About Processing Form 706-GS(D-1)
ONESOURCE Trust Tax allows you to process Form 706-GS(D-1) for taxable distributions made from an irrevocable trust to a skip person. Distributions made to a skip person for qualifying educational or medical expenses (which are posted to tax codes 301 through 304, 337 through 339, and 390) are not generation-skipping transfers (GSTs) and are excluded from Form 706-GS(D-1).
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Transactions posted to the tax codes listed in GST-Applicable Tax Codes may be GSTs.
Form 706-GS(D-1) is an information return. It includes the following information a skip person needs to complete Form 706-GS(D):
- A description of the property distributed
- The date of distribution
- The inclusion ratio
- The value of the distribution
The skip person is responsible for filing Form 706-GS(D) with the IRS, and is liable for any GST tax due.
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ONESOURCE Trust Tax supports only Form 706-GS(D-1). Form 709 (Schedule D), 706 (Schedule R), 706 (Schedule R-1), 706-GS(D) or 706-GS(T), which are used to report direct skips and taxable terminations, are not supported.
Form 706-GS(D-1) must be filed for each skip person that received a taxable distribution, even if the inclusion ratio applicable to the distribution is zero. Copy A is paper-filed with the IRS and Copy B is sent to the skip person by April 15 of the year following the calendar year in which the distribution was made. If you need to request an extension of time to file, ONESOURCE Trust Tax allows you to process and print Form 7004 (Application for Automatic 6-Month Extension of Time to File Certain Business Income Tax, Information, and Other Returns). You are responsible for filing Form 7004 with the IRS.
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Even though e-filing is unavailable for Form 706-GS(D-1), you can still use ONESOURCE Trust Tax to e-file the trust's Form 1041.
Tasks
Complete the following tasks to process Form 706-GS(D-1) for paper-filing with the IRS and skip persons:
- Identifying Trusts with Distributions that May Be GSTs
- Setting Up a Recipient as a Skip Person
- Reviewing the GST Information Reported on Form 706-GS(D-1)
- Answering the Form 1041 Skip Person Question
- Processing Form 706-GS(D-1)
- Filing Form 706-GS(D-1)