A Gift was made to a trust where there are 2 beneficiaries that are children of the donor and 3 beneficiaries that are grandchildren. One child has a 50% share of the trust, the other child a 40% share. The grandchildren have a total of 10% share. When reporting these gifts on form 709, does 90% of the gift amount get reported for only gift tax purposes and 10% of the gift amount get reported as a direct skip which is subject to both gift tax and generation skipping tax? ======>I guess so.Pty that you give directly to your grandchild(ren) is subject o an immediate GST tax. In addition to any gift tax or estate tax if this tax is ALSO subject to.
Or does 1/5 of the gift amount get allocated to each beneficiary (since there are 5 beneficiaries) subject to gift tax or gift tax and generation skipping tax depending on the generation of the beneficiary?=======>>>A mentioned above. GST tax was enacted so that all family pty ‘d be subject to a tax(whether gift tax, estate tax/ gst tax) at least once in EACH GENERATION. Before the gst tax, it was possible to avoid a tax on each generation either I guesss by transferring pty in trust to a child for life after which the pty ‘d pass to next generation w/o additional gift/estate tax OR transferring directly to a grandchild from a grandparent, outright or in trust, subject to only to a single estate/gift tax , avoiding taxation on the child’s or mid genration’.so the gst tax may apply to gifts/ direct skips occurring at your death to skip persons.SO it imposes a tax on both outright gifts and transfers in trust to or for the benefit of persons.ALSO gst t ax is intended to duplicate the consequences if you gave the pty to a child (rather than a grandchild) and your child in return gave it to your grandchild. In this sort of two transfer situation, two taxes ‘d be imposed; consequently, the gst tax adds a second tax to gifts you make directly to your grandchildren. note; immediate gst tax rule does not apply if you transfer pty to a grandchild after the death of your child, the parent of the grandchild. gst tax is imposed only if the transfer avoids incurring a gift or estate tax at each generation level.