Gift Tax Calculation and Form 709
Calculation Procedures: The general structure of the gift calculation process is as follows.Form 709 Due Date: Form 709 is due April 15th of the year following the gift.
Calculation of gift tax is a cumulative process. All prior gifts and prior gift taxes payable under current schedules are considered when calculating the current gift tax payable. Under Sec. 1015(d), the basis of property may be increased if gift tax was paid upon the gift transfer. The unified gift tax exemption can be applied only up to amount of the gift tax liability, any gifts in excess must be paid by the donor.
Calculation Procedures
The general structure of the gift calculation process is as follows:
| CURRENT GIFTS | ____________________ |
| PRIOR GIFTS | ____________________ |
| TOTAL GIFTS SUBTOTAL | ____________________ |
| MARITAL DEDUCTION | ____________________ |
| CHARITABLE DEDUCTION | ____________________ |
| ANNUAL EXCLUSION | ____________________ |
| NET TAXABLE GIFT | ____________________ |
| TENTATIVE TAX | ____________________ |
| GIFT TAX CREDIT | ____________________ |
| TOTAL TAX | ____________________ |
Example 1.2.6A Gift Tax Payable In Year 2026
Harold Wilson has made gifts to his daughter Susan over the past three years in excess of his annual exclusion. The excess gifts are $2,250,000, $2,360,000 and $2,470,000, respectively. He makes a gift this year to Susan of $5,331,000 and also gives $1,000,000 to charity.The Form 709 gift tax return will be as follows:
| Current Gifts | $6,000,000 |
| Prior Gifts | $7,080,000 |
| Total Gifts Subtotal | $13,080,000 |
| Marital Deduction | 0 |
| Charitable Deduction | $1,000,000 |
| Annual Exclusion | $19,000 |
| Net Taxable Gift | $12,061,000 |
| Tentative Tax | $4,770,200 |
| Gift Tax Credit | $5,945,800 |
| Total Tax | $0 |
Form 709 Due Date
Form 709 is due April 15th of the year following the gift. It includes for each transfer a description of the asset, the donor's basis, the date of the gift and the value of the gift. The tax is payable at the time the return is due. Gift tax that is not paid could subject the donor to liability for an additional penalty of .5% each month the tax is late, with a maximum of 25%. Sec. 6651(a)(2). Valuing the gift and filing the Form 709 will start the three-year statute of limitations running, provided that there is "adequate disclosure." Reg. 25.2504-2.