what is form 706 united states estate and generation skipping transfer tax return 
form 706 united states estate and generation skipping transfer tax return is an internal revenue service irs form used by an executor of a decedent s estate to calculate the estate tax owed according to chapter 11 of the internal revenue code irc the tax is levied on the entire taxable estate not just on the share a specific beneficiary receives executors also use form 706 to calculate the generation skipping transfer tax gstt imposed by chapter 13 of the irc 1form 706 is used by an executor of an estate to calculate the amount of tax owed on estates valued at more than 12 92 million if the decedent died in 2023 or 13 61 million in 2024 3form 706 also helps executors determine the overall value of an estate prior to distributing any assets to beneficiaries as outlined in the decedent s will or trust the irs treats any inheritance on a stepped up valuation or a step up basis that means the cost basis is adjusted to the fair market value of the inherited property as of the date of death 5using the stepped up valuation methodology allows heirs to minimize capital gains taxes the method also allows for a cleaner valuation process in terms of limiting the number of administrative tasks associated with the estate who can file form 706 form 706 must be filed by the executor of the estate of every u s citizen or resident to determine if the estate exceeds the exclusion amount add together amounts 1 2 and 3 below the gross estate includes the irs uses a stepped up valuation methodology in determining the value of an estate form 706 is available on the irs webpage related formsform 706 na united states estate and generation skipping transfer tax return is used to calculate estate tax and gstt liability for nonresident alien decedents 8form 706 gs d generation skipping transfer tax return for distributions is used to calculate taxes due on trust distributions subject to the gstt any skip person who receives a taxable distribution coming from a trust must use form 706 gs d to calculate and report the tax due 4a generation skipping transfer tax gst is a transfer of money or property either as an inheritance or a gift to someone who is two or more generations below the grantor the person who receives the inheritance or gift is called the skip person while a skip person is often a grandchild it could be anyone who s at least 37 years younger than the grantor 9the gstt is imposed on gifts and inheritances that a skip person receives this ensures that taxes are paid at each generational level the gstt has the same lifetime exemption as the federal estate and gift taxes 12 92 million for 2023 13 61 million for 2024 3trustees must report taxable distributions to skip persons using form 706 gs d 1 notification of distribution from a generation skipping trust note that trustees must also provide the skip person with the information needed to figure the tax due on the distribution 1