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If I have appreciated property
such as real estate or stock, is there any way I can destroy the
tax benefits due to me and my trust when my charitable remainder
trustee sells the property?
You can inadvertently turn lemonade into lemons
in a number of ways, a few of which are particularly noteworthy:
You can enter into preexisting "sale" paperwork before
the asset is given to your charitable trust and risk the IRS's
disallowance of your planning based upon step transaction or assignment
of income theories. The property you are transferring can be encumbered
by debt, which could very well disqualify it. You can forget to
get a qualified appraisal by an independent appraiser and disqualify
the property. You can violate the charitable foundation provisions
of the tax laws. For example, you could innocently continue to
live in a home you have transferred to your charitable trust.
You can generate from the trust unrelated business income, which
is income not related to the charitable purpose of your trust
as determined by the IRS (there is no easy way to explain this
further without going into great and boring detail), and disqualify
it.
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