BLOCKING UBITBLOCKING UBIT
From David T. Leibell and Daniel L. Daniels, principals in Cummings & Lockwood LLC in Stamford, Conn., we have this update: The Internal Revenue Service has ruled that a charitable remainder trust's investment in a private equity fund did not cause a problem of unrelated business income tax (UBIT) when the investment was made through an off-shore corporation established by the fund. One of the scariest
July 1, 2006
Rorie M. Sherman Editor in Chief
From David T. Leibell and Daniel L. Daniels, principals in Cummings & Lockwood LLC in Stamford, Conn., we have this update:
The Internal Revenue Service has ruled that a charitable remainder trust's investment in a private equity fund did not cause a problem of unrelated business income tax (UBIT) when the investment was made through an off-shore corporation established by the fund.
One of the scariest tax issues for a trustee of a charitable remainder trust (CRT) is UBIT. If a CRT has even one dollar of unrelated business income during the taxable year, the trust loses its tax-exempt status for that year. If that year happened to be the year in which a low-basis asset funding the trust was sold, it would be...
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