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Fillable Form 706-GS (T)

A form one files with the IRS to assess the tax liability due on the termination of a generation-skipping trust. The trustee is required to file the form if the trust terminates under certain circumstances.

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What is Form 706-GS(T)?

Form 706-GS(T), Generation-Skipping Transfer Tax Return For Terminations, is an Internal Revenue Service (IRS) form used by trustees to figure and report the tax due from certain trust terminations that are subject to the generation-skipping transfer (GST) tax.

Generally, the trustee of any trust that has a taxable termination must file Form 706 GS(T) for the tax year in which the termination occurred.

Termination may occur by reason of death, a lapse of time, the release of power, or any other means. All taxable terminations are subject to the generation-skipping transfer (GST) tax. A taxable termination is the conclusion of an interest in the property held in trust unless:

  • Immediately after the termination, a non-skip person has an interest in the property.
  • At no time after the termination may a distribution be made from the trust to a skip person.

The trustee must file Form 706 GS T by April 15 of the year following the calendar year in which the termination occurs. If the due date falls on a Saturday, Sunday, or legal holiday, file on the next business day.

If you are not able to file the return by the due date, you may request an extension of time to file by filing Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns. The extension is automatic, so you do not have to sign the form or provide a reason for your request. You must file Form 7004 on or before the regular due date of Form 706-GS(T).

File Form 706-GS(T) at the following address:

Department of the Treasury

Internal Revenue Service

Cincinnati, OH 45999

How to fill out Form 706-GS(T)?

Filling out IRS Form 706-GS(T) is quick and simple. You can download and print a PDF copy of Form 706-GS(T) from the Internal Revenue Service (IRS) website that you can manually complete. But for your convenience, you can also fill out Form 706 GS (T) electronically on PDFRun. By following the instructions below, you can accomplish the form in minutes.

Complete Form 706-GS(T) in the following order: Parts I and II, Schedule A (through line 4), Schedule B, Schedule A (lines 5 through 10), Part III.

Calendar Year

Enter the calendar tax year.

Part I – General Information

Line 1a

Enter the name of the trust.

Line 1b

Enter the trust’s employer identification number (EIN).

All trusts filing Form 706-GS(T) must have an employer identification number (EIN). A non-explicit trust must have an EIN that is separate from any other entity’s EIN and that will be used only by the entity in its capacity as the non-explicit trust. Non-explicit trusts are arrangements that have substantially the same effect as a trust. They will be treated as a trust even though they are not an explicit trust.

A trust or non-explicit trust that does not have an EIN should apply for one on Form SS-4, Application for Employer Identification Number.

Line 2a

Enter the name of the trustee.

Line 2b

Enter the trustee’s address, including the number and street or P.O. box; apartment or suite number; city, town, or post office; state and ZIP code.

If the trustee has a foreign address, enter the trustee’s foreign country name, foreign province or county, and foreign postal code. Otherwise, leave the spaces blank.

Part II – Trust Information

Line 3

Mark the appropriate box if any exemption has been allocated to this trust by reason of the deemed allocation rules of section 2632. You may select:

  • Yes
  • No

If you marked yes, describe the allocation on Schedule A, line 7, attach a schedule showing how the inclusion ratio was calculated.

Enter the Schedule A number on the space provided.

Line 4

Mark the appropriate box if the property has been contributed to this trust since the last Form 706-GS(T) or Form 706-GS(D-1), Notification of Distribution From a Generation-Skipping Trust, was filed. You may select:

  • Yes
  • No

If you marked yes, attach a schedule showing how the inclusion ratio was calculated.

Line 5

Mark the appropriate box if any terminations have occurred that are not reported on this return because of the exceptions in section 2611(b)(1) or (2) relating to medical and educational exclusions and prior payment of generation-skipping transfer (GST) tax. You may select:

  • Yes
  • No

If you marked yes, attach a statement describing the termination.

Line 6

Mark the appropriate box if any contributions have been made to this trust were not included in calculating the trust’s inclusion ratio. You may select:

  • Yes
  • No

If you marked yes, attach a statement explaining why the contribution was not included.

Enter the Schedule A number on the space provided.

Line 7

Mark the appropriate box if the special qualified terminable interest property (QTIP) election in section 2652(a)(3) has been made for this trust. You may select:

  • Yes
  • No

Enter the Schedule A number on the space provided.

Line 8

Mark the box if this is an explicit trust and attach a statement describing the trust arrangement that makes its effect substantially similar to an explicit trust.

Name of trust

Enter the name of the trust.

EIN of trust

Enter the employer identification number (EIN) of the trust.

Schedule A No.

Enter the number of Schedule A.

Schedule A – Taxable Terminations

If you need more than one Schedule A, make copies before completing it. Also, make a copy of Schedule B for each Schedule A you will file. If you need additional space to provide all the required information for any given schedule, attach a separate sheet of the same size to that schedule.

Combine on a single Schedule A all terminations from a single trust that have the same inclusion ratio. However, you must complete a separate Schedule A for each terminating interest that has a different inclusion ratio. Number each Schedule A consecutively in the space provided at the top.

Line 1

In Column A, enter the name of the skip persons.

Skip person means a trust beneficiary who is either:

  • A natural person assigned to a generation that is two or more generations below the settlor’s generation.
  • A trust that meets either of the following conditions:
    • All interests in the trust are held by skip persons.
    • No person holds an interest in the trust, and at no time after the transfer to the trust may a distribution be made to a non-skip person.

In Column B, enter the corresponding social security number (SSN) or employer identification number (EIN) of each skip person.

In Column C, enter the item number from line 4 below in which interest is held.

Line 2

Enter a description of the terminating power of interest. If you need more space, attach an additional sheet.

Termination means the conclusion (for example, by death, a lapse of time, or the release of power, and others) of an interest in the property held in trust unless:

  • Immediately after the termination, a non-skip person has an interest in such property.
  • At no time after the termination is it possible for distribution (including distributions on termination) to be made from the trust to a skip person.

If you are reporting separate trusts on this Form 706-GS(T), explain why you are treating parts of the trust as separate trusts. You must treat them as separate trusts as:

  • Portions of trust are attributable to transfers from different transferors.
  • Substantially separate and independent shares of different beneficiaries in a trust.

Line 3

Mark the box if you elect an alternate valuation.

You may elect alternate valuation under section 2032 for all terminations in the same trust that occurred at the same time as and as a result of the death of an individual. If you elect alternate valuation, you must use it to value all property included in those terminations.

You may not elect alternate valuation unless the election will decrease both the total value of the property interests that were subject to the termination and the total net generation-skipping transfer (GST) tax due after the allowable credit.

Mark the box on line 3 of all the applicable Schedules A if you elect alternate valuation. Once made, the election cannot be revoked. You may make the election on a late filed Form 706-GS(T), provided it is not filed later than 1 year after the due date (including extensions).

If you elect alternate valuation, value the property interest that has been terminated as follows:

  • Any property distributed or otherwise disposed of or separated from the trust within 6 months after the termination is valued on the date of distribution or other disposition. Value the property on the date it ceases to form a part of the trust; that is, on the date the title passes as a result of its distribution or other disposition.
  • Any property not distributed or otherwise disposed of within 6 months following the termination is valued on the date 6 months after the termination.
  • Any property or interest that is affected by mere lapse of time is valued as of the time of termination. However, you may change this date of termination value to the value as of the date of distribution or other disposition to account for any change that is not due to mere lapse of time.

If the alternate valuation date falls after the initial due date of the return, you must request an extension to file on Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns. The extension is automatic, so you do not have to sign the form or provide a reason for your request.

Line 4

Terminations of interests in trusts to which additions have been made. When an addition is made to an irrevocable trust after September 25, 1985, only the portion of the trust resulting from the addition is subject to the generation-skipping transfer (GST) tax. For terminations, this portion is the product of the allocation fraction and the value of the property subject to the termination (including accumulated income and appreciation on that property).

The allocation fraction is a fraction, the numerator of which is the value of the addition as of the date it was made (regardless of whether it was subject to gift or estate tax). The denominator of the fraction is the fair market value of the entire trust immediately after the addition, less any amount of expenses, indebtedness, or taxes that would be allowable as a deduction under section 2053.

When there is more than one addition, the allocation fraction must be revised after each addition. The numerator of the revised fraction is the sum of:

  • The value of the portion of the trust subject to the generation-skipping transfer (GST) tax immediately before the last addition, and
  • The amount of the latest addition.

The denominator of the revised fraction is the total value of the entire trust immediately after the latest addition.

If the addition results from a generation-skipping transfer, reduce both the numerator and denominator by the amount of any generation-skipping transfer (GST) tax imposed on the transfer and recovered from the trust. Round off the allocation fraction to five decimal places (for example, “.00123”).

In Column A, identify by separate item number all property in which an interest has terminated during the tax year. You may combine under the same item number all property that has the same termination date, valuation date, and unit value, such as stocks or bonds. Otherwise, assign a separate item number to each article of property.

In Column B, describe the real estate in enough detail so that the Internal Revenue Service (IRS) can easily locate it for inspection and valuation.

For each parcel of real estate, report the area and, if the parcel is improved, describe the improvements. For city or town property, report the street number, ward, subdivision, and block and lot. For rural property, report the township, range, and landmarks.

For stocks, give:

  • The number of shares
  • Whether common or preferred
  • The issue
  • The par value where needed for valuation
  • The price per share
  • The exact name of the corporation
  • The principal exchange upon which sold, if listed on an exchange
  • The Committee on Uniform Securities Identification Procedures (CUSIP) number

For bonds, give:

  • The quantity and denomination
  • The name of the obligor
  • The date of maturity
  • The principal exchange, if listed on an exchange
  • The interest rate
  • The interest due date
  • The Committee on Uniform Securities Identification Procedures (CUSIP) number

If the stock or bond is unlisted, show the company’s principal business office. The CUSIP (Committee on Uniform Security Identification Procedure) number is a nine-digit number assigned to all stocks and bonds traded on major exchanges and many unlisted securities. Usually, the CUSIP number is printed on the face of the stock certificate. If the CUSIP number is not printed on the certificate, it may be obtained through the company’s transfer agent.

Any interest in the personal property involved in a termination must be described in enough detail so that the Internal Revenue Service (IRS) can value it.

In Column C, enter the date of termination, following the format: MM/DD/YYYY.

In Column D, unless you elected alternate valuation by checking the box on line 3 of Schedule A, the valuation date should be the same as the termination date.

In Column E, reduce the value of any property being reported on Schedule A by the amount of any consideration provided by the skip person. Explain how the values reported in this column were figured and attach copies of any appraisals.

Finally, enter the total amount of the value of the properties on the space provided.

Name of trust

Enter the name of the trust.

Schedule A No.

Enter the number of schedule A.

EIN of trust

Enter the employer identification number (EIN) of the trust.

Schedule B(1) – General Trust Debts, Expenses, and Taxes

To figure the taxable amount for a taxable termination, you may deduct expenses similar to those deductible under section 2053 from the value of the property subject to the termination.

Report here only those expenses related to the entire trust. Examples of such expenses are trustee’s fees, administrative expenses, financial advisor’s fees, and accounting fees.

In Column A, assign an item number to each separate expense. These will not necessarily correspond with the item numbers on Schedule A. Then, enter the item numbers.

In Column B, enter the list of names and addresses of persons to whom the expenses are payable and describe the nature of the expenses.

In Column C, enter here the entire amount of the expense for the tax year for which the return is being filed.

Line 1

Enter the total amount of Schedule B(1) by adding the amounts in Column C.

Line 2

Figure the percentage of expense to allocate to the property involved in the termination as follows:

  • Divide the value of the interest that has been terminated by the total value of the trust at the time of the termination; and
  • Multiply the result by a fraction, the numerator of which is the number of days in the year through the date of the termination, and the denominator of which is the total number of days in the year (or, if the entire trust was terminated during the year, the total number of days the trust was in existence during the year).

If there is more than one termination during the year, you must reduce the total expense used in the allocation by the expense allocated to the prior terminations. For example, assume that the total administrative expense for the year was $1,000 and $300 was allocated to the first termination. The expense allocated to the second termination would be a percentage of $700, not of the entire $1,000.

Line 3

Enter the net deduction by multiplying line 1 by line 2.

Schedule B(2) – Specific Termination-Related Debts, Expenses, and Taxes

To figure the taxable amount for a taxable termination, you may deduct expenses similar to those deductible under section 2053 from the value of the property subject to the termination.

Report here only those expenses related solely to the interest that has been terminated. Examples of these expenses are property tax on real estate, the cost of selling property, or attorney’s fees for defending the title to property.

In Column A, assign an item number to each separate expense. This will not necessarily correspond with the item numbers on Schedule A. Then, enter the item numbers.

In Column B, enter the list of names and addresses of persons to whom the expenses are payable and describe the nature of the expense. List the item numbers from Schedule A to which the expense relates.

In Column C, if the expense relates to more property than that involved in the termination but less than the entire trust, enter only the amount attributable to the property involved in the termination. Determine this amount by multiplying the total expense times a fraction. The numerator of the fraction is the value of the property involved in the termination and to which the expense relates. The denominator is the total value of the property to which the expense relates.

Line 4

Enter the total amount of Schedule B(2).

Line 5

Enter the sum of lines 3 and 4.

Schedule A (lines 5 through 10)

Line 5

Enter the total deductions applicable to this Schedule A. This is the same amount you entered on Schedule B(2), line 5.

Line 6

Enter the taxable amount by subtracting line 5 from line 4.

Line 7

The trustee must figure out the inclusion ratio for every termination. All terminations, or any parts of a single termination, that have different inclusion ratios must be shown on separate Schedules A. Identify the separate trusts by Schedule A number when showing your inclusion ratio calculation.

The inclusion ratio is the excess of 1 over the applicable fraction determined for the trust in which the termination occurred.

The applicable fraction is a fraction, the numerator of which is the amount of the generation-skipping transfer (GST) exemption. The denominator of the fraction is:

  • The value of the property transferred to the trust, minus
  • The sum of:
    • Any federal estate tax or state death tax actually recovered from the trust attributable to the property, and
    • Any charitable deduction allowed under section 2055 or 2522 with respect to the property.

Round the applicable fraction to at least the nearest one-thousandth (for example,“.001”).

Line 8

Enter the applicable tax rate at the time the generation-skipping transfer occurred. See the Instructions for Form 706-GS(T) for the Table of Maximum Tax Rates.

Line 9

Enter the applicable rate by multiplying line 7 by line 8.

Line 10

Enter the generation-skipping transfer (GST) tax by multiplying line 6 by line 9.

Part III – Tax Computation

Line 9a

Enter the summary of the generation-skipping transfer (GST) tax from Schedules A, line 10 on the appropriate spaces.

Line 9b

If you have more than six Schedules A attached to this form, enter the total generation-skipping transfer (GST) tax from all Schedules A in excess of six.

Line 10

Enter the total generation-skipping transfer (GST) tax by adding lines 9a1 through line 9b.

Line 11

Enter the payment, if any, made with Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns.

Line 12

If line 10 is larger than line 11, enter the amount of tax due owed.

Make checks payable to the “United States Treasury.” Enter the trust’s employer identification number (EIN), the year of the transfer, and “Form 706-GS(T)” on the check to ensure posting to the proper account. Enclose, but do not attach, the payment with Form 706-GS(T).

Line 13

If line 11 is larger than line 10, enter the overpayment amount to be refunded.

Sign Here

By signing, you understand that under the penalties of perjury, you declare that you have examined this return, including accompanying schedules and statements, and to the best of your knowledge and belief, that it is true, correct, and complete.

Signature of fiduciary or officer representing fiduciary

Affix your signature (or your representative’s signature).

Date

Enter the date you signed the form.

Paid Preparer Use Only

Complete this section, only if you are a paid preparer.

A tax return preparer is any person who prepares for compensation, or who employs one or more persons to prepare for compensation, all or a substantial portion of any return of tax or any claim for refund of tax under the Internal Revenue Code.

Print/Type preparer’s name

Enter your full name.

Preparer’s signature

Affix your signature.

Date

Enter the date you signed the form.

Check if self-employed

Mark the box if you are self-employed.

PTIN

Enter your preparer tax identification number (PTIN).

Firm’s name

Enter your firm’s name.

Firm’s address

Enter your firm’s address, including street number, city, state, and ZIP code.

Firm’s EIN

Enter your firm’s employer identification number (EIN).

Phone no.

Enter your phone number.

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