Gift Tax Form 709

[Patrick Michael]

I am preparing my first gift tax form and want to make sure I am understanding the instructions correctly.  Husband and wife gave a sister $15,000 cash and will split the gift.  No other reportable gifts were made.

 

If I understand it correctly both the husband and wife have to file a 709, but they are mailed in the same envelope. 

 

In part 1 - Gifts Subject Only to Gift Tax, the gift is reported in the top section but is it reported in the "Gifts made by spouse" section also?

 

Thanks for the help.

[Gail in Virginia]

If they each gave the sister $7,500 as a gift, neither of them reached the limit to require reporting the gift unless there are other gifts during the year that you did not mention.  i don't think a 709 would be required under these circumstances. 

[Patrick Michael]

If it matters, the check was written out of the wife's account, not a joint account.  Would the IRS consider that the whole gift from the wife so a return would have to be filed to show the gift was split between the two of them?

[Margaret CPA in OH]

Hmm, would there be any joint funds in that account? Were there ever? Would the husband have transferred some money from his account to cover his share?

[Jack from Ohio]

It does not matter whose account it comes out of.  They are married.  The threshold is $14,000 per person per year. 

 

No form 709 is needed.  No one will ever question this.  Sleep well.

[jklcpa]

Because the funds came from an account solely in the wife's name, technically she gave the entire gift and she is electing to split the gift with her husband, so she needs to file a 709 and check the box electing the split for that to be valid.  Husband must sign her 709 in the designated area for the split to be valid.  If the the husband made no other gifts, there is an exception that allows him to not have to file a 709 as noted in the instructions, so only the wife needs to file. Wife would check "no" on line 17, and the husband must sign on line 18 of page 1 of the wife's form 709:

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.

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.

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

[Jack from Ohio]

Too much effort. 

[jklcpa]

Too much effort.

 

Which, to read the instructions or to file properly?

 

The OP asked how to file the gift tax return properly to make the election.  He didn't ask about the effort or whether that effort is "too much".   I would not suggest that the client forego filing and miss making that election, but in any case that is up to the client to decide, not the preparer.

[Jack from Ohio]

Which, to read the instructions or to file properly?

 

The OP asked how to file the gift tax return properly to make the election.  He didn't ask about the effort or whether that effort is "too much".   I would not suggest that the client forego filing and miss making that election, but in any case that is up to the client to decide, not the preparer.

Reality.  A major factor in decisions.  What process is EVER going to look at or show where the money came from?  What IRS notice will be sent if the 709 is not created?  What reporting would be done to trigger any of the above.  Who is ever going to ask if the money came from a joint account, or a single account?

 

Reality.  A major factor in decisions.

Edited February 10, 2015 by Jack from Ohio

[jklcpa]

Reality.  A major factor in decisions.

 

So it's your contention that if no one will EVER look then it's ok to miss an election, or to not file, or to file incorrectly, and that's how you advise your clients as an enrolled agent?  Nice!  /s

 

 

The OP asked how to file the gift tax return PROPERLY to make the election. 

 

The OP now has the correct answer.  He can now decide how to properly advise his client.

 

Reality.  A major factor in decisions. 

 

 

... in any case that is up to the client to decide, not the preparer.

[Jack from Ohio]

So it's your contention that if no one will EVER look then it's ok to miss an election, or to not file, or to file incorrectly, and that's how you advise your clients as an enrolled agent?  Nice! 

Are you Karen Hawkins in disguise? 

[jklcpa]

The OP asked how to properly file the gift tax return to make the election. I gave the technically correct answer so that he knows the proper way to do that, and he will decide how best to advise his client.  If you don't want to do that then don't, but I don't know why you are taking such exception to me providing the OP with the technically correct answer here.

[kcjenkins]

Are you Karen Hawkins in disguise? 

You are out of line this time, Jack.  The question was not "how likely is this to be questioned?"  It was "what's the correct way to file in this situation?"