706-GS(T)

[Randall]

Is a 706-GS(T) required for all final trust returns, even if there is no GST? For my situation, benefiary died, trust to distribute assets to remainder beneficiaries. One is a sibling and non-skip person (25%). The other 3 siblings are deceased and their shares will go to their children. Total amount is about $200k so exemption should mean no GST.

[kcjenkins]

Purpose of Form

Form 706-GS(T) is used by a trustee to figure and report the tax due from certain trust terminations that are subject to the generation-skipping transfer (GST) tax.

Who Must File

In general, the trustee of any trust that has a taxable termination (defined below) must file Form 706-GS(T) for the tax year in which the termination occurred.

Terminations Subject to GST Tax

A termination may occur by reason of death, lapse of time, release of a power, or any other means.

In general, all taxable terminations are subject to the GST tax. A taxable termination is the conclusion of an interest in property held in trust unless:

• 
  Immediately after the termination, a non-skip person has an interest in the property or
  
• 
  At no time after the termination may a distribution be made from the trust to a skip person.
  

[Randall]

KC, I saw this. The two provisions say one 'or' the other. I think in my case, there is one non-skip person who has a 25% interest. However, reading further than your quote, there seems to be a partial termination:

"... a specified portion of the trust's assets are distributed to 1 or more skip persons, such termination shall constitute a taxable termination with respect to such portion of the trust property."

This leads me to believe a 706-GS(T) is required. I think the exemption should mean no tax but I'm not sure. The origin of the trust goes so far back, no one knows anything. The value of the trust assets are about $200,000, stocks bought years ago, basis approximately half at $100,000. Long term gains will go to beneficiaries. But will the GST exemption apply at $5,000,000. The original value of trust assets were about $100,000.

[Randall]

I'm also wondering if the 706-GS(T) is required at all due to the exception of being an irrevocable trust before Sept 25, 1985. The trust was created 6/24/82.

[kcjenkins]

I'm also wondering if the 706-GS(T) is required at all due to the exception of being an irrevocable trust before Sept 25, 1985. The trust was created 6/24/82.

Sounds like that exception is a good one!