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PDtax, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 4622
Experience:  35 years tax experience, including four years at a Big 4 firm.
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On a 709 tax return where do you claim the charitable

Customer Question

on a 709 tax return where do you claim the charitable contribution deduction for a unitrust?
Submitted: 2 years ago.
Category: Tax
Expert:  PDtax replied 2 years ago.

Hi from just answer. I'm PDtax, and want to assist.

Expert:  PDtax replied 2 years ago.

Can you expand on your question? A 709 is a gift tax return. I assume you mean 706.

Customer: replied 2 years ago.
Nope, I mean a 709 Gift Estate Tax Return. my uncle established a Charitable Remainder unitrust for the benefit of my cousin. Funded the trust with shares. Received a Gift Receipt noting the charitable contribution deduction, but I am not sure how it's reported on the 709.
Expert:  PDtax replied 2 years ago.

Got it. The fair market value of the future contribution is the deduction, with an income passing to a beneficiary, then the principal goes to charity.

The 709 needs to report the gifted income stream to the beneficiary. Let's say your unitrust throws off $20,000 per year for ten years. The present value of that ten year annuity is the gift. The remainder is a charitable deduction for your uncle.

Report the present value of the annuity on 709, part 2, line 1.

Thanks for asking at just answer. Positive feedback is appreciated. I'm PDtax.

Customer: replied 2 years ago.
Thank you so much for your quick response. Actually, this is the first 709 return since it was funded. It will not yet include my cousin's income stream. The trust was funded with $515,444.63 in shares and we received a gift receipt showing a charitable deduction of $170,725.57. So I'm not sure exactly what we are to report on the 709? Do I just report all the shares ($515,444.63) under charitable gift section? And what becomes of the $170,725.57Charitable deduction. Does that get reported under gifts to 3rd person, i.e. my cousin as beneficiary of the unitrust? I do appreciate your assistance.
Expert:  PDtax replied 2 years ago.

The charitable contribution of 170,725.57 is claimed by the donor on their 1040 schedule A. The fair value of the payments to be given to the cousin are reported on the 709. The terms of the unitrust often mandate the specific amounts to be paid to the income beneficiary, maybe $40,000 per year. Computing the fair value of that is needed, as that is the gift.

Expert:  PDtax replied 2 years ago.

If this answers your questions, positive feedback is appreciated. I'm PDtax.