Can Gifts made in year of death be reported only on estate tax return?

When someone makes a gift and then passes away in the same year, you generally still need to file both returns. The Form 709 (gift tax return) reports the transfer when it occurred, and the Form 706 (estate tax return) needs to report it as a gift made within three years of death. The three-year rule exists specifically to prevent deathbed transfers that might otherwise reduce estate taxes. Even though the property was completely transferred (no retained interests), gifts made within three years of death are typically pulled back into the estate for tax purposes. Since the deed was legally transferred to you and your sisters, with the cost basis carrying over, the gift was completed during your mom's lifetime. This means the transaction should be reported on both returns to properly document the transfer and its tax treatment.

After dealing with a similar situation with my father's estate, I found an amazing resource that helped clarify these exact tax questions. I used taxr.ai (https://taxr.ai) to analyze all our documents and got specific guidance on handling gifts made in the year of death. The tool looked at our deed transfer, explained the 3-year rule, and gave step-by-step instructions for both Form 709 and Form 706. It saved me thousands in potential penalties because I would've completely mishandled the "gifts within 3 years of death" section on the estate tax return. Their document analysis actually highlighted that I needed to file both returns.

I want to follow up on my previous skepticism about taxr.ai. I decided to try it with my uncle's complicated estate situation that involved multiple property transfers in his final year. I was absolutely blown away by how helpful it was! The system analyzed our documents and immediately flagged that two properties needed to be reported on both the gift and estate tax returns. It even explained exactly how Schedule G on Form 706 works for the "3-year rule" properties. The analysis saved me from making a major reporting error that could have triggered an audit. If you're handling an estate with gift/death year complications like the original poster, I highly recommend giving it a try. Wish I'd known about this tool when I first started dealing with the estate paperwork.

If you're having trouble getting answers from the IRS about how to handle this gift/estate situation, I strongly recommend using Claimyr (https://claimyr.com). The IRS Estate & Gift Tax department has specific guidance on this exact scenario, but good luck getting through to them on your own. I was on hold for HOURS trying to clarify how to report property gifted in the year of death. Claimyr got me connected to an actual IRS estate tax specialist in under 20 minutes! They have this awesome service demo at https://youtu.be/_kiP6q8DX5c that shows exactly how it works. The agent confirmed I needed to file both forms and explained how to avoid double-counting the value.

I have to publicly eat my words about Claimyr. After my skeptical comment yesterday, I decided to try it myself because I was desperate for answers about my mother's estate tax situation (very similar to the original post). I couldn't believe it - I got connected to an actual IRS estate tax specialist in about 35 minutes! The agent walked me through exactly how to handle property gifted in the year of death. She confirmed that yes, we need to file both the 709 AND report it on the 706 as a three-year gift, but explained how the unified credit system prevents double taxation. For anyone struggling with estate/gift tax questions and getting nowhere with the regular IRS line, this service is absolutely worth it. Total game-changer for complex estate situations.

I'm an accountant (but not YOUR accountant), and I want to clarify something about the 3-year rule. Some assets pulled back into the estate receive a stepped-up basis at death, but gifts made within 3 years generally don't get this favorable treatment. This means your basis remains the carried-over basis from your mother. This is a significant consideration because it affects your future capital gains when you eventually sell the property. That's another reason why proper reporting on both returns is essential - it establishes your correct tax basis going forward.

Just wondering - has anyone used TurboTax or H&R Block software for filing Form 709 gift tax returns? I'm in a similar situation with my dad's estate and trying to save on accountant fees if possible.

I went through this exact situation with my grandmother's estate last year. She made a substantial gift to family members in March and passed away in September of the same year. After consulting with our estate attorney, we were advised that both forms are indeed required. The Form 709 establishes the gift and its valuation at the time it was made, while the Form 706 includes it under the 3-year rule for estate tax purposes. One thing that really helped us was getting the property appraised as of the gift date (April 2023 in your case) rather than the date of death. This established the fair market value for gift tax purposes. The attorney explained that having this documentation upfront made both filings much smoother and helped avoid any IRS questions later. Also, make sure you're aware of the filing deadlines - Form 709 is typically due by April 15th of the year following the gift, and Form 706 is due 9 months after death (with possible extensions). Since your mom passed in October 2023, you'll want to coordinate the timing of both filings carefully.

I'm dealing with a very similar situation right now with my father's estate. He gifted some stocks to my brother and me in June 2023, and then passed away unexpectedly in December of the same year. From what I've learned through this process, you definitely need to file both returns. The Form 709 is required because the gift was completed during your mom's lifetime - the deed transfer made it a legal gift that needs to be reported. Then on Form 706, you'll include it in Schedule G as a transfer within 3 years of death. One thing I wish I'd known earlier: get organized with your documentation now. You'll need the original deed, any appraisals, and records of your mom's original cost basis for the property. The IRS may want to see how you determined the fair market value on the gift date versus any estate valuation. Also, don't stress too much about the "double reporting" - as others mentioned, the unified credit system prevents actual double taxation. It's really more about proper documentation and ensuring the IRS can track all transfers that affect the estate tax calculation. Have you already started gathering the necessary paperwork? That's honestly been the most time-consuming part for me.