Instructions for Form 706-GS(D-1) (Rev. June 1999) Notification of Distribution From a Generation-Skipping Trust Section references are to the Internal Revenue Code unless otherwise noted. Department of the Treasury Internal Revenue Service General Instructions Purpose of Form A trustee uses Form 706-GS(D-1) to report certain distributions from a trust that are subject to the generation- skipping transfer tax and to provide the skip person distributee with information needed to figure the tax due on the distribution. When To File Generally, the trustee must file Copy A of Form 706-GS(D-1) with the IRS and send Copy B to the distributee by April 15th of the year following the calendar year when the distribution was made. If the due date falls on a Saturday, Sunday, or legal holiday, file on the next business day. Where To File Copy A The trustee must send Copy A to the IRS. Mail it to the Internal Revenue Service Center indicated below for the state where an estate or gift tax return of the settlor must be filed to report the most recent transfer to the trust. If the settlor is (or was at death) a nonresident citizen or alien, mail it to the Internal Revenue Service Center, Philadelphia, PA 19255, USA. Note:   You must enter the address of this service center at the bottom of Copy B of Form 706-GS(D-1) in the space instructing the distributee where to file. Copy B The trustee must send this copy to the skip person distributee and should keep a copy of the form for the trust records. Who Must File In general, the trustee of any trust that makes a taxable distribution must file a Form 706-GS(D-1) for each skip person. See Distributions Subject to GST Tax below for a discussion of what constitutes a taxable distribution. The trustee must file a return for each skip person even if the inclusion ratio applicable to the distribution is zero. See Column d— Inclusion Ratio on page 4. Trusts Nonexplicit Trusts An arrangement that has substantially the same effect as a trust will be treated as a trust even though it is not an explicit trust. Examples of such arrangements are insurance and annuity contracts, arrangements involving life estates and remainders, and estates for years. In general, a transfer of property in which the identity of the transferee is conditioned on the occurrence of an event is a transfer in trust. This rule does not apply to a testamentary trust, however, if the event is to occur within 6 months of the transferor's date of death. Nonexplicit trusts do not include decedents' estates. In the case of a nonexplicit trust, the person in actual or constructive possession of the property involved is considered the trustee and is liable for filing Form 706-GS(D-1). If you are filing this return for a nonexplicit trust, see Line 2a. Trust's Employer Identification Number on page 4. Separate Trusts You must treat as separate trusts: (a) portions of a trust that are attributable to transfers from different transferors, and (b) substantially separate and independent shares of different beneficiaries in a trust. You must report such separate trusts under different item numbers in column a of line 3, even if they have the same inclusion ratios. Distributions Subject to GST Tax In general, all taxable distributions are subject to the GST tax. A taxable distribution is any distribution from a trust to a skip person (other than a taxable termination or a direct skip). If any GST tax imposed on a distribution is paid out of the trust from which the distribution was made, the amount of tax paid by the trust is also a taxable distribution. A distribution is not considered a taxable distribution if, had it been made inter vivos by an individual, it would have been a nontaxable gift because of section 2503(e) (relating Delaware, District of Columbia, Maryland, Pennsylvania, Virginia Philadelphia, PA 19255 Indiana, Kentucky, Michigan, Ohio, West Virginia Cincinnati, OH 45999 Kansas, New Mexico, Oklahoma, Texas Austin, TX 73301 Alabama, Arkansas, Louisiana, Mississippi, North Carolina, Tennessee Memphis, TN 37501 Alaska, Arizona, California (counties of Alpine, Amador, Butte, Calaveras, Colusa, Contra Costa, Del Norte, El Dorado, Glenn, Humboldt, Lake, Lassen, Marin, Mendocino, Modoc, Napa, Nevada, Placer, Plumas, Sacramento, San Joaquin, Shasta, Sierra, Siskiyou, Solano, Sonoma, Sutter, Tehama, Trinity, Yolo, and Yuba), Colorado, Idaho, Montana, Nebraska, Nevada, North Dakota, Oregon, South Dakota, Utah, Washington, Wyoming Ogden, UT 84201 California (all other counties), Hawaii Fresno, CA 93888 Florida, Georgia, South Carolina Atlanta, GA 39901 New Jersey, New York (New York City and counties of Nassau, Rockland, Suffolk, and Westchester) Holtsville, NY 00501 New York (all other counties), Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont Andover, MA 05501 Illinois, Iowa, Minnesota, Missouri, Wisconsin Kansas City, MO 64999 Cat. No. 10926L