Instructions For Form 709 - 2009 (Page 9 of 12) in pdf

the trust instrument to the return on which

Part 3—Indirect Skips

Split Gifts—Gifts Made by

you report your first transfer to the trust.

Spouse

Some gifts made to trusts are subject only

However, to report subsequent transfers

to gift tax at the time of the transfer but

See this heading under Part I on page 8.

to the trust, you may attach a brief

later may be subject to GST tax. The GST

description of the terms of the trust or a

Part 4—Taxable Gift

tax could apply either at the time of a

copy of the trust instrument.

Reconciliation

distribution from the trust, at the

termination of the trust, or both.

Also attach any appraisal used to

Line 2

determine the value of real estate or

Section 2632(c) defines indirect skips

other property.

Enter the total annual exclusions you are

and applies special rules to the allocation

claiming for the gifts listed on Schedule A.

of GST exemption to such transfers. In

If you do not attach this information,

See Annual Exclusion on page 2. If you

general, an indirect skip is a transfer of

you must include in Schedule A full

split a gift with your spouse, the annual

property that is subject to gift tax (other

information to explain how the value was

exclusion you claim against that gift may

than a direct skip) and is made to a GST

determined.

not be more than the smaller of your half

trust. A GST trust is a trust that could

of the gift or $13,000.

have a generation-skipping transfer with

Part 2—Direct Skips

respect to the transferor, unless the trust

Deductions

List in Part 2 only those gifts that are

provides for certain distributions of trust

currently subject to both the gift and GST

corpus to non-skip persons. See section

Line 4. Marital deduction

taxes. You must list the gifts in Part 2 in

2632(c)(3)(B) for details.

the chronological order that you made

Enter on line 4 all of the gifts to your

List in Part 3 those gifts that are

them. Number, describe, and value the

spouse that you listed on Schedule A and

indirect skips as defined in section

gifts as described in the instructions for

for which you are claiming a marital

2632(c) or may later be subject to GST

Part 1 on page 8.

deduction. Do not enter any gift that you

tax. This includes indirect skips for which

did not include on Schedule A. On the

If you made a transfer to a trust that

election (2), described below, will be

dotted line on line 4, indicate which

was a direct skip, list the entire gift as one

made in the current year or has been

numbered items from Schedule A are

line entry in Part 2.

made in a previous year. You must list the

gifts to your spouse for which you are

gifts in Part 3 in the chronological order

Column C. 2632(b) Election

claiming the marital deduction.

that you made them.

If you elect under section 2632(b)(3) to

Do not enter on line 4 any gifts to

Column C. 2632(c) Election

not have the automatic allocation rules of

TIP

your spouse who was not a U.S.

Section 2632(c) provides for the

section 2632(b) apply to a transfer, enter

citizen at the time of the gift.

automatic allocation of the donor’s

a check in column C next to the transfer.

unused GST exemption to indirect skips.

You may deduct all gifts of

You must also attach a statement to Form

nonterminable interests made during the

This section also sets forth three different

709 clearly describing the transaction and

year that you entered on Schedule A

elections you may make regarding the

the extent to which the automatic

regardless of amount, and certain gifts of

allocation of exemption.

allocation is not to apply. Reporting a

terminable interests as outlined below.

direct skip on a timely filed Form 709 and

Election 1. You may elect not to have the

paying the GST tax on the transfer will

automatic allocation rules apply to the

Terminable interests. Generally, you

qualify as such a statement.

current transfer made to a particular

cannot take the marital deduction if the

trust.

gift to your spouse is a terminable

How to report generation-skipping

Election 2. You may elect not to have the

interest. In most instances, a terminable

transfers after the close of an ETIP. If

automatic rules apply to both the

interest is nondeductible if someone other

you are reporting a generation-skipping

current transfer and any and all future

than the donee spouse will have an

transfer that was subject to an ETIP

transfers made to a particular trust.

interest in the property following the

(provided the ETIP closed as a result of

Election 3. You may elect to treat any

termination of the donee spouse’s

something other than the death of the

trust as a GST trust for purposes of the

interest. Some examples of terminable

transferor; see Form 706), and you are

automatic allocation rules.

interests are:

also reporting gifts made during the year,

•

See section 2632(c)(5) for details.

A life estate,

complete Schedule A as you normally

•

An estate for a specified number of

When to make an election. Election (1)

would with the following changes.

years, or

is timely made if it is made on a timely

•

Report the transfer subject to an ETIP

Any other property interest that after a

filed gift tax return for the year the transfer

on Schedule A, Part 2.

period of time will terminate or fail.

was made or was deemed to have been

made.

Column B. In addition to the

If you transfer an interest to your

information already requested, describe

Elections (2) and (3) may be made on

spouse as sole joint tenant with yourself

the interest that is closing the ETIP;

a timely filed gift tax return for the year for

or as a tenant by the entirety, the interest

explain what caused the interest to

which the election is to become effective.

is not considered a terminable interest

terminate; and list the year the gift portion

just because the tenancy may be

To make one of these elections, check

of the transfer was reported and its item

severed.

column C next to the transfer to which the

number on Schedule A that was originally

election applies. You must also attach an

Life estate with power of appointment.

filed to report the gift portion of the ETIP

explanation as described below. If you

You may deduct, without an election, a

transfer.

are making election (2) or (3) on a return

gift of a terminable interest if all four

on which the transfer is not reported,

Column E. Give the date the ETIP

requirements below are met:

simply attach the statement described

closed rather than the date of the initial

1. Your spouse is entitled for life to all

below.

gift.

of the income from the entire interest;

If you are reporting a transfer to a trust

2. The income is paid yearly or more

Columns F, G, and H. Enter “N/A” in

for which election (2) or (3) was made on

often;

these columns.

a previously filed return, do not make an

3. Your spouse has the unlimited

The value is entered only in Column B

entry in column C for that transfer and do

power, while he or she is alive or by will,

of Part 1, Schedule C. See Column B on

not attach a statement.

to appoint the entire interest in all

page 10.

Attachment. You must attach a

circumstances; and

statement to Form 709 that describes the

4. No part of the entire interest is

Split Gifts—Gifts Made by

election you are making and clearly

subject to another person’s power of

Spouse

identifies the trusts and/or transfers to

appointment (except to appoint it to your

See this heading under Part 1 on page 8.

which the election applies.

spouse).

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Instructions For Form 709 - 2009 Page 9

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