Tax Analysts provides news, analysis, and commentary on tax-related topics, including the latest developments affecting treatment of charitable remainder trust taxation.
In general, under section 664, a charitable remainder trust (CRT) is arranged so that a donor or another person receives an income or similar interest from the trust for some time period. After that, the trust property, or remainder interest, is received by a qualified charitable organization. Generally the donor can take a charitable deduction equal to the present value of the charitable remainder interest when the transfer occurs, even though the remainder interest is a partial interest in property. Or the donor may make a charitable donation using a charitable lead trust, which also allows for a charitable deduction. Generally with a charitable lead trust, the charity receives payments (the lead interest) from the trust for a period of time, and the remainder interest goes back to the donor or to other beneficiaries.
Charitable remainder trusts may take the form of charitable remainder annuity trusts (CRATs) or charitable remainder unitrusts (CRUTs). They are generally held to the same rules that apply to private foundations with respect to excise taxes imposed on nonexempt trusts.
In 2014, the IRS published proposed regulations (REG-154890-03) that provide rules for determining a taxable beneficiary's basis in a term interest in a CRT upon a sale or other disposition of all interests in the trust to the extent that basis consists of a share of adjusted uniform basis.
Tax Analysts consistently and promptly publishes all relevant developments regarding the charitable remainder trust taxation.