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Part 1—Gifts Subject Only to

Clearly identify in the description

is generally the present value on the date

column which gifts create the opening of

of the gift.

Gift Tax

an estate tax inclusion period (ETIP) as

Sections 2701 and 2702 provide

List in Part 1 gifts subject only to the gift

described under Transfers Subject to an

special valuation rules to determine the

tax. Generally, all of the gifts you made to

“Estate Tax Inclusion Period” on page

amount of the gift when a donor transfers

your spouse (that are required to be

3. Describe the interest that is creating

an equity interest in a corporation or

listed, as described earlier), to your

the ETIP. An allocation of GST exemption

partnership (section 2701) or makes a gift

children, and to charitable organizations

to property subject to an ETIP that is

in trust (section 2702). The rules only

are not subject to the GST tax and

made prior to the close of the ETIP

apply if, immediately after the transfer, the

should, therefore, be listed only in Part 1.

becomes effective no earlier than the date

donor (or an applicable family member)

of the close of the ETIP. See the

Group the gifts in four categories: gifts

holds an applicable retained interest in

instructions for Schedule C beginning on

made to your spouse; gifts made to third

the corporation or partnership, or retains

page 10.

parties that are to be split with your

an interest in the trust. For details, see

spouse; charitable gifts (if you are not

sections 2701 and 2702, and their

Column D. Donor’s Adjusted

splitting gifts with your spouse); and other

regulations.

Basis of Gifts

gifts. If a transfer results in gifts to two or

Column G — Split Gifts

Show the basis you would use for income

more individuals (such as a life estate to

tax purposes if the gift were sold or

Enter an amount in this column only if you

one with remainder to the other), list the

exchanged. Generally, this means cost

have chosen to split gifts with your

gift to each separately.

plus improvements, less applicable

spouse.

Number and describe all gifts

depreciation, amortization, and depletion.

Split gifts — gifts made by spouse

(including charitable, public, and similar

For more information on adjusted

gifts) in the columns provided in Schedule

If you have elected to split gifts with your

basis, see Pub. 551, Basis of Assets.

spouse AND your spouse has given a

Columns E and F. Date and

gift(s) that is being split with you, enter in

Column B

this area of Part 1 information on the

Value of Gift

gift(s) made by your spouse. If only you

Describe each gift in enough detail so that

The value of a gift is the fair market value

made gifts and you are splitting them with

the property can be easily identified, as

of the property on the date the gift is

your spouse, do not make an entry in this

explained below.

made. The fair market value is the price

area.

at which the property would change

For real estate provide:

Generally, if you elect to split your

•

hands between a willing buyer and a

A legal description of each parcel;

gifts, you must split all gifts made by you

•

willing seller, when neither is forced to

The street number, name, and area if

and your spouse to third-party donees.

buy or to sell, and when both have

the property is located in a city; and

The only exception is if you gave your

•

reasonable knowledge of all relevant

A short statement of any improvements

spouse a general power of appointment

facts. Fair market value may not be

made to the property.

over a gift you made.

determined by a forced sale price, nor by

For bonds, give:

•

the sale price of the item in a market

Supplemental Documents

The number of bonds transferred;

other than that in which the item is most

•

The principal amount of each bond;

To support the value of your gifts, you

•

commonly sold to the public. The location

Name of obligor;

must provide information showing how it

•

of the item must be taken into account

Date of maturity;

was determined.

wherever appropriate.

•

Rate of interest;

For stock of close corporations or

•

The fair market value of a stock or

Date or dates when interest is payable;

inactive stock, attach balance sheets,

•

bond (whether listed or unlisted) is the

Series number if there is more than one

particularly the one nearest the date of

mean between the highest and lowest

issue;

the gift, and statements of net earnings or

•

selling prices quoted on the valuation

Exchanges where listed or, if unlisted,

operating results and dividends paid for

date. If only the closing selling prices are

give the location of the principal business

each of the 5 preceding years.

available, then the fair market value is the

office of the corporation; and

•

For each life insurance policy, attach

mean between the quoted closing selling

CUSIP number. The CUSIP number is

Form 712, Life Insurance Statement.

price on the valuation date and on the

a nine-digit number assigned by the

trading day before the valuation date. To

American Banking Association to traded

Note for single premium or paid-up

figure the fair market value if there were

securities.

policies: In certain situations, for

no sales on the valuation date, see the

For stocks:

example, where the surrender value of

•

instructions for Schedule B of Form 706.

Give number of shares;

the policy exceeds its replacement cost,

•

State whether common or preferred;

the true economic value of the policy will

Stock of close corporations or inactive

•

If preferred, give the issue, par value,

be greater than the amount shown on line

stock must be valued on the basis of net

quotation at which returned, and exact

59 of Form 712. In these situations, report

worth, earnings, earning and dividend

name of corporation;

the full economic value of the policy on

capacity, and other relevant factors.

•

If unlisted on a principal exchange, give

Schedule A. See Rev. Rul. 78-137,

Generally, the best indication of the

the location of the principal business

1978-1 C.B. 280 for details.

value of real property is the price paid for

office of the corporation, the state in

the property in an arm’s-length

If the gift was made by means of a

which incorporated, and the date of

transaction on or before the valuation

trust, attach a certified or verified copy of

incorporation;

date. If there has been no such

the trust instrument to the return on which

•

If listed, give principal exchange; and

transaction, use the comparable sales

you report your first transfer to the trust.

•

CUSIP number.

method. In comparing similar properties,

However, to report subsequent transfers

For interests in property based on the

consider differences in the date of the

to the trust, you may attach a brief

length of a person’s life, give the date of

sale, and the size, condition, and location

description of the terms of the trust or a

birth of the person.

of the properties, and make all

copy of the trust instrument.

appropriate adjustments.

For life insurance policies, give the

Also attach any appraisal used to

name of the insurer and the policy

The value of all annuities, life estates,

determine the value of real estate or other

number.

terms for years, remainders, or reversions

property.

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Instructions For Form 709 - United States Gift (And Generation-Skipping Transfer) Tax Return - 2003 Page 8

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