IRS designates certain CRAT arrangements as listed transactions

The IRS has issued final regulations designating certain arrangements purporting to be charitable remainder annuity trusts (CRATs) as listed transactions, requiring disclosure by material advisers and certain participants in those transactions.

Listed transactions are transactions the IRS has identified as potential tax-avoidance arrangements and are subject to heightened reporting requirements.

CRATs are irrevocable trusts that allow people to donate assets to charity and draw annual income for life or for a specific period. But these trusts are sometimes misused to eliminate income from the sale of property.

The IRS said the final regulations describe transactions in which taxpayers purport to eliminate ordinary income and/or capital gain from the sale of property. Read more.