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A. Yes, if no charitable deduction such as a gift tax charitable deduction was allowed with respect to the trust payout. If no such deduction was allowed, the excess business holdings provisions of Internal Revenue Code Section 4943 don’t apply to the trust.
A. Yes, but there’s a tax problem for the donor. Under Blake v. Comm’r, the U.S. Court of Appeals for the Second Circuit ruled that the Internal Revenue Service will consider the redemption to be from the donor, which will stick the donor with dividend income. The Second Circuit said it would take this position with respect to closely held stock given to a charity if (1) the stock is redeemed from the charity and (2) the charity provides consideration to the donor for the stock.
A. Yes. The only possible deduction allowed for a distribution of trust or estate income to charity is the charitable deduction allowed under IRC Section 642. And, that deduction is allowed only for income paid to charity pursuant to the governing instrument. A trustee’s voluntary payment, even if authorized, isn’t made pursuant to the governing instrument because that instrument must require the payment.
A. The IRS has indicated it’s deemed made on the date the charge is posted to the donor’s account, as shown on the credit card statement.
A. Yes, according to Van Der Lee v. Comm’r.
A. No. In Graev v. Comm’r, the Tax Court said that the conditional nature of the gift, by itself, precludes a charitable deduction. So much for comfort letters from the charity, assuring the donor of the return of the asset if the IRS denies the charitable deduction.
A. An estate tax charitable deduction is allowed if the agreement is made in good faith, is arm’s length and settles a real controversy. For example, an estate tax charitable deduction was allowed for assets passing outright from the decedent’s estate to charity when the assets passed via an agreement settling a controversy involving a bequest to the charity of a remainder interest in a non-qualified CRT (the charity received the assets in lieu of the non-deductible remainder interest). Revenue Ruling 89-31.
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