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Internal Revenue Service

The Small Business and Work

exclusion is allowed. To the extent that

201 West Rivercenter Boulevard

Opportunity Tax Act of 2007 extended

you transferred the life income interest

Covington, KY 41011

section 6694 income tax return preparer

without receiving any value in return, the

penalties to all tax return preparers,

transfer is a gift, and you may claim an

including gift tax return preparers. Now,

annual exclusion, treating the person to

See the Caution under Lines 12–

gift tax return preparers who prepare any

whom you transferred the interest as the

18. Split Gifts, later, before you

TIP

return or claim for refund with an

donee for purposes of figuring the annual

mail the return.

understatement of tax liability due to willful

exclusion.

or reckless conduct can be penalized

Adequate Disclosure

Specific Instructions

$5,000 or 75% of the fee received (or fee

to be received), whichever is greater, for

To begin the running of the statute

each return. See section 6694, its

of limitations for a gift, the gift

Part 1—General

regulations, and Ann. 2009-15, 2009-11

must be adequately disclosed on

Information

CAUTION

I.R.B. 687, available at

IRS.gov/pub/irs-

Form 709 (or an attached statement) filed

irbs/irb09-11.pdf

for more information.

for the year of the gift.

Lines 4 and 6. Address. Enter your

Joint Tenancy

current mailing address.

In general, a gift will be considered

adequately disclosed if the return or

If you buy property with your own funds

Foreign address. If your address is

statement includes the following.

and the title to the property is held by you

outside of the United States or its

A full and complete Form 709.

and a donee as joint tenants with right of

possessions or territories, enter the

A description of the transferred property

survivorship and if either you or the donee

information as follows: city, province or

and any consideration received by the

may give up those rights by severing your

state, and name of country. Follow the

donor.

interest, you have made a gift to the donee

country's practice for entering the postal

The identity of, and relationship

in the amount of half the value of the

code. Do not abbreviate the country

between, the donor and each donee.

property.

name.

If the property is transferred in trust, the

If you create a joint bank account for

trust's employer identification number

Line 5. Legal residence (domicile). In

yourself and a donee (or a similar kind of

(EIN) and a brief description of the terms

general, your legal residence (also known

ownership by which you can get back the

of the trust (or a copy of the trust

as your domicile) is acquired by living in a

entire fund without the donee's consent),

instrument in lieu of the description).

place, for even a brief period of time, with

you have made a gift to the donee when

Either a qualified appraisal or a detailed

no definite present intention of moving

the donee draws on the account for his or

description of the method used to

from that place.

her own benefit. The amount of the gift is

determine the fair market value of the gift.

Enter the state of the United States

the amount that the donee took out

(including the District of Columbia) or a

See Regulations section

without any obligation to repay you.

foreign country in which you legally reside

301.6501(c)-1(e) and (f) for details,

or are domiciled at the time of the gift.

If you buy a U.S. savings bond

including what constitutes a qualified

registered as payable to yourself or a

appraisal, the information required if no

Line 7. Citizenship. Enter your

donee, there is a gift to the donee when he

appraisal is provided, and the information

citizenship.

or she cashes the bond without any

required for transfers under sections 2701

The term citizen of the United States

obligation to account to you.

and 2702.

includes a person who, at the time of

Transfer of Certain Life

making the gift:

Penalties

Was domiciled in a possession of the

Estates Received From

United States,

Late filing and late payment. Section

Spouse

Was a U.S. citizen, and

6651 imposes penalties for both late filing

Became a U.S. citizen for a reason

and late payment, unless there is

If you received a qualified terminable

other than being a citizen of a U.S.

reasonable cause for the delay.

interest (see Line 12. Election Out of QTIP

possession or being born or residing in a

Treatment of Annuities in the instructions

Reasonable cause determinations. If

possession.

for Schedule A, later) from your spouse for

you receive a notice about penalties after

which a marital deduction was elected on

you file Form 709, send an explanation

Note. A taxpayer is considered a resident

your spouse's estate or gift tax return, you

and we will determine if you meet

of the United States if one of two tests are

will be subject to the gift tax (and GST tax,

reasonable cause criteria. Do not attach

passed. See

IRS.gov/substantial-

if applicable) if you dispose of all or part of

an explanation when you file Form 709.

presence-test

for more information.

your life income interest (by gift, sale, or

There also are penalties for willful

Generally, a resident of the United States

otherwise).

failure to file a return on time, willful

is subject to the same tax rules as citizens.

attempt to evade or defeat payment of tax,

Generally, the entire value of the

A nonresident not a citizen of the

and valuation understatements that cause

property transferred will be treated as a

United States includes a person who, at

an underpayment of the tax. A substantial

taxable gift less:

the time of making the gift:

valuation understatement occurs when the

1. The amount you received (if any)

Was domiciled in a possession of the

reported value of property entered on

for the life income interest, and

United States,

Form 709 is 65% or less of the actual

Was a U.S. citizen, and

2. The amount (if any) determined

value of the property. A gross valuation

Became a U.S. citizen only because he

after the application of section 2702,

understatement occurs when the reported

or she was a citizen of a possession or

valuing certain retained interests at zero,

value listed on the Form 709 is 40% or

was born or resided in a possession.

for the life income interest you retained

less of the actual value of the property.

after the transfer.

Return preparer. Penalties also may be

That portion of the property's value that

applied to tax return preparers, including

is attributable to the remainder interest is a

gift tax return preparers.

gift of a future interest for which no annual

-5-

Instructions For Form 709 - United States Gift (And Generation-Skipping Transfer) Tax Return - 2017 Page 5

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