In the complex world of estate planning and taxation, understanding specialized IRS forms is crucial for trustees and beneficiaries alike. IRS Form 706-GS(D-1), officially titled “Notification of Distribution From a Generation-Skipping Trust,” plays a key role in reporting distributions subject to the generation-skipping transfer (GST) tax. This form ensures compliance with federal tax laws when assets skip generations, helping avoid hefty penalties and ensuring accurate tax calculations. Whether you’re a trustee managing a trust or a distributee receiving funds, this SEO-optimized guide covers everything you need to know about Form 706-GS(D-1), including its purpose, filing requirements, and step-by-step completion tips. We’ll draw from the latest official IRS resources as of 2026 to provide accurate, up-to-date information.
What Is IRS Form 706-GS(D-1)?
IRS Form 706-GS(D-1) is a notification form used by trustees to report taxable distributions from a trust to skip persons—individuals or entities typically two or more generations below the trust’s settlor. Unlike standard income tax forms, this one focuses on the GST tax, which applies to transfers that “skip” a generation to prevent tax avoidance in estate planning. The form not only informs the IRS but also provides the distributee (the skip person) with essential details to calculate and report their own GST tax liability using the related Form 706-GS(D).
This form is particularly relevant for generation-skipping trusts, where assets are passed directly to grandchildren or further descendants, bypassing the intermediate generation. It’s revised periodically, with the current version dated December 2025, reflecting inflation-adjusted GST exemption amounts and minor structural changes.
Purpose of Form 706-GS(D-1)
The primary purpose of Form 706-GS(D-1) is twofold:
- To notify the IRS of distributions from a trust that may be subject to GST tax.
- To supply the skip person distributee with information, such as the inclusion ratio and property details, needed to file their Generation-Skipping Transfer Tax Return for Distributions (Form 706-GS(D)).
Even if the inclusion ratio is zero (meaning no tax is due), the trustee must still file the form for each applicable distribution. This ensures transparency and helps the IRS track potential taxable events in estate and trust administrations.
Who Must File Form 706-GS(D-1)?
Filing responsibility falls on the trustee of the trust making the distribution. This includes:
- Trustees of explicit trusts.
- For nonexplicit trusts (arrangements like insurance contracts, annuities, life estates, or remainders that function similarly to trusts), the person in actual or constructive possession of the property is considered the trustee and must file.
A separate form is required for each skip person receiving a taxable distribution, defined as:
- A natural person assigned to a generation two or more below the settlor’s.
- A trust where all interests are held by skip persons, or where no current interests are held and future distributions can only go to skip persons.
Distributions from separate trusts (e.g., portions from different transferors or independent beneficiary shares) must be reported as distinct entities, even if they share the same inclusion ratio. Skip persons themselves do not file this form; they use the information provided to complete Form 706-GS(D).
When and Where to File Form 706-GS(D-1)?
Timing is critical for compliance:
- File Copy A with the IRS and send Copy B to the distributee by April 15 of the year following the calendar year of the distribution.
- If April 15 falls on a weekend or legal holiday, the deadline shifts to the next business day.
Submit Copy A to:
- Department of the Treasury, Internal Revenue Service Center, Stop 824G, 7940 Kentucky Drive, Florence, KY 41042-2915.
- For private delivery services, use the same address.
How to Complete Form 706-GS(D-1): Step-by-Step Guide?
The form is divided into three parts. Here’s a breakdown based on the latest instructions:
Part I: General Information
- Enter the skip person distributee’s name, address, and taxpayer identification number (TIN)—use SSN for individuals or EIN for trusts. If unknown, note “unknown” or “none.”
- Provide the trust’s name, address, and TIN. For nonexplicit trusts, ensure a separate TIN is obtained and used exclusively for this purpose; write “Applied for” if pending.
Part II: Distributions
Report all taxable distributions made during the year:
- Column (a) Item Number: Assign consecutive numbers; list distributions with different inclusion ratios separately. Use distinct numbers for separate trusts.
- Column (b) Description of Property: Provide detailed descriptions—e.g., for real estate, include location and improvements; for stocks/bonds, list shares, type, CUSIP, etc.; for other property, ensure enough detail for valuation.
- Column (d) Inclusion Ratio: Calculate as 1 minus the applicable fraction (rounded to three decimal places). The applicable fraction’s numerator is the GST exemption allocated; denominator is the property value minus certain deductions. Adjust for multiple transfers, ETIPs, or charitable lead trusts.
- Column (e) Value: Use the fair market value at the distribution date.
Part III: Trust Information
- Identify the trustee (or possessor for nonexplicit trusts).
- Refigure inclusion ratios for additions to pre-existing trusts.
Sign the form as the trustee or authorized representative.
Key Terms Explained
- Skip Person: As noted, typically grandchildren or further descendants; generation assignments consider family lines, adoptions, and age brackets.
- Inclusion Ratio: Determines the taxable portion of the distribution; zero means no GST tax applies.
- GST Exemption: For 2025, it’s $13,990,000, with inflation adjustments annually post-2025 per IRS revenue procedures.
- Taxable Distribution: Any trust payout to a skip person, excluding terminations or direct skips.
Penalties for Non-Compliance
While specific penalties aren’t detailed in the form instructions, failure to file or provide accurate information can lead to general IRS penalties for trusts, including interest on unpaid taxes or fines for non-filing. Trustees should consult IRS guidelines or a tax professional to avoid issues.
Recent Updates as of 2026
The December 2025 revision includes reorganized general information lines and clarifications on TINs for trusts. GST exemption amounts continue to adjust for inflation—check the latest IRS revenue procedure for 2026 figures. No major structural changes are noted beyond these.
Download IRS Form 706-GS(D-1)
You can download the latest PDF version of Form 706-GS(D-1) directly from the IRS website: https://www.irs.gov/pub/irs-pdf/f706gsd1.pdf. For instructions, visit https://www.irs.gov/instructions/i706gsd1.
Navigating GST tax forms like 706-GS(D-1) can be daunting, but staying informed ensures smooth estate planning. If you’re unsure about your specific situation, consult a qualified tax advisor or attorney specializing in estate taxes. This guide is for informational purposes only and not a substitute for professional advice.