Tear It Down

With just two revenue rulings, the Internal Revenue Service established the 5 percent exhaustion rule, which essentially says that if there is a more than 5 percent possibility that a charitable remainder annuity trust (CRAT) will run out of assets and leave nothing to charity, then the donor may not take a charitable deduction for it. The intention behind those rulings is commendable. The IRS should

With just two revenue rulings, the Internal Revenue Service established the “5 percent exhaustion rule,” which essentially says that if there is a more than 5 percent possibility that a charitable remainder annuity trust (CRAT) will run out of assets and leave nothing to charity, then the donor may not take a charitable deduction for it. The intention behind those rulings is commendable. The IRS should not be in the business of allowing deductions for charitable gifts that will never exist. B

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