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the paid preparer must give a copy of

If you need more space than is

basis of net worth, earnings, earning

the completed return to the

provided in Part II, attach an additional

and dividend capacity, and other

distributee.

sheet of the same size and use the

relevant factors. For such stock,

same format that is used in Part II.

attach balance sheets, particularly the

Note. A paid preparer may sign

Make sure that the total tentative

one nearest the date of the

original or amended returns by rubber

transfers from the continuation sheet

distribution, and statements of net

stamp, mechanical device, or

are included on line 3 of Part II.

earnings or operating results and

computer software program.

dividends paid for each of the 5

Column b

preceding years.

Specific Instructions

In column b, use the same item

Reduce the reported value of real

number that was used for the

estate by the amount of any

corresponding distribution on Form

Part I

outstanding lien against the property

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

on the date of distribution. Attach

Line 1a

distributions from more than one trust,

copies of any such liens. Explain how

you may need to repeat item

If the skip person distributee is a trust,

the reported values were determined

numbers.

enter the name of the trust here.

and attach copies of any appraisals.

Column c

Line 1b

For more information, see the

There may be instances when the

For skip person distributees who are

Instructions for Form 706, United

trustee has either not completed

individuals, enter the distributee's

States Estate (and Generation-

columns e (value) and f (tentative

social security number (SSN) here

Skipping Transfer) Tax Return. You

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

and leave line 1c blank. If the skip

can get the Instructions for Form 706,

when you disagree with the amounts

person distributee is a trust, see the

and other IRS forms and publications,

the trustee entered. If this occurs,

instructions for line 1c. Do not enter a

by calling 1-800-TAX-FORMS or by

attach a statement to this return

number on both line 1b and line 1c.

visiting

IRS.gov.

showing what you think are the

Line 1c

correct amounts and how you figured

Part III

them.

If the skip person distributee is a trust,

Line 4

enter the trust's employer

To figure the tentative transfer

identification number (EIN) and leave

(column c of this form), multiply the

You may deduct any adjusted

line 1b blank. Do not enter a number

applicable inclusion ratio from Form

allowable expenses incurred in

on both line 1b and line 1c.

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

connection with the preparation of this

value of the distribution. Use the

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 trust,

value of the distribution.

the determination, collection, or

enter the trustee's name here. If the

refund of the GST tax reported or

The value of a distribution is its fair

skip person distributee is a minor or is

which should have been reported on

under some disability that precludes

market value on the date of

this return from the amount of the

distribution. Fair market value (FMV)

the individual from filing the return,

distribution you received.

is the price at which the property

enter the name of the person who is

legally responsible for conducting the

would change hands between a

Adjusted allowable expenses are

affairs of the distributee, such as a

willing buyer and a willing seller, when

equal to the total allowable expenses

neither is forced to buy or to sell, and

parent or guardian. Also, include the

multiplied by the inclusion ratio. If you

title or relationship to the distributee.

both have reasonable knowledge of

have more than one inclusion ratio in

all the relevant facts. FMV may not be

Part II, column d, of Form 706-GS

Line 2b

determined by a forced sale price nor

(D-1), prorate the total expense

Enter the address at which you wish

by the sale price of the item in a

among the inclusion ratios based on

to receive correspondence from the

market other than that in which the

the relative value of each distribution

IRS regarding this return. If there is an

item is most commonly sold to the

made at the various inclusion ratios.

entry on line 2a, the address entered

public. The location of the item must

You may deduct an expense even

here will normally be that of the

be taken into account whenever

though it has not been paid at the time

person listed on line 2a, rather than

appropriate.

the return is filed as long as the

the individual or trust listed on line 1a.

Determine the value of the property

amount of the expense is clearly

Part II

distributed as of the date of the

ascertainable at that time. If an

distribution. The date of distribution is

additional allowable expense is

Report all the taxable distributions

listed in Form 706-GS(D-1), Part II,

incurred after the return is filed, file

with inclusion ratios greater than zero

column c.

Form 843, Claim for Refund and

that you received during the year. The

Request for Abatement, to claim a

Reduce the value of any property

trustee will report these distributions

refund.

being reported in Part II by the amount

to you on Form 706-GS(D-1). Attach a

of any consideration provided by the

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

Example. The following example

received during the year to this return.

distributee.

illustrates the rules above.

You should also keep a copy for your

Value the stock of close

You listed three distributions in Part

records.

corporations or inactive stock on the

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

-2-

Instructions For Form 706-Gs(D) - Generation-Skipping Transfer Tax Return For Distributions Page 2

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