Gift tax return for 2011 reflects recent law changes - Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return and instructions

IRS has released final Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, for gifts made during 2011 and instructions. The final form and instructions reflect law, administrative and indexing changes for gifts made in 2011 including changes made by the Tax Relief Act of 2010 .

Form 709. This form is used to report transfers subject to the federal gift and certain generation-skipping transfer (GST) taxes and to figure the tax, if any, due on those transfers. It also is used to report allocation of the lifetime GST exemption to property transferred during the transferor's lifetime.

New items. A caption entitled “What's New” notes the following changes:

... Due date. The due date for 2011 gifts is Apr. 17, 2012, because Apr. 15 is a Sunday and Apr. 16 is the Emancipation Day holiday in the District of Columbia.

... Regular annual exclusion. The annual exclusion remains at $13,000.

... Annual exclusion for gifts to noncitizen spouses. For gifts made to spouses who are not U.S. citizens, the annual exclusion has increased to $136,000.

... Top rate. The top rate for gifts and generation-skipping transfers is now 35%.

... Unified credit. The unified credit for 2011 is $1,730,800.

... Credit allocated to prior gifts. Section 302(d)(2) of the Tax Relief Act of 2010 mandates that any unified credit allocated to gifts made in prior periods be redetermined using current gift tax rates. The instructions contain elaborate worksheets for doing this.

... Applicable exclusion amount. The applicable exclusion amount now may consist of a basic exclusion amount of $5,000,000 that, starting in 2012, will be indexed for inflation and, in the case of a surviving spouse, the unused exclusion amount of a predeceased spouse (who died after Dec. 31, 2010). The executor of a predeceased spouse's estate must have elected on a timely and complete Form 706 to allow the donor to use the predeceased spouse's unused exclusion amount. IRS recently gave estates of some 2011 decedents get more time to make this election.The indexed applicable exclusion amount for 2012 is $5,120,000 (see Rev Proc 2011-52, 2011-45 IRB 701).

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