509. When does the gift of an annuity between spouses qualify for the gift tax marital deduction?Stevenrcline202015-04-28T20:22:00Z2015-04-28T20:22:00Z12851629Summit Business Media133191114Site Map/Annuities/Gift Taxation/Nonqualified/In GeneralSite Map/Transfer Taxation/Federal Gift Taxation/Annuities/Nonqualified/In General2005-01-25T00:00:00ZTaxFactsDefaultArticle118450703-00-tf1.xml703.00;#1563;#2368;#0x010100C568DB52D9D0A14D9B2FDCC96666E9F2007948130EC3DB064584E219954237AF3900242457EFB8B24247815D688C526CD44D009C4E67E972694125ABDA91AC61F5E51FTax Facts 1Under what circumstances does the gift of an annuity between spouses qualify for the gift tax marital deduction?61800.0000000000TaxFactsDefaultArticleSBMEDIA\moss-admin2010-01-14T23:23:58Z509. When does the gift of an annuity between spouses qualify for the gift tax marital deduction?A direct gift to a spouse of an annuity contract in which no one else has an interest qualifies for the gift tax marital deduction. The interest of a donee spouse in a joint and survivor annuity in which only the donor and donee spouses have a right to receive payments during such spouses’ joint lifetimes is treated as a “qualifying income interest for life” for which the marital deduction is available unless the donor spouse irrevocably elects otherwise within the time allowed for filing a gift tax return..IRC Sec. 2523(f)(6). To the extent provided in the IRS regulations, an annuity interest is treated in a manner similar to an income interest in property (regardless of whether the property from which the annuity is payable can be separately identified)..IRC Sec. 2523(f)(3). If, however, an election is made to not have the donee spouse’s interest treated as a “qualifying income interest for life,” the marital deduction is not allowed if the donor gives an interest in the contract to a third party, or keeps an interest for himself, and there is a possibility that the donor or the third party could receive some benefits from this interest after the donee’s interest ends. Thus, if the donee spouse’s interest is not treated as a “qualifying income interest for life,” the gift of a refund annuity will not qualify if the refund is payable to the donor or a third party in the event of the donee’s death during the refund period..Treas. Reg. §25.2523(b)-1(b)(6)(Example 3); §25.2523(b)-1(c)(2). Although the gift tax marital deduction is not allowed for a non-US citizen spouse, an annual exclusion may be allowed instead of the marital deduction..IRC Sec. 2523(i). For calendar year 2015, the exclusion amount is increased to $147,000 (up from $145,000 in 2014). However, this rule does not apply for gifts of future interests of property, which includes transfers resulting from joint and survivor annuities..Rev. Proc. 2013-35, 2013-47 IRB 537, Rev. Proc. 2014-61, 2014-47 IRB 860.