Instructions For Form 709 - 2007 Page 2

ADVERTISEMENT

Gifts to charities. If the only gifts you
Line 12. Election Out of QTIP Treatment
also includes amounts paid for medical
made during the year are deductible as
of Annuities on page 10.
insurance on behalf of any individual.
gifts to charities, you do not need to file a
Except as described above, you do not
The medical exclusion does not apply
return as long as you transferred your
have to file a gift tax return to report gifts
to amounts paid for medical care that are
entire interest in the property to qualifying
to your spouse regardless of the amount
reimbursed by the donee’s insurance. If
charities. If you transferred only a partial
of these gifts and regardless of whether
payment for a medical expense is
interest, or transferred part of your
the gifts are present or future interests.
reimbursed by the donee’s insurance
interest to someone other than a charity,
company, your payment for that expense,
Transfers Not Subject to the
you must still file a return and report all of
to the extent of the reimbursed amount, is
your gifts to charities.
Gift Tax
not eligible for the medical exclusion and
If you are required to file a return to
Three types of transfers are not subject to
you have made a gift to the donee.
report noncharitable gifts and you made
the gift tax. These are:
To the extent that the payment was for
gifts to charities, you must include all of
Transfers to political organizations,
something other than medical care, it is a
your gifts to charities on the return.
Payments that qualify for the
gift to the individual on whose behalf the
educational exclusion, and
Transfers Subject to the
payment was made and may be offset by
Payments that qualify for the medical
Gift Tax
the annual exclusion if it is otherwise
exclusion.
available.
Generally, the federal gift tax applies to
These transfers are not “gifts” as that
any transfer by gift of real or personal
term is used on Form 709 and its
The medical and educational
property, whether tangible or intangible,
instructions. You need not file a Form 709
exclusions are allowed without regard to
that you made directly or indirectly, in
to report these transfers and should not
the relationship between you and the
trust, or by any other means to a donee.
list them on Schedule A of Form 709 if
donee. For examples illustrating these
you do file Form 709.
exclusions, see Regulations section
The gift tax applies not only to the
25.2503-6.
gratuitous transfer of any kind of property,
Political organizations. The gift tax
but also to sales or exchanges, not made
does not apply to a transfer to a political
Qualified disclaimers. A donee’s
in the ordinary course of business, where
organization (defined in section 527(e)(1))
refusal to accept a gift is called a
money or money’s worth is exchanged
for the use of the organization.
disclaimer. If a person makes a qualified
but the value of the money (or property)
disclaimer with respect to any interest in
Educational exclusion. The gift tax
or money’s worth received is less than the
property, the property will be treated as if
does not apply to an amount you paid on
value of what is sold or exchanged. The
it had never been transferred to that
behalf of an individual to a qualifying
gift tax is in addition to any other tax, such
person. Accordingly, the disclaimant is
domestic or foreign educational
as federal income tax, paid or due on the
not regarded as making a gift to the
organization as tuition for the education or
transfer.
person who receives the property
training of the individual. A qualifying
The exercise or release of a general
because of the qualified disclaimer.
educational organization is one that
power of appointment may be a gift by the
normally maintains a regular faculty and
Requirements. To be a qualified
individual possessing the power. General
curriculum and normally has a regularly
disclaimer, a refusal to accept an interest
powers of appointment are those in which
enrolled body of pupils or students in
in property must meet the following
the holders of the power can appoint the
attendance at the place where its
conditions.
property subject to the power to
educational activities are regularly carried
1. The refusal must be in writing.
themselves, their creditors, their estates,
on. See section 170(b)(1)(A)(ii) and its
2. The refusal must be received by
or the creditors of their estates. To qualify
regulations.
the donor, the legal representative of the
as a power of appointment, it must be
The payment must be made directly to
donor, the holder of the legal title to the
created by someone other than the holder
the qualifying educational organization
property to which the interest relates, or
of the power.
and it must be for tuition. No educational
the person in possession of the property
The gift tax may also apply to the
exclusion is allowed for amounts paid for
within 9 months after the later of:
forgiveness of a debt, to interest-free or
books, supplies, room and board, or other
a. the day on which the transfer
below market interest rate loans, to the
similar expenses that do not constitute
creating the interest is made or
assignment of the benefits of an
direct tuition costs. To the extent that the
b. the day on which the disclaimant
insurance policy, to certain property
payment to the educational institution was
reaches age 21.
settlements in divorce cases, and to the
for something other than tuition, it is a gift
3. The disclaimant must not have
giving up of some amount of annuity in
to the individual for whose benefit it was
accepted the interest or any of its
exchange for the creation of a survivor
made, and may be offset by the annual
benefits.
annuity.
exclusion if it is otherwise available.
4. As a result of the refusal, the
Bonds that are exempt from federal
Contributions to a qualified tuition
interest must pass without any direction
income taxes are not exempt from federal
program (QTP) on behalf of a designated
from the disclaimant to either:
gift taxes.
beneficiary do not qualify for the
a. the spouse of the decedent or
Code sections 2701 and 2702 provide
educational exclusion. See Line B —
b. a person other than the
rules for determining whether certain
Qualified Tuition Programs (529 Plans or
disclaimant, and
transfers to a family member of interests
Programs) beginning on page 5.
5. The refusal must be irrevocable
in corporations, partnerships, and trusts
Medical exclusion. The gift tax does not
and unqualified.
are gifts. The rules of section 2704
apply to an amount you paid on behalf of
determine whether the lapse of any voting
an individual to a person or institution that
The 9-month period for making the
or liquidation right is a gift.
provided medical care for the individual.
disclaimer generally is determined
Gifts to your spouse. You must file a
The payment must be to the care
separately for each taxable transfer. For
gift tax return if you made any gift to your
provider. The medical care must meet the
gifts, the period begins on the date the
spouse of a terminable interest that does
requirements of section 213(d) (definition
transfer is a completed transfer for gift tax
not meet the exception described in Life
of medical care for income tax deduction
purposes.
estate with power of appointment on page
purposes). Medical care includes
Annual Exclusion
9 or if your spouse is not a U.S. citizen
expenses incurred for the diagnosis, cure,
and the total gifts you made to your
mitigation, treatment, or prevention of
The first $12,000 of gifts of present
spouse during the year exceed $125,000.
disease, or for the purpose of affecting
interests to each donee during the
You must also file a gift tax return to
any structure or function of the body, or
calendar year is subtracted from total gifts
make the Qualified Terminable Interest
for transportation primarily for and
in figuring the amount of taxable gifts. For
Property (QTIP) election described under
essential to medical care. Medical care
a gift in trust, each beneficiary of the trust
-2-

ADVERTISEMENT

00 votes

Related Articles

Related forms

Related Categories

Parent category: Financial