Schedule D is used to report generation-skipping transfers and to compute generation-skipping transfer tax and exemption allocations on Form 709. This schedule applies when gifts are made to skip persons or to trusts that fall under generation-skipping transfer tax rules.
When Schedule D is required
Schedule D must be completed when any gift reported on Schedule A is classified as a direct skip, an indirect skip, or another transfer subject to generation-skipping transfer tax considerations. Even when a gift is fully covered by the GST exemption, it must still be reported and reflected on Schedule D.
Part 1: Generation-skipping transfers
Part 1 lists generation-skipping transfers, including direct skips reported on Schedule A, Part 2, and certain transfers subject to an estate tax inclusion period. Each transfer is listed with its value and net transfer amount for GST purposes.
Part 2: GST exemption reconciliation
Part 2 tracks the donor’s available GST exemption, the amount used in prior periods, and the exemption claimed for current-year transfers. This section determines how much exemption remains available for future transfers and ensures proper allocation across all reported gifts.
Part 3: GST tax computation
Part 3 calculates the generation-skipping transfer tax by applying the inclusion ratio and applicable rate to each net transfer. The resulting GST tax amounts are carried to Schedule A and to Part II of the main return to be included in the total tax computation.
How Schedule D connects to the rest of the form
Schedule D relies on gift classifications made on Schedule A and feeds calculated GST tax amounts back into Schedule A, Part 4, and Part II of Form 709. It works alongside Schedule B to ensure that prior-period GST exemption usage is properly reflected.
Why Schedule D reporting is required even when no GST tax is due
Schedule D documents exemption allocations and inclusion ratios that affect future transfers. Reporting is required to establish a clear record of how GST exemption has been applied, even when the exemption fully offsets the transfer and no GST tax is payable.
This page explains the role of Schedule D in Form 709. For an overview of how all schedules fit together, see Form 709 structure explained. For current-year gift classification, see Schedule A explained. For the authoritative schedule layout and official instructions, refer to the IRS Form 709 official document overview.