Caution: DRAFT-NOT FOR FILING - This is an early release draft of an IRS tax form, instructions

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2018                                                                                                               Department of the Treasury
                                                                                                                   Internal Revenue Service

Instructions for Form 709
United States Gift (and Generation-Skipping Transfer) Tax Return
For gifts made during calendar year 2018




  DRAFT AS OF
Section references are to the Internal Revenue       • The applicable exclusion amount                 bring these children home by looking at
Code unless otherwise noted.                         consists of the basic exclusion amount            the photographs and calling
                                                     ($11,180,000 in 2018) and, in the case of         1-800-THE-LOST (1-800-843-5678) if you
Future Developments                                  a surviving spouse, any unused exclusion          recognize a child.
                                                     amount of the last deceased spouse (who
For the latest information about
                                                                                                       General Instructions

December 10, 2018
                                                     died after December 31, 2010). The
developments related to Form 709 and its             executor of the predeceased spouse's
instructions, such as legislation enacted            estate must have elected on a timely and
after they were published, go to IRS.gov/            complete Form 706 to allow the donor to           Purpose of Form
Form709.                                             use the predeceased spouse's unused               Use Form 709 to report the following.
                                                     exclusion amount.                                 • Transfers subject to the federal gift and
         For Gifts Made              Use Revision                                                      certain generation-skipping transfer (GST)
                                          of
                                                     • Effective January 1, 2019, Form 709
                                                     will be filed in Kansas City, Missouri. See       taxes and to figure the tax due, if any, on
                                      Form 709
                                                     Where To File, later.                             those transfers.
      After         and Before          Dated
                                                                                                       • Allocation of the lifetime GST
     –––––           January 1,       November
                                                     Reminders                                         exemption to property transferred during
                       1982           1981           Same-sex marriage. For federal tax                the transferor's lifetime. (For more details,
                                                     purposes, marriages of couples of the             see Schedule D, Part 2—GST Exemption
  December 31,       January 1,       January 1987
                                                     same sex are treated the same as                  Reconciliation, later, and Regulations
      1981             1987
                                                     marriages of couples of the opposite sex.         section 26.2632-1.)
  December 31,       January 1,       December
      1986             1989           1988
                                                     The term “spouse” includes an individual                  All gift and GST taxes must be
                                                     married to a person of the same sex.                 !    figured and filed on a calendar
  December 31,       January 1,       December       However, individuals who have entered             CAUTION year basis. List all reportable gifts
      1988             1990           1989           into a registered domestic partnership,           made during the calendar year on one
  December 31,       October 9,       October 1990   civil union, or other similar relationship that   Form 709. This means you must file a
      1989             1990                          isn't considered a marriage under state           separate return for each calendar year a
 October 8, 1990     January 1,       November
                                                     law aren't considered married for federal         reportable gift is given (for example, a gift
                       1992           1991           tax purposes.                                     given in 2018 must be reported on a 2018
                                                                                                       Form 709). Do not file more than one Form
  December 31,       January 1,       December           Restored Exclusion Amount. If a
                                                                                                       709 for any 1 calendar year.
      1992             1998           1996           donor made a taxable gift to the donor’s
                                                     same-sex spouse and that transfer
  December 31,         –––––          *
                                                     resulted in a reduction of the donor’s            How To Complete Form 709
      1997
                                                     available applicable exclusion amount,               1. Determine whether you are
         * Use the corresponding annual form.        there is a new procedure allowing the             required to file Form 709.
                                                     donor to restore the exclusion that was              2. Determine what gifts you must
                                                     utilized in the transfer. For more details,       report.
                                                     see Schedule C, Restored Exclusion
                                                     Amount, later.                                       3. Decide whether you and your
What's New                                               If a donor made a taxable gift to a skip
                                                                                                       spouse, if any, will elect to split gifts for the
                                                                                                       year.
Increased basic exclusion amount.                    person whose generation assignment is
                                                     changed as a result of Notice 2017-15,               4. Complete lines 1 through 19 of Part
Section 2010(c)(3), as amended by P. L.                                                                1—General Information.
115-97, increased the basic exclusion                any allocation of GST exemption to that
amount from $5 million, indexed for                  gift may be deemed to be void. For more              5. List each gift on Part 1, 2, or 3 of
inflation, to $10 million, indexed for               details, see the instructions for Gifts           Schedule A, as appropriate.
inflation, for estates of decedents dying            Subject to Both Gift and GST Taxes, later.           6. Complete Schedules B, C, and D,
and gifts made after December 31, 2017.                  For more information about the                as applicable.
 • The annual gift exclusion for 2018 is             Restored Exclusion Amount and GST                    7. If the gift was listed on Part 2 or 3 of
increased to $15,000. See Annual                     transfers, see Notice 2017-15, 2017-06            Schedule A, complete the necessary
Exclusion, later.                                    I.R.B. 783.                                       portions of Schedule D.
 • For gifts made to spouses who are not                                                                  8. Complete Part 2—Tax
U.S. citizens, the annual exclusion has              Photographs of Missing                            Computation.
increased to $152,000. See Nonresidents
not Citizens of the United States, later.            Children                                             9. Sign and date the return.
 • The top rate for gifts and generation-            The IRS is a proud partner with the
                                                     National Center for Missing and Exploited                  Make sure to complete page 1
skipping transfers remains at 40%. See                                                                          and the applicable schedules in
Table for Computing Gift Tax.                        Children® (NCMEC). Photographs of                    !
                                                                                                       CAUTION their entirety. Returns filed without
 • The basic credit amount for 2018 is               missing children selected by the Center
                                                     may appear in instructions on pages that          entries in each field will not be processed.
$4,417,800. See Table of Basic Exclusion
and Credit Amounts.                                  would otherwise be blank. You can help

Sep 11, 2018                                                        Cat. No. 16784X
Remember, if you are splitting           still file a return and report all of your gifts   Gifts to your spouse. You must file a gift
 TIP gifts, your spouse must sign                to charities.                                      tax return if you made any gift to your
       line 18 in Part 1—General                                                                    spouse of a terminable interest that does
Information.                                     Note. See Pub. 526, Charitable                     not meet the exception described in Life
                                                 Contributions, for more information on             estate with power of appointment, later, or
                                                 identifying a qualified charity.
Who Must File                                        If you are required to file a return to
                                                                                                    if your spouse is not a U.S. citizen and the
                                                                                                    total gifts you made to your spouse during
In general. If you are a citizen or resident     report noncharitable gifts and you made            the year exceed $152,000.
of the United States, you must file a gift tax   gifts to charities, you must include all of




  DRAFT AS OF
return (whether or not any tax is ultimately                                                            You also must file a gift tax return to
                                                 your gifts to charities on the return.             make the qualified terminable interest
due) in the following situations.
• If you gave gifts to someone in 2018           Transfers Subject to the Gift                      property (QTIP) election described under
totaling more than $15,000 (other than to                                                           Line 12. Election Out of QTIP Treatment of
                                                 Tax                                                Annuities, later.
your spouse), you probably must file Form
709. But see Transfers Not Subject to Gift       Generally, the federal gift tax applies to
                                                                                                        Except as described earlier, you do not
                                                 any transfer by gift of real or personal




December 10, 2018
Tax and Gifts to Your Spouse, later, for                                                            have to file a gift tax return to report gifts to
more information on specific gifts that are      property, whether tangible or intangible,
                                                                                                    your spouse regardless of the amount of
not taxable.                                     that you made directly or indirectly, in
                                                                                                    these gifts and regardless of whether the
                                                 trust, or by any other means.
• Certain gifts, called future interests, are                                                       gifts are present or future interests.
not subject to the $15,000 annual                    The gift tax applies not only to the free
exclusion and you must file Form 709                                                                Transfers Not Subject to the
                                                 transfer of any kind of property, but also to
even if the gift was under $15,000. See          sales or exchanges, not made in the                Gift Tax
Annual Exclusion, later.                         ordinary course of business, where value           Four types of transfers are not subject to
• Spouses may not file a joint gift tax          of the money (or property) received is less        the gift tax. These are:
return. Each individual is responsible for       than the value of what is sold or                   • Transfers to political organizations,
his or her own Form 709.                         exchanged. The gift tax is in addition to           • Transfers to certain exempt
• You must file a gift tax return to split       any other tax, such as federal income tax,         organizations,
gifts with your spouse (regardless of their      paid or due on the transfer.                        • Payments that qualify for the
amount) as described in Part 1—General                                                              educational exclusion, and
Information, later.                                 The exercise or release of a general             • Payments that qualify for the medical
• If a gift is of community property, it is      power of appointment may be a gift by the          exclusion.
considered made one-half by each                 individual possessing the power. General           These transfers are not “gifts” as that term
spouse. For example, a gift of $100,000 of       powers of appointment are those in which           is used on Form 709 and its instructions.
community property is considered a gift of       the holders of the power can appoint the           You need not file a Form 709 to report
$50,000 made by each spouse, and each            property under the power to themselves,            these transfers and should not list them on
spouse must file a gift tax return.              their creditors, their estates, or the             Schedule A of Form 709 if you do file
• Likewise, each spouse must file a gift         creditors of their estates. To qualify as a        Form 709.
tax return if they have made a gift of           power of appointment, it must be created
property held by them as joint tenants or        by someone other than the holder of the            Political organizations. The gift tax
tenants by the entirety.                         power.                                             does not apply to a transfer to a political
• Only individuals are required to file gift                                                        organization (defined in section 527(e)(1))
tax returns. If a trust, estate, partnership,       The gift tax also may apply to forgiving        for the use of the organization.
or corporation makes a gift, the individual      a debt, to making an interest-free or below
                                                                                                    Certain exempt organizations. The gift
beneficiaries, partners, or stockholders         market interest rate loan, to transferring
                                                                                                    tax does not apply to a transfer to any civic
are considered donors and may be liable          the benefits of an insurance policy, to
                                                                                                    league or other organization described in
for the gift and GST taxes.                      certain property settlements in divorce
                                                                                                    section 501(c)(4), any labor, agricultural,
• The donor is responsible for paying the        cases, and to giving up of some amount of
                                                                                                    or horticultural organization described in
gift tax. However, if the donor does not         annuity in exchange for the creation of a
                                                                                                    section 501(c)(5), or any business league
pay the tax, the person receiving the gift       survivor annuity.
                                                                                                    or other organization described in section
may have to pay the tax.                                                                            501(c)(6) for the use of such organization,
                                                    The gift tax applies to any digital asset,
• If a donor dies before filing a return, the    such as an electronic record, content, or          provided that such organization is exempt
donor's executor must file the return.                                                              from tax under section 501(a).
                                                 data stored or existing in a binary format,
Who does not need to file. If you meet           in which the donor transfers a right to use        Educational exclusion. The gift tax
all of the following requirements, you are       or possess, including virtual currency or          does not apply to an amount you paid on
not required to file Form 709.                   other digital representation of value that         behalf of an individual to a qualifying
 • You made no gifts during the year to          functions as a medium of exchange, a unit          domestic or foreign educational
your spouse.                                     of account, and/or a store of value;               organization as tuition for the education or
 • You did not give more than $15,000 to         domain names; images; multimedia; and              training of the individual. A qualifying
any one donee.                                   textual content files.                             educational organization is one that
 • All the gifts you made were of present                                                           normally maintains a regular faculty and
interests.                                           Bonds that are exempt from federal
                                                                                                    curriculum and normally has a regularly
                                                 income taxes are not exempt from federal
Gifts to charities. If the only gifts you                                                           enrolled body of pupils or students in
                                                 gift taxes.
made during the year are deductible as                                                              attendance at the place where its
gifts to charities, you do not need to file a        Sections 2701 and 2702 provide rules           educational activities are regularly carried
return as long as you transferred your           for determining whether certain transfers          on. See section 170(b)(1)(A)(ii) and its
entire interest in the property to qualifying    to a family member of interests in                 regulations.
charities. If you transferred only a partial     corporations, partnerships, and trusts are             The payment must be made directly to
interest, or transferred part of your interest   gifts. The rules of section 2704 determine         the qualifying educational organization
to someone other than a charity, you must        whether the lapse of any voting or                 and it must be for tuition. No educational
                                                 liquidation right is a gift.

                                                                        -2-
exclusion is allowed for amounts paid for       in property must meet the following               and enjoyment of the property or income
books, supplies, room and board, or other       conditions.                                       from the property will not begin until some
similar expenses that are not direct tuition        1. The refusal must be in writing.            future date. Future interests include
costs. To the extent that the payment to                                                          reversions, remainders, and other similar
the educational organization was for                2. The refusal must be received by the        interests or estates.
something other than tuition, it is a gift to   donor, the legal representative of the
the individual for whose benefit it was         donor, the holder of the legal title to the          A contribution to a QTP on behalf of a
made, and may be offset by the annual           property disclaimed, or the person in             designated beneficiary is considered a gift
exclusion if it is otherwise available.         possession of the property within 9               of a present interest.




  DRAFT AS OF
                                                months after the later of:
   Contributions to a qualified tuition                                                              A gift to a minor is considered a
program (QTP) on behalf of a designated             a. The day the transfer creating the          present interest if all of the following
beneficiary do not qualify for the              interest is made, or                              conditions are met.
educational exclusion. See Line                     b. The day the disclaimant reaches               1. Both the property and its income
B—Qualified Tuition Programs (529 Plans         age 21.                                           may be expended by, or for the benefit of,
or Programs) in the instructions for                3. The disclaimant must not have              the minor before the minor reaches age




December 10, 2018
Schedule A, later.                              accepted the interest or any of its benefits.     21.
Medical exclusion. The gift tax does not            4. As a result of the refusal, the               2. All remaining property and its
apply to an amount you paid on behalf of        interest must pass without any direction          income must pass to the minor on the
an individual to a person or institution that   from the disclaimant to either:                   minor's 21st birthday.
provided medical care for the individual.           a. The spouse of the decedent, or                3. If the minor dies before the age of
The payment must be to the care provider.                                                         21, the property and its income will be
The medical care must meet the                      b. A person other than the
                                                disclaimant.                                      payable either to the minor's estate or to
requirements of section 213(d) (definition                                                        whomever the minor may appoint under a
of medical care for income tax deduction            5. The refusal must be irrevocable
                                                                                                  general power of appointment.
purposes). Medical care includes                and unqualified.
expenses incurred for the diagnosis, cure,                                                            The gift of a present interest to more
                                                    The 9-month period for making the
mitigation, treatment, or prevention of                                                           than one donee as joint tenants qualifies
                                                disclaimer generally is determined
disease, or for the purpose of affecting                                                          for the annual exclusion for each donee.
                                                separately for each taxable transfer. For
any structure or function of the body, or for
transportation primarily for and essential to
                                                gifts, the period begins on the date the          Nonresidents not Citizens of
                                                transfer is a completed transfer for gift tax     the United States
medical care. Medical care also includes
                                                purposes.
amounts paid for medical insurance on                                                             Nonresidents not citizens of the United
behalf of any individual.                       Annual Exclusion                                  States are subject to gift and GST taxes
    The medical exclusion does not apply        The first $15,000 of gifts of present             for gifts of tangible property situated in the
to amounts paid for medical care that are       interest to each donee during the calendar        United States. A person is considered a
reimbursed by the donee's insurance. If         year is subtracted from total gifts in            nonresident not a citizen of the United
payment for a medical expense is                figuring the amount of taxable gifts. For a       States if he or she, at the time the gift is
reimbursed by the donee's insurance             gift in trust, each beneficiary of the trust is   made, (1) was not a citizen of the United
company, your payment for that expense,         treated as a separate donee for purposes          States and did not reside there, or (2) was
to the extent of the reimbursed amount, is      of the annual exclusion.                          domiciled in a U.S. possession and
not eligible for the medical exclusion and                                                        acquired citizenship solely by reason of
you are considered to have made a gift to          All of the gifts made during the               birth or residence in the possession.
the donee of the reimbursed amount.             calendar year to a donee are fully                Under certain circumstances, they also
                                                excluded under the annual exclusion if            are subject to gift and GST taxes for gifts
    To the extent that the payment was for      they are all gifts of present interest and
something other than medical care, it is a                                                        of intangible property. See section
                                                they total $15,000 or less.                       2501(a).
gift to the individual on whose behalf the
payment was made and may be offset by           Note. For gifts made to spouses who are              If you are a nonresident not a citizen of
the annual exclusion if it is otherwise         not U.S. citizens, the annual exclusion has       the United States who made a gift subject
available.                                      been increased to $152,000, provided the          to gift tax, you must file a gift tax return
    The medical and educational                 additional (above the $15,000 annual              when any of the following apply.
exclusions are allowed without regard to        exclusion) $137,000 gift would otherwise          • You gave any gifts of future interests.
the relationship between you and the            qualify for the gift tax marital deduction (as    • Your gifts of present interests to any
donee. For examples illustrating these          described in the Schedule A, Part 4, line 4,      donee other than your spouse total more
exclusions, see Regulations section             instructions, later).                             than $15,000.
25.2503-6(c).                                                                                     • Your outright gifts to your spouse who is
                                                Note. Only the annual exclusion applies           not a U.S. citizen total more than
Qualified disclaimers. A donee's refusal        to gifts made to a nonresident not a citizen      $152,000.
to accept a gift is called a disclaimer. If a   of the United States. Deductions and
person makes a qualified disclaimer of any      credits are not considered in determining         Transfers Subject to the GST
interest in property, the property will be      gift tax liability for such transfers.            Tax
treated as if it had never been transferred
to that person. Accordingly, the                   A gift of a future interest cannot be          You must report on Form 709 the GST tax
disclaimant is not regarded as making a         excluded under the annual exclusion.              imposed on inter vivos direct skips. An
gift to the person who receives the                                                               inter vivos direct skip is a transfer made
                                                   A gift is considered a present interest if
property because of the qualified                                                                 during the donor's lifetime that is:
                                                the donee has all immediate rights to the
disclaimer.                                     use, possession, and enjoyment of the
                                                                                                   • Subject to the gift tax,
                                                property or income from the property.
                                                                                                   • Of an interest in property, and
   Requirements. To be a qualified                                                                 • Made to a skip person. (See Gifts
disclaimer, a refusal to accept an interest        A gift is considered a future interest if      Subject to Both Gift and GST Taxes,
                                                the donee's rights to the use, possession,        later.)

                                                                      -3-
A transfer is subject to the gift tax if it is      If you are filing this Form 709 solely to    When To File
required to be reported on Schedule A of             report the GST portion of transfers subject
                                                                                                     Form 709 is an annual return.
Form 709 under the rules contained in the            to an ETIP, complete the form as you
gift tax portions of these instructions,             normally would with the following                  Generally, you must file Form 709 no
including the split gift rules. Therefore,           exceptions.                                     earlier than January 1, but not later than
transfers made to political organizations,              1. Write “ETIP” at the top of page 1.        April 15, of the year after the gift was
transfers made to certain exempt                                                                     made. However, in instances when April
organizations, transfers that qualify for the           2. Complete only lines 1 through 6, 8,
                                                     and 9 of Part 1—General Information.            15 falls on a Saturday, Sunday, or legal
medical or educational exclusions,




  DRAFT AS OF
                                                                                                     holiday, Form 709 will be due on the next
transfers that are fully excluded under the             3. Complete Schedule A, Part 2, as
                                                                                                     business day. See section 7503.
annual exclusion, and most transfers                 explained in the instructions for that
made to your spouse are not subject to the           schedule.                                          If the donor died during 2018, the
GST tax.                                                4. Complete Schedule D. Complete             executor must file the donor's 2018 Form
                                                     column B of Schedule D, Part 1, as              709 not later than the earlier of:
   Transfers subject to the GST tax are              explained in the instructions for that          • The due date (with extensions) for filing



December 10, 2018
described in further detail in the                   schedule.                                       the donor's estate tax return; or
instructions.                                                                                        • April 15, 2019, or the extended due
                                                        5. Complete only lines 10 and 11 of
         Certain transfers, particularly             Schedule A, Part 4.                             date granted for filing the donor's gift tax
   !     transfers to a trust, that are not                                                          return.
                                                        6. Complete Part 2—Tax
 CAUTION subject to gift tax and are

therefore not subject to the GST tax on
                                                     Computation.                                    Extension of Time To File
Form 709 may be subject to the GST tax               Section 2701 Elections                          There are two methods of extending the
at a later date. This is true even if the                                                            time to file the gift tax return. Neither
                                                     The special valuation rules of section 2701     method extends the time to pay the gift or
transfer is less than the $15,000 annual
                                                     contain three elections that you can make       GST taxes. If you want an extension of
exclusion. In this instance, you may want
                                                     only with Form 709.                             time to pay the gift or GST taxes, you must
to apply a GST exemption amount to the
transfer on this return or on a Notice of               1. A transferor may elect to treat a         request that separately. See Regulations
Allocation. For more information, see                qualified payment right he or she holds         section 25.6161-1.
Schedule D, Part 2—GST Exemption                     (and all other rights of the same class) as
                                                                                                     By extending the time to file your in-
Reconciliation and Schedule A, Part                  other than a qualified payment right.
                                                                                                     come tax return. Any extension of time
3—Indirect Skips, later.                                2. A person may elect to treat a             granted for filing your calendar year 2018
                                                     distribution right held by that person in a     federal income tax return also will
Transfers Subject to an Estate                       controlled entity as a qualified payment        automatically extend the time to file your
Tax Inclusion Period (ETIP)                          right.                                          2018 federal gift tax return. Income tax
Certain transfers that are direct skips                 3. An interest holder may elect to treat     extensions are made by using Form 4868,
receive special treatment. If the                    as a taxable event the payment of a             Application for Automatic Extension of
transferred property would have been                 qualified payment that occurs more than 4       Time To File U.S. Individual Income Tax
includible in the donor's estate if the donor        years after its due date.                       Return, or Form 2350, Application for
had died immediately after the transfer (for                                                         Extension of Time To File U.S. Income
                                                         The elections described in (1) and (2)      Tax Return. You may only use these forms
a reason other than the donor having died            must be made on the Form 709 that is filed
within 3 years of making the gift), the                                                              to extend the time for filing your gift tax
                                                     by the transferor to report the transfer that   return if you also are requesting an
direct skip will be treated as having been           is being valued under section 2701. The
made at the end of the ETIP rather than at                                                           extension of time to file your income tax
                                                     elections are made by attaching a               return.
the time of the actual transfer.                     statement to Form 709. For information on
                                                     what must be in the statement and for           By filing Form 8892. If you do not
    For example, if A transferred her house          definitions and other details on the            request an extension for your income tax
to her granddaughter, B, but retained the            elections, see section 2701 and                 return, use Form 8892, Application for
right to live in the house until her death (a        Regulations section 25.2701-2(c).               Automatic Extension of Time To File Form
retained life estate), the value of the house                                                        709 and/or Payment of Gift/
would be includible in A's estate if she                The election described in (3) may be         Generation-Skipping Transfer Tax, to
died while still holding the life estate. In         made by attaching a statement to the            request an automatic 6-month extension
this case, the transfer to B is a completed          Form 709 filed by the recipient of the          of time to file your federal gift tax return. In
gift (it is a transfer of a future interest) and     qualified payment for the year the              addition to containing an extension
must be reported on Part 1 of Schedule A.            payment is received. If the election is         request, Form 8892 also serves as a
The GST portion of the transfer would not            made on a timely filed return, the taxable      payment voucher (Form 8892-V) for a
be reported until A died or otherwise gave           event is deemed to occur on the date the        balance due on federal gift taxes for which
up her life estate in the house.                     qualified payment is received. If it is made    you are extending the time to file. For
                                                     on a late filed return, the taxable event is    more information, see Form 8892.
    Report the gift portion of such a                deemed to occur on the first day of the
transfer on Schedule A, Part 1, at the time          month immediately preceding the month in        Private Delivery Services
of the actual transfer. Report the GST               which the return is filed. For information on   (PDSs)
portion on Schedule A, Part 2, but only at           what must be in the statement and for           Filers can use certain PDSs designated by
the close of the ETIP. Use Form 709 only             definitions and other details on this           the IRS to meet the “timely mailing as
to report those transfers where the ETIP             election, see section 2701 and                  timely filing” rule for tax returns. Go to
closed due to something other than the               Regulations section 25.2701-4(d).               IRS.gov/PDS for the current list of
donor's death. (If the ETIP closed as the
                                                        All of the elections may be revoked, but     designated services.
result of the donor's death, report the
transfer on Form 706, United States                  only with the consent of the IRS.
                                                                                                        The PDS can tell you how to get written
Estate (and Generation-Skipping Transfer)                                                            proof of the mailing date.
Tax Return.)

                                                                          -4-
For the IRS mailing address to use if            appraisal, the information required if no        donee, there is a gift to the donee when he
you're using a PDS, go to IRS.gov/                  appraisal is provided, and the information       or she cashes the bond without any
PDSstreetAddresses.                                 required for transfers under sections 2701       obligation to account to you.
                                                    and 2702.
        PDSs can't deliver items to P.O.
      ! boxes. You must use the U.S.                                                                 Transfer of Certain Life
CAUTION Postal Service to mail any item to
                                                    Penalties                                        Estates Received From
an IRS P.O. box address.                            Late filing and late payment. Section            Spouse
                                                    6651 imposes penalties for both late filing      If you received a qualified terminable




  DRAFT AS OF
Where To File                                       and late payment, unless there is                interest (see Line 12. Election Out of QTIP
                                                    reasonable cause for the delay.                  Treatment of Annuities in the instructions
Prior to January 1, 2019, file Form 709 at
the following address.                              Reasonable cause determinations. If              for Schedule A, later) from your spouse for
                                                    you receive a notice about penalties after       which a marital deduction was elected on
          Department of the Treasury                you file Form 709, send an explanation           your spouse's estate or gift tax return, you
          Internal Revenue Service Center           and we will determine if you meet                will be subject to the gift tax (and GST tax,




December 10, 2018
          Cincinnati, OH 45999                      reasonable-cause criteria. Do not attach         if applicable) if you dispose of all or part of
                                                    an explanation when you file Form 709.           your life income interest (by gift, sale, or
      If submitting Form 709 by a PDS, mail             There also are penalties for willful         otherwise).
to:                                                 failure to file a return on time, willful            Generally, the entire value of the
                                                    attempt to evade or defeat payment of tax,       property transferred will be treated as a
          Internal Revenue Service                  and valuation understatements that cause         taxable gift less:
          201 West Rivercenter Boulevard            an underpayment of the tax. A substantial
          Covington, KY 41011                       valuation understatement occurs when the             1. The amount you received (if any)
                                                    reported value of property entered on            for the life income interest; and
  Effective January 1, 2019, file Form              Form 709 is 65% or less of the actual                2. The amount (if any) determined
709 at the following address.                       value of the property. A gross valuation         after the application of section 2702,
                                                    understatement occurs when the reported          valuing certain retained interests at zero,
          Department of the Treasury                value listed on the Form 709 is 40% or           for the life income interest you retained
          Internal Revenue Service Center           less of the actual value of the property.        after the transfer.
          Kansas City, MO 64999
                                                    Return preparer. Penalties also may be               That portion of the property's value that
                                                    applied to tax return preparers, including       is attributable to the remainder interest is a
      If submitting Form 709 by a PDS, mail         gift tax return preparers.                       gift of a future interest for which no annual
to:                                                                                                  exclusion is allowed. To the extent that
                                                        The Small Business and Work
                                                    Opportunity Tax Act of 2007 extended             you transferred the life income interest
          Internal Revenue Service
                                                    section 6694 income tax return preparer          without receiving any value in return, the
          333 W. Pershing Road
                                                    penalties to all tax return preparers,           transfer is a gift, and you may claim an
          Kansas City, MO 64108
                                                    including gift tax return preparers. Now,        annual exclusion, treating the person to
                                                    gift tax return preparers who prepare any        whom you transferred the interest as the
             See the Caution under Lines 12–                                                         donee for purposes of figuring the annual
                                                    return or claim for refund with an
 TIP 18. Split Gifts, later, before you             understatement of tax liability due to willful   exclusion.
             mail the return.
                                                    or reckless conduct can be penalized

Adequate Disclosure
                                                    $5,000 or 75% of the fee received (or fee
                                                    to be received), whichever is greater, for
                                                                                                     Specific Instructions
                                                    each return. See section 6694, its
         To begin the running of the statute        regulations, and Ann. 2009-15, 2009-11           Part 1—General
      !  of limitations for a gift, the gift must
CAUTION be adequately disclosed on Form
                                                    I.R.B. 687, available at IRS.gov/pub/irs-        Information
                                                    irbs/irb09-11.pdf, for more information.
709 (or an attached statement) filed for the                                                         Lines 4 and 6. Address. Enter your
year of the gift.                                                                                    current mailing address.
                                                    Joint Tenancy
    In general, a gift will be considered           If you buy property with your own funds              Foreign address. If your address is
adequately disclosed if the return or               and the title to the property is held by you     outside of the United States or its
statement includes the following.                   and a donee as joint tenants with right of       possessions or territories, enter the
 • A full and complete Form 709.                    survivorship and if either you or the donee      information as follows: city, province or
 • A description of the transferred property        may give up those rights by severing your        state, and name of country. Follow the
and any consideration received by the               interest, you have made a gift to the donee      country's practice for entering the postal
donor.                                              in the amount of half the value of the           code. Do not abbreviate the country
 • The identity of, and relationship                property.                                        name.
between, the donor and each donee.
                                                       If you create a joint bank account for        Line 5. Legal residence (domicile). In
 • If the property is transferred in trust, the                                                      general, your legal residence (also known
trust's employer identification number              yourself and a donee (or a similar kind of
                                                    ownership by which you can get back the          as your domicile) is acquired by living in a
(EIN) and a brief description of the terms
                                                    entire fund without the donee's consent),        place, for even a brief period of time, with
of the trust (or a copy of the trust
                                                    you have made a gift to the donee when           no definite present intention of moving
instrument in lieu of the description).
                                                    the donee draws on the account for his or        from that place.
 • Either a qualified appraisal or a detailed
description of the method used to                   her own benefit. The amount of the gift is          Enter the state of the United States
determine the fair market value of the gift.        the amount that the donee took out               (including the District of Columbia) or a
                                                    without any obligation to repay you.             foreign country in which you legally reside
   See Regulations section                                                                           or are domiciled at the time of the gift.
301.6501(c)-1(e) and (f) for details,                  If you buy a U.S. savings bond
including what constitutes a qualified              registered as payable to yourself or a

                                                                         -5-
Line 7. Citizenship. Enter your                        If the consent is effective, the liability     • Only one spouse (the donor spouse)
citizenship.                                       for the entire gift tax of each spouse is joint   made gifts of more than $15,000 but not
                                                   and several.                                      more than $30,000 to any third-party
    The term “citizen of the United States”                                                          donee,
includes a person who, at the time of                 If you meet these requirements and
                                                   want your gifts to be considered made              • The only gifts made by the other
making the gift:                                                                                     spouse (the consenting spouse) were gifts
 • Was domiciled in a possession of the            one-half by you and one-half by your
                                                   spouse, check the “Yes” box on line 12,           of not more than $15,000 to third-party
United States,                                                                                       donees other than those to whom the
 • Was a U.S. citizen, and                         complete lines 13 through 17, and have
                                                                                                     donor spouse made gifts, and




  DRAFT AS OF
 • Became a U.S. citizen for a reason              your spouse sign the consent on line 18.
                                                                                                      • All of the gifts by both spouses were of
other than being a citizen of a U.S.                  If you are not married or do not wish to       present interests.
possession or being born or residing in a          split gifts, skip to line 19.
possession.                                                                                             If either of the above exceptions is met,
                                                   Line 15. If you were married to one               only the donor spouse must file a return
Note. A taxpayer is considered a resident          another for all of 2018, check the “Yes”          and the consenting spouse signifies
of the United States if one of two tests are       box and skip to line 17. If you were              consent on that return.




December 10, 2018
passed. See IRS.gov/Substantial-                   married for only part of the year, check the         Specific instructions for Part 2—Tax
Presence-Test for more information.                “No” box and go to line 16. If you were           Computation are discussed later. Because
Generally, a resident of the United States         divorced or widowed after you made the            you must complete Schedules A, B, C,
is subject to the same tax rules as citizens.      gift, you cannot elect to split gifts if you      and D to fill out Part 2, you will find
                                                   remarried before the end of 2018.                 instructions for these schedules later.
    A nonresident not a citizen of the
United States includes a person who, at            Line 16. Check the box that explains the          Line 19. Application of DSUE
the time of making the gift:                       change in your marital status during the
 • Was domiciled in a possession of the            year and give the date you were married,          Amount
United States,                                     divorced, or widowed.                             If the donor is a citizen or resident of the
 • Was a U.S. citizen, and                                                                           United States and his or her spouse died
 • Became a U.S. citizen only because he           Consent of Spouse                                 after December 31, 2010, the donor may
or she was a citizen of a possession or            Your spouse must sign the consent for             be eligible to use the deceased spouse's
was born or resided in a possession.               your gift-splitting election to be valid. The     unused exclusion (DSUE) amount. The
                                                   consent may generally be signed at any            executor of his or her spouse's estate
Lines 12–18. Split Gifts                           time after the end of the calendar year.          must have elected on Form 706 to allow
         A married couple may not file a           However, there are two exceptions.                use of the unused exclusion amount. See
         joint gift tax return. However, if            1. The consent may not be signed              the instructions for Form 706, Part
   !
 CAUTION after reading the instructions            after April 15 following the end of the year      6—Portability of Deceased Spousal
below, you and your spouse agree to split          in which the gift was made. But if neither        Unused Exclusion. If the executor of the
your gifts, you should file both of your           you nor your spouse has filed a gift tax          estate made this election, attach the first
individual gift tax returns together (that is,     return for the year on or before that date,       four pages of Form 706 filed by the estate.
in the same envelope) to help the IRS              the consent must be made on the first gift        Include any attachments related to DSUE
process the returns and to avoid                   tax return for the year filed by either of        that were filed with Form 706 and
correspondence from the IRS.                       you.                                              calculations of any adjustments to the
                                                                                                     DSUE amount like audit reports or
If you and your spouse both consent, all               2. The consent may not be signed
                                                                                                     previously filed Forms 709. See also
gifts (including gifts of property held with       after a notice of deficiency for the gift tax
                                                                                                     section 2010(c)(4) and related regulations.
your spouse as joint tenants or tenants by         for the year has been sent to either you or
the entirety) either of you make to third          your spouse.                                          Using the checkboxes provided,
parties during the calendar year will be              The executor for a deceased spouse or          indicate whether the donor is applying or
considered as made one-half by each of             the guardian for a legally incompetent            has applied a DSUE amount from a
you if all of the following apply.                 spouse may sign the consent.                      predeceased spouse to gifts reported on
 • You and your spouse were married to                                                               this or a previous Form 709. If so,
one another at the time of the gift.                                                                 complete Schedule C before going to Part
 • If divorced or widowed after the gift, you      When the Consenting Spouse Also                   2—Tax Computation.
did not remarry during the rest of the             Must File a Gift Tax Return
calendar year.
 • Neither of you was a nonresident not a
                                                   In general, if you and your spouse elect
                                                   gift splitting, then both spouses must file
                                                                                                     Schedule A. Computation
citizen of the United States at the time of        his or her own individual gift tax return.        of Taxable Gifts
the gift.                                                                                            Do not enter on Schedule A any gift or part
 • You did not give your spouse a general              However, only one spouse must file a          of a gift that qualifies for the political
power of appointment over the property             return if the requirements of either of the       organization, educational, or medical
interest transferred.                              exceptions below are met. In these                exclusions. In the instructions below, gifts
                                                   exceptions, gifts means transfers (or parts       means transfers (or parts of transfers) that
    If you transferred property partly to your     of transfers) that do not qualify for the         do not qualify for the political organization,
spouse and partly to third parties, you can        political organization, educational, or           educational, or medical exclusions.
only split the gifts if the interest transferred   medical exclusions.
to the third parties is ascertainable at the                                                         Line A. Valuation Discounts
time of the gift.                                  Exception 1. During the calendar year:
                                                                                                     If the value of any gift you report in either
                                                   • Only one spouse made any gifts,                 Part 1, Part 2, or Part 3 of Schedule A
   The consent is effective for the entire         • The total value of these gifts to each          includes a discount for lack of
calendar year; therefore, all gifts made by        third-party donee does not exceed
                                                                                                     marketability, a minority interest, a
both you and your spouse to third parties          $30,000, and
                                                                                                     fractional interest in real estate, blockage,
during the calendar year (while you were           • All of the gifts were of present interests.     market absorption, or for any other
married) must be split.                            Exception 2. During the calendar year:            reason, answer “Yes” to the question at

                                                                        -6-
the top of Schedule A. Also attach an                portion of the QTP gift because she is not        Gifts to Donees Other Than
explanation giving the basis for the                 otherwise required to file Form 709.
claimed discounts and showing the
                                                                                                       Your Spouse
amount of the discounts taken.                          You make the election by checking the          You must always enter all gifts of future
                                                     box on line B at the top of Schedule A.           interests that you made during the
Line B. Qualified Tuition                            The election must be made for the                 calendar year regardless of their value.
Programs (529 Plans or                               calendar year in which the contribution is
                                                     made. Also attach an explanation that             Gift splitting not elected. If the total gifts
Programs)                                            includes the following.                           of present interests to any donee are more
                                                                                                       than $15,000 in the calendar year, then




  DRAFT AS OF
If in 2018, you contributed more than                 • The total amount contributed per
$15,000 to a qualified tuition plan (QTP)            individual beneficiary.                           you must enter all such gifts that you
on behalf of any one person, you may                  • The amount for which the election is           made during the year to or on behalf of
elect to treat up to $75,000 of the                  being made.                                       that donee, including those gifts that will
contribution for that person as if you had            • The name of the individual for whom the        be excluded under the annual exclusion. If
made it ratably over a 5-year period. The            contribution was made.                            the total is $15,000 or less, you need not
election allows you to apply the annual                                                                enter on Schedule A any gifts (except gifts




December 10, 2018
exclusion to a portion of the contribution in           If you are electing gift splitting, apply      of future interests) that you made to that
each of the 5 years, beginning in 2018.              the gift-splitting rules before applying the      donee. Enter these gifts in the top half of
You can make this election for as many               QTP rules. Each spouse would then                 Part 1, 2, or 3, as applicable.
separate people as you made QTP                      decide individually whether to make this
                                                                                                       Gift splitting elected. Enter on
contributions.                                       QTP election.
                                                                                                       Schedule A the entire value of every gift
    You can only apply the election to a                       Contributions to QTPs do not            you made during the calendar year while
maximum of $75,000. You must report all                !       qualify for the education               you were married, even if the gift's value
of your 2018 QTP contributions for any
                                                     CAUTION   exclusion.                              will be less than $15,000 after it is split in
single person that exceed $75,000 (in                                                                  column G of Part 1, 2, or 3 of Schedule A.
addition to any other gifts you made to that         How To Complete Parts 1, 2,                       Gifts made by spouse. If you elected
person).                                             and 3                                             gift splitting and your spouse made gifts,
                                                     After you determine which gifts you made          list those gifts in the space below “Gifts
    For each of the 5 years, you report in
                                                     in 2018 that are subject to the gift tax, list    made by spouse” in Part 1, 2, or 3. Report
Part 1 of Schedule A one-fifth (20%) of the
                                                     them on Schedule A. You must divide               these gifts in the same way you report gifts
amount for which you made the election.
                                                     these gifts between:                              you made.
In column E of Part 1 (Schedule A), list the
date of the gift as the calendar year for                1. Part 1—those subject only to the           Gifts to Your Spouse
which you are deemed to have made the                gift tax (gifts made to nonskip
                                                                                                       Except for the gifts described below, you
gift (that is, the year of the current Form          persons—see Part 1—Gifts Subject Only
                                                                                                       do not need to enter any of your gifts to
709 you are filing). Do not list the actual          to Gift Tax),
                                                                                                       your spouse on Schedule A.
year of contribution for subsequent years.               2. Part 2—those subject to both the
                                                     gift and GST taxes (gifts made to skip            Terminable interests. Terminable
    However, if in any of the last 4 years of                                                          interests are defined in the instructions for
the election, you did not make any other             persons—see Gifts Subject to Both Gift
                                                     and GST Taxes and Part 2—Direct Skips),           Part 4, line 4. If all the terminable interests
gifts that would require you to file a Form                                                            you gave to your spouse qualify as life
709, you do not need to file Form 709 to             and
                                                                                                       estates with power of appointment
report that year's portion of the election               3. Part 3—those subject only to the           (defined under Life estate with power of
amount.                                              gift tax at this time but which could later be    appointment, later), you do not need to
                                                     subject to GST tax (gifts that are indirect       enter any of them on Schedule A.
   Example. In 2018, D contributed                   skips—see Part 3—Indirect Skips).
$100,000 to a QTP for the benefit of her                                                                   However, if you gave your spouse any
son. D elects to treat $75,000 of this                 If you need more space, attach a                terminable interest that does not qualify as
contribution as having been made ratably             separate sheet using the same format as           a life estate with power of appointment,
over a 5-year period. Accordingly, for               Schedule A.                                       you must report on Schedule A all gifts of
2018, D reports the following.                                 Use the following guidelines when       terminable interests you made to your
                                                      TIP entering gifts on Schedule A.                spouse during the year.
   $25,000     (the amount of the contribution                                                         Charitable remainder trusts. If you
               that exceeded $75,000)
                                                     • Enter a gift only once—in Part 1, Part 2,       make a gift to a charitable remainder trust
 + $15,000     (the 1/5 portion from the election)   or Part 3.                                        and your spouse is the only noncharitable
   $40,000     the total gift to her son listed in    • Do not enter any gift or part of a gift that   beneficiary (other than yourself), the
               Part 1 of Schedule A for 2018         qualified for the political organization,         interest you gave to your spouse is not
                                                     educational, or medical exclusion.                considered a terminable interest and,
                                                      • Enter gifts under “Gifts made by               therefore, should not be shown on
    In 2019, D gives a gift of $20,000 cash          spouse” only if you have chosen to split          Schedule A. See section 2523(g)(1). For
to her niece and no other gifts. On her              gifts with your spouse and your spouse is         definitions and rules concerning these
2019 Form 709, D reports in Part 1 of                required to file a Form 709 (see Part             trusts, see section 2056(b)(8)(B).
Schedule A the $20,000 gift to her niece             1—General Information, Lines 12–18. Split
                                                                                                       Future interest. Generally, you should
and a $15,000 gift to her son (the one-fifth         Gifts).
                                                                                                       not report a gift of a future interest to your
portion of the 2018 gift that is treated as           • In column F, enter the full value of the       spouse unless the future interest also is a
made in 2019). In column E of Part 1                 gift (including those made by your spouse,
                                                                                                       terminable interest that is required to be
(Schedule A), D lists “2019” as the date of          if applicable). If you have chosen to split
                                                                                                       reported as described earlier. However, if
the gift.                                            gifts, that one-half portion of the gift is
                                                                                                       you gave a gift of a future interest to your
    D makes no gifts in 2020, 2021, or               entered in column G.
                                                                                                       spouse and you are required to report the
2022. She is not required to file Form 709                                                             gift on Form 709 because you gave the
in any of those years to report the one-fifth

                                                                          -7-
present interest to a donee other than your       than an estate) that although not explicitly      married to the donor is assigned to the
spouse, then you should enter the entire          a trust, has substantially the same effect        donor's generation.
gift, including the future interest given to      as a trust. For example, a trust includes            4. A relationship by adoption or
your spouse, on Schedule A. You should            life estates with remainders, terms for           half-blood is treated as a relationship by
use the rules under Gifts Subject to Both         years, and insurance and annuity                  whole-blood.
Gift and GST Taxes, later, to determine           contracts. A transfer of property that is
whether to enter the gift on Schedule A,          conditional on the occurrence of an event            A person who is not assigned to a
Part 1, 2, or 3.                                  is a transfer in trust.                           generation according to (1), (2), (3), or (4)
                                                                                                    above is assigned to a generation based




  DRAFT AS OF
Spouses who are not U.S. citizens. If             Interest in property. If a gift is made to a      on his or her birth date as follows.
your spouse is not a U.S. citizen and you         natural person, it is always considered a
gave him or her a gift of a future interest,      gift of an interest in property for purposes         1. A person who was born not more
you must report on Schedule A all gifts to        of the GST tax.                                   than 121/2 years after the donor is in the
your spouse for the year. If all gifts to your        If a gift is made to a trust, a natural       donor's generation.
spouse were present interests, do not             person will have an interest in the property         2. A person born more than 121/2
report on Schedule A any gifts to your




December 10, 2018
                                                  transferred to the trust if that person either    years, but not more than 371/2 years, after
spouse if the total of such gifts for the year    has a present right to receive income or          the donor is in the first generation younger
does not exceed $152,000 and all gifts in         corpus from the trust (such as an income          than the donor.
excess of $15,000 would qualify for a             interest for life) or is a permissible current
marital deduction if your spouse were a                                                                3. Similar rules apply for a new
                                                  recipient of income or corpus from the
U.S. citizen (see the instructions for                                                              generation every 25 years.
                                                  trust (for example, possesses a general
Schedule A, Part 4, line 4). If the gifts         power of appointment).                               If more than one of the rules for
exceed $152,000, you must report all of                                                             assigning generations applies to a donee,
the gifts even though some may be                 Skip person. A donee, who is a natural
                                                  person, is a skip person if that donee is         that donee is generally assigned to the
excluded.                                                                                           youngest of the generations that would
                                                  assigned to a generation that is two or
                                                                                                    apply.
Gifts Subject to Both Gift                        more generations below the generation
                                                  assignment of the donor. See Determining
and GST Taxes                                     the Generation of a Donee below.
                                                                                                       If an estate, trust, partnership,
                                                                                                    corporation, or other entity (other than
Definitions                                           A donee that is a trust is a skip person      governmental entities and certain
                                                  if all the interests in the property              charitable organizations and trusts,
Direct skip. The GST tax you must report          transferred to the trust (as defined above)       described in sections 511(a)(2) and
on Form 709 is that imposed only on inter         are held by skip persons.                         511(b)(2), as discussed later) is a donee,
vivos direct skips. An inter vivos direct skip                                                      then each person who indirectly receives
                                                      A trust also will be a skip person if there
is a transfer that is:                                                                              the gift through the entity is treated as a
                                                  are no interests in the property transferred
 • Subject to the gift tax,                       to the trust held by any person, and future       donee and is assigned to a generation as
 • Of an interest in property, and                distributions or terminations from the trust      explained in the above rules.
 • Made to a skip person.                         can be made only to skip persons.
All three requirements must be met before                                                              Charitable organizations and trusts,
the gift is subject to the GST tax.               Nonskip person. A nonskip person is               described in sections 511(a)(2) and
    A gift is “subject to the gift tax” if you    any donee who is not a skip person.               511(b)(2), and governmental entities are
are required to list it on Schedule A of                                                            assigned to the donor's generation.
                                                  Determining the Generation of                     Transfers to such organizations are
Form 709. However, if you make a
nontaxable gift (which is a direct skip) to a     a Donee                                           therefore not subject to the GST tax.
trust for the benefit of an individual, this      Generally, a generation is determined             These gifts should always be listed in Part
transfer is subject to the GST tax unless:        along family lines as follows.                    1 of Schedule A.
    1. During the lifetime of the                    1. If the donee is a lineal descendant         Generation assignments under Notice
beneficiary, no corpus or income may be           of a grandparent of the donor (for                2017-15. Notice 2017-15 permits a
distributed to anyone other than the              example, the donor's cousin, niece,               taxpayer to reduce his or her GST
beneficiary; and                                  nephew, etc.), the number of generations          exemption allocated to transfers that were
    2. If the beneficiary dies before the         between the donor and the descendant              made to or for the benefit of transferees
termination of the trust, the assets of the       (donee) is determined by subtracting the          whose generation assignment is changed
trust will be included in the gross estate of     number of generations between the                 as a result of the Windsor decision. A
the beneficiary.                                  grandparent and the donor from the                taxpayer’s GST exemption that was
                                                  number of generations between the                 allocated to a transfer to a transferee (or a
Note. If the property transferred in the          grandparent and the descendant (donee).           trust for the sole benefit of such
direct skip would have been includible in            2. If the donee is a lineal descendant         transferee) whose generation assignment
the donor's estate if the donor died              of a grandparent of a spouse (or former           should have been determined on the basis
immediately after the transfer, see               spouse) of the donor, the number of               of a familial relationship as the result of the
Transfers Subject to an Estate Tax                generations between the donor and the             Windsor decision, and are nonskip
Inclusion Period (ETIP), earlier.                 descendant (donee) is determined by               persons, is deemed void. For additional
                                                  subtracting the number of generations             information, go to IRS.gov/Estate-and-
   To determine if a gift “is of an interest in
                                                  between the grandparent and the spouse            Gift-Taxes.
property” and “is made to a skip person,”
you must first determine if the donee is a        (or former spouse) from the number of             Charitable Remainder Trusts
“natural person” or a “trust,” as defined         generations between the grandparent and
                                                  the descendant (donee).                           Gifts in the form of charitable remainder
below.                                                                                              annuity trusts, charitable remainder
                                                     3. A person who at any time was                unitrusts, and pooled income funds are
Trust. For purposes of the GST tax, a
                                                  married to a person described in (1) or (2)       not transfers to skip persons and therefore
trust includes not only an ordinary trust,
                                                  above is assigned to the generation of that       are not direct skips. You should always list
but also any other arrangement (other
                                                  person. A person who at any time was              these gifts in Part 1 of Schedule A even if

                                                                        -8-
all of the life beneficiaries are skip          Examples                                              Group the gifts in four categories.
persons.
                                                The GST rules can be illustrated by the
                                                                                                  • Gifts made to your spouse.
                                                                                                  • Gifts made to third parties that are to be
Generation Assignment Where                     following examples.                               split with your spouse.
Intervening Parent Is Deceased                      Example 1. You give your house to              • Charitable gifts (if you are not splitting
If you made a gift to your grandchild and at    your daughter for her life with the               gifts with your spouse).
the time you made the gift, the                 remainder then passing to her children.            • Other gifts.
grandchild's parent (who is your or your        This gift is made to a “trust” even though        If a transfer results in gifts to two or more
spouse's or your former spouse's child) is      there is no explicit trust instrument. The        individuals (such as a life estate to one




  DRAFT AS OF
deceased, then for purposes of generation       interest in the property transferred (the         with remainder to the other), list the gift to
assignment, your grandchild is considered       present right to use the house) is                each separately.
to be your child rather than your               transferred to a nonskip person (your
grandchild. Your grandchild's children will     daughter). Therefore, the trust is not a skip         Number and describe all gifts
be treated as your grandchildren rather         person because there is an interest in the        (including charitable, public, and similar
than your great-grandchildren.                  transferred property that is held by a            gifts) in the columns provided in




December 10, 2018
                                                nonskip person, and the gift is not a direct      Schedule A.
   This rule also is applied to your lineal     skip. The transfer is an indirect skip,
descendants below the level of                  however, because on the death of the              Column B
grandchild. For example, if your                daughter, a termination of her interest in
grandchild is deceased, your                    the trust will occur that may be subject to       Describe each gift in enough detail so that
great-grandchildren who are lineal              the GST tax. See the instructions for Part        the property can be easily identified, as
descendants of the deceased grandchild          3—Indirect Skips, later, for a discussion of      explained below.
are considered your grandchildren for           how to allocate GST exemption to such a
purposes of the GST tax.                        trust.                                                For real estate, give:
    This special rule also may apply in            Example 2. You give $100,000 to your
                                                                                                  • A legal description of each parcel;
other cases of the death of a parent of the     grandchild. This gift is a direct skip that is
                                                                                                  • The street number, name, and area if
                                                                                                  the property is located in a city; and
transferee. If property is transferred to a     not made in trust. You should list it in Part
descendant of a parent of the transferor        2 of Schedule A.
                                                                                                  • A short statement of any improvements
                                                                                                  made to the property.
and that person's parent (who is a lineal           Example 3. You establish a trust that
descendant of the parent of the transferor)     is required to accumulate income for 10
is deceased at the time the transfer is                                                               For bonds, give:
                                                years and then pay its income to your             •  The number of bonds transferred;
subject to gift or estate tax, then for         grandchildren for their lives and upon their
purposes of generation assignment, the                                                            •  The principal amount of each bond;
                                                deaths distribute the corpus to their             •  Name of obligor;
individual is treated as if he or she is a      children. Because the trust has no current
member of the generation that is one                                                              •  Date of maturity;
                                                beneficiaries, there are no present               •  Rate of interest;
generation below the lower of:                  interests in the property transferred to the
 • The transferor's generation, or                                                                •  Date or dates when interest is payable;
                                                trust. All of the persons to whom the trust       •  Series number, if there is more than
 • The generation assignment of the             can make future distributions (including
youngest living ancestor of the individual                                                        one issue;
                                                distributions upon the termination of             • Exchanges where listed or, if unlisted,
who also is a descendant of the parent of       interests in property held in trust) are skip
the transferor.                                                                                   give the location of the principal business
                                                persons (that is, your grandchildren and          office of the corporation; and
   The same rules apply to the generation       great-grandchildren). Therefore, the trust        • CUSIP number. The CUSIP number is a
assignment of any descendant of the             itself is a skip person and you should list       nine-digit number assigned by the
individual.                                     the gift in Part 2 of Schedule A.                 American Banking Association to traded
                                                    Example 4. You establish a trust that         securities.
   This rule does not apply to a transfer to
an individual who is not a lineal               pays all of its income to your
descendant of the transferor if the             grandchildren for 10 years. At the end of             For stocks:
transferor at the time of the transfer has      10 years, the corpus is to be distributed to      • Give number of shares;
any living lineal descendants.                  your children. Since for this purpose             • State whether common or preferred;
                                                interests in trusts are defined only as           • If preferred, give the issue, par value,
    If any transfer of property to a trust      present interests, all of the interests in this   quotation at which returned, and exact
would have been a direct skip except for        trust are held by skip persons (the               name of corporation;
this generation assignment rule, then the       children's interests are future interests).        • If unlisted on a principal exchange, give
rule also applies to transfers from the trust   Therefore, the trust is a skip person and         the location of the principal business office
attributable to such property.                  you should list the entire amount you             of the corporation, the state in which
                                                transferred to the trust in Part 2 of             incorporated, and the date of
    Ninety-day rule. For assigning              Schedule A even though some of the                incorporation;
individuals to generations for purposes of
the GST tax, any individual who dies no
                                                trust's ultimate beneficiaries are nonskip         • If listed, give principal exchange; and
later than 90 days after a transfer
                                                persons.                                           • CUSIP number.
occurring by reason of the death of the         Part 1—Gifts Subject Only to
transferor is treated as having                                                                       For interests in property based on the
                                                Gift Tax                                          length of a person's life, give the date of
predeceased the transferor. The 90-day
rule applies to transfers occurring on or       List in Part 1 gifts subject only to the gift     birth of the person. If you transfer any
after July 18, 2005. See Regulations            tax. Generally, all of the gifts you made to      interest in a closely held entity, provide the
section 26.2651-1(a)(2)(iii) for more           your spouse (that are required to be listed,      EIN of the entity.
information.                                    as described earlier), to your children, and
                                                to charitable organizations are not subject         For life insurance policies, give the
                                                to the GST tax and should, therefore, be          name of the insurer and the policy
                                                listed only in Part 1.                            number.

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