contribution of "S" Corp shares into a CRT

contribution of "S" Corp shares into a CRT

Forum topic posted in Forum on 10 November 2010| comments
audience: | last updated: 10 November 2010
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Joined: 04/23/2008
Points: 45
I have a friend who told me that he was advised not to contribute shares of his closely held S Corp shares into a charitable remainder trust. Please let me know if this is a valid concern, and if so, what are the issues involved that would or could make this a problem situation. Greg

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Joined: 11/05/2009
Points: 30
see REv ruling 92-48
Rev. Ruling 92-48. The holding is very helpful in that it confirms that a CRUT can be a holder of "S" Corp. stock bequeathed to it by a decedent pursuant to 1361(c)(2)(A)(iii). I have felt that, and you confirmed it as your feeling in your E-mail of today at 12:09 PM.
Joined: 11/18/1998
Points: 60
A CRT is not an eligible
A CRT is not an eligible shareholder of an S corp., so if a shareholder contributes his stock to a CRT, the corp. would blow its S election and become a C corp.
Joined: 12/22/2009
Points: 15
S Corp shares and CRTs
To my knowledge CRTs can not be S share holders. If you transfer shares to a CRT you will blow your S election
Joined: 12/31/1998
Points: 15
CRT and S Corp
Greg, A CRT is not an eligible S corporation shareholder. Therefore, the corporation would lose its S election.
Joined: 04/23/2008
Points: 45
converting shares of S to C corp for purpose of CRT contribution
Susan, Thanks for your reply. Would it (or could it) make sense for a donor to change one's business form from S to C corp, if it allowed for a contribution of closely held shares to a CRT. I know the C corp is subject to double taxation, but are there other drawbacks to electing a C Corp form? Also, could a donor change from S corp to LLC, and then donate shares to a CRT? (in other words, can a CRT be an eligible LLC shareholder?) Thanks again, Greg Hutto
Joined: 10/27/2005
Points: 15
The S CORP stock(depending on what S corp does) would more than likley produce UBTI which in a CRT would be subject to 100% tax on the UBTI. This is the primary concern.
Joined: 05/12/2004
Points: 15
Donation of S corp shares to CRT
Good question. I look forward to getting some opinions as well.
Joined: 10/25/1999
Points: 45
Sub S Corps & CRTs
While a CRT may not be a shareholder of a Sub S corp., it may be appropriate for the Sub S corp. to establish a CRUT, for example, and fund it with Sub S corp. property. To make it effective, the shareholders of the Sub S corp. should have basis in excess of the value of the charitable gift to the CRUT.
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