Tax News

CCH (cch.taxgroup.com) reports:

  The IRS has adopted final regulations governing the excise tax on unrelated business taxable income (UBTI) earned by charitable remainder trusts (CRTs). The regulations are effective for tax years beginning after 2006.

  The excise tax 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 distributions made to beneficiaries. The tax is reported and payable in accordance with appropriate forms and instructions (currently Form 4720, Return of Certain Excise Taxes).

  The final regulations do not provide any transition relief to allow CRTs with UBTI to restructure their activities. Although the excise tax took effect just a few days after it was enacted, it replaced a more onerous sanction --the loss of tax-exempt status. Thus, the excise tax does not represent any change in long-standing tax policy that discouraged CRTs from having UBTI.

T.D 9403, 2008FED ¶47,038

T.D 9403, FINH ¶43,118

Other References:

 
Code Sec. 664

  CCH Reference - 2008FED ¶24,461

  CCH Reference - FINH ¶16,925

  Tax Research Consultant

  CCH Reference - TRC EXEMPT: 12,252.15