The IRS has issued final regulations identifying certain charitable remainder annuity trust (CRAT) arrangements as “listed transactions” — potential tax-avoidance schemes that carry heightened reporting requirements. The regs target improper use of a CRAT to sell appreciated property and purchase a single premium immediate annuity (SPIA) with the net proceeds to avoid recognizing ordinary income and/or capital gains from the sale of the appreciated property. Certain participants and material advisors in the listed transactions must file disclosures with the IRS and could face penalties for failing to do so. We’re here if you have questions about proper vs. improper CRAT arrangements.
