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§ 9.22 CONTRIBUTIONS BY TRUSTSavailable to the trust, for federal tax purposes, the trust must take into account itsdistributive share of the partnership’s income, gain, loss, deductions (includingcharitable contributions), and credits. 510 Under these circumstances, a trust’sdeduction for its distributive share of a charitable contribution made by a partnershipwill not be disallowed merely because the trust’s governing instrumentdoes not authorize the trustee to make charitable contributions. 511(b) Gifts of Interests in PropertiesA charitable deduction is not allowed for the fair market value of a contributionof any interest in property that is less than the donor’s entire interest in the propertyand that is transferred in trust, unless the transfer meets certain requirements.512 However, if a donor’s entire interest in the property is transferred intrust and contributed to a charitable organization, a charitable deduction isallowed. 513 For example, if an item of property is transferred in trust, with therequirement that the income of the trust be paid for a term of 20 years to achurch and thereafter the remainder is to be paid to an educational institution, adeduction is allowed for the value of the property. 514These rules do not apply with respect to a contribution of a partial interest inproperty if the interest is the donor’s entire interest in the property (an incomeinterest or remainder interest). If the property in which a partial interest existswas divided in order to create the interest and thus avoid these rules, however,the deduction is not allowable. 515EXAMPLE 9.18X, an individual, desires to contribute to a charitable organization the reversionary interest incertain securities that she owns. X transfers the securities in trust with the requirement that theincome of the trust be paid to her son for life and that the reversionary interest be paid toherself. Immediately after creating the trust, X contributes the reversionary interest to thecharitable organization. X is not allowed to take a charitable contribution deduction for the giftof her entire interest, namely, the reversionary interest in the trust. aaId.As the example illustrates, the charitable contribution deduction is precludedwhen the ineligible partial interests are created on or about the sametime. This ban is not necessarily permanent, however; when there is a substantialtime gap between the creation of a trust and the contribution in question, thecharitable deduction may be available. One instance in which this occurredinvolved the contribution of a fraction of an income interest in a charitableremainder trust to a charitable organization that was the remainder interest beneficiary(leading to a partial termination of the trust). The IRS was persuaded510 See § 6.14.511 Rev. Rul. 2004-5, 2004-3 I.R.B. 295.512 IRC § 170(f)(2); Reg. § 1.170A-6(a)(1).513 IRC § 170(f)(2)(D).514 Reg. § 1.170A-6(a)(1).515 Reg. § 1.170A-6(a)(2). 337