Tax Court In Brief | Furrer V. Comm'r | Charitable Remainder Trusts; Non-Cash Charitable Contribution Substantiation; Taxability Of CRAT Distributions

• Published date: 04 October 2022
• Subject Matter: Tax, Income Tax, Tax Authorities
• Law Firm: Freeman Law
• Author: Freeman Law

The Tax Court in Brief - September 26th - September 30th, 2022

Freeman Law's "The Tax Court in Brief" covers every substantive Tax Court opinion, providing a weekly brief of its decisions in clear, concise prose.

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Tax Litigation: The Week of September 26th, 2022, through September 30th, 2022

• Patitz, Moody v. Comm'r, T.C. Memo 2022-99 | September 27, 2022 | Weiler, J. | Dkt No. 2784-19
• Powell and Iakovenko v. Comm'r, T.C. Summary Opinion, 2022-19 | Sept. 26, 2022 | Copeland, J. | Docket No 20268-19S
• Powell and Iakovenko v. Comm'r, T.C Summary Opinion, 2022-19 | Copeland, J. | Docket No 20268-19S
• Ashford v. Comm'r, T.C. Memo. 2022-101| September 29, 2022 | Vasquez, Judge | Dkt. No. 17590-18, 2492-19 (Consolidated)
• Collins v. Comm'r, T.C. Summary Opinion 2022-20| September 29, 2022 | Paris, Judge | Dkt. No. 14017-17S

Furrer v. Comm'r, T.C. Memo. 2022-100| September 28, 2022 | Lauber, Judge | Dkt. No. 7633-19

Summary: This opinion (long in facts and law) regards charitable remainder annuity trusts (CRATs). Petitioners made in-kind transfers of agricultural crops to the CRATs in 2015 and 2016. The CRATs sold the crops (like milo, cotton, and corn, but, here, just corn and soybeans) and used the proceeds to purchase annuity plans. During 2015-2017 the annuity plans made cash distributions to petitioners. The trust instrument designated petitioners as life beneficiaries and three eligible section 501(c)(3) charities as remainder beneficiaries.

When forming CRAT I petitioners transferred to it 100,000 bushels of corn and 10,000 bushels of soybeans grown on their farm. In August 2015 CRAT I sold the crops for $469,003. The sales were effected by Co-Alliance LLP, a grain marketing and storage facility where petitioners stored the crops. CRAT I distributed $47,000 of the proceeds to the charitable remainder beneficiaries and used most of the balance to purchase a Single Premium Immediate Annuity (SPIA) from Symetra Life Insurance Co. (Symetra). The SPIA made annual annuity payments of $84,368 to petitioners in 2015-2017. For each year Symetra issued to the trustee a Form 1099-R. These forms listed the annuity payments as "gross distributions" and showed a small amount of interest as the "taxable amount." Petitioners created the Donald & Rita Furrer Charitable Remainder Annuity Trust of 2016 (CRAT II).

Following the previous pattern, petitioners designated themselves as life beneficiaries, with the remainder going to seven eligible section 501(c)(3) charities. Petitioners funded CRAT II by transferring to it bushels of corn and bushels of soybeans grown on their farm. CRAT II sold the crops for $691,827. The sales were again effected by Co-Alliance LLP, the grain marketing and storage facility. CRAT II distributed $69,294 of the proceeds to the charitable remainder beneficiaries and used the balance to purchase another SPIA from Symetra. This SPIA made annual annuity payments of $124,921 to petitioners in 2016 and 2017. Symetra again issued a Form...