Instructions For Form 709 - 2016 (Page 3 of 19) in pdf

B—Qualified Tuition Programs (529 Plans

b. the day the disclaimant reaches

2. All remaining property and its

or Programs) in the instructions for

age 21.

income must pass to the minor on the

Schedule A, later.

minor's 21st birthday.

3. The disclaimant must not have

accepted the interest or any of its benefits.

3. If the minor dies before the age of

Medical exclusion. The gift tax does not

21, the property and its income will be

apply to an amount you paid on behalf of

4. As a result of the refusal, the

payable either to the minor's estate or to

an individual to a person or institution that

interest must pass without any direction

whomever the minor may appoint under a

provided medical care for the individual.

from the disclaimant to either:

general power of appointment.

The payment must be to the care provider.

a. the spouse of the decedent, or

The medical care must meet the

The gift of a present interest to more

b. a person other than the

requirements of section 213(d) (definition

than one donee as joint tenants qualifies

disclaimant.

of medical care for income tax deduction

for the annual exclusion for each donee.

5. The refusal must be irrevocable

purposes). Medical care includes

Nonresidents not Citizens of

expenses incurred for the diagnosis, cure,

and unqualified.

mitigation, treatment, or prevention of

the United States

The 9-month period for making the

disease, or for the purpose of affecting

disclaimer generally is determined

Nonresidents not citizens of the United

any structure or function of the body, or for

separately for each taxable transfer. For

States are subject to gift and GST taxes

transportation primarily for and essential to

gifts, the period begins on the date the

for gifts of tangible property situated in the

medical care. Medical care also includes

transfer is a completed transfer for gift tax

United States. A person is considered a

amounts paid for medical insurance on

purposes.

nonresident not a citizen of the United

behalf of any individual.

States if he or she, at the time the gift is

Annual Exclusion

The medical exclusion does not apply

made, (1) was not a citizen of the United

to amounts paid for medical care that are

The first $14,000 of gifts of present

States and did not reside there, or (2) was

reimbursed by the donee's insurance. If

interest to each donee during the calendar

domiciled in a United States possession

payment for a medical expense is

year is subtracted from total gifts in

and acquired citizenship solely by reason

reimbursed by the donee's insurance

figuring the amount of taxable gifts. For a

of birth or residence in the possession.

company, your payment for that expense,

gift in trust, each beneficiary of the trust is

Under certain circumstances, they are

to the extent of the reimbursed amount, is

treated as a separate donee for purposes

also subject to gift and GST taxes for gifts

not eligible for the medical exclusion and

of the annual exclusion.

of intangible property. See section

you are considered to have made a gift to

2501(a).

All of the gifts made during the

the donee of the reimbursed amount.

calendar year to a donee are fully

If you are a nonresident not a citizen of

To the extent that the payment was for

excluded under the annual exclusion if

the United States who made a gift subject

something other than medical care, it is a

they are all gifts of present interest and

to gift tax, you must file a gift tax return

gift to the individual on whose behalf the

they total $14,000 or less.

where:

payment was made and may be offset by

You gave any gifts of future interests,

the annual exclusion if it is otherwise

Note. For gifts made to spouses who are

Your gifts of present interests to any

available.

not U.S. citizens, the annual exclusion has

donee other than your spouse total more

The medical and educational

been increased to $148,000, provided the

than $14,000, or

exclusions are allowed without regard to

additional (above the $14,000 annual

Your outright gifts to your spouse who is

the relationship between you and the

exclusion) $134,000 gift would otherwise

not a U.S. citizen total more than

donee. For examples illustrating these

qualify for the gift tax marital deduction (as

$148,000.

exclusions, see Regulations section

described in the Schedule A, Part 4, line 4

Transfers Subject to the GST

25.2503-6(c).

instructions, later).

Tax

Qualified disclaimers. A donee's refusal

A gift of a future interest cannot be

to accept a gift is called a disclaimer. If a

You must report on Form 709 the GST tax

excluded under the annual exclusion.

person makes a qualified disclaimer of any

imposed on inter vivos direct skips. An

interest in property, the property will be

A gift is considered a present interest if

inter vivos direct skip is a transfer made

the donee has all immediate rights to the

during the donor's lifetime that is:

treated as if it had never been transferred

use, possession, and enjoyment of the

to that person. Accordingly, the

Subject to the gift tax,

property or income from the property.

disclaimant is not regarded as making a

Of an interest in property, and

gift to the person who receives the

Made to a skip person. (See Gifts

A gift is considered a future interest if

property because of the qualified

Subject to Both Gift and GST Taxes,

the donee's rights to the use, possession,

later.)

disclaimer.

and enjoyment of the property or income

Requirements. To be a qualified

A transfer is subject to the gift tax if it is

from the property will not begin until some

disclaimer, a refusal to accept an interest

required to be reported on Schedule A of

future date. Future interests include

in property must meet the following

Form 709 under the rules contained in the

reversions, remainders, and other similar

gift tax portions of these instructions,

conditions.

interests or estates.

including the split gift rules. Therefore,

1. The refusal must be in writing.

A contribution to a QTP on behalf of a

transfers made to political organizations,

2. The refusal must be received by the

designated beneficiary is considered a gift

transfers made to certain exempt

donor, the legal representative of the

of a present interest.

organizations, transfers that qualify for the

donor, the holder of the legal title to the

medical or educational exclusions,

A gift to a minor is considered a

property disclaimed, or the person in

transfers that are fully excluded under the

present interest if all of the following

possession of the property within 9

annual exclusion, and most transfers

conditions are met.

months after the later of:

made to your spouse are not subject to the

1. Both the property and its income

a. the day the transfer creating the

GST tax.

may be expended by, or for the benefit of,

interest is made, or

the minor before the minor reaches age

21.

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Instructions For Form 709 - 2016 Page 3

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