Form 709 Gift Tax Return Presented by: LEVI M. DILLON, Attorney/cpa Amy E. Ott, attorney/CPA Bourland, Wall & Wenzel, P.C. The Blum Firm, P.C. Attorneys at Law Attorneys at Law

The Unified Tax System Federal Transfer Taxes Gift Tax Estate Tax Generation-Skipping Transfer (“GST”) Tax Who is “Skip Person” Family and Unrelated Persons Unified Transfer Tax Credit (Applicable Amount) Generation-Skipping Transfer Tax Exemption (“GSTTE”)

Reportable Gifts Definition of a “Gift” Any transaction in which an interest in property is gratuitously passed of conferred upon another, regardless of means or device employed…” Donative Intent Unlimited Marital Deduction Charitable Exemption

Reportable Gifts Continued… Future Interest > $15,000 per person per donee for 2018 ($14,000 for 2017) > $15,000 to non-citizen spouse ($14,000 for 2017) QTIP Community Property Gift Gift Split Split Interest Gift GSTTE Allocation other than default

Reportable Gifts Continued… Gifts that do not seem like gifts Debt Forgiveness Loans at below-market interest rates Insurance policy benefits Annuity conversion to survivor annuity Unqualified disclaimers Transfers that seem like gifts but are not Political Organizations Educational Institutions for Tuition Medical Institutions for Medical Care

Property Character & Gifting Community Property vs. Separate Property Split Gifts Who Must File

Types of Gifts Gifts subject only to Gift Tax Gifts subject to Gift Tax and GST Tax Direct Skips Gifts that may be subject to Gift Tax and GST Tax Indirect Skips

Annual Exclusion Gifts Gift of a Present Interest less than or equal to $15,000 ($14,000 for 2017) Gifts to Trusts do not qualify UNLESS Crummy Withdrawal Rights 5 & 5 Power Hanging Power

Generation-Skipping Transfer Tax Exemption Lifetime GSTTE Annual Exclusion for GST Tax Outright Gifts Gifts in Trust Planning point Automatic Allocation Order of Allocation Direct Skips Indirect Skips

Generation-Skipping Transfer Tax Exemption Continued… Elections - Opting In/Opting Out Direct Skip If Elect to Opt Out, GST Tax Due Indirect Skip Opt Out – One Time Opt Out – Forever Opt In – Non-GSTTE Trust

Generation-Skipping Transfer Tax Exemption Continued… Election Out Statement Identifies Transferee Trust Identifies Specific Transfer Affirmative Language to Elect Out Termination Statement Formula Allocation Savings Clause Impact of Late Allocation

Deceased Spouse’s Unused Exemption Introduction to Portability the Deceased Spouse’s Unused Exemption (“DSUE”) Amount Election on Deceased Spouse’s Form 706 Use of the DSUE Amount Last Deceased Spouse When is it Available Order of Application

Valuation Part I – Full & Adequate Disclosure Statute of Limitations Full and Adequate Disclosure Requirements Safe Harbor Audit Risk Use of Appraisals in Audit

Valuation Part II – Formula Clauses Valuation and Tax Reporting Gift and Sale Scenarios Types of Formula Clauses Defined Value Gift Use to ensure gift does not exceed remaining Unified Credit amount Tips for Reporting Purchase Price Adjustment in a Sale To ensure no gift is made

Case Studies