Instructions For Form 706 - 2016 Page 46
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54The 2652(a)(3) election must include
unused GST exemption. The exemption
need this information to figure the GST
the value of all property in the trust for
will be first allocated to property that is
tax on future distributions and
which a QTIP election was allowed
the subject of a direct skip occurring at
terminations.
under section 2056(b)(7).
the decedent's death, and then to trusts
Line 9, column E. Trust's
as to which the decedent is the
If a section 2652(a)(3) election is
inclusion ratio. The trustee must know
transferor. To avoid the application of
made, then the decedent will, for GST
the trust's inclusion ratio to figure the
the deemed allocation rules, you should
tax purposes, be treated as the
trust's GST tax for future distributions
enter on line 9 every trust (except
transferor of all the property in the trust
and terminations. You are not required
certain trusts entered on Schedule R-1,
for which a marital deduction was
to inform the trustee of the inclusion
as described later) to which you wish to
allowed to the decedent's estate under
ratio and may not have enough
allocate any part of the decedent's GST
section 2056(b)(7). In this case, the
information to figure it. Therefore, you
exemption. Unless you enter a trust on
executor of the decedent's estate may
are not required to make an entry in
line 9, the unused GST exemption will
allocate part or all of the decedent's
column E. However, column E and the
be allocated to it under the deemed
GST exemption to the property.
worksheet later are provided to assist
allocation rules.
You make the election simply by
you in figuring the inclusion ratio for the
If a trust is entered on Schedule R-1,
listing qualifying property on line 9 of
trustee if you wish to do so.
the amount you entered on line 4 of
Part 1.
Inform the trustee of the amount of
Schedule R-1 serves as a Notice of
the GST exemption you allocated to the
Line 2. These allocations will have
Allocation and you need not enter the
trust. Line 9, columns C and D may be
been made either on Forms 709 filed by
trust on line 9 unless you wish to
used to figure this amount for each trust.
the decedent or on Notices of Allocation
allocate more than the Schedule R-1,
made by the decedent for inter vivos
line 4 amount to the trust. However, you
Note. This worksheet will figure an
transfers that were not direct skips but
must enter the trust on line 9 if you wish
accurate inclusion ratio only if the
to which the decedent allocated the
to allocate any of the unused GST
decedent was the only settlor of the
GST exemption. These allocations by
exemption amount to it. Such an
trust. Use a separate worksheet for
the decedent are irrevocable.
additional allocation would not ordinarily
each trust (or separate share of a trust
be appropriate in the case of a trust
Also include on this line allocations
that is treated as a separate trust).
entered on Schedule R-1 when the trust
deemed to have been made by the
property passes outright (rather than to
decedent under the rules of section
WORKSHEET (inclusion ratio):
another trust) at the decedent's death.
2632. Unless the decedent elected out
However, where section 2032A property
of the deemed allocation rules,
1 Total estate and gift tax value of
is involved, it may be appropriate to
allocations are deemed to have been
all of the property interests that
allocate additional exemption amounts
made in the following order:
passed to the trust
. . . . . . .
to the property. See the instructions for
1. To inter vivos direct skips and
2 Estate taxes, state death taxes,
line 10 later.
and other charges actually
2. Beginning with transfers made
recovered from the trust
. . .
To avoid application of the
after December 31, 2000, to lifetime
3 GST taxes imposed on direct
deemed allocation rules, Form
transfers to certain trusts, by the
!
skips to skip persons other than
706 and Schedule R should be
decedent, that constituted indirect skips
this trust and borne by the
CAUTION
filed to allocate the exemption to trusts
that were subject to the gift tax.
property transferred to this
that may later have taxable terminations
trust
. . . . . . . . . . . . . . .
For more information, see section
or distributions under section 2612 even
4 GST taxes actually recovered
2632 and related regulations.
if the form is not required to be filed to
from this trust (from Schedule R,
report estate or GST tax.
Part 2, line 8 or Schedule R-1,
Line 3. Make an entry on this line if you
line 6)
. . . . . . . . . . . . . .
are filing Form(s) 709 for the decedent
5 Add lines 2 through 4
. . . . .
Line 9, column C. Enter the GST
and wish to allocate any exemption.
6 Subtract line 5 from line 1
exemption, included on lines 2 through
. .
Lines 4, 5, and 6. These lines
7 Add columns C and D of
6 of Part 1 of Schedule R (discussed
represent your allocation of the GST
line 9
above), that was allocated to the trust.
. . . . . . . . . . . . . . .
exemption to direct skips made by
8 Divide line 7 by line 6
. . . . .
Line 9, column D. Allocate the
reason of the decedent's death.
9 Trust's inclusion ratio. Subtract
amount on line 8 of Part 1 of Schedule R
Complete Parts 2 and 3 and
line 8 from 1.000
. . . . . . . .
in line 9, column D. This amount may be
Schedule R-1 before completing these
allocated to transfers into trusts that are
lines.
Line 10. Special-use allocation. For
not otherwise reported on Form 706.
skip persons who receive an interest in
Line 9. Line 9 is used to allocate the
For example, the line 8 amount may be
section 2032A special-use property, you
remaining unused GST exemption (from
allocated to an inter vivos trust
may allocate more GST exemption than
line 8) and to help you figure the trust's
established by the decedent during his
the direct skip amount to reduce the
inclusion ratio. Line 9 is a Notice of
or her lifetime and not included in the
additional GST tax that would be due
Allocation for allocating the GST
gross estate. This allocation is made by
when the interest is later disposed of or
exemption to trusts as to which the
identifying the trust on line 9 and making
qualified use ceases. See
decedent is the transferor and from
an allocation to it using column D. If the
Schedule A-1, above, for more details
which a generation-skipping transfer
trust is not included in the gross estate,
about this additional GST tax.
could occur after the decedent's death.
value the trust as of the date of death.
Enter on line 10 the total additional
If line 9 is not completed, the deemed
Inform the trustee of each trust listed on
GST exemption available to allocate to
allocation at death rules will apply to
line 9 of the total GST exemption you
all skip persons who received any
allocate the decedent's remaining
allocated to the trust. The trustee will
interest in section 2032A property.
-46-
Part Instructions
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