Specific Instructions

Part I—General Information

Line 1a. Skip Person Distributee's Identifying Number

Enter the social security number of an individual distributee. (If the number is unknown or the individual has no number, indicate “unknown” or “none.”) If the distributee is a trust, enter the trust's employer identification number (EIN).

Line 2a. Trust's Employer Identification Number

Enter the EIN of the trust from which the distribution was made.

A nonexplicit trust as described under Who Must File must have an EIN that is separate from any other entity's EIN and that will be used only by the nonexplicit trust.

A trust or nonexplicit trust that does not have an EIN should apply for one on Form SS-4, Application for Employer Identification Number. You can get Form SS-4, and other IRS tax forms and publications, by calling 1-800- TAX-FORM (1-800-829-3676) or by visiting IRS.gov.

Send Form SS-4 to the address listed under Where To File. If the EIN has not been received by the filing time for the GST form, write “Applied for” on  
line 2a.

Part II—Distributions

Report all taxable distributions made during the year from the trust listed on line 2 to the skip person distributee listed on line 1. Report a distribution even if its inclusion ratio is zero.

Column a. Item no.

Assign consecutive numbers to each distribution made during the year. Different items of property having different inclusion ratios must be listed separately in Part II. Include under a single item number any properties having the same inclusion ratio even if they were distributed at different times. An exception to this is distributions from “separate trusts” as that term was defined earlier. You must report distributions from such separate trusts under different item numbers even if they have the same inclusion ratio.

Column b. Description of Property

Real estate.   Describe the real estate in enough detail so that the IRS can easily locate it for inspection and valuation. For each parcel of real estate, report the location and, if the parcel is improved, describe the improvements. For city or town property, report the street number, ward, subdivision, block and lot, etc. For rural property, report the township, range, landmarks, etc.

Stocks and bonds.   For stocks, give:
  • Number of shares;

  • Whether common or preferred;

  • Issue;

  • Par value where needed for valuation;

  • Price per share;

  • Exact name of corporation;

  • Principal exchange upon which sold, if listed on an exchange; and

  • CUSIP number.

  For bonds, give:
  • Quantity and denomination;

  • Name of obligor;

  • Date of maturity;

  • Interest rate;

  • Interest due date;

  • Principal exchange, if listed on an exchange; and

  • CUSIP number.

  If the stock or bond is unlisted, show the company's principal business office.

  The CUSIP (Committee on Uniform Security Identification Procedure) number is a nine-digit number that is assigned to all stocks and bonds traded on major exchanges and many unlisted securities. Usually the CUSIP number is printed on the face of the stock certificate. If the CUSIP number is not printed on the certificate, it may be obtained through the company's transfer agent.

Other personal property.   Any personal property distributed must be described in enough detail that the IRS can value it.

Column d. Inclusion Ratio

Note.

The trustee must provide the inclusion ratio for every distribution.

All distributions, or any part of a single distribution, that have different inclusion ratios must be listed as separate items in column a.

The inclusion ratio is the excess of 1 over the applicable fraction determined for the trust from which the distribution was made.

Applicable fraction.   The applicable fraction is a fraction, the numerator of which is the amount of the GST exemption allocated to the trust. The denominator of the fraction is:
  1. The value of the property transferred to the trust, minus

  2. The sum of:

    1. Any federal estate tax or state death tax actually recovered from the trust attributable to the property and

    2. Any charitable deduction allowed under section 2055 or 2522 with respect to the property.

  Round the applicable fraction to at least the nearest one-thousandth (for example, “.001”).

Numerator (GST exemption).   Every individual settlor is allowed a lifetime GST exemption to be allocated against property that the individual has transferred. For generation-skipping transfers made through 1998, the exemption was $1 million. The GST exemption amounts for 1999 through 2013 are as follows:
Year Amount
1999 $1,010,000
2000 $1,030,000
2001 $1,060,000
2002 $1,100,000
2003 $1,120,000
2004 and 2005 $1,500,000
2006–2008 $2,000,000
2009 $3,500,000
2010 and 2011 $5,000,000
2012 $5,120,000
2013 $5,250,000

Note.

The GST exclusion amount for years after 2013 will be subject to adjustments for annual inflation.

  For existing trusts, transferors may allocate the additional GST exemption amount attributable to section 2631(c) increases if they otherwise qualify under the existing rules for late allocations. For more information, see section 2632 and Multiple transfers into a trust below.

  Once made, allocations are irrevocable.

  Allocation of the GST exemption is made by the settlor on Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, and/or Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, by the executor of the settlor's estate. Therefore, you should obtain information regarding the allocation of the exemption to this trust from the settlor or the executor of the settlor's estate, as applicable.

  If the settlor's entire GST exemption is not allocated by the due date (including extensions) of the settlor's estate tax return, the exemption is automatically allocated under the rules of section 2632.

Transfers subject to an estate tax inclusion period.   If a transferor made an inter vivos transfer, and the property transferred would have been includible in the transferor's estate if he or she had died immediately after the transfer (other than by reason of the transferor dying within 3 years of making the gift), for purposes of determining the inclusion ratio, an allocation of GST exemption will only become effective at the close of the estate tax inclusion period (ETIP).

  The value of the property for the purpose of figuring the inclusion ratio is the estate tax value if the property is included in the transferor's gross estate, or its value at the close of the ETIP.

  The ETIP closes at the earliest of:
  1. The time the transferred property would no longer be includible in the settlor's estate,

  2. The date of a generation- 
    skipping transfer of the property, or

  3. The date of death of the settlor.

Denominator (valuation of trust assets).   In general, the value to be used in the applicable fraction is the gift tax value for an inter vivos transfer as long as the allocation of the GST exemption was made on a timely filed gift tax return. The value of a testamentary transfer is generally the estate tax value.

  If the allocation of the exemption to an inter vivos transfer is not made on a timely filed gift tax return, the value for purposes of the applicable fraction is the value of the property transferred at the time the allocation is filed with the IRS.

Qualified terminable interest property.

For qualified terminable interest property (QTIP) that is included in the estate of the surviving spouse of the settlor because of section 2044, unless a special QTIP election has been made under section 2652(a)(3), the surviving spouse is considered the transferor under section 2652(a) for GST purposes, and the value is the estate tax value in the estate of the surviving spouse.

A special QTIP election allows property for which a QTIP election was made for estate or gift tax purposes to be treated for GST tax purposes as if this QTIP election had not been made. If the special QTIP election has been made, the predeceased settlor spouse is the transferor and the value is that spouse's estate or gift tax value under the rules described above. Either the settlor spouse or the executor of the settlor spouse's estate must make the special QTIP election.

ETIP.

If an individual could not make a timely allocation of exemption because of an ETIP, the value of the property for the purpose of computing the inclusion ratio is the estate tax value if the property is includible in the transferor's gross estate. If the property is not includible in the transferor's gross estate, the property is valued at the close of the ETIP, provided that the GST exemption is allocated on a timely filed gift tax return for the calendar year in which the ETIP closes.

Multiple transfers into a trust.   When a transfer is made to a pre-existing trust, the applicable fraction must be recomputed. The numerator of the new fraction is the sum of:
  1. The exemption allocated to the current transfer and

  2. The nontax portion of the trust immediately before the current transfer (the product of the applicable fraction and the value of all of the property in the trust immediately before the current transfer).

  The denominator of the new fraction is the sum of:
  1. The value of the current transfer (minus any federal estate tax or state death tax actually paid by the trust attributable to such property) and any charitable deduction allowed with respect to such property and

  2. The value of all property in the trust immediately before the current transfer.

Charitable lead annuity trusts.   For distributions from a charitable lead annuity trust, the numerator of the applicable fraction is the adjusted GST exemption as defined below. The denominator is the value of the trust immediately after termination of the charitable lead annuity.

  The adjusted GST exemption is the sum of:
  1. The exemption allocated to the trust and

  2. Interest on the exemption determined at the interest rate used to figure the estate or gift deduction for the charitable lead annuity and for the actual period of the charitable lead annuity.

  In the case of a late allocation, the amount of interest accrued prior to the date of allocation is zero.

Column e. Value

Enter the value of the property distributed from the trust at the time of distribution.

Part III—Trust Information

Line 4

An arrangement that has substantially the same effect as a trust will be treated as a trust even though it is not an explicit trust. Examples of such arrangements are insurance and annuity contracts, arrangements involving life estates and remainders, and estates for years. Nonexplicit trusts do not include decedent's estates.

In the case of a nonexplicit trust, the trustee is the person in actual or constructive possession of the property involved.

Line 5

Whenever property is transferred into a pre-existing trust, the inclusion ratio must be refigured. See Multiple transfers into a trust for the rule on how to refigure the inclusion ratio.


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