Form It-1 And Instructions - Inheritance Tax

You must have all of the decedent’s gift tax returns (Form

Instructions for Part 2: Tax computation

709, United States Gift and Generation-Skipping Transfer Tax

Return) before you complete Worksheet TG. The amounts

(page 1 of Form IT-1)

you will enter on Worksheet TG can usually be derived from

In general, the gross estate tax is figured by applying the

these returns as filed. However, if any of the returns were

unified rates shown in Table A, on page 6, to the total of

audited by the IRS, you should use the amounts that were

transfers both during life and at death, and then subtract-

finally determined as a result of the audits.

ing the gift taxes. The result then acts as a limitation to the

In addition, you must include in column b of Worksheet TG

inheritance tax which is figured by subtracting $60,000 from

any gifts in excess of the annual exclusion made by the de-

the taxable estate and applying the rates from Table B, page

cedent (or on behalf of the decedent under a power of attor-

6. Please complete Part 2—Tax computation.

ney) but for which no Forms 709 were filed. You must make

a reasonable inquiry as to the existence of any such gifts. The

Line 1

annual exclusion for 1977 through 1981 was $3,000 per do-

If you elected alternate valuation on line 1, Part 3—Elections

nee per year and $10,000 for years after 1981.

by the executor, enter amount you entered in the “Alternate

For tax years beginning after 1998, the $10,000 exclusion for

value” column of item 12 of Part 5—Recapitulation. Other-

gifts is indexed for inflation. See Rev. Proc. 98-61, 1998-52

wise, enter the amount from the “Value at date of death”

I.R.B. 23

column.

Special treatment of split gifts. These special rules apply

only if:

Line 2

• The decedent’s spouse predeceased the decedent;

Enter the total allowable deductions from page 3, Part 5—

• The decedent’s spouse made gifts that were “split” with

Recapitulation, item 23.

the decedent under the rules of Section 2513;

• The decedent was the “consenting spouse” for those split

Lines 4 (adjusted taxable gifts) and 9 (total gift tax

gifts, as that term is used on Form 709; and

payable)

• The split gifts were included in the decedent’s spouse’s

gross estate under Section 2035.

Three worksheets are provided to help you compute the

entries for these lines. You do not need to file these

If all four conditions above are met, do not include these gifts

worksheets with your return, but you should keep them for

on line 4 of the Part 2—Tax computation and do not include

your records.

the gift taxes payable on these gifts on line 9 of Part 2—Tax

computation. These adjustments are incorporated into the

Worksheet TG—Taxable gifts reconciliation

worksheets.

This worksheet allows you to reconcile the decedent’s life-

time taxable gifts to compute totals that will be used for the

Line 4 Worksheet and the Line 9 Worksheet.

Worksheet TG. Taxable gifts reconciliation

(to be used for lines 4 and 9 of Part 2—Tax computation)

Note: For the definition of a taxable gift see Section 2503. Ignore the old specific exemption. Follow

Form 709. That is, include only the decedent’s one-half of split gifts, whether the gifts were made by

Calendar year or

Total taxable gifts for

the decedent or the decedent’s spouse. In addition to gifts reported on Form 709, you must include

calendar quarter

period (see note)

any taxable gifts in excess of the annual exclusion that were not reported on Form 709.

Taxable amount

Gift tax paid by

included in column b

included in column b for

decedent on gifts in

decedent’s spouse on

for gifts included in the

gifts that qualify for

column d

gifts in column c

gross estate

“special treatment of split

1. Total taxable gifts

made before 1977

gifts” described above

2. Totals for gifts

made after 1976

Have questions? See “Taxpayer assistance.”

Form It-1 And Instructions - Inheritance Tax - 2004 Page 4

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