Jul 1, 2007 12:00 PM

By Laura H. Peebles, director, Deloitte Tax LLP, Washington

The general tax rule is that trusts compute their income and deductions as if they were individuals.¹ Probably the most significant exception to this rule is the charitable deduction: The rules are so different for trusts that it may be easier to forget everything you know about individual income tax rules and start over.² Grantors of grantor trusts deduct the contributions made by the trust as if the grantor had made them personally.³ If a trust is only partially a grantor trust, then the contributions made in the grantor portion are deductible by the grantor.⁴

For non-grantor trusts, it's a whole different ball game for charitable deductions. These trusts enjoy advantages over individuals when it comes to unlimited deductions and contributions to non-U.S. charities. But non-grantor trusts are more constrained in their deductions than individuals depending on the source of their income, the asset donated and the terms of their trust instruments. There also are specific limitations on deductions allocated from pass-through investments such as partnerships and Subchapter S corporations.

Topics of Interest

Estate Tax	Donor Advised Funds
GSTs	Family Offices
Private Foundations	Life Insurance
2010 Tax Act News	Industry Trends Surveys

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Topics of Interest

Estate Tax	Donor Advised Funds
GSTs	Family Offices
Private Foundations	Life Insurance
2010 Tax Act News	Industry Trends Surveys

E-Newsletter Signup

2011 Trust Glossary

Click here to download the 2011 Trust Glossary

50 Years Ago This Month

Click here to read the issue.

50 years ago, in May 1962, we featured articles such as: "Future of Canadian Trusteeship" by Arthur H. Mingay", "Training Trust Employees" by Ian M. Marr, "What is a Trust Officer?" by Eric J. Brown, and "Selling Services" by Donald I. Webb.

Conrad Teitell's Guide to Tax Benefits For Charitable Gifts

Click here to view the most up to date guide (September 2011)

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