Form 706-GS(D) (2018): GST Distribution Checklist
This checklist explains how to prepare Form 706-GS(D) for taxable distributions made during calendar year 2018 and received by a skip person. It is limited to GST tax reporting for the taxable distribution event type under Chapter 13 of the Internal Revenue Code.
Form 706-GS(D) is used to compute GST tax due using the trust’s inclusion ratio and the applicable maximum tax rate framework. It does not replace the official IRS forms and instructions, but it helps keep the filing process organized and consistent with trustee reporting.
What Form 706-GS(D) Is and Is Not
Form 706-GS(D) is filed to calculate and report GST tax due on taxable distributions from a trust to a skip person. The filer is generally the skip person distributee, not the trustee or the trust.
This return does not cover taxable terminations, which are reported on Form 706-GS(T) by the trustee, nor does it cover direct skips. It also does not provide a method for allocating GST exemptions, as allocation is generally handled on Form 709 or through an estate tax filing, when applicable.
Before You Start: Required Concepts and Documents
A Form 706-GS(D) filing applies only when the event is a taxable distribution, meaning a trust distribution to a skip person that is not a taxable termination or direct skip. The key driver for computation is the inclusion ratio applicable to the trust property distributed.
Preparation should begin by collecting Form 706-GS(D-1) for each 2018 distribution and matching all trust identifiers to the trustee’s reporting. Distribution statements, trustee correspondence, and valuation records should be retained to support amounts, dates, and inclusion ratios.
Ten-Step Compliance Checklist (2018)
Step 1: Verify filing applicability
Confirm the recipient is a skip person for this trust, and the payment qualifies as a taxable distribution rather than a direct skip or taxable termination. Use the trustee’s Form 706-GS(D-1)
as the starting point for distribution details and GST tax inputs.
Step 2: Confirm the filing year and timing framework
Confirm the distribution was paid or credited during calendar year 2018 and falls within the correct reporting period for this tax return. Retain evidence of the distribution date from trustee statements or account records.
Step 3: Complete the distributee identification
Enter the distributee’s identifying information and contact details exactly as required by the form.
Do not list the trustee as the primary filer, as the signing responsibility lies with the distributee or an authorized representative.
Step 4: Identify the trust consistently
Enter the trust name and EIN exactly as shown on Form 706-GS(D-1) to align reporting across
IRS forms. Consistent identification reduces processing issues and makes follow-up tax analysis easier if questions arise.
Step 5: Report each distribution accurately
List each taxable distribution separately with the amount and the date it was paid or credited during 2018. Keep items distinct when multiple distributions occurred or when trust property values are reported differently across dates.
Step 6: Determine the applicable inclusion ratio
Use the inclusion ratio provided by the trustee to identify the portion of the distribution subject to the generation-skipping transfer tax. Avoid framing the issue as a beneficiary exemption amount test because the trust’s inclusion ratio drives the computation.
Step 7: Compute GST tax using the correct rate
Apply the applicable maximum tax rate framework for GST tax on 2018 distributions, using the top federal estate tax rate concept rather than marginal brackets. Compute tax due by applying the inclusion ratio-based taxable portion to the applicable rate structure.
Step 8: Coordinate with trustee reporting
Ensure distribution amounts, dates, trust identifiers, and inclusion ratio figures match the trustee’s reporting on Form 706-GS(D-1). Keep a complete support file with the notice, distribution statements, and any correspondence addressing trust arrangements or reporting assumptions.
Step 9: Sign and date the return
Ensure the distributee signs and dates the return, or confirm an authorized representative signs when legal authority exists. Do not rely on a trustee's signature because the trustee’s role is limited to the separate notification filing.
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- Tax relief options if you owe the IRS
Step 10: Confirm the correct return type
Confirm the reported event is a taxable distribution and not a taxable termination, because the termination event is handled on Form 706-GS(T) by the trustee. Do not assume return types can be mixed, since the IRS uses separate GST return requirements for each triggering event.
2018-Specific Clarity Notes
Residency alone does not determine whether filing is required, since the key trigger is whether a skip person received a taxable distribution. The technical driver is the inclusion ratio and the applicable rate framework, not a beneficiary threshold or a simple percentage shortcut.
Reverse QTIP and basis adjustment concepts should not be mixed into this return unless the official instructions require it for the reported facts. When issues involve trust structures, qualified severance, or unusual trust agreements, a tax professional may be needed to confirm treatment under section 2612 and related chapter 13 rules.
Quick Output Review and Closing Notes
Before filing, confirm all trust identifiers match the trustee’s notice and confirm every 2018 distribution with an inclusion ratio greater than zero is listed and computed. Confirm that the inclusion ratio calculations follow the applicable rate framework, and confirm that the distributee or an authorized representative signs the return.
GST filings often support estate planning goals, such as multigenerational wealth transfers, dynasty trusts, and asset protection provisions, so records should be retained for future reference. When trust arrangements are complex or disputes arise, review by tax professionals familiar with generation-skipping transfer tax reporting can help reduce errors and improve compliance.
If you’re missing tax documents or want to ensure the numbers you enter match IRS records, we can help.
