdf

c. Similar rules apply for a new

transferor has any living lineal

If you fill in your own return, leave

generation every 25 years.

descendants.

the Paid Preparer’s space blank. If

someone prepares your return and

If any transfer of property to a trust

If more than one of the rules for

does not charge you, that person

would have been a direct skip except

assigning generations applies to a

should not sign the return. Generally,

for this generation assignment rule,

beneficiary, the beneficiary is generally

anyone who is paid to prepare your

then the rule also applies to transfers

assigned to the youngest of the

return must sign it in the Paid

from the trust attributable to such

generations that apply.

Preparer’s Use Only area of the return.

property.

If an entity such as a partnership,

Ninety-day rule. For purposes of

corporation, trust, or estate has an

determining if an individual’s parent is

interest in property, each individual who

Specific Instructions

deceased at the time of a testamentary

has a beneficial interest in the entity

Complete Form 706-GS(T) in the

transfer, an individual’s parent who dies

(for example, partners, shareholders,

following order: Parts I and II, Schedule

no later than ninety days after a

and beneficiaries) is treated as having

A (through line 4), Schedule B,

transfer occurring by reason of the

an interest in the property. The

Schedule A (lines 5 through 10),

death of the transferor is treated as

individual is then assigned to a

Part III.

having predeceased the transferor. The

generation using the rules described

ninety-day rule applies to transfers

above.

Part I

occurring on or after July 18, 2005. See

Government entities and certain

Regulations section 26.2651-1, for

charitable organizations are assigned to

more information.

Line 1b. Employer

the transferor’s generation.

Identification Number

Terminations in their favor will never be

Multiple Skips

generation-skipping transfers.

All trusts filing Form 706-GS(T) must

If after a generation-skipping transfer,

have an employer identification number

Generation Assignment

the property transferred is held in trust,

(EIN). A nonexplicit trust as described

Where Intervening Parent Is

then for the purpose of determining the

on page 1 under Who Must File must

taxability of subsequent transfers from

Dead

have an EIN that is separate from any

the trust involving that property, the

other entity’s EIN and that will be used

If you made a gift or bequest to your

transferor of the property is assigned to

only by the entity in its capacity as the

grandchild and at the time you made

the first generation above the highest

nonexplicit trust.

the gift or bequest, the grandchild’s

generation of any person who has an

parent (who is your or your spouse’s or

A trust or nonexplicit trust that does

interest in the trust immediately after

your former spouse’s child) is dead,

not have an EIN should apply for one

the initial transfer.

then for purposes of generation

on Form SS-4, Application for Employer

assignment, your grandchild will be

Identification Number. You can get

Penalties and Interest

considered to be your child rather than

Form SS-4, and other IRS tax forms

Section 6651 provides for penalties for

your grandchild. Your grandchild’s

and publications, by calling

both late filing and for late payment

children will be treated as your

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

unless there is reasonable cause for

grandchildren rather than your

by accessing the IRS website at

the delay. The law also provides

great-grandchildren.

penalties for willful attempts to evade

This rule is also applied to your lineal

Send Form SS-4 to the same

payment of tax.

descendants below the level of

Internal Revenue Service Center where

grandchild. For example, if your

Form 706-GS(T) is filed. If you do not

The late filing penalty will not be

grandchild is dead, your

receive the EIN by the filing time for the

imposed if the taxpayer can show that

great-grandchildren who are lineal

GST form, write “Applied for” on line 1b.

the failure to file a timely return is due

descendants of the dead grandchild are

to reasonable cause. Trustees filing late

You can also apply for an EIN online

considered your grandchildren for

(after the due date, including

at or obtain an

purposes of the GST tax.

extensions) should attach an

EIN immediately by calling

explanation to the return to show

This rule is also applied to other

1-800-829-4933, Monday through

reasonable cause.

lineal descendants. For example, if

Friday from 7 a.m. to 10 p.m. (local

property is transferred to an individual

time).

Section 6662 provides penalties for

who is a descendant of a parent of the

underpayments of GST taxes of $5,000

Part II

transferor, and that individual’s parent

or more that are attributable to

(who is a lineal descendant of the

valuation understatements. A valuation

parent of the transferor) is dead at the

Line 4

understatement occurs when the value

time the transfer is subject to gift or

of property reported on Form

Whenever property is transferred into a

estate tax, then for purposes of

706-GS(T) is 50% or less of the actual

pre-existing trust, the inclusion ratio

generation assignment, the individual is

value of the property.

must be refigured. See Multiple

treated as if he or she is a member of

transfers on page 6 for the rule on how

Interest will be charged on taxes not

the generation that is one generation

to refigure the inclusion ratio.

paid by their due date, even if an

below the lower of:

•

extension of time to file is granted.

the transferor’s generation, or

Line 7

•

Interest is also charged on any

the generation assignment of the

If a qualified terminable interest

additions to tax imposed by section

youngest living ancestor of the

property deduction was taken by the

6651 from the due date of the return

individual, who is also a descendant of

settlor as donor spouse or by the

(including any extensions) until the

the parent of the transferor.

executor of a decedent settlor’s estate

addition to tax is paid.

The same rules apply to the

for the transfer of any property into this

generation assignment of any

trust, the donor spouse or the executor,

Signature

descendant of the individual.

as the case may be, may have made

This rule does not apply to a transfer

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

an election at that time to treat such

to an individual who is not a lineal

trustee or by an authorized

transfer for the purpose of the GST tax

descendant of the transferor if the

representative.

as if it was not qualified terminable

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Instructions For Form 706-Gs(T) - 2006 Page 3

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