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Private Letter Ruling 200747001Private Letter Ruling 200747001
In PLR 200747001 (Aug. 3, 2007), the Internal Revenue Service ruled that a charitable lead annuity trust (CLAT) would qualify as a grantor trust under Internal Revenue Code Section 674. As such, the CLAT was a permitted S corporation shareholder under IRC Section 1361, and the grantors were entitled to a charitable income tax deduction under IRC Section 170 (in addition to the charitable gift tax
January 1, 2009
David A. Handler
In PLR 200747001 (Aug. 3, 2007), the Internal Revenue Service ruled that a charitable lead annuity trust (CLAT) would qualify as a grantor trust under Internal Revenue Code Section 674. As such, the CLAT was a permitted S corporation shareholder under IRC Section 1361, and the grantors were entitled to a charitable income tax deduction under IRC Section 170 (in addition to the charitable gift tax deduction) for the actuarial value of the charitable annuity interest.
In that ruling, a husband and wife proposed transferring shares in an S corp. to an inter vivos CLAT. The terms of the CLAT provided for payment of an annuity to a designated charity for five years, after which any assets remaining in the CLAT would be distribu...
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