Business United States Gift and Generation-Skipping Transfer Tax Return

Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, is used to report taxable gifts. The form is required for the transfer of all gifts other than:

1. A transfer that is not more than the annual exclusion,

2. A qualified transfer for educational or medical expenses, or

3. A transfer to your spouse that qualifies for unlimited marital deduction.

C. Due Date - All gift and generation skipping taxes (GST) are computed and filed on a calendar year basis regardless of the taxpayer's income tax accounting period. An extension of time to file a gift tax return (up to 6 months) may be requested from the District Director or Service Center. There is no form provided for this purpose, but it can be completed with a letter which explains the reason for the request. An extension to file an income tax return that is a calendar year automatically extends the time for filing a gift tax return. An extension of time to pay (up to 6 months) can be obtained from the Service Center where filed. With no extension, the tax is due when the return is filed.

D. A penalty for failure to pay is one-half percent per month of the unpaid balance, up to 25%.

E. Gifts in General - The gift tax applies to a transfer of real or personal property. The property may be tangible or intangible. The gift may be direct, indirect, or transferred in trust.

1. The tax may apply to transfers made for valuable consideration if the value of the property transferred is more than the consideration received. (part sale/part gift)

2. Below market loans may have as a gift the reasonable value of the use of the money loaned. This provision does not apply to gift loans between individuals for any day on which the total outstanding amount of the loan between such individuals is not more than $10,000 unless the loan is directly