Instructions For Form 709 - 2007 (Page 8 of 12) in pdf

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Example 3. You establish a trust that

Series number, if there is more than

selling prices quoted on the valuation

is required to accumulate income for 10

one issue;

date. If only the closing selling prices are

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years and then pay its income to your

Exchanges where listed or, if unlisted,

available, then the fair market value is the

grandchildren for their lives and upon

give the location of the principal business

mean between the quoted closing selling

their deaths distribute the corpus to their

office of the corporation; and

price on the valuation date and on the

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children. Because the trust has no current

CUSIP number. The CUSIP number is

trading day before the valuation date. To

beneficiaries, there are no present

a nine-digit number assigned by the

figure the fair market value if there were

interests in the property transferred to the

American Banking Association to traded

no sales on the valuation date, see the

trust. All of the persons to whom the trust

securities.

instructions for Schedule B of Form 706.

can make future distributions (including

For stocks:

Stock of close corporations or inactive

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distributions upon the termination of

Give number of shares;

stock must be valued on the basis of net

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interests in property held in trust) are skip

State whether common or preferred;

worth, earnings, earning and dividend

persons (that is, your grandchildren and

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If preferred, give the issue, par value,

capacity, and other relevant factors.

great-grandchildren). Therefore, the trust

quotation at which returned, and exact

Generally, the best indication of the

itself is a skip person and you should list

name of corporation;

value of real property is the price paid for

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the gift in Part 2 of Schedule A.

If unlisted on a principal exchange, give

the property in an arm’s-length

Example 4. You establish a trust

the location of the principal business

transaction on or before the valuation

office of the corporation, the state in

that pays all of its income to your

date. If there has been no such

grandchildren for 10 years. At the end of

which incorporated, and the date of

transaction, use the comparable sales

10 years, the corpus is to be distributed to

incorporation;

method. In comparing similar properties,

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your children. Since for this purpose

If listed, give principal exchange; and

consider differences in the date of the

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interests in trusts are defined only as

CUSIP number.

sale, and the size, condition, and location

present interests, all of the interests in

For interests in property based on the

of the properties, and make all

this trust are held by skip persons (the

length of a person’s life, give the date of

appropriate adjustments.

children’s interests are future interests).

birth of the person. If you transfer any

The value of all annuities, life estates,

Therefore, the trust is a skip person and

interest in a closely held entity, provide

terms for years, remainders, or reversions

you should list the entire amount you

the EIN of the entity.

is generally the present value on the date

transferred to the trust in Part 2 of

For life insurance policies, give the

of the gift.

Schedule A even though some of the

name of the insurer and the policy

trust’s ultimate beneficiaries are nonskip

Sections 2701 and 2702 provide

number.

persons.

special valuation rules to determine the

Clearly identify in the description

amount of the gift when a donor transfers

Part 1—Gifts Subject Only to

column which gifts create the opening of

an equity interest in a corporation or

Gift Tax

an ETIP as described under Transfers

partnership (section 2701) or makes a gift

Subject to an Estate Tax Inclusion Period

List in Part 1 gifts subject only to the gift

in trust (section 2702). The rules only

tax. Generally, all of the gifts you made to

(ETIP) on page 3. Describe the interest

apply if, immediately after the transfer, the

your spouse (that are required to be

that is creating the ETIP. An allocation of

donor (or an applicable family member)

listed, as described earlier), to your

GST exemption to property subject to an

holds an applicable retained interest in

ETIP that is made prior to the close of the

children, and to charitable organizations

the corporation or partnership, or retains

ETIP becomes effective no earlier than

are not subject to the GST tax and

an interest in the trust. For details, see

the date of the close of the ETIP. See the

should, therefore, be listed only in Part 1.

sections 2701 and 2702, and their

instructions for Schedule C under

regulations.

Group the gifts in four categories:

Schedule C. Computation of GST Tax

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Gifts made to your spouse,

Column G. Split Gifts

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beginning on page 10.

Gifts made to third parties that are to

Enter an amount in this column only if you

be split with your spouse,

Column D. Donor’s Adjusted Basis

have chosen to split gifts with your

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Charitable gifts (if you are not splitting

of Gifts

spouse.

gifts with your spouse), and

Show the basis you would use for income

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Split Gifts—Gifts Made by

Other gifts.

tax purposes if the gift were sold or

If a transfer results in gifts to two or more

Spouse

exchanged. Generally, this means cost

individuals (such as a life estate to one

plus improvements, less applicable

If you elected to split gifts with your

with remainder to the other), list the gift to

depreciation, amortization, and depletion.

spouse and your spouse has given a

each separately.

gift(s) that is being split with you, enter in

For more information on adjusted

Number and describe all gifts

this area of Part 1 information on the

basis, see Pub. 551, Basis of Assets.

(including charitable, public, and similar

gift(s) made by your spouse. If only you

Columns E and F. Date and Value

gifts) in the columns provided in

made gifts and your are splitting them

Schedule A.

of Gift

with your spouse, do not make an entry in

this area.

The value of a gift is the fair market value

Column B

of the property on the date the gift is

Generally, if you elect to split your

Describe each gift in enough detail so that

made. The fair market value is the price

gifts, you must split all gifts made by you

the property can be easily identified, as

at which the property would change

and your spouse to third-party donees.

explained below.

hands between a willing buyer and a

The only exception is if you gave your

For real estate, give:

willing seller, when neither is forced to

spouse a general power of appointment

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A legal description of each parcel;

buy or to sell, and when both have

over a gift you made.

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The street number, name, and area if

reasonable knowledge of all relevant

Supplemental Documents

the property is located in a city; and

facts. Fair market value may not be

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A short statement of any improvements

determined by a forced sale price, nor by

To support the value of your gifts, you

made to the property.

the sale price of the item in a market

must provide information showing how it

other than that in which the item is most

was determined.

For bonds, give:

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commonly sold to the public. The location

The number of bonds transferred;

For stock of close corporations or

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of the item must be taken into account

The principal amount of each bond;

inactive stock, attach balance sheets,

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whenever appropriate.

Name of obligor;

particularly the one nearest the date of

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Date of maturity;

The fair market value of a stock or

the gift, and statements of net earnings or

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Rate of interest;

bond (whether listed or unlisted) is the

operating results and dividends paid for

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Date or dates when interest is payable;

mean between the highest and lowest

each of the 5 preceding years.

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Instructions For Form 709 - 2007 Page 8

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