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Complex Gift Reporting on Form 709: GRATs, Business Interests, Crummey Trusts, CLTs and CRTs, and QPRTsTHURSDAY, AUGUST 20, 2020, 1:00-2:50 pm Eastern

FOR LIVE PROGRAM ONLY

© 2020 Cohen & Company

PRESENTED BY

GRATs, Business Interests, Crummey Trusts, CLTs & CRTs, & QPRTsSupplementary Information

Scott Swain, CPA, CFA, CFP®, MT

Michael Boncher, CPA

Complex Gift Reporting on Form 709:

1


II. Gifts to Crummey Trusts

2

Form (2019)905581 04-01-19

Part 2 - Direct Skips.

A B C D E F G H

Total of column H

Form 709 (2019)

Gifts that are direct skips and are subject to both gift tax and generation-skipping transfer tax. You must list the gifts in chronological order.

Donee's name and addressRelationship to donor (if any)Description of giftIf the gift was of securities, give CUSIP no.If closely held entity, give EIN

¥¥¥¥¥

Itemnumber

2632(b)election

out

Donor's adjustedbasis of gift

Dateof gift

Value atdate of gift

For split gifts,enter 1/2 ofcolumn F

Net transfer(subtract col. G

from col. F)

��

SCHEDULE A, PART 2 CONTINUATION SHEET

709 J

1 EASTON DOE111-11-1111123 MAIN STREETCLEVELAND, OHIO 44115GRANDSONWITHDRAWAL RIGHT UNDER JOHN DOEIRREVOCABLE TRUST FBO EASTON DOE

JANE DOE, TRUSTEE123 MAIN ST.CLEVELAND, OH 44115TRUST EIN: 12-1111111

COPY OF TRUST AGREEMENT IS ATTACHED

DESCRIPTION OF GIFT: CASHPORTION OF GIFT VALUE SUBJECT TOWITHDRAWAL RIGHTS 15,000. 15,000. 15,000.12/31/19

2 JOHN DOE IRREVOCBLE TRUST FBO EASTON DOE

JOHN A. DOE 000-00-0001

20,000.

12-1111111123 MAIN STREETCLEVELAND, OHIO 44115TRUST FOR BENEFIT OF GRANDSONJOHN DOE IRREVOCABLE TRUST FBO EASTON DOEJANE DOE, TRUSTEE123 MAIN ST.CLEVELAND, OH 44115TRUST EIN: 12-1111111

COPY OF TRUST AGREEMENT IS ATTACHED

DESCRIPTION OF GIFT: CASHPORTION OF GIFT VALUE NOT SUBJECT TOWITHDRAWAL RIGHTS 5,000. 5,000. 5,000.12/31/19

3


III. Gifts of Privately Held Business Interests

4

Form (2019)905591 04-01-19

Part 3 - Indirect Skips.

A B C D E F G H

Total of column H

Form 709 (2019)

Gifts to trusts that are currently subject to gift tax and may later be subject to generation-skipping transfer tax. You must list these gifts in chronological order.


¥¥¥¥¥

Itemnumber

2632(c)election


Dateof gift




from col. F)

��


709 J

1 JOHN DOE IRREVOCABLE TRUST DTD 12-31-1900-0000000123 MAIN STREETCLEVELAND, OHIO 44115TRUST FOR BENEFIT OF DAUGHTER

JANE DOE, TRUSTEETRUST EIN: 00-0000000

ASSIGNMENT OF 500 CLASS B SHARES OF DOE,LLC500 BROAD STREETCLEVELAND, OH 44115LLC EIN: 22-0000000

LLC WAS ESTABLISHED IN THE STATE OF OHIOON 1/1/2010

FAIR MARKET VALUE DETERMINED BASED ONAPPRAISAL CO. VALUATION OF CLASS B UNITS

JOHN A. DOE 000-00-0001

800,000.

WITH DISCOUNTS FOR LACK OF MARKETABILITY& CONTROL

SEE ATTACHMENTS:

1. TRUST AGREEMENT2. VALUATION REPORT3. SCHEDULE OF ALL PARTIES RELATED TOTHE TRANSFEROR HOLDING AN EQUITY INTERESTIN DOE, LLC

700,000. 800,000. 800,000.12/31/19

5

John Doe Attachment to 2019 Gift Tax Return Valuation & Discount Explanation

As indicated on Schedule A, Part 3 of Form 709, the Taxpayer gifted 500 Class B non-voting units of Doe, LLC (Doe), a privately-held limited liability company. The 500 unit gift represents a 4% ownership interest in Doe. Prior to the gifting, the donor owned 60% of all combined classes of stock of Doe, representing a controlling interest.

The valuation of $800,000 for the 4% interest reflects the valuation discount determined by an independent appraiser based on the valuation of a 1% non-controlling interest in Doe. The valuation report concludes that a combined discount of 20% is appropriate for a 1% interest due to lack of control and marketability. Attached is a copy of the full valuation report.

6

2019 Form 709 Attachment

Taxpayer: John Doe SSN: 000-00-0001

DISCLOSURE STATEMENT

THIS STATEMENT IS MADE PURSUANT TO SECTION 6501 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), FOR THE PURPOSE OF DESCRIBING A TRANSFER FOR WHICH

THE TAXPAYER RECEIVED FULL AND ADEQUATE CONSIDERATION IN MONEY OR MONEY’S WORTH.

Date of Transfer: DECEMBER 31, 2019

Transferor: JOHN DOE GRANTOR SSN: 000-00-0001

Transfer Recipient: JOHN DOE IRREVOCABLE TRUST DTD 12-31-19 EIN: 00-0000000

Transfer Description: SALE OF 4,500 CLASS B UNITS OF DOE, LLC. VALUED AT $7,200,000500 BROAD STREET, CLEVELAND, OH 44115 ORGANIZED IN THE STATE OF OHIO ON 01/01/2010EIN: 22-0000000

FAIR MARKET VALUE DETERMINED BASED ON APPRAISAL CO. VALUATION OF ONE CLASS B SHARE WITH DISCOUNTS FOR LACK OF MARKETABILITY AND CONTROL. THE VALUE REPORTED ON THIS GIFT TAX RETURN IS AT LEAST AS GREAT AS THE MINIMUM VALUE REQUIRED UNDER IRC. SEC. 2701(A)(4).

COPIES OF THE VALUATION REPORT, THE TRUST AGREEMENT, AND A SUMMARY OF THE RELATED PARTY OWNERS OF THE LLC ARE ATTACHED.

Consideration Received: SUBJECT TO PURCHASE AGREEMENT DATED 12/31/2019, TRUSTEES DELIVERED A SECURED PROMISSORY NOTE PAYABLE TO THE SELLER IN AN AMOUNT EQUAL TO $7,200,000 BEARING AN INTEREST AT THE RATE OF ONE AND SIXTY-NINE HUNDRETHS PERCENT (1.69%) ANNUALLY.

Reason for Exclusion from Form 709: AS A RESULT OF TAXPAYER’S HAVING RECEIVED FULL AND ADEQUATE CONSIDERATION IN MONEY OR MONEY’S WORTH IN EXCHANGE FOR THE PROPERTY TRANSFERRED TO THE TRUST, NO GIFT IS BEING REPORTED ON THIS RETURN RELATED TO THIS TRANSACTION.

7


IV. Transfers to Grantor Retained Annuity Trusts (GRATs)

8

²

WKH�UHPDLQGHU�LQWHUHVW�SDVVHV�WR�RQH�JHQHUDWLRQ�\RXQJHU�PHPEHUV�RI�WKH�*¶V�IDPLO\

²

*¶V�TXDOLILHG�LQWHUHVW�PXVW�EH�SD\DEOH�IRU�D�IL[HG�WHUP

*¶V�ULJKW�WR�UHYRNH�D�TXDOLILHG�LQWHUHVW�RI�KLV�RU�KHU�VSRXVHGLVWULEXWLRQV�PD\�QRW�EH�PDGH�WR�DQ\RQH�EXW�*�RU�*¶V�*¶V�LQWHUHVW�PD\�QRW�EH�SUHSDLG�E\�WKH�*5$7

RI�WKH�SULRU�\HDU¶V�SD\PHQWSDUW�RI�WKH�WUXVW¶V�DVVHWV�DUH�LQFOXGHG�LQ�WKH�*¶V�HVWDWH�

9

Form (2019)905571 04‐01‐19

Part 1 ‐ Gifts Subject Only to Gift Tax.

A B C D E F G H

Total of column H

Form 709 (2019)

Gifts less political organization, medical, and educational exclusions. (see instructions)


¥¥¥¥¥

Itemnumber


Dateof gift




from col. F)

��

SCHEDULE A, PART I CONTINUATION SHEET

709 J

1 JOHN A. DOE GRANTOR RETAINED ANNUITYTRUST, DATED JULY 1, 201999‐9999999123 MAIN STREETCLEVELAND, OHIO 44115JANE A. DOE, TRUSTEE

DESCRIPTION OF GIFT ‐

TRANSFER OF 160,000 SHARES OF:

ABC CORPORATION456 MAIN STREETCLEVELAND, OHIO 44115

EIN: 00‐0000000

SHARES VALUED AT: $8,000,000TAXABLE GIFT VALUED AT: $6QUALIFIED RETAINED INTEREST VALUED AT:

JOHN A. DOE 000‐00‐0001

6.

$7,999,994

SEE ATTACHMENTS:

1. TRUST AGREEMENT2. CALCULATION OF TAXABLE GIFT3. VALUATION4. SCHEDULE OF ALL PARTIES RELATED TOTHE TRANSFEROR HOLDING AN EQUITY INTERESTIN ABC CORPORATION 6,000,000. 6. 6.07/01/19

Grantor Retained Annuity Trust

Type of Calculation: TermTransfer Date: 5/2020§7520 Rate: 0.80%Income Earned by Trust: 0.00%Term: 10Total Number of Payments: 10Annual Growth of Principal: 0.00%Pre-discounted FMV: $8,000,000Discounted FMV: $8,000,000Optimized: YesUsing Optimized Payout: 10.44528%Exhaustion Method: IRSPayment Period: AnnualPayment Timing: EndDistribute Principal in Kind: YesVary Annuity Payments? NoIs Transfer To or For the Benefit of a Member of the Transferor's Family? YesIs Interest in Trust Retained by Transferor or Applicable Family Member? YesWith Reversion? No

*** §2702 IS Applicable ***Base Term Certain Annuity Factor: 9.5737Frequency Adjustment Factor: 1.0000Annual Annuity Payout: $835,622.40Initial Amount of Payment Per Period: $835,622.40Value of Term Certain Annuity Interest: $7,999,998.17Value of Grantor's Retained Interest: $7,999,998.17(1) Taxable Gift (Based on Term Interest): $1.83

Economic ScheduleBeginning 0.00% 0.00% Required Distributed

Year Principal Growth Annual Income Payments Discount Remainder1 $8,000,000.00 $0.00 $0.00 $835,622.40 $0.00 $7,164,377.602 $7,164,377.60 $0.00 $0.00 $835,622.40 $0.00 $6,328,755.203 $6,328,755.20 $0.00 $0.00 $835,622.40 $0.00 $5,493,132.804 $5,493,132.80 $0.00 $0.00 $835,622.40 $0.00 $4,657,510.405 $4,657,510.40 $0.00 $0.00 $835,622.40 $0.00 $3,821,888.006 $3,821,888.00 $0.00 $0.00 $835,622.40 $0.00 $2,986,265.607 $2,986,265.60 $0.00 $0.00 $835,622.40 $0.00 $2,150,643.208 $2,150,643.20 $0.00 $0.00 $835,622.40 $0.00 $1,315,020.809 $1,315,020.80 $0.00 $0.00 $835,622.40 $0.00 $479,398.4010 $479,398.40 $0.00 $0.00 $835,622.40 $0.00 $0.00

Summary $8,000,000.00 $0.00 $0.00 $8,356,224.00 $0.00 $0.00

Page 1

11


V. Gifts to Qualified Personal Residence Trusts (QPRTs)

12

²

13

Form (2019)905571 04‐01‐19

Part 1 ‐ Gifts Subject Only to Gift Tax.

A B C D E F G H

Total of column H

Form 709 (2019)



¥¥¥¥¥

Itemnumber


Dateof gift




from col. F)

��


709 J

1 JOHN A. DOE QUALIFIED PERSONAL RESIDENCETRUST, DATED JULY 1, 201999‐9999998123 MAIN STREETCLEVELAND, OHIO 44115JANE A. DOE, TRUSTEE


GIFT OF RESIDENCE LOCATED AT:

123 MAIN STREETCLEVELAND, OHIO 44115

PARCEL NUMBER: 00000000001

LEGAL DESCRIPTION: LOT X

RESIDENCE VALUED AT: $500,000TAXABLE GIFT VALUED AT: $432,125

JOHN A. DOE 000‐00‐0001

432,125.

VALUE RETAINED BY GRANTOR: $67,875

SEE ATTACHMENTS:

1. TRUST AGREEMENT2. CALCULATION OF TAXABLE GIFT3. DEED4. VALUATION5. SCHEDULE OF ALL PARTIES RELATED TOTHE TRANSFEROR HOLDING AN EQUITY INTERESTIN THE RESIDENCE 100,000. 432,125. 432,125.07/01/19

GRIT and Qualified Personal Residence Trust

Transfer Date: 5/2020§7520 Rate: 0.80%Principal: $500,000Grantor's Current Age: 50Term of Trust: 10After-Tax Growth: 4.00%Comb. Death Tax Bracket: 50.00%With Reversion? Yes

Grantor's Age When Trust Term Ends: 60Value of Nontaxable Interest Retained by Grantor: $67,875Taxable Gift (Present Value of Remainder Interest): $432,125Property Value After 10 Years: $740,122

Potential Death Tax Savings: $153,999(Combined Bracket times [Value of Property minus Taxable Gift])

Qualified Annuity that Must be Paid Annually if Entire Trust Ceases to be a QPRT: $7,289

Total Income InterestReversion Income Interest With Reversion Remainder

Factor: 0.06125 0.07450 0.13575 0.86425Value: $30,625 $37,250 $67,875 $432,125

Page 1

15


VI. Gift to Charitable Remainder Trusts (CRTs) and Charitable Lead Trusts (CLTs)

16

&KDULWDEOH 5HPDLQGHU $QQXLW\ 7UXVW 7HUP RI <HDUV

FRQWLQJHQW�EHQHILFLDU\�PD\�EH�WKH�LQGLYLGXDOV¶�HVWDWHV�RU�KHLUV

'¶V�DELOLW\ RU�WUXVWHH¶V�DELOLW\�LI�'�LV�DOORZHG�WR�DFW�

DQG�GRQRU¶V�DGMXVWHG�JURVV�LQFRPH

SHULRG�LV�GDWH�RI�UHFLSLHQW¶V�GHDWK

17

Form (2019)905571 04-01-19

Part 1 - Gifts Subject Only to Gift Tax.

A B C D E F G H

Total of column H

Form 709 (2019)



¥¥¥¥¥

Itemnumber


Dateof gift




from col. F)

��


709 J

1 UNITED WAY OF CUYAHOGA COUNTY33-00000001000 MARKET STREETCLEVELAND, OHIO 44115501(C)(3) CHARITY

GIFT DESCRIPTION: REMAINDER INTEREST IN$1,000,000 OF CASH GIFTED TO JOHN DOEFAMILY CHARITABLE REMAINDER ANNUITYTRUST.

TRUST TERM IS 20 YEARS WITH ANNUITYPAYMENT PAID QUARTERLY TO THE GRANTOR,JOHN DOE. AS SUCH NO TAXABLE GIFT ISREPORTED.

JANE DOE, TRUSTEE123 MAIN STREETCLEVELAND, OH 44115TRUST EIN: 44-0000000

JOHN A. DOE 000-00-0001

234,304.

A COPY OF THE TRUST AGREEMENT, RELATEDPRESENT VALUE CALCULATIONS, AND INTERESTRATE ELECTION STATEMENT ARE ATTACHED. 234,304. 234,304. 234,304.08/31/19

18

Charitable Remainder Annuity Trust

Trust Type: TermTransfer Date: 8/2019§7520 Rate: 2.80%FMV of Trust: $1,000,000Growth of Trust: 6.00%Percentage Payout: 5.000%Payment Period: QuarterlyPayment Timing: EndTerm: 20Total Number of Payments: 80Exhaustion Method: IRS

Amount of Annuity: $50,000.00Annuity Factor: 15.1563Payout Frequency Factor: 1.0104Present Value of Annuity = Annual Payout times Factors: $765,696.28Charitable Remainder = FMV of Trust less PV of Annuity: $234,303.72Charitable Deduction for Remainder Interest: $234,303.72Donor's Deduction as Percentage of Amount Transferred: 23.430%

Beginning 6.00%Year Principal Growth Payment Remainder

1 $1,000,000.00 $58,875.00 $50,000.00 $1,008,875.002 $1,008,875.00 $59,407.52 $50,000.00 $1,018,282.523 $1,018,282.52 $59,971.96 $50,000.00 $1,028,254.484 $1,028,254.48 $60,570.28 $50,000.00 $1,038,824.765 $1,038,824.76 $61,204.48 $50,000.00 $1,050,029.246 $1,050,029.24 $61,876.76 $50,000.00 $1,061,906.007 $1,061,906.00 $62,589.36 $50,000.00 $1,074,495.368 $1,074,495.36 $63,344.72 $50,000.00 $1,087,840.089 $1,087,840.08 $64,145.40 $50,000.00 $1,101,985.4810 $1,101,985.48 $64,994.12 $50,000.00 $1,116,979.6011 $1,116,979.60 $65,893.76 $50,000.00 $1,132,873.3612 $1,132,873.36 $66,847.40 $50,000.00 $1,149,720.7613 $1,149,720.76 $67,858.24 $50,000.00 $1,167,579.0014 $1,167,579.00 $68,929.72 $50,000.00 $1,186,508.7215 $1,186,508.72 $70,065.52 $50,000.00 $1,206,574.2416 $1,206,574.24 $71,269.44 $50,000.00 $1,227,843.6817 $1,227,843.68 $72,545.64 $50,000.00 $1,250,389.3218 $1,250,389.32 $73,898.36 $50,000.00 $1,274,287.6819 $1,274,287.68 $75,332.28 $50,000.00 $1,299,619.9620 $1,299,619.96 $76,852.20 $50,000.00 $1,326,472.16

Summary: $1,000,000.00 $1,326,472.16 $1,000,000.00 $1,326,472.16

Page 1

19

John Doe SSN: 000-00-0001 111 Vincent Ave.

Cleveland, OH 44115 Tax Year Ending 12/31/19

PRIOR-MONTH ELECTION UNDER §7520(a) FOR VALUING A CHARITABLE REMAINDER INTEREST

Attachment to Form 709, U.S. Gift Tax Return

John Doe (hereinafter “the taxpayer”), who was 60 years old on May 1, 2019, transferred $1,000,000 in cash to a charitable remainder annuity trust on August 31, 2019. The trust instrument requires that the trust pay the taxpayer quarterly 5.0% of the fair market value of the trust assets contributed to the trust, or $50,000, for a fixed term of 20 years. The charitable remainder beneficiary is the United Way of Cuyahoga County, EIN 33-0000000, located at 1000 Market Street, Cleveland, Ohio. A copy of the trust instrument is attached as Exhibit A. The taxpayer is not terminally ill within the meaning of Treas. Reg. §1.7520-3(b)(3).

Pursuant to §7520(a), the taxpayer hereby elects to use the §7520 rate for June 2019, (the second month preceding the date of donation), which is 2.8%.

The amount of the charitable contribution claimed is $234,304, computed in accordance with Reg. §1.664-4(e). See copy of the present value calculation details attached.

[Note that the language regarding the age of the donor and the statement that the donor is not terminally ill are only required when the trust is a “lifetime” trust, but were included to illustrate the appropriate language.]

20

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SD\PHQW�PXVW�EH�DW�OHDVW�DQQXDOO\�DQG�IRU�IL[HG�GROODU�DPRXQW�RU�IL[HG�SHUFHQWDJH�RI�IDLU�PDUNHW�YDOXH�RI�WUXVW¶V�LQLWLDO�DVDQG�PD\�LQFUHDVH�RYHU�DQQXLW\¶V�WHUP

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&%¶V�LQWHUHVW¶V�SUHVHQW�YDOXH�LV�OHVV�WKDQ�RU�HTXDO�WR�

JDLQV�IURP�VDOH�RI�FDSLWDO�DVVHWV�ZLOO�EH�GHGXFWLEOH�IURP�&/$7¶V�LQFRPH�LI�LW�LV�SDUW�RI�DQQXLW\�SD\PHQWHVWDWH�WD[�GHGXFWLRQ�IRU�GHFHGHQW¶V�HVWDWH�XQGHU�,

21

Form (2019)905571 04-01-19


A B C D E F G H

Total of column H

Form 709 (2019)



¥¥¥¥¥

Itemnumber


Dateof gift




from col. F)

��


709 J

1 DOE FAMILY CHARITABLE LEAD ANNUITY TRUST55-0000000123 MAIN STREETCLEVELAND, OHIO 44115TRUST FOR THE BENEFIT OF DAUGHTER

JANE DOE, TRUSTEE

GIFT DESCRIPTION: REMAINDER INTEREST IN$1,000,000 OF CASH GIFTED TO JOHN DOEFAMILY CHARITABLE LEAD ANNUITY TRUST. DONOR'S DAUGHTER, JANE DOE IS THEREMAINDER BENEFICIARY.

TRUST TERM IS 20 YEARS WITH 5.213%ANNUITY PAYMENT PAID ANNUALLY TOQUALIFIED CHARITABLE ORGANIZATIONS. PRESENT VALUE OF THE CHARITABLE ANNUITYINTEREST = $1,000,000. AS SUCH, THEVALUE OF THE REMAINDER INTEREST FOR GIFT

JOHN A. DOE 000-00-0001

TAX PURPOSES IS $0.

A COPY OF THE TRUST AGREEMENT, RELATEDPRESENT VALUE CALCULATIONS, AND INTERESTRATE ELECTION STATEMENT ARE ATTACHED. 0. 0. 0.08/01/20

22

Form (2019)905571 04-01-19


A B C D E F G H

Total of column H

Form 709 (2019)



¥¥¥¥¥

Itemnumber


Dateof gift




from col. F)

��


709 J

1 UNITED WAY OF CUYAHOGA COUNTY33-00000001000 MARKET STREETCLEVELAND, OHIO 44115501(C)(3) CHARITY

JANE DOE, TRUSTEE

GIFT DESCRIPTION: TERM ANNUITY INTERESTIN $1,000,000 OF CASH GIFTED TO JOHN DOEFAMILY CHARITABLE LEAD ANNUITY TRUST.

TRUST TERM IS 20 YEARS WITH 5.213%ANNUITY PAYMENT PAID ANNUALLY TO UNITEDWAY OF CUYAHOGA COUNTY. PRESENT VALUEOF THE CHARITABLE ANNUITY TERM INTEREST =$1,000,000, WHICH IS ELIGILBE FOR ACHARITABLE DEDUCTION FOR GIFT TAXPURPOSES.

JOHN A. DOE 000-00-0001

1,000,000.

A COPY OF THE TRUST AGREEMENT, RELATEDPRESENT VALUE CALCULATIONS, AND INTERESTRATE ELECTION STATEMENT ARE ATTACHED. 1,000,000. 1,000,000. 1,000,000.08/01/20

23

Charitable Lead Annuity Trust

Trust Type: TermTransfer Date: 8/2020§7520 Rate: 0.40%FMV of Trust: $1,000,000Growth of Trust: 6.00%Percentage Payout: 5.213%Payment Period: AnnualPayment Timing: EndTerm: 20Total Number of Payments: 20Exhaustion Method: IRSVary Annuity Payments? NoEconomic Schedule Compounding: Annual

Annual Payout: $52,130.00Annual Payment: $52,130.00Term Certain Annuity Factor: 19.1841Payout Frequency Factor: 1.0000Present Value of Annuity: $1,000,000.00Remainder Interest = FMV of Trust less PV of Annuity: $0.00

Charitable Deduction for Income Interest: $1,000,000.00Donor's Deduction as Percentage of Amount Transferred: 100.000%

Beginning 6.00%Year Principal Growth Payment Remainder

1 $1,000,000.00 $60,000.00 $52,130.00 $1,007,870.002 $1,007,870.00 $60,472.20 $52,130.00 $1,016,212.203 $1,016,212.20 $60,972.73 $52,130.00 $1,025,054.934 $1,025,054.93 $61,503.30 $52,130.00 $1,034,428.235 $1,034,428.23 $62,065.69 $52,130.00 $1,044,363.926 $1,044,363.92 $62,661.84 $52,130.00 $1,054,895.767 $1,054,895.76 $63,293.75 $52,130.00 $1,066,059.518 $1,066,059.51 $63,963.57 $52,130.00 $1,077,893.089 $1,077,893.08 $64,673.58 $52,130.00 $1,090,436.6610 $1,090,436.66 $65,426.20 $52,130.00 $1,103,732.8611 $1,103,732.86 $66,223.97 $52,130.00 $1,117,826.8312 $1,117,826.83 $67,069.61 $52,130.00 $1,132,766.4413 $1,132,766.44 $67,965.99 $52,130.00 $1,148,602.4314 $1,148,602.43 $68,916.15 $52,130.00 $1,165,388.5815 $1,165,388.58 $69,923.31 $52,130.00 $1,183,181.8916 $1,183,181.89 $70,990.91 $52,130.00 $1,202,042.8017 $1,202,042.80 $72,122.57 $52,130.00 $1,222,035.3718 $1,222,035.37 $73,322.12 $52,130.00 $1,243,227.4919 $1,243,227.49 $74,593.65 $52,130.00 $1,265,691.1420 $1,265,691.14 $75,941.47 $52,130.00 $1,289,502.61

Summary: $1,000,000.00 $1,332,102.61 $1,042,600.00 $1,289,502.61

Page 1

24

John Doe SSN: 000-00-0001 111 Vincent Ave.

Cleveland, OH 44115 Tax Year Ending 12/31/19

PRIOR-MONTH ELECTION UNDER §7520(a) FOR VALUING A CHARITABLE LEAD TRUST ANNUITY INTEREST

Attachment to Form 709, U.S. Gift Tax Return

John Doe (hereinafter “the taxpayer”), who was 60 years old on May 1, 2019, transferred $1,000,000 in cash to a charitable lead annuity trust on August 1, 2020. The trust instrument requires that the trust annually distribute to qualified charitable organizations 5.213% of the fair market value of the trust assets initially contributed to the trust, or $52,130, for a fixed term of 20 years. The charitable annuity beneficiary is the United Way of Cuyahoga County, EIN 33-0000000, located at 1000 Market Street, Cleveland, Ohio. A copy of the trust instrument is attached as Exhibit A. The taxpayer is not terminally ill within the meaning of Treas. Reg. §1.7520-3(b)(3).

Pursuant to §7520(a), the taxpayer hereby elects to use the §7520 rate for August 2020, (the month of the donation), which is 0.4%.

The present value of the charitable annuity is $1,000,000, computed in accordance with Reg. §2055(e)(2) and 2522(c)(2). See copy of the present value calculation details attached.

[Note that in this case the interest rate for the month of the gift was the optimal rate. It is questionable as to whether this election is necessary if that is the case, but best practice would be to include it anyway. Also note that the language regarding the age of the donor and the statement that the donor is not terminally ill are only required when the trust is a “lifetime” trust, but were included to illustrate the appropriate language.]

25


VII. GST Exemption allocations for trust gifting

26

Form (2019)905591 04‐01‐19

Part 3 ‐ Indirect Skips.

A B C D E F G H

Total of column H

Form 709 (2019)

Gifts to trusts that are currently subject to gift tax and may later be subject to generation‐skipping transfer tax. You must list these gifts in chronological order.


¥¥¥¥¥

Itemnumber

2632(c)election


Dateof gift




from col. F)

��


709 J

1 JOHN A. DOE IRREVOCABLE TRUST, DATED JULY1, 201999‐9999997123 MAIN STREETCLEVELAND, OHIO 44115JANE A. DOE, TRUSTEE


CASH

A COPY OF THE TRUST AGREEMENT ISATTACHED. 1,000,000. 1,000,000. 1,000,000.07/01/19

JOHN A. DOE 000‐00‐0001

1,000,000.

[X]

John A. Doe TIN: 000-00-0001FYE: 12/31/2019

Statement Attached to and Made Part of Form 709:

Trust Name Trust ID No.

John A. Doe Irrevocable Trust, Dated July 1, 2019

99-9999997

PERMANENT ELECTION TO TREAT TRUST AS A GST TRUST

Pursuant to IRC Sec. 2632(c)(5)(A)(ii) and Reg. 26.2632-1(b)(3), the taxpayer hereby elects to treat the following as a GST trust. As a result of this election, all current and future transfers to the trust will be indirect skips defined in IRC Sec. 2632(c)(3)(A), to which the taxpayer’s unused

GST tax exemption will be automatically allocated in accordance with IRC Sec. 2632(c)(1). The election for the following trust(s) and transfers will remain in effect, unless and until terminated. The allocation of GST exemption necessary to produce an inclusion ratio (as defined in Sec.

2642(a)), which is closest to, or, if possible, equal to zero.

Address

123 Main Street, Cleveland, Ohio 44115

28

John A. Doe TIN: 000-00-0001FYE: 12/31/2019

Statement Attached to and Made Part of Form 709:

Trust Name Trust ID No.

Description of Transfer (Schedule A, Part 3, Item #)

John A. Doe Irrevocable Trust, Dated July 1, 2019 99-9999997 1

ELECTION NOT TO HAVE THE AUTOMATIC GST TAX EXEMPTION ALLOCATION RULES APPLY TO ALL CURRENT-YEAR AND FUTURE-YEAR TRANSFERS

Pursuant to IRC Sec. 2632(c)(5)(A)(i)(II) and Reg. 26.2632-1(b)(2)(iii)(A)(5), the taxpayer hereby elects not to have the automatic GST tax exemption allocation rules apply to all current-year and future-year transfers to the following trust. This election, unless and until terminated,

will remain in effect for all future transfers of property made by the taxpayer to the following trust(s).

29

Form (2019)

905532 04‐06‐20

5

Part 2 ‐ GST Exemption Reconciliation (Section 2631) and Section 2652(a)(3) Election

1

2

3

4

5

6

7

1

2

3

4

5

6

7

8

"Election Out"

You must attach a "Notice of Allocation."

8

Part 3 ‐ Tax ComputationA E F GB C D

Total generation‐skipping transfer tax.

(If more space is needed, attach additional statements.)

Form 709 (2019) Page

Check here | if you are making a section 2652(a)(3) (special QTIP) election. See instructions.

Enter the item numbers from Schedule A of the gifts for which you are making this election |

Maximum allowable exemption (see instructions) ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Total exemption used for periods before filing this return

Exemption available for this return. Subtract line 2 from line 1

Exemption claimed on this return from Part 3, column C, total below

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

~~~~~~~~~~~~~~~~~~~~~~~~~~~~

~~~~~~~~~~~~~~~~~~~~~~~~~

Automatic allocation of exemption to transfers reported on Schedule A, Part 3. To opt out of the automatic

allocation rules, you must attach an statement. See instructions ~~~~~~~~~~~~~~~~~~~~

Exemption allocated to transfers not shown on line 4 or 5 above. See instructions

Add lines 4, 5, and 6 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Exemption available for future transfers. Subtract line 7 from line 3 ��

Item number(from

Schedule D,Part 1)

Inclusion ratio(Subtract col. D

from 1.000)

Applicable rate(multiply col. Eby 40% (0.40))

Generation‐skippingtransfer tax

(multiply col. B by col. F)

Net transfer(from Schedule D,

Part 1, col. E)

GST exemptionallocated

Divide col. Cby col. B

Gifts made by spouse (for gift splitting only)

Enter here; on page

3, Schedule A, Part 4, line 10; and on page 1, Part 2 ‐ Tax

Computation, line 16

Total exemption claimed. Enter here andon Part 2, line 4, above. May not exceedPart 2, line 3, above ��

709

SEE STATEMENT 2

11,400,000.

1,000,000.

10,400,000.

1,000,000.

11,400,000.

JOHN A. DOE 000‐00‐0001

}}}}}}}}}}} }}}}}}}}}}}JOHN A. DOE 000‐00‐0001

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~STATEMENT 1FORM 709 ELECTION OUT OF AUTOMATIC ALLOCATION

}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}

THE DONOR HEREBY ELECTS THAT THE GST EXEMPTION AUTOMATIC ALLOCATION RULESWILL NOT APPLY TO ANY OR FUTURE TRANSFERS THAT THE DONOR MAY MAKE TOTHE FOLLOWING TRUST(S):

2019

JOHN A. DOE IRREVOCABLE TRUST, DATED JULY 1, 2019

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~STATEMENT 2FORM 709 NOTICE OF ALLOCATION

}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}

TRANSFER 1}}}}}}}}}}} GST EXEMPTIONTRUST IDENTIFICATION ITEM NUMBER VALUE OF GIFT ALLOCATED TO GIFT}}}}}}}}}}}}}}}}}}}}}}}}} }}}}}}}}}}}}}}}} }}}}}}}}}}}}}} }}}}}}}}}}}}}}}}}JOHN A. DOE IRREVOCABLE PART 3 ITEM 1 1,000,000. 1,000,000.* TRUST, DATED JULY 1, 201123 MAIN STREETCLEVELAND, OHIO 4411599‐9999997

INCLUSION RATIO AFTER ALLOCATION .000*

}}}}}}}}}}}}}} TOTAL GST EXEMPTION ALLOCATED 1,000,000. (TO FORM 709, SCHEDULE D, PART 2, LINE 6) ~~~~~~~~~~~~~~

* SEE STATEMENT OF GST EXEMPTION ALLOCATION

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~STATEMENT 3FORM 709 STATEMENT OF GST EXEMPTION ALLOCATION

}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}} TRANSFER 1}}}}}}}}}}}THE TAXPAYER ALLOCATES GST EXEMPTION TO THE EXTENT OF UNUSED GST EXEMPTION,IN AN AMOUNT NECESSARY TO OBTAIN AN APPLICABLE FRACTION OF ONE SO THAT THERESULTING INCLUSION RATIO WILL BE ZERO AS DEFINED BY INTERNAL REVENUE CODESECTION 2642(A). THIS FORMULA FOR ALLOCATION OF THE GST EXEMPTION IS MADEPURSUANT TO TREASURY REGULATION SECTION 26.2632‐1(B)(4)(I). BASED UPON THEVALUES INDICATED, THIS FORMULA RESULTS IN THE ALLOCATION OF GST EXEMPTIONSET FORTH ABOVE. IF VALUES ARE CHANGED UPON AUDIT, THE FORMULA ALLOCATIONWILL ALSO CHANGE. ANY ALLOCATION OF GST EXEMPTION IN EXCESS OF THE AMOUNTNECESSARY TO OBTAIN AN INCLUSION RATIO OF ZERO IS VOID PURSUANT TO TREASURYREGULATION SECTION 26.2632‐1(B)(4)(I).

STATEMENT(S) 1, 2, 3

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