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Gift Tax, Form 709

Can the 529(c)(2)(B) election be made two years in a row.  For example, if someone contributes the following amounts to a beneficiary's 529 plan:

 

$51,000 in 2023

$36,000 in 2024

 

Can the 2023 contribution be treated as having been ratably over a five year period starting in 2023?  Can the 2024 contribution be treated as having been ratably over a five year period starting in 2024?  If this is allowed, the total amounts of non-taxable gifts will be: 

 

2023: $51,000/5  = $10,200 (Limit is $17,000)

2024:$51,000/5 + $36,000/5 = $17,400 (Limit is $18,000)

2025:$51,000/5 + $36,000/5 = $17,400 (Assume limit remains $18,000)

2026:$51,000/5 + $36,000/5 = $17,400 (Assume limit remains $18,000)

2027:$51,000/5 + $36,000/5 = $17,400 (Assume limit remains $18,000)

2028: $36,000/5 = $7,200 (Assume limit remains $18,000)

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7 Replies

Gift Tax, Form 709

Thank you, M-M Tax!  Per the web-site you quoted, clearly it is allowed.  Can this also be found on the IRS site or somewhere in the tax code?

M-MTax
Level 10

Gift Tax, Form 709

Gift Tax, Form 709

Perfect, thanks!

Gift Tax, Form 709

Slightly different gift tax question:
In 2024, let's say unmarried donor A makes the following gifts:

  • $30,000 to donee B
  • $3,000 to donee C


Questions:

  • I assume 709 will need to be filed as one of the gifts is over the annual exclusion amount of $18,000. Correct?
  • What goes on lines 1, 2, and 3 on Part 4 of Schedule A? ($33,000, $36,000 and $0, respectively)?
  • If the previous numbers are correct, then donor A ends up NOT using any of their applicable tax credit amount of $5,389,800?

If all of this is true, seems a bit odd that a donor can essentially 'offset' a large gift to one donee by 'spreading' the annual exclusion amounts across several donees with small gifts (as low as $1 even)? Am I missing something? For 709 instructions do not seem to clarify this point. Just trying to understand the gift tax stuff better.

M-MTax
Level 10

Gift Tax, Form 709

Not sure what you're getting at but a 709 would be required for donee B because it's over $18k.

Donee C's gift of $3k wouldn't even need to be reported on the 709 at all.

Gift Tax, Form 709

That makes sense now, thanks.  

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