Instructions For Form 709 - 2016 (Page 2 of 19) in pdf

to someone other than a charity, you must

Except as described earlier, you do not

Remember, if you are splitting

still file a return and report all of your gifts

have to file a gift tax return to report gifts to

gifts, your spouse must sign

TIP

to charities.

your spouse regardless of the amount of

line 18, in Part 1—General

these gifts and regardless of whether the

If you are required to file a return to

Information.

gifts are present or future interests.

report noncharitable gifts and you made

gifts to charities, you must include all of

Transfers Not Subject to the

Who Must File

your gifts to charities on the return.

Gift Tax

In general. If you are a citizen or resident

Transfers Subject to the Gift

Four types of transfers are not subject to

of the United States, you must file a gift tax

Tax

the gift tax. These are:

return (whether or not any tax is ultimately

Transfers to political organizations,

due) in the following situations.

Generally, the federal gift tax applies to

Transfers to certain exempt

If you gave gifts to someone in 2016

any transfer by gift of real or personal

organizations,

totalling more than $14,000 (other than to

property, whether tangible or intangible,

Payments that qualify for the

your spouse), you probably must file Form

that you made directly or indirectly, in

educational exclusion, and

709. But see Transfers Not Subject to Gift

trust, or by any other means.

Payments that qualify for the medical

Tax and Gifts to Your Spouse, later, for

The gift tax applies not only to the free

exclusion.

more information on specific gifts that are

transfer of any kind of property, but also to

These transfers are not “gifts” as that term

not taxable.

sales or exchanges, not made in the

is used on Form 709 and its instructions.

Certain gifts, called future interests, are

ordinary course of business, where value

You need not file a Form 709 to report

not subject to the $14,000 annual

of the money (or property) received is less

these transfers and should not list them on

exclusion and you must file Form 709

than the value of what is sold or

Schedule A of Form 709 if you do file

even if the gift was under $14,000. See

exchanged. The gift tax is in addition to

Form 709.

Annual Exclusion, later.

any other tax, such as federal income tax,

Spouses may not file a joint gift tax

Political organizations. The gift tax

paid or due on the transfer.

return. Each individual is responsible for

does not apply to a transfer to a political

his or her own Form 709.

The exercise or release of a general

organization (defined in section 527(e)(1))

You must file a gift tax return to split

power of appointment may be a gift by the

for the use of the organization.

gifts with your spouse (regardless of their

individual possessing the power. General

Certain exempt organizations. The gift

amount) as described in Part 1—General

powers of appointment are those in which

tax does not apply to a transfer to any civic

Information.

the holders of the power can appoint the

league or other organization described in

If a gift is of community property, it is

property under the power to themselves,

section 501(c)(4), any labor, agricultural,

considered made one-half by each

their creditors, their estates, or the

or horticultural organization described in

spouse. For example, a gift of $100,000 of

creditors of their estates. To qualify as a

section 501(c)(5), or any business league

community property is considered a gift of

power of appointment, it must be created

or other organization described in section

$50,000 made by each spouse, and each

by someone other than the holder of the

501(c)(6) for the use of such organization,

spouse must file a gift tax return.

power.

provided that such organization is exempt

Likewise, each spouse must file a gift

The gift tax may also apply to forgiving

from tax under section 501(a).

tax return if they have made a gift of

a debt, to making an interest-free or below

property held by them as joint tenants or

Educational exclusion. The gift tax

market interest rate loan, to transferring

tenants by the entirety.

does not apply to an amount you paid on

the benefits of an insurance policy, to

Only individuals are required to file gift

behalf of an individual to a qualifying

certain property settlements in divorce

tax returns. If a trust, estate, partnership,

domestic or foreign educational

cases, and to giving up of some amount of

or corporation makes a gift, the individual

organization as tuition for the education or

annuity in exchange for the creation of a

beneficiaries, partners, or stockholders

training of the individual. A qualifying

survivor annuity.

are considered donors and may be liable

educational organization is one that

for the gift and GST taxes.

normally maintains a regular faculty and

Bonds that are exempt from federal

The donor is responsible for paying the

curriculum and normally has a regularly

income taxes are not exempt from federal

gift tax. However, if the donor does not

enrolled body of pupils or students in

gift taxes.

pay the tax, the person receiving the gift

attendance at the place where its

may have to pay the tax.

Sections 2701 and 2702 provide rules

educational activities are regularly carried

If a donor dies before filing a return, the

for determining whether certain transfers

on. See section 170(b)(1)(A)(ii) and its

donor's executor must file the return.

to a family member of interests in

regulations.

corporations, partnerships, and trusts are

Who does not need to file. If you meet

The payment must be made directly to

gifts. The rules of section 2704 determine

all of the following requirements, you are

the qualifying educational organization

whether the lapse of any voting or

not required to file Form 709.

and it must be for tuition. No educational

liquidation right is a gift.

You made no gifts during the year to

exclusion is allowed for amounts paid for

your spouse.

Gifts to your spouse. You must file a gift

books, supplies, room and board, or other

You did not give more than $14,000 to

tax return if you made any gift to your

similar expenses that are not direct tuition

any one donee.

spouse of a terminable interest that does

costs. To the extent that the payment to

All the gifts you made were of present

not meet the exception described in Life

the educational organization was for

interests.

estate with power of appointment, or if

something other than tuition, it is a gift to

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

the individual for whose benefit it was

Gifts to charities. If the only gifts you

total gifts you made to your spouse during

made, and may be offset by the annual

made during the year are deductible as

the year exceed $148,000.

exclusion if it is otherwise available.

gifts to charities, you do not need to file a

You must also file a gift tax return to

return as long as you transferred your

Contributions to a qualified tuition

make the Qualified Terminable Interest

entire interest in the property to qualifying

program (QTP) on behalf of a designated

Property (QTIP) election described under

beneficiary do not qualify for the

charities. If you transferred only a partial

Line 12. Election Out of QTIP Treatment of

educational exclusion. See Line

interest, or transferred part of your interest

Annuities.

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Instructions For Form 709 - 2016 Page 2

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