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The value is entered only in column B

election applies. You also must attach an

donee spouse's interest. Some examples

of Part 1, Schedule D. See Column B,

explanation as described below. If you are

of terminable interests are:

earlier.

making election 2 or 3 on a return on

A life estate,

which the transfer is not reported, simply

An estate for a specified number of

Split Gifts—Gifts Made by

attach the statement described below.

years, or

Spouse

Any other property interest that after a

period of time will terminate or fail.

See this heading under Part 1.

If you are reporting a transfer to a trust

for which election 2 or 3 was made on a

If you transfer an interest to your

Part 3—Indirect Skips

previously filed return, do not make an

spouse as sole joint tenant with yourself or

Some gifts made to trusts are subject only

entry in column C for that transfer and do

as a tenant by the entirety, the interest is

to gift tax at the time of the transfer but

not attach a statement.

not considered a terminable interest just

later may be subject to GST tax. The GST

because the tenancy may be severed.

Attachment. Attach a statement to Form

tax could apply either at the time of a

709 that describes the election you are

Life estate with power of appointment.

distribution from the trust, at the

making and clearly identifies the trusts

You may deduct, without an election, a gift

termination of the trust, or both.

and/or transfers to which the election

of a terminable interest if all four

Section 2632(c) defines indirect skips

applies.

requirements below are met.

and applies special rules to the allocation

Split Gifts—Gifts Made by

1. Your spouse is entitled for life to all

of GST exemption to such transfers. In

of the income from the entire interest.

Spouse

general, an indirect skip is a transfer of

2. The income is paid yearly or more

property that is subject to gift tax (other

See this heading under Part 1.

often.

than a direct skip) and is made to a GST

Part 4—Taxable Gift

trust. A GST trust is a trust that could have

3. Your spouse has the unlimited

a generation-skipping transfer with respect

Reconciliation

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

to the transferor, unless the trust provides

appoint the entire interest in all

Line 1

for certain distributions of trust corpus to

circumstances.

nonskip persons. See section 2632(c)(3)

Enter only gifts of the donor. If gift-splitting

4. No part of the entire interest is

(B) for details.

has been elected, enter only the value of

subject to another person's power of

the gift that is attributable to the spouse

List in Part 3 those gifts that are indirect

appointment (except to appoint it to your

that is filing the return.

skips as defined in section 2632(c) or may

spouse).

later be subject to GST tax. This includes

If either the right to income or the

indirect skips for which election 2,

Line 2

power of appointment given to your

described below, will be made in the

Enter the total annual exclusions you are

spouse pertains only to a specific portion

current year or has been made in a

claiming for the gifts listed on Schedule A.

of a property interest, the marital

previous year. You must list the gifts in

See Annual Exclusion, earlier. If you split a

deduction is allowed only to the extent that

Part 3 in the chronological order that you

gift with your spouse, the annual exclusion

the rights of your spouse meet all four of

made them.

you claim against that gift may not be

the above conditions. For example, if your

more than the smaller of your half of the

spouse is to receive all of the income from

Column C. Section 2632(c)

gift or $14,000.

the entire interest, but only has a power to

Election

appoint one-half of the entire interest, then

Deductions

only one-half qualifies for the marital

Section 2632(c) provides for the automatic

Line 4. Marital Deduction

deduction.

allocation of the donor's unused GST

exemption to indirect skips. This section

A partial interest in property is treated

Enter all of the gifts to your spouse that

also sets forth three different elections you

as a specific portion of an entire interest

you listed on Schedule A and for which

may make regarding the allocation of

only if the rights of your spouse to the

you are claiming a marital deduction. Do

exemption.

income and to the power are a fractional

not enter any gift that you did not include

or percentile share of the entire property

on Schedule A. On the dotted line on

Election 1. You may elect not to have

interest. This means that the interest or

line 4, indicate which numbered items

the automatic allocation rules apply to

share will reflect any increase or decrease

from Schedule A are gifts to your spouse

the current transfer made to a

in the value of the entire property interest.

for which you are claiming the marital

particular trust.

If the spouse is entitled to receive a

deduction.

Election 2. You may elect not to have

specified sum of income annually, the

the automatic rules apply to both the

Do not enter on line 4 any gifts to

capital amount that would produce such a

current transfer and any and all future

your spouse who was not a U.S.

sum will be considered the specific portion

TIP

transfers made to a particular trust.

citizen at the time of the gift.

from which the spouse is entitled to

Election 3. You may elect to treat any

receive the income.

trust as a GST trust for purposes of

the automatic allocation rules.

You may deduct all gifts of

Election to deduct qualified terminable

nonterminable interests made during the

interest property (QTIP). You may elect

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

year that you entered on Schedule A

to deduct a gift of a terminable interest if it

When to make an election. Election 1 is

regardless of amount, and certain gifts of

meets requirements (1), (2), and (4)

timely made if it is made on a timely filed

terminable interests as outlined below.

earlier, even though it does not meet

gift tax return for the year the transfer was

requirement (3).

Terminable interests. Generally, you

made or was deemed to have been made.

cannot take the marital deduction if the gift

You make this election simply by listing

Elections 2 and 3 may be made on a

to your spouse is a terminable interest. In

the qualified terminable interest property

timely filed gift tax return for the year for

most instances, a terminable interest is

on Schedule A and deducting its value

which the election is to become effective.

nondeductible if someone other than the

from Schedule A, Part 4, line 4. You are

donee spouse will have an interest in the

presumed to have made the election for all

To make one of these elections, check

property following the termination of the

qualified property that you both list and

column C next to the transfer to which the

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Instructions For Form 709 - United States Gift (And Generation-Skipping Transfer) Tax Return - 2017 Page 11

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