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If the donor died during 2006, the

If you buy a U.S. savings bond

Adequate Disclosure

executor must file the donor’s 2006 Form

registered as payable to yourself or the

donee, there is a gift to the donee when

709 not later than the earlier of:

To begin the running of the statute

•

he or she cashes the bond without any

The due date (with extensions) for filing

of limitations regarding a gift, the

obligation to account to you.

the donor’s estate tax return or

gift must be adequately disclosed

CAUTION

•

on Form 709 (or an attached statement)

April 16, 2007, or the extended due

Transfer of Certain Life

filed for the year of the gift.

date granted for filing the donor’s gift tax

Estates Received From

return.

In general, a gift will be considered

adequately disclosed if the return or

Spouse

statement provides the following:

Under this rule, the 2006 Form 709 may

•

If you received a qualified terminable

A description of the transferred

be due before April 16, 2007, if the donor

interest (see Line 12. Election Out of

property and any consideration received

died before July 15, 2006. If the donor

QTIP Treatment of Annuities on page 10)

by the donor;

died after July 14, 2006, the due date

•

from your spouse for which a marital

The identity of, and relationship

(without extensions) is April 16, 2007. If

deduction was elected on your spouse’s

between, the donor and each donee;

no estate tax return is required to be filed,

•

estate or gift tax return, you will be

If the property is transferred in trust, the

the due date for the 2006 Form 709

subject to the gift tax (and GST tax, if

trust’s employer identification number

(without extensions) is April 16, 2007. For

applicable) if you dispose of all or part of

(EIN) and a brief description of the terms

more details, see Regulations section

your life income interest (by gift, sale, or

of the trust (or a copy of the trust

25.6075-1.

otherwise).

instrument in lieu of the description); and

•

Either a qualified appraisal or a detailed

The entire value of the property

Extension of Time To File

description of the method used to

involved less:

determine the fair market value of the gift.

There are two methods of extending the

1. The amount you received on the

time to file the gift tax return. Neither

See Regulations section

disposition and

method extends the time to pay the gift or

301.6501(c)-1(e) and (f) for details,

2. The amount (if any) of the life

GST taxes. If you want an extension of

including what constitutes a qualified

income interest you retained after the

time to pay the gift or GST taxes, you

appraisal, the information required if no

transfer will be treated as a taxable gift.

must request that separately. (See

appraisal is provided, and the information

That portion of the property’s value that is

Regulations section 25.6161-1.)

required for transfers under sections 2701

attributable to the remainder interest is a

and 2702.

gift of a future interest for which no annual

By extending the time to file your

exclusion is allowed. To the extent you

Penalties

income tax return. Any extension of

made a gift of the life income interest, you

time granted for filing your calendar year

may claim an annual exclusion, treating

The law provides for penalties for both

2006 federal income tax return will also

late filing of returns and late payment of

the person to whom you transferred the

automatically extend the time to file your

tax unless you have reasonable cause.

interest as the donee for purposes of

2006 gift tax return. Income tax

computing the annual exclusion.

There are also penalties for valuation

extensions are made by using Form

understatements that cause an

4868, Application for Automatic Extension

underpayment of the tax, willful failure to

of Time To File U.S. Individual Income

file a return on time, and willful attempt to

Specific Instructions

Tax Return or Form 2350, Application for

evade or defeat payment of tax.

Extension of Time To File U.S. Income

The late filing penalty will not be

Tax Return. You may only use these

Part 1—General

imposed if the taxpayer can show that the

forms to extend the time for filing your gift

failure to file a timely return is due to

Information

tax return if you are also requesting an

reasonable cause. Those filing late (after

extension of time to file your income tax

the due date, including extensions)

Lines 12–18. Split Gifts

return.

should attach an explanation to the return

to show reasonable cause.

A married couple may not file a

By filing Form 8892. If you do not

joint gift tax return. However, if

A valuation understatement occurs

request an extension for your income tax

after reading the instructions

when the reported value of property

CAUTION

return, use Form 8892, Application for

below, you and your spouse agree to split

entered on Form 709 is 65% or less of the

Automatic Extension of Time To File

your gifts, you should file both of your

actual value of the property.

Form 709 and/or Payment of Gift/

individual gift tax returns together (that is,

Generation-Skipping Transfer Tax, to

in the same envelope) to help the IRS

Joint Tenancy

request an automatic 6-month extension

process the returns and to avoid

of time to file your federal gift tax return.

If you buy property with your own funds

correspondence from the IRS.

and the title to such property is held by

This form must be used instead of writing

Note. Form 709-A, United States Short

yourself and the donee as joint tenants

a letter to the Cincinnati Service Center to

Form Gift Tax Return, previously used by

with right of survivorship and if either you

request an extension of time to file Form

married couples to report nontaxable gifts

or the donee may give up those rights by

709. In addition to containing an

they consent to split is obsolete.

severing your interest, you have made a

extension request, Form 8892 also serves

gift to the donee in the amount of half the

as a payment voucher (Form 8892-V) for

If you and your spouse agree, all gifts

value of the property.

a balance due on federal gift taxes for

(including gifts of property held with your

which you are extending the time to file.

If you create a joint bank account for

spouse as joint tenants or tenants by the

For more information, see Form 8892 and

yourself and the donee (or a similar kind

entirety) either of you make to third

its instructions.

of ownership by which you can get back

parties during the calendar year will be

the entire fund without the donee’s

considered as made one-half by each of

consent), you have made a gift to the

you if:

•

Where To File

donee when the donee draws on the

You and your spouse were married to

account for his or her own benefit. The

one another at the time of the gift;

File Form 709 at the following address:

•

amount of the gift is the amount that the

If divorced or widowed after the gift,

Internal Revenue Service Center

donee took out without any obligation to

you did not remarry during the rest of the

Cincinnati, OH 45999

repay you.

calendar year;

-4-

Instructions For Form 709 - United States Gift (And Generation-Skipping Transfer) Tax Return - 2006 Page 4

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