Friday, June 3, 2011

The Obama Gift Tax Returns

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Little noted in the press reports surrounding the April 15 release of President and Mrs. Obama’s 2009 income tax returns is the fact that each of them also released copies of their 2009 gift tax returns on Form 709.

Anyone hoping that the President was reporting the funding of a two-year GRAT (see the administration’s Green Book recommendation that GRATs have a term of at least 10 years) will be disappointed. The returns show no gifts in the current year. Instead, they merely report the carry-forward portion of $60,000 gifts that the Obamas made in 2007 to their daughters’ 529 college plans. When these transfers were reported for 2007, the Obamas both elected under §529(c)(2)(B) to have them treated as made over a five-year period, bringing the entire gifts within the annual gift tax exclusion.  

But the 2009 returns are a redundancy.  As noted in 822-2^nd T.M., Estate, Gift and Generation-Skipping Tax Returns and Audits, at IX.K., since 2002 the Form 709 Instructions have advised taxpayers that it is not necessary to file Form 709 solely to report the carry-forward portion of a gift made under §529(c)(2)(B). Whether the returns were filed out of an abundance of caution, or ignorance of the instructions, they were not required. 

Harold W. Pskowski, Managing Editor for Estates, Gifts and Trusts 

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