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the specific portion from which the spouse

your Form 709, complete Schedule C,

Schedule C. Computation

is entitled to receive the income.

and enter on line 10 the total of Schedule

C, Part 3, column H. Otherwise, enter

Election to deduct qualified terminable

of GST Tax

zero on line 10.

interest property (QTIP). You may elect

to deduct a gift of a terminable interest if it

Part 1—Generation-Skipping

Line 12. Election Out of QTIP

meets requirements (1), (2), and (4) on

Treatment of Annuities

Transfers

page 9, even though it does not meet

Section 2523(f)(6) creates an automatic

You must enter in Part 1 all of the gifts

requirement (3).

QTIP election for gifts of joint and survivor

you listed in Part 2 of Schedule A, in that

You make this election simply by

annuities where the spouses are the only

order and using those same values.

listing the qualified terminable interest

possible recipients of the annuity prior to

property on Schedule A and deducting its

Column B

the death of the last surviving spouse.

value from Schedule A, Part 4, line 4. You

If you are reporting a generation-skipping

are presumed to have made the election

The donor spouse can elect out of

transfer that occurred because of the

for all qualified property that you both list

QTIP treatment, however, by checking

close of an ETIP, complete column B for

and deduct on Schedule A. You may not

the box on line 12 and entering the item

such transfer as follows.

make the election on a late filed Form

number from Schedule A for the annuities

1. Provided the GST exemption is

709.

for which you are making the election.

being allocated on a timely filed gift tax

Any annuities entered on line 12 cannot

Line 5

return, enter the value as of the close of

also be entered on line 4 of Schedule A,

Enter the amount of the annual

the ETIP.

Part 4. Any such annuities that are not

exclusions that were claimed for the gifts

2. If the exemption is being allocated

listed on line 12 must be entered on line 4

you listed on line 4.

after the due date (including extensions)

of Part 4, Schedule A. If there is more

for the gift tax return on which the transfer

than one such joint and survivor annuity,

Line 7. Charitable Deduction

should be reported, enter the value as of

you are not required to make the election

You may deduct from the total gifts made

the time the exemption allocation was

for all of them. Once made, the election is

during the calendar year all gifts you gave

made.

irrevocable.

to or for the use of:

•

The United States, a state or political

Column C

subdivision of a state or the District of

Schedule B. Gifts From

You are allowed to claim the gift tax

Columbia, for exclusively public purposes;

•

annual exclusion currently allowable with

Any corporation, trust, community

Prior Periods

respect to your reported direct skips

chest, fund, or foundation organized and

(other than certain direct skips to trusts —

If you did not file gift tax returns for

operated only for religious, charitable,

see Note below), using the rules and

previous periods, check the “No” box on

scientific, literary, or educational

limits discussed earlier for the gift tax

page 1 of Form 709, line 11a of Part 1 —

purposes, or to prevent cruelty to children

annual exclusion. However, you must

General Information and skip to Part 2 —

or animals, or to foster national or

allocate the exclusion on a gift-by-gift

Tax Computation on the same page.

international amateur sports competition

basis for GST computation purposes. You

(However, be sure to complete Schedule

(if none of its activities involve providing

must allocate the exclusion to each gift to

C, if applicable.) If you filed gift tax returns

athletic equipment unless it is a qualified

the maximum allowable amount and in

for previous periods, check the “Yes” box

amateur sports organization), as long as

chronological order, beginning with the

on line 11a and complete Schedule B by

no part of the earnings benefits any one

earliest gift that qualifies for the exclusion.

listing the years or quarters in

person, no substantial propaganda is

Be sure that you do not claim a total

chronological order as described below. If

produced, and no lobbying or

exclusion of more than $12,000 per

you need more space, attach a separate

campaigning for any candidate for public

donee.

sheet using the same format as

office is done;

•

Schedule B.

A fraternal society, order, or

Note. You may not claim any annual

association operating under a lodge

exclusion for a transfer made to a trust

If you filed returns for gifts made

system, if the transferred property is to be

unless the trust meets the requirements

before 1971 or after 1981, show the

used only for religious, charitable,

discussed under Direct skip on page 6.

calendar years in column A. If you filed

scientific, literary, or educational

returns for gifts made after 1970 and

Part 2—GST Exemption

purposes, including the encouragement of

before 1982, show the calendar quarters.

Reconciliation

art and the prevention of cruelty to

In column B, identify the Internal

children or animals; or

•

Revenue Service office where you filed

Line 1

Any war veterans’ organization

the returns. If you have changed your

organized in the United States (or any of

Every donor is allowed a lifetime GST

name, be sure to list any other names

its possessions), or any of its auxiliary

exemption. The amount of the exemption

under which the returns were filed. If

departments or local chapters or posts, as

for 2006 is $2,000,000. For transfers

there was any other variation in the

long as no part of any of the earnings

made through 1998, the GST exemption

names under which you filed, such as the

benefits any one person.

was $1 million. The exemption amounts

use of full given names instead of initials,

for 1999 through 2005 are as follows:

On line 7, show your total charitable,

please explain.

public, or similar gifts (minus annual

Year

Amount

exclusions allowed). On the dotted line,

In column C, enter the amount of

1999 . . . . . . . . . $1,010,000

indicate which numbered items from the

unified credit actually applied in the prior

2000 . . . . . . . . . $1,030,000

top of Schedule A are charitable gifts.

period. If you are required to reduce your

2001 . . . . . . . . . $1,060,000

allowable unified credit because of gifts

Line 10. GST Tax

2002 . . . . . . . . . $1,100,000

you made after September 8, 1976, and

2003 . . . . . . . . . $1,120,000

If you will pay GST tax with this return on

before January 1, 1977, enter the unified

2004 and 2005 . . . . . $1,500,000

any direct skips reported on this return,

credit determined after the reduction.

the amount of that GST tax is also

In column E, show the correct amount

In general, each annual increase can only

considered a gift and must be added to

(the amount finally determined) of the

be allocated to transfers made (or

your other gifts reported on this return.

taxable gifts for each earlier period.

appreciation occurring) during or after the

If you entered gifts on Part 2, or if you

year of the transfer.

and your spouse elected gift splitting and

See Regulations section 25.2504-2 for

your spouse made gifts subject to the

rules regarding the final determination of

Example. A donor made $1,750,000

GST tax that you are required to show on

the value of a gift.

in GSTs through 2005, and allocated all

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Instructions For Form 709 - United States Gift (And Generation-Skipping Transfer) Tax Return - 2006 Page 10

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