Instructions For Form 709 - 2016 (Page 9 of 19) in pdf

The transferor's generation, or

distributions upon the termination of

Exchanges where listed or, if unlisted,

The generation assignment of the

interests in property held in trust) are skip

give the location of the principal business

youngest living ancestor of the individual

persons (that is, your grandchildren and

office of the corporation; and

who is also a descendant of the parent of

great-grandchildren). Therefore, the trust

CUSIP number. The CUSIP number is a

the transferor.

itself is a skip person and you should list

nine-digit number assigned by the

the gift in Part 2 of Schedule A.

American Banking Association to traded

The same rules apply to the generation

securities.

Example 4. You establish a trust that

assignment of any descendant of the

pays all of its income to your

individual.

For stocks:

grandchildren for 10 years. At the end of

Give number of shares;

This rule does not apply to a transfer to

10 years, the corpus is to be distributed to

State whether common or preferred;

an individual who is not a lineal

your children. Since for this purpose

If preferred, give the issue, par value,

descendant of the transferor if the

interests in trusts are defined only as

transferor at the time of the transfer has

quotation at which returned, and exact

present interests, all of the interests in this

name of corporation;

any living lineal descendants.

trust are held by skip persons (the

If unlisted on a principal exchange, give

children's interests are future interests).

If any transfer of property to a trust

the location of the principal business office

Therefore, the trust is a skip person and

would have been a direct skip except for

of the corporation, the state in which

you should list the entire amount you

this generation assignment rule, then the

incorporated, and the date of

transferred to the trust in Part 2 of

rule also applies to transfers from the trust

incorporation;

Schedule A even though some of the

attributable to such property.

If listed, give principal exchange; and

trust's ultimate beneficiaries are nonskip

CUSIP number.

Ninety-day rule. For assigning

persons.

individuals to generations for purposes of

Part 1—Gifts Subject Only to

For interests in property based on the

the GST tax, any individual who dies no

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

Gift Tax

later than 90 days after a transfer

birth of the person. If you transfer any

occurring by reason of the death of the

List in Part 1 gifts subject only to the gift

interest in a closely held entity, provide the

transferor is treated as having

tax. Generally, all of the gifts you made to

EIN of the entity.

predeceased the transferor. The 90-day

your spouse (that are required to be listed,

rule applies to transfers occurring on or

as described earlier), to your children, and

For life insurance policies, give the

after July 18, 2005. See Regulations

to charitable organizations are not subject

name of the insurer and the policy

section 26.2651-1(a)(2)(iii) for more

to the GST tax and should, therefore, be

number.

information.

listed only in Part 1.

Clearly identify in the description

Group the gifts in four categories.

Examples

Gifts made to your spouse.

column which gifts create the opening of

The GST rules can be illustrated by the

Gifts made to third parties that are to be

an ETIP as described under Transfers

following examples.

Subject to an Estate Tax Inclusion Period

split with your spouse.

(ETIP). Describe the interest that is

Charitable gifts (if you are not splitting

Example 1. You give your house to

gifts with your spouse).

creating the ETIP. An allocation of GST

your daughter for her life with the

Other gifts.

exemption to property subject to an ETIP

remainder then passing to her children.

that is made prior to the close of the ETIP

If a transfer results in gifts to two or more

This gift is made to a “trust” even though

becomes effective no earlier than the date

individuals (such as a life estate to one

there is no explicit trust instrument. The

of the close of the ETIP. See Schedule D.

with remainder to the other), list the gift to

interest in the property transferred (the

each separately.

Computation of GST Tax.

present right to use the house) is

transferred to a nonskip person (your

Number and describe all gifts

Column D. Donor's Adjusted Basis

daughter). Therefore, the trust is not a skip

(including charitable, public, and similar

person because there is an interest in the

gifts) in the columns provided in

of Gifts

transferred property that is held by a

Schedule A.

Show the basis you would use for income

nonskip person, and the gift is not a direct

tax purposes if the gift were sold or

skip. The transfer is an indirect skip,

Column B

exchanged. Generally, this means cost

however, because on the death of the

plus improvements, less applicable

daughter, a termination of her interest in

Describe each gift in enough detail so that

depreciation, amortization, and depletion.

the trust will occur that may be subject to

the property can be easily identified, as

the GST tax. See the instructions for Part

explained below.

For more information on adjusted

3—Indirect Skips for a discussion of how

basis, see Pub. 551, Basis of Assets.

For real estate, give:

to allocate GST exemption to such a trust.

A legal description of each parcel;

Example 2. You give $100,000 to your

The street number, name, and area if

Columns E and F. Date and Value

grandchild. This gift is a direct skip that is

the property is located in a city; and

of Gift

not made in trust. You should list it in Part

A short statement of any improvements

2 of Schedule A.

The value of a gift is the fair market value

made to the property.

Example 3. You establish a trust that

(FMV) of the property on the date the gift

is required to accumulate income for 10

For bonds, give:

is made (valuation date). The FMV is the

years and then pay its income to your

The number of bonds transferred;

price at which the property would change

grandchildren for their lives and upon their

The principal amount of each bond;

hands between a willing buyer and a

deaths distribute the corpus to their

Name of obligor;

willing seller, when neither is forced to buy

children. Because the trust has no current

Date of maturity;

or to sell, and when both have reasonable

beneficiaries, there are no present

Rate of interest;

knowledge of all relevant facts. FMV may

interests in the property transferred to the

Date or dates when interest is payable;

not be determined by a forced sale price,

trust. All of the persons to whom the trust

Series number, if there is more than

nor by the sale price of the item in a

can make future distributions (including

one issue;

market other than that in which the item is

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Instructions For Form 709 - 2016 Page 9

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