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Table for Computing Gift Tax

appreciation occurring) during or after the

year of the transfer.

Example. A donor made $1,750,000

Column A

Column B

Column C

Column D

in GSTs through 2005, and allocated all

$1,500,000 of the exemption to those

Rate of tax

transfers. In 2010, the donor makes a

Taxable

Tax on

on excess

$207,000 taxable generation-skipping

amount

amount in

over amount

transfer. The donor can allocate $207,000

over

not over —

Column A

in Column A

of exemption to the 2010 transfer but

- - - - -

$10,000

- - - - -

18%

cannot allocate the $3,293,000 of unused

$10,000

20,000

$1,800

20%

2010 exemption to pre-2010 transfers.

20,000

40,000

3,800

22%

However, if in 2005, the donor made a

40,000

60,000

8,200

24%

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

60,000

80,000

13,000

26%

a direct skip, but from which generation-

skipping transfers could be made in the

80,000

100,000

18,200

28%

future, the donor could allocate the

100,000

150,000

23,800

30%

increased exemption to the trust, even

150,000

250,000

38,800

32%

though no additional transfers were made

to the trust. See Regulations section

250,000

500,000

70,800

34%

26.2642-4 for the redetermination of the

500,000

- - - - - - -

155,800

35%

applicable fraction when additional

exemption is allocated to the trust.

Table of Unified Credits

2. If the GST exemption is being

You should keep a record of your

(as Recalculated for 2010 Rates)

allocated on a late filed (past the due date

transfers and exemption allocations to

including extensions) gift tax return, enter

make sure that any future increases are

Recalculated

the value as of the date the gift tax return

Period

allocated correctly.

Unified Credit

was filed.

Enter on line 1 of Part 2 the maximum

1977 (Quarters 1 and

$6,000

GST exemption you are allowed. This will

Column C

not necessarily be the highest indexed

You are allowed to claim the gift tax

1977 (Quarters 3 and

amount if you made no generation-

$30,000

annual exclusion currently allowable with

skipping transfers during the year of the

respect to your reported direct skips

increase.

1978

$34,000

(other than certain direct skips to

The donor can apply this exemption to

trusts — see Note below), using the rules

1979

$38,000

inter vivos transfers (that is, transfers

and limits discussed earlier for the gift tax

made during the donor’s life) on Form

1980

$42,500

annual exclusion. However, you must

709. The executor can apply the

allocate the exclusion on a gift-by-gift

1981

$47,000

exemption on Form 706 to transfers

basis for GST computation purposes. You

taking effect at death. An allocation is

1982

$62,800

must allocate the exclusion to each gift to

irrevocable.

the maximum allowable amount and in

1983

$79,300

In the case of inter vivos direct skips, a

chronological order, beginning with the

portion of the donor’s unused exemption

earliest gift that qualifies for the exclusion.

1984

$96,300

is automatically allocated to the

Be sure that you do not claim a total

1985

$121,800

transferred property unless the donor

exclusion of more than $13,000 per

elects otherwise. To elect out of the

donee.

1986

$155,800

automatic allocation of exemption, you

must file Form 709 and attach a

Note. You may not claim any annual

1987 through 1997

$190,800

exclusion for a transfer made to a trust

statement to it clearly describing the

1998

$199,550

transaction and the extent to which the

unless the trust meets the requirements

automatic allocation is not to apply.

discussed under Part 2 — Direct Skips.

1999

$208,300

Reporting a direct skip on a timely filed

2000 and 2001

$217,050

Form 709 and paying the GST tax on the

Part 2—GST Exemption

transfer will prevent an automatic

Reconciliation

2002 through 2010

$330,800

allocation.

Line 1

Special QTIP election. If you elect QTIP

treatment for any gifts in trust listed on

Every donor is allowed a lifetime GST

Schedule C. Computation

Schedule A, then on Schedule C you may

exemption. The amount of the exemption

also elect to treat the entire trust as

of GST Tax

for 2010 is $5,000,000. For transfers

non-QTIP for purposes of the GST tax.

made through 1998, the GST exemption

The election must be made for the entire

was $1 million. The exemption amounts

Part 1—Generation-Skipping

trust that contains the particular gift

for 1999 through 2012 are as follows:

Transfers

involved on this return. Be sure to identify

Year

Amount

the item number of the specific gift for

You must enter in Part 1 all of the gifts

1999 . . . . . . . . . $1,010,000

which you are making this special QTIP

you listed in Part 2 of Schedule A, in that

2000 . . . . . . . . . $1,030,000

election.

order and using those same values.

2001 . . . . . . . . . $1,060,000

Column B

Line 5

2002 . . . . . . . . . $1,100,000

If you are reporting a generation-skipping

Enter the amount of GST exemption you

2003 . . . . . . . . . $1,120,000

are applying to transfers reported in Part

transfer that occurred because of the

2004 and 2005 . . . . . $1,500,000

3 of Schedule A.

close of an ETIP, complete column B for

2006, 2007, and 2008 . . . $2,000,000

such transfer as follows:

2009 . . . . . . . . . $3,500,000

Section 2632(c) provides an automatic

1. If the GST exemption is being

2010, 2011, and 2012 . . . $5,000,000

allocation to indirect skips of any unused

allocated on a timely filed (including

GST exemption. The unused exemption

extensions) gift tax return, enter the value

In general, each annual increase can only

is allocated to indirect skips to the extent

as of the close of the ETIP.

be allocated to transfers made (or

necessary to make the inclusion ratio

-14-

Instructions For Form 709 - United States Gift (And Generation-Skipping Transfer) Tax Return - 2010 Page 14

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