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CHARITABLE REMAINDER TRUSTSbeneficiaries, and the grantor did not have the power to alter these amounts. TheIRS ruled that the fact that the grantor was one of the trustees and had the powerto remove the others did not cause the grantor to be treated as the owner of anyportion of the trusts. Thus, the trusts complied with that aspect of the rules.The IRS then examined the impact of the power in A and B, and ultimatelyin the grantor, to designate the specific charitable remainder interest beneficiaries.The IRS ruled that this right came within an exception to the general ownershiprule 193 and thus did not cause the grantor to be treated as the owner of anyportion of the trusts. (The IRS also ruled that no other provision of the grantortrust rules would cause the grantor to be treated as the owner of the trusts.)In another instance, the IRS reviewed a trust that was intended to qualify as acharitable remainder trust. The trust had an independent trustee. The trust’s governinginstrument provided that the trustee was to pay the specified distributionto or among the named individuals (B, C, and D) in such amounts and proportionsas the trustee, in its sole discretion, from time to time determined until thedeath of the survivor of B, C, or D. B was a child of A. C was unrelated to, but wasa former employee of, A. D was unrelated to and never employed by A. The IRSheld that because the trustee was independent, the payments could be allocatedas described without precluding the trust from qualifying as a charitable remaindertrust, inasmuch as the power to make the allocation would not cause any personto be treated as the owner of the trust or any portion of it. 194A pet animal is not a person for this purpose. Thus, an otherwise qualifyingcharitable remainder unitrust that provides for care for a pet animal during itslifetime does not qualify as a CRUT. 195(e) Other PaymentsNo amount other than the unitrust amount may be paid to or for the use of anyperson other than a charitable organization. 196 An amount is not paid to or forthe use of any person other than a charitable organization if the amount is transferredfor full and complete consideration. 197 The trust may not be subject to apower to invade, alter, amend, or revoke for the beneficial use of a person otherthan a charitable organization. 198 The grantor may, however, retain the powerexercisable only by will to revoke or terminate the interest of any income beneficiaryother than a charitable organization. 199 Also, the grantor may reserve thepower to designate a substitute charitable remainder beneficiary without disqualifyingan otherwise qualifying charitable remainder unitrust. 200193 IRC § 674 (b)(4).194 Rev. Rul. 77-73, 1977-1 C.B. 175.195 Rev. Rul. 78-105, 1978-1 C.B. 295.196 IRC § 664(d)(2)(B).197 If an income interest beneficiary of a CRUT decides to terminate the CRUT by selling the interest to the remainderinterest beneficiary, the income interest beneficiary will be taxable (IRC § 1001) on the amount ofmoney and/or fair market value of the property received; the beneficiary would not have any basis in the property,so the full amount must be recognized (IRC § 1001(c)) and is taxable as long-term capital gain. Rev. Rul.72-243, 1972-1 C.B. 233. See, e.g., Priv. Ltr. Rul. 200127023.198 Reg. § 1.664-3(a)(4). See, e.g., Atkinson Estate v. Commissioner, 115 T.C. 26 (2000).199 See § 12.2(e), note 94. See, e.g., Rev. Rul. 74-149, 1974-1 C.B. 157; Priv. Ltr. Rul. 9252023 (holding that aCRUT is not disqualified by reason of such a provision).200 Rev. Rul. 76-8, 1976-1 C.B. 179. 436