Contents

SPECIAL GIFT SITUATIONSthat the six-year gap spanning creation of the trust and the fractional interest giftdemonstrated that the donors did not inappropriately divide their interest in thetrust. 516A charitable contribution deduction is not allowed for the fair market valueof a gift, to a charitable organization, of a remainder interest in property that isless than the donor’s entire interest in the property and that the donor transfersin trust, unless the trust is• a pooled income fund, 517• a charitable remainder annuity trust, 518 or• a charitable remainder unitrust. 519A charitable contribution deduction is not allowed for the fair market valueof a gift, to a charitable organization, of an income interest in property that isless than the donor’s entire interest in the property and that the donor transfersin trust, unless the income interest is a guaranteed annuity interest or a unitrustinterest, and the grantor is treated as the owner of the interest. 520(c) Guaranteed Annuity InterestsAn income interest is a guaranteed annuity interest only if it is an irrevocable right,pursuant to the governing instrument of the trust, to receive a guaranteed annuity.A guaranteed annuity is an arrangement under which a determinableamount is paid periodically (but not less than annually), for a specified termand/or for the life or lives of an individual or individuals, each of whom mustbe living at the date of transfer and can be ascertained at that date. For example,the annuity may be paid for the life of A plus a term of years. An amount isdeterminable if the exact amount that must be paid under the conditions specifiedin the governing instrument of the trust can be ascertained as of the date oftransfer. For example, the amount to be paid may be a stated sum for a term, orfor the life of an individual, at the expiration of which it may be changed by aspecified amount but may not be redetermined by reference to a fluctuatingindex, such as the cost of living index. The amount to be paid may be expressedin terms of a fraction or percentage of the cost of living index on the date oftransfer. 521An income interest is a guaranteed annuity interest only if it is a guaranteedannuity interest in every respect. For example, if the income interest is the rightto receive from a trust each year a payment equal to the lesser of a sum certain ora fixed percentage of the net fair market value of the trust assets, determinedannually, the interest is not a guaranteed annuity interest. 522516 Priv. Ltr. Rul. 9550026.517 See Chapter 13.518 See § 12.2.519 See § 12.3.520 IRC § 170(f)(2)(B); Reg. § 1.170A-6(c)(1).521 Reg. § 1.170A-6(c)(2)(i)(A).522 Reg. § 1.170A-6(c)(2)(i)(B). 338