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GIFTS OF AND USING LIFE INSURANCEentitled to all the payments under the contract. 59 No inference should be madeas to the applicability of other provisions of the Internal Revenue Code withrespect to the acquisition by the trust of a life insurance, endowment, or annuitycontract, or the appropriateness of this type of an investment by a charitableremainder trust.Nothing in this legislation is intended to suggest that a life insurance,endowment, or annuity contract would be a personal benefit contract solelybecause an individual who is a recipient of income from a charitable remaindertrust uses an income payment to purchase a life insurance, endowment, or annuitycontract, and a beneficiary under the contract is the recipient, a member ofhis or her family, or another person he or she designates.Excise Tax. This legislation imposes an excise tax on a charitable organizationthat pays the premiums of any life insurance, annuity, or endowment contract inconnection with a transfer for which a deduction is not allowable under theabove deduction denial rule. 60 The tax equals the amount of the premiums paidby the organization on any life insurance, annuity, or endowment contract. Thetax applies even if all of the direct and indirect beneficiaries under the contract(including any related side agreement) are charities.Payments are treated as made by the organization if they are made by anyother person pursuant to an understanding or expectation of payment. 61 Theexcise tax is to be applied taking into account rules ordinarily applicable to excisetaxes in other exempt organizations contexts, 62 such as statute of limitation rules.Reporting. The legislation requires that the charitable organization annuallyreport the amount of premiums paid during the year that is subject to the excisetax. 63 It must also report the name and taxpayer identification number of eachbeneficiary under the life insurance, annuity, or endowment contract to whichthe premiums relate. Other information could be required by the IRS. It isintended that a beneficiary include any beneficiary under any side agreement towhich the charitable organization is a party or of which it is otherwise aware.Penalties applicable to returns 64 apply to returns under this reportingrequirement. Returns required under this legislation have to be furnished atsuch time and in such manner as the IRS requires.Regulations. The legislation provides for the Treasury to promulgate regulationsnecessary or appropriate to carry out the purposes of the proposal, includingregulations to prevent avoidance of the purpose of the proposal. 65 Forexample, it is intended that the regulations will prevent avoidance of these purposesby inappropriate or improper reliance on the limited exceptions provided(see above) for certain beneficiaries under bona fide charitable gift annuities and59 IRC § 170(f)(10)(E).60 IRC § 170(f)(10)(F)(i).61 IRC § 170(f)(10)(E)(ii).62 That is, IRC ch. 41 or 42.63 IRC § 170(f)(10)(F)(iii). This report is on Form 8870.64 That is, annual information returns required by IRC § 6033.65 IRC § 170(f)(10)(I). 542