Specific Instructions

Part 1—General Information

Lines 4 and 6. Address.   Enter your current mailing address.

Foreign address.

If your address is outside of the United States or its possessions or territories, enter the information as follows: city, province or state, and name of country. Follow the country's practice for entering the postal code. Do not abbreviate the country name.

Line 5. Legal residence (domicile).   In general, your legal residence (also known as your domicile) is acquired by living in a place, for even a brief period of time, with no definite present intention of moving from that place.

  Enter the state of the United States (including the District of Columbia) or a foreign country in which you legally reside or are domiciled at the time of the gift.

Line 7. Citizenship.   Enter your citizenship.

  The term citizen of the United States includes a person who, at the time of making the gift:
  • Was domiciled in a possession of the United States,

  • Was a U.S. citizen, and

  • Became a U.S. citizen for a reason other than being a citizen of a U.S. possession or being born or residing in a possession.

  A nonresident not a citizen of the United States includes a person who, at the time of making the gift:
  • Was domiciled in a possession of the United States,

  • Was a U.S. citizen, and

  • Became a U.S. citizen only because he or she was a citizen of a possession or was born or resided in a possession.

Lines 12–18. Split Gifts

A married couple may not file a joint gift tax return. However, if after reading the instructions below, you and your spouse agree to split your gifts, you should file both of your individual gift tax returns together (that is, in the same envelope) to help the IRS process the returns and to avoid correspondence from the IRS.

If you and your spouse agree, all gifts (including gifts of property held with your spouse as joint tenants or tenants by the entirety) either of you make to third parties during the calendar year will be considered as made one-half by each of you if:

  • You and your spouse were married to one another at the time of the gift;

  • If divorced or widowed after the gift, you did not remarry during the rest of the calendar year;

  • Neither of you was a nonresident not a citizen of the United States at the time of the gift; and

  • You did not give your spouse a general power of appointment over the property interest transferred.

If you transferred property partly to your spouse and partly to third parties, you can only split the gifts if the interest transferred to the third parties is ascertainable at the time of the gift.

The consent is effective for the entire calendar year; therefore, all gifts made by both you and your spouse to third parties during the calendar year (while you were married) must be split.

If the consent is effective, the liability for the entire gift tax of each spouse is joint and several.

If you meet these requirements and want your gifts to be considered made one-half by you and one-half by your spouse, check the “Yes” box on line 12; complete lines 13 through 17; and have your spouse sign the consent on line 18.

If you are not married or do not wish to split gifts, skip to line 19.

Line 15.   If you were married to one another for all of 2013, check the “Yes” box and skip to line 17. If you were married for only part of the year, check the “No” box and go to line 16. If you were divorced or widowed after you made the gift, you cannot elect to split gifts if you remarried before the end of 2013.

Line 16.   Check the box that explains the change in your marital status during the year and give the date you were married, divorced, or widowed.

Consent of Spouse

Your spouse must sign the consent for your gift-splitting election to be valid. The consent may generally be signed at any time after the end of the calendar year. However, there are two exceptions.

  1. The consent may not be signed after April 15 following the end of the year in which the gift was made. But, if neither you nor your spouse has filed a gift tax return for the year on or before that date, the consent must be made on the first gift tax return for the year filed by either of you.

  2. The consent may not be signed after a notice of deficiency for the gift tax for the year has been sent to either you or your spouse.

The executor for a deceased spouse or the guardian for a legally incompetent spouse may sign the consent.

When the Consenting Spouse Must Also File a Gift Tax Return

In general, if you and your spouse elect gift splitting, then both spouses must file his or her own, individual, gift tax return.

However, only one spouse must file a return if the requirements of either of the exceptions below are met. In the exceptions below, gifts means transfers (or parts of transfers) that do not qualify for the political organization, educational, or medical exclusions.

Exception 1.   During the calendar year:
  • Only one spouse made any gifts,

  • The total value of these gifts to each third-party donee does not exceed $28,000, and

  • All of the gifts were of present interests.

Exception 2.   During the calendar year:
  • Only one spouse (the donor spouse) made gifts of more than $14,000 but not more than $28,000 to any third-party donee,

  • The only gifts made by the other spouse (the consenting spouse) were gifts of not more than $14,000 to third-party donees other than those to whom the donor spouse made gifts, and

  • All of the gifts by both spouses were of present interests.

  If either of the above exceptions is met, only the donor spouse must file a return and the consenting spouse signifies consent on that return.

  Specific instructions for Part 2—Tax Computation are discussed later. Because you must complete Schedules A, B, C, and D to fill out Part 2, you will find instructions for these schedules below.

Line 19. Application of DSUE Amount

If the donor is a citizen or resident of the United States and his or her spouse died after December 31, 2010, the donor may be eligible to use the deceased spouse's unused exclusion (DSUE) amount. The executor of his or her spouse's estate must have elected on Form 706 to allow use of the unused exclusion amount. See instructions for Form 706, Part 6—Portability of the Deceased Spousal Unused Exclusion. If the executor of the estate made this election, attach Form 706 filed by the estate and include a calculation of the DSUE amount (either as an attachment or on Part 6—Portability of the Deceased Spousal Unused Exclusion). See also section 2010(c)(4) and related regulations.

Using the checkboxes provided, indicate whether the donor is applying or has applied a DSUE amount from a predeceased spouse to gifts reported on this or a previous Form 709. If so, complete Schedule C before going to Part 2—Tax Computation.

Schedule A. Computation of Taxable Gifts

Do not enter on Schedule A any gift or part of a gift that qualifies for the political organization, educational, or medical exclusions. In the instructions below, gifts means transfers (or parts of transfers) that do not qualify for the political organization, educational, or medical exclusions.

Line A. Valuation Discounts

If the value of any gift you report in either Part 1, Part 2, or Part 3 of Schedule A includes a discount for lack of marketability, a minority interest, a fractional interest in real estate, blockage, market absorption, or for any other reason, answer “Yes” to the question at the top of Schedule A. Also, attach an explanation giving the basis for the claimed discounts and showing the amount of the discounts taken.

Line B. Qualified Tuition Programs (529 Plans or Programs)

If in 2013, you contributed more than $14,000 to a Qualified Tuition Plan (QTP) on behalf of any one person, you may elect to treat up to $70,000 of the contribution for that person as if you had made it ratably over a 5-year period. The election allows you to apply the annual exclusion to a portion of the contribution in each of the 5 years, beginning in 2013. You can make this election for as many separate people as you made QTP contributions.

You can only apply the election to a maximum of $70,000. You must report all of your 2013 QTP contributions for any single person that exceed $70,000 (in addition to any other gifts you made to that person).

For each of the 5 years, you report in Part 1 of Schedule A one-fifth (20%) of the amount for which you made the election. In column E of Part 1 (Schedule A) list the date of the gift as the calendar year for which you are deemed to have made the gift (that is, the year of the current Form 709 you are filing). Do not list the actual year of contribution for subsequent years.

However, if in any of the last 4 years of the election, you did not make any other gifts that would require you to file a Form 709, you do not need to file Form 709 to report that year's portion of the election amount.

Example.

In 2013, D contributed $100,000 to a QTP for the benefit of her son. D elects to treat $70,000 of this contribution as having been made ratably over a 5-year period. Accordingly, for 2013, D reports the following:

  $30,000   (the amount of the contribution that exceeded $70,000)
+ $14,000   (the 1/5 portion from the election)
  $44,000   the total gift to her son listed in Part 1 of Schedule A for 2013

In 2014, D gives a gift of $20,000 cash to her niece and no other gifts. On her 2014 Form 709, D reports in Part 1 of Schedule A the $20,000 gift to her niece and a $14,000 gift to her son (the one-fifth portion of the 2013 gift that is treated as made in 2014). In column E of Part 1 (Schedule A), D lists “2014” as the date of the gift.

D makes no gifts in 2015, 2016, or 2017. She is not required to file Form 709 in any of those years to report the one-fifth portion of the QTP gift, because she is not otherwise required to file Form 709.

You make the election by checking the box on line B at the top of Schedule A. The election must be made for the calendar year in which the contribution is made. Also attach an explanation that includes the following:

  • The total amount contributed per individual beneficiary,

  • The amount for which the election is being made, and

  • The name of the individual for whom the contribution was made.

If you are electing gift splitting, apply the gift-splitting rules before applying the QTP rules. Each spouse would then decide individually whether to make this QTP election.

Contributions to QTPs do not qualify for the education exclusion.

How To Complete Parts 1, 2, and 3

After you determine which gifts you made in 2013 that are subject to the gift tax, list them on Schedule A. You must divide these gifts between:

  1. Part 1—those subject only to the gift tax (gifts made to nonskip persons—see Part 1—Gifts Subject Only to Gift Tax),

  2. Part 2—those subject to both the gift and GST taxes (gifts made to skip persons—see Gifts Subject to Both Gift and GST Taxes and Part 2—Direct Skips), and

  3. Part 3—those subject only to the gift tax at this time but which could later be subject to GST tax (gifts that are indirect skips, see Part 3—Indirect Skips).

If you need more space, attach a separate sheet using the same format as Schedule A.

Use the following guidelines when entering gifts on Schedule A: 

  • Enter a gift only once—in Part 1, Part 2, or Part 3;

  • Do not enter any gift or part of a gift that qualified for the political organization, educational, or medical exclusion;

  • Enter gifts under “Gifts made by spouse” only if you have chosen to split gifts with your spouse and your spouse is required to file a Form 709 (see Part 1—General Information, Lines 12–18. Split Gifts); and

  • In column F, enter the full value of the gift (including those made by your spouse, if applicable). If you have chosen to split gifts, that one-half portion of the gift is entered in column G.

Gifts to Donees Other Than Your Spouse

You must always enter all gifts of future interests that you made during the calendar year regardless of their value.

Gift splitting not elected.   If the total gifts of present interests to any donee are more than $14,000 in the calendar year, then you must enter all such gifts that you made during the year to or on behalf of that donee, including those gifts that will be excluded under the annual exclusion. If the total is $14,000 or less, you need not enter on Schedule A any gifts (except gifts of future interests) that you made to that donee. Enter these gifts in the top half of Part 1, 2, or 3, as applicable.

Gift splitting elected.   Enter on Schedule A the entire value of every gift you made during the calendar year while you were married, even if the gift's value will be less than $14,000 after it is split in Column G of Part 1, 2, or 3 of Schedule A.

Gifts made by spouse.   If you elected gift splitting and your spouse made gifts, list those gifts in the space below “Gifts made by spouse” in Part 1, 2, or 3. Report these gifts in the same way you report gifts you made.

Gifts to Your Spouse

Except for the gifts described below, you do not need to enter any of your gifts to your spouse on Schedule A.

Terminable interests.   Terminable interests are defined in the instructions to Part 4, line 4. If all the terminable interests you gave to your spouse qualify as life estates with power of appointment (defined under Life estate with power of appointment), you do not need to enter any of them on Schedule A.

  However, if you gave your spouse any terminable interest that does not qualify as a life estate with power of appointment, you must report on Schedule A all gifts of terminable interests you made to your spouse during the year.

Charitable remainder trusts.   If you make a gift to a charitable remainder trust and your spouse is the only noncharitable beneficiary (other than yourself), the interest you gave to your spouse is not considered a terminable interest and, therefore, should not be shown on Schedule A. See section 2523(g)(1). For definitions and rules concerning these trusts, see section 2056(b)(8)(B).

Future interest.   Generally, you should not report a gift of a future interest to your spouse unless the future interest is also a terminable interest that is required to be reported as described above. However, if you gave a gift of a future interest to your spouse and you are required to report the gift on Form 709 because you gave the present interest to a donee other than your spouse, then you should enter the entire gift, including the future interest given to your spouse, on Schedule A. You should use the rules under Gifts Subject to Both Gift and GST Taxes, later, to determine whether to enter the gift on Schedule A, Part 1, Part 2, or Part 3.

Spouses who are not U.S. citizens.   If your spouse is not a U.S. citizen and you gave him or her a gift of a future interest, you must report on Schedule A all gifts to your spouse for the year. If all gifts to your spouse were present interests, do not report on Schedule A any gifts to your spouse if the total of such gifts for the year does not exceed $143,000 and all gifts in excess of $14,000 would qualify for a marital deduction if your spouse were a U.S. citizen (see the instructions for Schedule A, Part 4, line 4). If the gifts exceed $143,000, you must report all of the gifts even though some may be excluded.

Gifts Subject to Both Gift and GST Taxes

Definitions

Direct skip.   The GST tax you must report on Form 709 is that imposed only on inter vivos direct skips. An inter vivos direct skip is a transfer that is:
  • Subject to the gift tax,

  • Of an interest in property, and

  • Made to a skip person.

All three requirements must be met before the gift is subject to the GST tax.

  A gift is “subject to the gift tax” if you are required to list it on Schedule A of Form 709. However, if you make a nontaxable gift (which is a direct skip) to a trust for the benefit of an individual, this transfer is subject to the GST tax unless:
  1. During the lifetime of the beneficiary, no corpus or income may be distributed to anyone other than the beneficiary, and

  2. If the beneficiary dies before the termination of the trust, the assets of the trust will be included in the gross estate of the beneficiary.

Note.

If the property transferred in the direct skip would have been includible in the donor's estate if the donor died immediately after the transfer, see Transfers Subject to an Estate Tax Inclusion Period (ETIP).

  To determine if a gift “is of an interest in property” and “is made to a skip person,” you must first determine if the donee is a “natural person” or a “trust,” as defined below.

Trust.   For purposes of the GST tax, a trust includes not only an ordinary trust, but also any other arrangement (other than an estate) that although not explicitly a trust, has substantially the same effect as a trust. For example, a trust includes life estates with remainders, terms for years, and insurance and annuity contracts. A transfer of property that is conditional on the occurrence of an event is a transfer in trust.

Interest in property.   If a gift is made to a natural person, it is always considered a gift of an interest in property for purposes of the GST tax.

  If a gift is made to a trust, a natural person will have an interest in the property transferred to the trust if that person either has a present right to receive income or corpus from the trust (such as an income interest for life) or is a permissible current recipient of income or corpus from the trust (for example, possesses a general power of appointment).

Skip person.   A donee, who is a natural person, is a skip person if that donee is assigned to a generation that is two or more generations below the generation assignment of the donor. See Determining the Generation of a Donee.

  A donee that is a trust is a skip person if all the interests in the property transferred to the trust (as defined above) are held by skip persons.

  A trust will also be a skip person if there are no interests in the property transferred to the trust held by any person, and future distributions or terminations from the trust can be made only to skip persons.

Nonskip person.   A nonskip person is any donee who is not a skip person.

Determining the Generation of a Donee

Generally, a generation is determined along family lines as follows:

  1. If the donee is a lineal descendant of a grandparent of the donor (for example, the donor's cousin, niece, nephew, etc.), the number of generations between the donor and the descendant (donee) is determined by subtracting the number of generations between the grandparent and the donor from the number of generations between the grandparent and the descendant (donee).

  2. If the donee is a lineal descendant of a grandparent of a spouse (or former spouse) of the donor, the number of generations between the donor and the descendant (donee) is determined by subtracting the number of generations between the grandparent and the spouse (or former spouse) from the number of generations between the grandparent and the descendant (donee).

  3. A person who at any time was married to a person described in (1) or (2) above is assigned to the generation of that person. A person who at any time was married to the donor is assigned to the donor's generation.

  4. A relationship by adoption or half-blood is treated as a relationship by whole-blood.

A person who is not assigned to a generation according to (1), (2), (3), or (4) above is assigned to a generation based on his or her birth date as follows:

  1. A person who was born not more than 12½ years after the donor is in the donor's generation.

  2. A person born more than 12½ years, but not more than 37½ years, after the donor is in the first generation younger than the donor.

  3. Similar rules apply for a new generation every 25 years.

If more than one of the rules for assigning generations applies to a donee, that donee is generally assigned to the youngest of the generations that would apply.

If an estate, trust, partnership, corporation, or other entity (other than governmental entities and certain charitable organizations and trusts, described in sections 511(a)(2) and 511(b)(2), as discussed later) is a donee, then each person who indirectly receives the gift through the entity is treated as a donee and is assigned to a generation as explained in the above rules.

Charitable organizations and trusts, described in sections 511(a)(2) and 511(b)(2), and governmental entities are assigned to the donor's generation. Transfers to such organizations are therefore not subject to the GST tax. These gifts should always be listed in Part 1 of Schedule A.

Charitable Remainder Trusts

Gifts in the form of charitable remainder annuity trusts, charitable remainder unitrusts, and pooled income funds are not transfers to skip persons and therefore are not direct skips. You should always list these gifts in Part 1 of Schedule A even if all of the life beneficiaries are skip persons.

Generation Assignment Where Intervening Parent Is Deceased

If you made a gift to your grandchild and at the time you made the gift, the grandchild's parent (who is your or your spouse's or your former spouse's child) is deceased, then for purposes of generation assignment, your grandchild is considered to be your child rather than your grandchild. Your grandchild's children will be treated as your grandchildren rather than your great-grandchildren.

This rule is also applied to your lineal descendants below the level of grandchild. For example, if your grandchild is deceased, your great-grandchildren who are lineal descendants of the deceased grandchild are considered your grandchildren for purposes of the GST tax.

This special rule may also apply in other cases of the death of a parent of the transferee. If property is transferred to a descendant of a parent of the transferor and that person's parent (who is a lineal descendant of the parent of the transferor) is deceased at the time the transfer is subject to gift or estate tax, then for purposes of generation assignment, the individual is treated as if he or she is a member of the generation that is one generation below the lower of:

  • The transferor's generation, or

  • The generation assignment of the youngest living ancestor of the individual who is also a descendant of the parent of the transferor.

The same rules apply to the generation assignment of any descendant of the individual.

This rule does not apply to a transfer to an individual who is not a lineal descendant of the transferor if the transferor at the time of the transfer has any living lineal descendants.

If any transfer of property to a trust would have been a direct skip except for this generation assignment rule, then the rule also applies to transfers from the trust attributable to such property.

Ninety-day rule.

For assigning individuals to generations for purposes of the GST tax, any individual who dies no later than 90 days after a transfer occurring by reason of the death of the transferor is treated as having predeceased the transferor. The 90-day rule applies to transfers occurring on or after July 18, 2005. See Regulations section 26.2651-1(a)(2)(iii) for more information.

Examples

The GST rules can be illustrated by the following examples.

Example 1.

You give your house to your daughter for her life with the remainder then passing to her children. This gift is made to a “trust” even though there is no explicit trust instrument. The interest in the property transferred (the present right to use the house) is transferred to a nonskip person (your daughter). Therefore, the trust is not a skip person because there is an interest in the transferred property that is held by a nonskip person, and the gift is not a direct skip. The transfer is an indirect skip, however, because on the death of the daughter, a termination of her interest in the trust will occur that may be subject to the GST tax. See the instructions for Part 3—Indirect Skips for a discussion of how to allocate GST exemption to such a trust.

Example 2.

You give $100,000 to your grandchild. This gift is a direct skip that is not made in trust. You should list it in Part 2 of Schedule A.

Example 3.

You establish a trust that is required to accumulate income for 10 years and then pay its income to your grandchildren for their lives and upon their deaths distribute the corpus to their children. Because the trust has no current beneficiaries, there are no present interests in the property transferred to the trust. All of the persons to whom the trust can make future distributions (including distributions upon the termination of interests in property held in trust) are skip persons (that is, your grandchildren and great-grandchildren). Therefore, the trust itself is a skip person and you should list the gift in Part 2 of Schedule A.

Example 4.

You establish a trust that pays all of its income to your grandchildren for 10 years. At the end of 10 years, the corpus is to be distributed to your children. Since for this purpose interests in trusts are defined only as present interests, all of the interests in this trust are held by skip persons (the children's interests are future interests). Therefore, the trust is a skip person and you should list the entire amount you transferred to the trust in Part 2 of Schedule A even though some of the trust's ultimate beneficiaries are nonskip persons.

Part 1—Gifts Subject Only to Gift Tax

List in Part 1 gifts subject only to the gift tax. Generally, all of the gifts you made to your spouse (that are required to be listed, as described earlier), to your children, and to charitable organizations are not subject to the GST tax and should, therefore, be listed only in Part 1.

Group the gifts in four categories:

  • Gifts made to your spouse,

  • Gifts made to third parties that are to be split with your spouse,

  • Charitable gifts (if you are not splitting gifts with your spouse), and

  • Other gifts.

If a transfer results in gifts to two or more individuals (such as a life estate to one with remainder to the other), list the gift to each separately.

Number and describe all gifts (including charitable, public, and similar gifts) in the columns provided in Schedule A.

Column B

Describe each gift in enough detail so that the property can be easily identified, as explained below.

For real estate, give:

  • A legal description of each parcel;

  • The street number, name, and area if the property is located in a city; and

  • A short statement of any improvements made to the property.

For bonds, give:

  • The number of bonds transferred;

  • The principal amount of each bond;

  • Name of obligor;

  • Date of maturity;

  • Rate of interest;

  • Date or dates when interest is payable;

  • Series number, if there is more than one issue;

  • Exchanges where listed or, if unlisted, give the location of the principal business office of the corporation; and

  • CUSIP number. The CUSIP number is a nine-digit number assigned by the American Banking Association to traded securities.

For stocks:

  • Give number of shares;

  • State whether common or preferred;

  • If preferred, give the issue, par value, quotation at which returned, and exact name of corporation;

  • If unlisted on a principal exchange, give the location of the principal business office of the corporation, the state in which incorporated, and the date of incorporation;

  • If listed, give principal exchange; and

  • CUSIP number.

For interests in property based on the length of a person's life, give the date of birth of the person. If you transfer any interest in a closely held entity, provide the EIN of the entity.

For life insurance policies, give the name of the insurer and the policy number.

Clearly identify in the description column which gifts create the opening of an ETIP as described under Transfers Subject to an Estate Tax Inclusion Period (ETIP). Describe the interest that is creating the ETIP. An allocation of GST exemption to property subject to an ETIP that is made prior to the close of the ETIP becomes effective no earlier than the date of the close of the ETIP. See Schedule D. Computation of GST Tax.

Column D. Donor's Adjusted Basis of Gifts

Show the basis you would use for income tax purposes if the gift were sold or exchanged. Generally, this means cost plus improvements, less applicable depreciation, amortization, and depletion.

For more information on adjusted basis, see Pub. 551, Basis of Assets.

Columns E and F. Date and Value of Gift

The value of a gift is the fair market value (FMV) of the property on the date the gift is made (valuation date). The FMV is the price at which the property would change hands between a willing buyer and a willing seller, when neither is forced to buy or to sell, and when both have reasonable knowledge of all relevant facts. FMV may not be determined by a forced sale price, nor by the sale price of the item in a market other than that in which the item is most commonly sold to the public. The location of the item must be taken into account whenever appropriate.

The FMV of a stock or bond (whether listed or unlisted) is the mean between the highest and lowest selling prices quoted on the valuation date. If only the closing selling prices are available, then the FMV is the mean between the quoted closing selling price on the valuation date and on the trading day before the valuation date. If there were no sales on the valuation date, figure the FMV as follows:

  1. Find the mean between the highest and lowest selling prices on the nearest trading date before and the nearest trading date after the valuation date. Both trading dates must be reasonably close to the valuation date.

  2. Prorate the difference between mean prices to the valuation date.

  3. Add or subtract (whichever applies) the prorated part of the difference to or from the mean price figured for the nearest trading date before the actual valuation date.

If no actual sales were made reasonably close to the valuation date, make the same computation using the mean between the bona fide bid and the asked prices instead of sales prices. If actual sales prices or bona fide bid and asked prices are available within a reasonable period of time before the valuation date but not after the valuation date, or vice versa, use the mean between the highest and lowest sales prices or bid and asked prices as the FMV.

Stock of close corporations or inactive stock must be valued on the basis of net worth, earnings, earning and dividend capacity, and other relevant factors.

Generally, the best indication of the value of real property is the price paid for the property in an arm's-length transaction on or before the valuation date. If there has been no such transaction, use the comparable sales method. In comparing similar properties, consider differences in the date of the sale, and the size, condition, and location of the properties, and make all appropriate adjustments.

The value of all annuities, life estates, terms for years, remainders, or reversions is generally the present value on the date of the gift.

Sections 2701 and 2702 provide special valuation rules to determine the amount of the gift when a donor transfers an equity interest in a corporation or partnership (section 2701) or makes a gift in trust (section 2702). The rules only apply if, immediately after the transfer, the donor (or an applicable family member) holds an applicable retained interest in the corporation or partnership, or retains an interest in the trust. For details, see sections 2701 and 2702, and their regulations.

Column G. Split Gifts

Enter an amount in this column only if you have chosen to split gifts with your spouse.

Split Gifts—Gifts Made by Spouses

If you elected to split gifts with your spouse and your spouse has given a gift(s) that is being split with you, enter in this area of Part 1 information on the gift(s) made by your spouse. If only you made gifts and you are splitting them with your spouse, do not make an entry in this area.

Generally, if you elect to split your gifts, you must split all gifts made by you and your spouse to third-party donees. The only exception is if you gave your spouse a general power of appointment over a gift you made.

Supplemental Documents

To support the value of your gifts, you must provide information showing how it was determined.

For stock of close corporations or inactive stock, attach balance sheets, particularly the one nearest the date of the gift, and statements of net earnings or operating results and dividends paid for each of the 5 preceding years.

For each life insurance policy, attach Form 712, Life Insurance Statement.

Note for single premium or paid-up policies.    In certain situations, for example, where the surrender value of the policy exceeds its replacement cost, the true economic value of the policy will be greater than the amount shown on line 59 of Form 712. In these situations, report the full economic value of the policy on Schedule A. See Rev. Rul. 78-137, 1978-1 C.B. 280 for details.

If the gift was made by means of a trust, attach a certified or verified copy of the trust instrument to the return on which you report your first transfer to the trust. However, to report subsequent transfers to the trust, you may attach a brief description of the terms of the trust or a copy of the trust instrument.

Also attach any appraisal used to determine the value of real estate or other property.

If you do not attach this information, Schedule A must include a full explanation of how value was determined.

Part 2—Direct Skips

List in Part 2 only those gifts that are currently subject to both the gift and GST taxes. You must list the gifts in Part 2 in the chronological order that you made them. Number, describe, and value the gifts as described in the instructions for Part 1.

If you made a transfer to a trust that was a direct skip, list the entire gift as one line entry in Part 2.

Column C. 2632(b) Election

If you elect under section 2632(b)(3) to not have the automatic allocation rules of section 2632(b) apply to a transfer, enter a check in column C next to the transfer. You must also attach a statement to Form 709 clearly describing the transaction and the extent to which the automatic allocation is not to apply. Reporting a direct skip on a timely filed Form 709 and paying the GST tax on the transfer will qualify as such a statement.

How to report generation-skipping transfers after the close of an ETIP.   If you are reporting a generation-skipping transfer that was subject to an ETIP (provided the ETIP closed as a result of something other than the death of the transferor; see Form 706), and you are also reporting gifts made during the year, complete Schedule A as you normally would with the transfer subject to an ETIP listed on Schedule A, Part 2.

Column B.

In addition to the information already requested, describe the interest that is closing the ETIP; explain what caused the interest to terminate; and list the year the gift portion of the transfer was reported and its item number on Schedule A that was originally filed to report the gift portion of the ETIP transfer.

Column E.

Give the date the ETIP closed rather than the date of the initial gift.

Columns F, G, and H.

Enter “N/A” in these columns.

The value is entered only in Column B of Part 1, Schedule D. See Column B, earlier.

Split Gifts—Gifts Made by Spouse

See this heading under Part 1.

Part 3—Indirect Skips

Some gifts made to trusts are subject only to gift tax at the time of the transfer but later may be subject to GST tax. The GST tax could apply either at the time of a distribution from the trust, at the termination of the trust, or both.

Section 2632(c) defines indirect skips and applies special rules to the allocation of GST exemption to such transfers. In general, an indirect skip is a transfer of property that is subject to gift tax (other than a direct skip) and is made to a GST trust. A GST trust is a trust that could have a generation-skipping transfer with respect to the transferor, unless the trust provides for certain distributions of trust corpus to nonskip persons. See section 2632(c)(3)(B) for details.

List in Part 3 those gifts that are indirect skips as defined in section 2632(c) or may later be subject to GST tax. This includes indirect skips for which election (2), described below, will be made in the current year or has been made in a previous year. You must list the gifts in Part 3 in the chronological order that you made them.

Column C. 2632(c) Election

Section 2632(c) provides for the automatic allocation of the donor's unused GST exemption to indirect skips. This section also sets forth three different elections you may make regarding the allocation of exemption.

Election 1. You may elect not to have the automatic allocation rules apply to the current transfer made to a particular trust.

Election 2. You may elect not to have the automatic rules apply to both the current transfer and any and all future transfers made to a particular trust.

Election 3. You may elect to treat any trust as a GST trust for purposes of the automatic allocation rules.

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

When to make an election.   Election 1 is timely made if it is made on a timely filed gift tax return for the year the transfer was made or was deemed to have been made.

  Elections 2 and 3 may be made on a timely filed gift tax return for the year for which the election is to become effective.

To make one of these elections, check column C next to the transfer to which the election applies. You must also attach an explanation as described below. If you are making election 2 or 3 on a return on which the transfer is not reported, simply attach the statement described below.

If you are reporting a transfer to a trust for which election 2 or 3 was made on a previously filed return, do not make an entry in column C for that transfer and do not attach a statement.

Attachment.   Attach a statement to Form 709 that describes the election you are making and clearly identifies the trusts and/or transfers to which the election applies.

Split Gifts—Gifts Made by Spouse

See this heading under Part 1.

Part 4—Taxable Gift Reconciliation

Line 2

Enter the total annual exclusions you are claiming for the gifts listed on Schedule A. See Annual Exclusion, earlier. If you split a gift with your spouse, the annual exclusion you claim against that gift may not be more than the smaller of your half of the gift or $14,000.

Deductions

Line 4. Marital deduction

Enter all of the gifts to your spouse that you listed on Schedule A and for which you are claiming a marital deduction. Do not enter any gift that you did not include on Schedule A. On the dotted line on line 4, indicate which numbered items from Schedule A are gifts to your spouse for which you are claiming the marital deduction.

Do not enter on line 4 any gifts to your spouse who was not a U.S. citizen at the time of the gift.

You may deduct all gifts of nonterminable interests made during the year that you entered on Schedule A regardless of amount, and certain gifts of terminable interests as outlined below.

Terminable interests.   Generally, you cannot take the marital deduction if the gift to your spouse is a terminable interest. In most instances, a terminable interest is nondeductible if someone other than the donee spouse will have an interest in the property following the termination of the donee spouse's interest. Some examples of terminable interests are:
  • A life estate,

  • An estate for a specified number of years, or

  • Any other property interest that after a period of time will terminate or fail.

  If you transfer an interest to your spouse as sole joint tenant with yourself or as a tenant by the entirety, the interest is not considered a terminable interest just because the tenancy may be severed.

Life estate with power of appointment.   You may deduct, without an election, a gift of a terminable interest if all four requirements below are met:
  1. Your spouse is entitled for life to all of the income from the entire interest;

  2. The income is paid yearly or more often;

  3. Your spouse has the unlimited power, while he or she is alive or by will, to appoint the entire interest in all circumstances; and,

  4. No part of the entire interest is subject to another person's power of appointment (except to appoint it to your spouse).

  If either the right to income or the power of appointment given to your spouse pertains only to a specific portion of a property interest, the marital deduction is allowed only to the extent that the rights of your spouse meet all four of the above conditions. For example, if your spouse is to receive all of the income from the entire interest, but only has a power to appoint one-half of the entire interest, then only one-half qualifies for the marital deduction.

  A partial interest in property is treated as a specific portion of an entire interest only if the rights of your spouse to the income and to the power are a fractional or percentile share of the entire property interest. This means that the interest or share will reflect any increase or decrease in the value of the entire property interest. If the spouse is entitled to receive a specified sum of income annually, the capital amount that would produce such a sum will be considered the specific portion from which the spouse is entitled to receive the income.

Election to deduct qualified terminable interest property (QTIP).   You may elect to deduct a gift of a terminable interest if it meets requirements (1), (2), and (4) earlier, even though it does not meet requirement (3).

  You make this election simply by listing the qualified terminable interest property on Schedule A and deducting its value from Schedule A, Part 4, line 4. You are presumed to have made the election for all qualified property that you both list and deduct on Schedule A. You may not make the election on a late filed Form 709.

Line 5

Enter the amount of the annual exclusions that were claimed for the gifts listed on line 4.

Line 7. Charitable Deduction

You may deduct from the total gifts made during the calendar year all gifts you gave to or for the use of:

  • The United States, a state or political subdivision of a state or the District of Columbia for exclusively public purposes;

  • Any corporation, trust, community chest, fund, or foundation organized and operated only for religious, charitable, scientific, literary, or educational purposes, or to prevent cruelty to children or animals, or to foster national or international amateur sports competition (if none of its activities involve providing athletic equipment unless it is a qualified amateur sports organization), as long as no part of the earnings benefits any one person, no substantial propaganda is produced, and no lobbying or campaigning for any candidate for public office is done;

  • A fraternal society, order, or association operating under a lodge system, if the transferred property is to be used only for religious, charitable, scientific, literary, or educational purposes, including the encouragement of art and the prevention of cruelty to children or animals; or

  • Any war veterans' organization organized in the United States (or any of its possessions), or any of its auxiliary departments or local chapters or posts, as long as no part of any of the earnings benefits any one person.

On line 7, show your total charitable, public, or similar gifts (minus annual exclusions allowed). On the dotted line, indicate which numbered items from the top of Schedule A are charitable gifts.

Line 10. GST Tax

If GST tax is due on any direct skips reported on this return, the amount of that GST tax is also considered a gift and must be added to the value of the direct skip reported on this return.

If you entered gifts on Part 2, or if you and your spouse elected gift splitting and your spouse made gifts subject to the GST tax that you are required to show on your Form 709, complete Schedule D, and enter on line 10 the total from Schedule D, Part 3, column H. Otherwise, enter zero on line 10.

Line 12. Election Out of QTIP Treatment of Annuities

Section 2523(f)(6) creates an automatic QTIP election for gifts of joint and survivor annuities where the spouses are the only possible recipients of the annuity prior to the death of the last surviving spouse.

The donor spouse can elect out of QTIP treatment, however, by checking the box on line 12 and entering the item number from Schedule A for the annuities for which you are making the election. Any annuities entered on line 12 cannot also be entered on line 4 of Schedule A, Part 4. Any such annuities that are not listed on line 12 must be entered on line 4 of Part 4, Schedule A. If there is more than one such joint and survivor annuity, you are not required to make the election for all of them. Once made, the election is irrevocable.

Schedule B. Gifts From Prior Periods

If you did not file gift tax returns for previous periods, check the “No” box on page 1 of Form 709, line 11a of Part 1—General Information. If you filed gift tax returns for previous periods, check the “Yes” box on line 11a and complete Schedule B by listing the years or quarters in chronological order as described below. If you need more space, attach a separate sheet using the same format as Schedule B.

Complete Schedule A before beginning Schedule B.

Column A.   If you filed returns for gifts made before 1971 or after 1981, show the calendar years in column A. If you filed returns for gifts made after 1970 and before 1982, show the calendar quarters.

Column B.   In column B, identify the IRS office where you filed the returns. If you have changed your name, be sure to list any other names under which the returns were filed. If there was any other variation in the names under which you filed, such as the use of full given names instead of initials, please explain.

Column C.   To determine the amount of applicable credit (formerly unified credit) used for gifts made after 1976, use the Worksheet for Schedule B, Column C (Credit Allowable for Prior Periods), later, unless your prior gifts total $500,000 or less.

Prior gifts totaling $500,000 or less.

In column C, enter the amount of applicable credit actually applied in the prior period.

Prior gifts totaling over $500,000.

See Redetermining the Applicable Credit, later.

Column D.   In column D, enter the amount of specific exemption claimed for gifts made in periods ending before January 1, 1977.

Column E.   In column E, show the correct amount (the amount finally determined) of the taxable gifts for each earlier period.

See Regulations section 25.2504-2 for rules regarding the final determination of the value of a gift.

Redetermining the Applicable Credit.

To redetermine the Applicable Credit for prior gifts in excess of $500,000, use the Worksheet for Schedule B, Column C (Credit Allowable for Prior Periods).

Instructions for Worksheet for Schedule B, Column C (Credit Allowable for Prior Periods)

Beginning with the earliest year after 1976 in which gifts using a credit amount were made, determine the credit amount (at current rates) for each quarter/year as follows:
Column  
A 
Period
Enter the quarter/year of the prior gift(s). Pre-1977 gifts will be on the first row.
B 
Taxable Gifts for Current Period
Enter the amount of all taxable gifts for the year in column A. The total of all pre-1977 gifts should be combined in the first row.
C 
Taxable Gifts for Prior Periods
Enter the amount from Column D of the previous row.
D 
Cumulative Taxable Gifts Including Current Period
Enter the sum of Columns B and C from the current row.
E 
Tax on Gifts for Prior Periods
Enter the amount from Column F of the previous row.
F 
Tax on Cumulative Gifts Including Current Period
Enter the tax based on the amount in Column D of the current row using the Table for Computing Gift Tax.
G 
Tax on Gifts for Current Period
Subtract the amount in Column E from the amount in Column F of the current row and enter here.
H 
DSUE Amount from Predeceased Spouse(s)
Enter the total Deceased Spousal Unused Exclusion amount (if any) received from the estate of the donor's last deceased spouse.
I 
Basic Exclusion Amount for Year of Gift
Enter the exclusion amount corresponding with the year listed in Column A of the current row. (SeeTable of Exclusion and Credit Amounts), later.
J 
Applicable Exclusion Amount
Add the amounts in Columns H and I of the current row and enter here.
K 
Applicable Credit Amount (based on Amount in Column J)
Using the Table for Computing Gift Tax, determine the credit corresponding to the amount in Column J of the current row and enter here. For each row in Column K, subtract 20 percent of any amount allowed as a specific exemption for gifts made after September 8, 1976, and before January 1, 1977.
L 
Applicable Credit Amount Used in Prior Periods
Enter the total of the amounts in Columns L and N of the previous row.
M 
Available Credit in Current Period
Subtract the amount in Column L from the amount in Column K of the current row and enter here.
N 
Credit Allowable
Enter the lesser of Column G or Column M of the current row.
Repeat this process for each prior year with taxable gifts. Do not enter less than zero.

Worksheet for Schedule B, Column C (Credit Allowable for Prior Periods).

Prior Years Credit Recalculation (for Form 709 Schedule B, Column C) 
(Keep for your records.)
A B C D E F G H I J K L M N
Period Taxable Gifts for Current Period Taxable Gifts for Prior Periods1 Cumulative Taxable Gifts Including Current Period  
(Col. B + Col. C)
Tax on Gifts for Prior Periods (Col. C)2, 3 Tax on Cumulative Gifts Including Current Period (Col. D)3 Tax on Gifts for Current Period 
(Col. F - Col. E)
DSUE from Predeceased Spouse(s) Basic Exclusion for Year of Gift4 Applicable Exclusion Amount 
(Col. H + Col. I)
Applicable Credit Amount based on Column J3, 5 Applicable Credit Amount Used in Prior Periods3, 6 Available Credit in Current Period  
(Col. K - Col. L)
Credit Allowable 
(lesser of Col. G or Col. M)
Pre-1977                          
YYYY                          
YYYY                          
YYYY                          
Total Applicable Credit Used in Prior Periods (Enter the Total of Column N on Schedule B, Line 1, Column C):  
1. Column C: Enter amount from column D of the previous row. 
2. Column E: Compute the tax on the amount in Column C or enter amount from column F of the previous row. 
3. To compute tax or credit amount, see Table for Computing Gift Tax, later. 
4. For years prior to 2010, the basic exclusion amount equals the applicable exclusion amount. 
5. For each row in Column K, subtract 20 percent of any amount allowed as a specific exemption for gifts made after September 8, 1976, and before January 1, 1977. 
6. Enter the total of Columns L and N of the previous row.
Example 1. Prior Years Credit Recalculation (for Form 709 Schedule B, Column C) 
(Three post-1976 years involved. All have the same maximum credit available. Tentative tax exceeds available credit.)
A B C D E F G H I J K L M N
Period Taxable Gifts for Current Period Taxable Gifts for Prior Periods1 Cumulative Taxable Gifts Including Current Period  
(Col. B + Col. C)
Tax on Gifts for Prior Periods (Col. C)2, 3 Tax on Cumulative Gifts Including Current Period (Col. D)3 Tax on Gifts for Current Period 
(Col. F - Col. E)
DSUE from Predeceased Spouse(s) Basic Exclusion for Year of the Gift4 Applicable Exclusion Amount 
(Col. H + Col. I)
Applicable Credit Amount based on Column J3, 5 Applicable Credit Amount Used in Prior Periods3, 6 Available Credit in Current Period 
(Col. K - Col. L)
Credit Allowable 
(lesser of Col. G or Col. M)
Pre-1977                          
2004 800,000 0 800,000 0 267,800 267,800 0 1,000,000 1,000,000 345,800 0 345,800 267,800
2007 300,000 800,000 1,100,000 267,800 385,800 118,000 0 1,000,000 1,000,000 345,800 267,800 78,000 78,000
2009 200,000 1,100,000 1,300,000 385,800 465,800 80,000 0 1,000,000 1,000,000 345,800 345,800 0 0
Total Applicable Credit Used in Prior Periods (Enter the Total of Column N on Schedule B, Line 1, Column C): 345,800
1. Column C: Enter amount from column D of the previous row. 
2. Column E: Compute the tax on the amount in Column C or enter amount from column F of the previous row. 
3. To compute tax or credit amount, see Table for Computing Gift Tax, later. 
4. For years prior to 2010, the basic exclusion amount equals the applicable exclusion amount. 
5. For each row in Column K, subtract 20 percent of any amount allowed as a specific exemption for gifts made after September 8, 1976, and before January 1, 1977. 
6. Enter the total of Columns L and N of the previous row.
Example 2. Prior Years Credit Recalculation (for Form 709 Schedule B, Column C)  
(Pre-1977 gifts plus 3 post-1976 years: Earlier years' gifts exceed credit then available. Last gift made after credit increased.)
A B C D E F G H I J K L M N
Period Taxable Gifts for Current Period Taxable Gifts for Prior Periods1 Cumulative Taxable Gifts Including Current Period  
(Col. B + Col. C)
Tax on Gifts for Prior Periods (Col. C)2, 3 Tax on Cumulative Gifts Including Current Period (Col. D)3 Tax on Gifts for Current Period 
(Col. F - Col. E)
DSUE from Predeceased Spouse(s) Basic Exclusion for Year of the Gift4 Applicable Exclusion Amount 
(Col. H + Col. I)
Applicable Credit Amount based on Column J3, 5 Applicable Credit Amount Used in Prior Periods3, 6 Available Credit in Current Period  
(Col. K - Col. L)
Credit Allowable 
(lesser of Col. G or Col. M)
Pre-1977 200,000   200,000   54,800                
1987 600,000 200,000 800,000 54,800 267,800 213,000 0 600,000 600,000 192,800 0 192,800 192,800
1999 200,000 800,000 1,000,000 267,800 345,800 78,000 0 650,000 650,000 211,300 192,800 18,500 18,500
2002 100 1,000,000 1,000,100 345,800 345,840 40 0 1,000,000 1,000,000 345,800 211,300 134,500 40
Total Applicable Credit Used in Prior Periods (Enter the Total of Column N on Schedule B, Line 1, Column C): 211,340
1. Column C: Enter amount from column D of the previous row. 
2. Column E: Compute the tax on the amount in Column C or enter amount from column F of the previous row. 
3. To compute tax or credit amount, see Table for Computing Gift Tax, later. 
4. For years prior to 2010, the basic exclusion amount equals the applicable exclusion amount. 
5. For each row in Column K, subtract 20 percent of any amount allowed as a specific exemption for gifts made after September 8, 1976, and before January 1, 1977. 
6. Enter the total of Columns L and N of the previous row.
Example 3. Prior Years Credit Recalculation (for Form 709 Schedule B, Column C) 
($4M gift made within the applicable credit, $5M DSUE received prior to subsequent $4M gift in the same year.)
A B C D E F G H I J K L M N
Period Taxable Gifts for Current Period Taxable Gifts for Prior Periods1 Cumulative Taxable Gifts Including Current Period  
(Col. B + Col. C)
Tax on Gifts for Prior Periods (Col. C)2, 3 Tax on Cumulative Gifts Including Current Period (Col. D)3 Tax on Gifts for Current Period 
(Col. F - Col. E)
DSUE from Predeceased Spouse(s) Basic Exclusion for Year of the Gift4 Applicable Exclusion Amount 
(Col. H + Col. I)
Applicable Credit Amount based on Column J3, 5 Applicable Credit Amount Used in Prior Periods3, 6 Available Credit in Current Period  
(Col. K - Col. L)
Credit Allowable 
(lesser of Col. G or Col. M)
Pre-1977                          
2011 8,000,000 0 8,000,000 0 3,145,800 3,145,800 4,000,000 5,000,000 9,000,000 3,545,800 0 3,545,800 3,145,800
YYYY                          
YYYY                          
Total Applicable Credit Used in Prior Periods (Enter the Total of Column N on Schedule B, Line 1, Column C): 3,145,800
1. Column C: Enter amount from column D of the previous row. 
2. Column E: Compute the tax on the amount in Column C or enter amount from column F of the previous row. 
3. To compute tax or credit amount, see Table for Computing Gift Tax, later. 
4. For years prior to 2010, the basic exclusion amount equals the applicable exclusion amount. 
5. For each row in Column K, subtract 20 percent of any amount allowed as a specific exemption for gifts made after September 8, 1976, and before January 1, 1977. 
6. Enter the total of Columns L and N of the previous row.
Example 4. Prior Years Credit Recalculation (for Form 709 Schedule B, Column C) 
(Prior gift exceeds applicable credit, $5M DSUE received prior to subsequent gift.)
A B C D E F G H I J K L M N
Period Taxable Gifts for Current Period Taxable Gifts for Prior Periods1 Cumulative Taxable Gifts Including Current Period  
(Col. B + Col. C)
Tax on Gifts for Prior Periods (Col. C)2, 3 Tax on Cumulative Gifts Including Current Period (Col. D)3 Tax on Gifts for Current Period 
(Col. F - Col. E)
DSUE from Predeceased Spouse(s) Basic Exclusion for Year of the Gift4 Applicable Exclusion Amount 
(Col. H + Col. I)
Applicable Credit Amount based on Column J3, 5 Applicable Credit Amount Used in Prior Periods3, 6 Available Credit in Current Period  
(Col. K - Col. L)
Credit Allowable 
(lesser of Col. G or Col. M)
Pre-1977                          
2002 4,000,000 0 4,000,000 0 1,545,800 1,545,800 0 1,000,000 1,000,000 345,800 0 345,800 345,800
2011 4,000,000 4,000,000 8,000,000 1,545,800 3,145,800 1,600,000 4,000,000 5,000,000 9,000,000 3,545,800 345,800 3,200,000 1,600,000
YYYY                          
Total Applicable Credit Used in Prior Periods(Enter the Total of Column N on Schedule B, Line 1, Column C): 1,945,800
1. Column C: Enter amount from column D of the previous row. 
2. Column E: Compute the tax on the amount in Column C or enter amount from column F of the previous row. 
3. To compute tax or credit amount, see Table for Computing Gift Tax, later. 
4. For years prior to 2010, the basic exclusion amount equals the applicable exclusion amount. 
5. For each row in Column K, subtract 20 percent of any amount allowed as a specific exemption for gifts made after September 8, 1976, and before January 1, 1977. 
6. Enter the total of Columns L and N of the previous row.

Table of Basic Exclusion and Credit Amounts 
(as Recalculated for 2013 Rates)

Period Exclusion Amounts Credit Amounts
1977 (Quarters 1 & 2) $30,000 $6,000
1977 (Quarters 3 & 4) $120,667 $30,000
1978 $134,000 $34,000
1979 $147,333 $38,000
1980 $161,563 $42,500
1981 $175,625 $47,000
1982 $225,000 $62,800
1983 $275,000 $79,300
1984 $325,000 $96,300
1985 $400,000 $121,800
1986 $500,000 $155,800
1987 through 1997 $600,000 $192,800
1998 $625,000 $202,050
1999 $650,000 $211,300
2000 and 2001 $675,000 $220,550
2002 through 2010 $1,000,000 $345,800
2011 $5,000,000 $1,945,800
2012 $5,120,000 $1,993,800
2013 $5,250,000 $2,045,800

Schedule C. Portability of Deceased Spousal Unused Exclusion (DSUE) Amount

Section 303 of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 authorized estates of decedents dying on or after January 1, 2011, to elect to transfer any unused exclusion to the surviving spouse. The amount received by the surviving spouse is called the deceased spousal unused exclusion, or DSUE, amount. If the executor of the decedent's estate elects transfer, or portability, of the DSUE amount, the surviving spouse can apply the DSUE amount received from the estate of his or her last deceased spouse (defined later) against any tax liability arising from subsequent lifetime gifts and transfers at death.

Complete Schedule A before beginning Schedule C.

Note.

A nonresident surviving spouse who is not a citizen of the United States may not take into account the DSUE amount of a deceased spouse, except to the extent allowed by treaty with his or her country of citizenship.

Last Deceased Spouse Limitation

The last deceased spouse is the most recently deceased person who was married to the surviving spouse at the time of that person's death. The identity of the last deceased spouse is determined as of the day a taxable gift is made and is not impacted by whether the decedent's estate elected portability or whether the last deceased spouse had any DSUE amount available. Remarriage also does not affect the designation of the last deceased spouse and does not prevent the surviving spouse from applying the DSUE amount to taxable transfers.

When a taxable gift is made, the DSUE amount received from the last deceased spouse is applied before the surviving spouse's basic exclusion amount. A surviving spouse who has more than one predeceased spouse is not precluded from using the DSUE amount of each spouse in succession. A surviving spouse may not use the sum of DSUE amounts from multiple predeceased spouses at one time nor may the DSUE amount of a predeceased spouse be applied after the death of a subsequent spouse.

When a surviving spouse applies the DSUE amount to a lifetime gift, the IRS may examine any return of a predeceased spouse whose executor elected portability to verify the allowable DSUE amount. The DSUE may be adjusted or eliminated as a result of the examination; however, the IRS may make an assessment of additional tax on the return of a predeceased spouse only within the applicable limitations period under section 6501.

Completing Schedule C

Complete Schedule C if the donor is a surviving spouse who received a DSUE amount from one or more predeceased spouses.

Entry spaces with gray shading and columns and lines marked “Reserved” are inactive. Do not enter any information in these areas.

Schedule C requests information on all DSUE amounts received from the donor's last deceased spouse and any previously deceased spouses. Each line in the chart should reflect a different predeceased spouse.

Part 1. DSUE Received From the Last Deceased Spouse

In this Part, include information about the DSUE amount from the donor's most recently deceased spouse (whose date of death is after December 31, 2010). In column E, enter the total of the amount in column D that the donor has applied to gifts in previous years and is applying to gifts reported on this return.

Part 2. DSUE Received From Other Predeceased Spouse(s)

Enter information about the DSUE amount from the spouse(s), if any, who died prior to the donor's most recently deceased spouse (but not before January 1, 2011) if the prior spouse's executor elected portability of the DSUE amount. In column D, indicate the amount of DSUE received from the estate of each predeceased spouse. In column E, enter the portion of the amount of DSUE shown in column D that was applied to prior lifetime gifts or transfers.

Any remaining DSUE from a predeceased spouse cannot be applied against tax arising from lifetime gifts if that spouse is not the most recently deceased spouse on the date of the gift. This rule applies even if the last deceased spouse had no DSUE amount or made no valid portability election, or if the DSUE amount from the last deceased spouse has been fully applied to gifts in previous periods.

Determining the Applicable Credit Amount including DSUE

On line 1, enter the donor's basic exclusion amount; for 2013, this amount is $5,250,000. Add the amounts listed in column E from Parts 1 and 2 and enter the total on line 2. On line 3, enter the total of lines 1 and 2. Using the Table for Computing Gift Tax, later, determine the donor's applicable credit by applying the appropriate tax rate to the amount on line 3. Enter this amount on line 4 and on line 7 of Part 2—Tax Computation.

Schedule D. Computation of GST Tax

Part 1—Generation-Skipping Transfers

Enter in Part 1 all of the gifts you listed in Part 2 of Schedule A, in the same order and showing the same values.

Column B

If you are reporting a generation-skipping transfer that occurred because of the close of an ETIP, complete column B for such transfer as follows:

  1. If the GST exemption is being allocated on a timely filed (including extensions) gift tax return, enter the value as of the close of the ETIP.

  2. If the GST exemption is being allocated on a late filed (past the due date including extensions) gift tax return, enter the value as of the date the gift tax return was filed.

Column C

You are allowed to claim the gift tax annual exclusion currently allowable for your reported direct skips (other than certain direct skips to trusts—see Note), using the rules and limits discussed earlier for the gift tax annual exclusion. However, you must allocate the exclusion on a gift-by-gift basis for GST computation purposes. You must allocate the exclusion to each gift to the maximum allowable amount and in chronological order, beginning with the earliest gift that qualifies for the exclusion. Be sure that you do not claim a total exclusion of more than $14,000 per donee.

Note.

You may not claim any annual exclusion for a transfer made to a trust unless the trust meets the requirements discussed under Part 2—Direct Skips.

Part 2—GST Exemption Reconciliation

Line 1

Every donor is allowed a lifetime GST exemption. The amount of the exemption for 2013 is $5,250,000. For transfers made through 1998, the GST exemption was $1 million. The exemption amounts for 1999 through 2013 are as follows:

Year Amount
1999 $1,010,000
2000 $1,030,000
2001 $1,060,000
2002 $1,100,000
2003 $1,120,000
2004 and 2005 $1,500,000
2006, 2007, and 2008 $2,000,000
2009 $3,500,000
2010 and 2011 $5,000,000
2012 $5,120,000
2013 $5,250,000

In general, each annual increase can only be allocated to transfers made (or appreciation occurring) during or after the year of the transfer.

Example.

A donor made $1,750,000 in GSTs through 2005, and allocated all $1,500,000 of the exemption to those transfers. In 2013, the donor makes a $207,000 taxable generation-skipping transfer. The donor can allocate $207,000 of exemption to the 2013 transfer but cannot allocate the $3,543,000 of unused 2013 exemption to pre-2013 transfers.

However, if in 2005, the donor made a $1,750,000 transfer to a trust that was not a direct skip, but from which generation-skipping transfers could be made in the future, the donor could allocate the increased exemption to the trust, even though no additional transfers were made to the trust. See Regulations section 26.2642-4 for the redetermination of the applicable fraction when additional exemption is allocated to the trust.

Keep a record of your transfers and exemption allocations to make sure that any future increases are allocated correctly.

Enter on line 1 of Part 2 the maximum GST exemption you are allowed. This will not necessarily be the highest indexed amount if you made no generation- skipping transfers during the year of the increase.

The donor can apply this exemption to inter vivos transfers (that is, transfers made during the donor's life) on Form 709. The executor can apply the exemption on Form 706 to transfers taking effect at death. An allocation is irrevocable.

In the case of inter vivos direct skips, a portion of the donor's unused exemption is automatically allocated to the transferred property unless the donor elects otherwise. To elect out of the automatic allocation of exemption, you must file Form 709 and attach a statement to it clearly describing the transaction and the extent to which the automatic allocation is not to apply. Reporting a direct skip on a timely filed Form 709 and paying the GST tax on the transfer will prevent an automatic allocation.

Special QTIP election.   If you elect QTIP treatment for any gifts in trust listed on Schedule A, then on Schedule D you may also elect to treat the entire trust as non-QTIP for purposes of the GST tax. The election must be made for the entire trust that contains the particular gift involved on this return. Be sure to identify the item number of the specific gift for which you are making this special QTIP election.

Line 5

Enter the amount of GST exemption you are applying to transfers reported in Part 3 of Schedule A.

Section 2632(c) provides an automatic allocation to indirect skips of any unused GST exemption. The unused exemption is allocated to indirect skips to the extent necessary to make the inclusion ratio zero for the property transferred. You may elect out of this automatic allocation as explained in the instructions for Part 3.

Line 6

Notice of allocation.    You may wish to allocate GST exemption to transfers not reported on this return, such as a late allocation.

  To allocate your exemption to such transfers, attach a statement to this Form 709 and entitle it “Notice of Allocation.” The notice must contain the following for each trust (or other transfer):
  • Clear identification of the trust, including the trust's EIN, if known;

  • If this is a late allocation, the year the transfer was reported on Form 709;

  • The value of the trust assets at the effective date of the allocation;

  • The amount of your GST exemption allocated to each gift (or a statement that you are allocating exemption by means of a formula such as “an amount necessary to produce an inclusion ratio of zero”); and

  • The inclusion ratio of the trust after the allocation.

  Total the exemption allocations and enter this total on line 6.

Note.

Where the property involved in such a transfer is subject to an ETIP because it would be includible in the donor's estate if the donor died immediately after the transfer (other than by reason of the donor having died within 3 years of making the gift), an allocation of the GST exemption at the time of the transfer will only become effective at the end of the ETIP. For details, see Transfers Subject to an Estate Tax Inclusion Period (ETIP), earlier, and section 2642(f).

Part 3—Tax Computation

You must enter in Part 3 every gift you listed in Part 1 of Schedule D.

Column C

You are not required to allocate your available exemption. You may allocate some, all, or none of your available exemption, as you wish, among the gifts listed in Part 3 of Schedule D. However, the total exemption claimed in column C may not exceed the amount you entered on line 3 of Part 2 of Schedule D.

You may enter an amount in column C that is greater than the amount you entered in column B.

Column D

Carry your computation to three decimal places (for example, “1.000”).

Part 2—Tax Computation (Page 1 of Form 709)

Table for Computing Gift Tax

Column A Column B Column C Column D
Taxable 
amount 
over
Taxable 
amount 
not over—
Tax on 
amount in 
Column A
Rate of tax 
on excess 
over amount 
in Column A
- - - - - $10,000 - - - - - 18%
$10,000 20,000 $1,800 20%
20,000 40,000 3,800 22%
40,000 60,000 8,200 24%
60,000 80,000 13,000 26%
       
80,000 100,000 18,200 28%
100,000 150,000 23,800 30%
150,000 250,000 38,800 32%
250,000 500,000 70,800 34%
500,000 750,000 155,800 37%
750,000 1,000,000 248,300 39%
1,000,000 – – – – 345,800 40%

Lines 4 and 5

To compute the tax for the amount on line 3 (to be entered on line 4) and the tax for the amount on line 2 (to be entered on line 5), use the Table for Computing Gift Tax, earlier.

Line 7

The applicable credit (formerly unified credit) amount is the tentative tax on the applicable exclusion amount. For gifts made in 2013, the applicable exclusion amount equals:

  • The basic exclusion amount of $5,250,000, PLUS

  • Any deceased spousal unused exclusion (DSUE) amount.

If you are a citizen or resident of the United States, you must apply any available applicable credit against gift tax. If you are not eligible to use a DSUE amount from a predeceased spouse, enter $2,045,800 on Line 7. Nonresidents not citizens of the United States may not claim the applicable credit and should enter zero on line 7.

If you are eligible to use a DSUE amount from a predeceased spouse, complete Schedule C—Deceased Spousal Unused Exclusion (DSUE) Amount and enter the amount from line 4 of that schedule on line 7 of Part 2—Tax Computation.

Determine the tentative tax on the applicable exclusion amount using the rates in Table for Computing Gift Tax, above, and enter the result on Line 7.

Line 10

Enter 20% of the amount allowed as a specific exemption for gifts made after September 8, 1976, and before January 1, 1977. (These amounts will be among those listed in Schedule B, column D, for gifts made in the third and fourth quarters of 1976.)

Line 13

Gift tax conventions are in effect with Australia, Austria, Denmark, France, Germany, Japan, and the United Kingdom. If you are claiming a credit for payment of foreign gift tax, figure the credit and attach the calculation to Form 709, along with evidence that the foreign taxes were paid. See the applicable convention for details of computing the credit.

Line 19

Make your check or money order payable to “United States Treasury” and write the donor's social security number on it. You may not use an overpayment on Form 1040 to offset the gift and GST taxes owed on Form 709.

Signature

As a donor, you must sign the return. If you pay another person, firm, or corporation to prepare your return, that person must also sign the return as preparer unless he or she is your regular full-time employee.

Third-party designee.   If you want to allow the return preparer (listed on the bottom of page 1 of Form 709) to discuss your 2013 Form 709 with the IRS, check the “Yes” box to the far right of your signature on page 1 of your return.

  If you check the “Yes” box, you (and your spouse, if splitting gifts) are authorizing the IRS to call your return preparer to answer questions that may arise during the processing of your return. You are also authorizing the return preparer of your 2013 Form 709 to:
  • Give the IRS any information that is missing from your return,

  • Call the IRS for information about the processing of your return or the status of your payment(s),

  • Receive copies of notices or transcripts related to your return, upon request, and

  • Respond to certain IRS notices about math errors, offsets, and return preparation.

  You are not authorizing your return preparer to receive any refund check, to bind you to anything (including any additional tax liability), or otherwise represent you before the IRS. If you want to expand the authorization of your return preparer, see Pub. 947, Practice Before the IRS and Power of Attorney.

  The authorization will automatically end three years from the date of filing Form 709. If you wish to revoke the authorization before it ends, see Pub. 947.


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