- 3.11.106.12 Processing Form 706-A, United States Additional Estate Tax Return
- 3.11.106.13 Processing Form 706-D, United States Additional Estate Tax Return Under Code Section 2057
- 3.11.106.14 Processing Schedule R-1 (Form 706), Generation-Skipping Transfer Tax (Direct Skips From a Trust Payment Voucher)
- 3.11.106.15 Processing Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return
- 3.11.106.16 Processing Form 709-A, United States Short Form Gift Tax
- 3.11.106.17 Processing Form 706-GS(D), Generation-Skipping Transfer Tax For Distribution
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The following information pertains to processing Form 706-A, United States Additional Estate Tax Return:
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As a result of the Tax Reform Act of 1976, Public Law 81–666, Section 2032A of the Internal Revenue Code permits the executor of an estate, if the decedent died after December 31, 1976, to make an election to value the decedents real property on the basis of its actual use, rather than its fair market value determined according to its highest and best, or most valuable use.
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Section 2032A also provides that all persons with an interest in the property must enter into a written agreement consenting to personal liability for any additional tax imposed in the event the property is sold or disposed of, or no longer qualifies for the special farm or business use.
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An additional estate tax is imposed if the disposition or cessation was within 15 years after the decedents death, if the decedent died before January 1, 1982, or within 10 years of decedents death if the decedent died after December 31, 1981 (and before the death of the qualified heir), the qualified heir disposes of any interest in the specially valued real property (other than to a member of his/her family), or the qualified heir ceases to use the specially valued real property. The tax is not imposed more than once for any one interest.
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The qualified heir must file Form 706-A, United States Additional Estate Tax Return, if any additional estate tax is due. Form 706–A must be filed within 6 months after the taxable disposition or cessation of the qualified use unless an extension of time has been granted.
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For tax periods after 8112 all taxpayers who have exchanges or involuntary conversions, even if they are nontaxable, must file Form 706–A.
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The 15–year rule for the estates of decedents dying before 1982 expired in 1997. Lines 16 through 19 that were on the March 1997 Form 706–A have been deleted. These lines were used only if the decedent died before January 1, 1982, and the taxable event occurred more than 120 months after the commencement date. The lines on the Form 706–A have been re-numbered.
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Form 4768, Application for Extension of Time To File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes, may be filed to apply for an extension of time to file.
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Form 706-A, United States Additional Estate Tax Returns, are filed at CSPC.
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Examine all returns for timeliness, completeness, name and address, Social Security Number (SSN) of heir, decedents name, social security number and Date of Death. Document Code 84 and MFT 53 have been assigned for use with Form 706-A, United States Additional Estate Tax Return.
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Any adjustment to the original return which is disclosed either by a corrected return or in letter form will be forwarded to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation for its review.
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Form 706-A, United States Additional Estate Tax Return, should be filed within 6 months after the specially valued property ceases to qualify for the reduced valuation. This is the time when the payment is required to be made.
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The tax period is determined by the date on which the qualified heir disposed of any interest in the specially valued property.
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Check the return and attached documents for date on which the qualified heir disposed of any interest in the specially valued property, or ceased to use (for the qualified use) the specially valued real property.
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Edit the date of disposition (from Page 2, Schedule A, Column (C)) in the top center of the form in YYYYMM format.
Note:
If the tax period cannot be determined, route the return to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.
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The following information pertains to entity verification:
If Then Part I—Entity Data Verify that the heir's name, address, and social security number and the decedents name, social security number and Date of Death was entered in Part I of Form 706-A, United States Additional Estate Tax Return. Heir's name, address or social security number or the decedents name, social security number or Date of Death is missing on the return and cannot be found on attachments 1. Research IDRS for missing information.
2. If information not found on IDRS, send return to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.
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Form 706-A, United States Additional Estate Tax Return, should be reviewed to determine if the return and schedules were accurately completed. Manual math verification of the return is not required.
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Cincinnati Compliance Services, Estate and Gift Tax Campus Operation will correspond for supporting schedules, if missing, for estates that have a Total Gross Estate of $5,000,000 and over for individuals dying after January 1, 2010.
If Then Schedule A--Disposition of Specially Valued Property or Cessation of Qualified Use Verify that the total amounts of Columns D and E were entered on Page 1, Part II, Lines 12 and 13 respectively. Schedule B--Involuntary Conversions or Exchanges Verify that the total amount from Column C was entered on Page 1, Part II, Line 16. Part II--Tax Computation Verify the following line items:
1. Line 1c—Subtract Line 1b from Line 1a.
2. Line 2c—Subtract Line 2b from Line 2a.
3. Line 3c—Subtract Line 3b from Line 3a.
4. Line 4—Divide Line 1c by Line 2c and enter as a percent (%).
5. Line 5—Multiply Line 3c by percent (%) on Line 4.
6. Line 7—Divide Line 6 by Line 1a and enter the result as a percent (%).
7. Line 8—Multiply Line 5 by percent (%) on Line 7.
8. Line 14—Subtract Line 13 from Line 12.
9. For 1/1/99 — Form 706–A Part II — Lines 16, 17, 18 and 19 were deleted. Renumber the following lines:
Change Line 20 to 16,
Line 21 to 17,
Line 22 to 18 and
Line 23 to 19.
See exhibits in back of IRM for prior and current forms.
10. Line 17 — Divide Line 16 by Line 12 and enter as a percent (%).Note:
If there are no entries on Lines 16, 17 or 18, enter Line 15 on Line 19.
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The following information pertains to penalty and interest:
If Then There is a green-rockered amount stamped or printed on the form (indicating that a remittance was submitted with the form) Compare it against the amount on Line 19. If that amount is greater than Line 19 (additional estate tax due), it is possible that the amount may be interest at the underpayment rate established under Section 6621 for the period beginning on the date the estate tax liability was due and ending on the date such additional estate tax is due. The green-rockered amount is greater than the amount on Line 19
1. Edit on the dotted line, to the left of Line 19, "TC-340" and the amount totaling the difference. (For example, if the green-rockered amount is $455.00, and the amount on Line 19 is $405.00, then you would edit "TC-340 - $50.00" to indicate a restricted interest assessment of $50.00.)
2. After editing, follow the procedures in IRM 3.11.106.13.5, Tax Period-Form 706-D.
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The following information pertains to processing Form 706-D, United States Additional Estate Tax Return Under Code Section 2057.
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A provision within the Internal Revenue Service Restructuring and Reform Act of 1998 requires a qualified heir to report and to pay additional estate tax, if:
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Any "taxable event" occurs to the qualified family owned business interest within 10 years of the decedents death, and
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The decedents death was later than December 31, 1997.
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The additional tax is computed on Form 706-D, United States Additional Estate Tax Return Under Code Section 2057. The tax is due 6 months after the taxable disposition, disqualifying act, or cessation of qualified use of the Qualified Family Owned Business Interest (QFOBI).
Note:
Code Section 2057 is repealed for individuals dying after January 1, 2004.
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A "taxable event" is defined as follows:
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The qualified heir disposes of any portion of his/her interest in the family owned business, other than by disposition to a member of the qualified heir's family or through a qualified condition contribution under Section 170(h).
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The qualified heir ceases to meet material participation requirements, i.e., if neither the qualified heir nor any member of his or her family has materially participated in the trade or business for at least 5 years or any 8-year period.
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The principal place of business of the qualified family owned business ceases to be located in the United States.
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The qualified heir loses United States citizenship and neither a qualified trust was created nor a security arrangement made.
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Form 4768, Application for Extension of Time To File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes, may be filed to apply for an extension of time to file.
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Form 706-D, United States Additional Estate Tax Returns Under Code Section 2057, are filed at CSPC.
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Examine all returns for timeliness, completeness, name and address, social security number of heir, decedents name, social security number and Date of Death. Document Code 84, MFT 53, and a blocking range of 650-699 have been assigned for use with Form 706-D, United States Additional Estate Tax Return Under Code Section 2057.
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Any adjustment to the original return that is disclosed either by a corrected return or in letter form will be forwarded to the Cincinnati Compliance Services, Estate and Gift Tax Campus Operation for its review.
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Form 706-D, United States Additional Estate Tax Return Under Code Section 2057, should be filed within 6 months after the taxable disposition, disqualifying act, or cessation of qualified use of the Qualified Family Owned Business Interest (QFOBI). This is the time when the payment is required to be made.
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The tax period is determined by the date on which the qualified heir disposed of any interest in the real property.
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Check the return and attached documents for date on which the qualified heir disposed of any interest in the real property, or ceased to use (for the qualified use) the real property, or performed a disqualifying act of the real property. Usually, this date can be found on Page 2, Schedule A, Column (C).
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Edit the date of disposition (from Page 2, Schedule A, Column (C)) in the top center of the form in YYYYMM format.
Note:
If the tax period cannot be determined, route the return to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.
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The following information pertains to entity verification:
If Then Part I - Entity Verify that the heir's name, address, and social security number and the decedents name, social security number and Date of Death was entered in Part 1 of Form 706-D, United States Additional Estate Tax Return Under Code Section 2057. If the heir's name, address or social security number or the decedents name, social security number or Date of Death is missing on the return and cannot be found on attachments
1. Research IDRS for missing information.
2. If information not found on IDRS, send return to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.
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Form 706-D, United States Additional Estate Tax Return Under Code Section 2056, should be reviewed to determine if the return and schedules were accurately completed. Manual math verification of the return is not required.
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Cincinnati Compliance Services, Estate and Gift Tax Campus Operations will correspond for supporting schedules, if missing, for estates that have a Total Gross Estate of $5,000,000 and over for individuals dying after January 1, 2010.
If Then Schedule A-Disposition of Qualified Family-Owned Business Interest, Failure to Materially Participate, or Disqualifying Act (Taxable Under section 2057(f)(1)) Verify that the total amounts were entered correctly from Column (D) to Page 1, Part II, Line 12. Schedule B- Involuntary Conversions or Exchanges Verify that the total amount was entered from Column (C) to Page 1, Part II, Line 11. Part II- Tax Computation 1. Line 3c- Subtract Line 3b from Line 3a.
2. Line 4- Divide Line 1 by Line 2 and enter result as a percentage (%).
3. Line 5- Multiply Line 3c by Line 4.
4. Line 7- Divide Line 6 by Line 1 and enter the result as a percentage (%).
5. Line 8- Multiply Line 5 by the percentage (%) on Line 7.
6. Line 9- Use Applicable percentage (%) as entered by taxpayer.
7. Line 10- Multiply Line 8 by the Applicable percentage (%) on Line 9.
8. Line 13- Divide Line 11 by Line 12 and enter result as a percentage (%).
9. Line 14- Multiply Line 10 by the percentage (%) on Line 13.
10. Line 15- Subtract Line 14 from Line 10.Note:
If there are no entries on Lines 11, 12, 13 or 14, enter Line 10 on Line 15.
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The following information pertains to penalty and interest:
If Then There is a green-rockered amount stamped or printed on the form (indicating that a remittance was submitted with the form) Compare it against the amount on Line 15. If that amount is greater than Line 15 (additional estate tax due), the amount should be interest at the underpayment rate established under Section 6621 for the period beginning on the date the estate tax liability was due and ending on the date such additional estate tax is due. Note:
If no interest is included in the payment, route the return to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.
The green-rockered amount is greater than the amount on Line 15
1. Edit on the dotted line, to the left of Line 15, "TC-340" and the amount totaling the difference. (For example, if the green-rockered amount is $455.00, and the amount on Line 15 is $405.00, then you would edit "TC-340 - $50.00" to indicate a restricted interest assessment of $50.00.)
2. After editing, follow the procedures in IRM 3.11.106.13.5, Tax Period-Form 706-D.
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Code Section 2603(a)(2) provides that the Generation-Skipping Transfer (GST) tax imposed on a direct skip from a trust is to be paid by the trustee. Schedule R–1 (Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return) serves as a payment voucher for the trustee to remit the GST tax to the Internal Revenue Service.
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Examine all returns for timeliness and completeness of all entity data. Schedule R–1 will be processed as a non-master file account using Document Code 85, MFT 53 and blocking series 590 through 599.
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The Schedule R-1 (Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return) is due 9 months after the decedents Date of Death.
Exception:
If the date of death is between January 1, 2010, and December 17, 2010 (inclusively); the return due date is September 19, 2011, as mandated in the Extender's Legislation (PL 111-312).
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The following information pertains to math verification:
If Then Information is missing 1. Contact executor of the estate.
2. Where possible, verify amounts on Lines 1 through 8 on the schedule against the items listed in Part I. Computation of the GST Tax on the Direct Skip (Description of property interests subject to the direct skip).
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The following information pertains to penalty and interest:
If Then Using the due date to determine timeliness Decide whether penalties and interest need to be assessed. It is determined that penalty and interest assessments (or any other adjustment actions) are required Prepare Form 3465, Adjustment Request, as instructed. Route the return to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.
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Receipt and Control will send all Schedule R–1s (Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return) with remittance to Deposit Activity, who will stamp the schedule with an NMF number and deposit the remittance. After numbering, the return will be sent to Code and Edit for math verification and then to Accounting for further processing.
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A tax is imposed on the lifetime transfer of property by an individual. It is imposed upon the donor, the person making the transfer. The chief purpose of the gift tax is to deter the making of gifts to avoid estate taxes. Before December 31, 1976, gift tax rates were only three-fourths of estate tax rates; however, there is now a unified rate for both taxes.
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A gift is a voluntary transfer of property by one to another without consideration or compensation. The tax law applies when the donor has parted with possession and control and has no power to change the disposition.
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Only individuals are required to file gift tax returns. If a trust, estate, partnership, or corporation makes gifts to the individual beneficiaries, partners, or stockholders, they are considered donors and may be liable for gift tax.
Note:
Trusts file Form 709 using an EIN. If Form 709 is filed with an EIN, continue processing.
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The due date for the 2011 Form 709 (without extensions) is April 16, 2012. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
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The entity area of the Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, consists of the following:
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Donor's name,
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Donor's Address, and
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Donor's Social Security Number (SSN).
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On Form 709, underline the first 4 letters of the donors last name. Underline the address, if any of the following apply:
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Line 11a box is checked "No" .
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Line 11b box is checked "Yes" .
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If both boxes on Line 11a or 11b are blank.
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Both boxes or neither box is checked for Line 11b.
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Deceased donor with CCC "F" .
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If the "in care of" name or symbols is included, abbreviate "in care of" or symbols as %.
If Then There is any reference to Reg. 25.2511-2 (incomplete gifts) on Page 1 of Form 709 1. Edit the return.
2. Remove the return from the block and give to your manager to hold for Examination's review.An amended ("G" coded) return See IRM 3.11.106.15.2.2, Amended Returns-Form 709. Both a PO Box and a street address are shown on the return 1. Perfect the address.
Note: PO Box will always take precedence over a street address.
2. Underline the PO Box.
3. Input the street address, with a TC014.Joint return with 2 names on Line 1 and gift to any one donee is over $26,000 Correspond to secure separate Forms 709. Joint return with 2 names on Line 1 and gift to any one donee is $26,000 or less Circle out spouses name and continue processing. Note:
Always circle out the "in care of" symbol ("c/o" or "%" ) if it is present with an address. Do not use the ampersand (&) and the percent symbol (%) when editing address information.
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The donors residence (domicile) is found on Page 1, Part 1, Box 5.
Note:
The legal residence (domicile) of the donor (Box 5) determines whether the return is a domestic or foreign (international) address return.
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CSPC will process all domestic domicile address returns and all foreign (international) address returns (any address that is not in 1 of the 50 states or the District of Columbia).
Note:
CSPC will edit the Citizenship Code.
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All U.S. Possessions are considered foreign (international):
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American Samoa (AS)
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Federated States of Micronesia (FM)
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Guam (GU)
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Northern Mariana Islands (MP)
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Marshall Islands (MH)
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Palau (PW)
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Puerto Rico (PR)
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Virgin Islands (U.S.) — (VI)
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APO/FPO addresses are not considered to be foreign (international) addresses.
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The Postal Service established new address requirements for APO/DPO/FPO addresses.
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If the old address appears (for example—APO New York, NY 091XX) it must be converted to the new state code abbreviation based on the ZIP Code (for example, the previous example would be converted to APO AE 091XX).
ZIP Code Address Abbreviation 340XX APO/DPO/FPO AA 090XX-098XX APO/DPO/FPO AE 962XX-966XX APO/DPO/FPO AP
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The following information pertains to amended returns:
If Then Return is marked "Amended" , "Revised" , "Adjusted" , "Subsequent" , "Substitute" , "Supplemental" , etc. See IRM 3.11.106.5.5.1 Amended Returns. Entity cannot be perfected on amended return and document is numbered Edit Action Code 320 to the return and route to Entity. Entity cannot be perfected on amended return and document is unnumbered after IDRS research Attach Form 4227, Intra-SC Reject or Routing Slip, and route to Entity.
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See IRM 3.11.106.8, Received Date, for information regarding received date editing.
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The following information pertains to the IRS received date:
If Then An IRS received date 1. It will be edited to the BMF in all instances, timely or delinquent.
2. See IRM 20.1, Penalty Handbook, for reasonable causes for delinquency.Date stamp is omitted Determine and enter received date in MMDDYY format in Part 2 of return, to the left of Lines 6 and 7. (See Figure 3.11.106–8.) Figure 3.11.106-8
This image is too large to be displayed in the current screen. Please click the link to view the image.Received Date
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The IRS received date must be stamped on all returns. Caution should be taken to determine when a return was filed or became processable. Determine the received date from return, envelope, or attachments. (See Figure 3.11.106-8.)
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Place penalty and interest code between Lines 2 and 3 of Page 1, Part 2-Tax Computation. (See Figure 3.11.106-9.) See IRM 3.11.106.2.9, Penalty and Interest Code, for description of codes.
Figure 3.11.106-9
This image is too large to be displayed in the current screen. Please click the link to view the image.Penalty and Interest Code
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An SSN is a 9 digit number which is assigned to an individual by the Social Security Administration.
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An SSN is valid if it contains 9 numeric characters, all nines and/or all zeros will be considered invalid.
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The Donor's SSN must be present on Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return.
If Then Other than 9 digits or multiple SSN's Check attachments and schedules for current SSNs. Missing SSN and return is unnumbered 1. Research IDRS.
2. If SSN not found, prepare Form 4227, Intra-SC Reject or Routing Slip, and route to Entity Control.Missing SSN and return is numbered 1. Edit Action Code 320 on the return.
2. Prepare Form 4227 and route to Entity Control.
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The following information pertains to the spouses SSN:
If Then Consent is given to split gifts 1. The spouses SSN must be present.
2. (The return will be coded with Consent Code "1" .)Spouse's SSN is missing 1. Take action to obtain.
2. See IRM 3.11.106.15.10, Consent Information/Consent of Spouse, for further explanation of Consent Codes.Primary and secondary SSNs are identical Check through attachments and schedules. If present, enter the correct SSN. Unable to locate within attached documents Research for the SSN, using local Submission Processing Center procedures. No record of spouses SSN is found in any taxpayer directory (numbered return) 1. Edit Action Code 320 on the return.
2. Prepare Form 4227, Intra-SC Reject or Routing Slip, and route to Entity Control.
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Verify Schedule A, Column E, Date of gift to determine tax period.
If Then Gift was made in current year 1. Do not edit tax period to Calendar Year at top of Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return.
2. The current tax period is automatically generated.Other than current tax period It must be edited in YYMM format. (See Figure 3.11.106-10.) Form 709 is for a tax year 197012 to 198012. Note:
Internal Revenue Code required quarterly gift tax returns for these periods.
Send returns to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation on Form 4227, Intra-SC Reject or Routing Slip. Form 709 "Calendar Year" is blank Determine tax period ending from latest "Date of gift" listed in Schedule A. No dates are listed on Schedule A or attachments Process as the year indicated on the form/return. Multiple years are filed on 1 return 1. Correspond using Form 3696 or other approved Correspondence Action Sheet.
2. Prepare dummy return if tax data can be determined for each year.
3. Continue processing.Exception:
Do not correspond for multiple tax years if Box B on Schedule A is checked or if there is an indication on Schedule A (or on an attachment) that the gift is a contribution to a section 529(c)(2)(B) - Qualified State Tuition Program.
More than one return for the same tax period and the same taxpayer Correspond using Form 3696 or other approved Correspondence Action Sheet. Unable to determine tax data for multiple years Correspond. See IRM 3.11.106.6, Taxpayer Correspondence General. Figure 3.11.106-10
This image is too large to be displayed in the current screen. Please click the link to view the image.Tax Period
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For early filed returns (for example, 2011 returns filed in 2011 but due on or before April 16, 2012), proceed as follows:
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Completely code the return using current IRM procedures. Initiate any needed correspondence before suspending the return. Use Action Code 2XX for correspondence, then attach Form 4227, Intra-SC Reject or Routing Slip, and annotate Action Code 480 as secondary action required.
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Leave returns in batch for processing.
If Then Unnumbered return 1. Do not send the return back to taxpayer.
2. Edit Action Code 480 on the return.
3. Edit tax period.
4. Attach Form 4227, Intra-SC Reject or Routing Slip, marked "Early Filed--Hold" to the return and route to Rejects.Numbered return
(no remittance)1. Do not send return back to taxpayer.
2. Edit Action Code 480 on the return.
3. Edit tax period.
4. Attach Form 4227 marked "Early Filed--Hold" to the return and route to Rejects.Numbered return
(remittance only)1. Do not send return back to taxpayer.
2. Remittance will be deposited to the taxpayer's account.
3. Edit CCC "Y" for remittance returns only.
4. Post the return as the month actually received. For example, if the return is received in April, 2012, post it as 1204. -
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Valid codes are A (2010 only), D, F, G, L, O, R, W, X, Y, 3 and 7. See IRM 3.11.106.5, Computer Condition Codes-CCCs, for description of codes.
Reminder:
Edit CCC "A" to identify 2010 (ONLY) revisions of Form 709 if there are any dollar amount entries (other than zero) anywhere on Page 2, Schedule A, Parts 2 or 3, or on Page 4, Schedule C (other than Exemption amounts (only) shown in Part 2, Lines 1, 3, and/or 8). DO NOT edit CCC "A" if other than 2010. See Figure 3.11.106-11.
Figure 3.11.106-11
This image is too large to be displayed in the current screen. Please click the link to view the image.CCC "A" for 2010 Form 709 ONLY
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For Citizenship Code, follow these procedures:
If Then On Page 1, Part 1, Box 5, taxpayer indicates that his legal residence is not in the U.S. and that he is not a citizen of the U.S. on Page 1, Part 1, Box 7, of the return
1. Edit a code "1" at the right end of Line 7, Part 1, Page 1. (See Figure 3.11.106-12)
2. Edit CCC "Y" .
3. If blank or there is an indication the donor is an American, leave blank.Figure 3.11.106-12
This image is too large to be displayed in the current screen. Please click the link to view the image.Citizenship Code
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All gift tax extension information has been removed from Form 2350, Application for Extension of Time To File U.S. Income tax Return, and Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return. A new separate gift tax extension Form 8892, Application for Automatic Extension of Time To File Form 709 and/or Payment of Gift/Generation-Skipping Transfer Tax, will be processed beginning January 1, 2005. Processing instructions for the new form are in IRM 3.11.212, Applications for Extension of Time to File, Returns and Documents Analysis.
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The following information pertains to extension of time to file and deferment of payment:
If Then Timely filed return with attachments (Balance due returns only) 1. Any timely filed return with attachments requesting extension of time to pay under IRC Section 6161 which has not been approved will be processed as a tentatively allowed deferment.
2. Annotate top of return, "Hardship Extension Tentatively Allowed" and requested extended date.
3. Forward extension request to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.Untimely filed return (Balance due returns only) 1. Any untimely filed hardship requests will also be routed to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.
2. Accept and note on return "Hardship Tentatively Disallowed, Withhold Issuance of Notice to Taxpayer" .
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The following information pertains to consent of spouse:
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IRC Section 2513 states that if husband and wife consent, all gifts made to third parties will, for purposes of gift tax, be considered as made one-half by each provided that the husband and wife are either U.S. citizens or U.S. residents.
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The consent is effective only for those gifts made while the husband and wife are actually married.
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If there is any indication of taxpayer intent to split gifts on the return, allow the consent.
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Any of the following conditions constitute a valid consent:
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The taxpayer/spouse checks "Yes" on Page 1, Part 1, Line 12.
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The spouses signature is present on Page 1, Part 1, Line 18.
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A timely signed jurat (a signed statement containing the same language found in Line 18) from the spouse is received.
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The consent of the husband is indicated (signified) on the wife's return and the wife's consent is signified on the husband's return.
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The consent of each spouse is signified on his or her own return.
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The consents of both spouses are signified on one of the returns.
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If Page 2, Part 1, 2, or 3, column G (Schedule A (Form 709)) indicates Gifts by Spouse Information, consider this a valid consent by spouse.
If Then Consent Code is "1" and spouses SSN is missing, incomplete, or not a valid SSN 1. Search attachments for spouses SSN.
2. If not found, research IDRS.No consent to split Edit Consent Code "0" . The taxpayer/spouse checked "No" on Line 12, but signed the consent 1. Allow the consent.
2. Edit Consent Code "1" .If Then Once you have determined that a valid consent has been made Edit Consent Code "1" in the left margin, on Page 1, Part 1, Line 18. (See Figure 3.11.106-13) Once you have determined that a valid consent has not been made Edit "0" and "X" Line 14 if present. Note:
The spouses return may be in-house, therefore, do not correspond for spouses signature.
Figure 3.11.106-13
This image is too large to be displayed in the current screen. Please click the link to view the image.Consent Code
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Effective January 1, 2004, the Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, program was modified to accept dollars-only transcription for all lines on Form 709 except for the following, which must be entered in dollars and cents:
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Line 17 - Total Tax Amount
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Line 18 - Prepaid Taxes
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Line 19 - Balance Due
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Line 20 - Refunded Amount
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Any lines in (1) above that have a vertical bold line, decimal, dash, or denominations clearly indicated will be treated as dollars and cents. No further editing is required.
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If not clearly indicated, edit dollars and cents.
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See Exhibit 3.11.106-4 for a display of Form 709 transcription lines (including Schedule A).
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Line 1 — Taxable gifts Current Period Amount. This amount is carried forward from Schedule A, Part 4, Line 11. Accept taxpayer's figures.
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Line 2 — Taxable gifts Prior Period Amount. This amount is carried forward from Schedule B, Line 3. Accept taxpayer's figures.
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Line 3 — Total taxable gifts. Accept taxpayer's figures.
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Line 4 — Total tax taxpayer (current). Accept taxpayer's figures.
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Line 5 — Total tax taxpayer (prior). Accept taxpayer's figures.
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Line 6 — Balance. Accept taxpayer's figures.
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Line 7 — Maximum unified credit. This is a computer generated line for versions of forms created for tax years 1988 and subsequent. Only citizens or residents of the United States are to take any available unified credit against the gift tax. Non-resident aliens may NOT claim the unified credit. They are advised to delete the (unified credit) amount on Line 7 and write in zero (0) on Line 11.
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Accept taxpayer's figures.
Caution:
Make sure Line 7 amount is correct for the year being filed (see table below for amounts).
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Line 8 — Total tax settlement gifts. Accept taxpayer's figures.
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Line 9 — Balance after unified credit amount. The following information pertains to Line 9:
If Then Lines 8 and 9 are blank Verify the amount by tax year on the Unified Credit table below and edit to Line 9. Line 9 is blank, but Lines 7 and 8 contain entries Subtract Line 8 from Line 7 and enter the result on Line 9. -
The following table contains information for the unified credit and exemption equivalent for citizens and residents (Form 709, United States Gift (and Generation-Skipping Transfer) Tax Returns):
Year Unified Credit Exemption Equivalent 1977 $30,000 $120,667 1978 $34,000 $134,000 1979 $38,000 $147,333 1980 $42,500 $161,562 1981 $47,000 $175,625 1982 $62,800 $225,000 1983 $73,300 $275,000 1984 $96,300 $325,000 1985 $121,800 $400,000 1986 $155,800 $500,000 1987 thru 1997 $192,800 $600,000 1998 $202,050 $625,000 1999 $211,300 $650,000 2000 and 2001 $220,550 $675,000 2002 thru 2009 $345,800 $1,000,000 2010 $330,800 $1,000,000 2011 and 2012 $1,730,800* $5,000,000* *The Unified Credit and Exemption Equivalent amounts for 2012 decedents will be increased due to an inflation adjustment. -
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Line 10 — Adjustment to unified credit. Accept taxpayer's figures.
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Line 11 — Balance after unified credit adjustment. If Lines 10 and 11 are blank, enter the amount from Line 9 on Line 11.
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Line 12 — Unified credit. Accept taxpayer's figures.
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Line 13 — Credit for foreign gift taxes. Accept taxpayer's figures.
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Line 14 — Total credits. Accept taxpayer's figures.
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Line 15 — Total gift tax. Accept taxpayer's figures.
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Line 16 — Generation-Skipping Transfer Tax (GST). Accept taxpayer's figures.
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Line 17 — Total tax. Accept taxpayer's figures.
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Line 18 — Prior payments. Accept taxpayer's figures.
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Line 19 — Balance due. Accept taxpayer's figures.
Note:
Check non-remit Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, for presence of a remittance (i.e., check attached) before releasing to Numbering.
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Line 20 — Overpayment. Accept taxpayer's figures.
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The purpose of green rockering Tax Due amounts is to show that money was received with the return. If the amount contains penalty and/or interest:
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X-out the rockered amount.
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Delete the penalty and/or interest.
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Edit the Balance Due to the left of the original entry.
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Edit a received date if one is not present.
Note:
See Figure 3.11.106-9.
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If more than one Schedule A on return, staple all Schedules A together and continue processing.
Note:
Do not math verify Schedule A.
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Taxpayers are allowed a contribution to a qualified state tuition plan on behalf of a designated beneficiary. If the taxpayer's total contributions to a qualified state tuition program on behalf of any individual beneficiary exceeded $13,000, then for purposes of the annual exclusion the taxpayer may elect under Section 529(c)(2)(B) to treat up to $65,000 of his/her total contributions as having been made ratably over a 5 year period beginning in 2003. These are considered gifts of a present interest.
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The following information pertains to Section 529(c)(2)(B) - Qualified State Tuition Programs:
If Then The taxpayer checked box B, Schedule A, and entered the amounts of gifts on Schedule A; or if there is an indication on Schedule A (or an attachment) that the gift is a contribution to a section 529(c)(2)(B) - Qualified State Tuition Program ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
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The following information pertains to Donor's adjusted basis of gift:
If Then There is more than one entry in Parts 1, 2, or 3 in Donor's adjusted basis of gift Edit the amount of $1.00 to top middle portion of Page 2 on all returns, except amended returns. (See Figure 3.11.106-14) Blank, zero, "see attached" , or "etc." is notated with no amounts in Column D Do not edit $1.00 to the top of Column D, Part 1, Page 2. Figure 3.11.106-14
This image is too large to be displayed in the current screen. Please click the link to view the image.Number of Donees
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Verify that there is an entry. A donee can be: an individual, a charitable organization, or the beneficiaries of a trust.
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Each individual to whom a gift is directly given is a donee. It does not matter how many times a gift is given; the individual accounts for only one donee.
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Trust—A trust can be set up for one or a number of beneficiaries. They can be individuals or charitable organizations.
Note:
The number of beneficiaries of the trust determines the number of donees, not the existence or number of the trusts.
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Follow these procedures:
If Then Page 1, Part 1, Line 10 is blank or zero 1. Enter the correct number of donees from Schedule A, Column B, or from an attachment with Schedule A information or allow the number of donees necessary to offset the annual exclusion being claimed. Note:
The annual exclusion is $13,000 for 2009 through 2011; $12,000 for 2006 through 2008; $11,000 for 2002 through 2005; and $10,000 for 2001 and prior returns.
2. Leave an action trail on Page 1 (left side between Lines 11-20) stating: "Schedule A" or "Line 2" .Page 3, Part 4, Line 2 is blank or zero "X" out the number of donees. (See Figure 3.11.106-14.) Note:
The spouses return may be in-house, therefore, do not correspond.
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Edit the Foreign Spouse Indicator on Page 2, Schedule A, left margin. Edit a "1" for foreign spouse and leave blank for domestic spouse. (See Exhibit 3.11.106-4.)
If Then There is a foreign spouse present 1. Verify that the amount on Page 3, Part 4, Line 2 includes the $136,000 amount (for tax year 2011). Note:
This amount was $134,000 for 2010; $133,000 for 2009; $128,000 for 2008; $125,000 for 2007; $120,000 for 2006; $117,000 for 2005; $114,000 for 2004, $112,000 for 2003, $110,000 for 2002, $106,000 for 2001, $103,000 for 2000, $101,000 for 1999 and $100,000 for 1998.
2. The annual exclusion for a foreign spouse cannot exceed $136,000.The foreign spouse indicator is not present but Line 2 includes the $136,000 exclusion 1. Edit a "1" .
2. Do not correspond.
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Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, with deceased donors will be processed as a regular return.
If Then The donor died in the year the gift was made, indicating that this is a final return Edit CCC "F" . Page 1, Part 1, Line 8 block is checked and the donor died in the year the gift was made Edit a "1" next to the DOD block. (See Figure 3.11.106-15) The donor died after the tax period (i.e., a gift was given in February 2010 and the donor died in January 2011) 1. Do not enter CCC "F" .
2. Do not enter deceased donor code "1" .Page 1, Part 1, Line 8 block is checked 1. DOD must also be present.
2. If not present, research the return and attachments.DOD cannot be found 1. Research IDRS for DOD.
2. If DOD not found, route to Entity Control on Form 4227, Intra-SC Reject or Routing Slip.Figure 3.11.106-15
This image is too large to be displayed in the current screen. Please click the link to view the image.Deceased Donor
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A signature is required on all Form 709, United States Gift (and Generation-Skipping Transfer) Tax Returns.
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Process unsigned returns as follows:
If Then Unnumbered, Numbered or Balance Due Returns 1. Correspond for signature using Form 3696, Correspondence Action Sheet, or Form 3696-A, IDRS Correspondence Action Sheet, or other in-house letter.
2. Hold return in suspense.
3. Edit Action Code 225 (numbered returns only).Replies to Correspondence When signed jurat (declaration) is received, attach it to the return.
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Form 709-A, United States Short Form Gift Tax Return, was obsoleted effective October 2003.
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If Form 709-A is received, send back to taxpayer on Form 6800, Request for Missing Information or Papers To Complete Your Tax Return or Form 8038-CP, or other appropriate letter, and request that the taxpayer file on Form 709.
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If Form 709-A is received from another function (i.e., Compliance, 6020(b), etc.), send back to originator stating that Forms 709-A were obsolete effective October 2003.
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The following information pertains to Form 706-GS(D), Generation Skipping Transfer Tax For Distributions.
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As a result of the Tax Reform Act of 1986, Public Law 99–514, Section 2601–2663, anyone who received a taxable distribution from a trust made after October 22, 1986, must file a Form 706-GS(D). Under certain circumstances, the tax applies to distribution made after September 25, 1985. This tax is paid by the distributee.
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Trustees are required to report generation-skipping distributions on Form 706-GS(D-1). Copy B is sent to the distributee to use in preparing Form 706-GS(D).
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Forms 706-GS(D) and 706-GS(D–1) Copy A must be filed and processed at CSPC.
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All taxable generation-skipping distributions received during the year will be reported in Part II of Form 706-GS(D). The transferee will receive Form 706-GS(D–1), copy of each trust from which a taxable distribution is received. The Form D–1, Part II, Column f will provide the tentative transfer amount since this is calculated with trust information.