Contents

§ 12.11 CALCULATION OF CHARITABLE DEDUCTIONtrust. 425 If the governing instrument does not prescribe when the distributionis made during the period for which the payment is to be made, the distributionis considered payable on the first day of the period for which the paymentis made. 426These rules require determination of an adjusted payout rate. 427 There arerules for when the unitrust payment period is for a term of years 428 and for whenit is for the life of an individual. 429The regulations also state the process for requesting a ruling from the IRSthat supplies an actuarial factor in the CRUT context. 430 Any claim for a charitablecontribution deduction on any return for the value of a remainder interest ina CRUT must be supported by a full statement attached to the appropriate taxreturn showing the computation of the present value of the interest. 431Other tables are used to compute the value of a remainder interest in cases ofa unitrust interest determined on the basis of multiple lives. 432EXAMPLE 12.26E, an individual aged 70, makes a contribution of $100,000 to a SCRUT. The gift is made inNovember 2004. The unitrust amount, paid annually, is based on 5 percent. The valuation dateprecedes the first payout by 12 months. The unitrust interest is for E’s life. The payout sequencefactor is 0.959693. The adjusted payout rate is 4.798465 percent. The (interpolated) liferemainder factor is 0.540940. The value of the remainder interest (and thus the resultingcharitable contribution deduction) is $54,094. E’s charitable deduction as a percentage of theamount transferred is 54.09 percent.EXAMPLE 12.27F, an individual aged 75, and G, an individual aged 70, make a contribution of $100,000 to aSCRUT. The gift is made in November 2004. The unitrust amount, paid annually, jointly for life,then to the survivor, is based on 6 percent. The valuation date is at the beginning of the year.The payout sequence factor is 0.959693. The adjusted payout rate is 5.758158 percent. The liferemainder factor is 0.398220. The value of the remainder interest (and thus the resultingcharitable contribution deduction) is $39,822. F’s and G’s charitable deduction as a percentageof the amount transferred is 39.82 percent. aaThe illustrations in Examples 12.26 and 12.27 were provided by the Children’s Mercy Hospitals and Clinics,Kansas City, Missouri.425 Reg. § 1.664-4(a).426 Id. This presumption was in the tax regulations when they were issued in proposed form and attracted comments.In its explanation accompanying the regulations in final form, the IRS observed that “[u]nitrusts havetraditionally been regarded as providing for distributions at the beginning of each period unless the governinginstrument provides to the contrary” and that this “presumption has been reflected in [the] unitrust factors prescribedin the regulations . . . since the enactment of” the CRUT rules. This observation was made in rationalizingwhy the presumption was continued in the final regulations.427 Reg. § 1.664-4(e)(3).428 Reg. § 1.664-4(e)(4).429 Reg. § 1.664-4(e)(5).430 Reg. § 1.664-4(b).431 Reg. § 1.664-4(c).432 See § 11.2. 475