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portion of the election, you do not need to

Column G of Part 1, 2, or 3 of Schedule

Gifts Subject to Both Gift

file or otherwise report that year’s portion.

and GST Taxes

Note: Contributions to qualified tuition

Gifts made by spouse. If you elected

programs do not qualify for the

gift splitting and your spouse made gifts,

Definitions

educational exclusion.

list those gifts in the space below “Gifts

Direct skip. The GST tax you must

made by spouse” in Part 1, 2, or 3. Report

How To Complete Parts 1, 2,

report on Form 709 is that imposed only

these gifts in the same way you report

and 3

on inter vivos direct skips. An “inter vivos

gifts you made.

direct skip” is a transfer that (a) is subject

After you determine which gifts you made

Gifts to Your Spouse

to the gift tax, (b) is of an interest in

are subject to the gift tax and therefore

property, and (c) is made to a skip

Except for the gifts described below, you

should be listed on Schedule A, you must

person. All three requirements must be

do not need to enter any of your gifts to

divide these gifts between (a) Part 1 —

met before the gift is subject to the GST

your spouse on Schedule A.

those subject only to the gift tax (gifts

tax.

made to nonskip persons — see page 8),

Terminable interest. Terminable

(b) Part 2 — those subject to both the gift

A gift is “subject to the gift tax” if you

interests are defined in the instructions to

and GST taxes (gifts made to skip

are required to list it on Schedule A of

line 4 of Part 4. If all the terminable

persons — see below), and (c) Part 3 —

Form 709. However, if you make a

interests you gave to your spouse qualify

those subject only to the gift tax at this

nontaxable gift (which is a direct skip) to a

as life estates with power of appointment

time but which could later be subject to

trust for the benefit of an individual, this

(defined on page 9) you do not need to

GST tax (gifts that are indirect skips —

transfer is subject to the GST tax unless:

enter any of them on Schedule A.

see page 9).

1. During the lifetime of the

However, if you gave your spouse any

If you need more space, attach a

beneficiary, no corpus or income may be

terminable interest that does not qualify

separate sheet using the same format as

distributed to anyone other than the

as a life estate with power of

beneficiary, and

Schedule A.

appointment, you must report on

2. If the beneficiary dies before the

Schedule A all gifts of terminable interests

Use the following guidelines

termination of the trust, the assets of the

you made to your spouse during the year.

when entering gifts on

trust will be included in the gross estate of

TIP

Charitable remainder trusts. If you

Schedule A:

the beneficiary.

make a gift to a charitable remainder trust

•

and your spouse is the only noncharitable

Note: If the property transferred in the

Enter a gift only once — in Part 1,

beneficiary (other than yourself), the

direct skip would have been includible in

Part 2, or Part 3;

interest you gave to your spouse is not

•

the donor’s estate if the donor had died

Do not enter any gift or part of a gift

considered a terminable interest and,

immediately after the transfer, see

that qualified for the political

therefore, should not be shown on

Transfers Subject to an “Estate Tax

organization, educational, or

Schedule A. For definitions and rules

Inclusion Period” on page 3.

medical exclusion;

concerning these trusts, see section

•

To determine if a gift “is of an interest

Enter gifts under “Gifts made by

2056(b)(8)(B) and Regulations section

in property” and “is made to a skip

spouse” only if you have chosen to

20.2055-2.

person,” you must first determine if the

split gifts with your spouse and your

Future interest. Generally, you should

donee is a “natural person” or a “trust” as

spouse is required to file a Form

not report a gift of a future interest to your

defined below.

709 (see page 5);

spouse unless the future interest is also a

•

Trust. For purposes of the GST tax, trust

In column F, enter the full value of

terminable interest that is required to be

includes not only an explicit trust, but also

the gift (including those made by

reported as described above. However, if

any other arrangement (other than an

your spouse, if applicable). If you

you gave a gift of a future interest to your

estate) that although not explicitly a trust,

have chosen to split gifts, that

spouse and you are required to report the

has substantially the same effect as a

one-half portion of the gift is entered

gift on Form 709 because you gave the

trust. For example, trust includes life

in column G.

present interest to a donee other than

estates with remainders, terms for years,

your spouse, then you should enter the

Gifts to Donees Other Than

and insurance and annuity contracts. A

entire gift, including the future interest

Your Spouse

transfer of property that is conditional on

given to your spouse, on Schedule A. You

the occurrence of an event is a transfer in

You must always enter all gifts of future

should use the rules under Gifts Subject

trust.

interests that you made during the

to Both Gift and GST Taxes, below, to

calendar year regardless of their value.

Interest in property. If a gift is made to a

determine whether to enter the gift on

“natural person,” it is always considered a

No gift splitting. If the total gifts of

Schedule A, Part 1, Part 2, or Part 3.

gift of an interest in property for purposes

present interests to any donee are more

Spouses who are not U.S. citizens. If

of the GST tax.

than $11,000 in the calendar year, then

your spouse is not a U.S. citizen and you

you must enter all such gifts that you

If a gift is made to a trust, a natural

gave him or her a gift of a future interest,

made during the year to or on behalf of

person will have an interest in the

you must report on Schedule A all gifts to

that donee, including those gifts that will

property transferred to the trust if that

your spouse for the year. If all gifts to your

be excluded under the annual exclusion.

person either has a present right to

spouse were present interests, do not

If the total is $11,000 or less, you need

receive income or corpus from the trust

report on Schedule A any gifts to your

not enter on Schedule A any gifts (except

(such as an income interest for life) or is a

spouse if the total of such gifts for the

gifts of future interests) that you made to

permissible current recipient of income or

year does not exceed $112,000 and all

that donee. Enter these gifts in the top

corpus from the trust (e.g., possesses a

gifts in excess of $11,000 would qualify

half of Part 1, 2, or 3, as applicable.

general power of appointment).

for a marital deduction if your spouse

Gift splitting elected. Enter on Schedule

were a U.S. citizen (see the instructions

Skip person. A donee who is a natural

A the entire value of every gift you made

for Schedule A, Part 4, line 4, on page 9).

person is a skip person if that donee is

during the calendar year while you were

If the gifts exceed $112,000, you must

assigned to a generation that is two or

married, even if the gift’s value will be

report all of the gifts even though some

more generations below the generation

less than $11,000 after it is split in

may be excluded.

assignment of the donor. See

-6-

Instructions For Form 709 - United States Gift (And Generation-Skipping Transfer) Tax Return - 2003 Page 6

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