Instructions For Form 709 - 2007 (Page 9 of 12) in pdf

For each life insurance policy, attach

Column E. Give the date the ETIP

on which the transfer is not reported,

Form 712, Life Insurance Statement.

closed rather than the date of the initial

simply attach the statement described

gift.

below.

Note for single premium or paid-up

If you are reporting a transfer to a trust

Columns F, G, and H. Enter “N/A” in

policies. In certain situations, for

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

these columns.

example, where the surrender value of

a previously filed return, do not make an

the policy exceeds its replacement cost,

The value is entered only in Column B

entry in column C for that transfer and do

the true economic value of the policy will

of Part 1, Schedule C. See Column B on

not attach a statement.

be greater than the amount shown on line

page 10.

59 of Form 712. In these situations, report

Attachment. You must attach a

Split Gifts—Gifts Made by

the full economic value of the policy on

statement to Form 709 that describes the

Spouse

Schedule A. See Rev. Rul. 78-137,

election you are making and clearly

1978-1 C.B. 280 for details.

identifies the trusts and/or transfers to

See this heading under Part 1 on page 8.

which the election applies.

If the gift was made by means of a

Part 3—Indirect Skips

trust, attach a certified or verified copy of

Split Gifts—Gifts Made by

Some gifts made to trusts are subject only

the trust instrument to the return on which

Spouse

to gift tax at the time of the transfer but

you report your first transfer to the trust.

later may be subject to GST tax. The GST

See this heading under Part I on page 8.

However, to report subsequent transfers

tax could apply either at the time of a

to the trust, you may attach a brief

Part 4—Taxable Gift

distribution from the trust, at the

description of the terms of the trust or a

Reconciliation

termination of the trust, or both.

copy of the trust instrument.

Section 2632(c) defines indirect skips

Also attach any appraisal used to

Line 2

and applies special rules to the allocation

determine the value of real estate or

Enter the total annual exclusions you are

of GST exemption to such transfers. In

other property.

claiming for the gifts listed on Schedule A.

general, an indirect skip is a transfer of

If you do not attach this information,

See Annual Exclusion on page 2. If you

property that is subject to gift tax (other

you must include in Schedule A full

split a gift with your spouse, the annual

than a direct skip) and is made to a GST

information to explain how the value was

exclusion you claim against that gift may

trust. A GST trust is a trust that could

determined.

not be more than the smaller of your half

have a generation-skipping transfer with

of the gift or $12,000.

respect to the transferor, unless the trust

Part 2—Direct Skips

provides for certain distributions of trust

Deductions

List in Part 2 only those gifts that are

corpus to non-skip persons. See section

currently subject to both the gift and GST

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

Line 4. Marital deduction

taxes. You must list the gifts in Part 2 in

List in Part 3 those gifts that are

the chronological order that you made

Enter on line 4 all of the gifts to your

indirect skips as defined in section

them. Number, describe, and value the

spouse that you listed on Schedule A and

2632(c) or may later be subject to GST

gifts as described in the instructions for

for which you are claiming a marital

tax. This includes indirect skips for which

Part 1 on page 8.

deduction. Do not enter any gift that you

election (2), described below, will be

did not include on Schedule A. On the

If you made a transfer to a trust that

made in the current year or has been

dotted line on line 4, indicate which

was a direct skip, list the entire gift as one

made in a previous year. You must list the

numbered items from Schedule A are

line entry in Part 2.

gifts in Part 3 in the chronological order

gifts to your spouse for which you are

that you made them.

Column C. 2632(b) Election

claiming the marital deduction.

Column C. 2632(c) Election

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

Do not enter on line 4 any gifts to

not have the automatic allocation rules of

Section 2632(c) provides for the

TIP

your spouse who was not a U.S.

section 2632(b) apply to a transfer, enter

automatic allocation of the donor’s

citizen at the time of the gift.

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

This section also sets forth three different

nonterminable interests made during the

709 clearly describing the transaction and

elections you may make regarding the

year that you entered on Schedule A

the extent to which the automatic

allocation of exemption.

regardless of amount, and certain gifts of

allocation is not to apply. Reporting a

Election 1. You may elect not to have the

terminable interests as outlined below.

direct skip on a timely filed Form 709 and

automatic allocation rules apply to the

paying the GST tax on the transfer will

Terminable interests. Generally, you

current transfer made to a particular

qualify as such a statement.

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

transfers after the close of an ETIP. If

interest. In most instances, a terminable

automatic rules apply to both the

you are reporting a generation-skipping

current transfer and any and all future

interest is nondeductible if someone other

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.

•

complete Schedule A as you normally

A life estate,

When to make an election. Election (1)

•

would with the following changes.

An estate for a specified number of

is timely made if it is made on a timely

years, or

filed gift tax return for the year the transfer

Report the transfer subject to an ETIP

•

Any other property interest that after a

was made or was deemed to have been

on Schedule A, Part 2.

period of time will terminate or fail.

made.

Column B. In addition to the

If you transfer an interest to your

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

information already requested, describe

spouse as sole joint tenant with yourself

a timely filed gift tax return for the year for

the interest that is closing the ETIP;

or as a tenant by the entirety, the interest

which the election is to become effective.

explain what caused the interest to

is not considered a terminable interest

terminate; and list the year the gift portion

To make one of these elections, check

just because the tenancy may be

of the transfer was reported and its item

column C next to the transfer to which the

severed.

number on Schedule A that was originally

election applies. You must also attach an

filed to report the gift portion of the ETIP

explanation as described below. If you

Life estate with power of appointment.

transfer.

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

You may deduct, without an election, a

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Instructions For Form 709 - 2007 Page 9

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