Ltr. Rul. 9231008

Ltr. Rul. 9231008

Story posted in Letter Rulings on 5 October 1999
audience: PGDC Network | last updated: 15 June 2011
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COMINGLING OF CHARITABLE REMAINDER TRUSTS' ASSETS PERMITTED

Reference:

Section 664 -- Charitable Remainder Trusts
UIL Number(s) 0664.00-00

Full Text:

Date: April 29, 1992 Refer Reply to: CC:PSI:3 TR-31-873-91

Dear * * *

This letter is in response to your letter dated April 12, 1991, and subsequent correspondence submitted concerning whether pooling assets of several charitable remainder trusts will adversely affect each trust's qualification as a charitable remainder trust under section 664 of the Internal Revenue Code.

According to the information submitted, X and Y, both organizations described in section 501(c)(3) of the Code, are under the common control of A. X and Y have each adopted substantially similar by-laws and have elected the same persons as directors and officers. Y has granted X authority to maintain custody of its assets and generally to conduct and manage its business affairs.

X is the trustee and the remainderman of several trusts, while Y is the trustee and the remainderman of several other trusts. X and Y represent that each of the trusts qualifies as either a charitable remainder unitrust or charitable remainder annuity trust under section 664 of the Code.

X and Y propose to invest jointly the assets of the charitable remainder trusts for which either is the trustee. Separate accounts and records will be maintained to identify the portion of the jointly invested assets owned by each trust and the income earned by and attributable to such portion.

In Rev. Rul. 73-571, 1973-2 C.B. 213, a bank, as trustee of a charitable remainder unitrust, invested the assets of such trust in common trust funds maintained by the bank. Rev. Rul. 73-571 holds that the investment by the bank of the assets of the charitable remainder unitrust in common trust funds maintained by the bank does not jeopardize the exempt status of the charitable remainder trust or the donor's charitable contribution deduction.

In Rev. Rul. 83-19, 1983-1 C.B. 115, a university commingled the assets of several charitable remainder trusts with assets of the university's general endowment fund for purposes of investment. Rev. Rul 83-19 holds that the joint investment of the assets will not jeopardize the exempt status of the charitable remainder trusts or the donors' charitable contribution deductions because such investment does not affect the status of the charitable remainder trusts.

Based on the information submitted and the representations made, we conclude that X and Y may jointly invest the assets of the charitable remainder trusts, for which X or Y is the trustee, without adversely affecting either the qualification of the trusts as charitable remainder trusts under section 664 of the Code or the donors' charitable contribution deductions, if the trusts are otherwise qualified under section 664.

No opinion is expressed as to the federal tax consequences of the proposed transaction under any other provision of the Code. Specifically, no opinion is expressed whether the joint investment of the assets of the trusts creates a separate entity for federal income tax purposes.

This ruling is directed only to the taxpayer who requested it. Section 6110(j)(3) of the Code provides that it may not be used or cited as precedent.

Sincerely yours,

Frances D. Schafer
Senior Technician Reviewer Branch 3
Office of the Assistant Chief Counsel
(Passthroughs and Special Industries)

Enclosure
Copy for section 6110 purposes

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