- 9 -
If the trust makes a donation to charity from that portion
of the trust, the person who is treated as the owner of that
portion may cumulate those charitable donations with the person’s
own charitable donations and deduct them under section 170.3
Sec. 1.671-2(c), Income Tax Regs.
We look to State law to examine the nature of rights and
interests in a trust. Estate of Nicholson v. Commissioner, 94
T.C. 666, 672-673 (1990). Arkansas courts consider the four
corners of the governing instrument to ascertain the intention of
the settlor regarding the nature of interests in a trust. Estate
of Whiting v. Commissioner, T.C. Memo. 2004-68 (citing Aycock
Pontiac, Inc. v. Aycock, 983 S.W.2d 915, 919-920 (Ark. 1998));
Gregory v. Moose, 590 S.W.2d 665, 667-668 (Ark. Ct. App. 1979).
We look to the provisions of the trust agreement to
determine whether petitioner is treated as the owner of any
portion of the trust under section 678. We find that petitioner
is treated as the owner of the income portion of the trust under
section 678. Petitioner has significant powers with respect to
the trust income on account of his dual role as trustee and sole
3Scholars have suggested that this provision might be
intended to permit a deduction even when the trust’s charitable
contribution was not from income. E.g., Blattmachr & Michaelson,
Income Taxation of Estates and Trusts, sec. 3:3.3 n.48 (14th ed.
1999). Trusts themselves ordinarily may deduct contributions
under sec. 642(c) only if they are made from income. We need not
consider this point further because we conclude that petitioner
is not treated as the owner of any portion of the trust other
than the income portion.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: May 25, 2011