The Gift Tax Return

ACTEC Fellow David Pratt who practices in West Palm Beach, Florida has recently published his article The Anatomy of the New Federal Gift Tax Return, Including a Review of the Gift Tax Statute of Limitations and Gift Splitting Provisions, 31 ACTEC J. 102 (2005).  Here is the introduction to his very practical article:

In 2004, the Internal Revenue Service (the “IRS”) substantially revised Form 709, United States (and Generation-Skipping Transfer Tax Return) (the “709”), which is applicable to gifts made in 2003. In 2005, the IRS released another revised Form 709, which is substantially the same as the 2003 709. The most significant change to Form 709 (from the 2002 and prior year’s forms) was to Schedule A. Specifically, a new Part 3 and three additional columns were added. Such revisions were implemented to (1) modify the method in which spouses who elect to gift-split report such gifts under Section 2513 of the Internal Revenue Code of 1986, as amended (the “Code”); (2) add a section to Schedule A to report “indirect skips;” (3) add a mechanism to elect out of the automatic allocation of generation-skipping transfer (“GST”) tax exemption for direct and indirect skips; and (4) add a line to Part 2 of Schedule C (GST tax schedule) to illustrate the automatic allocation of GST tax when an indirect skip is reported. While the 709 has changed significantly from its prior version, practitioners who file returns to report gifts made prior to 2003 will presumably still need to use the prior form for the applicable year.