Abstract
Abstract:
I. INTRODUCTION II. GIVING IRD TO CHARITY III. IRD PAID TO AN ESTATE--SEPARATE SHARES? A. The Separate Share Regulations in Operation 1. Decedent's Will Silent as to Allocation of IRD [...]
Authors' Synopsis: Taxpayers sometimes die with a right to gross income that has not been received at the time of death and is not reportable on the decedent's final or other pre-death income tax return, that is, with an entitlement to items of 'income in respect of a decedent' (IRD). An estate with charitable beneficiaries that receives IRD will want a section 642(c) income tax charitable deduction for amounts of gross income distributed or distributable to or set aside for a charitable purpose to offset the gross income realized when the IRD is collected and reportable in gross income. This is possible when the IRD is distributable to or set aside for the charity pursuant to the terms of the governing instrument. This Article analyzes the potential application of the separate share regulations under section 663(c) and the income tax charitable deduction under section 642(c) when the estate has both charitable and non-charitable residuary beneficiaries. This Article concludes that a charity's interest in the residue of an estate is not a separate share within the meaning of the separate share regulations. Next, this Article considers whether a direction in the decedent's will to distribute items of IRD to charity as a part of the charity's interest in the decedent's residuary estate satisfies the 'economic effect' requirement found in the Treasury Regulations for section 642(c). This Article suggests that it does, but that the conclusion is not certain. Finally, the Article suggests possible solutions to assure that the income tax charitable deduction is available for an estate when it pays over the proceeds from items of IRD to a charity.
