Instructions for Form 706-GS(D) (Rev. June 1999) Generation-Skipping Transfer Tax Return for Distributions Section references are to the Internal Revenue Code unless otherwise noted. Department of the Treasury Internal Revenue Service Item To Note You might be able to deduct on your Form 1040 the generation-skipping transfer tax you pay with this form. See the instructions for Part III, line 11, on page 2 for details. General Instructions Purpose of Form Form 706-GS(D) is used by a skip person distributee to calculate and report the tax due on distributions from a trust that are subject to the generation-skipping transfer (GST) tax. Who Must File In general, anyone who receives a taxable distribution from a trust must file Form 706-GS(D). Trustees are required to report taxable distributions to skip person distributees on Form 706-GS(D-1), Notification of Distribution From a Generation- Skipping Trust. Even if you receive a Form 706-GS(D-1), however, you do not need to file Form 706-GS(D) if the inclusion ratio found in Part II, line 3, column d, of Form 706-GS(D-1) is zero for ALL distributions reported to you. If you are required to file Form 706-GS(D), you do not have to include any distributions that have an inclusion ratio of zero. When To File The generation-skipping transfer tax on distributions is figured and reported on a calendar year basis, regardless of your income tax accounting period. You must file Form 706-GS(D) on or after January 1 but not later than April 15 of the year following the calendar year when the distributions were made. 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 2758, Application for Extension of Time To File Certain Excise, Income, Information, and Other Returns. This does not provide for an automatic extension, so be sure to file Form 2758 in adequate time to allow the IRS to consider the application and to reply before the return's regular due date. Where To File File Form 706-GS(D) at the Internal Revenue Service Center specified on your copy of Form 706-GS(D-1). Penalties and Interest Section 6651 provides penalties for both late filing and late payment unless there is reasonable cause for the delay.   The law also provides penalties for willful attempts to evade payment of tax. The late filing penalty will not be imposed if the taxpayer can show that the failure to file a timely return is due to reasonable cause. Taxpayers filing late (after the due date, including extensions) should attach an explanation to the return to show reasonable cause. Section 6662 provides a penalty for underpayment of GST taxes of $5,000 or more that is attributable to valuation understatements. A valuation understatement occurs when the reported value of property listed on Form 706-GS(D) is 50% or less of the actual value of the property. Interest will be charged on taxes not paid by their due date, even if an extension of time to file is granted. Interest is also charged on any additions to tax imposed by section 6651 from the due date of the return (including any extensions) until the addition to tax is paid. Signature Either the distributee or an authorized representative must sign Form 706-GS(D). If you fill in your own return, leave the Paid Preparer's space blank. If someone prepares your return and does not charge you, that person should not sign the return. Generally, anyone who is paid to prepare your return must sign it and fill in the other blanks in the Paid Preparer's Use Only area of the return. Specific Instructions Part I Line 1a If the skip person distributee is a trust, enter the name of the trust here. Line 1b For skip person distributees who are individuals, enter the distributee's social security number (SSN) here and leave line 1c blank. If the skip person distributee is a trust, see the instructions for line 1c. DO NOT enter a number on both line 1b and line 1c. Line 1c If the skip person distributee is a trust, enter the trust's employer identification number (EIN) and leave line 1b blank.   DO NOT enter a number on both line 1b and line 1c. Line 2a If the skip person distributee is a trust, enter the trustee's name here. If the skip person distributee is a minor or is under some disability that precludes the individual from filing the return, enter the name of the person who is legally responsible for conducting the affairs of the distributee, such as a parent or guardian. Also, include the title or relationship to the distributee. Line 2b Enter the address at which you wish to receive correspondence from the IRS regarding this return. If there is an entry on line 2a, the address entered here will normally be that of the person listed on line 2a, rather than the individual or trust listed on line 1a. Cat. No. 10828G