Jury Still Out on Income Deferral CRTs

Jury Still Out on Income Deferral CRTs

News story posted in Revenue Procedures on 24 March 1998| comments
audience: National Publication | last updated: 18 May 2011
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Summary

The IRS announced that it will not issue advance rulings concerning whether creating or using income exception charitable remainder unitrusts to control the timing of the trust's receipt of income for the benefit of its income recipients results in the trust's failure to function exclusively as a CRT.

Each year the IRS issues a Revenue Procedure that updates the list of those areas of the Code on which it will not issue advance guidance. In Rev. Proc. 98-3 we noted that the subject matter Rev. Proc. 97-23 was not included. You may recall that in Rev. Proc. 97-23, the IRS announced that it will not issue advance rulings concerning whether creating or using income exception charitable remainder unitrusts to control the timing of the trust's receipt of income for the benefit of its income recipients results in the trust's failure to function exclusively as a CRT. We wondered whether the failure to include this issue in the new list meant that the IRS would rule on "income deferral" CRTs or if the issue had been inadvertently omitted. In contacting IRS personnel, they clarified that not listing Rev. Proc. 97-23 was indeed an oversight and that they are still considering this issue. Even though the Service recently issued a favorable Technical Advice Memorandum regarding income deferral, a TAM cannot be cited as tax precedent; donors and trustees might be well advised to proceed with caution until definitive authority, perhaps in the form of a Revenue Ruling or regulations are issued or promulgated.

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