Form 709 Schedule A: Reporting Gifts, Valuation, and Exclusions

Schedule A of Form 709 is where you list, line by line, every gift you made during the year that federal law requires you to report. The Form 709 Schedule A instructions ask you to classify each gift by type of recipient, describe the property, enter its fair market value on the date of the gift, and then reduce the total in Part 3 using the annual exclusion and any marital or charitable deduction. For 2026, a gift generally lands on Schedule A when it exceeds the $19,000 annual exclusion to one person, when it’s a future interest of any amount, or when you’re electing to split gifts with your spouse.¹

Which Gifts Belong on Schedule A

A reportable gift is any completed transfer of property where you received nothing, or less than full value, in return.² “Completed” means you’ve given up all control and can’t take the property back or redirect it. The transfer doesn’t need to feel like generosity. Selling a rental worth $500,000 to a relative for $100,000 creates a $400,000 gift, and it belongs on Schedule A.

Transfers to irrevocable trusts count as completed gifts the moment property moves in, even if beneficiaries won’t see anything for years. Forgiving a debt works the same way: cancel a $200,000 note owed to you and you’ve made a $200,000 gift.

Present interest versus future interest drives whether the annual exclusion applies. A present interest gives the recipient the immediate right to use or enjoy the property. A remainder interest that only pays out after a term of years is a future interest, and future-interest gifts don’t qualify for the $19,000 annual exclusion at all, so they go on Schedule A regardless of size.

What You Don’t Need to Report

Four categories of transfers either aren’t gifts for tax purposes or fall below the reporting threshold:³

Present-interest gifts totaling $19,000 or less to any one person during 2026.
Tuition and medical payments made directly to the school or provider under IRC 2503(e). Tuition means tuition, not room, board, or books. Medical means most medical and dental services, hospital care, prescription drugs, and health insurance premiums, not cosmetic procedures or gym memberships. Pay the institution directly; reimbursing the student or patient doesn’t qualify.⁴
Gifts to a U.S. citizen spouse, which qualify for the unlimited marital deduction and don’t require Form 709 in most cases.
Contributions to qualified political organizations.

The Three Parts of Schedule A

Schedule A splits into three parts. Getting each gift into the right part controls whether the generation-skipping transfer tax (GSTT) applies and whether the annual exclusion is available.

Part 1 — Gifts subject only to gift tax. Most gifts land here: present-interest or future-interest transfers to someone in your children’s generation or closer, and gifts to trusts whose beneficiaries aren’t skip persons.
Part 2 — Direct skips. A direct skip is a transfer to a “skip person,” meaning someone at least two generations below you (a grandchild, for example) or a trust where every beneficiary is a skip person. These face the GSTT on top of any gift tax.⁵
Part 3 — Summary and deductions. This section pulls the totals from Parts 1 and 2 and applies your exclusions, marital deduction, and charitable deduction to get to the net taxable amount.

A gift misplaced in Part 1 that belongs in Part 2 can underreport the GSTT, and if the numbers are large the IRS won’t treat that as harmless.

What Each Column Requires

Every line in Parts 1 and 2 asks for the same set of information:

Item number, sequential from 1. Two different gifts to the same person (cash in March, stock in September) each get their own line.
Donee’s full legal name and address. For a trust, use the trust’s name, not the beneficiary’s.
Donee’s relationship to you: spouse, child, grandchild, friend, charity, trust. Relationship drives exclusion eligibility and GSTT classification.
Description of the gift. Cash is fine for money; for property, be specific enough to identify it — address for real estate, ticker and share count for stock, make and model for vehicles.
Date of gift. The exact date the transfer was completed. For stock, when the shares hit the donee’s account. For real estate, typically when the deed was recorded.
Value at date of gift, meaning fair market value on that date.

Individual gift totals flow to Part 3, where you subtract the annual exclusion (up to $19,000 per donee for qualified present-interest gifts), the marital deduction, and any charitable deduction. What’s left is your taxable gift.

Determining Fair Market Value

Fair market value is the price a willing buyer and willing seller would agree on, both knowing the relevant facts and neither under pressure. The valuation method depends on the asset.

Publicly Traded Securities

For exchange-listed stocks and bonds, FMV is the average of the highest and lowest quoted selling prices on the gift date.⁶ If the gift date is a weekend or holiday, calculate a weighted average of the mean prices on the nearest trading days before and after, weighting the closer day more heavily. Keep the calculation on file.

Real Estate

Real property requires a qualified appraisal that accounts for comparable sales, condition, location, zoning, and any encumbrances such as easements or liens. Attach the appraisal report to Form 709.⁵

Closely Held Business Interests

Interests in private corporations, partnerships, and LLCs draw the most IRS scrutiny of any entry on a gift tax return. You need an analysis covering the company’s underlying assets, earnings history, and industry comparables. Valuation discounts are common: a lack-of-marketability discount reflects that a private interest can’t be sold like listed stock, and a minority discount reflects the limited control of a non-controlling stake. The IRS challenges discounts aggressively, and claiming them without a detailed appraisal invites audit. Attach balance sheets, five years of earnings statements, and the appraiser’s full report.⁵

Digital Assets

Cryptocurrency, NFTs, and stablecoins are property for gift tax purposes, and gifts above the annual exclusion go on Form 709.⁷ Valuation is harder than for traditional securities because prices can swing widely in a single day. Use a reputable exchange or pricing index to establish FMV at the time of the transfer, and document the source. The IRS hasn’t specified whether to use the listed-stock high-low average or another method, so the safer approach is a price snapshot at the moment the transfer hit the blockchain, with records of the source.

Other Personal Property

Art, jewelry, and collectibles should be supported by a qualified appraisal from an independent appraiser. Form 709 doesn’t set a dollar threshold triggering a mandatory appraisal the way charitable contribution rules do. Instead, adequate disclosure requires either a qualified appraisal or a detailed description of your valuation method for non-publicly-traded property. If the gift is worth more than a few thousand dollars, an appraisal is the safer choice. For life insurance policies, FMV is generally the interpolated terminal reserve value plus any unexpired premiums.

Exclusions and Deductions in Part 3

Annual Exclusion

For 2026, the first $19,000 of present-interest gifts to each recipient is excluded without touching your lifetime exemption.¹ The exclusion is per donee: $19,000 each to five people is $95,000 excluded without any filing at all. Give $25,000 to one person and Form 709 is due to report the $6,000 above the exclusion.

Gifts to trusts don’t qualify as present interests unless the trust has a Crummey withdrawal power, which gives the beneficiary a temporary right to pull out the contribution. That temporary right converts a future interest into a present interest eligible for the $19,000 exclusion. Attach a copy of the trust instrument so the IRS can verify the provision.

Marital Deduction

Gifts to a U.S. citizen spouse qualify for an unlimited marital deduction. Report the gift on Schedule A and subtract the full value in Part 3.

If your spouse isn’t a U.S. citizen, the unlimited deduction doesn’t apply. A higher annual exclusion of $194,000 replaces the standard $19,000 for 2026.⁸ Amounts above that are taxable unless transferred through a qualified domestic trust (QDOT).

Charitable Deduction

Gifts to qualified charitable organizations are fully deductible. Report the gift on Schedule A and take the deduction in Part 3. Include the organization’s IRS determination letter with your filing if the deduction is significant.

Gift Splitting Between Spouses

Married couples can elect to treat every gift made by either spouse as if each made half. That doubles the annual exclusion to $38,000 per recipient and lets both spouses use their lifetime exemptions at once. Both spouses must be U.S. citizens or residents and married at the time of the gift.⁵

The general rule: both spouses file their own Form 709 and both sign Part III to consent. On the donor spouse’s Schedule A, the full value is reported, and then half is subtracted in Part 3 as the consenting spouse’s share.

Two narrow exceptions let only the donor spouse file:⁵

Only one spouse made gifts during the year, the total to each donee was $38,000 or less, and every gift was a present interest.
The donor spouse gave between $19,000 and $38,000 to certain donees, the consenting spouse gave $19,000 or less to entirely different donees, and all gifts were present interests.

Outside those two situations, the consenting spouse files a return even if they personally gave nothing. That catches many couples off guard.

The 529 Plan Five-Year Election

You can front-load up to five years of annual exclusions into a 529 education savings plan in a single contribution. For 2026, that’s up to $95,000 per beneficiary from one donor, or $190,000 for a married couple electing gift splitting, with no gift tax consequence.¹ To use it, file Form 709 and check the box on Schedule A indicating the five-year spread. The contribution is then treated as $19,000 per year over five consecutive years.

The election uses your entire annual exclusion for that beneficiary for all five years. Any additional gift to the same person during that stretch exceeds the exclusion and reduces your lifetime exemption. If the donor dies during the five-year period, the portion allocated to years after death is pulled back into the donor’s estate.

Adequate Disclosure and the Statute of Limitations

This is where detail on Schedule A pays for itself. When a gift is adequately disclosed, the IRS has three years from the filing date to challenge the value or assess more tax. Without adequate disclosure, there’s no time limit at all. The IRS can come back a decade later and revalue the gift.⁹

The regulations require the return, or an attached statement, to include:

A description of the property transferred and any consideration received.
The identity of each recipient and your relationship to them.
For transfers to a trust, the trust’s tax identification number and either a brief description of the terms or a copy of the trust instrument.
A detailed description of how you determined fair market value, including the financial data you relied on, any restrictions on the property, and any discounts claimed (minority, lack of marketability, blockage).

For publicly traded securities, listing the exchange, the CUSIP number, and the mean of the high and low prices on the valuation date meets the requirement.⁹ For private entity interests, disclose the fair market value of 100% of the entity before discounts, the percentage transferred, and the reported value of that interest after discounts. Skimping on any of these leaves the statute of limitations open.

Attachments and Filing Deadline

Form 709 with Schedule A is due April 15 of the year after the gift was made.¹⁰ An automatic six-month extension on your income tax return using Form 4868 also extends Form 709 to October 15.¹¹ If you don’t need an income tax extension, you can request a separate six-month extension just for Form 709.

An extension to file is not an extension to pay. Gift tax owed is due April 15 regardless. Interest and penalties on unpaid tax start running from that date.

Attach the following as they apply:

Qualified appraisals for real estate, business interests, art, and other non-cash property where you used an appraisal to determine value.
Copies of trust instruments for any gift to a trust, so the IRS can verify Crummey powers or other present-interest provisions.
Balance sheets and five years of earnings statements for closely held business interests.
Documentation supporting any marital deduction, charitable deduction, or non-citizen spouse exclusion.
Promissory notes or written agreements for gifts involving debt forgiveness.

Penalties for Late Filing or Undervaluation

Most people who file Form 709 owe nothing, because gifts above the annual exclusion first reduce the lifetime exemption ($15 million for 2026 under Public Law 119-21) before any tax is due.¹ When tax is owed and the return is late, the failure-to-file penalty is 5% of the unpaid tax per month, capped at 25%. Failure-to-pay adds 0.5% per month, also capped at 25%. When both apply, the failure-to-file portion is reduced by the failure-to-pay amount, so the combined maximum is 25% (22.5% late filing plus 2.5% late payment). Fraudulent failure to file raises the rate to 15% per month, up to 75%.

Interest also runs on unpaid gift tax. For the first quarter of 2026, the underpayment rate is 7% per year, compounded daily, and adjusts quarterly based on the federal short-term rate plus three percentage points.¹²

Valuation understatements carry their own penalties. Reporting a gift at 65% or less of its actual value, when the resulting underpayment exceeds $5,000, triggers a 20% penalty on the underpaid tax.¹³ Report a gift at 40% or less of correct value and it’s a gross valuation misstatement, doubling the penalty to 40%. That’s why a qualified appraisal for real estate or a business interest isn’t really optional. The appraiser’s fee is a fraction of what a 40% penalty on a large gift would cost.

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