Form 709 - United States Gift (and Generation-Skipping Transfer) Tax Return

2016

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 2016.
Section references are to the Internal Revenue
Code unless otherwise noted.

Future Developments
For the latest information about
developments related to Form 709 and its
instructions, such as legislation enacted
after they were published, go to
www.irs.gov/form709.
For Disclosure, Privacy Act, and
Paperwork Reduction Act Notice, see
later.
For Gifts Made
After

and Before

Use Revision
of
Form 709
Dated

–––––

January 1,
1982

November
1981

December 31,
1981

January 1,
1987

January 1987

December 31,
1986

January 1,
1989

December
1988

December 31,
1988

January 1,
1990

December
1989

December 31,
1989

October 9,
1990

October 1990

October 8, 1990

January 1,
1992

November
1991

December 31,
1992

January 1,
1998

December
1996

December 31,
1997

–––––

*

* Use the corresponding annual form.

What's New

The annual gift exclusion for 2016
remains at $14,000. See Annual
Exclusion, later.
For gifts made to spouses who are not
U.S. citizens, the annual exclusion has
increased to $148,000. See Nonresidents
not Citizens of the United States, later.
The top rate for gifts and generationskipping transfers remains at 40%. See
Table for Computing Gift Tax.
The basic credit amount for 2016 is
$2,125,800. See Table of Basic Exclusion
and Credit Amounts.
The applicable exclusion amount
consists of the basic exclusion amount
($5,450,000 in 2016) and, in the case of a
surviving spouse, any unused exclusion
Nov 15, 2016

amount of the last deceased spouse (who
died after December 31, 2010). The
executor of the predeceased spouse's
estate must have elected on a timely and
complete Form 706 to allow the donor to
use the predeceased spouse's unused
exclusion amount.
Final regulations regarding portability of
the deceased spousal unused exclusion
(DSUE) amount were published in the
Federal Register on June 16, 2015. The
final regulations are effective for dates of
death and gifts on or after June 12, 2015.
See Treasury Decision 9725, available at
www.irs.gov/irb/2015-26_IRB/ar12.html.
Same-sex marriages. For federal tax
purposes, marriages of couples of the
same sex are treated the same as
marriages of couples of the opposite sex.
The term “spouse” includes an individual
married to a person of the same sex.
However, individuals who have entered
into a registered domestic partnership,
civil union, or other similar relationship that
isn't considered a marriage under state
law aren't considered married for federal
tax purposes.
QTIP election of predeceased spouse.
Rev. Proc. 2016-49 provides updated
procedures to disregard and treat as null
and void for transfer tax purposes a
qualified terminable interest property
(QTIP) election in situations where the
QTIP election was not necessary to
reduce the estate tax liability to zero. This
guidance provides that such procedures
are unavailable where QTIP elections are
made in estates in which the executor
elected portability of the deceased
spousal unused exclusion (DSUE) amount
under section 2010(c)(5)(A). If no DSUE
election was made and the QTIP election
qualifies to be treated as null and void, the
taxpayer must notify the IRS that the
election qualifies by entering “Filed
pursuant to Revenue Procedure 2016-49”
at the top of Form 709. See https://
www.irs.gov/pub/irs-drop/rp-16-49.pdf for
more information.

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General Instructions
Purpose of Form

Use Form 709 to report the following.
Transfers subject to the federal gift and
certain generation-skipping transfer (GST)
taxes and to figure the tax due, if any, on
those transfers.
Allocation of the lifetime GST
exemption to property transferred during
the transferor's lifetime. (For more details,
see Schedule D, Part 2—GST Exemption
Reconciliation, later, and Regulations
section 26.2632-1.)
All gift and GST taxes must be
computed and filed on a calendar
CAUTION year basis. List all reportable gifts
made during the calendar year on one
Form 709. This means you must file a
separate return for each calendar year a
reportable gift is given (for example, a gift
given in 2016 must be reported on a 2016
Form 709). Do not file more than one Form
709 for any one calendar year.

!

How To Complete Form 709
1. Determine whether you are
required to file Form 709.
2. Determine what gifts you must
report.
3. Decide whether you and your
spouse, if any, will elect to split gifts for the
year.
4. Complete lines 1 through 19 of Part
1—General Information.
5. List each gift on Part 1, 2, or 3 of
Schedule A, as appropriate.
6. Complete Schedules B, C, and D,
as applicable.
7. If the gift was listed on Part 2 or 3 of
Schedule A, complete the necessary
portions of Schedule D.
8. Complete Schedule A, Part 4.
9. Complete Part 2—Tax
Computation.
10. Sign and date the return.
Make sure to complete page 1
and the applicable schedules in
CAUTION their entirety. Returns filed without
entries in each field will not be processed.

!

Remember, if you are splitting
TIP gifts, your spouse must sign
line 18, in Part 1—General
Information.

Who Must File

In general. If you are a citizen or resident
of the United States, you must file a gift tax
return (whether or not any tax is ultimately
due) in the following situations.
If you gave gifts to someone in 2016
totalling more than $14,000 (other than to
your spouse), you probably must file Form
709. But see Transfers Not Subject to Gift
Tax and Gifts to Your Spouse, later, for
more information on specific gifts that are
not taxable.
Certain gifts, called future interests, are
not subject to the $14,000 annual
exclusion and you must file Form 709
even if the gift was under $14,000. See
Annual Exclusion, later.
Spouses may not file a joint gift tax
return. Each individual is responsible for
his or her own Form 709.
You must file a gift tax return to split
gifts with your spouse (regardless of their
amount) as described in Part 1—General
Information.
If a gift is of community property, it is
considered made one-half by each
spouse. For example, a gift of $100,000 of
community property is considered a gift of
$50,000 made by each spouse, and each
spouse must file a gift tax return.
Likewise, each spouse must file a gift
tax return if they have made a gift of
property held by them as joint tenants or
tenants by the entirety.
Only individuals are required to file gift
tax returns. If a trust, estate, partnership,
or corporation makes a gift, the individual
beneficiaries, partners, or stockholders
are considered donors and may be liable
for the gift and GST taxes.
The donor is responsible for paying the
gift tax. However, if the donor does not
pay the tax, the person receiving the gift
may have to pay the tax.
If a donor dies before filing a return, the
donor's executor must file the return.
Who does not need to file. If you meet
all of the following requirements, you are
not required to file Form 709.
You made no gifts during the year to
your spouse.
You did not give more than $14,000 to
any one donee.
All the gifts you made were of present
interests.
Gifts to charities. If the only gifts you
made during the year are deductible as
gifts to charities, you do not need to file a
return as long as you transferred your
entire interest in the property to qualifying
charities. If you transferred only a partial
interest, or transferred part of your interest

to someone other than a charity, you must
still file a return and report all of your gifts
to charities.
If you are required to file a return to
report noncharitable gifts and you made
gifts to charities, you must include all of
your gifts to charities on the return.

Transfers Subject to the Gift
Tax

Generally, the federal gift tax applies to
any transfer by gift of real or personal
property, whether tangible or intangible,
that you made directly or indirectly, in
trust, or by any other means.
The gift tax applies not only to the free
transfer of any kind of property, but also to
sales or exchanges, not made in the
ordinary course of business, where value
of the money (or property) received is less
than the value of what is sold or
exchanged. The gift tax is in addition to
any other tax, such as federal income tax,
paid or due on the transfer.
The exercise or release of a general
power of appointment may be a gift by the
individual possessing the power. General
powers of appointment are those in which
the holders of the power can appoint the
property under the power to themselves,
their creditors, their estates, or the
creditors of their estates. To qualify as a
power of appointment, it must be created
by someone other than the holder of the
power.
The gift tax may also apply to forgiving
a debt, to making an interest-free or below
market interest rate loan, to transferring
the benefits of an insurance policy, to
certain property settlements in divorce
cases, and to giving up of some amount of
annuity in exchange for the creation of a
survivor annuity.
Bonds that are exempt from federal
income taxes are not exempt from federal
gift taxes.
Sections 2701 and 2702 provide rules
for determining whether certain transfers
to a family member of interests in
corporations, partnerships, and trusts are
gifts. The rules of section 2704 determine
whether the lapse of any voting or
liquidation right is a gift.

Gifts to your spouse. You must file a gift
tax return if you made any gift to your
spouse of a terminable interest that does
not meet the exception described in Life
estate with power of appointment, or if
your spouse is not a U.S. citizen and the
total gifts you made to your spouse during
the year exceed $148,000.
You must also file a gift tax return to
make the Qualified Terminable Interest
Property (QTIP) election described under
Line 12. Election Out of QTIP Treatment of
Annuities.
-2-

Except as described earlier, you do not
have to file a gift tax return to report gifts to
your spouse regardless of the amount of
these gifts and regardless of whether the
gifts are present or future interests.

Transfers Not Subject to the
Gift Tax

Four types of transfers are not subject to
the gift tax. These are:
Transfers to political organizations,
Transfers to certain exempt
organizations,
Payments that qualify for the
educational exclusion, and
Payments that qualify for the medical
exclusion.
These transfers are not “gifts” as that term
is used on Form 709 and its instructions.
You need not file a Form 709 to report
these transfers and should not list them on
Schedule A of Form 709 if you do file
Form 709.

Political organizations. The gift tax
does not apply to a transfer to a political
organization (defined in section 527(e)(1))
for the use of the organization.
Certain exempt organizations. The gift
tax does not apply to a transfer to any civic
league or other organization described in
section 501(c)(4), any labor, agricultural,
or horticultural organization described in
section 501(c)(5), or any business league
or other organization described in section
501(c)(6) for the use of such organization,
provided that such organization is exempt
from tax under section 501(a).
Educational exclusion. The gift tax
does not apply to an amount you paid on
behalf of an individual to a qualifying
domestic or foreign educational
organization as tuition for the education or
training of the individual. A qualifying
educational organization is one that
normally maintains a regular faculty and
curriculum and normally has a regularly
enrolled body of pupils or students in
attendance at the place where its
educational activities are regularly carried
on. See section 170(b)(1)(A)(ii) and its
regulations.
The payment must be made directly to
the qualifying educational organization
and it must be for tuition. No educational
exclusion is allowed for amounts paid for
books, supplies, room and board, or other
similar expenses that are not direct tuition
costs. To the extent that the payment to
the educational organization was for
something other than tuition, it is a gift to
the individual for whose benefit it was
made, and may be offset by the annual
exclusion if it is otherwise available.
Contributions to a qualified tuition
program (QTP) on behalf of a designated
beneficiary do not qualify for the
educational exclusion. See Line

B—Qualified Tuition Programs (529 Plans
or Programs) in the instructions for
Schedule A, later.
Medical exclusion. The gift tax does not
apply to an amount you paid on behalf of
an individual to a person or institution that
provided medical care for the individual.
The payment must be to the care provider.
The medical care must meet the
requirements of section 213(d) (definition
of medical care for income tax deduction
purposes). Medical care includes
expenses incurred for the diagnosis, cure,
mitigation, treatment, or prevention of
disease, or for the purpose of affecting
any structure or function of the body, or for
transportation primarily for and essential to
medical care. Medical care also includes
amounts paid for medical insurance on
behalf of any individual.
The medical exclusion does not apply
to amounts paid for medical care that are
reimbursed by the donee's insurance. If
payment for a medical expense is
reimbursed by the donee's insurance
company, your payment for that expense,
to the extent of the reimbursed amount, is
not eligible for the medical exclusion and
you are considered to have made a gift to
the donee of the reimbursed amount.
To the extent that the payment was for
something other than medical care, it is a
gift to the individual on whose behalf the
payment was made and may be offset by
the annual exclusion if it is otherwise
available.
The medical and educational
exclusions are allowed without regard to
the relationship between you and the
donee. For examples illustrating these
exclusions, see Regulations section
25.2503-6(c).
Qualified disclaimers. A donee's refusal
to accept a gift is called a disclaimer. If a
person makes a qualified disclaimer of any
interest in property, the property will be
treated as if it had never been transferred
to that person. Accordingly, the
disclaimant is not regarded as making a
gift to the person who receives the
property because of the qualified
disclaimer.
Requirements. To be a qualified
disclaimer, a refusal to accept an interest
in property must meet the following
conditions.
1. The refusal must be in writing.
2. The refusal must be received by the
donor, the legal representative of the
donor, the holder of the legal title to the
property disclaimed, or the person in
possession of the property within 9
months after the later of:
a. the day the transfer creating the
interest is made, or

b. the day the disclaimant reaches
age 21.
3. The disclaimant must not have
accepted the interest or any of its benefits.
4. As a result of the refusal, the
interest must pass without any direction
from the disclaimant to either:
a. the spouse of the decedent, or
b. a person other than the
disclaimant.
5. The refusal must be irrevocable
and unqualified.
The 9-month period for making the
disclaimer generally is determined
separately for each taxable transfer. For
gifts, the period begins on the date the
transfer is a completed transfer for gift tax
purposes.

Annual Exclusion

The first $14,000 of gifts of present
interest to each donee during the calendar
year is subtracted from total gifts in
figuring the amount of taxable gifts. For a
gift in trust, each beneficiary of the trust is
treated as a separate donee for purposes
of the annual exclusion.
All of the gifts made during the
calendar year to a donee are fully
excluded under the annual exclusion if
they are all gifts of present interest and
they total $14,000 or less.
Note. For gifts made to spouses who are
not U.S. citizens, the annual exclusion has
been increased to $148,000, provided the
additional (above the $14,000 annual
exclusion) $134,000 gift would otherwise
qualify for the gift tax marital deduction (as
described in the Schedule A, Part 4, line 4
instructions, later).
A gift of a future interest cannot be
excluded under the annual exclusion.
A gift is considered a present interest if
the donee has all immediate rights to the
use, possession, and enjoyment of the
property or income from the property.
A gift is considered a future interest if
the donee's rights to the use, possession,
and enjoyment of the property or income
from the property will not begin until some
future date. Future interests include
reversions, remainders, and other similar
interests or estates.
A contribution to a QTP on behalf of a
designated beneficiary is considered a gift
of a present interest.
A gift to a minor is considered a
present interest if all of the following
conditions are met.
1. Both the property and its income
may be expended by, or for the benefit of,
the minor before the minor reaches age
21.
-3-

2. All remaining property and its
income must pass to the minor on the
minor's 21st birthday.
3. If the minor dies before the age of
21, the property and its income will be
payable either to the minor's estate or to
whomever the minor may appoint under a
general power of appointment.
The gift of a present interest to more
than one donee as joint tenants qualifies
for the annual exclusion for each donee.

Nonresidents not Citizens of
the United States

Nonresidents not citizens of the United
States are subject to gift and GST taxes
for gifts of tangible property situated in the
United States. A person is considered a
nonresident not a citizen of the United
States if he or she, at the time the gift is
made, (1) was not a citizen of the United
States and did not reside there, or (2) was
domiciled in a United States possession
and acquired citizenship solely by reason
of birth or residence in the possession.
Under certain circumstances, they are
also subject to gift and GST taxes for gifts
of intangible property. See section
2501(a).
If you are a nonresident not a citizen of
the United States who made a gift subject
to gift tax, you must file a gift tax return
where:
You gave any gifts of future interests,
Your gifts of present interests to any
donee other than your spouse total more
than $14,000, or
Your outright gifts to your spouse who is
not a U.S. citizen total more than
$148,000.

Transfers Subject to the GST
Tax

You must report on Form 709 the GST tax
imposed on inter vivos direct skips. An
inter vivos direct skip is a transfer made
during the donor's lifetime that is:
Subject to the gift tax,
Of an interest in property, and
Made to a skip person. (See Gifts
Subject to Both Gift and GST Taxes,
later.)
A transfer is subject to the gift tax if it is
required to be reported on Schedule A of
Form 709 under the rules contained in the
gift tax portions of these instructions,
including the split gift rules. Therefore,
transfers made to political organizations,
transfers made to certain exempt
organizations, transfers that qualify for the
medical or educational exclusions,
transfers that are fully excluded under the
annual exclusion, and most transfers
made to your spouse are not subject to the
GST tax.

Transfers subject to the GST tax are
described in further detail in the
instructions.
Certain transfers, particularly
transfers to a trust, that are not
CAUTION subject to gift tax and are
therefore not subject to the GST tax on
Form 709 may be subject to the GST tax
at a later date. This is true even if the
transfer is less than the $14,000 annual
exclusion. In this instance, you may want
to apply a GST exemption amount to the
transfer on this return or on a Notice of
Allocation. For more information, see
Schedule D, Part 2—GST Exemption
Reconciliation and Schedule A, Part
3—Indirect Skips.

!

Transfers Subject to an Estate
Tax Inclusion Period (ETIP)

Certain transfers that are direct skips
receive special treatment. If the
transferred property would have been
includible in the donor's estate if the donor
had died immediately after the transfer (for
a reason other than the donor having died
within 3 years of making the gift), the
direct skip will be treated as having been
made at the end of the ETIP rather than at
the time of the actual transfer.
For example, if A transferred her house
to her granddaughter, B, but retained the
right to live in the house until her death (a
retained life estate), the value of the house
would be includible in A's estate if she
died while still holding the life estate. In
this case, the transfer to B is a completed
gift (it is a transfer of a future interest) and
must be reported on Part 1 of Schedule A.
The GST portion of the transfer would not
be reported until A died or otherwise gave
up her life estate in the house.
Report the gift portion of such a
transfer on Schedule A, Part 1, at the time
of the actual transfer. Report the GST
portion on Schedule A, Part 2, but only at
the close of the ETIP. Use Form 709 only
to report those transfers where the ETIP
closed due to something other than the
donor's death. (If the ETIP closed as the
result of the donor's death, report the
transfer on Form 706, United States
Estate (and Generation-Skipping Transfer)
Tax Return.)
If you are filing this Form 709 solely to
report the GST portion of transfers subject
to an ETIP, complete the form as you
normally would with the following
exceptions.
1. Write “ETIP” at the top of page 1.
2. Complete only lines 1 through 6, 8,
and 9 of Part 1—General Information.
3. Complete Schedule A, Part 2, as
explained in the instructions for that
schedule.

4. Complete Schedule D. Complete
column B of Schedule D, Part 1, as
explained in the instructions for that
schedule.
5. Complete only lines 10 and 11 of
Schedule A, Part 4.
6. Complete Part 2—Tax
Computation.

Section 2701 Elections

The special valuation rules of section 2701
contain three elections that you must
make with Form 709.
1. A transferor may elect to treat a
qualified payment right he or she holds
(and all other rights of the same class) as
other than a qualified payment right.
2. A person may elect to treat a
distribution right held by that person in a
controlled entity as a qualified payment
right.
3. An interest holder may elect to treat
as a taxable event the payment of a
qualified payment that occurs more than 4
years after its due date.
The elections described in (1) and (2)
must be made on the Form 709 that is filed
by the transferor to report the transfer that
is being valued under section 2701. The
elections are made by attaching a
statement to Form 709. For information on
what must be in the statement and for
definitions and other details on the
elections, see section 2701 and
Regulations section 25.2701-2(c).
The election described in (3) may be
made by attaching a statement to the
Form 709 filed by the recipient of the
qualified payment for the year the
payment is received. If the election is
made on a timely filed return, the taxable
event is deemed to occur on the date the
qualified payment is received. If it is made
on a late filed return, the taxable event is
deemed to occur on the first day of the
month immediately preceding the month in
which the return is filed. For information on
what must be in the statement and for
definitions and other details on this
election, see section 2701 and
Regulations section 25.2701-4(d).
All of the elections may be revoked
only with the consent of the IRS.

When To File

Form 709 is an annual return.
Generally, you must file the Form 709
no earlier than January 1, but not later
than April 15, of the year after the gift was
made. However, in instances when April
15 falls on a Saturday, Sunday, or legal
holiday, Form 709 will be due on the next
business day. See section 7503.
If the donor died during 2016, the
executor must file the donor's 2016 Form
709 not later than the earlier of:
-4-

The due date (with extensions) for filing
the donor's estate tax return; or
April 18, 2017, or the extended due
date granted for filing the donor's gift tax
return.

Extension of Time To File

There are two methods of extending the
time to file the gift tax return. Neither
method extends the time to pay the gift or
GST taxes. If you want an extension of
time to pay the gift or GST taxes, you must
request that separately. See Regulations
section 25.6161-1.
By extending the time to file your income tax return. Any extension of time
granted for filing your calendar year 2016
federal income tax return will also
automatically extend the time to file your
2016 federal gift tax return. Income tax
extensions are made by using Form 4868,
Application for Automatic Extension of
Time To File U.S. Individual Income Tax
Return, or Form 2350, Application for
Extension of Time To File U.S. Income
Tax Return. You may only use these forms
to extend the time for filing your gift tax
return if you are also requesting an
extension of time to file your income tax
return.
By filing Form 8892. If you do not
request an extension for your income tax
return, use Form 8892, Application for
Automatic Extension of Time To File Form
709 and/or Payment of Gift/
Generation-Skipping Transfer Tax, to
request an automatic 6-month extension
of time to file your federal gift tax return. In
addition to containing an extension
request, Form 8892 also serves as a
payment voucher (Form 8892-V) for a
balance due on federal gift taxes for which
you are extending the time to file. For
more information, see Form 8892.

Private Delivery Services

You can use certain private delivery
services designated by the IRS to meet
the “timely mailing as timely filing/paying”
rule for tax returns and payments. These
private delivery services include only the
following.
Federal Express (FedEx): FedEx First
Overnight, FedEx Priority Overnight,
FedEx Standard Overnight, FedEx 2Day,
FedEx International Next Flight Out,
FedEx International Priority, FedEx
International First, and FedEx International
Economy.
United Parcel Service (UPS): UPS Next
Day Air Early AM, UPS Next Day Air, UPS
Next Day Air Saver, UPS 2nd Day Air,
UPS 2nd Day Air A.M., UPS Worldwide
Express Plus, and UPS Worldwide
Express.
DHL Express 9:00, DHL Express 10:30,
DHL Express 12:00, DHL Express
Worldwide, DHL Express Envelope, DHL
Import Express 10:30, DHL Import

Express 12:00, and DHL Import Express
Worldwide.
The private delivery service can tell you
how to get written proof of the mailing
date.

Where To File

File Form 709 at the following address.
Department of the Treasury
Internal Revenue Service Center
Cincinnati, OH 45999
If submitting Form 709 by private
delivery service (discussed earlier), mail
to:
Internal Revenue Service
201 West Rivercenter Boulevard
Covington, KY 41011
See the Caution under Lines 12–

TIP 18. Split Gifts, later, before you
mail the return.

Adequate Disclosure
To begin the running of the statute
of limitations for a gift, the gift
CAUTION must be adequately disclosed on
Form 709 (or an attached statement) filed
for the year of the gift.

!

In general, a gift will be considered
adequately disclosed if the return or
statement includes the following.
A full and complete Form 709.
A description of the transferred property
and any consideration received by the
donor.
The identity of, and relationship
between, the donor and each donee.
If the property is transferred in trust, the
trust's employer identification number
(EIN) and a brief description of the terms
of the trust (or a copy of the trust
instrument in lieu of the description).
Either a qualified appraisal or a detailed
description of the method used to
determine the fair market value of the gift.
See Regulations section
301.6501(c)-1(e) and (f) for details,
including what constitutes a qualified
appraisal, the information required if no
appraisal is provided, and the information
required for transfers under sections 2701
and 2702.

Penalties
Late filing and late payment. Section
6651 imposes penalties for both late filing
and late payment, unless there is
reasonable cause for the delay.
Reasonable cause determinations. If
you receive a notice about penalties after
you file Form 709, send an explanation
and we will determine if you meet

reasonable cause criteria. Do not attach
an explanation when you file Form 709.
There are also penalties for willful
failure to file a return on time, willful
attempt to evade or defeat payment of tax,
and valuation understatements that cause
an underpayment of the tax. A substantial
valuation understatement occurs when the
reported value of property entered on
Form 709 is 65% or less of the actual
value of the property. A gross valuation
understatement occurs when the reported
value listed on the Form 709 is 40% or
less of the actual value of the property.
Return preparer. Penalties may also be
applied to tax return preparers, including
gift tax return preparers.
The Small Business and Work
Opportunity Tax Act of 2007 extended
section 6694 income tax return preparer
penalties to all tax return preparers,
including gift tax return preparers. Now,
gift tax return preparers who prepare any
return or claim for refund with an
understatement of tax liability due to willful
or reckless conduct can be penalized
$5,000 or 75% of the income received (or
income to be received), whichever is
greater, for each return. See section 6694,
its regulations, and Ann. 2009-15,
2009-11 I.R.B. 687, available at
www.irs.gov/pub/irs-irbs/irb09-11.pdf for
more information.

Joint Tenancy

If you buy property with your own funds
and the title to the property is held by you
and a donee as joint tenants with right of
survivorship and if either you or the donee
may give up those rights by severing your
interest, you have made a gift to the donee
in the amount of half the value of the
property.
If you create a joint bank account for
yourself and a donee (or a similar kind of
ownership by which you can get back the
entire fund without the donee's consent),
you have made a gift to the donee when
the donee draws on the account for his or
her own benefit. The amount of the gift is
the amount that the donee took out
without any obligation to repay you.
If you buy a U.S. savings bond
registered as payable to yourself or a
donee, there is a gift to the donee when he
or she cashes the bond without any
obligation to account to you.

Transfer of Certain Life
Estates Received From
Spouse

If you received a qualified terminable
interest (see Line 12. Election Out of QTIP
Treatment of Annuities in the instructions
for Schedule A, later) from your spouse for
which a marital deduction was elected on
your spouse's estate or gift tax return, you
-5-

will be subject to the gift tax (and GST tax,
if applicable) if you dispose of all or part of
your life income interest (by gift, sale, or
otherwise).
Generally, the entire value of the
property transferred less:
1. The amount you received (if any)
for the life income interest, and
2. The amount (if any) determined
after the application of section 2702,
valuing certain retained interests at zero,
for the life income interest you retained
after the transfer, will be treated as a
taxable gift.
That portion of the property's value that
is attributable to the remainder interest is a
gift of a future interest for which no annual
exclusion is allowed. To the extent you
made a gift of the life income interest, you
may claim an annual exclusion, treating
the person to whom you transferred the
interest as the donee for purposes of
figuring the annual exclusion.

Specific Instructions
Part 1—General
Information
Lines 4 and 6. Address. Enter your
current mailing address.
Foreign address. If your address is
outside of the United States or its
possessions or territories, enter the
information as follows: city, province or
state, and name of country. Follow the
country's practice for entering the postal
code. Do not abbreviate the country
name.
Line 5. Legal residence (domicile). In
general, your legal residence (also known
as your domicile) is acquired by living in a
place, for even a brief period of time, with
no definite present intention of moving
from that place.
Enter the state of the United States
(including the District of Columbia) or a
foreign country in which you legally reside
or are domiciled at the time of the gift.
Line 7. Citizenship. Enter your
citizenship.
The term citizen of the United States
includes a person who, at the time of
making the gift:
Was domiciled in a possession of the
United States,
Was a U.S. citizen, and
Became a U.S. citizen for a reason
other than being a citizen of a U.S.
possession or being born or residing in a
possession.
A nonresident not a citizen of the
United States includes a person who, at
the time of making the gift:

Was domiciled in a possession of the
United States,
Was a U.S. citizen, and
Became a U.S. citizen only because he
or she was a citizen of a possession or
was born or resided in a possession.

Lines 12–18. Split Gifts
A married couple may not file a
joint gift tax return. However, if
CAUTION after reading the instructions
below, you and your spouse agree to split
your gifts, you should file both of your
individual gift tax returns together (that is,
in the same envelope) to help the IRS
process the returns and to avoid
correspondence from the IRS.

!

If you and your spouse agree, all gifts
(including gifts of property held with your
spouse as joint tenants or tenants by the
entirety) either of you make to third parties
during the calendar year will be
considered as made one-half by each of
you if:
You and your spouse were married to
one another at the time of the gift;
If divorced or widowed after the gift, you
did not remarry during the rest of the
calendar year;
Neither of you was a nonresident not a
citizen of the United States at the time of
the gift; and
You did not give your spouse a general
power of appointment over the property
interest transferred.
If you transferred property partly to your
spouse and partly to third parties, you can
only split the gifts if the interest transferred
to the third parties is ascertainable at the
time of the gift.
The consent is effective for the entire
calendar year; therefore, all gifts made by
both you and your spouse to third parties
during the calendar year (while you were
married) must be split.
If the consent is effective, the liability
for the entire gift tax of each spouse is joint
and several.
If you meet these requirements and
want your gifts to be considered made
one-half by you and one-half by your
spouse, check the “Yes” box on line 12;
complete lines 13 through 17; and have
your spouse sign the consent on line 18.
If you are not married or do not wish to
split gifts, skip to line 19.
Line 15. If you were married to one
another for all of 2016, check the “Yes”
box and skip to line 17. If you were
married for only part of the year, check the
“No” box and go to line 16. If you were
divorced or widowed after you made the
gift, you cannot elect to split gifts if you
remarried before the end of 2016.
Line 16. Check the box that explains the
change in your marital status during the

year and give the date you were married,
divorced, or widowed.

Consent of Spouse

Your spouse must sign the consent for
your gift-splitting election to be valid. The
consent may generally be signed at any
time after the end of the calendar year.
However, there are two exceptions.
1. The consent may not be signed
after April 15 following the end of the year
in which the gift was made. But, if neither
you nor your spouse has filed a gift tax
return for the year on or before that date,
the consent must be made on the first gift
tax return for the year filed by either of
you.
2. The consent may not be signed
after a notice of deficiency for the gift tax
for the year has been sent to either you or
your spouse.
The executor for a deceased spouse or
the guardian for a legally incompetent
spouse may sign the consent.

When the Consenting Spouse
Must Also File a Gift Tax Return
In general, if you and your spouse elect
gift splitting, then both spouses must file
his or her own individual, gift tax return.
However, only one spouse must file a
return if the requirements of either of the
exceptions below are met. In these
exceptions, gifts means transfers (or parts
of transfers) that do not qualify for the
political organization, educational, or
medical exclusions.
Exception 1. During the calendar year:
Only one spouse made any gifts,
The total value of these gifts to each
third-party donee does not exceed
$28,000, and
All of the gifts were of present interests.
Exception 2. During the calendar year:
Only one spouse (the donor spouse)
made gifts of more than $14,000 but not
more than $28,000 to any third-party
donee,
The only gifts made by the other
spouse (the consenting spouse) were gifts
of not more than $14,000 to third-party
donees other than those to whom the
donor spouse made gifts, and
All of the gifts by both spouses were of
present interests.
If either of the above exceptions is met,
only the donor spouse must file a return
and the consenting spouse signifies
consent on that return.
Specific instructions for Part 2—Tax
Computation are discussed later. Because
you must complete Schedules A, B, C,
and D to fill out Part 2, you will find
instructions for these schedules later.

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Line 19. Application of DSUE
Amount

If the donor is a citizen or resident of the
United States and his or her spouse died
after December 31, 2010, the donor may
be eligible to use the deceased spouse's
unused exclusion (DSUE) amount. The
executor of his or her spouse's estate
must have elected on Form 706 to allow
use of the unused exclusion amount. See
instructions for Form 706, Part
6—Portability of Deceased Spousal
Unused Exclusion. If the executor of the
estate made this election, attach the first
four pages of the Form 706 filed by the
estate. Include any attachments related to
DSUE that were filed with Form 706 and
calculations of any adjustments to the
DSUE amount like audit reports or
previously filed Forms 709. See also
section 2010(c)(4) and related regulations.
Using the checkboxes provided,
indicate whether the donor is applying or
has applied a DSUE amount from a
predeceased spouse to gifts reported on
this or a previous Form 709. If so,
complete Schedule C before going to Part
2—Tax Computation.

Schedule A. Computation
of Taxable Gifts

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

Line A. Valuation Discounts

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

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

If in 2016, you contributed more than
$14,000 to a Qualified Tuition Plan (QTP)
on behalf of any one person, you may
elect to treat up to $70,000 of the
contribution for that person as if you had
made it ratably over a 5-year period. The
election allows you to apply the annual
exclusion to a portion of the contribution in
each of the 5 years, beginning in 2016.
You can make this election for as many
separate people as you made QTP
contributions.

You can only apply the election to a
maximum of $70,000. You must report all
of your 2016 QTP contributions for any
single person that exceed $70,000 (in
addition to any other gifts you made to that
person).
For each of the 5 years, you report in
Part 1 of Schedule A one-fifth (20%) of the
amount for which you made the election.
In column E of Part 1 (Schedule A) list the
date of the gift as the calendar year for
which you are deemed to have made the
gift (that is, the year of the current Form
709 you are filing). Do not list the actual
year of contribution for subsequent years.
However, if in any of the last 4 years of
the election, you did not make any other
gifts that would require you to file a Form
709, you do not need to file Form 709 to
report that year's portion of the election
amount.
Example. In 2016, D contributed
$100,000 to a QTP for the benefit of her
son. D elects to treat $70,000 of this
contribution as having been made ratably
over a 5-year period. Accordingly, for
2016, D reports the following.
$30,000
+ $14,000
$44,000

(the amount of the contribution
that exceeded $70,000)
(the 1 5 portion from the election)
the total gift to her son listed in
Part 1 of Schedule A for 2016

In 2017, D gives a gift of $20,000 cash
to her niece and no other gifts. On her
2017 Form 709, D reports in Part 1 of
Schedule A the $20,000 gift to her niece
and a $14,000 gift to her son (the one-fifth
portion of the 2016 gift that is treated as
made in 2017). In column E of Part 1
(Schedule A), D lists “2017” as the date of
the gift.
D makes no gifts in 2018, 2019, or
2020. She is not required to file Form 709
in any of those years to report the one-fifth
portion of the QTP gift because she is not
otherwise required to file Form 709.
You make the election by checking the
box on line B at the top of Schedule A.
The election must be made for the
calendar year in which the contribution is
made. Also attach an explanation that
includes the following.
The total amount contributed per
individual beneficiary.
The amount for which the election is
being made.
The name of the individual for whom the
contribution was made.
If you are electing gift splitting, apply
the gift-splitting rules before applying the
QTP rules. Each spouse would then
decide individually whether to make this
QTP election.

!

CAUTION

Contributions to QTPs do not
qualify for the education
exclusion.

How To Complete Parts 1, 2,
and 3

After you determine which gifts you made
in 2016 that are subject to the gift tax, list
them on Schedule A. You must divide
these gifts between:
1. Part 1—those subject only to the
gift tax (gifts made to nonskip
persons—see Part 1—Gifts Subject Only
to Gift Tax),
2. Part 2—those subject to both the
gift and GST taxes (gifts made to skip
persons—see Gifts Subject to Both Gift
and GST Taxes and Part 2—Direct Skips),
and
3. Part 3—those subject only to the
gift tax at this time but which could later be
subject to GST tax (gifts that are indirect
skips, see Part 3—Indirect Skips).
If you need more space, attach a
separate sheet using the same format as
Schedule A.
Use the following guidelines when

TIP entering gifts on Schedule A.

Enter a gift only once—in Part 1, Part 2,
or Part 3.
Do not enter any gift or part of a gift that
qualified for the political organization,
educational, or medical exclusion.
Enter gifts under “Gifts made by
spouse” only if you have chosen to split
gifts with your spouse and your spouse is
required to file a Form 709 (see Part
1—General Information, Lines 12–18. Split
Gifts).
In column F, enter the full value of the
gift (including those made by your spouse,
if applicable). If you have chosen to split
gifts, that one-half portion of the gift is
entered in column G.

Gifts to Donees Other Than
Your Spouse

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

Gift splitting not elected. If the total gifts
of present interests to any donee are more
than $14,000 in the calendar year, then
you must enter all such gifts that you
made during the year to or on behalf of
that donee, including those gifts that will
be excluded under the annual exclusion. If
the total is $14,000 or less, you need not
enter on Schedule A any gifts (except gifts
of future interests) that you made to that
donee. Enter these gifts in the top half of
Part 1, 2, or 3, as applicable.
Gift splitting elected. Enter on
Schedule A the entire value of every gift
-7-

you made during the calendar year while
you were married, even if the gift's value
will be less than $14,000 after it is split in
column G of Part 1, 2, or 3 of Schedule A.
Gifts made by spouse. If you elected
gift splitting and your spouse made gifts,
list those gifts in the space below “Gifts
made by spouse” in Part 1, 2, or 3. Report
these gifts in the same way you report gifts
you made.

Gifts to Your Spouse

Except for the gifts described below, you
do not need to enter any of your gifts to
your spouse on Schedule A.
Terminable interests. Terminable
interests are defined in the instructions to
Part 4, line 4. If all the terminable interests
you gave to your spouse qualify as life
estates with power of appointment
(defined under Life estate with power of
appointment), you do not need to enter
any of them on Schedule A.
However, if you gave your spouse any
terminable interest that does not qualify as
a life estate with power of appointment,
you must report on Schedule A all gifts of
terminable interests you made to your
spouse during the year.
Charitable remainder trusts. If you
make a gift to a charitable remainder trust
and your spouse is the only noncharitable
beneficiary (other than yourself), the
interest you gave to your spouse is not
considered a terminable interest and,
therefore, should not be shown on
Schedule A. See section 2523(g)(1). For
definitions and rules concerning these
trusts, see section 2056(b)(8)(B).
Future interest. Generally, you should
not report a gift of a future interest to your
spouse unless the future interest is also a
terminable interest that is required to be
reported as described earlier. However, if
you gave a gift of a future interest to your
spouse and you are required to report the
gift on Form 709 because you gave the
present interest to a donee other than your
spouse, then you should enter the entire
gift, including the future interest given to
your spouse, on Schedule A. You should
use the rules under Gifts Subject to Both
Gift and GST Taxes, later, to determine
whether to enter the gift on Schedule A,
Part 1, Part 2, or Part 3.
Spouses who are not U.S. citizens. If
your spouse is not a U.S. citizen and you
gave him or her a gift of a future interest,
you must report on Schedule A all gifts to
your spouse for the year. If all gifts to your
spouse were present interests, do not
report on Schedule A any gifts to your
spouse if the total of such gifts for the year
does not exceed $148,000 and all gifts in
excess of $14,000 would qualify for a
marital deduction if your spouse were a
U.S. citizen (see the instructions for

Schedule A, Part 4, line 4). If the gifts
exceed $148,000, you must report all of
the gifts even though some may be
excluded.

Gifts Subject to Both Gift
and GST Taxes
Definitions
Direct skip. The GST tax you must report
on Form 709 is that imposed only on inter
vivos direct skips. An inter vivos direct skip
is a transfer that is:
Subject to the gift tax,
Of an interest in property, and
Made to a skip person.
All three requirements must be met before
the gift is subject to the GST tax.
A gift is “subject to the gift tax” if you
are required to list it on Schedule A of
Form 709. However, if you make a
nontaxable gift (which is a direct skip) to a
trust for the benefit of an individual, this
transfer is subject to the GST tax unless:
1. During the lifetime of the
beneficiary, no corpus or income may be
distributed to anyone other than the
beneficiary; and
2. If the beneficiary dies before the
termination of the trust, the assets of the
trust will be included in the gross estate of
the beneficiary.
Note. If the property transferred in the
direct skip would have been includible in
the donor's estate if the donor died
immediately after the transfer, see
Transfers Subject to an Estate Tax
Inclusion Period (ETIP).
To determine if a gift “is of an interest in
property” and “is made to a skip person,”
you must first determine if the donee is a
“natural person” or a “trust,” as defined
below.
Trust. For purposes of the GST tax, a
trust includes not only an ordinary trust,
but also any other arrangement (other
than an estate) that although not explicitly
a trust, has substantially the same effect
as a trust. For example, a trust includes
life estates with remainders, terms for
years, and insurance and annuity
contracts. A transfer of property that is
conditional on the occurrence of an event
is a transfer in trust.
Interest in property. If a gift is made to a
natural person, it is always considered a
gift of an interest in property for purposes
of the GST tax.
If a gift is made to a trust, a natural
person will have an interest in the property
transferred to the trust if that person either
has a present right to receive income or
corpus from the trust (such as an income
interest for life) or is a permissible current
recipient of income or corpus from the

trust (for example, possesses a general
power of appointment).

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

Skip person. A donee, who is a natural
person, is a skip person if that donee is
assigned to a generation that is two or
more generations below the generation
assignment of the donor. See Determining
the Generation of a Donee.
A donee that is a trust is a skip person
if all the interests in the property
transferred to the trust (as defined above)
are held by skip persons.
A trust will also be a skip person if there
are no interests in the property transferred
to the trust held by any person, and future
distributions or terminations from the trust
can be made only to skip persons.

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

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

Determining the Generation of
a Donee

Generally, a generation is determined
along family lines as follows.
1. If the donee is a lineal descendant
of a grandparent of the donor (for
example, the donor's cousin, niece,
nephew, etc.), the number of generations
between the donor and the descendant
(donee) is determined by subtracting the
number of generations between the
grandparent and the donor from the
number of generations between the
grandparent and the descendant (donee).
2. If the donee is a lineal descendant
of a grandparent of a spouse (or former
spouse) of the donor, the number of
generations between the donor and the
descendant (donee) is determined by
subtracting the number of generations
between the grandparent and the spouse
(or former spouse) from the number of
generations between the grandparent and
the descendant (donee).
3. A person who at any time was
married to a person described in (1) or (2)
above is assigned to the generation of that
person. A person who at any time was
married to the donor is assigned to the
donor's generation.
4. A relationship by adoption or
half-blood is treated as a relationship by
whole-blood.
A person who is not assigned to a
generation according to (1), (2), (3), or (4)
above is assigned to a generation based
on his or her birth date as follows.
1. A person who was born not more
than 121 2 years after the donor is in the
donor's generation.
2. A person born more than 121 2
years, but not more than 371 2 years, after
the donor is in the first generation younger
than the donor.

-8-

If an estate, trust, partnership,
corporation, or other entity (other than
governmental entities and certain
charitable organizations and trusts,
described in sections 511(a)(2) and
511(b)(2), as discussed later) is a donee,
then each person who indirectly receives
the gift through the entity is treated as a
donee and is assigned to a generation as
explained in the above rules.
Charitable organizations and trusts,
described in sections 511(a)(2) and
511(b)(2), and governmental entities are
assigned to the donor's generation.
Transfers to such organizations are
therefore not subject to the GST tax.
These gifts should always be listed in Part
1 of Schedule A.

Charitable Remainder Trusts

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

Generation Assignment Where
Intervening Parent Is Deceased

If you made a gift to your grandchild and at
the time you made the gift, the
grandchild's parent (who is your or your
spouse's or your former spouse's child) is
deceased, then for purposes of generation
assignment, your grandchild is considered
to be your child rather than your
grandchild. Your grandchild's children will
be treated as your grandchildren rather
than your great-grandchildren.
This rule is also applied to your lineal
descendants below the level of
grandchild. For example, if your
grandchild is deceased, your
great-grandchildren who are lineal
descendants of the deceased grandchild
are considered your grandchildren for
purposes of the GST tax.
This special rule may also apply in
other cases of the death of a parent of the
transferee. If property is transferred to a
descendant of a parent of the transferor
and that person's parent (who is a lineal
descendant of the parent of the transferor)
is deceased at the time the transfer is
subject to gift or estate tax, then for
purposes of generation assignment, the
individual is treated as if he or she is a
member of the generation that is one
generation below the lower of:

The transferor's generation, or
The generation assignment of the
youngest living ancestor of the individual
who is also a descendant of the parent of
the transferor.
The same rules apply to the generation
assignment of any descendant of the
individual.
This rule does not apply to a transfer to
an individual who is not a lineal
descendant of the transferor if the
transferor at the time of the transfer has
any living lineal descendants.
If any transfer of property to a trust
would have been a direct skip except for
this generation assignment rule, then the
rule also applies to transfers from the trust
attributable to such property.
Ninety-day rule. For assigning
individuals to generations for purposes of
the GST tax, any individual who dies no
later than 90 days after a transfer
occurring by reason of the death of the
transferor is treated as having
predeceased the transferor. The 90-day
rule applies to transfers occurring on or
after July 18, 2005. See Regulations
section 26.2651-1(a)(2)(iii) for more
information.

Examples
The GST rules can be illustrated by the
following examples.
Example 1. You give your house to
your daughter for her life with the
remainder then passing to her children.
This gift is made to a “trust” even though
there is no explicit trust instrument. The
interest in the property transferred (the
present right to use the house) is
transferred to a nonskip person (your
daughter). Therefore, the trust is not a skip
person because there is an interest in the
transferred property that is held by a
nonskip person, and the gift is not a direct
skip. The transfer is an indirect skip,
however, because on the death of the
daughter, a termination of her interest in
the trust will occur that may be subject to
the GST tax. See the instructions for Part
3—Indirect Skips for a discussion of how
to allocate GST exemption to such a trust.
Example 2. You give $100,000 to your
grandchild. This gift is a direct skip that is
not made in trust. You should list it in Part
2 of Schedule A.
Example 3. You establish a trust that
is required to accumulate income for 10
years and then pay its income to your
grandchildren for their lives and upon their
deaths distribute the corpus to their
children. Because the trust has no current
beneficiaries, there are no present
interests in the property transferred to the
trust. All of the persons to whom the trust
can make future distributions (including

distributions upon the termination of
interests in property held in trust) are skip
persons (that is, your grandchildren and
great-grandchildren). Therefore, the trust
itself is a skip person and you should list
the gift in Part 2 of Schedule A.
Example 4. You establish a trust that
pays all of its income to your
grandchildren for 10 years. At the end of
10 years, the corpus is to be distributed to
your children. Since for this purpose
interests in trusts are defined only as
present interests, all of the interests in this
trust are held by skip persons (the
children's interests are future interests).
Therefore, the trust is a skip person and
you should list the entire amount you
transferred to the trust in Part 2 of
Schedule A even though some of the
trust's ultimate beneficiaries are nonskip
persons.

Part 1—Gifts Subject Only to
Gift Tax

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

Exchanges where listed or, if unlisted,
give the location of the principal business
office of the corporation; and
CUSIP number. The CUSIP number is a
nine-digit number assigned by the
American Banking Association to traded
securities.
For stocks:
Give number of shares;
State whether common or preferred;
If preferred, give the issue, par value,
quotation at which returned, and exact
name of corporation;
If unlisted on a principal exchange, give
the location of the principal business office
of the corporation, the state in which
incorporated, and the date of
incorporation;
If listed, give principal exchange; and
CUSIP number.
For interests in property based on the
length of a person's life, give the date of
birth of the person. If you transfer any
interest in a closely held entity, provide the
EIN of the entity.
For life insurance policies, give the
name of the insurer and the policy
number.

Group the gifts in four categories.
Gifts made to your spouse.
Gifts made to third parties that are to be
split with your spouse.
Charitable gifts (if you are not splitting
gifts with your spouse).
Other gifts.
If a transfer results in gifts to two or more
individuals (such as a life estate to one
with remainder to the other), list the gift to
each separately.

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

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

Column D. Donor's Adjusted Basis
of Gifts

Column B
Describe each gift in enough detail so that
the property can be easily identified, as
explained below.
For real estate, give:
A legal description of each parcel;
The street number, name, and area if
the property is located in a city; and
A short statement of any improvements
made to the property.
For bonds, give:
The number of bonds transferred;
The principal amount of each bond;
Name of obligor;
Date of maturity;
Rate of interest;
Date or dates when interest is payable;
Series number, if there is more than
one issue;
-9-

Show the basis you would use for income
tax purposes if the gift were sold or
exchanged. Generally, this means cost
plus improvements, less applicable
depreciation, amortization, and depletion.
For more information on adjusted
basis, see Pub. 551, Basis of Assets.

Columns E and F. Date and Value
of Gift
The value of a gift is the fair market value
(FMV) of the property on the date the gift
is made (valuation date). The FMV is the
price at which the property would change
hands between a willing buyer and a
willing seller, when neither is forced to buy
or to sell, and when both have reasonable
knowledge of all relevant facts. FMV may
not be determined by a forced sale price,
nor by the sale price of the item in a
market other than that in which the item is

most commonly sold to the public. The
location of the item must be taken into
account whenever appropriate.
The FMV of a stock or bond (whether
listed or unlisted) is the mean between the
highest and lowest selling prices quoted
on the valuation date. If only the closing
selling prices are available, then the FMV
is the mean between the quoted closing
selling price on the valuation date and on
the trading day before the valuation date.
If there were no sales on the valuation
date, figure the FMV as follows.
1. Find the mean between the highest
and lowest selling prices on the nearest
trading date before and the nearest
trading date after the valuation date. Both
trading dates must be reasonably close to
the valuation date.
2. Prorate the difference between
mean prices to the valuation date.
3. Add or subtract (whichever applies)
the prorated part of the difference to or
from the mean price figured for the nearest
trading date before the actual valuation
date.
If no actual sales were made
reasonably close to the valuation date,
make the same computation using the
mean between the bona fide bid and the
asked prices instead of sales prices. If
actual sales prices or bona fide bid and
asked prices are available within a
reasonable period of time before the
valuation date but not after the valuation
date, or vice versa, use the mean between
the highest and lowest sales prices or bid
and asked prices as the FMV.
Stock of close corporations or inactive
stock must be valued on the basis of net
worth, earnings, earning and dividend
capacity, and other relevant factors.
Generally, the best indication of the
value of real property is the price paid for
the property in an arm's-length transaction
on or before the valuation date. If there
has been no such transaction, use the
comparable sales method. In comparing
similar properties, consider differences in
the date of the sale, and the size,
condition, and location of the properties,
and make all appropriate adjustments.
The value of all annuities, life estates,
terms for years, remainders, or reversions
is generally the present value on the date
of the gift.
Sections 2701 and 2702 provide
special valuation rules to determine the
amount of the gift when a donor transfers
an equity interest in a corporation or
partnership (section 2701) or makes a gift
in trust (section 2702). The rules only
apply if, immediately after the transfer, the

donor (or an applicable family member)
holds an applicable retained interest in the
corporation or partnership, or retains an
interest in the trust. For details, see
sections 2701 and 2702, and their
regulations.

Part 2—Direct Skips

Column G. Split Gifts

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

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

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

Split Gifts—Gifts Made by
Spouses

If you elected to split gifts with your
spouse and your spouse has given a
gift(s) that is being split with you, enter in
this area of Part 1 information on the gift(s)
made by your spouse. If only you made
gifts and you are splitting them with your
spouse, do not make an entry in this area.
Generally, if you elect to split your gifts,
you must split all gifts made by you and
your spouse to third-party donees. The
only exception is if you gave your spouse
a general power of appointment over a gift
you made.

Supplemental Documents

To support the value of your gifts, you
must provide information showing how it
was determined.
For stock of close corporations or
inactive stock, attach balance sheets,
particularly the one nearest the date of the
gift, and statements of net earnings or
operating results and dividends paid for
each of the 5 preceding years.
For each life insurance policy, attach
Form 712, Life Insurance Statement.

Note for single premium or paid-up
policies. In certain situations, for
example, where the surrender value of the
policy exceeds its replacement cost, the
true economic value of the policy will be
greater than the amount shown on line 59
of Form 712. In these situations, report the
full economic value of the policy on
Schedule A. See Rev. Rul. 78-137, 1978-1
C.B. 280, for details.
If the gift was made by means of a
trust, attach a certified or verified copy of
the trust instrument to the return on which
you report your first transfer to the trust.
However, to report subsequent transfers
to the trust, you may attach a brief
description of the terms of the trust or a
copy of the trust instrument.
Also attach any appraisal used to
determine the value of real estate or other
property.
If you do not attach this information,
Schedule A must include a full explanation
of how value was determined.
-10-

Column C. 2632(b) Election
If you elect under section 2632(b)(3) to not
have the automatic allocation rules of
section 2632(b) apply to a transfer, enter a
check in column C next to the transfer.
You must also attach a statement to Form
709 clearly describing the transaction and
the extent to which the automatic
allocation is not to apply. Reporting a
direct skip on a timely filed Form 709 and
paying the GST tax on the transfer will
qualify as such a statement.
How to report generation-skipping
transfers after the close of an ETIP. If
you are reporting a generation-skipping
transfer that was subject to an ETIP
(provided the ETIP closed as a result of
something other than the death of the
transferor; see Form 706), and you are
also reporting gifts made during the year,
complete Schedule A as you normally
would with the transfer subject to an ETIP
listed on Schedule A, Part 2.
Column B. In addition to the
information already requested, describe
the interest that is closing the ETIP;
explain what caused the interest to
terminate; and list the year the gift portion
of the transfer was reported and its item
number on Schedule A that was originally
filed to report the gift portion of the ETIP
transfer.
Column E. Give the date the ETIP
closed rather than the date of the initial
gift.
Columns F, G, and H. Enter “N/A” in
these columns.
The value is entered only in column B
of Part 1, Schedule D. See Column B,
earlier.

Split Gifts—Gifts Made by
Spouse
See this heading under Part 1.

Part 3—Indirect Skips

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

Section 2632(c) defines indirect skips
and applies special rules to the allocation
of GST exemption to such transfers. In
general, an indirect skip is a transfer of
property that is subject to gift tax (other
than a direct skip) and is made to a GST
trust. A GST trust is a trust that could have
a generation-skipping transfer with respect
to the transferor, unless the trust provides
for certain distributions of trust corpus to
nonskip persons. See section 2632(c)(3)
(B) for details.
List in Part 3 those gifts that are indirect
skips as defined in section 2632(c) or may
later be subject to GST tax. This includes
indirect skips for which election 2,
described below, will be made in the
current year or has been made in a
previous year. You must list the gifts in
Part 3 in the chronological order that you
made them.

Split Gifts—Gifts Made by
Spouse
See this heading under Part 1.

Part 4—Taxable Gift
Reconciliation
Line 1
Enter only gifts of the donor. If gift-splitting
has been elected, enter only the value of
the gift that is attributable to the spouse
that is filing the return.

Line 2
Enter the total annual exclusions you are
claiming for the gifts listed on Schedule A.
See Annual Exclusion, earlier. If you split a
gift with your spouse, the annual exclusion
you claim against that gift may not be
more than the smaller of your half of the
gift or $14,000.

Column C. 2632(c) Election

Deductions

Section 2632(c) provides for the automatic
allocation of the donor's unused GST
exemption to indirect skips. This section
also sets forth three different elections you
may make regarding the allocation of
exemption.
Election 1. You may elect not to have
the automatic allocation rules apply to
the current transfer made to a
particular trust.
Election 2. You may elect not to have
the automatic rules apply to both the
current transfer and any and all future
transfers made to a particular trust.
Election 3. You may elect to treat any
trust as a GST trust for purposes of
the automatic allocation rules.
See section 2632(c)(5) for details.

Line 4. Marital Deduction

When to make an election. Election 1 is
timely made if it is made on a timely filed
gift tax return for the year the transfer was
made or was deemed to have been made.
Elections 2 and 3 may be made on a
timely filed gift tax return for the year for
which the election is to become effective.
To make one of these elections, check
column C next to the transfer to which the
election applies. You must also attach an
explanation as described below. If you are
making election 2 or 3 on a return on
which the transfer is not reported, simply
attach the statement described below.
If you are reporting a transfer to a trust
for which election 2 or 3 was made on a
previously filed return, do not make an
entry in column C for that transfer and do
not attach a statement.
Attachment. Attach a statement to Form
709 that describes the election you are
making and clearly identifies the trusts
and/or transfers to which the election
applies.

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

TIP your spouse who was not a U.S.
citizen at the time of the gift.

You may deduct all gifts of
nonterminable interests made during the
year that you entered on Schedule A
regardless of amount, and certain gifts of
terminable interests as outlined below.
Terminable interests. Generally, you
cannot take the marital deduction if the gift
to your spouse is a terminable interest. In
most instances, a terminable interest is
nondeductible if someone other than the
donee spouse will have an interest in the
property following the termination of the
donee spouse's interest. Some examples
of terminable interests are:
A life estate,
An estate for a specified number of
years, or
Any other property interest that after a
period of time will terminate or fail.
If you transfer an interest to your
spouse as sole joint tenant with yourself or
as a tenant by the entirety, the interest is
not considered a terminable interest just
because the tenancy may be severed.
Life estate with power of appointment.
You may deduct, without an election, a gift
of a terminable interest if all four
requirements below are met.
-11-

1. Your spouse is entitled for life to all
of the income from the entire interest.
2. The income is paid yearly or more
often.
3. Your spouse has the unlimited
power, while he or she is alive or by will, to
appoint the entire interest in all
circumstances.
4. No part of the entire interest is
subject to another person's power of
appointment (except to appoint it to your
spouse).
If either the right to income or the
power of appointment given to your
spouse pertains only to a specific portion
of a property interest, the marital
deduction is allowed only to the extent that
the rights of your spouse meet all four of
the above conditions. For example, if your
spouse is to receive all of the income from
the entire interest, but only has a power to
appoint one-half of the entire interest, then
only one-half qualifies for the marital
deduction.
A partial interest in property is treated
as a specific portion of an entire interest
only if the rights of your spouse to the
income and to the power are a fractional
or percentile share of the entire property
interest. This means that the interest or
share will reflect any increase or decrease
in the value of the entire property interest.
If the spouse is entitled to receive a
specified sum of income annually, the
capital amount that would produce such a
sum will be considered the specific portion
from which the spouse is entitled to
receive the income.
Election to deduct qualified terminable
interest property (QTIP). You may elect
to deduct a gift of a terminable interest if it
meets requirements (1), (2), and (4)
earlier, even though it does not meet
requirement (3).
You make this election simply by listing
the qualified terminable interest property
on Schedule A and deducting its value
from Schedule A, Part 4, line 4. You are
presumed to have made the election for all
qualified property that you both list and
deduct on Schedule A. You may not make
the election on a late filed Form 709.

Line 5
Enter the amount of the annual exclusions
that were claimed for the gifts listed on
line 4.

Line 7. Charitable Deduction
You may deduct from the total gifts made
during the calendar year all gifts you gave
to or for the use of:
The United States, a state or political
subdivision of a state or the District of
Columbia for exclusively public purposes;

Any corporation, trust, community
chest, fund, or foundation organized and
operated only for religious, charitable,
scientific, literary, or educational
purposes, or to prevent cruelty to children
or animals, or to foster national or
international amateur sports competition
(if none of its activities involve providing
athletic equipment unless it is a qualified
amateur sports organization), as long as
no part of the earnings benefits any one
person, no substantial propaganda is
produced, and no lobbying or
campaigning for any candidate for public
office is done;
A fraternal society, order, or association
operating under a lodge system, if the
transferred property is to be used only for
religious, charitable, scientific, literary, or
educational purposes, including the
encouragement of art and the prevention
of cruelty to children or animals; or
Any war veterans' organization
organized in the United States (or any of
its possessions), or any of its auxiliary
departments or local chapters or posts, as
long as no part of any of the earnings
benefits any one person.
On line 7, show your total charitable,
public, or similar gifts (minus annual
exclusions allowed). On the dotted line,
indicate which numbered items from the
top of Schedule A are charitable gifts.

Line 10. GST Tax
If GST tax is due on any direct skips
reported on this return, the amount of that
GST tax is also considered a gift and must
be added to the value of the direct skip
reported on this return.
If you entered gifts on Part 2, or if you
and your spouse elected gift splitting and
your spouse made gifts subject to the GST
tax that you are required to show on your
Form 709, complete Schedule D, and

enter on line 10 the total from Schedule D,
Part 3, column H. Otherwise, enter zero on
line 10.

Line 12. Election Out of QTIP
Treatment of Annuities
Section 2523(f)(6) creates an automatic
QTIP election for gifts of joint and survivor
annuities where the spouses are the only
possible recipients of the annuity prior to
the death of the last surviving spouse.
The donor spouse can elect out of
QTIP treatment, however, by checking the
box on line 12 and entering the item
number from Schedule A for the annuities
for which you are making the election. Any
annuities entered on line 12 cannot also
be entered on line 4 of Schedule A, Part 4.
Any such annuities that are not listed on
line 12 must be entered on line 4 of Part 4,
Schedule A. If there is more than one such
joint and survivor annuity, you are not
required to make the election for all of
them. Once made, the election is
irrevocable.

Schedule B. Gifts From
Prior Periods

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

!

Complete Schedule A before
beginning Schedule B.

CAUTION

-12-

Column A. If you filed returns for gifts
made before 1971 or after 1981, show the
calendar years in column A. If you filed
returns for gifts made after 1970 and
before 1982, show the calendar quarters.
Column B. In column B, identify the IRS
office where you filed the returns. If you
have changed your name, be sure to list
any other names under which the returns
were filed. If there was any other variation
in the names under which you filed, such
as the use of full given names instead of
initials, please explain.
Column C. To determine the amount of
applicable credit (formerly unified credit)
used for gifts made after 1976, use the
Worksheet for Schedule B, Column C
(Credit Allowable for Prior Periods), unless
your prior gifts total $500,000 or less.
Prior gifts totaling $500,000 or less.
In column C, enter the amount of
applicable credit actually applied in the
prior period.
Prior gifts totaling over $500,000.
See Redetermining the Applicable Credit,
later.
Column D. In column D, enter the
amount of specific exemption claimed for
gifts made in periods ending before
January 1, 1977.
Column E. In column E, show the correct
amount (the amount finally determined) of
the taxable gifts for each earlier period.
See Regulations section 25.2504-2 for
rules regarding the final determination of
the value of a gift.

Redetermining the Applicable
Credit

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

Instructions for Worksheet for Schedule B, Column C (Credit Allowable for Prior Periods)
Beginning with the earliest year after 1976 in which gifts using a credit amount were made, determine the credit amount (at current rates) for each
quarter/year as follows.
Column
A
Period

Enter the quarter/year of the prior gift(s). Pre-1977 gifts will be on the first row.

B
Taxable Gifts for Current Period

Enter the amount of all taxable gifts for the year in Column A. The total of all pre-1977 gifts should
be combined in the first row.

C
Taxable Gifts for Prior Periods

Enter the amount from Column D of the previous row.

D
Cumulative Taxable Gifts Including Current Period

Enter the sum of Columns B and C from the current row.

E
Tax on Gifts for Prior Periods

Enter the amount from Column F of the previous row.

F
Tax on Cumulative Gifts Including Current Period

Enter the tax based on the amount in Column D of the current row using the Table for Computing
Gift Tax.

G
Tax on Gifts for Current Period

Subtract the amount in Column E from the amount in Column F of the current row and enter here.

H
Used DSUE Amount From Predeceased Spouse(s)

Enter the total DSUE amount (if any) received from the estate of the donor's last deceased
spouse and used by the donor in prior periods and the current period. DSUE may not be applied
to gifts made before the DSUE arose.

I
Basic Exclusion Amount for Year of Gift

Enter the exclusion amount corresponding with the year listed in Column A of the current row.
(See Table of Basic Exclusion and Credit Amounts.)

J
Applicable Exclusion Amount

Add the amounts in Columns H and I of the current row and enter here.

K
Applicable Credit Amount (Based on Amount in Column J)

L
Applicable Credit Amount Used in Prior Periods

Using the Table for Computing Gift Tax, determine the credit corresponding to the amount in
Column J of the current row and enter here. For each row in Column K, subtract 20% of any
amount allowed as a specific exemption for gifts made after September 8, 1976, and before
January 1, 1977.
Enter the total of the amounts in Columns L and N of the previous row.

M
Available Credit in Current Period

Subtract the amount in Column L from the amount in Column K of the current row and enter here.

N
Credit Allowable

Enter the lesser of Column G or Column M of the current row.

Repeat this process for each prior year with taxable gifts. Do not enter less than zero.

Worksheet for Schedule B, Column C (Credit Allowable for Prior Periods)
Prior Years Credit Recalculation (for Form 709 Schedule B, Column C)
(Keep for your records.)
A

B

Period

Taxable
Gifts for
Current
Period

C

D

Taxable
Cumulative
Gifts for Taxable Gifts
Prior
Including
Periods1
Current
Period
(Col. B + Col.
C)

E

F

G

H

I

J

Tax on
Gifts for
Prior
Periods
(Col. C)2, 3

Tax on
Cumulative
Gifts
Including
Current
Period (Col.
D)3

Tax on
Gifts for
Current
Period
(Col. F –
Col. E)

DSUE From
Predeceased
Spouse(s)

Basic
Exclusion
for Year of
Gift4

Applicable
Exclusion
Amount
(Col. H +
Col. I)

K

L

M

Applicable
Applicable
Available
Credit
Credit
Credit in
Amount
Amount
Current
Based on Used in Prior
Period
3, 5
3, 6
Column J
Periods
(Col. K – Col.
L)

Pre-1977
YYYY
YYYY
YYYY
Total Applicable Credit Used in Prior Periods (Enter the Total of Column N on Schedule B, Line 1, Column C) :
Column C: Enter amount from Column D of the previous row.
2.
Column E: Compute the tax on the amount in Column C or enter amount from Column F of the previous row.
3.
To compute tax or credit amount, see Table for Computing Gift Tax.
4.
For years prior to 2010, the basic exclusion amount equals the applicable exclusion amount.
5.
For each row in Column K, subtract 20% of any amount allowed as a specific exemption for gifts made after September 8, 1976, and before January 1, 1977.
6.
Enter the total of Columns L and N of the previous row.
1.

-13-

N
Credit
Allowable
(lesser of
Col. G or
Col. M)

Example 1. Prior Years Credit Recalculation (for Form 709 Schedule B, Column C)
(Three post-1976 years involved. All have the same maximum credit available. Tentative tax exceeds available credit.)
A

B

Period

Taxable
Gifts for
Current
Period

C

D

Taxable
Cumulative
Gifts for Taxable Gifts
Prior
Including
Periods1
Current
Period
(Col. B + Col.
C)

E

F

G

H

I

J

Tax on
Gifts for
Prior
Periods
(Col. C)2, 3

Tax on
Cumulative
Gifts
Including
Current
Period (Col.
D)3

Tax on
Gifts for
Current
Period
(Col. F –
Col. E)

DSUE From
Predeceased
Spouse(s)

Basic
Exclusion
for Year of
the Gift4

Applicable
Exclusion
Amount
(Col. H +
Col. I)

K

L

M

N

Applicable
Applicable
Available
Credit
Credit
Credit in
Amount
Amount
Current
Based on Used in Prior
Period
3, 5
3, 6
Column J
Periods
(Col. K – Col.
L)

Credit
Allowable
(lesser of
Col. G or
Col. M)

Pre-1977
2004

800,000

0

800,000

0

267,800

267,800

0

1,000,000

1,000,000

345,800

0

345,800

267,800

2007

300,000

800,000

1,100,000

267,800

385,800

118,000

0

1,000,000

1,000,000

345,800

267,800

78,000

78,000

2009

200,000

1,100,000

1,300,000

385,800

465,800

80,000

0

1,000,000

1,000,000

345,800

345,800

0

0

Total Applicable Credit Used in Prior Periods (Enter the Total of Column N on Schedule B, Line 1, Column C) :

345,800

Column C: Enter amount from Column D of the previous row.
Column E: Compute the tax on the amount in Column C or enter amount from Column F of the previous row.
3.
To compute tax or credit amount, see Table for Computing Gift Tax.
4.
For years prior to 2010, the basic exclusion amount equals the applicable exclusion amount.
5.
For each row in Column K, subtract 20% of any amount allowed as a specific exemption for gifts made after September 8, 1976, and before January 1, 1977.
6.
Enter the total of Columns L and N of the previous row.
1.

2.

Example 2. Prior Years Credit Recalculation (for Form 709 Schedule B, Column C)
(Pre-1977 gifts plus 3 post-1976 years: Earlier years' gifts exceed credit then available. Last gift made after credit increased.)
A

B

Period

Taxable
Gifts for
Current
Period

C

D

Taxable
Cumulative
Gifts for Taxable Gifts
Prior
Including
Periods1
Current
Period
(Col. B + Col.
C)

E

F

G

Tax on
Gifts for
Prior
Periods
(Col. C)2, 3

Tax on
Cumulative
Gifts
Including
Current
Period (Col.
D)3

Tax on
Gifts for
Current
Period
(Col. F –
Col. E)

200,000

H

I

DSUE From
Basic
PreExclusion
deceased for Year of
Spouse(s)
the Gift4

J
Applicable
Exclusion
Amount
(Col. H +
Col. I)

K

L

M

Applicable
Applicable
Available
Credit
Credit
Credit in
Amount
Amount
Current
Based on Used in Prior
Period
3, 5
3, 6
Column J
Periods
(Col. K – Col.
L)

N
Credit
Allowable
(lesser of
Col. G or
Col. M)

Pre-1977

200,000

1987

600,000

200,000

800,000

54,800

267,800

54,800
213,000

0

600,000

600,000

192,800

0

192,800

192,800

1999

200,000

800,000

1,000,000

267,800

345,800

78,000

0

650,000

650,000

211,300

192,800

18,500

18,500

2002

100

1,000,000

1,000,100

345,800

345,840

40

0

1,000,000

1,000,000

345,800

211,300

134,500

40

Total Applicable Credit Used in Prior Periods (Enter the Total of Column N on Schedule B, Line 1, Column C) :

211,340

Column C: Enter amount from Column D of the previous row.
Column E: Compute the tax on the amount in Column C or enter amount from Column F of the previous row.
3.
To compute tax or credit amount, see Table for Computing Gift Tax.
4.
For years prior to 2010, the basic exclusion amount equals the applicable exclusion amount.
5.
For each row in Column K, subtract 20% of any amount allowed as a specific exemption for gifts made after September 8, 1976, and before January 1, 1977.
6.
Enter the total of Columns L and N of the previous row.
1.

2.

-14-

Example 3. Prior Years Credit Recalculation (for Form 709 Schedule B, Column C)
($6M gift exceeds the applicable credit, $5M DSUE received prior to subsequent $4M gift in the same year.)
A

B

Period

Taxable
Gifts for
Current
Period

C

D

Taxable
Cumulative
Gifts for Taxable Gifts
Prior
Including
Periods1
Current
Period
(Col. B + Col.
C)

E

F

G

Tax on
Gifts for
Prior
Periods
(Col. C)2, 3

Tax on
Cumulative
Gifts
Including
Current
Period (Col.
D)3

Tax on
Gifts for
Current
Period
(Col. F –
Col. E)

H

I

DSUE From
Basic
PreExclusion
deceased for Year of
Spouse(s)4
the Gift5

J
Applicable
Exclusion
Amount
(Col. H +
Col. I)

K

L

M

Applicable
Applicable
Available
Credit
Credit
Credit in
Amount
Amount
Current
Based on Used in Prior
Period
3, 6
3, 7
Column J
Periods
(Col. K – Col.
L)

N
Credit
Allowable
(lesser of
Col. G or
Col. M)

Pre-1977
2011

10,000,000

0

10,000,000

0

3,945,800

3,945,800

4,000,000

5,000,000

9,000,000

3,545,800

0

3,545,800

3,545,800

Total Applicable Credit Used in Prior Periods (Enter the Total of Column N on Schedule B, Line 1, Column C) :

3,545,800

YYYY
YYYY

Column C: Enter amount from Column D of the previous row.
2.
Column E: Compute the tax on the amount in Column C or enter amount from Column F of the previous row.
3.
To compute tax or credit amount, see Table for Computing Gift Tax.
4.
DSUE may not be applied to gifts made prior to when it arises. Consequently, the available DSUE for the current period is limited to $4,000,000, the value of gifts made after the DSUE arose.
5.
For years prior to 2010, the basic exclusion amount equals the applicable exclusion amount.
6.
For each row in Column K, subtract 20% of any amount allowed as a specific exemption for gifts made after September 8, 1976, and before January 1, 1977.
7.
Enter the total of Columns L and N of the previous row.
1.

Example 4. Prior Years Credit Recalculation (for Form 709 Schedule B, Column C)
(Prior gift exceeds applicable credit, $5M DSUE received prior to subsequent gift.)
A

B

Period

Taxable
Gifts for
Current
Period

C

D

Taxable
Cumulative
Gifts for Taxable Gifts
Prior
Including
Periods1
Current
Period
(Col. B + Col.
C)

E

F

G

Tax on
Gifts for
Prior
Periods
(Col. C)2, 3

Tax on
Cumulative
Gifts
Including
Current
Period (Col.
D)3

Tax on
Gifts for
Current
Period
(Col. F –
Col. E)

H

I

DSUE From
Basic
PreExclusion
deceased for Year of
Spouse(s)
the Gift4

J
Applicable
Exclusion
Amount
(Col. H +
Col. I)

K

L

M

N

Applicable
Applicable
Available
Credit
Credit
Credit
Credit in
Allowable
Amount
Amount
Current
(lesser of
Based on
Used in Prior
Period
Col. G or
3, 5
3, 6
Column J
Periods
(Col. K – Col.
Col. M)
L)

Pre-1977
2002

4,000,000

0

4,000,000

0

1,545,800

1,545,800

0

1,000,000

1,000,000

345,800

0

345,800

345,800

2011

4,000,000

4,000,000

8,000,000

1,545,800

3,145,800

1,600,000

4,000,000

5,000,000

9,000,000

3,545,800

345,800

3,200,000

1,600,000

Total Applicable Credit Used in Prior Periods (Enter the Total of Column N on Schedule B, Line 1, Column C) :

1,945,800

YYYY

Column C: Enter amount from Column D of the previous row.
2.
Column E: Compute the tax on the amount in Column C or enter amount from Column F of the previous row.
3.
To compute tax or credit amount, see Table for Computing Gift Tax.
4.
For years prior to 2010, the basic exclusion amount equals the applicable exclusion amount.
5.
For each row in Column K, subtract 20% of any amount allowed as a specific exemption for gifts made after September 8, 1976, and before January 1, 1977.
6.
Enter the total of Columns L and N of the previous row.
1.

-15-

Table of Basic Exclusion and
Credit Amounts
(as Recalculated for 2016 Rates)
Period

Exclusion
Amounts

Credit
Amounts

1977 (Quarters 1 & 2)

$30,000

$6,000

1977 (Quarters 3 & 4)

$120,667

$30,000

1978

$134,000

$34,000

1979

$147,333

$38,000

1980

$161,563

$42,500

1981

$175,625

$47,000

1982

$225,000

$62,800

1983

$275,000

$79,300

1984

$325,000

$96,300

1985

$400,000

$121,800

1986

$500,000

$155,800

1987 through 1997

$600,000

$192,800

1998

$625,000

$202,050

1999

$650,000

$211,300

2000 and 2001

$675,000

$220,550

2002 through 2010

$1,000,000

$345,800

2011

$5,000,000 $1,945,800

2012

$5,120,000 $1,993,800

2013

$5,250,000 $2,045,800

2014

$5,340,000 $2,081,800

2015

$5,430,000 $2,117,800

2016

$5,450,000 $2,125,800

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

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

!

Complete Schedule A before
beginning Schedule C.

CAUTION

Note. A nonresident surviving spouse
who is not a citizen of the United States
may not take into account the DSUE
amount of a deceased spouse, except to

the extent allowed by treaty with his or her
country of citizenship.

Last Deceased Spouse
Limitation

The last deceased spouse is the most
recently deceased person who was
married to the surviving spouse at the time
of that person's death. The identity of the
last deceased spouse is determined as of
the day a taxable gift is made and is not
impacted by whether the decedent's
estate elected portability or whether the
last deceased spouse had any DSUE
amount available. Remarriage also does
not affect the designation of the last
deceased spouse and does not prevent
the surviving spouse from applying the
DSUE amount to taxable transfers.
When a taxable gift is made, the DSUE
amount received from the last deceased
spouse is applied before the surviving
spouse's basic exclusion amount. A
surviving spouse who has more than one
predeceased spouse is not precluded
from using the DSUE amount of each
spouse in succession. A surviving spouse
may not use the sum of DSUE amounts
from multiple predeceased spouses at
one time nor may the DSUE amount of a
predeceased spouse be applied after the
death of a subsequent spouse.
When a surviving spouse applies the
DSUE amount to a lifetime gift, the IRS
may examine any return of a predeceased
spouse whose executor elected portability
to verify the allowable DSUE amount. The
DSUE may be adjusted or eliminated as a
result of the examination; however, the
IRS may make an assessment of
additional tax on the return of a
predeceased spouse only within the
applicable limitations period under section
6501.

Completing Schedule C

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

death is after December 31, 2010). In
column E, enter the total of the amount in
column D that the donor has applied to
gifts in previous years and is applying to
gifts reported on this return. A donor may
apply DSUE only to gifts made after the
DSUE arose.

Part 2. DSUE Received From Other
Predeceased Spouse(s)
Enter information about the DSUE amount
from the spouse(s), if any, who died prior
to the donor's most recently deceased
spouse (but not before January 1, 2011) if
the prior spouse's executor elected
portability of the DSUE amount. In column
D, indicate the amount of DSUE received
from the estate of each predeceased
spouse. In column E, enter the portion of
the amount of DSUE shown in column D
that was applied to prior lifetime gifts or
transfers. A donor may apply DSUE only
to gifts made after the DSUE arose.
Any remaining DSUE from a
predeceased spouse cannot be
CAUTION applied against tax arising from
lifetime gifts if that spouse is not the most
recently deceased spouse on the date of
the gift. This rule applies even if the last
deceased spouse had no DSUE amount
or made no valid portability election, or if
the DSUE amount from the last deceased
spouse has been fully applied to gifts in
previous periods.

!

Determining the Applicable Credit
Amount Including DSUE
On line 1, enter the donor's basic
exclusion amount; for 2016, this amount is
$5,450,000. Add the amounts listed in
column E from Parts 1 and 2 and enter the
total on line 2. On line 3, enter the total of
lines 1 and 2. Using the Table for
Computing Gift Tax, determine the donor's
applicable credit by applying the
appropriate tax rate to the amount on
line 3. Enter this amount on line 4 and on
line 7 of Part 2—Tax Computation.

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

Schedule D. Computation
of GST Tax

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

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

!

Part 1. DSUE Received From the
Last Deceased Spouse
In this Part, include information about the
DSUE amount from the donor's most
recently deceased spouse (whose date of
-16-

Part 1—Generation-Skipping
Transfers

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

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

Column C
You are allowed to claim the gift tax
annual exclusion currently allowable for
your reported direct skips (other than
certain direct skips to trusts—see Note),
using the rules and limits discussed earlier
for the gift tax annual exclusion. However,
you must allocate the exclusion on a
gift-by-gift basis for GST computation
purposes. You must allocate the exclusion
to each gift to the maximum allowable
amount and in chronological order,
beginning with the earliest gift that
qualifies for the exclusion. Be sure that
you do not claim a total exclusion of more
than $14,000 per donee.
Note. You may not claim any annual
exclusion for a transfer made to a trust
unless the trust meets the requirements
discussed under Part 2—Direct Skips.

Part 2—GST Exemption
Reconciliation
Line 1
Every donor is allowed a lifetime GST
exemption. The amount of the exemption
for 2016 is $5,450,000. For transfers
made through 1998, the GST exemption
was $1 million. The exemption amounts
for 1999 through 2016 are as follows.
Year
1999 . . . . . . . . .
2000 . . . . . . . . .
2001 . . . . . . . . .
2002 . . . . . . . . .
2003 . . . . . . . . .
2004 and 2005 . . .
2006, 2007, and 2008
2009 . . . . . . . . .
2010 and 2011 . . .
2012 . . . . . . . . .
2013 . . . . . . . . .
2014 . . . . . . . . .
2015 . . . . . . . . .
2016 . . . . . . . . .

. . . . .
. . . . .
. . . . .
. . . . .
. . . . .
. . . . .
. . . .
. . . . .
. . . . .
. . . . .
. . . . .
. . . . .
. . . . .
. . . . .

Amount
$1,010,000
$1,030,000
$1,060,000
$1,100,000
$1,120,000
$1,500,000
$2,000,000
$3,500,000
$5,000,000
$5,120,000
$5,250,000
$5,340,000
$5,430,000
$5,450,000

$207,000 taxable generation-skipping
transfer. The donor can allocate $207,000
of exemption to the 2016 transfer but
cannot allocate the $3,743,000 of unused
2016 exemption to pre-2016 transfers.
However, if in 2005, the donor made a
$1,750,000 transfer to a trust that was not
a direct skip, but from which
generation-skipping transfers could be
made in the future, the donor could
allocate the increased exemption to the
trust, even though no additional transfers
were made to the trust. See Regulations
section 26.2642-4 for the redetermination
of the applicable fraction when additional
exemption is allocated to the trust.
Keep a record of your transfers and
exemption allocations to make sure that
any future increases are allocated
correctly.
Enter on line 1 of Part 2 the maximum
GST exemption you are allowed. This will
not necessarily be the highest indexed
amount if you made no generationskipping transfers during the year of the
increase.
The donor can apply this exemption to
inter vivos transfers (that is, transfers
made during the donor's life) on Form 709.
The executor can apply the exemption on
Form 706 to transfers taking effect at
death. An allocation is irrevocable.
In the case of inter vivos direct skips, a
portion of the donor's unused exemption is
automatically allocated to the transferred
property unless the donor elects
otherwise. To elect out of the automatic
allocation of exemption, you must file
Form 709 and attach a statement to it
clearly describing the transaction and the
extent to which the automatic allocation is
not to apply. Reporting a direct skip on a
timely filed Form 709 and paying the GST
tax on the transfer will prevent an
automatic allocation.
Special QTIP election. If you elect QTIP
treatment for any gifts in trust listed on
Schedule A, then on Schedule D you may
also elect to treat the entire trust as
non-QTIP for purposes of the GST tax.
The election must be made for the entire
trust that contains the particular gift
involved on this return. Be sure to identify
the item number of the specific gift for
which you are making this special QTIP
election.

Line 5
In general, each annual increase can only
be allocated to transfers made (or
appreciation occurring) during or after the
year of the transfer.
Example. A donor made $1,750,000
in GSTs through 2005, and allocated all
$1,500,000 of the exemption to those
transfers. In 2016, the donor makes a

Enter the amount of GST exemption you
are applying to transfers reported in Part 3
of Schedule A.
Section 2632(c) provides an automatic
allocation to indirect skips of any unused
GST exemption. The unused exemption is
allocated to indirect skips to the extent
necessary to make the inclusion ratio zero
-17-

for the property transferred. You may elect
out of this automatic allocation as
explained in the instructions for Part 3.

Line 6
Notice of allocation. You may wish to
allocate GST exemption to transfers not
reported on this return, such as a late
allocation.
To allocate your exemption to such
transfers, attach a statement to this Form
709 and entitle it “Notice of Allocation.”
The notice must contain the following for
each trust (or other transfer).
Clear identification of the trust,
including the trust's EIN, if known.
If this is a late allocation, the year the
transfer was reported on Form 709.
The value of the trust assets at the
effective date of the allocation.
The amount of your GST exemption
allocated to each gift (or a statement that
you are allocating exemption by means of
a formula such as “an amount necessary
to produce an inclusion ratio of zero”).
The inclusion ratio of the trust after the
allocation.
Total the exemption allocations and
enter this total on line 6.
Note. Where the property involved in
such a transfer is subject to an ETIP
because it would be includible in the
donor's estate if the donor died
immediately after the transfer (other than
by reason of the donor having died within
3 years of making the gift), an allocation of
the GST exemption at the time of the
transfer will only become effective at the
end of the ETIP. For details, see Transfers
Subject to an Estate Tax Inclusion Period
(ETIP), earlier, and section 2642(f).

Part 3—Tax Computation

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

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

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

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

Table for Computing Gift Tax

----$10,000
20,000
40,000
60,000

$10,000
20,000
40,000
60,000
80,000

----$1,800
3,800
8,200
13,000

18%
20%
22%
24%
26%

No checks of $100 million or more
accepted. The IRS cannot accept a single
check (including a cashier's check) for
amounts of $100,000,000 ($100 million) or
more. If you're sending $100 million or
more by check, you'll need to spread the
payments over two or more checks, with
each check made out for an amount less
than $100 million. The $100 million or
more amount limit does not apply to other
methods of payment (such as electronic
payments), so please consider paying by
means other than checks.

80,000
100,000
150,000
250,000
500,000
750,000
1,000,000

100,000
150,000
250,000
500,000
750,000
1,000,000
-----

18,200
23,800
38,800
70,800
155,800
248,300
345,800

28%
30%
32%
34%
37%
39%
40%

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

Taxable
amount
over

Taxable
amount
not over—

Tax on
amount in
Column A

Rate of tax
on excess
over amount
in Column A

Lines 4 and 5

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

Line 7

The applicable credit (formerly unified
credit) amount is the tentative tax on the
applicable exclusion amount. For gifts
made in 2016, the applicable exclusion
amount equals:
The basic exclusion amount of
$5,450,000, PLUS
Any deceased spousal unused
exclusion (DSUE) amount.
If you are a citizen or resident of the
United States, you must apply any
available applicable credit against gift tax.
If you are not eligible to use a DSUE
amount from a predeceased spouse, enter
$2,125,800 on line 7. Nonresidents not
citizens of the United States may not claim
the applicable credit and should enter zero
on line 7.
If you are eligible to use a DSUE
amount from a predeceased spouse,
complete Schedule C—Deceased
Spousal Unused Exclusion (DSUE)
Amount and enter the amount from line 4
of that schedule on line 7 of Part 2—Tax
Computation.

.

Column D

.

Column C

.

Column B

.

Column A

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

Line 10

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

Line 13

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

Line 19

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

Signature

Third-party designee. If you want to
allow the return preparer (listed on the
bottom of page 1 of Form 709) to discuss
your 2016 Form 709 with the IRS, check
the “Yes” box to the far right of your
signature on page 1 of your return.
If you check the “Yes” box, you (and
your spouse, if splitting gifts) are
authorizing the IRS to call your return
preparer to answer questions that may
arise during the processing of your return.
You are also authorizing the return
preparer of your 2016 Form 709 to:
Give the IRS any information that is
missing from your return;
Call the IRS for information about the
processing of your return or the status of
your payment(s);
Receive copies of notices or transcripts
related to your return, upon request; and
Respond to certain IRS notices about
math errors, offsets, and return
preparation.
You are not authorizing your return
preparer to receive any refund check, to
bind you to anything (including any
additional tax liability), or otherwise
represent you before the IRS. If you want
to expand the authorization of your return
preparer, see Pub. 947, Practice Before
the IRS and Power of Attorney.
The authorization will automatically end
three years from the date of filing Form
709. If you wish to revoke the
authorization before it ends, see Pub. 947.

Disclosure, Privacy Act, and Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal
Revenue laws of the United States. We need the information to figure and collect the right amount of tax. Form 709 is used to report
(1) transfers subject to the federal gift and certain GST taxes and to figure the tax, if any, due on those transfers, and (2) allocations of
the lifetime GST exemption to property transferred during the transferor's lifetime.
Our legal right to ask for the information requested on this form is found in sections 6001, 6011, 6019, and 6061, and their
regulations. You are required to provide the information requested on this form. Section 6109 requires that you provide your identifying
number.
Generally, tax returns and return information are confidential, as stated in section 6103. However, section 6103 allows or requires
the Internal Revenue Service to disclose or give such information shown on your Form 709 to the Department of Justice to enforce the
tax laws, both civil and criminal, and to cities, states, the District of Columbia, and U.S. commonwealths or possessions for use in
-18-

administering their tax laws. We may also disclose this information to other countries under a tax treaty, to federal and state agencies
to enforce federal nontax criminal laws, or to federal law enforcement and intelligence agencies to combat terrorism.
We may disclose the information on your Form 709 to the Department of the Treasury and contractors for tax administration
purposes; and to other persons as necessary to obtain information which we cannot get in any other way for purposes of determining
the amount of or to collect the tax you owe. We may disclose the information on your Form 709 to the Comptroller General to review
the Internal Revenue Service. We may also disclose the information on your Form 709 to Committees of Congress; federal, state, and
local child support agencies; and to other federal agencies for the purpose of determining entitlement for benefits or the eligibility for,
and the repayment of, loans.
If you are required to but do not file a Form 709, or do not provide the information requested on the form, or provide fraudulent
information, you may be charged penalties and be subject to criminal prosecution.
You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form
displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their contents
may become material in the administration of any Internal Revenue law.
The time needed to complete and file this form will vary depending on individual circumstances. The estimated average time is:
Recordkeeping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 min.
Learning about the law or the form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 hr., 53 min.
Preparing the form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 hrs., 21 min.
Copying, assembling, and sending the form to the IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 hr., 3 min.

If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler, we would be
happy to hear from you. You can send us comments from www.irs.gov/formspubs. Click on “More Information” and then on “Give us
your feedback.” Or you can also send your comments to the Internal Revenue Service, Tax Forms and Publications Division, 1111
Constitution Ave. NW, IR-6526, Washington, DC 20224. Do not send the tax form to this office. Instead, see Where To File, earlier.

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