Anatomy of the Form 709

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The client-facing version is at Gift tax returns, with the gift and estate overview at Gift and estate taxes. This is the desk copy. Line numbers are from the 2025 form, which was redesigned in 2024 (Part I reorganized, the spousal consent moved to a new Part III, Schedule A columns changed, the consenting spouse now signs a separate Notice of Consent) (verify).

Step 0: Does a return have to be filed?

§6019 and §2503. Only individuals file; a trust, partnership or corporation that makes a gift is treated as its beneficiaries, partners or shareholders giving. Spouses never file jointly. The calendar year is the period; one return per year.

• File if the donor gave any one person (other than a U.S.-citizen spouse) gifts of present interests totaling more than the annual exclusion — $19,000 for 2025 and for 2026 (Rev. Proc. 2024-40, Rev. Proc. 2025-32; it was $18,000 for 2024); or gave anyone a future interest of any amount (a remainder, a trust interest without withdrawal rights, a gift that starts later); or wants to split gifts with a spouse; or gave a noncitizen spouse more than $194,000 in 2026 ($190,000 in 2025); or gave a spouse a terminable interest for which the QTIP election will be made; or elects the 529 five-year spread; or made a gift of community or joint property (each spouse files for half).
• No return for: gifts to a U.S.-citizen spouse of any amount (the unlimited marital deduction); tuition paid directly to the school and medical expenses paid directly to the provider (§2503(e), unlimited, any relationship); gifts to political organizations (§2501(a)(4)); gifts to charity of the donor’s entire interest when those are the only gifts over the exclusion; present-interest gifts of $19,000 or less per donee. A return that is required to report other gifts must also report the charitable gifts.
• Present interest: the donee can use, possess or enjoy it now. Cash, a check once it clears, a deed delivered, stock transferred, a 529 contribution, a UTMA account, a trust with Crummey withdrawal rights (letters sent, a real window to withdraw). Future interest: anything else in trust, a remainder, a gift the donee cannot touch until a date — no exclusion, and a return at $1.
• The gifts people don’t know they made: adding a child to the deed (half the house, the day the deed records); paying off a child’s mortgage or credit card; a loan to family at less than the AFR (the forgone interest is a gift each year under §7872, with a $10,000 de minimis for non-income-producing loans) and a loan later forgiven (the principal, when forgiven); a joint bank or brokerage account when the other owner draws on it (not when it is opened); premiums paid on a policy owned by an irrevocable trust (Crummey letters or future interest); a below-market sale to a relative (the bargain element); transferring a car or boat title; supporting an adult child beyond the legal obligation. None of these come in with a 1099.
• Not gifts: support of a minor child; paying a spouse’s expenses; a transfer under a divorce decree within the §2516 window; a disclaimer that is qualified under §2518; the bank’s share of a joint account the other spouse funded (spouses only).
• Who: a citizen or resident (domicile, not days) for worldwide gifts; a nonresident non-citizen for gifts of U.S.-situs tangible property and real estate on Form 709-NA (new for 2024). If the donor died before filing, the executor files and signs; the gift return is due with the 706 if that is earlier (verify).

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Step 1: When, where, and what it costs to skip it

• Due April 15 after the calendar year of the gift (October 15 for the year of death if the 706 is due sooner, the 706 date). A Form 4868 for the income tax return automatically extends the 709; with no 4868, Form 8892 extends the 709 alone and carries the payment voucher (8892-V). Extensions extend filing, never the tax.
• Where: e-file is finally available — the IRS opened Modernized e-File for Forms 709 and 709-NA with the 2024 forms (processing year 2025), including balance-due returns with electronic withdrawal, and the software supports it now; or paper to Department of the Treasury, Internal Revenue Service, Kansas City, MO 64999 (private delivery to 333 W. Pershing Road, Kansas City, MO 64108). Paper spouses put both returns in one envelope and keep the certified-mail receipt; the postmark is the filing date and the filing date starts the statute. E-filed, the acknowledgment is the proof.
• Penalties: §6651 at 5% a month of the tax due for late filing and ½% for late payment — so a late return with no tax has no dollar penalty. The cost of not filing is elsewhere: the statute of limitations never starts (§6501(c)(9)) on a gift that is not adequately disclosed on a return, so the IRS can revalue it at death decades later; the lifetime tally is wrong on every later return and on the 706; and a required but unfiled return is a problem on an estate audit. A gift return with GST allocations that is late loses the ability to make the election on a late return in several places (QTIP, the 529 spread, some GST elections).
• Adequate disclosure (Reg. §301.6501(c)-1(f)): the description of the property, the donee and relationship, the date, the method of valuation (an appraisal, or a detailed statement of the method, comparables and discounts for anything not cash or listed securities), any discounts taken and why, and a statement of any position contrary to a regulation or ruling. Meet it and the three years run; miss it and they never do. For a closely held interest or real estate, attach the appraisal; for a discounted FLP interest, the appraisal is the return.
• Amended: the same form with line 15 checked, “Amended” at the top, and a statement of what changed; a supplemental return after the statute has run can still start it on a newly disclosed gift.

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Step 2: Part I, General Information (lines 1–21)

• Lines 1–11: name, SSN, address (a P.O. box only if the post office does not deliver to the street), foreign address lines. Line 12, legal residence (domicile): the state — it matters for community property and for state gift tax (only Connecticut has one); “Colorado.” Line 13, citizenship: “USA”; a noncitizen resident writes the country, and a noncitizen donor’s treatment turns on domicile.
• Line 14: donor died during the year — check it, give the date; the executor signs and the return should be coordinated with the 706 (gifts within three years of death come back into the estate for the gift tax paid, §2035(b); the adjusted taxable gifts go on the 706 either way). Line 15: amended. Line 16: extended (4868 or 8892).
• Line 17: number of donees on Schedule A, each counted once. Line 18a: has the donor ever filed a 709 (or the old 709-A)? “Yes” means Schedule B; and the honest answer is often “we don’t know” — ask for every prior return, then ask the IRS (Form 4506 for copies; the gift tax account transcript by letter to Cincinnati, or through the 2848 on the gift tax line, form 709, with the years listed). 18b: address changed since the last 709.
• Line 19: gifts by spouses to third parties — “Yes” sends the return to Part III. Line 20: a DSUE amount from a predeceased spouse applied on this or any prior return → Schedule C. Line 21: digital assets — answered by everyone; a gift of crypto is a gift of property at its value on the date, with the donor’s basis carrying over.
• Signature: the donor, and the preparer with PTIN; the consenting spouse no longer signs the return itself but signs the Notice of Consent attached to it (verify). The third-party designee box lets the IRS call the office about processing.

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Step 3: Part III, Spouse’s Consent on Gifts to Third Parties (lines 1–7)

§2513. With the consent, every gift either spouse makes to anyone else during the year is treated as made half by each — two annual exclusions ($38,000 per donee for 2026) and two exemptions, out of one checkbook.

• Requirements: married at the time of the gift (line 4; if married part of the year, line 5 gives the date and splitting covers only the married period and only if neither remarried during the year); both U.S. citizens or residents; the consent covers all gifts by both spouses to third parties for the whole year — it cannot be picked gift by gift; a gift to the other spouse is never split; and a gift to a trust in which the consenting spouse has an interest can be split only as to the portion that is ascertainable and not the spouse’s (a trust the spouse can take from is the usual trap).
• Who files: if only one spouse made gifts and the total to each donee is not over $38,000, only the donor files, with the consent (line 6 “No”). If both made gifts, or any donee got more than $38,000 from one spouse, both file, each showing half of everything, mailed in one envelope. Each return lists the other spouse’s gifts in the “Gifts made by spouse” block of Schedule A.
• Line 7 / Notice of Consent: a signed statement by the consenting spouse (name, SSN, the year, “I consent to have the gifts made by me and my spouse to third parties during the calendar year considered as made one-half by each of us”), attached to the donor’s return. Once made it is irrevocable after the due date; it cannot be made for the first time on a return filed after a notice of deficiency, or after either spouse has already filed a return for the year without it.
• Why not just split the check? Because a $38,000 check from a joint account is two $19,000 gifts only if the funds are really both spouses’ and the intention is clear — and a check from the husband’s separate brokerage account is his gift alone. The consent fixes it cleanly and costs one more return at most. Community-property gifts are already half each with no election.

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Step 4: Schedule A, Parts 1–3 — listing and valuing the gifts

• Question A: does any value reflect a valuation discount (minority, marketability, fractional interest)? “Yes” means an explanation and, in practice, an appraisal; this is the line the IRS reads first. Question B: the §529(c)(2)(B) five-year election — a contribution up to $95,000 (5 × $19,000; $190,000 split) treated as made ratably over five years; check the box, attach a statement, and report one-fifth this year. The election cannot be made on a late return, and if the donor dies within the five years the unused years come back into the estate.
• Part 1, gifts subject only to gift tax: everything that is not a skip. One line per gift (or per donee per kind of property, with cash gifts to one person aggregated for the year): (a) item number; (b) donee’s name and address and, for a trust, the trust’s name, EIN and the beneficiaries; (c) relationship to the donor; (d) description — for real estate the legal description and address, for stock the company, class, number of shares and CUSIP, for a closely held interest the entity, the percentage and the appraisal reference, for a 529 the plan and account; (e) the donor’s adjusted basis (the donee needs it; §1015); (f) the date of gift (the day the check clears or the deed records or the shares move, not the day it was decided); (g) value at the date of gift; (h) for split gifts, half; (i) net transfer; and the checkboxes (k) charitable, (l) deductible gift to spouse, (m) the §2652(a)(3) reverse QTIP election. Tuition, medical and political gifts that are fully excluded are not listed at all.
• Valuation (§2512, Reg. §25.2512-1): fair market value on the date of the gift. Listed securities: the mean of the high and low that day (the prior and next trading day weighted if a weekend). Mutual funds: the NAV. Real estate: an appraisal, or at least a broker’s opinion plus the county’s actual value with an explanation — an appraisal is cheaper than an audit. Closely held business interests and partnership units: a qualified appraisal, with the discounts explained; the 2016 proposed §2704 regulations that would have killed discounts were withdrawn in 2017 and discounts remain available on the facts. Life insurance: the interpolated terminal reserve (Form 712 from the company). A gift of a remainder or a life estate: the §7520 tables at that month’s rate.
• Part 2, direct skips: gifts to a skip person — a grandchild or more remote descendant (unless the grandchild’s parent, the donor’s child, is dead: the predeceased-parent rule moves the grandchild up), anyone unrelated more than 37½ years younger, or a trust all of whose beneficiaries are skip persons. In chronological order. Subject to gift tax and GST tax; the GST goes to Schedule D. An outright $19,000 to a grandchild is a direct skip that is fully excluded for gift tax and, if it also qualifies under §2642(c), has a zero inclusion ratio — and it is still listed here.
• Part 3, indirect skips and other transfers in trust: gifts to a trust that could someday benefit a skip person (a GST trust under §2632(c) — the typical dynasty or children’s trust with grandchildren as contingent beneficiaries) and any other transfer in trust that is not a direct skip. This is where the automatic allocation of GST exemption bites: exemption is allocated to Part 3 transfers automatically unless the donor opts out with a statement, and opting out or in on the wrong trust is a mistake that is only discovered at a grandchild’s death.
• “Gifts made by spouse” block under each part: for split gifts, the other spouse’s gifts, half each. Totals for each part carry to Part 4 line 1.

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Step 5: Schedule A, Part 4 — Taxable Gift Reconciliation (lines 1–12)

• Line 1: total of column (i) from Parts 1, 2 and 3. Line 2, annual exclusions: $19,000 per donee for present interests only (never more than the gift to that donee; never for a future interest; a trust is looked through to its beneficiaries only for Crummey-type powers; for a split gift each spouse takes $19,000 against their half). Line 3: the included amount.
• Lines 4–6, the marital deduction: gifts to a U.S.-citizen spouse with box (l) checked — which only appear on the return at all when they are terminable interests or when the donor is filing for other reasons and chooses to show them. Outright gifts to a citizen spouse are deductible in full; a life-income interest in a trust is deductible only with the QTIP election, and the election is made simply by listing the trust with box (l) checked and taking the deduction on line 4 (a partial deduction is a fractional election). The price of the QTIP election is §2044: the trust is in the spouse’s estate at death, and if the spouse gives away the income interest during life the whole trust is a gift (§2519). Line 12: the election out of QTIP treatment for joint and survivor annuities (§2523(f)(6)) — rare. Gifts to a noncitizen spouse get no marital deduction; the $194,000 exclusion (2026) is the substitute and only for present interests that would otherwise have qualified.
• Line 7, the charitable deduction: gifts with box (k) checked, less the exclusion already taken on them — outright gifts of a whole interest, and the charitable portion of a split-interest trust (CRT, CLT, with the §7520 computation attached). Gifts of a partial interest with no trust (a remainder in a residence or farm, an undivided fractional interest, a qualified conservation easement) are the exceptions that qualify.
• Lines 8–11: deductions; subtotal; the GST tax payable with this return (Schedule D Part 3) added back — because the gift tax base includes the GST tax paid on a direct skip; line 11, taxable gifts, to Part II line 1.

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Step 6: Schedule B, Gifts From Prior Periods

• Required when line 18a is “Yes.” One row per prior year with a return: (a) the year (or quarter, for 1971–1981); (b) the IRS office where filed; (c) the applicable credit as recalculated under Reg. §25.2505-2 — not the credit actually claimed on the old return but the credit on the taxable gifts of that year computed at current rates, so that the exemption used in a 2010 return at 35% is restated in 2026 terms; (d) the specific exemption for 1971–1976 gifts; (e) the taxable gifts of that year. Line 1 total of column (c) goes to Part II line 8; line 3 total of column (e) to Part II line 2. Attach the recalculation.
• Prior taxable gifts are cumulative for life. They never fall off; they push this year’s gifts into higher brackets (everything over $1 million is already at 40%, so in practice they only consume exemption); and they go on the 706 as adjusted taxable gifts. The lifetime total is the number the office keeps in the permanent file for every gifting client, with the returns.
• Missing returns: a client who “gave the kids some money over the years” and never filed has a Schedule B problem on this year’s return and an unfiled-return problem for each prior year. The fix is to file the old years now (the current-year form for each year, no penalty if no tax was due, the statute starting on filing) so this year’s Schedule B is right. Reconstruct from bank records and the family’s memory; disclose adequately; do not estimate on the current return and hope.

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Step 7: Schedule C, the DSUE amount

• A surviving spouse whose late spouse’s executor elected portability on a timely Form 706 (or under the Rev. Proc. 2022-32 five-year late election for small estates) has the deceased spouse’s unused exclusion to use for gifts. Schedule C: Part 1, the DSUE from the last deceased spouse (name, date of death, portability elected, the amount, how much used before this year, how much applied this year); Part 2, DSUE from earlier predeceased spouses that was used before the last spouse died (it is locked in by use); the total; the restored exclusion for pre-2018 gifts if any; and line 5, the applicable credit on the donor’s own basic exclusion plus the DSUE, to Part II line 7.
• The DSUE is used first, before the donor’s own exclusion (Reg. §25.2505-2(b)) — which is the point: use the dead spouse’s exclusion now, before the survivor remarries and a new “last deceased spouse” wipes out the unused portion. A widow with $5 million of DSUE and $5 million to give should give it, and this schedule is how.

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Step 8: Schedule D, Computation of GST Tax

• Part 1: each direct skip from Schedule A Part 2 (and transfers at the close of an estate tax inclusion period): the value, the nontaxable portion (the annual exclusion for an outright gift or a §2642(c) trust), the net transfer. Part 2, exemption reconciliation: the lifetime GST exemption ($15,000,000 for 2026, $13,990,000 for 2025, the same as the basic exclusion); exemption allocated on prior returns; allocated this year to the Part 1 direct skips; automatically allocated to Part 3 indirect skips unless the donor opts out (§2632(c)) — the election in or out is made by a statement attached to a timely return and can be made permanently for a trust; exemption allocated to transfers not shown on this return (a Notice of Allocation for a late allocation at current value); the remaining exemption. Part 3: for each direct skip, the inclusion ratio (1 minus exemption allocated ÷ net transfer), the tax at the maximum rate (40%) × the ratio, to Part II line 16 and Schedule A Part 4 line 10.
• In practice: an outright gift to a grandchild within the annual exclusion is listed and consumes nothing. A gift to a trust for grandchildren is where exemption is allocated deliberately, in writing, every time, with the inclusion ratio recorded in the trust’s permanent file; a zero inclusion ratio is worth more than the gift tax exemption because it covers the growth. The reverse QTIP box (m) lets a QTIP trust be treated as the donor’s for GST so the donor’s exemption can be allocated to it.

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Step 9: Part II, the tax computation (lines 1–20)

• Line 1 this year’s taxable gifts (Schedule A Part 4 line 11); line 2 prior taxable gifts (Schedule B line 3); line 3 the lifetime total; line 4 tax on the total and line 5 tax on the prior total, both from the Table for Computing Gift Tax (18% on the first $10,000, rising through the brackets to $345,800 on $1,000,000 and 40% on everything above); line 6 the difference — the tentative tax on this year’s gifts at the marginal rate.
• Line 7, the applicable credit: the tax on the basic exclusion amount — $5,945,800 for 2026 (tax on $15,000,000) and $5,541,800 for 2025 (tax on $13,990,000); from Schedule C line 5 if there is DSUE. Line 8: credit used in prior periods, recalculated (Schedule B line 1 column (c)). Line 9: what is left. Line 10: 20% of the pre-1977 specific exemption claimed between September 8 and December 31, 1976 — a line for a client born before 1930. Line 11–12: the credit allowed, the smaller of the tentative tax or the remaining credit. Line 13: foreign gift tax credit (treaty countries only). Line 15: gift tax after credit; line 16: GST tax from Schedule D; line 17: total; 18–20: prepaid with the extension, balance due or overpayment, direct deposit.
• So a $135,000 gift to a nephew in 2025: $135,000 less the $19,000 exclusion = $116,000 taxable; tax on $116,000 from the table is $28,600 ($23,800 on the first $100,000 plus 30% of the next $16,000); the credit covers it; tax due $0; lifetime exemption used, $116,000, carried on every future Schedule B and on the 706. The return exists to write that number down.
• P.L. 119-21 (July 2025) set the basic exclusion at $15,000,000 for 2026 and made it permanent, indexed from 2027; the 2026 sunset to about $7 million is gone. The planning conversation for clients under $15 million is now about basis, not about exemption: a gift carries the donor’s basis (§1015, with the dual-basis rule for loss property and the gift tax paid on appreciation added), and an inheritance gets a stepped-up basis (§1014). Give cash and high-basis assets; keep the appreciated ones. Inherited property and the step-up has the client version.

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Step 10: After the return

• Basis letter: give the donee the adjusted basis, holding period and gift tax paid (if any) in writing; the donee’s basis is the donor’s (plus gift tax on the appreciation), the holding period tacks, and for property worth less than basis at the gift the dual-basis rule applies on a later sale (§1015(a)). A gift of a house with a $40,000 basis is a $40,000-basis house in the child’s hands; the same house inherited would have been stepped up.
• Colorado has no gift tax, no inheritance tax, and no estate tax, and does not want a copy of the 709. The donee of Colorado real estate records the deed and pays the documentary fee; the county reassesses nothing because of a gift.
• The file: the return, the appraisal, the Notice of Consent, the GST allocation statement and the running lifetime schedule, kept permanently — they are needed at the donor’s death for Form 706 Schedule G and the adjusted taxable gifts, and they are the only proof of the statute having started.
• Income tax side: no deduction to the donor, no income to the donee (§102); the donee reports the income the property earns after the gift; a gift of appreciated stock to a child in the 0% capital gain bracket is the classic move, limited by the kiddie tax to age 24 for students; a gift to a charity goes on Schedule A of the 1040, not here, unless it is a split-interest trust.

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Questions at the desk

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Private reference, not client advice. Line references are to the 2025 Form 709 and its instructions; figures for 2026 from Rev. Proc. 2025-32 and P.L. 119-21. Items marked (verify) are to be confirmed against the current form and instructions before the figures freeze in December. Written October 26, 2026.