Electronic structure calculations are reported for Gd in GaN on Ga as well as on N site and for pairs of Gd on neighboring Ga and N sites, using the full-potential linearized muffin-tin orbital method in the local spin density approximation with Hubbard U corrections (LSDA+U). The energy of formation for the N site is found to be much higher than for the Ga site even after relaxations are included. The GdN configuration is found to be at best metastable (in ZB). In WZ and in the pair configurations, the Gd is found to move toward an interstitial site leaving a nitrogen vacancy behind. The electronic structure of these structures and their magnetic moments are discussed.