Common questions about Gifts in the 709 in Lacerte

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How to split gifts for a Form 709?

Lacerte has the ability to split gifts between taxpayer and spouse, while generating both returns in a single client file. Prior to 2009, 2 client files had to be created.

Follow these steps to set up a gift split between taxpayer and spouse, and create a spouse copy of form 706:

1. Go to Screen 1, Client Information
2. Check the Gift Splitting checkbox.
3. Check the Will file Form 709 checkbox.
4. Enter the First Name & Initial of the Spouse.
5. Enter the Last Name of the Spouse.
6. Enter the Social Security # for the Spouse.
7. Enter the gift information in Screen 7, Taxpayer Gifts or Screen 8, Spouses Gifts
8. If applicable, use Screen 9.1 for the Taxpayer’s Gifts from Prior Returns, and Screen 9.2 for the Spouse

Note: On the Forms tab, you can select which return to view under the State section on the left navigation panel.

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How do I allocate a gift to more than one donee for a 709 return?

Only one donee can be attached to one gift on the tax return in both Screen 7 - Taxpayer's Gifts and Screen 8 - Spouse's Gifts. The gift would need to be split appropriately so that only the portion of the gift received by the donee is reflected.  Please refer to the example illustrated below.

• A $99,999 gift split evenly between 3 donees

1. Navigate to Screen 2 - Donee Information and enter the appropriate information for all donees.
2. Navigate to Screen 7 - Taxpayer's Gifts.
3. Enter the gift description in the field labeled Description of gift (Ctrl+E).
4. Enter the donee's number in the field labeled Donee's number (MANDATORY for items & supplemental).
5. Enter the gift basis in the field labeled Donor's adjusted basis as it pertains to the portion of the gift given to the donee.
6. Enter the appropriate date in the field labeled Date of gift.
7. Enter the appropriate amount in the field labeled Fair market value for the gift as it pertains to the portion of the gift given to the donee, in this case, $33,333 (1/3 of the $99,999 total gift).
8. Enter other related information in the rest of the input screen as needed.
9. Repeat this process for the remaining donees.

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In Form 709, Gift Tax, where/how would you indicate that the donor is deceased?

The form instructions do not provide any guidance for this situation. We suggest you contact the IRS for additional information. You may also wish to create a statement in Screen 13 explaining the situation.

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How to input Gift of Equity on Sale of Home into Lacerte

Currently, Lacerte does not have a specific entry for a Sale of Home with a Gift of Equity. Due to the different types of tax liabilities that may result from this disposition, including the possible need to file a 709, the preparer will need to research the information regarding a Gift of Equity and determine how they want to report this transaction. We can help with the input in the Lacerte program to get the desired result at that time.

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How can I change the order of the gifts by donee on Form 709, Schedule A, to match the detail input screens?

To have Lacerte print the gifts by donee in the same order as the detail screens:

1. Go to Screen 3, Miscellaneous Information.
2. Scroll down to the Return Options section.
3. Enter a '1' in, "1 = do not sort gifts" code 10.

The Schedule A data should now match the order entered on the Detail Screens.

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How to report a gift to flow to Form 709, Schedule A, Part 2 or Part 3

Reporting a gift to Schedule A Part 2:

1. Go to Screen 2, Donee Information.
2. Select the applicable Donee from the left navigation panel.
3. Check the box, Skip Person?.

Reporting a gift to Schedule A Part 3:

1. Go to Screen 2, Donee Information.
2. Select the applicable Donee from the left navigation panel.
3. Check the box, GST Trust?.

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How do I extend a Gift Tax Return

There are two methods of extending the time to file the gift tax return:

• Any extension of time granted for filing your calendar year federal income tax return, Form 1040. The extension is made by using Form 4868 or 2350, which is done in the Individual module. If this method is used, enter a 1 in Extension Requested with 1040 on Form 4868 (Screen 5, code 2). This entry checks the box on Form 709, Part 1, line 9, United States Gift Tax Return. In addition, the program uses this entry to determine the proper due date of the return for the client letter accompanying the return.
• By filing Form 8892. If an extension is not granted for the 1040, use Form 8892, Application for Automatic Extension of Time To File Form 709 and/or Payment of Gift/Generation-Skipping Transfer Tax, to request an automatic 6-month extension of time to file the federal gift tax return. This form also serves as a payment voucher for a balance due on federal gift taxes.

To generate the 8892:

1. Go to Screen 5, Extended Returns
2. Enter a 1 in 1 = Extension requested on Form 8892
3. Enter Amount paid with extension request, if any
4. Verify the Form 8892 is generating under the Forms tab

Note: Neither method extends the time to pay the gift or GST taxes.

Troubleshooting Tip - If the 8892 is does not generate in Forms:

1.  Go to the Settings menu and select Options
2.  Choose the Tax return tab
3.  Scroll down to the Federal Tax Options heading and make sure the Form 8892 with return is set to Yes

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