Form 706-GS(D) (2015): GST Distribution Checklist
This checklist supports preparation of Form 706-GS(D), Generation-Skipping Transfer Tax
Return for Distributions, for taxable distributions made during calendar year 2015. It applies only to GST taxable distributions under chapter 13 of the Internal Revenue Code and uses the inclusion ratio to compute the taxable portion.
Form 706-GS(D) is separate from gift tax reporting on Form 709 and estate tax reporting on
Form 706. This guide focuses on identifying the correct GST event type, applying the inclusion ratio, calculating GST tax, and assembling the filing package.
Purpose and Scope of Form 706-GS(D)
A taxable distribution generally occurs when trust property is distributed to a skip person during the trust term, and the event is not a direct skip or a taxable termination. Reporting is limited to the taxable distribution event type and follows the form’s calendar-year rules for 2015.
This checklist does not address taxable terminations, direct skips, or automatic allocation rules that are handled through other GST mechanisms. It also does not cover estate tax computations reported on Form 706, since a different return structure governs those.
Who Files and How Roles Are Separated
The skip person distributee files Form 706-GS(D) to report and pay GST tax when required, or an authorized representative files on the distributee’s behalf. The trustee does not sign this return and does not replace the distributee’s filing obligation.
The trustee files Form 706-GS(D-1) to notify the Internal Revenue Service of the distribution and provide the inclusion ratio information needed for the computation. The transferor generally makes GST exemption allocation on Form 709 or by the decedent’s executor on Form 706, while the distributee uses the inclusion ratio supplied on the notification form.
Information Needed Before Preparing the Return
Preparation should start by collecting each Form 706-GS(D-1) received for 2015 distributions and organizing the trust-identifying information shown on those notices. The file should include the trust name, trust EIN, distribution date, property description, value used, and the inclusion ratio for each item or portion.
Expense records should also be gathered when allowable expenses will be claimed, including amounts related to preparing the return, determining, collecting, or refunding the GST tax. When multiple inclusion ratios apply, records should be organized so allocation can be performed consistently across items.
Ten-Step Checklist for Form 706-GS(D) (2015)
Step 1: Confirm the transfer is a taxable distribution
Confirm the event is a distribution from a trust to a skip person and is not a direct skip or taxable termination. Verify the distribution occurred during calendar year 2015 and separate items when different inclusion ratios apply.
Step 2: Confirm the correct reopening filer
Confirm the return is prepared for the skip person distributee rather than the trustee. If the distributee lacks capacity, confirm the legally authorized representative responsible for signing and filing.
Step 3: Verify inclusion ratio information
Confirm that an inclusion ratio is provided for each distribution item on the trustee’s notification form. Keep items separated when inclusion ratios differ because computations and expense allocations change.
Step 4: Determine distribution value
Use fair market value as of the distribution date and reduce the value for any consideration paid by the distributee. If the trustee’s reported value is disputed or incomplete, prepare a brief statement showing the corrected value and method.
Step 5: Compute the taxable portion
Compute the tentative transfer for each item by multiplying the distribution value by the inclusion ratio. Treat each item separately when the return requires multiple inclusion ratios.
Step 6: Apply the applicable GST tax rate
Apply the applicable maximum GST tax rate for 2015 distributions: 40 percent for transfers in the post-2012 period. Compute GST tax by multiplying the taxable portion by the maximum rate rather than using marginal brackets.
Step 7: Compute allowable adjusted expenses
Identify allowable expenses tied to preparing the return or determining, collecting, or refunding the GST tax. Multiply allowable expenses by the inclusion ratio and prorate them when more than one inclusion ratio applies.
Step 8: Complete the form sections in a clean sequence
Complete the general information section first, then list all taxable distributions in the distributions section using item numbering that matches the trustee’s notice. Complete the tax computation section last, after totals and adjusted expenses are finalized.
Step 9: Confirm signature requirements
Ensure the distributee or authorized representative signs the return in the proper signature area.
Do not use the trustee’s signature as a substitute for the distributee’s signature.
- Full IRS transcript retrieval (Wage & Income + Account)
- Professional tax form review
- Preparation & filing support
- Tax relief options if you owe the IRS
Step 10: Assemble and file the return
Attach copies of each trustee notification form for 2015 distributions and include any continuation sheets or explanatory statements. File by the calendar-year deadline, generally
April 15, 2016, and include payment documentation if tax is due.
Final Review and Closing Notes
Before filing, confirm every 2015 taxable distribution with an inclusion ratio greater than zero is listed and computed correctly. Confirm that the adjusted allowable expenses are properly allocated across the inclusion ratios, and confirm that the attachments match the item numbers shown on the return.
GST filings often intersect with estate planning that includes dynasty trusts, trust arrangements, and asset protection provisions, so records should be kept organized for future reference. When trust structures are complex or disputes arise, review by a tax professional familiar with GST rules and the administration process can help ensure accurate compliance.
If you’re missing tax documents or want to ensure the numbers you enter match IRS records, we can help.
