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Transfer of Certain Life

GST taxes. If you want an extension of

required for transfers under sections 2701

time to pay the gift or GST taxes, you

and 2702.

Estates Received From

must request that separately. (See

Spouse

Regulations section 25.6161-1.)

Penalties

By extending the time to file your

If you received a qualified terminable

The law provides for penalties for both

income tax return. Any extension of

interest (see Line 12. Election Out of

late filing of returns and late payment of

time granted for filing your calendar year

QTIP Treatment of Annuities, later) from

tax unless you have reasonable cause.

2010 federal income tax return will also

your spouse for which a marital deduction

automatically extend the time to file your

was elected on your spouse’s estate or

The late filing penalty will not be

2010 gift tax return. Income tax

gift tax return, you will be subject to the

imposed if the taxpayer can show that the

extensions are made by using Form

gift tax (and GST tax, if applicable) if you

failure to file a timely return is due to

4868, Application for Automatic Extension

dispose of all or part of your life income

reasonable cause. Those filing late (after

of Time To File U.S. Individual Income

interest (by gift, sale, or otherwise).

the due date, including extensions)

Tax Return, or Form 2350, Application for

should attach an explanation to the return

Generally, the entire value of the

Extension of Time To File U.S. Income

to show reasonable cause.

property involved less:

Tax Return. You may only use these

1. The amount you received (if any)

forms to extend the time for filing your gift

There are also penalties for valuation

for the life income interest, and

tax return if you are also requesting an

understatements that cause an

2. The amount (if any) determined

extension of time to file your income tax

underpayment of the tax, willful failure to

after the application of section 2702,

return.

file a return on time, and willful attempt to

valuing certain retained interests at zero,

evade or defeat payment of tax. A

By filing Form 8892. If you do not

for the life income interest you retained

valuation understatement occurs when

request an extension for your income tax

after the transfer will be treated as a

the reported value of property entered on

return, use Form 8892, Application for

taxable gift.

Form 709 is 65% or less of the actual

Automatic Extension of Time To File

value of the property.

That portion of the property’s value that is

Form 709 and/or Payment of Gift/

attributable to the remainder interest is a

Generation-Skipping Transfer Tax, to

Return preparer. The law also provides

gift of a future interest for which no annual

request an automatic 6-month extension

for the application of income tax return

exclusion is allowed. To the extent you

of time to file your federal gift tax return.

preparer penalties to all tax return

made a gift of the life income interest, you

In addition to containing an extension

preparers, including gift tax return

may claim an annual exclusion, treating

request, Form 8892 also serves as a

preparers.

the person to whom you transferred the

payment voucher (Form 8892-V) for a

interest as the donee for purposes of

balance due on federal gift taxes for

The Small Business and Work

computing the annual exclusion.

which you are extending the time to file.

Opportunity Tax Act of 2007 amended

For more information, see Form 8892.

section 6694 to extend the application of

income tax return preparer penalties to all

Specific Instructions

Where To File

tax return preparers, including gift tax

return preparers. Under the amended

File Form 709 at the following address:

Part 1—General

provision, gift tax return preparers who

Department of the Treasury

prepare any return or claim for refund that

Information

Internal Revenue Service Center

reflects an understatement of tax liability

Cincinnati, OH 45999

due to willful or reckless conduct are

Lines 4 and 6. Address. Enter your

subject to a penalty of $5,000 or 50% of

See the Caution under Lines 12 –

current mailing address.

the income derived (or income to be

18. Split Gifts, later, before you

TIP

Foreign address. If your address is

derived), whichever is greater, for the

mail the return.

outside of the United States or its

preparation of each such return. See

possessions or territories, enter the

section 6694, the regulations thereunder,

Adequate Disclosure

information as follows: city, province or

and Ann. 2009-15, 2009-11 I.R.B. 687 for

state, and name of country. Follow the

more information.

country’s practice for entering the postal

To begin the running of the statute

code. Do not abbreviate the country

of limitations regarding a gift, the

Joint Tenancy

name.

gift must be adequately disclosed

CAUTION

on Form 709 (or an attached statement)

Line 5. Legal residence (domicile). In

If you buy property with your own funds

filed for the year of the gift.

general, your legal residence (also known

and the title to the property is held by

as your domicile) is acquired by living in a

yourself and a donee as joint tenants with

In general, a gift will be considered

place, for even a brief period of time, with

right of survivorship and if either you or

adequately disclosed if the return or

no definite present intention of moving

the donee may give up those rights by

statement provides the following:

from that place.

•

severing your interest, you have made a

A description of the transferred

gift to the donee in the amount of half the

Enter one of the states of the United

property and any consideration received

value of the property.

States (including the District of Columbia)

by the donor;

•

or a foreign country in which you legally

The identity of, and relationship

If you create a joint bank account for

between, the donor and each donee;

reside or are domiciled at the time of the

yourself and a donee (or a similar kind of

•

If the property is transferred in trust, the

gift.

ownership by which you can get back the

trust’s employer identification number

Line 7. Citizenship. Enter your

entire fund without the donee’s consent),

(EIN) and a brief description of the terms

citizenship.

you have made a gift to the donee when

of the trust (or a copy of the trust

The term “citizen of the United States”

the donee draws on the account for his or

instrument in lieu of the description); and

includes a person who, at the time of

her own benefit. The amount of the gift is

•

Either a qualified appraisal or a detailed

making the gift:

the amount that the donee took out

description of the method used to

•

Was domiciled in a possession of the

without any obligation to repay you.

determine the fair market value of the gift.

United States,

•

See Regulations section

If you buy a U.S. savings bond

Was a U.S. citizen, and

•

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

registered as payable to yourself or a

Became a U.S. citizen for a reason

including what constitutes a qualified

donee, there is a gift to the donee when

other than being a citizen of a U.S.

appraisal, the information required if no

he or she cashes the bond without any

possession or being born or residing in a

appraisal is provided, and the information

obligation to account to you.

possession.

-4-

Instructions For Form 709 - United States Gift (And Generation-Skipping Transfer) Tax Return - 2010 Page 4

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