Identifying and Repairing Form 709 Gift Tax and GST Return Reporting Errors

Description

Tax advisers and estate planners frequently encounter situations where a client has made a reportable gift but has failed to file an accurate Form 709 Gift Tax Return. In some scenarios, gift tax return errors have critical and far-reaching effects for the taxpayer. Tax advisers must identify and fix the most common gift reporting errors.

The most common error in gift tax reporting involves taxpayers making reportable gifts but failing to file a Form 709 to disclose the transaction. In most cases, taxpayers are not aware of the requirement to file, particularly if the gift is to a spouse but subject to reporting requirements, such as a gift of a terminable interest or a future interest.

Additional and more complex issues arise when a taxpayer has made a "split gift" that fails to account for the spouse's share of the gift tax exemption, or where the originally filed Form 709 incorrectly allocated the generation-skipping tax exemption. Additionally, powers of appointment commonly found in estate and trust documents can present complicated gift tax reporting issues, depending on how those powers are structured and/or exercised.

Tax advisers and estate planners must identify errors in previous gift tax reporting and advise clients on remedying prior years' gift tax reporting errors to avoid tax issues in subsequent years.

Listen as our experienced panel provides a thorough and practical guide to identifying and remedying gift tax reporting errors, including correcting GST exemptions and amending Form 709.