In a legal memorandum, the Service has determined a testamentary trust that was named as the beneficiary of a decedent's IRA cannot claim an income tax deduction under section 642(c) for payments it made to charities. The trust was to pay a percentage of the trust property to the decedent's children and to several charities; however, it failed to meet the regulatory definition of a designated beneficiary trust under section 401(a)(9). Although the trust was subsequently modified by court order to comply, the Service determined the purpose of the modification was to permit the trust to deduct payments made to charities. Citing a revenue ruling and court decision, the Service concluded that since the modification was not made as the result of a conflict, the payments to the charities are not considered to be made under the governing instrument and, therefore, are not deductible.  MORE »

In a legal memorandum, the IRS has advised that a partial assignment of a decedent's IRA by a revocable trust that is named its beneficiary to charities in satisfaction of pecuniary legacies results in gross income to the trust under section 691(a)(2). Further, because the trust does not require the payment of such amounts from gross income, the trust is not entitled to a deduction under section 642(c)(1) for such assignments.  MORE »

In an internal legal memorandum, the IRS has concluded that a trust is not a charitable remainder unitrust because the trustor transferred debt-encumbered property to the trust in violation of the grantor trust rules and otherwise used the trust as a personal checking account for the benefit of himself and family members in violation of the rule against prohibited payments.  MORE »

In a legal memorandum, the IRS has set out standards dictating how U.S. charities must conduct their international grantmaking activities. The rules are similar to those governing domestic grantmaking.  MORE »