On June 7, 2007, Treasury issued proposed regulations that address the portion of a trust that is includable in a deceased grantor's gross estate under sections 2036 and 2039 in the event the grantor has retained the use of trust property or the right to an annuity or other income payment from the trust for life. Following the comment period and public hearing, Treasury has issued final regulations that are effective July 14, 2008. In addition to amounts includable with respect to GRATs, GRUTs, GRITs and CRTs measured by life, the final regulations address pooled income funds, remainder interests in personal residences and farms, and CRTs measured by a term of years.
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Treasury has issued proposed regulations that will amend the regulations under section 642(c) to confirm that a provision in a governing instrument of a charitable lead trust or in local law that specifically provides as to the source out of which amounts are to be paid, permanently set aside or used for a purpose specified in section 642(c) must have economic effect independent of income tax consequences in order to be respected for Federal tax purposes. Accordingly, payments to a charity will consist of the same proportion of each class of the items of income of the trust as the total of each class bears to the total of all classes. See § 1.642(c)-3(b)(2).  MORE »

Although the IRS last week canceled a public hearing in Washington, D.C. on proposed regulations for the new unrelated business income tax rules applicable to charitable remainder trusts, two firms from the State of Washington have asked for transitional relief in the form being able to elect the lesser of the taxes under the old and new law in order to allow CRTs time to restructure their investments.

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Treasury has issued proposed regulations that provide guidance under IRC § 664 on the tax effect of unrelated business taxable income on charitable remainder trusts for tax years beginning in 2007. The proposed regulations clarify that, consistent with § 1.664-1(d)(2), the excise tax imposed upon a charitable remainder trust with UBTI is treated as paid from corpus and the trust income that is UBTI is income of the trust for purposes of determining the character of the distribution made to the beneficiary. Notice of a public hearing on these proposed regulations is also provided.

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On November 13, 2007, Treasury issued final regulations that require certain large corporations, S corporations, large exempt organizations, and certain private foundations and section 4947(a)(1) trusts to file their tax returns on magnetic media. Treasury has now issued corrections to those regulations.  MORE »

In response to sections 1241 and 1243 of the Pension Protection Act of 2006, the Service has issued notice of proposed rulemaking regarding the payout requirements for Type III supporting organizations that are not functionally integrated, the criteria for determining whether a Type III supporting organization is functionally integrated, the modified requirements for Type III supporting organizations that are organized as trusts, and the requirements regarding the type of information a Type III supporting organization must provide to its supported organization(s) to demonstrate that it is responsive to its supported organization(s). Public comments are requested by October 31, 2007.  MORE »

The Treasury has issued proposed regulations providing guidance on the portion of a trust properly includible in a grantor's gross estate under IRC sections 2036 and 2039 if the grantor has retained the use of property in a trust or the right to an annuity, unitrust, or other income payment from such trust for life, for any period not ascertainable without reference to the grantor's death, or for a period that does not in fact end before the grantor's death. The guidance concludes that only section 2036 applies to charitable remainder trusts.  MORE »

The IRS has issued proposed regulations that address the portion of a trust that is includable in a deceased grantor's gross estate under sections 2036 and 2039 in the event the grantor has retained the use of trust property or the right to an annuity or other income payment from the trust for life.  MORE »

On October 17, 2006, the Treasury and IRS issued proposed regulations that would change the tax treatment of exchanges of property for private annuity contracts. Although the IRS stated that charitable gift annuities would not be affected by the new regulations, Conrad Teitell has drafted a statement in support of this position on behalf of the American Council on Gift Annuities and will testify before the IRS at a public hearing on February 16, 2007.  MORE »

The IRS has issued proposed regulations that provide guidance on the taxation of the exchange of property for an annuity contract.  MORE »