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CHARITABLE REMAINDER TRUSTS(h) Additional ContributionsA trust is not a CRUT unless its governing instrument either prohibits additionalcontributions to the trust after the initial contribution, or provides that for thetax year of the trust in which the additional contribution is made:• when no valuation date occurs after the time of the contribution and duringthe tax year in which the contribution is made, the additional propertymust be valued as of the time of contribution, and• the unitrust amount must be computed by multiplying the fixed percentageby the sum of (1) the net fair market value of the trust assets (excludingthe value of the additional property and any earned income from andany appreciation on the property after its contribution) and (2) that proportionof the value of the additional property (that was excluded), withthe number of days in the period that begins with the date of contributionand ends with the earlier of the last day of the tax year or the last day ofthe income payment period bears to the number of days in the period thatbegins with the first day of the tax year and ends with the earlier of thelast day of the tax year or the last day of the income payment period. 223This additional-contribution feature offers unique tax planning opportunities,such as use of a unitrust as a retirement program. In one instance, a husbandand wife created a CRUT with joint and survivorship income payments. The husbandwas in the process of retiring from his business of raising cattle for slaughterand farming crops. The first contributions to the trust were of cattle and crops;thereafter, as the business wound down, there were additional contributions offarming and ranching assets (including farm machinery) and more cattle andcrops. The charitable organization involved had the right to sell the stock andmachinery. 224 Thus, these individuals were able to gradually disband the business,transferring properties to the trust as they did so. The charitable trustee wasable to dispose of these properties without tax, the resulting proceeds were usedto fund the annual payout to the retirees, and the individuals received a charitablecontribution deduction for the gifts of remainder interests. 225For these purposes, all property passing to a CRUT by reason of death of thegrantor must be considered one contribution. 226The application of these rules is illustrated by the following examples.EXAMPLE 12.9On March 1, 2005, X makes an additional contribution of property to a CRUT. The tax year ofthe trust is the calendar year, and the regular valuation date is January 1 of each year. The fixedpercentage is 5 percent. For purposes of computing the required payout with respect to theadditional contribution for the year of contribution, the additional contribution is valued on223 Reg. § 1.664-3(b). Despite the fact that the governing instrument of a CRUT provided that additional contributionscould not be made to the trust, the donors made an additional contribution; the IRS viewed the secondgift, which was undone, as a legal nullity and ruled that the qualification of the trust was not disturbed. Priv.Ltr. Rul. 200052026.224 The IRS ruled that occasional sales of these items would not constitute an unrelated business that is regularlycarried on. See § 3.5(c).225 Priv. Ltr. Rul. 9413020.226 Reg. § 1.664-3(b). 440