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Article #: 19057
Overview
Generation-skipping transfer (GST) tax, foreign death tax credits, and credit for tax on prior transfers on Form 706 are entered on screens in the Form 706 Estate Forms tab of the Data Entry Menu. Amounts flow to Part 2 of the return as described in Drake Tax – 706: Tax Computation (Part 2) (KB 19053).
Generation-Skipping Transfer (GST) Tax
Drake Tax provides the following screens for completing forms related to GST tax:
- Screen R — For Schedule R, Generation-Skipping Transfer Tax, Part 1
- Screen R2 — For Schedule R, Parts 2 and 3
- Screen R1 — For Schedule R-1, Direct Skips From a Trust
- Screen 709 — For Schedule R, Part 1, lines 2 (“Total GST exemption allocated by the decedent”) and 3 (“Total GST exemption allocated by the executor”)
These screens are accessible from the Form 706 Estate Forms tab of the Data Entry Menu. The R, R1, and R2 screens are located in the Deductions section; the 709 link is on the left side of the menu.
Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, is filed using the 1040 program in Drake Tax. For more information on completing and filing Form 709, see Drake Tax – 709: Gift Tax Return Overview (KB 11391).
For more information on providing Form 709 information on the estate return, see the IRS Instructions for Form 706.
Schedule R
Because some amounts printed on Part 1 of Schedule R flow from Parts 2 and 3, screen R has fields for only item 9 of Part I (“Allocation of GST exemption to trusts”). The screen has space for entering data for two items. To add more items, press Page Down.
On screen R2, you can select to have GST information printed on Schedule R, Part 2, or on Schedule R, Part 3, by marking the applicable check box. If both boxes are marked, the information flows to Part 2.
Foreign Death Tax (Sch. P; Form 706-CE)
Use the top section of screen P to enter data for Schedule P, Credit for Foreign Death Taxes. Use the bottom section of this screen to enter data for Form 706-CE, Certificate of Payment of Foreign Death Tax.
Fields for Schedule P and Form 706-CE are located on the same screen. Open this screen by clicking either P or CE under the Form 706 Estate Forms tab in the Data Entry Menu, or by typing either P or CE in the selector field and pressing Enter.
Note If a foreign government refuses to certify Form 706-CE, the form must be filed directly with the IRS. See the IRS instructions for completing Form 706-CE.
Credit for Tax on Prior Transfers (Sch. Q)
Schedule Q is required for claiming a credit for tax on prior transfers. Use screen Q to enter data for Schedule Q. This data is calculated and then flows to Form 706, Part 2, line 14, “Credit for tax on prior transfers.”
Use the top section of screen Q to enter transferor information for Schedule Q. Use the rest of screen Q to complete the Schedule Q worksheet.
To enter multiple transferors, press Page Down for a new screen Q. Transfer amounts from subsequently added transferors appear in columns B and C of the Schedule Q worksheet. A new Schedule Q and Schedule Q worksheet are generated if there are more than three transferors.