Understanding Filing of a Gift Tax Return (Form 709)
Which of the following is a correct statement regarding filing of a gift tax return (Form 709)?
a. A donor must file a Form 709 in the same year in which the gift was made
This is a correct statement. The IRS requires donors to file a Gift Tax Return (Form 709) for any gifts made during the calendar year. The filing deadline is usually April 15th of the year following the gift.
b. The due date of a Form 709 is the same as the due date of the donor's Form 1040.
This statement is incorrect. The due date for Form 709 is generally April 15th, but it can be extended to October 15th if an extension is filed. The due date for Form 1040 is also April 15th, but that can also be extended.
c. A Form 709 may have to be filed even though the value of the gift was less than the amount of the annual exclusion.
This statement is correct. The annual exclusion for gift tax purposes allows individuals to give gifts up to a certain threshold without having to file a Form 709. However, there are certain circumstances in which a Form 709 may still need to be filed, regardless of the value of the gift.
d. Melody gives her husband a new Mercedes convertible for his birthday. Melody must file a Form 709 to report the gift even though no gift tax results.
This statement is incorrect. If no gift tax is due because the value of the gift is below the lifetime exclusion amount (currently $11.7 million for 2021), it is not necessary to file a Form 709 to report the gift.
Final answer: The correct statements are:
a. A donor must file a Form 709 in the same year in which the gift was made
c. A form 709 may have to be filed even though the value of the gift was less than the amount of the annual exclusion.
Explanation:
The correct statements have been outlined above, providing clarity on the requirements for filing a Gift Tax Return and the circumstances under which it needs to be done. Understanding these rules is essential for individuals making gifts and ensuring compliance with IRS regulations.