Have a Tax Question? Ask a Tax Expert
Hi from just answer. I'm PDtax, and want to assist.
Can you expand on your question? A 709 is a gift tax return. I assume you mean 706.
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.
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.
If this answers your questions, positive feedback is appreciated. I'm PDtax.