This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies.
Tax
This Portfolio is available with a subscription to Tax, a comprehensive research solution including over 500 Tax Management Portfolios, practice tools, primary sources and timely news.
Detailed Analysis
Part I: Charitable Remainder Trusts
1:I. Introduction
1:II. Legislative History
1:III. Basic Considerations
A. Description
B. Tax Consequences
1:IV. General Rules Applicable to Annuity Trusts and Unitrusts
A. Governing Instrument
B. Requirement That Trust Must Be Either an Annuity Trust or Unitrust
C. Permissible Income Recipients
D. Remainder Beneficiaries
E. Permissible Contributions
F. Additional Contributions
G. Restrictions on Investments
H. Restrictions on Powers of Invasion or Reversion
1. Return of Assets to Grantor
2. State Law - Powers of Invasion
I. Permissible Payments
J. Selection of Trustee
K. Trust Must Function Exclusively as Charitable Remainder Trust from Date of Creation
L. Testamentary Trusts
M. Reformation of a Charitable Remainder Trust
N. Division of a Charitable Remainder Trust
O. Termination of a Charitable Remainder Trust
P. Effective Dates
1:V. Payment of Annuity and Unitrust Amounts
A. In General
1. Annuity Trust
2. Unitrust
3. Time of Payment
B. Rules Common to Annuity Trusts and Unitrusts
1. Definition of Sum Certain and Fixed Percentage
2. Minimum Amounts
3. Maximum Amounts
4. Computation of Annuity or Unitrust Amount for Short Taxable Years and Last Taxable Year of Payment Period
5. Period of Payment
a. Payments “for Lifeâ€
b. Payments “for a Term of Yearsâ€
c. Combining “for Life†and “for a Term of Yearsâ€; “Tackingâ€
6. Qualified Contingencies
7. Termination of Income Interest
8. Incorrect Valuation of Trust Assets
9. Deferral of Annuity or Unitrust Amounts in the Case of a Testamentary Trust
C. Miscellaneous Special Rules
1. Inter Vivos Annuity Trust That Does Not Provide for Payment of Minimum Annuity Amount
2. Additional Contributions to Unitrust
3. Depreciation Reserve
D. Permissible Recipients
1. In General
2. Permissible Powers Over Income
a. Power to Allocate Annuity or Unitrust Amount
b. Grantor's Testamentary Power of Revocation
3. Payment of Income to § 170(c) Organization
1:VI. Remainder Beneficiary Rules
A. Permissible Remainder Beneficiaries
B. Concurrent or Successive Remainder Beneficiaries
C. Alternative Remainder Beneficiaries
D. Minimum Required Remainder Interest
1:VII. Taxation of the Recipient of the Annuity or Unitrust Amount
A. In General
B. Character of Distributions
1. Tiers of Income
2. Allocation of Deductions
3. Computation of Distributions
C. Distribution to § 170(c) Organization
D. Year of Inclusion
1. General Rule
2. Year of Recipient's Death
3. Payments Resulting from Incorrect Valuation
E. Distribution in Kind
1:VIII. Taxation of Grantor
1:IX. Taxation and Administration of Trust
A. Taxation of Trust
B. Calendar Year Requirement
C. Recordkeeping Requirements
D. Filing Requirements
E. Testamentary Trust - Period of Estate Administration
1. Distributions Deduction
2. Charitable Set-Aside Deduction
3. Effect of Estate Distribution on Tier System and Beneficiaries
1:X. Private Foundation Rules
A. In General
B. Overview of Applicable Private Foundation Provisions
1. Section 507 - Termination Tax
2. Section 508 - Governing Instrument Language
3. Section 4941 - Self-Dealing
4. Section 4943 - Excess Business Holdings
5. Section 4944 - Investments Jeopardizing Charitable Purpose
6. Section 4945 - Taxable Expenditures
C. Special Rules
1. Noncharitable Amounts
2. Segregated Amounts
3. Pre-May 27, 1969, Transfers
4. Special Exclusion from Applicability of § § 4943 and 4944
D. Special Problems Relating to Creation and Termination of Split-Interest Trusts
1. Creation
a. In General
b. Revocable Trust Becoming Split-Interest Trust
c. Certain Trusts That Wind Up
d. Estates
2. Termination
a. Charitable Remainder Trusts That Wind Up
b. Split-Interest Trusts That Become Charitable Trusts
1:XI. Income, Gift, and Estate Tax Charitable Deductions
A. In General
B. Computation of Value of Remainder Interest
1. Annuity Trust
a. Valuation Dates Before May 1, 1989
b. Valuation Dates After April 30, 1989
c. Incorrect Valuations
2. Unitrust
a. Adjusted Payout Rate
b. Valuation Factor
c. Computing the Value of the Remainder Interest
d. Special Cases
C. Appraisal of Unmarketable Assets
1:XII. Income Tax Charitable Deduction
Introductory Material
A. Deductibility Ceilings and Reduction Rules
1. Type of Charitable Donee
2. Gifts of Appreciated Long-Term Capital Gain Property
a. Gifts to Public Charities
b. Gifts to Private Foundations
3. Election to Apply 50% Deduction Ceiling
4. Gift of Ordinary Income Property
5. Gift “to†or “for the Use ofâ€
6. Interaction of 50%, 30%, and 20% Limitations and Five-Year Carryforward
7. Gift of Certain Intellectual Property
B. The Alternative Minimum Tax
C. Power to Change Character of Donee
D. The 5% Exhaustion Rule
E. Gift of Tangible Personal Property
F. Recognition of Gain Inherent in Contributed Property
1:XIII. Gift Tax
A. In General
B. Annuity Trust or Unitrust Interest
1. Annual Exclusion
2. Gift Tax Marital Deduction
3. Incomplete Gift
C. Remainder Interests
1. In General
2. Form of Trust
3. Reformation of Instrument
4. The 5% Exhaustion Rule
5. The 10% Minimum Charitable Benefit Rule
6. Identity of Remainder Beneficiaries
7. Section 508
D. Amount of Deduction
E. Disposition of Annuity Trust or Unitrust Interest
F. Application of § 2702
1:XIV. Estate Tax
A. In General
B. Effective Date and Transitional Rules
1. Effective Date
2. Reformation Proceedings
3. Effectiveness of Reformation Proceedings
C. Qualification for Charitable Deduction
1. Form of Trust
2. Remainder Beneficiaries
3. Acceleration of Charitable Remainder Interest
4. The 5% Exhaustion Rule
5. The 10% Minimum Charitable Benefit Rule
6. Inclusion of Property Subject to Power of Appointment
D. Amount of Deduction
1. Valuation of Remainder Interest
2. Death of Annuity or Unitrust Recipient Before Due Date of Estate Tax Return
3. Taxes Payable Out of Charitable Bequests
E. Effect of Other Provisions
1. Section 2036 - Retained Powers
2. Section 2035 - Transfers Within Three Years of Death
3. Section 508 - Governing Instrument Requirements
4. Basis
5. Section 2038 - Right to Revoke
6. Section 2056 - Marital Deduction
7. Disclaimer
8. Section 2012 - Credit
1:XV. Generation-Skipping Transfer Tax
1:XVI. Planning Considerations
Introductory Material
A. Choosing Between Annuity Trust and Unitrust
1. In General
2. Recordkeeping
3. Additional Contributions
4. Additional Payout Options
B. Long-Term Capital Gain Appreciated Assets
1. Contribution of Appreciated Income-Producing Assets
a. Operation of Tier Rules
b. Recognition of Gain on Transfer
c. Investment in Tax-Exempt Bonds
d. Summary
2. Contribution of Appreciated Nonincome- Producing Assets
3. Depreciable Property
4. Zero Coupon Bonds
C. Specific Strategies
1. Investment Diversification
2. Enhancement of Annual Return
D. Inter Vivos vs. Testamentary Gifts
Part II: Pooled Income Funds
2:XVII. Introduction and Summary of Requirements
2:XVIII. Specific Requirements for Qualification
Introductory Material
A. Contribution of Remainder Interests
1. Qualified Organizations
2. Only One Remainder Beneficiary
3. Alternative Remainder Beneficiary
B. Retention of Income Interest
1. Duration of Income Interest
2. Concurrent or Successive Life Beneficiaries
3. Revocation of Income Interests
4. Charitable Remainder Beneficiary as Income Beneficiary
C. Commingling of Property
D. Investment Prohibitions
1. Tax-Exempt Securities
2. Depreciable and Depletable Assets
E. Maintenance of the Fund
F. Who May Serve as Trustee
G. Income Realized by the Income Beneficiary
1. Amount of Income - Unit Plan
2. Calendar Year Requirement
3. Partial Years
4. Transfers Between Determination Dates
5. Testamentary Transfers
6. Partial Allocation of Income to Charity
H. Termination of Life Income Interest
I. Death Taxes
2:XIX. Type of Property Contributed to or Held by a Pooled Income Fund
Introductory Material
A. Property Subject to an Indebtedness
B. Tangible Personal Property
C. Depreciable Property
2:XX. Valuation of Income and Remainder Interest
Introductory Material
A. Computation of the Present Value of the Life Income Interest
B. Computation of Present Value of Remainder Interest
2:XXI. Amending the Governing Instrument
A. Fund Created After May 6, 1971
B. Funds Created Before May 7, 1971
2:XXII. Tax Considerations
Introductory Material
A. Taxation of the Fund
B. Income Tax Charitable Deduction
C. Estate Tax Charitable Deduction
D. Gift Tax Charitable Deduction
E. Generation-Skipping Transfer Tax
F. Taxation of the Beneficiary
G. Tax on Capital Gains
H. Private Foundation Rules
2:XXIII. Securities Laws
A. Philanthropy Protection Act of 1995
B. Disclosure Statement
C. State Blue Sky Considerations
2:XXIV. Planning Considerations
Introductory Material
A. Advantages
B. Disadvantages
C. Practical Considerations
2:XXV. Drafting Considerations
2:XXVI. Filing Requirements
Working Papers
Table of Worksheets
Other Sources
Worksheet 1 Conference Report to the Taxpayer Relief Act of 1997, H.R. Rep. No. 220, 105th Cong., 1st Session, 605–608 (for the Amendment of § 664)
Worksheet 2 Form 5227, Split-Interest Trust Information Return
Worksheet 3 Sample Contribution Statement (As required by Regs. § 1.664-4(c) for unitrusts and Regs. § 1.664-2(d) for annuity trusts)
Worksheet 4 Sample Prior-Month Election for Valuing Charitable Remainder Trusts (§ 7520(a))
Worksheet 5 Sample Memorandum to Individual Trustee of Newly Created Charitable Remainder Unitrust
Worksheet 6 Pooled Income Fund Disclosure Statement
Worksheet 7 Approximate Charitable Deduction Factors for Charitable Remainder Unitrusts at Various Payout Rates (5% to 10%) for One and Two Lives
Worksheet 8 Table S Based on Life Table 2000CM Single Life Remainder Factors Applicable on or After May 1, 2009 (from Regs. § 1.642(c)-6T(e))
Worksheet 9 Table U(1) Based on Life Table 2000CM Unitrust Single Life Remainder Factors Applicable or or After May 1, 2009 (from Regs. § 1.664-4T(e))
Worksheet 10 Life Table 2000CM Applicable on or After May 1, 2009 (from Regs. § 20.2031-7T(d))
Worksheet 11 “Charitable Remainder Trusts: The Income Deferral Abuse And Other Issuesâ€
Worksheet 12 Securities and Exchange Commission Release on Pooled Income Funds dated January 10, 1980
Bibliography
OFFICIAL
Statutes:
Regulations:
Committee Reports/Public Laws:
Treasury Rulings and Procedures:
Cases:
UNOFFICIAL
Periodicals:
1976
1977
1978
1979
1980
1982
1983
1984
1986
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
All think and code treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from think and code’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to [email protected].
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This think and code report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to [email protected].
Put me on standing order
Notify me when new releases are available (no standing order will be created)