How to Fill Out and File Form 706-GS(D): Parts, Deadline, and Filing

To file Form 706-GS(D), the generation-skipping transfer tax return for distributions, use the Form 706-GS(D-1) your trustee sent you to fill in the three parts of the return, then mail the signed form with a copy of each D-1 to the IRS service center in Kansas City by April 15 of the year after you received the distribution. The tax is a flat 40 percent applied to the taxable portion of the distribution, adjusted by the trust’s inclusion ratio.¹

Are You the Person Who Has to File

Form 706-GS(D) is filed by the recipient of a taxable distribution from a trust, when that recipient is a “skip person.” A skip person is someone two or more generations below the person who originally funded the trust. A grandchild receiving money from a trust set up by a grandparent is the standard case.² A trust can also be the distributee if every beneficiary holding an interest in it is a skip person.

Not every transfer to a grandchild uses this form. Direct skips and taxable terminations are reported elsewhere (Form 706-GS(T) for terminations, Form 709 or 706 for direct skips).³ If the trustee sent you a Form 706-GS(D-1), that is a strong signal that your distribution is the taxable-distribution kind and this is the correct return.

One important boundary: if your parent (the transferor’s child) died before the transfer was made, you are not treated as a skip person. You move up one generation for GST purposes, no tax is owed, and no Form 706-GS(D) is required.⁴ The same relief extends to grandnieces and grandnephews when the transferor has no living lineal descendants and their parent has already died. Confirm with the trustee before preparing anything if this could apply to you.

What to Gather Before You Start

The trustee of the distributing trust is required to send you Form 706-GS(D-1) by April 15 of the year after the distribution.⁵ You cannot complete your return without it. The D-1 carries the trust’s name and EIN, the transferor’s name and identifying number, the value of each distribution, and the inclusion ratio the trustee has computed.

Before you sit down with the form, pull together:

Your Form 706-GS(D-1) from every trust that made a distribution to you during the year.
Your Social Security number, or the trust’s TIN if the distributee is itself a trust.
Receipts for legal, accounting, or other expenses you paid to figure or pay the GST tax on this distribution.
Records of any GST tax already paid for the same distributions, including estimated payments or amounts a trust paid on your behalf.

Working Through the Three Parts

The form has three parts. The IRS instructions direct filers to complete Part III first, then Part II, then Part I, because the tax on Part II depends on totals from Part III. In practice most people still enter their identifying information in Part I first out of habit; the order does not matter as long as the numbers carry through correctly.

Part I: General Information

Line 1a is the distributee’s name. Enter your full legal name if you are an individual, or the trust’s name if the skip person is a trust. Line 1b is for a Social Security number; line 1c is for a trust’s TIN. Fill in one, not both.¹

Line 2a is for the name of a trustee, parent, or guardian if the distributee is a trust or a minor. Lines 2b through 2i are the mailing address where the IRS should send correspondence. If someone is filing on your behalf, that person’s address goes here.

Part III: Distributions

Part III is where you list each distribution you received during the calendar year, copying directly from Form 706-GS(D-1). For each distribution you enter the trust’s name and EIN, the transferor’s name and identifying number, the value, and the inclusion ratio. If you received distributions from more than one trust, each trust gets its own set of entries. Attach additional sheets if you run out of room, then bring the totals forward to Part II.

Part II: Tax Computation

Line 3 is the total of all distribution values from Part III. Line 4 lets you subtract adjusted allowable expenses, meaning costs you personally incurred to prepare this return or to determine, collect, or obtain a refund of the GST tax.⁶ Adjusted allowable expenses equal your total expenses multiplied by the inclusion ratio. If your distributions carry different inclusion ratios, prorate the expenses among them based on each distribution’s relative value.¹

Line 5 is the taxable amount (line 3 minus line 4). Line 6 is the applicable rate, which equals the maximum federal estate tax rate of 40 percent multiplied by the inclusion ratio from the D-1. When the inclusion ratio is 1.000, the applicable rate is the full 40 percent. When exemption was allocated to the trust and the ratio is lower, the effective rate drops in the same proportion. An inclusion ratio of zero means no tax is owed on the distribution, but you still file the return if you received a D-1.

Line 7 is the tentative tax (line 5 times line 6). Line 8 is for any GST tax already paid on the same distributions. Line 9 is the tax due (line 7 minus line 8). If line 8 is larger than line 7, line 10 captures the overpayment, and you can request a refund by direct deposit using lines 10b through 10d.

Where the Inclusion Ratio Comes From

The inclusion ratio is the single biggest variable in your tax bill, and the trustee computes it, not you. It reflects how much of the trust’s value the transferor sheltered with GST exemption. Mechanically, the inclusion ratio equals 1 minus the applicable fraction, where the fraction’s numerator is the GST exemption allocated to the trust and its denominator is the value of property originally transferred in, after estate taxes recovered and charitable deductions.⁷

A grandparent who funded a $2 million trust and allocated $2 million of exemption to it produces an inclusion ratio of zero, and distributions carry no GST tax. A trust with no exemption allocated has an inclusion ratio of 1, and the full 40 percent applies. For 2026 the lifetime GST exemption is $15,000,000 per person.⁸ Older trusts funded when the exemption was lower are more likely to carry higher inclusion ratios and produce real tax on today’s distributions.

Deadline, Extension, and Late-Filing Penalty

Form 706-GS(D) is due April 15 of the year after the calendar year in which you received the distribution.⁹ A distribution received in 2025 produces a return due April 15, 2026. The recipient is personally liable for the tax. It does not come out of the trust’s remaining assets unless the trust agreement directs the trustee to pay it, in which case that payment is itself treated as an additional taxable distribution to you.⁶

If you need more time, file Form 7004 by the April 15 deadline. Form 706-GS(D) is listed under form code 01, and the extension is automatic for six months with no reason and no signature required.¹⁰ An extension on your personal income tax return does not cover Form 706-GS(D); you need the separate Form 7004.¹

An extension to file is not an extension to pay. Interest runs on unpaid tax from April 15 regardless. Filing late without an extension triggers a failure-to-file penalty of 5 percent of the unpaid tax for each month or partial month the return is late, up to 25 percent.¹¹

How to Submit the Return and Pay

Mail the signed return to:

Department of the Treasury
Internal Revenue Service Center
Kansas City, MO 64999¹

Attach a copy of every Form 706-GS(D-1) you received for the year.¹² If you are paying by check or money order, make it payable to “United States Treasury” and write your Social Security number and “Form 706-GS(D)” on it. The IRS instructions also direct filers to pay electronically through EFTPS or by same-day wire.¹³ If you overpaid, enter your routing and account information on Part II, lines 10b through 10d to receive a refund by direct deposit.

Send the package by certified mail with a return receipt. The IRS does not confirm receipt of paper-filed returns, so the certified mail receipt is your proof that you met the deadline.

Records to Keep

Keep a full copy of your filed Form 706-GS(D), every Form 706-GS(D-1) you received, your proof of mailing, and all supporting expense records for at least three years from the filing date. That matches the IRS’s normal assessment window.¹⁴ If you underreport the value of a distribution by more than 25 percent of the gross amount shown on the return, the assessment period stretches to six years, so holding records longer is the safer choice on larger distributions.

1
Internal Revenue Service. Instructions for Form 706-GS(D) – Generation-Skipping Transfer Tax Return for Distributions
2
Office of the Law Revision Counsel. 26 USC 2613 – Skip Person and Non-Skip Person Defined
3
Office of the Law Revision Counsel. 26 USC 2612 – Taxable Termination; Taxable Distribution; Direct Skip
4
Office of the Law Revision Counsel. 26 USC 2651 – Generation Assignment – Section: Special Rule for Persons With a Deceased Parent
5
Internal Revenue Service. Instructions for Form 706-GS(D-1)
6
Office of the Law Revision Counsel. 26 USC 2621 – Taxable Amount in Case of Taxable Distribution
7
Office of the Law Revision Counsel. 26 USC 2642 – Inclusion Ratio
8
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
9
Office of the Law Revision Counsel. 26 USC 2662 – Return Requirements
10
Internal Revenue Service. Form 7004 (Rev. December 2025)
11
Internal Revenue Service. Failure to File Penalty
12
Internal Revenue Service. Form 706-GS(D-1) (Rev. December 2025)
13
Internal Revenue Service. Instructions for Form 706-GS(D) (12/2025)
14
Internal Revenue Service. How Long Should I Keep Records