Trusts and Charitable Contributions CCA 20104202 - John R. Dundon II, Enrolled Agent
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Trusts and Charitable Contributions CCA 20104202

Trusts and Charitable Contributions CCA 20104202

Under IRC §170(c)(2)(A) generally speaking when a trust uses its income to buy an asset and in a later year gives that asset to a charity it is allowed a charitable deduction. Chief Counsel Advice 20104202 stipulates however that if the deduction was not limited to the trust’s basis in the assets, the contribution of low-basis property would yield a double tax advantage because the trust would be able to avoid tax on the potential gain and it would be able to deduct not only the basis but also the gain from gross income.

In other words trusts generally speaking may take a charitable deduction for real property donated equal to the trust’s cost basis in the property assuming that the property in question was purchased with income generated from the trust.

 



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