May 3, 2001 | Read Time: 2 minutes
By GRANT WILLIAMS
The Internal Revenue Service says that it received 85,060 informational tax returns in 1998 from charitable remainder trusts, a popular form of planned giving. The data was released in the tax agency’s first study of the charitable trusts.
Of the total returns received by the government, 20,137 — or 24 percent — were filed by charitable remainder annuity trusts, and 64,923 — or 76 percent — were provided by charitable remainder unitrusts.
In an annuity trust, a donor transfers cash, stock, or property to the trust, which then provides a yearly fixed payment — equal to at least 5 percent of the value of the asset at the time the gift agreement was made — to the donor, a beneficiary, or both. After the donor and any beneficiaries have died, the trust assets go to charity.
In a unitrust, a donor puts a contribution in the trust, which then makes regular payments to a beneficiary based on a fixed percentage of the fair market value of the net assets of the trust as they are valued each year. After the beneficiary dies, or payments from the trust otherwise expire, the remainder of the trust goes to charity.
The I.R.S. said that charitable annuity trusts reported net ordinary income of $300-million in 1998, total net capital gains of $900-million, and distributions of more than $700-million.
Charitable remainder unitrusts reported total assets at a fair market value of more than $64-billion and said that they earned $1.8-billion in ordinary income, received $8.2-billion in total net capital gains, and distributed more than $4.4-billion to beneficiaries.
The Internal Revenue Service said that its report, which appears in its Statistics of Income Bulletin for winter 2000-2001, is the first of what will be an annual series of studies of charitable remainder trusts and other types of planned gifts.
The bulletin is available for $22 a copy from the Superintendent of Documents, U.S. Government Printing Office, P.O. Box 371954, Pittsburgh, Pa. 15250.
