- 8 -
unitrust (CRUT) or charitable remainder annuity trust (CRAT)
(described in section 664), or a pooled income fund (PIF)
(described in section 642(c)(5)). Sec. 2055(e)(2)(A);6 Estate of
Edgar v. Commissioner, 74 T.C. 983, 986 (1980), affd. without
published opinion 676 F.2d 685 (3d Cir. 1982).
Congress imposed the section 2055(e)(2)(A) requirement that
a CRAT, CRUT, or PIF be used where there is a bequest of a
charitable remainder interest to remove the "incentive to favor
the income beneficiary over the remainder beneficiary by means of
manipulating the trust's investments." H. Rept. 91-413 (Part 1),
at 59 (1969), 1969-3 C.B. 200, 238; S. Rept. 91-552, at 88
(1969), 1969-3 C.B. 423, 480. It had come to Congress's
attention that taxpayers were claiming charitable deductions for
bequests of remainder interests in trusts based upon valuation
assumptions for the remainder interests that were inconsistent
with the manner in which the trusts assets were in fact managed.
Where trust assets were invested so as to maximize the income
interest, the value eventually passing to charity through the
remainder interest might bear little relationship to the
deduction previously taken. Therefore, Congress mandated a trust
6 Sec. 2055(e)(2) was enacted as part of the Tax Reform Act
of 1969 (the 1969 Act), Pub. L. 91-172, sec. 201(d)(1), 83 Stat.
560, and its requirements for split interests are often referred
to as the "1969 Act rules."
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011