Updated October 18, 2026. Quick answer: Schedule R figures the generation-skipping transfer tax the estate owes on direct skips at death, and Schedule R-1 notifies a trustee when a trust owes it. Both start from the asset schedules, and the tax total carries to Part II line 19.
IRS estate-administration forms, read line by line: Form 706-NA Part II lines 9 to 18 and Form 706-NA Part III.
What Schedules R and R-1 are
“Schedule R (Form 706) is used to figure the generation-skipping transfer (GST) tax that is payable by the estate.” “Schedule R-1 (Form 706) is used to figure the GST tax that is payable by certain trusts that are includible in the gross estate.” “The GST tax reported on Form 706 is imposed on only direct skips occurring at death.” The return is explained on the Form 706 page.
The five steps
The instructions lay out an order of work. “the first step in figuring the GST tax liability is to determine the property interests includible in the gross estate by completing Schedules A through I of Form 706.” “The second step is to determine who the skip persons are.” “The fourth step is to determine whether to enter the transfer on Schedule R (Form 706) or on Schedule R-1 (Form 706).”
What a direct skip is
“For purposes of Form 706, a direct skip is a transfer that is:” “Subject to the estate tax,” “Of an interest in property, and” “To a skip person.” “All three requirements must be met before the transfer is subject to the GST tax.”
“A transferee who is a natural person is a skip person if that transferee is assigned to a generation that is two or more generations below the generation assignment of the decedent.” “A transferee who is a trust is a skip person if all the interests in the property (as defined above) transferred to the trust are held by skip persons.”
One of the instructions’ examples reads: “The will bequeaths $100,000 to the decedent’s grandchild. This transfer is a direct skip that is not made in trust and should be shown on Schedule R (Form 706).”
Schedule R or Schedule R-1
“Report all generation-skipping transfers on Schedule R (Form 706) unless the rules below specifically provide that they are to be reported on Schedule R-1 (Form 706).” “Schedule R-1 (Form 706) serves as a notification from the executor to the trustee that a GST tax is due.” For trusts that are not ordinary trusts: “Direct skips from trusts that are trusts for GST tax purposes but are not ordinary trusts are to be shown on Schedule R-1 (Form 706) only if the total of all tentative maximum direct skips from the entity is $250,000 or more.”
When an executor is also a trustee: “If any of the executors of the decedent’s estate are trustees of the trust, then all direct skips for that trust must be shown on Schedule R (Form 706) and not on Schedule R-1 (Form 706)”.
Valuation
“Enter on Schedules R and R-1 of Form 706 the estate tax value of the property interests subject to the direct skips.” “If you elected alternate valuation (section 2032) and/or special-use valuation (section 2032A), you must use the alternate and/or special-use values on Schedules R and R-1 of Form 706.” The alternate valuation choice is explained on the alternate valuation date page, and special-use valuation on the Schedules T and U page.
Schedule R Part I: GST exemption
“This allocation is made by filing Form 706 and attaching a completed Schedule R (Form 706) and/or Schedule R-1 (Form 706). Once made, the allocation is irrevocable.” “You are not required to allocate all of the decedent’s GST exemption.” On the amount: “The current GST exemption is $15,000,000.” The instructions list the exemption for each year of transfer in a table, which this page does not reproduce.
Line 3: “Make an entry on this line if you are filing Form(s) 709 for the decedent and wish to allocate any exemption.” See the Form 709 filing rules. Lines 4, 5 and 6: “These lines represent your allocation of the GST exemption to direct skips made by reason of the decedent’s death.”
Line 9: “Line 9 is used to allocate the remaining unused GST exemption (from line 8) and to help you figure the trust’s inclusion ratio.” “If line 9 is not completed, the deemed allocation at death rules will apply to allocate the decedent’s remaining unused GST exemption.” The instructions also provide an Inclusion Ratio worksheet; its steps are not repeated here.
The special QTIP election: “allows you to treat such property for purposes of the GST tax as if the election to be treated as QTIP had not been made”. “You make the election simply by listing qualifying property on Part I, line 9.” The marital deduction side is on the Schedule M page.
Schedule R Parts II and III
“Use Part II to figure the GST tax on transfers in which the property interests transferred are to bear the GST tax on the transfers.” “Use Part III to report the GST tax on transfers in which the property interests transferred do not bear the GST tax on the transfers.” “Therefore, you will usually enter all of the direct skips on Part II.” “You may enter a transfer on Part III only if the will or trust instrument directs, by specific reference, that the GST tax is not to be paid from the transferred property interests.”
Part II, line 7: “Do not enter more than the amount on line 6.”
Schedule R-1
Part I, line 8: “Enter the due date of Form 706.” “You must send the copies of Schedule R-1 (Form 706) to the fiduciary before this date.” Part II, line 7: “Making an entry on line 7 constitutes a Notice of Allocation of the decedent’s GST exemption to the trust.” Line 9: “If the property interests entered on line 2 will not bear the GST tax, multiply line 9 by 40% (0.40).” “The executor(s) must sign Schedule R-1 (Form 706) in the same manner as Form 706.”
Where the number comes from
The values come from the estate tax values on the asset schedules (the instructions say “Estate tax value is the value shown on Schedules A through I of this Form 706.”), the will and trust instruments, and any Forms 709 the decedent filed.
Where it goes next
Part II of the form captions the GST line as “Generation-skipping transfer (GST) taxes payable from Schedule R (Form 706), Part II, line 11”. The next total reads “Total transfer taxes. Add lines 18 and 19”. See Form 706 Part II lines 13 to 23 for the rest of the computation. The separate estate tax exclusion amount is covered on the estate tax exemption page.
Edition and line numbers
This page reads the Form 706 revision dated August 2025 and the Instructions for Form 706 revision dated July 2026. They are the current files irs.gov served on 2026-10-18, byte-identical to the copies this page was checked against. The form says “To be filed for decedents dying after December 31, 2024.” The instructions state “For decedents dying after December 31, 2025.” The instructions also explain how the schedules are packaged: “The schedules should be completed and attached to Form 706, as necessary.” Check the revision date printed on your Form 706 and the instruction edition for the year of death, and use the line numbers on that revision.
Common mistakes
- Putting every trust skip on Schedule R. Some belong on R-1: the instructions say direct skips from some entities are shown there “only if the total of all tentative maximum direct skips from the entity is $250,000 or more”.
- Leaving line 9 blank when a trust should receive exemption. The instructions say “If line 9 is not completed, the deemed allocation at death rules will apply to allocate the decedent’s remaining unused GST exemption.”
- Sending Schedule R-1 to the trustee late. The instructions say “You must send the copies of Schedule R-1 (Form 706) to the fiduciary before this date.”
Related: Form 706, Form 709 filing rules, alternate valuation date, and estate tax exemption.
Sources
- Instructions for Form 706 (Rev. July 2026): https://www.irs.gov/pub/irs-pdf/i706.pdf
- Form 706 (Rev. August 2025), United States Estate (and Generation-Skipping Transfer) Tax Return: https://www.irs.gov/pub/irs-pdf/f706.pdf
Read from the IRS documents linked above on October 18, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.