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

Column e. Value. Reduce the value

expenses are property tax on real

GST

of any property being reported on

estate, the cost of selling property, or

Year of Transfer

exemption

1999 . . . . . . . . . . . . . . . . .

$1,010,000

Schedule A by the amount of any

attorney’s fees for defending the title to

2000 . . . . . . . . . . . . . . . . .

$1,030,000

consideration provided by the skip

property.

2001 . . . . . . . . . . . . . . . . .

$1,060,000

person.

Column a. Item no. Assign an item

2002 . . . . . . . . . . . . . . . . .

$1,100,000

Explain how the values reported in

number to each separate expense. This

2003 . . . . . . . . . . . . . . . . .

$1,120,000

column e were figured and attach

will not necessarily correspond with the

2004 and 2005 . . . . . . . . . .

$1,500,000

copies of any appraisals.

item numbers on Schedule A.

2006, 2007, and 2008 . . . . .

$2,000,000

2009 . . . . . . . . . . . . . . . . .

$3,500,000

Column b. Description. List the

Schedules B(1) and B(2)

2010 and 2011 . . . . . . . . . .

$5,000,000

names and addresses of persons to

2012 . . . . . . . . . . . . . . . . .

$5,120,000

To figure the taxable amount for a

whom the expenses are payable and

taxable termination, you may deduct

describe the nature of the expense. List

For existing trusts, transferors may

expenses similar to those deductible

the item number(s) from Schedule A to

allocate the additional GST exemption

under section 2053 from the value of

which the expense relates.

amount attributable to indexing

the property subject to the termination.

adjustments if they otherwise qualify

Column c. Amount. If the expense

under the existing rules for late

Schedule B(1)—General

relates to more property than that

allocations. For more information, see

involved in the termination but less than

Trust Debts, Expenses, and

section 2632 and Multiple transfers,

the entire trust, enter in column c only

Taxes

below.

the amount attributable to the property

Report here only those expenses

Once made, allocations are

involved in the termination. Determine

irrevocable.

related to the entire trust. Examples of

this amount by multiplying the total

such expenses are trustee’s fees,

expense times a fraction. The

Allocation of the GST exemption is

administrative expenses, financial

numerator of the fraction is the value of

made by the settlor on Form 709 or on

advisor’s fees, and accounting fees.

the property involved in the termination

Form 706 by the executor of the

and to which the expense relates. The

Column a. Item no. Assign an item

settlor’s estate. Therefore, you should

denominator is the total value of the

number to each separate expense.

obtain information regarding the

property to which the expense relates.

allocation of the exemption to this trust

These will not necessarily correspond

from the settlor or the executor of the

with the item numbers on Schedule A.

Schedule A (Lines 5–10)

settlor’s estate, as applicable.

Column b. Description. List the

If the settlor’s entire GST exemption

names and addresses of persons to

Line 7. Inclusion Ratio

is not allocated by the due date

whom the expenses are payable and

describe the nature of the expenses.

(including extensions) of the settlor’s

The trustee must figure the inclusion

estate tax return, the exemption is

Column c. Amount. Enter here the

ratio for every termination. All

automatically allocated to the settlor’s

entire amount of the expense for the

terminations, or any parts of a single

generation-skipping transfers under the

tax year for which the return is being

termination, that have different inclusion

rules of section 2632.

filed.

ratios must be shown on separate

Denominator. Valuation of trust

Schedules A. Identify the separate

Line 2. Figure the percentage of

assets. In general, for an inter vivos

trusts by Schedule A number when

expense to allocate to the property

transfer, you should use the gift tax

showing your inclusion ratio calculation.

involved in the termination as follows.

value in the denominator of the

1. Divide the value of the interest

The inclusion ratio is the excess of 1

applicable fraction as long as the

that has been terminated by the total

over the applicable fraction determined

allocation of the GST exemption was

value of the trust at the time of the

for the trust in which the termination

made on a timely filed gift tax return or

termination; and

occurred.

was deemed made under section

2. Multiply the result by a fraction,

2632(b)(1).

Applicable fraction. The applicable

the numerator of which is the number of

fraction is a fraction, the numerator of

If the allocation of the exemption to

days in the year through the date of the

which is the amount of the GST

an inter vivos transfer is not made on a

termination, and the denominator of

exemption. The denominator of the

timely filed gift tax return and is not

which is the total number of days in the

fraction is:

deemed made under section

year (or, if the entire trust was

2632(b)(1), the value for purposes of

1. The value of the property

terminated during the year, the total

the applicable fraction is the value of

transferred to the trust, minus

number of days the trust was in

the property transferred at the time the

2. The sum of:

existence during the year).

allocation under section 2632(a) is filed

a. Any federal estate tax or state

with the IRS.

If there is more than one termination

death tax actually recovered from the

during the year, you must reduce the

trust attributable to the property, and

The value of a testamentary transfer

total expense used in the allocation by

b. Any charitable deduction allowed

is generally the estate tax value.

the expense allocated to the prior

under section 2055 or 2522 with

For qualified terminable interest

terminations. For example, assume that

respect to the property.

property (QTIP) that is included in the

the total administrative expense for the

estate of the surviving spouse of the

year was $1,000 and $300 was

Round the applicable fraction to at

settlor because of section 2044, if the

allocated to the first termination. The

least the nearest one-thousandth (for

surviving spouse is considered the

expense allocated to the second

example,“.001”).

transferor under section 2652(a) for

termination would be a percentage of

GST purposes, the value is the estate

Numerator. GST exemption. Every

$700, not of the entire $1,000.

tax value in the estate of the surviving

individual settlor is allowed a lifetime

spouse.

Schedule B(2)—Specific

GST exemption against property that

the individual has transferred. For

A special QTIP election allows

Termination-Related Debts,

generation-skipping transfers made

property for which a QTIP election was

Expenses, and Taxes

through 1998, the amount of the

made for estate or gift tax purposes to

Report here only those expenses

exemption was $1 million. The GST

be treated for GST tax purposes as if

related solely to the interest that has

exemption amounts for 1999 through

the QTIP election had not been made.

terminated. Examples of these

2012 are as follows:

If the special QTIP election has been

-5-

Instructions For Form 706-Gs(T) - Generation-Skipping Transfer Tax Return For Terminations - Internal Revenue Service - 2011 Page 5

Related Articles

Related forms

Related Categories