Source: https://www.charitableplanning.com/library/documents/498056
Timestamp: 2019-04-19 21:12:58+00:00

Document:
Notwithstanding any other provision of this subchapter, the provisions of this section shall, in accordance with regulations prescribed by the Secretary, apply in the case of a charitable remainder annuity trust and a charitable remainder unitrust.
(4) Fourth, as a distribution of trust corpus.
For purposes of this section, the trust shall determine the amount of its undistributed capital gain on a cumulative net basis.
A charitable remainder annuity trust and a charitable remainder unitrust shall, for any taxable year, not be subject to any tax imposed by this subtitle.
In the case of a charitable remainder annuity trust or a charitable remainder unitrust which has unrelated business taxable income (within the meaning of section 512, determined as if part III of subchapter F applied to such trust) for a taxable year, there is hereby imposed on such trust or unitrust an excise tax equal to the amount of such unrelated business taxable income.
The tax imposed by subparagraph (A) shall be treated as imposed by chapter 42 for purposes of this title other than subchapter E of chapter 42.
For purposes of this paragraph, the references in section 6212(c)(1) to section 4940 shall be deemed to include references to this paragraph.
(D) the value (determined under section 7520) of such remainder interest is at least 10 percent of the initial net fair market value of all property placed in the trust.
(D) with respect to each contribution of property to the trust, the value (determined under section 7520) of such remainder interest in such property is at least 10 percent of the net fair market value of such property as of the date such property is contributed to the trust.
(B) any amount of the trust income which is in excess of the amount required to be distributed under paragraph (2)(A), to the extent that (by reason of subparagraph (A)) the aggregate of the amounts paid in prior years was less than the aggregate of such required amounts.
such contribution shall be treated as a transfer to a separate trust under regulations prescribed by the Secretary.
For purposes of determining the amount of any charitable contribution, the remainder interest of a charitable remainder annuity trust or charitable remainder unitrust shall be computed on the basis that an amount equal to 5 percent of the net fair market value of its assets (or a greater amount, if required under the terms of the trust instrument) is to be distributed each year. In the case of the early termination of a trust which is a charitable remainder unitrust by reason of subsection (d)(3), the valuation of interests in such trust for purposes of this section shall be made under rules similar to the rules of the preceding sentence.
If a trust would, but for a qualified contingency, meet the requirements of paragraph (1)(A) or (2)(A) of subsection (d), such trust shall be treated as meeting such requirements.
For purposes of determining the amount of any charitable contribution (or the actuarial value of any interest), a qualified contingency shall not be taken into account.
For purposes of this subsection, the term "qualified contingency" means any provision of a trust which provides that, upon the happening of a contingency, the payments described in paragraph (1)(A) or (2)(A) of subsection (d) (as the case may be) will terminate not later than such payments would otherwise terminate under the trust.
(E) the employer whose employees are covered by the plan described in this paragraph files with the Secretary a verified written statement consenting to the application of sections 4978 and 4979A with respect to such employer.
(C) immediately after the transfer, such plan owns (after the application of section 318(a)(4)) at least 60 percent of the value of the outstanding stock of the corporation.
(F) on termination of the plan, all securities so transferred which are not allocated to plan participants as of such termination are to be transferred to, or for the use of, an organization described in section 170(c).
For purposes of the preceding sentence, the term "independent trustee" means any trustee who is not a member of the family (within the meaning of section 2032A(e)(2)) of the decedent or a 5-percent shareholder. A plan shall not fail to be treated as meeting the requirements of section 401(a) by reason of meeting the requirements of this subsection.
(B) which has only 1 class of stock.
the plan shall be treated as having distributed (at the time of such allocation) to such person or shareholder the amount so allocated.
For purposes of subparagraph (A), the term "5-percent shareholder" means any person who owns (directly or through the application of section 318(a)) more than 5 percent of the outstanding stock of the corporation which issued such qualified employer securities or of any corporation which is a member of the same controlled group of corporations (within the meaning of section 409(l)(4)) as such corporation. For purposes of the preceding sentence, section 318(a) shall be applied without regard to the exception in paragraph (2)(B)(i) thereof.
For excise tax on allocations described in subparagraph (A), see section 4979A.
(B) interest on such amount at the underpayment rate under section 6621 (and compounded daily) from the due date for filing the return of the tax imposed by chapter 11.
(ii) 25 percent of the participant's compensation (as defined in section 415(c)(3)).
The Secretary shall adjust annually the $30,000 amount under subparagraph (A)(i) at the same time and in the same manner as under section 415(d), except that the base period shall be the calendar quarter beginning October 1, 1993, and any increase under this subparagraph which is not a multiple of $5,000 shall be rounded to the next lowest multiple of $5,000.
2018—Subsec. (g)(3)(E). Pub. L. 115–141 substituted "limitation under section 415(c)" for "limitations under sections 415(c) and (e)".
2015—Subsec. (e). Pub. L. 114–113 substituted "of interests" for "for purposes of charitable contribution" in heading and inserted at end of text "In the case of the early termination of a trust which is a charitable remainder unitrust by reason of subsection (d)(3), the valuation of interests in such trust for purposes of this section shall be made under rules similar to the rules of the preceding sentence."
2006—Subsec. (c). Pub. L. 109–432 amended heading and text of subsec. (c) generally. Prior to amendment, text read as follows: "A charitable remainder annuity trust and a charitable remainder unitrust shall, for any taxable year, not be subject to any tax imposed by this subtitle, unless such trust, for such year, has unrelated business taxable income (within the meaning of section 512, determined as if part III of subchapter F applied to such trust)."
Subsec. (g)(3)(E). Pub. L. 109–280 inserted "(determined on the basis of fair market value of securities when allocated to participants)" after "paragraph (7)".
2001—Subsec. (g)(3)(E). Pub. L. 107–16, §632(a)(3)(H)(i), substituted "applicable limitation under paragraph (7)" for "limitations under section 415(c)".
Subsec. (g)(7). Pub. L. 107–16, §632(a)(3)(H)(ii), added par. (7).
2000—Subsec. (d)(1)(C), (2)(C). Pub. L. 106–554 struck out period after "(as defined by subsection (g))". See 1997 Amendment notes below.
1998—Subsec. (d)(1)(C), (2)(C). Pub. L. 105–206 inserted ", and" at end.
1997—Subsec. (d)(1)(A). Pub. L. 105–34, §1089(a)(1), inserted "nor more than 50 percent" after "not less than 5 percent".
Subsec. (d)(1)(B). Pub. L. 105–34, §1530(c)(5), inserted "and other than qualified gratuitous transfers described in subparagraph (C)" after "subparagraph (A)".
Pub. L. 105–34, §1089(b)(1), struck out "and" at end.
Subsec. (d)(1)(C). Pub. L. 105–34, §1530(a), which directed amendment of subpar. (C) by striking period at end and inserting "or, to the extent the remainder interest is in qualified employer securities (as defined in subsection (g)(4)), all or part of such securities are to be transferred to an employee stock ownership plan (as defined in section 4975(e)(7)) in a qualified gratuitous transfer (as defined by subsection (g)).", was executed by making the insertion after "for such a use" to reflect the probable intent of Congress. Subpar. (C) did not contain a period after amendment by Pub. L. 105–34, §1089(b)(1). See below.
Pub. L. 105–34, §1089(b)(1), struck out period after "for such a use".
Subsec. (d)(1)(D). Pub. L. 105–34, §1089(b)(1), added subpar. (D).
Subsec. (d)(2)(A). Pub. L. 105–34, §1089(a)(1), inserted "nor more than 50 percent" after "not less than 5 percent".
Subsec. (d)(2)(B). Pub. L. 105–34, §1530(c)(5), inserted "and other than qualified gratuitous transfers described in subparagraph (C)" after "subparagraph (A)".
Pub. L. 105–34, §1089(b)(2), struck out "and" at end.
Subsec. (d)(2)(C). Pub. L. 105–34, §1530(a), which directed amendment of subpar. (C) by striking period at end and inserting "or, to the extent the remainder interest is in qualified employer securities (as defined in subsection (g)(4)), all or part of such securities are to be transferred to an employee stock ownership plan (as defined in section 4975(e)(7)) in a qualified gratuitous transfer (as defined by subsection (g)).", was executed by making the insertion after "for such a use" to reflect the probable intent of Congress. Subpar. (C) did not contain a period after amendment by Pub. L. 105–34, §1089(b)(2). See below.
Pub. L. 105–34, §1089(b)(2), struck out period after "for such a use".
Subsec. (d)(2)(D). Pub. L. 105–34, §1089(b)(2), added subpar. (D).
Subsec. (d)(4). Pub. L. 105–34, §1089(b)(4), added par. (4).
Subsec. (g). Pub. L. 105–34, §1530(b), added subsec. (g).
1984—Subsec. (f). Pub. L. 98–369 added subsec. (f).
1976—Subsec. (a). Pub. L. 94–455 struck out "or his delegate" after "Secretary".
Pub. L. 114–113, div. Q, title III, §344(b), Dec. 18, 2015, 129 Stat. 3115, provided that: "The amendment made by this section [amending this section] shall apply to terminations of trusts occurring after the date of the enactment of this Act [Dec. 18, 2015]."
Pub. L. 109–432, div. A, title IV, §424(b), Dec. 20, 2006, 120 Stat. 2974, provided that: "The amendment made by this section [amending this section] shall apply to taxable years beginning after December 31, 2006."
Pub. L. 109–280, title VIII, §868(b), Aug. 17, 2006, 120 Stat. 1025, provided that: "The amendment made by this section [amending this section] shall take effect on the date of the enactment of this Act [Aug. 17, 2006]."
Amendment by Pub. L. 107–16 applicable to years beginning after Dec. 31, 2001, see section 632(a)(4) of Pub. L. 107–16, set out as a note under section 72 of this title.
Pub. L. 105–34, title X, §1089(a)(2), Aug. 5, 1997, 111 Stat. 960, provided that: "The amendment made by paragraph (1) [amending this section] shall apply to transfers in trust after June 18, 1997."
"(A) In general.—Except as otherwise provided in this paragraph, the amendments made by this subsection [amending this section and section 2055 of this title] shall apply to transfers in trust after July 28, 1997.
"(ii) was on July 28, 1997, under a mental disability to change the disposition of his property and did not regain his competence to dispose of such property before the date of his death."
Amendment by section 1530(a), (b), (c)(5) of Pub. L. 105–34 applicable to transfers made by trusts to, or for the use of, an employee stock ownership plan after Aug. 5, 1997, see section 1530(d) of Pub. L. 105–34, set out as a note under section 401 of this title.
Amendment by Pub. L. 98–369, applicable to transfers after Dec. 31, 1978, see section 1022(e)(2) of Pub. L. 98–369, set out as a note under section 2055 of this title.
Section applicable to transfers in trust made after July 31, 1969, see section 201(g)(5), set out as an Effective Date of 1969 Amendment note under section 170 of this title.

References: §632
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