Tax and Legal Issues Arising in Connection With the Preparation of the Federal Gift Tax Return, Form 709 - Table of Contents

Sep 19, 2026

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Tax and legal analysis of issues that arise during preparation of the U.S. federal gift tax return, Form 709. The document outlines essential elements of the federal gift tax, including taxable gift definitions, completion rules, property basis considerations, and preparer penalties. It further covers annual exclusion gifts, computation steps, unified credit operation, filing and payment extensions, and split gifts between spouses. It also addresses transfers excluded by Congress, marital and charitable gifts, and related reporting and disclaimer requirements.

LanguageEnglish

CategoryLetters

FormatPDF

Pages37

Reading Time13 min

AccessFree to download

Essential Elements of the Federal Gift Tax

Property Law Requires Intent, Delivery and Acceptance

Definition of "Taxable Gift"

"Completed" Gifts Occasion Need to File Gift Tax Return

Importance of Basis

Preparer Penalties

Gifts "Finally Determined" Cannot Be Revalued

Annual Exclusion Gifts

Summary of Computation of Gift Tax Payable

Operation of Unified Credit

Extensions of Time to File and Pay

Split Gifts Between Spouses

Gifts by Nonresidents

Transfers Excluded by Congress

Donor "Should Not" Report Excluded Transfers

Transfers to Political Organizations

Transfers to Educational Institutions

Transfers to Medical Care Providers

Transfers Incident to Divorce

Qualified Disclaimers

Marital and Charitable Gifts

Unlimited Deduction for Outright Gifts to Spouses

Deduction for Gifts to Charities

Tax and Legal Issues Arising in Connection With The Preparation of the Federal Gift Tax Return, Form 709 © 2008 David L. Silverman, J.D., LL.M. (Taxation) Law Offices of David L. Silverman 2001 Marcus Avenue, Suite 265A South Lake Success, NY 11042 (516) 466-5900 September 13, 2008 1. Essential Elements of the Federal Gift Tax.................................. 1 a. Property Law Requires Intent, Delivery and Acceptance............. 1 b. Definition of “Taxable Gift”................................... 1 i. “Net Gifts”..................................... 1 ii. “Adjusted Taxable Gifts”.......................... 2 iii. Cumulative Nature of Gift Tax..................... 2 iv. Some Gifts May Cause Taxable Gain................ 2 v. Gifts Excluded From Gross Income................. 2 vi. Transfers for Inadequate Consideration............... 2 c. “Completed” Gifts Occasion Need to File Gift Tax Return........... 3 i. Exception...................................... 3 ii. Time When Gift is Complete....................... 3 iii. Effect of Earlier Reporting Where Initial Transfer Redetermined................................... 3 iv. Signing by Agent................................ 4 v. Amended Returns................................ 4 vi. Executor’s Responsibility......................... 4 d. Importance of Basis.......................................... 4 i. Basis of Property Acquired by Gift.................. 5 ii. Donee May Increase Basis by Portion of Gift Tax Paid by Donor......................................... 6 iii. Certain Bequests Made Within One Year of Death...... 6 iv. Donor Dies Early in Current Year................... 6 e. Preparer Penalties............................................ 6 i. Circular 230 “Deputizes” Attorneys and Accountants... 7 ii. Notice 2008-13................................. 7 f. Gifts “Finally Determined” Cannot Be Revalued................... 7 i. Caution: IRS May Revalue For Purposes of Increasing Marginal Rate on Later Gifts....................... 7 ii. Sometimes Prudent to File Gift Tax Return Even When No Gift........................................... 8 g. Annual Exclusion Gifts........................................ 8 i. Source of Confusion: ............................ 8 ii. Present Interest Requirement....................... 8 iii. Must Have Present Possessory Interest............... 8 iv. Special Rule for Trusts for Minors.................. 9 v. “Crummey” Trusts............................... 9 h. Summary of Computation of Gift Tax Payable..................... 9 i. Step One: Determine Gift Tax Liability.............. 9 ii. Step Two: Determine and Apply Available Unified Credit. .............................................. 9 iii. Illustration.................................... 10 i. Operation of Unified Credit................................... 10 i. Marginal Rate of Gift Tax once Gift Tax Liability Arises. ............................................. 10 ii. Marginal Rate Scheduled to Decrease, then Increase... 10 iii. Unified Credit Indicated on Form 709............... 11 iv. Donor May Not “Prepay” Gift Tax................. 11 v. Date of Gift Indicated on Return................... 11 vi. Amount Creditable.............................. 11 vii. Gift Tax Lifetime Exclusion “Counts” Toward Applicable Exclusion Amount.............................. 11 j. Extensions of Time to File and Pay............................. 11 i. Payment Must be Made Regardless of Extension...... 11 ii. Regulatory Extensions........................... 12 iii. Extensions of Time to Pay........................ 12 k. Split Gifts Between Spouses................................... 12 i. Formal Requirements............................ 12 ii. Reporting a Split Gift............................ 12 (1) Where Both Spouses Make Gifts During Year. ....................................... 13 iii. Consent Applies

FAQs

What are the essential elements involved in the federal gift tax?

The document covers required intent, delivery and acceptance, the definition of a taxable gift, and completion concepts, along with basis importance for property acquired by gift.

When must a gift tax return be filed for completed transfers?

It explains that "completed" gifts may trigger the need to file, including exceptions and timing rules for when a gift is complete and how earlier reporting can be redetermined.

How do split gifts between spouses and related formal requirements affect gift tax reporting?

It describes formal requirements for split gifts, how reporting should be done, consent timing, and how splitting impacts taxable gift amounts and resulting liability.

Sep 19, 2026

Upload by Mason