39.3 Filing a Gift Tax Return

A gift tax return generally must be filed on Form 709 for a gift made during 2012 to an individual other than your spouse if it exceeds $13,000 or is a gift of a future interest (regardless of value). A return does not have to be filed for gifts qualifying for the tuition or medical expense exclusion discussed in 39.2.

Married couples who consent to split gifts of over $13,000 in 2012 to any one person must report the gifts to the IRS on Form 709. No gift tax is due under the annual exclusion if the “split” gift is $26,000 or less.

Form 709 for 2012 generally must be filed by April 15, 2013. If you get a filing extension (Form 4868) for your income tax return, the extension also applies to the gift tax return. If you do not request an extension for your income tax return, you can use Form 8892 to request a filing extension for your gift tax return.

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image Caution
Gift Disclosure Starts Running of Statute of Limitations
To begin the running of the statute of limitations on gift valuation, the gift must be adequately disclosed on Form 709 filed for the year of the gift. Follow the gift reporting instructions for Schedule A of Form 709. Given this statute of limitations consideration, even donors of property valued at under the annual exclusion ($13,000 for 2012)may want to report the gift on Form 709 in order to start the clock running on how long the IRS has to challenge valuation of the gift.
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EXAMPLES
1. On July 16, 2012, Randall Johnson makes a gift of publicly traded stock to his son, Philip. He gives Philip 1,000 shares of stock valued at $20,000 ($20 per share). His cost basis for the 1,000 shares was $15,000. On Randall’s Form 709, Randall’s wife, Claire, consents to split the gift, thereby doubling the $13,000 annual exclusion for the gift. Neither Randall nor Claire made any other gifts during 2012. As a result of the gift splitting, Randall and Claire are each considered to have made a gift of $10,000 that is offset by the annual exclusion. No gift tax is due.
2. Same facts as in Example 1 except that the value of the stock given to Philip was $40,000 instead of $20,000. After Claire consents to split Randall’s gift, there is a taxable gift of $14,000 ($40,000 − $26,000 annual exclusion), of which half, or $7,000, is attributed to each of them. They each must file their own Form 709. Assuming that this is the first taxable gift for both Randall and Claire, they will each figure a gift tax of $1,260 on their $7,000 gift (Table 39-1). However, no tax is due because it is offset by a $1,260 credit (39.4).
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