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donor, the holder of the legal title to the

2. All remaining property and its

Transfers Subject to an “Estate

property to which the interest relates, or

income must pass to the minor on the

Tax Inclusion Period”

the person in possession of the property

minor’s 21st birthday; and

Certain transfers that are direct skips

within 9 months after the later of (a) the

3. If the minor dies before the age of

receive special treatment. If the

day on which the transfer creating the

21, the property and its income will be

transferred property would have been

interest is made or (b) the day on which

payable either to the minor’s estate or to

includible in the donor’s estate if the

the disclaimant reaches age 21;

whomever the minor may appoint under a

donor had died immediately after the

3. The disclaimant must not have

general power of appointment.

transfer (for a reason other than the donor

accepted the interest or any of its

The gift of a present interest to more

having died within 3 years of making the

benefits;

than one donee as joint tenants qualifies

gift), the direct skip will be treated as

4. As a result of the refusal, the

for the annual exclusion for each donee.

having been made at the end of the

interest must pass without any direction

estate tax inclusion period (ETIP) rather

from the disclaimant to either (a) the

Nonresident Aliens

than at the time of the actual transfer.

spouse of the decedent or (b) a person

Nonresident aliens are subject to gift and

other than the disclaimant; and

For example, if A transferred her

GST taxes for gifts of tangible property

5. The refusal must be irrevocable

house to her granddaughter, B, but

situated in the United States. Under

and unqualified.

retained the right to live in the house until

certain circumstances, they are also

her death (a retained life estate), the

The 9-month period for making the

subject to gift and GST taxes for gifts of

value of the house would be includible in

disclaimer generally is determined

intangible property. (See section

A’s estate if she died while still holding

separately for each taxable transfer. For

2501(a).)

the life estate. In this case, the transfer to

gifts, the period begins on the date the

B is a completed gift (it is a transfer of a

transfer is a completed transfer for gift tax

If you are a nonresident alien who

future interest) and must be reported on

purposes.

made a gift subject to gift tax, you must

Part 1 of Schedule A. The GST portion of

file a gift tax return if: (a) you gave any

Annual Exclusion

the transfer would not be reported until A

gifts of future interests; or (b) your gifts of

died or otherwise gave up her life estate

The first $11,000 of gifts of present

present interests to any donee other than

in the house.

interests to each donee during the

your spouse total more than $11,000; or

calendar year is subtracted from total gifts

Report the gift portion of such a

in figuring the amount of taxable gifts. For

is not a U.S. citizen total more than

transfer in Schedule A, Part 1, at the time

a gift in trust, each beneficiary of the trust

$112,000.

of the actual transfer. Report the GST

is treated as a separate donee for

portion in Schedule A, Part 2, but only at

purposes of the annual exclusion.

Transfers Subject to the

the close of the ETIP. Use Form 709 only

Generation-Skipping Transfer

to report those transfers where the ETIP

All of the gifts made during the

Tax

closed due to something other than the

calendar year to a donee are fully

donor’s death. (If the ETIP closed as the

excluded under the annual exclusion if

You must report on Form 709 the GST

result of the donor’s death, report the

they are all gifts of present interests and

tax imposed on inter vivos direct skips. An

transfer on Form 706.)

they total $11,000 or less.

inter vivos direct skip is a transfer made

during the donor’s lifetime that is: (a)

Note: For gifts made to spouses who are

If you are filing this Form 709 solely to

subject to the gift tax; (b) of an interest in

not U.S. citizens, the annual exclusion

report the GST portion of transfers

property; and (c) made to a skip person.

has been increased to $112,000,

subject to an ETIP, complete the form as

(See page 6.)

provided the additional (above the

you normally would with the following

$11,000 annual exclusion) $101,000 gift

exceptions:

A transfer is subject to the gift tax if it

would otherwise qualify for the gift tax

1. Write “ETIP” at the top of page 1;

is required to be reported on Schedule A

marital deduction (as described in the line

2. Complete only lines 1 – 6, 8, and 9

of Form 709 under the rules contained in

4 instructions on page 9).

of Part 1, General Information;

the gift tax portions of these instructions,

A gift of a future interest cannot be

3. Complete Schedule A, Part 2, as

including the split gift rules. Therefore,

explained in the instructions for that

excluded under the annual exclusion.

transfers made to political organizations,

schedule on page 9;

transfers that qualify for the medical or

A gift is considered a present interest if

4. Complete Schedule C. Complete

educational exclusions, transfers that are

the donee has all immediate rights to the

Column B of Schedule C, Part 1, as

fully excluded under the annual exclusion,

use, possession, and enjoyment of the

explained in the instructions for that

and most transfers made to your spouse

property or income from the property.

schedule on page 10;

are not subject to the GST tax.

A gift is considered a future interest if

5. Complete only lines 10 and 11 of

the donee’s rights to the use, possession,

Schedule A, Part 4; and

Transfers subject to the GST tax are

and enjoyment of the property or income

6. Complete Part 2 — Tax

described in further detail in the

from the property will not begin until some

Computation.

instructions beginning on page 6.

future date. Future interests include

Important: Certain transfers, particularly

reversions, remainders, and other similar

Section 2701 Elections

interests or estates.

transfers to a trust, that are not subject to

The special valuation rules of section

gift tax and are therefore not subject to

Note: A contribution to a qualified tuition

2701 contain three elections that you

the GST tax on Form 709 may be subject

plan on behalf of a designated beneficiary

must make with Form 709.

to the GST tax at a later date. This is true

is considered a gift of a present interest.

even if the transfer is less than the

1. A transferor may elect to treat a

A gift to a minor is considered a

$11,000 annual exclusion. In this

qualified payment right he or she holds

present interest if all of the following

instance, you may want to apply a GST

(and all other rights of the same class) as

conditions are met:

exemption amount to the transfer on this

other than a qualified payment right.

1. Both the property and its income

return or on a Notice of Allocation. For

2. A person may elect to treat a

may be expended by, or for the benefit of,

more information, see Part 3 — Indirect

distribution right held by that person in a

the minor before the minor reaches age

Skips on page 9 and Part 2 — GST

controlled entity as a qualified payment

21;

Exemption Reconciliation on page 11.

right.

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Instructions For Form 709 - United States Gift (And Generation-Skipping Transfer) Tax Return - 2003 Page 3

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