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condition, and location of the properties,

the trust instrument to the return on which

Columns E and F. Date and Value

and make all appropriate adjustments.

you report your first transfer to the trust.

of Gift

However, to report subsequent transfers

The value of a gift is the fair market value

The value of all annuities, life estates,

to the trust, you may attach a brief

(FMV) of the property on the date the gift

terms for years, remainders, or reversions

description of the terms of the trust or a

is made (valuation date). The FMV is the

is generally the present value on the date

copy of the trust instrument.

price at which the property would change

of the gift.

Also attach any appraisal used to

hands between a willing buyer and a

determine the value of real estate or other

Sections 2701 and 2702 provide

willing seller, when neither is forced to buy

property.

special valuation rules to determine the

or to sell, and when both have reasonable

amount of the gift when a donor transfers

knowledge of all relevant facts. FMV may

If you do not attach this information,

an equity interest in a corporation or

not be determined by a forced sale price,

Schedule A must include a full explanation

partnership (section 2701) or makes a gift

nor by the sale price of the item in a

of how value was determined.

in trust (section 2702). The rules only

market other than that in which the item is

Part 2—Direct Skips

apply if, immediately after the transfer, the

most commonly sold to the public. The

donor (or an applicable family member)

location of the item must be taken into

List in Part 2 only those gifts that are

holds an applicable retained interest in the

account whenever appropriate.

currently subject to both the gift and GST

corporation or partnership, or retains an

taxes. You must list the gifts in Part 2 in

interest in the trust. For details, see

The FMV of a stock or bond (whether

the chronological order that you made

sections 2701 and 2702, and their

listed or unlisted) is the mean between the

them. Number, describe, and value the

regulations.

highest and lowest selling prices quoted

gifts as described in the instructions for

on the valuation date. If only the closing

Part 1.

Column G. Split Gifts

selling prices are available, then the FMV

If you made a transfer to a trust that

is the mean between the quoted closing

Enter an amount in this column only if you

was a direct skip, list the entire gift as one

selling price on the valuation date and on

have chosen to split gifts with your

line entry in Part 2.

the trading day before the valuation date.

spouse.

If there were no sales on the valuation

Split Gifts—Gifts Made by

Column C. Section 2632(b)

date, figure the FMV as follows.

Spouses

Election

1. Find the mean between the highest

and lowest selling prices on the nearest

If you elected to split gifts with your

If you elect under section 2632(b)(3) to not

trading date before and the nearest

spouse and your spouse has given a

have the automatic allocation rules of

trading date after the valuation date. Both

gift(s) that is being split with you, enter in

section 2632(b) apply to a transfer, enter a

trading dates must be reasonably close to

this area of Part 1 information on the gift(s)

check in column C next to the transfer.

the valuation date.

made by your spouse. If only you made

You also must attach a statement to Form

2. Prorate the difference between

gifts and you are splitting them with your

709 clearly describing the transaction and

mean prices to the valuation date.

spouse, do not make an entry in this area.

the extent to which the automatic

allocation is not to apply. Reporting a

3. Add or subtract (whichever applies)

Generally, if you elect to split your gifts,

direct skip on a timely filed Form 709 and

the prorated part of the difference to or

you must split all gifts made by you and

paying the GST tax on the transfer will

from the mean price figured for the nearest

your spouse to third-party donees. The

qualify as such a statement.

trading date before the actual valuation

only exception is if you gave your spouse

date.

a general power of appointment over a gift

How to report generation-skipping

you made.

transfers after the close of an ETIP. If

If no actual sales were made

you are reporting a generation-skipping

Supplemental Documents

reasonably close to the valuation date,

transfer that was subject to an ETIP

make the same computation using the

To support the value of your gifts, you

(provided the ETIP closed as a result of

mean between the bona fide bid and the

must provide information showing how it

something other than the death of the

asked prices instead of sales prices. If

was determined.

transferor; see Form 706), and you also

actual sales prices or bona fide bid and

are reporting gifts made during the year,

For stock of close corporations or

asked prices are available within a

complete Schedule A as you normally

inactive stock, attach balance sheets,

reasonable period of time before the

would with the transfer subject to an ETIP

particularly the one nearest the date of the

valuation date but not after the valuation

listed on Schedule A, Part 2.

gift, and statements of net earnings or

date, or vice versa, use the mean between

operating results and dividends paid for

Column B. In addition to the

the highest and lowest sales prices or bid

each of the 5 preceding years.

information already requested, describe

and asked prices as the FMV.

the interest that is closing the ETIP,

For each life insurance policy, attach

explain what caused the interest to

Form 712, Life Insurance Statement.

Stock of close corporations or inactive

terminate, and list the year the gift portion

stock must be valued on the basis of net

Note for single premium or paid-up

of the transfer was reported and its item

worth, earnings, earning and dividend

policies. In certain situations, for

number on Schedule A that was originally

capacity, and other relevant factors.

example, where the surrender value of the

filed to report the gift portion of the ETIP

policy exceeds its replacement cost, the

transfer.

Generally, the best indication of the

true economic value of the policy will be

Column E. Give the date the ETIP

value of real property is the price paid for

greater than the amount shown on line 59

closed rather than the date of the initial

the property in an arm's-length transaction

of Form 712. In these situations, report the

gift.

on or before the valuation date. If there

full economic value of the policy on

has been no such transaction, use the

Schedule A. See Rev. Rul. 78-137, 1978-1

Columns F, G, and H. Enter “N/A” in

comparable sales method. In comparing

C.B. 280, for details.

these columns.

similar properties, consider differences in

If the gift was made by means of a

the date of the sale, and the size,

trust, attach a certified or verified copy of

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Instructions For Form 709 - United States Gift (And Generation-Skipping Transfer) Tax Return - 2017 Page 10

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