709 Gift Tax

[Mohamed]

I am working on 709, I have 2 questions, do I have to attach all appraisal and valuation reports to the return? or just write the name of appraisal firm ?.

Second question, If the appraisal was done early ( Jan) 2021 but the asset transfer late (oct to Dec) 2021, would this create a problem or it doesn't matter as the taxpayer could have gifted it at any time in 2021?

[sjrcpa]

Q1 Yes

Q2 Yes that may be a problem. Generally an appraisal should be within 6 months of the date of the gift. If it was real estate, it is relatively common to ask the appraiser to update the appraisal to the gift date. (Of course, there is a fee.)

[Mohamed]

Hi Sjrcpa, 

Thanks for your help but just to confirm, when I reviewed the 709 instruction I did not see where it state we must attach the valuation/ appraisal report , this what i found:

Adequate Disclosure

To begin the running of the statute of limitations for a gift, the gift must be adequately disclosed on Form 709 (or an attached statement) filed for the year of the gift..

In general, a gift will be considered adequately disclosed if the return or statement includes the following.

• A full and complete Form 709.

• A description of the transferred property and any consideration received by the donor.

• The identity of, and relationship between, the donor and each donee.

• If the property is transferred in trust, the trust's employer identification number (EIN) and a brief description of the terms of the trust (or a copy of the trust instrument in lieu of the description).

• Either a qualified appraisal or a detailed description of the method used to determine the fair market value of the gift.

[sjrcpa]

OK. I always attach the appraisal. Maybe at one time it said you had to.

[jeffmcpa2010]

Personally - I would probably attach it. I don't want to give the IRS any reason to give me grief down the road.

[Mohamed]

Honestly, I would love to do so , but one major asset was valued  on 12/31/2020 and the report date was 03/25/2021 , gift date was 09/20/2021, the assets is $7M in value and I do not want the valuation date and the gift date create a problem!!! 

[jeffmcpa2010]

For that big a gift I would give explain to the client (in writing) the risk of using that old an appraisal, and recommend that they have it updated. Of course it's their choice, you just want their choice documented so that if they come back with a problem, you can show your advice.