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person distributee is a trust, see the

the trustee entered. If this occurs,

Part III

instructions for line 1c. Do not enter a

attach a statement to this return

number on both line 1b and line 1c.

showing what you think are the

Line 4

correct amounts and how you

Line 1c

You may deduct from the amount of

figured them.

the distribution you received any

If the skip person distributee is a

To figure the tentative transfer

adjusted allowable expenses incurred

trust, enter the trust’s employer

(column c of this form), multiply the

in connection with the preparation of

identification number (EIN) and leave

applicable inclusion ratio from Form

line 1b blank. Do not enter a number

this Form 706-GS(D) or any other

706-GS(D-1), Part II, column d by the

on both line 1b and line 1c.

expenses incurred in connection with

value of the distribution. Use the

the determination, collection, or

Line 2a

following guidelines to determine the

refund of the GST tax reported or

value of the distribution. See the

If the skip person distributee is a

which should have been reported on

Instructions for Form 706, United

trust, enter the trustee’s name here. If

this return.

States Estate (and Generation-

the skip person distributee is a minor

Adjusted allowable expenses are

Skipping Transfer) Tax Return, for

or is under some disability that

equal to the total allowable expenses

more information. You can get Form

precludes the individual from filing the

multiplied by the inclusion ratio. If you

return, enter the name of the person

706, and other IRS forms and

have more than one inclusion ratio in

who is legally responsible for

publications, by calling

Part II, column d, of Form

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

conducting the affairs of the

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

distributee, such as a parent or

or by accessing the IRS website at

expense among the inclusion ratios

guardian. Also, include the title or

based on the relative value of each

relationship to the distributee.

distribution made at the various

You must determine the value of

inclusion ratios.

Line 2b

the property distributed as of the date

of the distribution. The date of

You may deduct an expense even

Enter the address at which you wish

distribution is listed in Form

though it has not been paid at the

to receive correspondence from the

706-GS(D-1), Part II, column c.

time the return is filed as long as the

IRS regarding this return. If there is

amount of the expense is clearly

an entry on line 2a, the address

The value of a distribution is its fair

ascertainable at that time. If an

entered here will normally be that of

market value on the date of

additional allowable expense is

the person listed on line 2a, rather

distribution. Fair market value is the

incurred after the return is filed, file

than the individual or trust listed on

price at which the property would

Form 843, Claim for Refund and

line 1a.

change hands between a willing

Request for Abatement, to claim

buyer and a willing seller, when

Part II

a refund.

neither is forced to buy or to sell, and

Report all the taxable distributions

Example. The following example

both have reasonable knowledge of

with inclusion ratios greater than zero

illustrates the rules above.

all the relevant facts. Fair market

that you received during the year.

value may not be determined by a

You listed three distributions in

The trustee will report these

forced sale price, nor by the sale

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

distributions to you on Form

price of the item in a market other

of the first distribution is $10,000 and

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

than that in which the item is most

has an inclusion ratio of .25. The

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

commonly sold to the public. The

value of the second distribution is

received during the year. You should

location of the item must be taken

$20,000 and has an inclusion ratio of

also keep a copy for your records.

into account whenever appropriate.

.33. The value of the third distribution

If you need more space than is

is $30,000 and has an inclusion ratio

Reduce the value of any property

provided in Part II, attach an

of .50. You received the completed

being reported in Part II by the

additional sheet of the same size and

return from the preparer along with

amount of any consideration provided

use the same format that is used in

the bill for the preparer’s fee on April

by the distributee.

Part II. Make sure that the total

14 and filed the return on April 15.

tentative transfers from the

Stock of close corporations or

You paid the preparer’s $200 fee on

continuation sheet are included on

inactive stock must be valued on the

April 20. The adjusted allowable

line 3 of Part II.

basis of net worth, earnings, earning

expense you should report on line 4

and dividend capacity, and other

of Part III is $80, calculated

Column b

relevant factors. For such stock,

as follows.

In column b, use the same item

attach balance sheets, particularly the

$10,000

number that was used for the

one nearest the date of the

200 = 33.33

.25 = 8 (rounded)

$60,000

corresponding distribution on Form

distribution, and statements of net

$20,000

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

earnings or operating results and

200 = 66.67

.33 = 22 (rounded)

distributions from more than one

$60,000

dividends paid for each of the 5

trust, you may need to repeat item

$30,000

preceding years.

200 = 100

.50

= 50

numbers.

$60,000

Reduce the reported value of real

Column c

Adjusted allowable expense

= 80

estate by the amount of any

outstanding lien against the property

There may be instances when the

Line 6

on the date of distribution. Attach

trustee has either not completed

copies of any such liens. Explain how

columns e (value) and f (tentative

Enter, using the table on page 3, the

the reported values were determined

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

maximum federal estate tax rate in

and attach copies of any appraisals.

when you disagree with the amounts

effect at the time the

-2-

Instructions For Form 706-Gs(D) - Department Of The Treasury Internal Revenue Service Page 2

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