PORTFOLIO

Estate and Gift Tax Charitable Deductions (Portfolio 839)

Tax Management Portfolio, Estate and Gift Tax Charitable Deductions, No. 839-2nd, surveys the estate tax charitable deduction allowed to a decedent's estate by §2055 for transfers to qualifying recipients for public, charitable, religious, and other similar purposes, and the gift tax charitable deduction available to a transferor by §2522 for lifetime transfers.

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DESCRIPTION

Tax Management Portfolio, Estate and Gift Tax Charitable Deductions, No. 839-2nd, surveys the estate tax charitable deduction allowed to a decedent's estate by §2055 for transfers to qualifying recipients for public, charitable, religious, and other similar purposes, and the gift tax charitable deduction available to a transferor by §2522 for lifetime transfers. The discussion of the estate tax deduction includes the criteria for eligible §2055 recipients; the requirements for qualifying inter vivos and testamentary transfers; the interaction of §2055 with the §2518 qualified disclaimer; and the special rules that apply when a transfer involves property in which interests are split between charitable and noncharitable recipients. The discussion of the gift tax deduction includes the criteria for eligible §2522 recipients; the requirements for qualifying transfers; and split-interest gifts. The Portfolio also discusses the requirements for obtaining a §2106 charitable deduction for estates of nonresident non-citizen decedents. The Portfolio is an analysis of the practical and tax advantages of the deductions as well as the pitfalls of ineffective planning or no planning.
The income tax aspects of charitable contributions are considered in 863 T.M., Charitable Contributions: Income Tax Aspects. Additional aspects of charitable contributions are considered in 794 T.M., Charitable Contributions by Corporations (U.S. Income Series); 865 T.M., Charitable Remainder Trusts and Pooled Income Funds; and 866 T.M., Charitable Lead Trusts.
This Portfolio may be cited as Beckwith and Allan, 839-2nd T.M., Estate and Gift Tax Charitable Deductions.


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AUTHORS

EDWARD J. BECKWITH, ESQ.
Edward Jay Beckwith, B.S., Pennsylvania State University (1971); J.D., Georgetown University Law Center (1974); M.L.T., Georgetown University Law Center (1983); Adjunct Professor of Law, Georgetown University Law Center; member, Bar of the District of Columbia (1975); member, American Bar Association (Sections on Taxation and Real Property, Probate and Trust Law); member, American Law Institute; fellow, American College of Trusts and Estates Counsel; Founder and Chair, Advanced Estate Planning Institute, Georgetown University Law Center (1988–Present); member, Estate Planning Council, Washington, D.C.; Who's Who in America, author, 840-2nd T.M., Estate Tax Deductions — Sections 2053 and 2054, and 261-3rd T.M. (1991) and 261-2nd T.M. (1984).

NATANYA H. ALLAN, ESQ.
Natanya Holland Allan, A.B., Princeton University (1995); J.D. Fordham Law School (2001), Adjunct Professor of Law, Georgetown University Law Center (2010); member, Bar of the State of New York (2002); member, Bar of the District of Columbia (2006); member, Estate Planning Counsel, Washington, D.C.; member, District of Columbia Bar Association (Sections on Estates, Trusts and Probate Law and Taxation).

TABLE OF CONTENTS

Detailed Analysis

I. Scope

II. Introduction to Estate Tax Deduction

III. Eligible Recipients - § 2055(a)

Introductory Material

A. Transfers for Public Purposes - § 2055(a)(1)

B. Transfers to Charitable, etc., Corporations - § 2055(a)(2)

C. Transfers to Trustees - § 2055(a)(3)

D. Transfers to Veterans’ Organizations - § 2055(a)(4)

E. Transfers to Employee Stock Ownership Plans- § 2055(a)(5)

IV. Qualifying Transfers

Introductory Material

A. Transfer by the Decedent

1. In General

2. Indefinite or Discretionary Bequests

3. Void or Voidable Bequests

4. Compromise Agreements

5. Charitable Pledges

B. Post-Mortem Alteration of Testamentary Gifts to Charity

1. Disclaimers - § § 2518 and 2055(a)

2. Will Contests

C. Powers of Appointment - § 2055(b)

V. Split-Interest Transfers

A. Introduction

B. Charitable Remainder Trusts - § 2055(e)(2)

C. Pooled Income Funds - § 2055(e)(2)

D. Charitable Income (Lead) Trusts - § 2055(e)(2)

E. Reformations - § 2055(e)(3)

1. Reformable Interest

2. Qualified Interest

3. Qualified Reformation

4. Regulations

5. Reformation of Charitable Remainder Trusts with Insufficient Charitable Interest

F. Transfers with Spouse as Life Beneficiary

1. In General

2. Special Rule for Charitable Remainder Trusts

3. Qualified Terminable Interest Property

4. Qualified Domestic Trusts

G. Personal Residence or Farm

H. Undivided Fractional Interests - § 2055(e)(2)

I. Easements and Other Interests for Conservation - § 2055(e)(2)

J. Copyrighted Works of Art - § 2055(e)(4)

K. Contingent Bequests

VI. Former Law on Split Interests and Powers of Diversion

A. Introduction

B. Remainder Interests Under Prior Law

C. Discretionary Powers Under Prior Law

D. Administrative Powers Under Prior Law

VII. Amount Deductible

A. Property Included in Gross Estate - § 2055(d)

B. Effect of Administration Expenses

C. Reduction for Taxes - § 2055(c)

1. In General

2. Apportionment of Death Taxes

3. Mutually Dependent Factors

D. Deduction for Certain Death Taxes - § 2053(d)

VIII. Proof to Support Deduction

A. In General

B. Actuarial Valuations

IX. Disallowance of Deduction - § 2055(a)(2), (a)(3) and (e)(1)

X. Nonresident Alien Decedents - § 2106(a)(2)

XI. Introduction to Gift Tax Deduction

A. Relationship to Estate and Income Tax Deductions

B. General Statutory Scheme

C. Eligible Recipients

1. Transfers for Public Purposes - § 2522(a)(1)

2. Gifts to Charitable Corporations or Trusts - § 2522(a)(2)

3. Gifts to Fraternal Orders Earmarked for Charitable, Etc., Purposes - § 2522(a)(3)

4. Gifts to Veterans’ Organizations - § 2522(a)(4)

5. Certain Transfers to Political Organizations - § 2501(a)(5)

D. Qualifying Transfers

1. The Transfer

2. Competency of Donor

3. Disclaimers - § 2518

4. Powers of Appointment - § 2514

5. Split-Interest Gifts - § 2522(c)(2) and (3)


WORKING PAPERS

Working Papers

Table of Worksheets

Worksheet 1 Checklist for Estate and Gift Tax Charitable Deductions (Other than for Non-Resident Aliens)

Worksheet 2 Deed of Gift (for Personal Property)

Worksheet 3 Charitable Pledge Agreement (to Create an Academic Chair)

Worksheet 4 Sample Charitable Bequests

Worksheet 5 Authorization to Executor to Specify Charities

Bibliography

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Treasury Regulations:

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IRS Procedures and Rulings:

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