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.

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.

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 automatic 6-month extension of time to file by filing Form 7004. 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(D). See Form 7004 for more information.

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

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 which exceed $5,000 that is attributable to valuation understatements. A substantial valuation understatement occurs when the reported value of property listed on Form 706-GS(D) is 65% 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.

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.