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Charitable Remainder Trusts Explained: CRAT vs CRUT, Taxes and Deductions

Josh Rendler, CFP®

Creator of Motion Retirement

Updated 2026-10-12 · Tax year 2026 · Figures checked October 10, 2026 · How this is checked

What is a charitable remainder trust and how does it work?

It's a trust you can't undo. It pays you, or people you name, at least once a year, for life or up to 20 years. Then what's left goes to charity. People call it a CRT (a trust that pays you or people you name for life or a set term, then gives what is left to charity). You get part of a tax deduction now. The trust generally pays no tax when it sells stock that went up. But that gain reaches you, taxed bit by bit inside your payments, to the extent the payments reach it. What's left goes to charity.

  • A CRT is permanent. Once money goes in, you can't take it back.
  • One kind pays the same dollars each year. The other pays a set percent of what the trust is worth that year. Both set a payout of 5% to 50% a year.
  • The charity's expected share must be worth at least 10% of what you put in, measured on the day you fund it.
  • The trust can usually sell stock with no tax at that moment. The gain isn't erased. It comes out to you in your payments over the years, to the extent the payments reach it. Whatever gain is left when payments end goes to charity.
  • Your deduction is only the value today of what charity is expected to get. Setup and yearly costs mean a CRT tends to fit larger gifts.
Jump to a question

This trust usually comes up for one kind of person. They own something now worth far more than they paid. They want income from it. And they already plan to leave a good share to charity.

It is often misunderstood. It does not wipe out capital gains tax. You can’t change your mind once it’s funded. And it costs real money to set up and run.

Are you 70½ or older and mainly want to give from an IRA? A QCD (money sent straight from your IRA to a charity at 70½ or older, not taxed as income, up to a yearly limit) is usually simpler. Want income plus a gift without a trust? Compare a gift annuity (a deal where you give a charity money and it pays you a set amount for life).

What is a charitable remainder trust?

It is a trust that pays at least one person first, then gives what’s left to charity. There are two kinds. One is a CRAT (a charity trust that pays you the same dollar amount every year). The other is a CRUT (a charity trust that pays you a set percent of its value, so payments go up and down).

A CRAT pays a fixed amount each year, set at 5% to 50% of what went in.1 A CRUT pays a set 5% to 50% of the trust’s value, measured again each year.2 Either pays at least once a year.1 It can run for a set term of up to 20 years, or for the lives of the people paid.13 Those people must be alive when the trust starts.3 The charity’s share must be worth at least 10% of what goes in.4

A charitable remainder trust pays no income tax, so it can sell what you gave without tax at that moment.5 Business-type income inside it is taxed at 100%.5 That includes part of the income from an asset with a loan on it, like a mortgaged building.6 The trust can’t be undone, and it files Form 5227 every year.7

How it works

  1. You fund it. You move cash, stock, land or other things you own into the trust.
  2. It pays you. At least once a year it pays you, or you and your spouse, or others you name.
  3. It can usually sell with no tax at that moment. So it can sell and reinvest the full amount. A mortgaged asset or business income is the exception, as the rule above says.
  4. Charity gets the rest. When payments end, what’s left goes to the charities you named.

Four players are involved. There’s you, the giver. There are the people who get paid. At least one of them must be someone other than a charity.8 There’s the trustee, who invests, pays and files the tax return. And there are the charities.

Part of the trust’s value goes to people and part goes to charity. That split is why your deduction is only partial.

Is a charitable remainder trust revocable?

No. It is permanent. The payout, term and 10% rules above are conditions the trust must meet. It has to meet them to skip income tax and give you a deduction. The trust document must also meet detailed IRS rules.

What is the difference between a CRAT and a CRUT?

CRAT: a fixed amount; CRUT: a set percent of each year's value.1234
Feature CRAT CRUT
Payment A set dollar amount, fixed at the start A set percent of the trust’s value, revalued each year
When markets rise Payment stays the same Payment rises
When markets fall Payment stays the same, and can eat into the trust Payment falls
Adding money later Not allowed. A new trust is needed9 Allowed only if the trust document says so and sets out how to value it10
Income-only version No Yes (net income or “flip” unitrust)11
Extra test 5% chance test (below) if it pays for life, unless the trust uses the IRS’s sample early-ending wording12 None
Often considered by People who want a steady check and accept inflation People who want payments to follow the investments

The choice usually comes down to steady pay versus inflation. A CRAT’s check never grows, so over time it buys less. A CRUT’s check moves with the investments. So a bad year in the market shows up in the next payment.

What is the 10% rule for charitable remainder trusts?

The charity’s expected share must be worth at least 10% of what goes in, measured on the day you fund the trust. The IRS sets the interest rates and life tables used. You may use the rate for the funding month, or either of the two months before.13 For a CRUT, each new gift is tested on its own.

Four things shrink the charity’s share:

  • A higher payout rate.
  • A longer payment period.
  • Younger people being paid.
  • A lower IRS interest rate, for a CRAT. By my reading, the same payout can pass one month and fail another. For a CRUT, the rate matters much less.

The law allows a payout up to 50%. But for most lifetime trusts, the 10% test fails long before that. So in real life, the test sets the top rate, not the 50% cap.

The 5% chance test for a CRAT

A CRAT has a second test. The question is whether the fixed payments could empty the trust while someone being paid for life is still alive. If there’s more than a 5% chance of that, it fails. A CRAT paying for a set number of years doesn’t face this test. If it fails, there’s no deduction, and the trust isn’t tax-free.12 A CRAT that uses the IRS’s sample wording ending the payments early isn’t put to this test at all.12

This test tends to bite when interest rates are low and the people being paid are young. A CRAT can pass the 10% test and still fail this one. A CRUT doesn’t face it, because its payment shrinks as the trust shrinks.

For CPAs and attorneysProbability-of-exhaustion test and the safe provision

The test comes from Rev. Rul. 70-452 as applied to CRATs in Rev. Rul. 77-374. Rev. Proc. 2016-42 provides a sample provision that terminates the annuity early if the trust would otherwise fall below a set level; a CRAT that includes it is not subject to the 5% test.12 The no-additional-contributions requirement is Treas. Reg. § 1.664-2(b).9

How long does a charitable remainder trust last?

It lasts for the lives of the people it pays, or for a set term of 20 years or less. The 20-year cap applies only to a trust measured by a set term. It applies to both kinds of trust. A trust measured by lives has no year cap. A trust can also end sooner if its document says so. The IRS’s sample CRAT wording does that.12

After the last payment, the trustee gives what’s left to the named charities. Or the trust keeps it for charity’s use.

How is the charitable deduction for a CRT calculated?

Two things drive the number. One is an IRS interest rate called the Section 7520 rate (an interest rate the IRS sets each month, used to value trust and annuity gifts to charity). The other is the yearly caps, which run off your AGI (your total income minus a few set subtractions, the number many tax rules start from).

You deduct only today’s value of what the charity will get later, figured with IRS tables and the Section 7520 rate.13 The usual yearly AGI caps still apply.13

Four things go into the number:

  1. What your gift is worth on the day you give it.
  2. The payout, in dollars or as a percent, and how often it’s paid.
  3. How long payments last. That’s a set term, or the ages of the people being paid.
  4. An IRS interest rate. It’s called the 7520 rate.

For a CRAT, a higher rate means a bigger deduction. For a CRUT, the rate matters much less.

Limits on the deduction

The normal yearly limits apply. They’re based on your AGI. Most charities are a public charity (a charity like a church, school or hospital that gets the best tax treatment for gifts). Some givers use a private foundation (a charity funded mostly by one person, family or company, not a public charity) instead.

The full list of yearly caps is on the charitable deductions page.

Stock that grew, given to most private foundations, is generally deducted at what you paid.14 Stock traded on a public market is the exception and counts at full value.14 Full value counts only up to 10% of that company’s stock.14 Your earlier gifts and your family’s gifts count toward that 10%.15

From 2026, if you itemize, your gifts count only above 0.5% of your AGI.16 By my reading, the floor comes off after the yearly AGI caps.17 It comes off in a set order, starting with gifts under the 20% cap and ending with cash to public charities.18

Two caps need a note for a trust gift:

  • Cash into the trust. By my reading, the 60% cash cap doesn’t apply, because you give a share of a trust, not cash. The 50% cap applies instead.19 Some advisers read it the other way. Your CPA can confirm which cap applies.
  • Stock that grew. By my reading, the same 30% cap applies to a gift through a trust. No source I found says that directly. Your CPA can confirm.

Those caps assume the trust hands what’s left straight to the charity. Say the trust instead keeps it and runs on for the charity. Then the law treats the gift as made “for the use of” the charity.20 Then lower caps apply. The general cap drops from 50% of AGI to generally 30%. For things you held over a year that grew in value, it’s generally 20%.20 Each can be lower if you made other gifts that year.20

See deduction limits and carryforwards.

Does a charitable remainder trust pay capital gains tax?

Generally no, not at the trust. No tax at the trust, except business-type income, which is taxed at 100%.576

But the gain doesn’t go away. The trust keeps your cost basis (what you paid for an investment, or after-tax money put in an IRA, used to figure what part is taxed), so the gain is tracked inside the trust. It comes out to you over time in your payments. The IRS calls this a way to “defer income taxes on the sale” of the assets.5

The plus is simple. The full amount, before tax, stays invested and earning.

The business-type income tax is the thing to watch. For a building with a loan, it can hit the share of the income tied to the loan. So land with a mortgage, or a share of a business, needs an expert’s review first.

Worked example · tax year 2026Selling $1,000,000 of stock yourself vs. inside a CRUT
Assumptions
  • Stock worth $1,000,000 that cost $200,000, held more than a year.
  • Assume a 23.8% federal tax on the gain if sold outright: the 20% top long-term capital gains rate plus the 3.8% net investment income tax. This is an assumption about a high-income seller, not a bracket lookup.
  • The CRUT pays 5% of its value each year. The outright sale money is assumed to be invested to earn the same 5%.
  • The CRUT deduction is left out here to show only the effect of the sale.
  • This example compares only the tax on the gain from a sale, not taxable income, so the senior deduction is left out.
Step Sell, then reinvest Fund a 5% CRUT, trust sells
Sale price $1,000,000 $1,000,000
Gain ($1,000,000 − $200,000) $800,000 $800,000 (tracked in trust)
Tax due at sale $800,000 × 23.8% = $190,400 $0 at the trust
Amount reinvested $1,000,000 − $190,400 = $809,600 $1,000,000
First-year income at 5% $809,600 × 5% = $40,480 $1,000,000 × 5% = $50,000
Who gets what’s left Your heirs Charity

The CRUT pays $9,520 more in year one ($50,000 − $40,480). That gap is before tax, not spendable dollars. You generally owe tax on the CRUT’s payment each year, under the four layers below. The untaxed layer, a return of what went in, comes last. It is reached only after the trust’s income and gain have all been paid out, this year’s and earlier years’.21 That can take many years. In the example, the 5% from the sale money is earnings on the reinvested dollars. How much of it is taxed depends on how you take it. If it comes out as interest or dividends, it is taxable. If you sell shares instead, only the gain part is taxed. Getting your own cost back is not income.22 The rate depends on what it’s invested in, and on whether the earnings are paid out or still only on paper. But look at the last row. With the sale, your heirs get whatever is left of the $809,600 someday. With the CRUT, charity gets what’s left.

The way I think about it, a CRT is worth a look when that money was already headed to charity. I don’t see it as a way to get more income for your family.

Do you pay taxes on income from a charitable remainder trust?

Generally yes.

Payments from a charitable remainder trust are taxed in four layers.21 First comes ordinary income, then capital gain, then other income such as tax-free income, then a tax-free return of what went in.21

Each layer counts the trust’s income and gain from this year and from earlier years not yet paid out.21

Say you fund a trust with stock that cost very little, and it sells. Now the trust holds a big pile of untaxed gain. For years, most of each payment comes out as capital gain. So the tax is spread out, not avoided.

Worked example · tax year 2026How one year's CRUT payment is taxed
Assumptions
  • Same CRUT as above: the trust sold the stock and holds $800,000 of gain not yet paid out.
  • This year the trust earns $12,000 of interest and dividends, all treated as layer-1 ordinary income to keep it simple.
  • This year's payment is $50,000.
  • This example shows only how one trust payment is sorted into tax layers, not the giver's taxable income.
Step Amount
Payment $50,000
Layer 1: ordinary income (this year’s income) $12,000
Payment left ($50,000 − $12,000) $38,000
Layer 2: capital gain (from the $800,000 pile) $38,000
Layers 3 and 4 $0
Gain left in the pile ($800,000 − $38,000) $762,000

Each payment carries out $38,000 of gain. If the payment and the trust’s income stayed at these amounts, the $800,000 pile would come out over many future payments. That is an illustration, not a forecast. In real life a CRUT’s payment changes each year, because the trust is revalued each year.

What are net income and “flip” unitrusts?

A net income unitrust pays the smaller of two amounts. One is the trust’s income that year, like interest, dividends and rent. The other is its set percent.11 The trust document and state law set what counts as income.23 Money from selling an asset is principal, not income, at least up to what the asset was worth going in.23 If the trust bought the asset, that floor is what the trust paid for it.24 By my reading, growth in value generally doesn’t show up as income to pay out.23 A “make-up” version can pay back earlier shortfalls in a later year when the trust earns more than its set percent.11 People call these NICRUTs and NIMCRUTs. Those are nicknames, not legal terms.

A flip unitrust starts out paying income only. Then it switches to a regular percent payout. The switch happens at the start of the year after a set date or event.25 The event can’t be something anyone controls. Selling an asset with no ready market counts. So does a marriage, divorce, death or the birth of a child.

The flip design is built for things that are hard to sell. Land or a private business may earn little and take time to sell. Paying income only at first means the trust never owes more than the asset can pay.

How do you fund a charitable remainder trust?

Most are funded with cash, stock or land. What you put in decides most of the tax benefit.

  • Stock that grew far past its cost and pays little income is the most common. The trust can usually sell it with no tax at that moment and spread the gain out.
  • Cash works too. But there’s no gain to put off, so the case rests on the deduction and income.
  • Land or buildings work most simply with no mortgage. A mortgage doesn’t bar it. But part of the income can then count as business-type income, taxed at 100%. There’s an exception for an old loan on a long-held piece of property (anything you own other than cash, such as stock or a fund, not just a house). You must have held it over 5 years. The loan must be over 5 years old when you give it. Then the loan isn’t counted for 10 years.26 That break is lost if the trust agrees to take over the loan. It’s also lost if the trust pays you anything for your share of the property.26 So a mortgaged property needs an expert’s review first. Income from running a business raises the same issue.
  • An IRA during your life can’t be moved straight into a CRT. Taking the money out first is taxable. The one exception is a small one-time QCD (a one-time IRA gift to a charity trust or annuity that pays you back) to a trust, covered below.

Steps to set one up

  1. Value what you’re giving. Stock that trades on a market is valued on the day you give it. Land or a private business usually needs an appraisal. Your CPA can confirm the IRS appraisal and form rules.
  2. Run the numbers. A calculation tests the payout, term and people against the 10% rule. A CRAT paying someone for life also gets the 5% test, unless the trust uses the IRS’s sample early-ending wording.12
  3. Have an attorney write the trust. It names the trustee, the people paid, the payout and the charities.
  4. Move the asset in before any sale is locked in. If it’s already sold, or a sale is as good as final, the gain is yours.
  5. Claim the deduction on your return for the year of the gift. The caps above apply.
  6. File Form 5227 every year the trust exists. Send each person paid a tax form called a Schedule K-1.21

Can I fund a charitable remainder trust with an IRA?

During your life, the only tax-free route is a one-time QCD. You can always withdraw and contribute the cash instead, but the withdrawal is taxable. At death, yes. A CRT can be named to inherit an IRA.

Here is how the reporting (the lines on your tax return where IRA withdrawals and QCDs are reported) works. Three terms come up below: Form 1099-R (the tax form that reports money paid out of an IRA or an annuity), an inherited IRA (an IRA you get from someone who died), and Form 8606 (the tax form that tracks money in an IRA you already paid tax on).

Your IRA firm reports a QCD on Form 1099-R as an ordinary IRA payout.27 It uses code 7 from your own IRA, or code 4 from an inherited IRA.27 For 2026 it may add code Y, but it doesn’t have to.28 Code Y pairs only with codes 4, 7 or K, and none of those is a Roth IRA code.29 On the 2025 Form 1040, put the whole payout on line 4a.30 Put only the part that isn’t a QCD on line 4b, and check box 2 on line 4c.3027 If you ever made nondeductible IRA contributions, Form 8606 figures line 4b.31

Once in your life, a QCD can fund a charitable gift annuity or a charitable remainder trust.32 The limit is $55,00032 in 2026, and it counts toward your yearly QCD limit.32 It was $50,000 in 2023 and is adjusted for inflation after that.33 Only QCDs can fund it, and only you, your spouse or both can get the payments.32 The right to those payments can’t be passed to anyone else.34 A gift annuity must start fixed payments of 5% or more within one year.32 The payments are taxed as ordinary income.32 On line 4c of Form 1040, you check box 3, enter “SIE,” and attach a statement.34

You must also meet the QCD age rule. 70½ or older on the day the money leaves the IRA.35

The trust must be a CRAT or a CRUT, and the usual trust rules above still apply. By my reading, the four layers don’t apply here, because every payment is ordinary income. Your CPA can confirm how to report the election. That cap is rarely big enough to justify its own trust. The details are on the one-time QCD to a trust or gift annuity page.

The rest of this section is about naming a CRT on your IRA. When a CRT inherits an IRA, the trust pays no income tax on it. So the full balance, before tax, gets reinvested. Your heirs then get payments taxed under the four layers. The IRA money reaches them as ordinary income, spread over the payment years.

Compare that with naming an adult child directly. They would hold an inherited IRA. That account comes with a deadline of its own. For deaths after 2019, most heirs named on the account must empty it by the end of the 10th year.363738.

If your estate is big enough to owe federal estate tax, it also gets a deduction for charity’s share. That share is the value of charity’s remainder interest, not the whole account.39

Gifts to charity at death are deducted from the estate for federal estate tax, with no dollar limit.40 A gift of only what’s left after others are paid qualifies only through a CRAT, CRUT or pooled income fund.40

What are the drawbacks of a charitable remainder trust?

The main drawbacks: it’s permanent, it costs money to run, it’s complex, and your heirs don’t get what’s left.

  • You can’t undo it. Once things are in the trust, they stay.
  • Your heirs don’t get the rest. Charity does.
  • It costs money. You need an attorney, a trustee, investing, a calculation and a tax return each year.
  • The gain tax is put off, not erased. Payments carry out the gains over time.
  • Only part of the gift is deductible. You deduct the value of charity’s share, not the full gift.
  • Strict rules. The IRS says it looks closely at these trusts.41 Sloppy running can cost the trust its tax-free status.

Can I replace what my heirs give up?

Some families pair a CRT with life insurance. The policy pays the heirs to make up for what goes to charity. People call this a wealth replacement trust. It’s a separate choice with its own cost and its own rules.

How much does it cost, and what is the minimum?

There is no minimum in the law. The real minimum comes from cost. Drafting, yearly tax returns, trustee fees and investing are mostly fixed. So they eat a bigger share of a small trust.

Whether a trust is big enough is a call to make with your attorney and CPA. The real question is whether it still comes out ahead after costs. Compare it with simpler choices:

What is the difference between a remainder trust and a lead trust?

They work in opposite order. A remainder trust pays people first, then charity. A charitable lead trust pays charity first. Then what’s left goes to you or your heirs.

A lead trust can give you an income tax deduction in one case. Charity’s payments must be a fixed amount or a fixed percent. And you must be treated as the trust’s owner for income tax.42 That means you pay tax on the trust’s income each year. A lead trust is mostly an estate planning tool. It’s outside the scope of this site.

What are the options for a large stock holding besides selling?

Besides selling all at once, the main giving options are below.

Option Tax on the gain in the shares given Income back to you Where the value ends up
Sell and pay the tax Yes, all at once You keep what’s left after tax You and your heirs
Give shares to charity No, on the shares given (details) None Charity
Give shares to a donor-advised fund No, on the shares given (details) None Charity, through grants you suggest
Gift annuity Part of the gain, spread over your expected years if conditions are met (details) Fixed for life Charity, after payments end
CRT None at the trust. The gain comes out in your payments Set dollars or percent, for life or up to 20 years Charity, after payments end

Other choices exist, like selling a little each year. Those are outside this site. Which mix fits depends on three things. How much income you need. How much you want to go to charity. And how much your heirs should get.

When might a CRT fit a retiree?

It tends to fit when three things are true. You own something big that cost little and you want to sell. You want income from its full value. And you’re fine with what’s left going to charity.

Times it’s often looked at:

  • A large single stock you want to spread out without paying the tax up front, while keeping income.
  • A rental building with no mortgage, like one fully written off that’s now a chore to run.
  • A business sale planned well ahead. The trust has to own it before a sale is locked in.
  • An IRA plan at death for a family that wants to give, as above.

It usually isn’t a fit for small gifts. Or for things with little gain. Or if you might need the money back. Or when you just want to give this year. For that, a QCD or grouping gifts into one year is simpler.

Common mistakes

  • Selling first. If you sell and then fund the trust with cash, the gain is yours. The asset has to go in before a sale is final.
  • Picking a payout that fails the 10% test. It’s worth running the numbers before drafting, mainly with two people paid.
  • Funding with a mortgaged building. This can trigger the 100% tax.
  • Missing the yearly return. Form 5227 is due every year.
  • Moving an IRA into a CRT during life. Taking IRA money out to fund it is taxable. The small one-time QCD is the one exception.

Sources (42)

Show

  1. A charitable remainder annuity trust (CRAT) pays a fixed sum each year of at least 5% and no more than 50% of the initial net fair market value of the trust property, at least annually, for life or lives of individuals living when the trust is created or for a term of no more than 20 years; the remainder goes to charity.

    • 26 U.S.C. § 664 (LII), § 664(d)(1)(A)a sum certain (which is not less than 5 percent nor more than 50 percent of the initial net fair market value of all property placed in trust) is to be paid, not less often than annually Checked 2026-10-09.
    • 26 U.S.C. § 664 (LII), § 664(d)(1)(A)for a term of years (not in excess of 20 years) or for the life or lives of such individual or individuals Checked 2026-10-09.
    • IRS: Charitable remainder trusts, Types of charitable remainder trustsA charitable remainder annuity trust (CRAT) pays a specific dollar amount each year. Checked 2026-10-09.

  2. A charitable remainder unitrust (CRUT) pays a fixed percentage, at least 5% and no more than 50%, of the trust's net fair market value revalued every year, so payments rise and fall with the trust's value.

    • 26 U.S.C. § 664 (LII), § 664(d)(2)(A)a fixed percentage (which is not less than 5 percent nor more than 50 percent) of the net fair market value of its assets, valued annually Checked 2026-10-09.
    • IRS: Charitable remainder trusts, Types of charitable remainder trustsThe payments generally must equal at least 5% and no more than 50% of the fair market value of the assets, valued annually. Checked 2026-10-09.

  3. A charitable remainder unitrust's payments, like a charitable remainder annuity trust's, may run only for a term of years not in excess of 20 years, or for the life or lives of individuals living when the trust is created.

    • 26 U.S.C. § 664 (LII), § 664(d)(2)(A)for a term of years (not in excess of 20 years) or for the life or lives of such individual or individuals Checked 2026-10-11.
    • 26 U.S.C. § 664 (LII), § 664(d)(2)(A)from which a fixed percentage (which is not less than 5 percent nor more than 50 percent) of the net fair market value of its assets, valued annually, is to be paid, not less often than annually, to one or more persons (at least one of which is not an organization described in section 170(c) and, in the case of individuals, only to an individual who is living at the time of the creation of the trust) for a term of years (not in excess of 20 years) or for the life or lives of such individual or individuals, Checked 2026-10-11.

  4. The value of the charitable remainder, determined under § 7520, must be at least 10% of the net fair market value of the property placed in the trust (for a CRUT, tested at each contribution).

    • 26 U.S.C. § 664 (LII), § 664(d)(1)(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 Checked 2026-10-09.
    • 26 U.S.C. § 664 (LII), § 664(d)(2)(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 Checked 2026-10-09.
    • IRS: Charitable remainder trusts, How a charitable remainder trust worksThe remainder donated to charity must be at least 10% of the initial net fair market value of all property placed in the trust Checked 2026-10-09.

  5. A CRAT or CRUT is not subject to federal income tax, so it can sell contributed appreciated assets without paying tax at the trust level; unrelated business taxable income is hit with a 100% excise tax. The IRS describes deferral of income tax on sales of contributed assets as a reason to create a CRT; the trust takes the donor's carryover basis.

    • 26 U.S.C. § 664 (LII), § 664(c)(1)shall, for any taxable year, not be subject to any tax imposed by this subtitle. Checked 2026-10-09.
    • 26 U.S.C. § 664 (LII), § 664(c)(2)(A)there is hereby imposed on such trust or unitrust an excise tax equal to the amount of such unrelated business taxable income. Checked 2026-10-09.
    • IRS: Charitable remainder trusts, Reasons to create a charitable remainder trustAllow you to defer income taxes on the sale of assets transferred to the trust Checked 2026-10-09.
    • IRS: Charitable remainder trusts, How a charitable remainder trust worksThe trust's basis in the transferred assets is carryover basis, which is the same basis that it would be in the hands of the donor Checked 2026-10-09.

  6. Unrelated business taxable income includes income from debt-financed property — property held to produce income that is subject to acquisition indebtedness, such as a building with a mortgage on it. So for a charitable remainder trust, whose unrelated business taxable income is hit with a 100% excise tax under § 664(c)(2)(A), part of the income from a mortgaged asset is caught by that tax.

    • 26 U.S.C. § 512 (LII), § 512(b)(4)Notwithstanding paragraph (1), (2), (3), or (5), in the case of debt-financed property (as defined in section 514) there shall be included, as an item of gross income derived from an unrelated trade or business, the amount ascertained under section 514(a)(1), and there shall be allowed, as a deduction, the amount ascertained under section 514(a)(2). Checked 2026-10-11.
    • 26 U.S.C. § 514 (LII), § 514(b)(1)For purposes of this section, the term "debt-financed property" means any property which is held to produce income and with respect to which there is an acquisition indebtedness (as defined in subsection (c)) at any time during the taxable year Checked 2026-10-11.
    • 26 U.S.C. § 514 (LII), § 514(c)(1)For purposes of this section, the term "acquisition indebtedness" means, with respect to any debt-financed property, the unpaid amount of— Checked 2026-10-11.

  7. Charitable remainder trusts are irrevocable, and each CRT must file Form 5227 annually.

    • IRS: Charitable remainder trusts, How a charitable remainder trust worksCharitable remainder trusts are irrevocable. Assets that go in can't be taken back. Checked 2026-10-09.
    • IRS: Charitable remainder trusts, Tax filingsCharitable remainder trusts must annually file Form 5227, Split-Interest Trust Information Return . Checked 2026-10-09.

  8. A charitable remainder annuity trust (and, under the parallel language of § 664(d)(2)(A), a charitable remainder unitrust) must pay its annual amount to one or more persons, at least one of which is not an organization described in section 170(c); a charity may be among those paid, but cannot be the only recipient of the payments.

    • 26 U.S.C. § 664 (LII), § 664(d)(1)(A)is to be paid, not less often than annually, to one or more persons (at least one of which is not an organization described in section 170(c) and, in the case of individuals, only to an individual who is living at the time of the creation of the trust) Checked 2026-10-11.

  9. A CRAT's governing instrument must prohibit additional contributions after the initial contribution (Treas. Reg. § 1.664-2(b)).

    • 26 CFR § 1.664-2 (LII), § 1.664-2(b)A trust is not a charitable remainder annuity trust unless its governing instrument provides that no additional contributions may be made to the charitable remainder annuity trust after the initial contribution . Checked 2026-10-09.

  10. A charitable remainder unitrust's governing instrument must either prohibit additional contributions after the initial one or contain the regulation's rules for valuing them and computing the payout in the year of the addition; additions are allowed only if the instrument so provides.

    • 26 CFR § 1.664-3 (LII), § 1.664-3(b)unless its governing instrument either prohibits additional contributions to the trust after the initial contribution or provides that for the taxable year of the trust in which the additional contribution is made Checked 2026-10-10.

  11. A unitrust may pay the lesser of trust income or the fixed percentage, with a make-up provision for prior shortfalls when income later exceeds the percentage (the 'net income' or NIMCRUT variant).

    • 26 U.S.C. § 664 (LII), § 664(d)(3)the amount of the trust income, if such amount is less than the amount required to be distributed under paragraph (2)(A) Checked 2026-10-09.
    • 26 U.S.C. § 664 (LII), § 664(d)(3)(B)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. Checked 2026-10-09.

  12. Under Rev. Rul. 70-452 as applied in Rev. Rul. 77-374, if the probability that the life beneficiary(ies) survive exhaustion of CRAT assets is greater than 5%, the remainder does not qualify for a charitable deduction and the CRAT is not exempt under § 664(c). Rev. Proc. 2016-42 provides a sample early-termination provision; a CRAT containing it is not subject to the test.

    • Rev. Proc. 2016-42, 2016-34 I.R.B. 269, Section 2 (Background)Rev. Rul. 70 – 452 holds that, if there is a greater than 5 percent probability that payment of the annuity will defeat the charity’s interest by exhausting the trust assets by the end of the trust term, then the possibility that the charitable transfer will not become effective is not so remote as to be negligible. Checked 2026-10-09.
    • Rev. Proc. 2016-42, 2016-34 I.R.B. 269, Section 2 (Background)then the charitable remainder interest of the CRAT does not qualify for an income, gift, or estate tax charitable deduction and the CRAT is not exempt from income tax under § 664(c). Checked 2026-10-09.
    • Rev. Proc. 2016-42, 2016-34 I.R.B. 269, Section 7A CRAT containing the sample provision will not be subject to the probability of exhaustion test set forth in Rev. Rul. 70-452, 1970-2 C.B.199, and applied in Rev. Rul. 77-374, 1977-2 C.B. 329. Checked 2026-10-09.

  13. A donor to a CRT gets a partial charitable deduction equal to the present value of the charity's remainder interest, computed with IRS actuarial tables and the § 7520 rate (120% of the federal midterm rate, rounded to the nearest 0.2%), with an election to use either of the two prior months' rates. A remainder interest in trust is deductible only if the trust is a CRAT, CRUT or pooled income fund. The deduction is subject to AGI limits and § 170(e).

    • IRS: Charitable remainder trusts, Charitable deductions for contributionsThe deduction is limited to the present value of the charitable organization's remainder interest. Checked 2026-10-09.
    • IRS: Charitable remainder trusts, Charitable deductions for contributionsThe charitable deduction is also subject to adjusted gross income limits and limitations under Internal Revenue Code (IRC) Section§ 170(e) . Checked 2026-10-09.
    • 26 U.S.C. § 7520 (LII), § 7520(a)equal to 120 percent of the Federal midterm rate in effect under section 1274(d)(1) for the month in which the valuation date falls. Checked 2026-10-09.
    • 26 U.S.C. § 7520 (LII), § 7520(a)the taxpayer may elect to use such Federal midterm rate for either of the 2 months preceding the month in which the valuation date falls Checked 2026-10-09.
    • 26 U.S.C. § 170 (LII), § 170(f)(2)(A)no deduction shall be allowed under this section for the value of a contribution of a remainder interest unless the trust is a charitable remainder annuity trust or a charitable remainder unitrust Checked 2026-10-09.

  14. Capital gain property given to most private (nonoperating) foundations is deductible only at basis, except 'qualified appreciated stock' (publicly traded stock that is capital gain property, subject to a 10% ownership limit), which keeps a fair-market-value deduction. Capital gain property gifts to these organizations are limited to 20% of AGI (or, if less, 30% of AGI minus 30%-category capital gain gifts).

    • 26 U.S.C. § 170 (LII), § 170(e)(1)(B)(ii)(ii) to or for the use of a private foundation (as defined in section 509(a) ), other than a private foundation described in subsection (b)(1)(F), Checked 2026-10-09.
    • 26 U.S.C. § 170 (LII), § 170(e)(5)(A)Subparagraph (B)(ii) of paragraph (1) shall not apply to any contribution of qualified appreciated stock . Checked 2026-10-09.
    • 26 U.S.C. § 170 (LII), § 170(e)(5)(B)for which (as of the date of the contribution) market quotations are readily available on an established securities market, and (ii) which is capital gain property Checked 2026-10-09.
    • 26 U.S.C. § 170 (LII), § 170(e)(5)(C)Donor may not contribute more than 10 percent of stock of corporation Checked 2026-10-09.
    • 26 U.S.C. § 170 (LII), § 170(b)(1)(D)(i)(I) 20 percent of the taxpayer’s contribution base for the taxable year, or (II) the excess of 30 percent of the taxpayer’s contribution base for the taxable year over the amount of the contributions of capital gain property to which subparagraph (C) applies. Checked 2026-10-09.
    • IRS Publication 526 (2025), Capital Gain Property, ExceptionsThe property (other than qualified appreciated stock) is contributed to certain private nonoperating foundations; Checked 2026-10-09.

  15. The 10 percent limit on qualified appreciated stock is cumulative and aggregated: stock is not qualified appreciated stock to the extent the amount contributed, increased by the aggregate amount of all prior such contributions by the donor of stock in that corporation, exceeds 10 percent in value of all of the corporation's outstanding stock; and the donor is treated as making all contributions made by any member of the donor's family.

    • 26 U.S.C. § 170 (LII), § 170(e)(5)(C)(i)In the case of any donor, the term “qualified appreciated stock” shall not include any stock of a corporation contributed by the donor in a contribution to which paragraph (1)(B)(ii) applies (determined without regard to this paragraph) to the extent that the amount of the stock so contributed (when increased by the aggregate amount of all prior such contributions by the donor of stock in such corporation) exceeds 10 percent (in value) of all of the outstanding stock of such corporation. Checked 2026-10-11.
    • 26 U.S.C. § 170 (LII), § 170(e)(5)(C)(ii)For purposes of clause (i), an individual shall be treated as making all contributions made by any member of his family (as defined in section 267(c)(4)). Checked 2026-10-11.

  16. Starting in 2026, itemized charitable deductions are allowed only to the extent total contributions exceed 0.5% of the taxpayer's contribution base (AGI). Disallowed amounts may carry forward only in limited circumstances (new § 170(d)(1)(C) — not reviewed).

    • 26 U.S.C. § 170 (LII), § 170(b)(1)(I)shall be allowed only to the extent that the aggregate of such contributions exceeds 0.5 percent of the taxpayer’s contribution base Checked 2026-10-09.
    • 26 U.S.C. § 170 (LII), Effective date note, P.L. 119-21 § 70425(c)shall apply to taxable years beginning after December 31, 2025 . Checked 2026-10-09.

  17. The 0.5% floor applies to charitable contributions 'otherwise allowable (without regard to this subparagraph)' as a deduction, i.e., read here as the amount allowable after the percentage-of-AGI limits. This ordering is the reviewer's reading of the statute text; no IRS worked example was located.

    • 26 U.S.C. § 170 (LII), § 170(b)(1)(I)Any charitable contribution otherwise allowable (without regard to this subparagraph) as a deduction under this section shall be allowed only to the extent that the aggregate of such contributions exceeds 0.5 percent of the taxpayer’s contribution base for the taxable year. Checked 2026-10-09.

  18. The 0.5% floor is applied first against 20%-limit capital gain gifts, then 30% capital gain gifts, then 30%-limit (other) gifts, then conservation gifts, then 50% gifts, and last against 60% cash gifts.

    • 26 U.S.C. § 170 (LII), § 170(b)(1)(I)(i)first, by taking into account charitable contributions to which subparagraph (D) applies to the extent thereof, Checked 2026-10-09.
    • 26 U.S.C. § 170 (LII), § 170(b)(1)(I)(vi)sixth, by taking into account charitable contributions to which subparagraph (G) applies to the extent thereof. Checked 2026-10-09.

  19. A gift to a charitable remainder trust is a contribution of a remainder interest in property under § 170(f)(2)(A), not a contribution 'of cash' under § 170(b)(1)(G). The general percentage limit for a contribution to a § 170(b)(1)(A) organization is 50 percent of the contribution base; the 60 percent limit of § 170(b)(1)(G) is keyed to contributions of cash.

    • 26 U.S.C. § 170 (LII), § 170(f)(2)(A)In the case of property transferred in trust, no deduction shall be allowed under this section for the value of a contribution of a remainder interest unless the trust is a charitable remainder annuity trust or a charitable remainder unitrust (described in section 664), or a pooled income fund (described in section 642(c)(5)) Checked 2026-10-11.
    • 26 U.S.C. § 170 (LII), § 170(b)(1)(A)shall be allowed to the extent that the aggregate of such contributions does not exceed 50 percent of the taxpayer's contribution base for the taxable year Checked 2026-10-11.

  20. A remainder interest in trust is a gift 'to' the charity, unless the trust instrument says that, when the prior interest ends, the interest is to be held in trust for the charity's benefit; then it is 'for the use of' the charity. Gifts 'for the use of' a public charity fall outside § 170(b)(1)(A), so cash is limited to 30% of the contribution base (§ 170(b)(1)(B)) and capital gain property to 20% (§ 170(b)(1)(D)).

    • 26 CFR § 1.170A-8 (LII), § 1.170A-8(a)(2)shall be considered as made “to” the charitable organization except that, if such interest is transferred in trust and, pursuant to the terms of the trust instrument, the interest contributed is, upon termination of the predecessor estate , to be held in trust for the benefit of such organization , the contribution shall be considered as made “for the use of” such organization . Checked 2026-10-10.
    • 26 U.S.C. § 170 (LII), § 170(b)(1)(B)Any charitable contribution other than a charitable contribution to which subparagraph (A) or (G) applies shall be allowed to the extent that the aggregate of such contributions does not exceed the lesser of— (i) 30 percent of the taxpayer’s contribution base for the taxable year Checked 2026-10-10.
    • 26 U.S.C. § 170 (LII), § 170(b)(1)(D)(i)In the case of charitable contributions (other than charitable contributions to which subparagraph (A) applies) of capital gain property, the total amount of such contributions of such property taken into account under subsection (a) for any taxable year shall not exceed the le Checked 2026-10-10.

  21. Payments from a CRT carry out the trust's income in four tiers: first ordinary income (current and undistributed prior), then capital gain, then other income (including tax-exempt income), then tax-free return of corpus. Payments are reported to the beneficiary on Schedule K-1 (Form 1041).

    • 26 U.S.C. § 664 (LII), § 664(b)(1)First, as amounts of income (other than gains, and amounts treated as gains, from the sale or other disposition of capital assets) includible in gross income Checked 2026-10-09.
    • 26 U.S.C. § 664 (LII), § 664(b)(2)Second, as a capital gain to the extent of the capital gain of the trust for the year and the undistributed capital gain of the trust for prior years Checked 2026-10-09.
    • 26 U.S.C. § 664 (LII), § 664(b)(4)Fourth, as a distribution of trust corpus. Checked 2026-10-09.
    • IRS: Charitable remainder trusts, Taxes on income paymentsOther income: Once all ordinary income and capital gains in the trust are fully distributed, payments are characterized as other income to the extent of the trust's current year and accumulated other income. This includes tax-exempt income. Checked 2026-10-09.
    • IRS: Charitable remainder trusts, Taxes on income paymentsmust be reported to them on Schedule K-1 (Form 1041) Checked 2026-10-09.

  22. When a taxpayer sells property to raise cash, only the gain is taxed: gain is the amount realized over the adjusted basis, and basis is the property's cost. So the part of a sale's proceeds that returns the owner's cost is not income. Applied to the worked comparison on this page, a 5% withdrawal taken from a reinvested brokerage balance is fully taxable only if it comes out as current income such as interest or dividends; if shares are sold to fund it, only the gain portion of those shares is taxed.

  23. For a net income unitrust, 'trust income' under § 664(d)(3)(A) means income determined under the terms of the governing instrument and applicable local law (§ 643(b)). Proceeds from selling assets the donor contributed must be allocated to principal, not trust income, at least to the extent of the fair market value of those assets when contributed; proceeds from assets the trust purchased must be allocated to principal at least to the extent of the purchase price. Amounts above those floors may be allocated to income only if the governing instrument so provides and local law does not prohibit it.

    • 26 U.S.C. § 643 (LII), § 643(b)means the amount of income of the estate or trust for the taxable year determined under the terms of the governing instrument and applicable local law Checked 2026-10-11.
    • 26 CFR § 1.664-3 (LII), § 1.664-3(a)(1)(i)(b)(3)Proceeds from the sale or exchange of any assets contributed to the trust by the donor must be allocated to principal and not to trust income at least to the extent of the fair market value of those assets on the date of their contribution to the trust. Checked 2026-10-11.
    • 26 CFR § 1.664-3 (LII), § 1.664-3(a)(1)(i)(b)(3)Except as provided in the two preceding sentences, proceeds from the sale or exchange of any assets contributed to the trust by the donor or purchased by the trust may be allocated to income, pursuant to the terms of the governing instrument, if not prohibited by applicable local law. Checked 2026-10-11.

  24. Proceeds from the sale or exchange of assets the trust purchased must be allocated to principal, not trust income, at least to the extent of the trust's purchase price of those assets.

    • 26 CFR § 1.664-3 (LII), § 1.664-3(a)(1)(i)(b)(3)Proceeds from the sale or exchange of any assets purchased by the trust must be allocated to principal and not to trust income at least to the extent of the trust's purchase price of those assets. Checked 2026-10-11.

  25. A unitrust may start as an income-only unitrust and 'flip' to the standard fixed-percentage payout, if triggered by a specific date or a single non-discretionary event (such as sale of unmarketable assets, marriage, divorce, death or birth of a child), effective the following taxable year.

    • 26 CFR § 1.664-3 (LII), § 1.664-3(a)(1)(i)(c)(1)is triggered on a specific date or by a single event whose occurrence is not discretionary with, or within the control of, the trustees or any other persons Checked 2026-10-09.
    • 26 CFR § 1.664-3 (LII), § 1.664-3(a)(1)(i)(c)(2)occurs at the beginning of the taxable year that immediately follows the taxable year during which the date or event specified Checked 2026-10-09.
    • 26 CFR § 1.664-3 (LII), § 1.664-3(a)(1)(i)(d)triggering event based on the sale of unmarketable assets as defined in § 1.664-1(a)(7)(ii) , or the marriage, divorce, death, or birth of a child Checked 2026-10-09.

  26. Where property is acquired by gift subject to a mortgage that was placed on the property more than 5 years before the gift, and the donor held the property more than 5 years before the gift, the indebtedness secured by that mortgage is not treated as acquisition indebtedness for 10 years following the gift. The exception does not apply if the organization assumes and agrees to pay the indebtedness, or pays anything for the donor's equity.

    • 26 U.S.C. § 514 (LII), § 514(c)(2)(B)(ii)If an organization acquires property by gift subject to a mortgage which was placed on the property more than 5 years before the gift, which property was held by the donor more than 5 years before the gift, the indebtedness secured by such mortgage shall not be treated as acquisition indebtedness during a period of 10 years following the date of such gift. Checked 2026-10-11.
    • 26 U.S.C. § 514 (LII), § 514(c)(2)(B), flush textThis subparagraph shall not apply if the organization, in order to acquire the equity in the property by bequest, devise, or gift, assumes and agrees to pay the indebtedness secured by the mortgage, or if the organization makes any payment for the equity in the property owned by the decedent or the donor. Checked 2026-10-11.

  27. The custodian reports the QCD as an ordinary IRA distribution on Form 1099-R (code 7 for an owner, code 4 for an inherited IRA); there is no QCD-specific code on 2025 forms. For 2026, the new code Y may optionally be added. On Form 1040 (2025), the taxpayer enters the gross amount on line 4a, the non-QCD taxable portion on line 4b, and checks box 2 on line 4c. The older "write QCD next to line 4b" instruction has been replaced by the line 4c checkbox on the 2025 form.

  28. Under the current Form 1099-R instructions, a QCD may be reported with code Y paired with code 7 (non-inherited IRA), code 4 (inherited IRA), or code K (IRA assets without a readily available fair market value). Code Y is optional for tax year 2026.

    • Instructions for Forms 1099-R and 5498 (current online version, covers 2026), Box 7a, Qualified charitable distributions (QCDs)To report a QCD, use code Y with: Code 7 for a QCD from a non-inherited (normal distribution) IRA, Code 4 for a QCD from an inherited (death distribution) IRA, or Code K for a QCD reporting distributions of traditional IRA assets not having a readily available FMV that are either from non-inherited or inherited IRAs. Checked 2026-10-09.

  29. Under the 2026 Form 1099-R instructions, code Y must be used together with code 4, 7 or K; none of those is a Roth IRA distribution code (Roth IRA distributions use codes Q, T or J), so the instructions provide no code Y combination for a QCD from a Roth IRA. Code Y is optional for tax year 2026.

  30. On the 2025 Form 1040, if all or part of an IRA distribution is a QCD, the total goes on line 4a; if only part is a QCD, the non-QCD part goes on line 4b; box 2 on line 4c is checked. When the IRA has nondeductible basis and a distribution goes to charity, Form 8606 is filed (Pub 590-B Amy example), and the basis portion may be deductible on Schedule A subject to AGI limits.

    • Instructions for Form 1040 (2025), Lines 4a and 4b, Exception 3If all or part of the distribution is a qualified charitable distribution (QCD), enter the total distribution on line 4a. If the total amount distributed is a QCD, enter -0- on line 4b. If only part of the distribution is a QCD, enter the part that is not a QCD on line 4b unless Exception 2 applies to that part. Check box 2 on line 4c. Checked 2026-10-09.
    • IRS Publication 590-B (2025), Ch. 2, QCDs, Amy exampleBecause Amy made a distribution of nondeductible contributions from her IRA, she must file Form 8606 with her return. Checked 2026-10-09.
    • IRS Publication 590-B (2025), Ch. 2, QCDs, Amy examplethe $5,000 portion of the distribution attributable to the nondeductible contributions can be deducted as a charitable contribution, subject to adjusted gross income (AGI) limits. Checked 2026-10-09.

  31. On the 2025 Form 1040, Exception 2 for lines 4a/4b: if you received a distribution from a non-Roth IRA and made nondeductible contributions to any traditional IRA for 2025 or an earlier year, enter the total on line 4a and use Form 8606 to figure line 4b. Rollovers are Exception 1.

    • Instructions for Form 1040 (2025), Lines 4a and 4b, Exception 2Exception 2. If any of the following apply, enter the total distribution on line 4a and see Form 8606 and its instructions to figure the amount to enter on line 4b. You received a distribution from an IRA (other than a Roth IRA) and you made nondeductible contributions to any of your traditional IRAs for 2025 or an earlier year. Checked 2026-10-10.

  32. Once in a lifetime, a QCD may fund a charitable remainder annuity trust, charitable remainder unitrust, or charitable gift annuity, if the entity is funded only by QCDs, only the owner and/or spouse hold the (nonassignable) income interest, and a CGA starts fixed payments of 5% or more within 1 year. The limit is $53,000 (2024), $54,000 (2025), $55,000 (2026) and counts within the annual QCD limit. Payments received are ordinary income. A statement must be attached to the return.

    • 26 U.S.C. § 408 (LII), § 408(d)(8)(F)(i)(I)an election is not in effect under this subparagraph for a preceding taxable year Checked 2026-10-09.
    • 26 U.S.C. § 408 (LII), § 408(d)(8)(F)(ii)(III)commences fixed payments of 5 percent or greater not later than 1 year from the date of funding. Checked 2026-10-09.
    • 26 U.S.C. § 408 (LII), § 408(d)(8)(F)(iv)no person holds an income interest in the split-interest entity other than the individual for whose benefit such account is maintained, the spouse of such individual, or both Checked 2026-10-09.
    • 26 U.S.C. § 408 (LII), § 408(d)(8)(F)(v)(I)shall be treated as ordinary income in the hands of the beneficiary Checked 2026-10-09.
    • IRS Notice 2023-75 (2024 limits), Section 408(d)(8)(F) paragraphis increased from $50,000 to $53,000. Checked 2026-10-09.
    • IRS Notice 2024-80 (2025 limits), Section 408(d)(8)(F) paragraphis increased from $53,000 to $54,000. Checked 2026-10-09.
    • IRS Notice 2025-67 (2026 limits), Section 408(d)(8)(F) paragraphfrom $54,000 to $55,000. Checked 2026-10-09.
    • Instructions for Form 1040 (2025), Line 4a/4b, Exception 3This includes any amount (up to $54,000) of a one-time QCD to a split-interest entity (SIE). Checked 2026-10-09.

  33. The statute sets the one-time split-interest QCD amount at $50,000; the provision (SECURE 2.0 § 307) applies to distributions in taxable years beginning after December 29, 2022, so $50,000 was the 2023 amount. It is inflation-indexed for years after 2023 ($53,000 for 2024, $54,000 for 2025, $55,000 for 2026).

    • 26 U.S.C. § 408 (LII), § 408(d)(8)(F)(i)(II)the aggregate amount of distributions of the taxpayer with respect to which an election under this subparagraph is made does not exceed $50,000 Checked 2026-10-10.
    • 26 U.S.C. § 408 (LII), Effective date note, Pub. L. 117-328, div. T, § 307(c)shall apply to distributions made in taxable years beginning after the date of the enactment of this Act Checked 2026-10-10.
    • 26 U.S.C. § 408 (LII), § 408(d)(8)(G)(i)In the case of any taxable year beginning after 2023, each of the dollar amounts in subparagraphs (A) and (F) shall be increased Checked 2026-10-10.

  34. To report the one-time split-interest QCD, check box 3 on Form 1040 line 4c, enter "SIE", and attach a statement covering no prior election, that only the owner and/or spouse hold the income interest, that it is nonassignable, and the amount.

  35. The IRA owner (or beneficiary) must be at least age 70½ on the date the distribution is made. This age was not changed when the RMD starting age rose to 73 (and later 75); QCD eligibility can begin years before RMDs are required.

    • 26 U.S.C. § 408 (LII), § 408(d)(8)(B)(ii)which is made on or after the date that the individual for whose benefit the plan is maintained has attained age 70½ Checked 2026-10-09.
    • IRS Publication 590-B (2025), Ch. 2, Qualified charitable distributions (QCDs)You must be at least age 70½ when the distribution is made. Checked 2026-10-09.
    • IRS Publication 590-B (2025), Ch. 1, Required beginning date FAQYou must begin receiving required minimum distributions by April 1 of the year following the year you reach age 73. Checked 2026-10-09.

  36. For IRA owners who die after 2019, a designated beneficiary who is not an eligible designated beneficiary must empty the account by the end of the 10th year after death. Eligible designated beneficiaries are the surviving spouse, the owner's minor child, a disabled or chronically ill individual, or someone not more than 10 years younger than the owner. If the owner died before the required beginning date and the 10-year rule applies, no distribution is required before the 10th year; if the owner died on or after the required beginning date, the final regulations require annual distributions to continue until the account is fully distributed. Eligible designated beneficiaries generally use life-expectancy distributions; a minor child's 10-year period starts at majority.

    • IRS Publication 590-B (2025), What's New / Reminders, Modification of required distribution rules for designated beneficiariesAll distributions must be made by the end of the 10th year after death, except for distributions made to certain eligible designated beneficiaries. Checked 2026-10-09.
    • IRS Publication 590-B (2025), Ch. 1, IRA Beneficiaries, Eligible designated beneficiariesAn IRA beneficiary is an eligible designated beneficiary if the beneficiary is the owner's surviving spouse, the owner's minor child, a disabled individual, a chronically ill individual, or any other individual who is not more than 10 years younger than the IRA owner. Checked 2026-10-09.
    • IRS Publication 590-B (2025), Ch. 1, Payment under the 10-year ruleIf the IRA owner dies before the required beginning date and the 10-year rule applies, no distribution is required for any year before the 10th year. Checked 2026-10-09.
    • 26 CFR § 1.401(a)(9)-5 (LII), § 1.401(a)(9)-5(d)(1)(i)The requirement to take an annual distribution in accordance with the preceding sentence continues to apply for every distribution calendar year until the employee 's interest is fully distributed. Checked 2026-10-09.
    • IRS Publication 590-B (2025), Ch. 1, Individual designated beneficiariesThe terms of most IRAs require individual designated beneficiaries, who are eligible designated beneficiaries, to take required minimum distributions using the life expectancy rules Checked 2026-10-09.
    • IRS Publication 590-B (2025), Ch. 1, 10-year ruleupon the minor child beneficiary reaching the age of majority Checked 2026-10-09.

  37. A designated beneficiary who is not an eligible designated beneficiary must fully distribute an inherited IRA by the 10th anniversary of the owner's death.

    • IRS Publication 590-B (2025), IRA Beneficiaries, Individual designated beneficiariesIf the individual designated beneficiary is not an eligible designated beneficiary, the beneficiary is required to fully distribute the IRA by the 10th anniversary of the owner's death under the 10-year rule. Checked 2026-10-09.

  38. If the owner died on or after the required beginning date, a designated beneficiary takes yearly required distributions for years after the year of death, and a designated beneficiary who is not an eligible designated beneficiary must also finish within 10 years.

    • IRS Publication 590-B (2025), Ch. 1, Owner Died on or After Required Beginning DateIf the owner died on or after their required beginning date (defined earlier) and you are a designated beneficiary, base your required minimum distributions for years after the year of the owner’s death on the longer of: Checked 2026-10-10.
    • IRS Publication 590-B (2025), Ch. 1, Owner Died on or After Required Beginning DateDistributions to a designated beneficiary who is not an eligible designated beneficiary must be completed within 10 years of the death of the owner. Checked 2026-10-10.

  39. For federal estate tax, where a transfer serves both a charitable and a private purpose, the deduction is allowed only for the charitable beneficial interest insofar as it is presently ascertainable and severable, and the amount of the deduction for a contribution of a partial interest is the fair market value of that partial interest at the appropriate valuation date — not the value of the whole transferred property.

    • 26 CFR § 20.2055-2 (LII), § 20.2055-2(a)If a trust is created or property is transferred for both a charitable and a private purpose, deduction may be taken of the value of the charitable beneficial interest only insofar as that interest is presently ascertainable, and hence severable from the noncharitable interest. Checked 2026-10-11.
    • 26 CFR § 20.2055-2 (LII), § 20.2055-2(f)(1)The amount of the deduction in the case of a contribution of a partial interest in property to which this section applies is the fair market value of the partial interest at the appropriate valuation date Checked 2026-10-11.

  40. The federal estate tax allows an unlimited deduction for bequests to qualifying charities; a split gift (charity gets a remainder) is deductible only through a CRAT, CRUT or pooled income fund.

    • 26 U.S.C. § 2055 (LII), § 2055(a)the value of the taxable estate shall be determined by deducting from the value of the gross estate the amount of all bequests, legacies, devises, or transfers— Checked 2026-10-09.
    • 26 U.S.C. § 2055 (LII), § 2055(e)(2)(A)in the case of a remainder interest, such interest is in a trust which is a charitable remainder annuity trust or a charitable remainder unitrust Checked 2026-10-09.

  41. The IRS states it closely examines CRTs for correct reporting, and lists inflating the basis of contributed assets and mischaracterizing ordinary income or capital gain distributions as corpus among illegal uses.

  42. A charitable lead trust gives charity the payments first. An income tax deduction for a lead (income) interest given in trust is allowed only if the charity's interest is a guaranteed annuity or a fixed percentage of the trust's yearly value, and the donor is treated as the owner of the trust for income tax purposes (so the donor is taxed on the trust's income).

    • 26 U.S.C. § 170 (LII), § 170(f)(2)(B)No deduction shall be allowed under this section for the value of any interest in property (other than a remainder interest) transferred in trust unless the interest is in the form of a guaranteed annuity or the trust instrument specifies that the interest is a fixed percentage distributed yearly of the fair market value of the trust property (to be determined yearly) and the grantor is treated as the owner of such interest for purposes of applying section 671. Checked 2026-10-10.