Giving in the News: Legal Update

As we head into the last weekend before the elections, it seems as if much of the world is “in recess,” as is our Congress. IRS issued two interesting reminders, one limiting a trust’s deduction to its basis in assets (rather than fair market value), and a second regarding late automatic elections of GST exemptions for GRATs, a problem which can befall in a similar manner a CLAT.

The IRS also announced that it is unprepared to handle the reporting requirements for carry over basis under the laws applicable to decedents dying in 2010, but promised guidance shortly.

Enjoy the weekend, and gird yourself for the election results!

CCA 201042023 – Trust’s Charitable Deduction Limited to Basis in Appreciated Assets

In CCA 201042023, a trust contributed appreciated properties purchased with accumulated income to charity. The Chief Counsel concluded that the trust should be allowed a deduction only to the extent of its adjusted basis in those properties.

PLR 201042005 – Late Election Out of Automatic Allocation of GST Tax Exemption (a warning for CLATs!)

In PLR 201042005, the Service granted an extension of time to elect out of the automatic allocation of GST tax exemption to a GRAT.

Other Items of Interest

In recent days:

  1. In Rev. Proc. 2010-40, the Service published inflation adjustments to various floors, limitations, credits, and exclusions for taxable years beginning after December 31, 2010.
  2. The Tennessee state attorney general filed two briefs with the chancery court regarding the Fisk University (“Fisk”) cy pres matter. One brief opposed the modified proposal to sell an undivided half interest in the Stieglitz collection to a museum in Arkansas and the other outlined a plan to fund keeping the collection on campus at Fisk.
  3. A credentialed appraiser wrote to senior tax counsel at the Treasury, responding to a proposal put forward several weeks ago by lawyers at MassMutual Financial Group concerning a simplified alternative method for valuing, for income tax charitable deduction purposes, an in-force life insurance policy contributed to a charity.
  4. status report filed in RCL Properties, Inc. v. United States indicated that the government settled a refund claim involving the valuation of several conservation easements, abandoning its reliance on a “matrix” compiled from valuation data on sales of other properties subject to similar easements.
  5. Speaking at a meeting of the AIPCA’s tax division, senior Treasury tax lawyers stated the department is working on guidance for executors of decedents who die in 2010 during the one-year hiatus in the estate tax.

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