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is assigned to a generation based on his

assignment, the individual is treated as

property listed on Form 706-GS(T) is

or her birth date as follows.

if he or she is a member of the

40% or less of the actual value of the

generation that is one generation below

property. No penalty will be assessed if

1. A person who was born not more

the lower of:

the underpayment of GST tax,

than 12

years after the transferor is in

1 2

The transferor's generation; or

attributable to substantial or gross

the transferor's generation.

The generation assignment of the

valuation understatment, does not

2. A person born more than 12

1 2

youngest living ancestor of the

exceed $5,000.

years, but not more than 37

years,

1 2

individual, who is also a descendant of

after the transferor is in the first

Interest will be charged on taxes not

the parent of the transferor.

generation younger than the transferor.

paid by their due date, even if an

The same rules apply to the

extension of time to file is granted.

3. Similar rules apply for a new

generation assignment of any

Interest is also charged on any additions

generation every 25 years.

descendant of the individual.

to tax imposed by section 6651 from the

If more than one of the rules for

due date of the return (including any

This rule does not apply to a transfer

assigning generations applies to a

extensions) until the addition to tax is

to an individual who is not a lineal

beneficiary, the beneficiary is generally

paid.

descendant of the transferor if the

assigned to the youngest of the

transferor has any living lineal

Return preparer. The Small Business

generations that apply.

descendants.

and Work Opportunity Act of 2007

If an entity such as a partnership,

extended return preparer penalties to all

If any transfer of property to a trust

corporation, trust, or estate has an

return preparers. Return preparers who

would have been a direct skip except for

interest in property, each individual who

prepare any return or claim for refund

this generation assignment rule, then

has a beneficial interest in the entity (for

which reflects an understatement of tax

the rule also applies to transfers from

example, partners, shareholders, and

liability due to an unreasonable position

the trust attributable to such property.

beneficiaries) is treated as having an

are subject to a penalty equal to the

interest in the property. The individual is

Ninety-day rule. For purposes of

greater of $1,000 or 50% of the income

then assigned to a generation using the

determining if an individual's parent is

derived (or to be derived) for the

rules described above.

deceased at the time of a testamentary

preparation of each such return. Return

transfer, an individual's parent who dies

preparers who prepare a return or claim

Government entities and certain

no later than 90 days after a transfer

for refund which reflects an

charitable organizations are assigned to

occurring by reason of the death of the

understatement of tax liability due to

the transferor's generation.

transferor is treated as having

willful or reckless conduct, are subject

Terminations in their favor will never be

predeceased the transferor. The 90-day

to a penalty of $5,000 or 75% of the

generation-skipping transfers.

rule applies to transfers occurring on or

income derived (or income to be

Generation Assignment Where

after July 18, 2005. See Regulations

derived), whichever is greater, for the

section 26.2651-1(a)(2)(iii).

Intervening Parent is Deceased

preparation of each such return. See

sections 6694(a) and 6694(b), the

Multiple Skips

If you made a gift or bequest to your

related regulations, and Ann. 2009-15,

grandchild and at the time you made the

If after a generation-skipping transfer,

2009-11 I.R.B. 687 (available at

gift or bequest, the grandchild's parent

the property transferred is held in trust,

IRS.gov/

pub/irs-irbs/irb09-11.pdf) for

(who is your or your spouse's or your

then for the purpose of determining the

more information.

former spouse's child) is deceased,

taxability of subsequent transfers from

then for purposes of generation

Signature

the trust involving that property, the

assignment, your grandchild will be

transferor of the property is assigned to

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

considered to be your child rather than

the first generation above the highest

trustee or by an authorized

your grandchild. Your grandchild's

generation of any person who has an

representative.

children will be treated as your

interest in the trust immediately after the

grandchildren rather than your

initial transfer.

If you fill in your own return, leave the

great-grandchildren.

Paid Preparer Use Only space blank. If

Penalties and Interest

This rule governs generation

someone prepares your return and does

assignment of lineal descendants below

Section 6651 provides for penalties for

not charge you, that person should not

the level of grandchild. For example, if

both late filing and for late payment

sign the return.

your grandchild is deceased, your

unless there is reasonable cause for the

Generally, anyone who is paid to

great-grandchildren who are lineal

delay. The law also provides penalties

prepare the return must sign the return

descendants of the deceased

for willful attempts to evade payment of

in the space provided and fill in the Paid

grandchild are considered your

tax.

Preparer Use Only area. See section

grandchildren for purposes of the GST

Section 6662 provides penalties for

7701(a)(36)(B) for exceptions.

tax.

underpayments of GST taxes due to

This rule also applies to other lineal

negligence, intentional disregard of

In addition to signing and completing

descendants. For example, if property is

rules and regulations, or a substantial or

the required information, the paid

transferred to an individual who is a

gross valuation understatement. A

preparer must give a copy of the

descendant of a parent of the transferor,

substantial valuation understatement

completed return to the taxpayer.

and that individual's parent (who is a

occurs when the reported value of

lineal descendant of the parent of the

property on Form 706-GS(T) is 65% or

Note. A paid preparer may sign original

transferor) is deceased at the time the

less of the actual value of the property.

or amended returns by rubber stamp,

transfer is subject to gift or estate tax,

A gross valuation understatement

mechanical device, or computer

then for purposes of generation

occurs when the reported value of the

software program.

-3-

Instructions For Form 706-Gs(T) - Generation-Skipping Transfer Tax Return For Terminations Page 3

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