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If you do not attach this information,

tax could apply either at the time of a

Split gifts — gifts made by spouse

you must include in Schedule A full

distribution from the trust, at the

See this heading under Part 1 on page 8.

information to explain how the value was

termination of the trust, or both.

Part 4—Taxable Gift

determined.

Reconciliation

Section 2632(c) defines indirect skips

Part 2—Direct Skips

and applies special rules to the allocation

List in Part 2 only those gifts that are

Line 2

of GST exemption to such transfers. In

currently subject to both the gift and GST

Enter the total annual exclusions you are

general, an indirect skip is a transfer of

taxes. You must list the gifts in Part 2

claiming for the gifts listed on Schedule A.

property that is subject to gift tax (other

in the chronological order that you

See Annual Exclusion on page 3. If you

than a direct skip) and is made to a GST

made them. Number, describe, and value

split a gift with your spouse, the annual

trust. A GST trust is a trust that could

the gifts as described in the instructions

exclusion you claim against that gift may

have a generation-skipping transfer with

for Part 1 on page 8.

not be more than your half of the gift.

respect to the transferor, unless the trust

If you made a transfer to a trust that

provides for certain distributions of trust

Deductions

was a direct skip, list the entire gift as one

corpus to non-skip persons. See section

line entry in Part 2.

2632(c)(3)(B) for details.

Line 4 —Marital deduction

Column C — 2632(b) Election

Enter on line 4 all of the gifts to your

List in Part 3 only those gifts that are

spouse that you listed on Schedule A and

If you elect under section 2632(b)(3) to

indirect skips as defined in section

for which you are claiming a marital

NOT have the automatic allocation rules

2632(c). You must list the gifts in Part 3 in

deduction. Do not enter any gift that

of section 2632(b) apply to a transfer,

the chronological order that you made

you did not include on Schedule A. On

enter a check in column C next to the

them.

the dotted line on line 4, indicate which

transfer. You must also attach a

numbered items from Schedule A are

statement to Form 709 clearly describing

Section 2632(c) provides for the

gifts to your spouse for which you are

the transaction and the extent to which

automatic allocation of the donor’s

claiming the marital deduction.

the automatic allocation is not to apply.

unused GST exemption to indirect skips.

Reporting a direct skip on a timely filed

Do not enter on line 4 any gifts

But see Column C — 2632(c) election

Form 709 and paying the GST tax on the

to your spouse who was not a

TIP

below for the rules on electing out of this

transfer will qualify as such a statement.

U.S. citizen at the time of the

automatic allocation and electing to treat

How to report GST transfers after the

gift.

a trust as a GST trust.

close of an ETIP. If you are reporting a

You may deduct all gifts of

generation-skipping transfer that was

nonterminable interests made during the

Column C — 2632(c) election. There are

subject to an “estate tax inclusion period”

year that you entered on Schedule A

three different elections you may make.

(ETIP) (provided the ETIP closed as a

regardless of amount, and certain gifts of

result of something other than the death

1. You may elect not to have the

terminable interests as outlined below.

of the transferor — see Form 706), and

automatic allocation rules apply to the

Terminable interests. Generally, you

you are also reporting gifts made during

current transfer made to a particular trust.

cannot take the marital deduction if the

the year, complete Schedule A as you

2. You may elect not to have the

gift to your spouse is a terminable

normally would with the following

automatic rules apply to both the current

interest. In most instances, a terminable

changes:

transfer and any and all future transfers

interest is nondeductible if someone other

Report the transfer subject to an ETIP

made to a particular trust.

than the donee spouse will have an

on Schedule A, Part 2.

3. You may elect to treat any trust as

interest in the property following the

1. Column B. In addition to the

a GST trust for purposes of the automatic

termination of the donee spouse’s

information already requested, describe

allocation rules.

interest. Some examples of terminable

the interest that is closing the ETIP;

interests are:

See section 2632(c)(5) for details.

•

explain what caused the interest to

A life estate;

•

terminate; and list the year the gift portion

An estate for a specified number of

When to make an election. Election

of the transfer was reported and its item

years; or

•

1 is timely made if it is made on a timely

number on Schedule A that was originally

Any other property interest that after a

filed gift tax return for the year the transfer

filed to report the gift portion of the ETIP

period of time will terminate or fail.

was made or was deemed to have been

transfer.

If you transfer an interest to your

made.

2. Column E. Give the date the ETIP

spouse as sole joint tenant with yourself

closed rather than the date of the initial

or as a tenant by the entirety, the interest

gift.

Elections 2 and 3 may be made on a

is not considered a terminable interest

3. Columns F, G and H. Enter “N/A”

timely filed gift tax return for the year for

just because the tenancy may be

in these columns.

which the election is to become effective.

severed.

Life estate with power of appointment.

The value is entered only in Column B

To make one of these elections, check

You may deduct, without an election, a

of Part 1, Schedule C. See page 10 of the

column C next to the transfer to which the

gift of a terminable interest if all four

instructions.

election applies. You must also attach an

requirements below are met:

Split gifts — gifts made by spouse

explanation as described below. If you

1. Your spouse is entitled for life to all

See this heading under Part 1 on page 8.

are making election 2 or 3 on a return on

of the income from the entire interest;

which the transfer is not reported, simply

2. The income is paid yearly or more

Part 3—Indirect Skips (Gifts to

attach the statement described below.

often;

trusts that are currently subject to

3. Your spouse has the unlimited

gift tax and may later be subject to

Attachment. You must attach a

power, while he or she is alive or by will,

the GST tax.)

statement to Form 709 that describes the

to appoint the entire interest in all

election you are making and clearly

Some gifts made to trusts are subject only

circumstances; and

identifies the trusts and/or transfers to

to gift tax at the time of the transfer but

4. No part of the entire interest is

which the election applies.

later may be subject to GST tax. The GST

subject to another person’s power of

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Instructions For Form 709 - United States Gift (And Generation-Skipping Transfer) Tax Return - 2003 Page 9

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