Instructions For Form 709 - 2008 (Page 9 of 12) in pdf

If the gift was made by means of a

Part 3—Indirect Skips

Split Gifts—Gifts Made by

trust, attach a certified or verified copy of

Spouse

Some gifts made to trusts are subject only

the trust instrument to the return on which

to gift tax at the time of the transfer but

See this heading under Part I on page 8.

you report your first transfer to the trust.

later may be subject to GST tax. The GST

However, to report subsequent transfers

Part 4—Taxable Gift

tax could apply either at the time of a

to the trust, you may attach a brief

Reconciliation

distribution from the trust, at the

description of the terms of the trust or a

termination of the trust, or both.

copy of the trust instrument.

Line 2

Section 2632(c) defines indirect skips

Also attach any appraisal used to

Enter the total annual exclusions you are

and applies special rules to the allocation

determine the value of real estate or

claiming for the gifts listed on Schedule A.

of GST exemption to such transfers. In

other property.

See Annual Exclusion on page 2. If you

general, an indirect skip is a transfer of

split a gift with your spouse, the annual

property that is subject to gift tax (other

If you do not attach this information,

exclusion you claim against that gift may

than a direct skip) and is made to a GST

you must include in Schedule A full

not be more than the smaller of your half

trust. A GST trust is a trust that could

information to explain how the value was

of the gift or $12,000.

have a generation-skipping transfer with

determined.

respect to the transferor, unless the trust

Deductions

Part 2—Direct Skips

provides for certain distributions of trust

List in Part 2 only those gifts that are

corpus to non-skip persons. See section

Line 4. Marital deduction

currently subject to both the gift and GST

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

Enter on line 4 all of the gifts to your

taxes. You must list the gifts in Part 2 in

List in Part 3 those gifts that are

spouse that you listed on Schedule A and

the chronological order that you made

indirect skips as defined in section

for which you are claiming a marital

them. Number, describe, and value the

2632(c) or may later be subject to GST

deduction. Do not enter any gift that you

gifts as described in the instructions for

tax. This includes indirect skips for which

did not include on Schedule A. On the

Part 1 on page 8.

election (2), described below, will be

dotted line on line 4, indicate which

made in the current year or has been

If you made a transfer to a trust that

numbered items from Schedule A are

made in a previous year. You must list the

was a direct skip, list the entire gift as one

gifts to your spouse for which you are

gifts in Part 3 in the chronological order

line entry in Part 2.

claiming the marital deduction.

that you made them.

Column C. 2632(b) Election

Do not enter on line 4 any gifts to

Column C. 2632(c) Election

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

TIP

your spouse who was not a U.S.

Section 2632(c) provides for the

not have the automatic allocation rules of

citizen at the time of the gift.

automatic allocation of the donor’s

section 2632(b) apply to a transfer, enter

unused GST exemption to indirect skips.

You may deduct all gifts of

a check in column C next to the transfer.

nonterminable interests made during the

This section also sets forth three different

You must also attach a statement to Form

year that you entered on Schedule A

elections you may make regarding the

709 clearly describing the transaction and

regardless of amount, and certain gifts of

allocation of exemption.

the extent to which the automatic

terminable interests as outlined below.

allocation is not to apply. Reporting a

Election 1. You may elect not to have the

direct skip on a timely filed Form 709 and

automatic allocation rules apply to the

Terminable interests. Generally, you

paying the GST tax on the transfer will

current transfer made to a particular

cannot take the marital deduction if the

qualify as such a statement.

trust.

gift to your spouse is a terminable

Election 2. You may elect not to have the

interest. In most instances, a terminable

How to report generation-skipping

automatic rules apply to both the

interest is nondeductible if someone other

transfers after the close of an ETIP. If

current transfer and any and all future

than the donee spouse will have an

you are reporting a generation-skipping

transfers made to a particular trust.

interest in the property following the

transfer that was subject to an ETIP

Election 3. You may elect to treat any

termination of the donee spouse’s

(provided the ETIP closed as a result of

trust as a GST trust for purposes of the

interest. Some examples of terminable

something other than the death of the

automatic allocation rules.

interests are:

transferor; see Form 706), and you are

•

See section 2632(c)(5) for details.

A life estate,

also reporting gifts made during the year,

•

An estate for a specified number of

When to make an election. Election (1)

complete Schedule A as you normally

years, or

is timely made if it is made on a timely

would with the following changes.

•

Any other property interest that after a

filed gift tax return for the year the transfer

Report the transfer subject to an ETIP

period of time will terminate or fail.

was made or was deemed to have been

on Schedule A, Part 2.

made.

If you transfer an interest to your

Column B. In addition to the

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

spouse as sole joint tenant with yourself

information already requested, describe

a timely filed gift tax return for the year for

or as a tenant by the entirety, the interest

the interest that is closing the ETIP;

which the election is to become effective.

is not considered a terminable interest

explain what caused the interest to

just because the tenancy may be

To make one of these elections, check

terminate; and list the year the gift portion

severed.

column C next to the transfer to which the

of the transfer was reported and its item

election applies. You must also attach an

Life estate with power of appointment.

number on Schedule A that was originally

explanation as described below. If you

You may deduct, without an election, a

filed to report the gift portion of the ETIP

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

gift of a terminable interest if all four

transfer.

on which the transfer is not reported,

requirements below are met:

Column E. Give the date the ETIP

simply attach the statement described

1. Your spouse is entitled for life to all

closed rather than the date of the initial

below.

of the income from the entire interest;

gift.

If you are reporting a transfer to a trust

2. The income is paid yearly or more

Columns F, G, and H. Enter “N/A” in

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

often;

these columns.

a previously filed return, do not make an

3. Your spouse has the unlimited

entry in column C for that transfer and do

The value is entered only in Column B

power, while he or she is alive or by will,

not attach a statement.

of Part 1, Schedule C. See Column B on

to appoint the entire interest in all

page 10.

Attachment. You must attach a

circumstances; and

statement to Form 709 that describes the

4. No part of the entire interest is

Split Gifts—Gifts Made by

election you are making and clearly

subject to another person’s power of

Spouse

identifies the trusts and/or transfers to

appointment (except to appoint it to your

See this heading under Part 1 on page 8.

which the election applies.

spouse).

-9-

Instructions For Form 709 - 2008 Page 9

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