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Trying to complete form 709 gift $35k to foreign citizen…

Trying to complete form...

Trying to complete form 709 gift $35k to foreign citizen confused

Accountant's Assistant: The Accountant will know how to help. Please tell me more, so we can help you best.

I don't understand part 2 tax computation I got part 1

Accountant's Assistant: Is there anything else important you think the Accountant should know?

It was gift of $35k in 2017 to my foreign fiancé who is domiciled in Bulgaria

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Answered in 2 hours by:
3/23/2018
Dr. Fiona Chen
Dr. Fiona Chen, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 1,030
Experience: Former IRS Revenue Agent
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I'm Fiona, former IRS revenue agent. I am looking at your question and will get back to you soon. Fiona Chen, MPA, Ph.D., CPA, ABV, CFF, CITP,IMTA

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Customer reply replied 2 months ago
thanks

Dear Customer,

Part I.

Can you interpret the gift as some to her, some to her parents, etc., then, the each person's amount will be lower than the limit for exemption of 14,000.

Part II.

You could even consider the purpose of the gift. It is for education, medication? Why did you gift 35,000? For her to act on your behalf or for your interest somehow?

Part III.

The part II of Form 709, part II, tax computation, the key is line 7, " enter $2,141,800 on line 7". According to the form instruction below.

https://www.irs.gov/pub/irs-pdf/i709.pdf

That is the maximum tax credit we have.

So, if you calculate your tax should be say 7,000, then, after the calculation with this amount, the end of the part II should be 0. It is because your tax due will not be over this credit limit for year 2017.

Please feel free to follow up.

Regards,

Fiona

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Customer reply replied 2 months ago
Part I.
Can you interpret the gift as some to her, some to her parents, etc., then, the each person's amount will be lower than the limit for exemption of 14,000.
Answer NO
Part II.
You could even consider the purpose of the gift. It is for education, medication? Why did you gift 35,000? For her to act on your behalf or for your interest somehow?
Answer: $21k went for her divorce and the remaining is to live on while I am over in Bulgaria until next year Its currently in her bank account
Part III.
The part II of Form 709, part II, tax computation, the key is line 7, " enter $2,141,800 on line 7". According to the form instruction below. Answer: entered $2141800 and I come up with zero on line 20
SCH A Computation of Taxable Gifts (Including transfers in trust) (see instructions PART 1
Answer: $35k coluum H
PART 2 and 3 is ZERO
Part 4—Taxable Gift Reconciliation
Answer: Took total gift $35k less $14k and have $21k lines 3 9 11
SCH B and C Answer: ZERO They do not pertain to me
SCH D Part 1 Answer: ZERO does not pertain to me
SCH D Part 2 Part 2—GST Exemption Reconciliation (Section 2631) and Section 2652(a)(3) Election and Part 3—Tax Computation Answer: ZERO
Customer reply replied 2 months ago
Do I send all forms in?

Dear Customer,

It looks like your gift was 21,000.

I am looking at the other items and will be right back with you.

Regards,

Fiona

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Dear Customer,

Part II. lines 1, 2, 3 should be Line 1: 21,000. Line 3: 21,000. The gift tax is calculated here. It is only because it is not more than the 2M, the final amount is 0.

Regards,

Fiona

Dr. Fiona Chen
Dr. Fiona Chen, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 1,030
Experience: Former IRS Revenue Agent
Verified
Dr. Fiona Chen and 87 other Tax Specialists are ready to help you
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Dr. Fiona Chen
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Category: Tax
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