IRS Overstates Abuse in Charity-Geared Trusts, Tax Advisers Say

Tax avoidance schemes are uncommon in most charitable remainder annuity trust transactions, tax practitioners said, despite the addition of certain uses of these trusts to the IRS’s list of suspect transactions.

Charitable remainder annuity trusts, or CRATs, allow individuals to donate to charities and receive income payments in return. But the IRS March 22 released proposed regulations outlining which uses of CRATs it considers abusive. The regulations are the latest in a series from the IRS to formalize its listed transactions, or deals that require additional disclosures because of tax avoidance concerns.

“This kind of abuse is not that ...