Instructions For Form 706-Gs(T) - 2016 (Page 3 of 8) in pdf

1. A person who was born not more

generation that is one generation below

property. No penalty will be assessed if

than 12

years after the transferor is in

the lower of:

the underpayment of GST tax,

the transferor's generation.

The transferor's generation or

attributable to substantial or gross

The generation assignment of the

valuation understatment, does not

2. A person born more than 12

youngest living ancestor of the

exceed $5,000.

years, but not more than 37

years,

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

3. Similar rules apply for a new

The same rules apply to the

extension of time to file is granted.

generation every 25 years.

generation assignment of any

Interest is also charged on any additions

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

assigning generations applies to a

This rule does not apply to a transfer

extensions) until the addition to tax is

beneficiary, the beneficiary is generally

to an individual who is not a lineal

paid.

assigned to the youngest of the

descendant of the transferor if the

Return preparer. The Small Business

generations that apply.

transferor has any living lineal

and Work Opportunity Act of 2007

descendants.

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

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

Ninety-day rule. For purposes of

then assigned to a generation using the

derived (or to be derived) for the

determining if an individual's parent is

rules described above.

preparation of each such return. Return

deceased at the time of a testamentary

preparers who prepare a return or claim

transfer, an individual's parent who dies

Government entities and certain

for refund which reflects an

no later than 90 days after a transfer

charitable organizations are assigned to

understatement of tax liability due to

occurring by reason of the death of the

the transferor's generation.

willful or reckless conduct, are subject

transferor is treated as having

Terminations in their favor will never be

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

predeceased the transferor. The 90-day

generation-skipping transfers.

income derived (or income to be

rule applies to transfers occurring on or

Generation Assignment Where

derived), whichever is greater, for the

after July 18, 2005. See Regulations

preparation of each such return. See

Intervening Parent is Deceased

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

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

If you made a gift or bequest to your

Multiple Skips

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,

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

(who is your or your spouse's or your

then for the purpose of determining the

for 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

If you fill in your own return, leave the

initial transfer.

great-grandchildren.

Paid Preparer Use Only space blank. If

Penalties and Interest

someone prepares your return and does

This rule governs generation

not charge you, that person should not

assignment of lineal descendants below

Section 6651 provides for penalties for

sign the return.

the level of grandchild. For example, if

both late filing and for late payment

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

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

Section 6662 provides penalties for

tax.

underpayments of GST taxes due to

In addition to signing and completing

This rule also applies to other lineal

negligence, intentional disregard of

the required information, the paid

descendants. For example, if property is

rules and regulations, or a substantial or

preparer must give a copy of the

transferred to an individual who is a

gross valuation understatement. A

completed return to the taxpayer.

descendant of a parent of the transferor,

substantial valuation understatement

Note. A paid preparer may sign original

and that individual's parent (who is a

occurs when the reported value of

or amended returns by rubber stamp,

lineal descendant of the parent of the

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

mechanical device, or computer

transferor) is deceased at the time the

less of the actual value of the property.

software program.

transfer is subject to gift or estate tax,

A gross valuation understatement

then for purposes of generation

occurs when the reported value of the

assignment, the individual is treated as

property listed on Form 706-GS(T) is

if he or she is a member of the

40% or less of the actual value of the

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Instructions For Form 706-Gs(T) - 2016 Page 3

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