Gift Tax Return Preparation

“Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return is filed for each year an individual gives an amount to a single donee in excess of the annual exclusion amount.”

Federal gift tax is imposed on your lifetime gifts. A gift occurs when an individual (donor) transfers property to another individual (donee) for less than fair and adequate consideration. “Fair and adequate” is generally defined as the price negotiated between a willing seller and willing buyer. Most gifts are given with no consideration. That is, after all, what makes them a gift! Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return is filed for each year an individual gives an amount to a single donee in excess of the annual exclusion amount. 

Some confusion surrounds the lifetime exemption and the annual exclusion amount. Let’s start with the annual exclusion amount first, which is currently $14,000 (2017). This exclusion alleviates some of the burden associated with making small gifts because if the combined amount given in a single year to a single individual is less than the exclusion amount, no gift tax return is required. The annual exclusion basically provides relief from reporting numerous small gifts. The first $14,000 (for 2017) of gifts made to any one person during the year is subtracted from total gifts to that person when determining the amount of taxable gifts for the year.

The lifetime gift tax exemption is the amount an individual may gift during their lifetime without paying gift tax. The lifetime gift tax exemption is unified with the federal estate tax exemption which means that lifetime gifts reduce the estate tax exemption available at death. This is often referred to as a “use it now or use it later” system because you can use the allocable credit now against current taxable gifts or at death as a credit against the estate tax. The basic exclusion amount for gift tax is $5.49 million in 2017 (resulting in an applicable credit amount of $2,141,800)

Here is what you can expect when you engage us to prepare a gift tax return . . .

• We will work with you to gather the information necessary to file a complete and accurate gift tax return, including information regarding prior period gift tax returns file, if any;
• We will help you understand the complex rules involving the tax basis and holding period of the property you gift (other than cash) so that you can communicate this critical information to the donee at the time of the gift; and
• We will provide you with advice for structuring future gifts to minimize your overall gift tax, generation-skipping tax, and estate tax. 

For more information, please call us at (775) 828-5027 or send us an email.