Feb 1, 2007 12:00 PM, Rorie M. Sherman Editor in Chief

By: Rorie M. Sherman Editor in Chief

David A. Handler, partner in the Chicago office of Kirkland & Ellis LLP, reports:

• Change to UBTI rule for CRTs

  Legislation passed in December 2006 now reduces the consequences of unrelated business taxable income (UBTI) for charitable remainder trusts (CRTs.) A CRT is exempt from income taxes unless it has UBTI, within the meaning of Internal Revenue Code Section 512. UBTI is generally income of an exempt organization from any unrelated trade or business regularly carried on by the organization. Until recently, if a CRT had even $1 of UBTI, it would lose its income tax exemption for all income during that year. However, the Tax Relief and Health Care Act of 2006, signed into law on Dec. 20, 2006, offers substantial relief from this rule. Beginning Jan. 1, 2007, a CRT with UBTI will not lose its tax-exempt status, but instead an excise tax will be imposed equal to 100 percent of the UBTI. This change amends IRC Section 664.

• Deduction allowed for conservation easements

  In Glass v. Commissioner, No. 06-1398 (Mich. Ct. App. Dec. 21, 2006), a couple owned a home and surrounding property along the shoreline of Lake Michigan. They granted a conservation easement to a charitable organization with respect to the shoreline property. The Court of Appeals for the Sixth Circuit affirmed the Tax Court's decision (124 T.C. 258) that the contribution qualified for an income tax deduction.

T&E Premium Content

To read the rest of this article, please login to our Premium Content section:

Registered Web Site Users
User Name:
Password:
Remember Me