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not to apply. Reporting a direct skip on a

Subject to an Estate Tax Inclusion Period

Year

Amount

timely filed Form 709 and paying the GST

(ETIP), earlier, and section 2642(f).

1999

$1,010,000

. . . . . . . . . . . . . .

tax on the transfer will prevent an

Part 3—Tax Computation

2000

$1,030,000

. . . . . . . . . . . . . .

automatic allocation.

2001

$1,060,000

. . . . . . . . . . . . . .

You must enter in Part 3 every gift you

Special QTIP election. If you elect QTIP

2002

$1,100,000

. . . . . . . . . . . . . .

listed in Part 1 of Schedule D.

treatment for any gifts in trust listed on

2003

$1,120,000

. . . . . . . . . . . . . .

Schedule A, then on Schedule D you also

2004 and 2005

$1,500,000

. . . . . . . .

Column C

may elect to treat the entire trust as

2006, 2007, and 2008

$2,000,000

. . . .

non-QTIP for purposes of the GST tax.

You are not required to allocate your

2009

$3,500,000

. . . . . . . . . . . . . .

The election must be made for the entire

available exemption. You may allocate

2010 and 2011

$5,000,000

. . . . . . . .

trust that contains the particular gift

some, all, or none of your available

2012

$5,120,000

. . . . . . . . . . . . . .

involved on this return. Be sure to identify

exemption, as you wish, among the gifts

2013

$5,250,000

. . . . . . . . . . . . . .

the item number of the specific gift for

listed in Part 3 of Schedule D. However,

2014

$5,340,000

. . . . . . . . . . . . . .

which you are making this special QTIP

the total exemption claimed in column C

2015

$5,430,000

. . . . . . . . . . . . . .

election.

may not exceed the amount you entered

2016

$5,450,000

. . . . . . . . . . . . . .

on line 3 of Part 2 of Schedule D.

2017

$5,490,000

. . . . . . . . . . . . . .

Line 5

Column D

Enter the amount of GST exemption you

In general, each annual increase can only

are applying to transfers reported in Part 3

Carry your computation to three decimal

be allocated to transfers made (or

of Schedule A.

places (for example, “1.000”).

appreciation occurring) during or after the

year of the transfer.

Section 2632(c) provides an automatic

Part 2—Tax Computation

allocation to indirect skips of any unused

Example. A donor made $1,750,000

GST exemption. The unused exemption is

in GSTs through 2005, and allocated all

(Page 1 of Form 709)

allocated to indirect skips to the extent

$1,500,000 of the exemption to those

necessary to make the inclusion ratio zero

Lines 4 and 5

transfers. In 2017, the donor makes a

for the property transferred. You may elect

$207,000 taxable generation-skipping

To compute the tax for the amount on

out of this automatic allocation as

transfer. The donor can allocate $207,000

line 3 (to be entered on line 4) and the tax

explained in the instructions for Part 3.

of exemption to the 2017 transfer but

for the amount on line 2 (to be entered on

cannot allocate the $3,783,000 of unused

line 5), use the Table for Computing Gift

2017 exemption to pre-2017 transfers.

Line 6

Tax.

However, if in 2005, the donor made a

Line 7

Notice of allocation. You may wish to

$1,750,000 transfer to a trust that was not

allocate GST exemption to transfers not

a direct skip, but from which

The applicable credit (formerly unified

reported on this return, such as a late

generation-skipping transfers could be

credit) amount is the tentative tax on the

allocation.

made in the future, the donor could

applicable exclusion amount. For gifts

To allocate your exemption to such

allocate the increased exemption to the

made in 2017, the applicable exclusion

trust, even though no additional transfers

transfers, attach a statement to this Form

amount equals:

were made to the trust. See Regulations

709 and entitle it “Notice of Allocation.”

The basic exclusion amount of

section 26.2642-4 for the redetermination

The notice must contain the following for

$5,490,000, PLUS

each trust (or other transfer).

of the applicable fraction when additional

Any deceased spousal unused

exemption is allocated to the trust.

Clear identification of the trust,

exclusion (DSUE) amount, PLUS

including the trust's EIN, if known.

Any Restored Exclusion Amount.

Keep a record of your transfers and

If this is a late allocation, the year the

exemption allocations to make sure that

If you are a citizen or resident of the

transfer was reported on Form 709.

any future increases are allocated

United States, you must apply any

The value of the trust assets at the

correctly.

available applicable credit against gift tax.

effective date of the allocation.

Enter on line 1 of Part 2 the maximum

If you are not eligible to use a DSUE

The amount of your GST exemption

GST exemption you are allowed. This will

amount from a predeceased spouse, or

allocated to each gift (or a statement that

not necessarily be the highest indexed

Restored Exclusion Amount on taxable

you are allocating exemption by means of

amount if you made no generation-

gifts made to a same-sex spouse, enter

a formula such as “an amount necessary

skipping transfers during the year of the

$2,141,800 on line 7. Nonresidents not

to produce an inclusion ratio of zero”).

increase.

citizens of the United States may not claim

The inclusion ratio of the trust after the

the applicable credit and should enter zero

The donor can apply this exemption to

allocation.

on line 7.

inter vivos transfers (that is, transfers

Total the exemption allocations and

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

If you are eligible to use a DSUE

enter this total on line 6.

The executor can apply the exemption on

amount from a predeceased spouse or a

Form 706 to transfers taking effect at

Restored Exclusion Amount for taxable

Note. Where the property involved in

death. An allocation is irrevocable.

gifts to a same-sex spouse (or both),

such a transfer is subject to an ETIP

complete Schedule C—Deceased

because it would be includible in the

In the case of inter vivos direct skips, a

Spousal Unused Exclusion (DSUE)

portion of the donor's unused exemption is

donor's estate if the donor died

Amount and enter the amount from line 5

automatically allocated to the transferred

immediately after the transfer (other than

of that schedule on line 7 of Part 2—Tax

property unless the donor elects

by reason of the donor having died within

Computation.

otherwise. To elect out of the automatic

3 years of making the gift), an allocation of

the GST exemption at the time of the

allocation of exemption, you must file

Determine the tentative tax on the

Form 709 and attach a statement to it

transfer will only become effective at the

applicable exclusion amount using the

clearly describing the transaction and the

end of the ETIP. For details, see Transfers

rates in the Table for Computing Gift Tax,

extent to which the automatic allocation is

and enter the result on line 7.

-18-

Instructions For Form 709 - United States Gift (And Generation-Skipping Transfer) Tax Return - 2017 Page 18

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