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SPECIAL GIFT SITUATIONSIf a transfer will be made to a charitable remainder trust, the trust probablyshould be established during the individual’s lifetime, with the expectation thatit will receive its largest contribution upon the individual’s death. This will makeit easier to keep the IRD off the estate’s income tax return than if payments aremade to a testamentary charitable remainder trust established in the decedent’swill. If an inter vivos remainder trust is established, a unitrust would be moreappropriate than an annuity trust, because an annuity trust can only receive asingle contribution, whereas a unitrust can receive numerous contributions. 302Tax-Exempt Organization Issues. A charitable remainder trust is a tax-exemptorganization; 303 a pooled income fund is not. 304 A pooled income fund avoidspaying income tax by distributing all of its net income (with a special rule forlong-term capital gains). 305 A contribution of IRD property to a pooled incomefund causes special problems because it is generally treated as principal underthe trust instrument and state law but as taxable income under the federal taxlaw. This produces a “trapping distribution” that will probably require a pooledincome fund to pay income tax. Transfers of IRD property to pooled incomefunds should therefore be avoided.There is no unrelated business income tax exposure when a charitable organizationor a charitable remainder trust receives IRD property. 306Even though contributions to charitable remainder trusts are considered corpusunder state trust law, the taxable nature of IRD property causes it to be classifiedas ordinary income rather than corpus. 307 There is no authority as to the taxconsequences with respect to the applicable federal estate tax deduction if retirementplan assets are paid to a charitable remainder trust. This does not fit very wellinto the multitier distribution system. 308 Perhaps some or all of it can be deductedratably over the expected life of the trust. 309§ 9.11 COMMODITY FUTURES CONTRACTSThe marked-to-market provisions of the federal tax law, concerning the transferof commodity futures contracts, generally require that a transfer result in realizationas income of the amount of the capital gain inherent in the contracts. 310 Acourt held that, in the instance of a charitable contribution of futures contracts,the donor must mark the contracts to market and recognize as income the longtermcapital gain portion of the contracts. 311302 See § 12.8.303 See § 12.6.304 See § 13.8.305 IRC § 642(c)(3), (5).306 Priv. Ltr. Rul. 9634019.307 Id.308 See § 12.5.309 Reg. § 1.691(c)-1(d).310 IRC § 1256.311 Greene v. United States, 79 F.3d 1348 (2d Cir.), cert. denied, 519 U.S. 1028 (1996), rev’g Greene v. UnitedStates, 864 F. Supp. 407 (S.D.N.Y. 1994). The argument was injected by the IRS in prior litigation involvingthe same donors in an appellate proceeding, but the court declined to review the issue because it was not raisedat trial. Greene v. United States, 13 F.3d 577 (2d Cir. 1994). 308