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than one such joint and survivor annuity,

Column C. If you elected gift splitting,

executor can apply the exemption on

you are not required to make the election

enter half the value of each gift entered in

Form 706 to transfers taking effect at

for all of them. Once made, the election

column B. If you did not elect gift splitting,

death. An allocation is irrevocable.

is irrevocable.

enter zero in column C.

In the case of inter vivos direct skips,

Column E. You are allowed to claim the

a portion of the donor's unused exemption

gift tax annual exclusion currently

is automatically allocated to the

Schedule B—Gifts From

allowable with respect to your reported

transferred property unless the donor

direct skips (other than certain direct skips

Prior Periods

elects otherwise. To elect out of the

to trusts—see Note below), using the

automatic application of exemption, you

If you did not file gift tax returns for

rules and limits discussed earlier for the

must file Form 709 and attach a statement

previous periods, check the “No” box on

gift tax annual exclusion. However, you

to it clearly describing the transaction and

line 11a of Part 1, page 1, and skip to the

must allocate the exclusion on a

the extent to which the automatic

Tax Computation on page 1. (However,

gift-by-gift basis for GST computation

allocation is not to apply. Reporting a

be sure to complete Schedule C, if

purposes. You must allocate the

direct skip on a timely filed Form 709 and

applicable.) If you filed gift tax returns for

exclusion to each gift to the maximum

paying the GST tax on the transfer will

previous periods, check the “Yes” box on

allowable amount and in chronological

qualify as such a statement.

line 11a and complete Schedule B by

order, beginning with the earliest gift that

Special QTIP election. If you have

listing the years or quarters in

qualifies for the exclusion. Be sure that

elected QTIP treatment for any gifts in

chronological order as described below.

you do not claim a total exclusion of more

trust listed on Schedule A, Part 1, then

If you need more space, attach a separate

than $10,000 per donee.

you may make an election on Schedule

sheet using the same format as Schedule

Note: You may not claim any annual

C to treat the entire trust as non-QTIP for

exclusion for a direct skip made to a trust

purposes of the GST tax. The election

If you filed returns for gifts made before

unless the trust meets the requirements

must be made for the entire trust that

1971 or after 1981, show the calendar

discussed under Direct Skip on page 6.

contains the particular gift involved on this

years in column A. If you filed returns for

return. Be sure to identify by item number

Part 2—GST Exemption

gifts made after 1970 and before 1982,

the specific gift for which you are making

show the calendar quarters.

Reconciliation

this special QTIP election.

In column B, identify the Internal

Line 5. You may wish to allocate your

Line 1. Every donor is allowed a lifetime

Revenue Service office where you filed

exemption to transfers made in trust that

GST exemption. The amount of the

the returns. If you have changed your

are not direct skips. For example, if you

exemption is indexed for inflation and is

name, be sure to list any other names

published annually by the IRS in a

transferred property to a trust that has

under which the returns were filed. If there

revenue procedure. For transfers made

your children as its present beneficiaries

was any other variation in the names

through 1998, the GST exemption is $1

and your grandchildren and great-

under which you filed, such as the use of

million. For transfers made in 2000, the

grandchildren as future beneficiaries, the

full given names instead of initials, please

exemption is $1,030,000. For transfers

transfer was not a direct skip because the

explain.

made in 1999, the exemption is

present interests in the trust are held by

nonskip persons. However, future

In column E, show the correct amount

$1,010,000.

terminations and distributions made

(the amount finally determined) of the

The $20,000 increase in 2000 from

from this trust would be subject to the

taxable gifts for each earlier period.

1999 can only be allocated to transfers

GST tax.

See Regulations section 25.2504–2 for

made during or after calendar year 2000.

rules regarding the final determination of

The $10,000 increase in 1999 can only

You may elect to reduce the trust's

the value of a gift.

be allocated to transfers made during or

inclusion ratio by allocating part or all of

after calendar year 1999.

your exemption to the transfer. Because

this transfer would be entered on

Example. A donor had made $1.5 million

Schedule C—Computation of

Schedule A, Part 1, it will not be shown

in GST transfers through 1998 and had

on Schedule C.

allocated all $1 million of the exemption

Generation-Skipping

to those transfers. In 2000, the donor

In other cases you may wish to allocate

Transfer Tax

makes a $5,000 taxable generation-

your exemption to a trust that is not

skipping transfer. The donor can allocate

involved in a transfer listed on Schedule

Part 1—Generation-Skipping

$5,000 of exemption to the 2000 transfer

A or C. For example, if your only gift for

Transfers

but cannot allocate $5,000 of the unused

the year was $10,000 transferred to a

exemption to pre-1999 transfers or

trust that had your children as present

You must enter in Part 1 all of the gifts

$20,000 of the unused exemption to

beneficiaries and your grandchildren as

you listed in Part 2 of Schedule A in that

pre-2000 transfers.

future beneficiaries, you would not be

order and using those same values.

required to file Form 709 for the year.

You should keep a record of your

Column B. Transfers subject to an

However, future distributions from the

transfers and exemption allocations to

ETIP. If you are reporting a

trust or the termination of the trust may

make sure that any future increases are

generation-skipping transfer that occurred

result in GST tax being due. In this case,

allocated correctly.

because of the close of an “estate tax

you may want to allocate GST exemption

inclusion period” (ETIP), complete column

Enter on line 1 of Part 2 the maximum

to the transfer at the time of the transfer.

B for such transfer as follows:

GST exemption you are allowed. This will

To allocate your exemption to such

not necessarily be the highest indexed

1. Provided the GST exemption is

transfers, attach a statement to this Form

amount if you have made no GST transfer

being allocated on a timely filed gift tax

709 and entitle it “Notice of Allocation.”

during the year of the increase. For

return, enter the value as of the close of

You may file one Notice of Allocation and

example, if your last GST transfer was in

the ETIP.

consolidate on it all of your Schedule A,

1998, your maximum GST exemption

2. If the exemption is being allocated

Part 1, transfers, plus all transfers not

would be $1,000,000, not $1,030,000.

after the due date (including extensions)

appearing on Form 709, to which you

The donor can apply this exemption to

for the gift tax return on which the transfer

wish to allocate your exemption. The

inter vivos transfers (i.e., transfers made

should be reported, enter the value as of

notice must contain the following for each

during the donor's life) on Form 709. The

the time the exemption allocation was

trust:

made.

Page 10

Instructions For Form 709 - United States Gift (And Generation-Skipping Transfer) Tax Return - 2000 Page 10

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