Instructions For Form 709 - 2016 (Page 11 of 19) in pdf

Split Gifts—Gifts Made by

Section 2632(c) defines indirect skips

1. Your spouse is entitled for life to all

and applies special rules to the allocation

of the income from the entire interest.

Spouse

of GST exemption to such transfers. In

2. The income is paid yearly or more

See this heading under Part 1.

general, an indirect skip is a transfer of

often.

property that is subject to gift tax (other

Part 4—Taxable Gift

3. Your spouse has the unlimited

than a direct skip) and is made to a GST

Reconciliation

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

trust. A GST trust is a trust that could have

appoint the entire interest in all

a generation-skipping transfer with respect

Line 1

circumstances.

to the transferor, unless the trust provides

Enter only gifts of the donor. If gift-splitting

4. No part of the entire interest is

for certain distributions of trust corpus to

has been elected, enter only the value of

subject to another person's power of

nonskip persons. See section 2632(c)(3)

the gift that is attributable to the spouse

appointment (except to appoint it to your

(B) for details.

that is filing the return.

spouse).

List in Part 3 those gifts that are indirect

If either the right to income or the

skips as defined in section 2632(c) or may

Line 2

power of appointment given to your

later be subject to GST tax. This includes

Enter the total annual exclusions you are

spouse pertains only to a specific portion

indirect skips for which election 2,

claiming for the gifts listed on Schedule A.

of a property interest, the marital

described below, will be made in the

See Annual Exclusion, earlier. If you split a

deduction is allowed only to the extent that

current year or has been made in a

gift with your spouse, the annual exclusion

the rights of your spouse meet all four of

previous year. You must list the gifts in

you claim against that gift may not be

the above conditions. For example, if your

Part 3 in the chronological order that you

more than the smaller of your half of the

spouse is to receive all of the income from

made them.

gift or $14,000.

the entire interest, but only has a power to

appoint one-half of the entire interest, then

Deductions

Column C. 2632(c) Election

only one-half qualifies for the marital

Section 2632(c) provides for the automatic

Line 4. Marital Deduction

deduction.

allocation of the donor's unused GST

A partial interest in property is treated

Enter all of the gifts to your spouse that

exemption to indirect skips. This section

as a specific portion of an entire interest

you listed on Schedule A and for which

also sets forth three different elections you

only if the rights of your spouse to the

you are claiming a marital deduction. Do

may make regarding the allocation of

income and to the power are a fractional

not enter any gift that you did not include

exemption.

or percentile share of the entire property

on Schedule A. On the dotted line on

Election 1. You may elect not to have

interest. This means that the interest or

line 4, indicate which numbered items

the automatic allocation rules apply to

share will reflect any increase or decrease

from Schedule A are gifts to your spouse

the current transfer made to a

in the value of the entire property interest.

for which you are claiming the marital

particular trust.

If the spouse is entitled to receive a

deduction.

Election 2. You may elect not to have

specified sum of income annually, the

Do not enter on line 4 any gifts to

the automatic rules apply to both the

capital amount that would produce such a

your spouse who was not a U.S.

current transfer and any and all future

TIP

sum will be considered the specific portion

citizen at the time of the gift.

transfers made to a particular trust.

from which the spouse is entitled to

Election 3. You may elect to treat any

receive the income.

trust as a GST trust for purposes of

You may deduct all gifts of

Election to deduct qualified terminable

the automatic allocation rules.

nonterminable interests made during the

interest property (QTIP). You may elect

year that you entered on Schedule A

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

to deduct a gift of a terminable interest if it

regardless of amount, and certain gifts of

meets requirements (1), (2), and (4)

When to make an election. Election 1 is

terminable interests as outlined below.

earlier, even though it does not meet

timely made if it is made on a timely filed

Terminable interests. Generally, you

requirement (3).

gift tax return for the year the transfer was

cannot take the marital deduction if the gift

made or was deemed to have been made.

You make this election simply by listing

to your spouse is a terminable interest. In

the qualified terminable interest property

Elections 2 and 3 may be made on a

most instances, a terminable interest is

on Schedule A and deducting its value

timely filed gift tax return for the year for

nondeductible if someone other than the

from Schedule A, Part 4, line 4. You are

which the election is to become effective.

donee spouse will have an interest in the

presumed to have made the election for all

property following the termination of the

qualified property that you both list and

To make one of these elections, check

donee spouse's interest. Some examples

deduct on Schedule A. You may not make

column C next to the transfer to which the

of terminable interests are:

the election on a late filed Form 709.

election applies. You must also attach an

A life estate,

explanation as described below. If you are

An estate for a specified number of

making election 2 or 3 on a return on

Line 5

years, or

which the transfer is not reported, simply

Any other property interest that after a

Enter the amount of the annual exclusions

attach the statement described below.

period of time will terminate or fail.

that were claimed for the gifts listed on

line 4.

If you transfer an interest to your

If you are reporting a transfer to a trust

spouse as sole joint tenant with yourself or

for which election 2 or 3 was made on a

as a tenant by the entirety, the interest is

Line 7. Charitable Deduction

previously filed return, do not make an

not considered a terminable interest just

entry in column C for that transfer and do

You may deduct from the total gifts made

because the tenancy may be severed.

not attach a statement.

during the calendar year all gifts you gave

Life estate with power of appointment.

to or for the use of:

Attachment. Attach a statement to Form

You may deduct, without an election, a gift

The United States, a state or political

709 that describes the election you are

of a terminable interest if all four

subdivision of a state or the District of

making and clearly identifies the trusts

requirements below are met.

Columbia for exclusively public purposes;

and/or transfers to which the election

applies.

-11-

Instructions For Form 709 - 2016 Page 11

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