Permalink Submitted by Robert Shaffer on Wed, 2007-10-31 05:46
Actually the Regs 20.2031-7(d) say the income beneficiaries would have income on gain (IRD) less the value of the annuity since the trust would have to be a CRAT or CRUT.
Permalink Submitted by Al Fry on Wed, 2007-10-31 15:27
I am somewhat confused. If the IRA bene is the CRT, why would the income benes be taxed at the time of death on the IRD? The CRT pays no taxes, however would track the ordinary income so that as the benes received their annuity payments, the OI would simply take precedence over Cap Gains, Tax-Free and Cost basis.
Permalink Submitted by Alan Spross on Tue, 2007-10-30 23:31
Do you mean IRD or RMD?
Permalink Submitted by Robert Shaffer on Tue, 2007-10-30 23:45
Income in REspect of a Decedant
Permalink Submitted by Alan Spross on Wed, 2007-10-31 02:17
The income beneficiaries of the CRT would owe taxes on the IRD from IRA earnings, but the charity would receive whatever is left tax free.
I imagine that the income beneficiaries would receive a potential IRD misc itemized deduction if federal estate taxes were paid.
Permalink Submitted by Robert Shaffer on Wed, 2007-10-31 05:46
Actually the Regs 20.2031-7(d) say the income beneficiaries would have income on gain (IRD) less the value of the annuity since the trust would have to be a CRAT or CRUT.
Permalink Submitted by Al Fry on Wed, 2007-10-31 15:27
I am somewhat confused. If the IRA bene is the CRT, why would the income benes be taxed at the time of death on the IRD? The CRT pays no taxes, however would track the ordinary income so that as the benes received their annuity payments, the OI would simply take precedence over Cap Gains, Tax-Free and Cost basis.
Permalink Submitted by Al Fry on Wed, 2007-10-31 15:32
Another thought. If the CRT was a NIMCRUT that owed back payments, I could see the IRA DB might force out income to the extent of the make-up.