Bloomberg Tax
June 22, 2023, 3:13 PM

CRAT Tax Scheme on Appreciated Property Sales Brings Big Losses

Richard L. Fox
Richard L. Fox
Law Offices of Richard L. Fox

A tax elimination “strategy” widely promoting the use of a charitable remainder annuity trust (CRAT) to fully escape federal income tax on the sale of appreciated property and to fund tax-free annuity payments to noncharitable beneficiaries of the CRAT has not lived up to the promises of its promoters, and instead has brought heavy legal and monetary loss to involved parties. Indeed, courts have leveled decisions against participating taxpayers and ordered that their names be disclosed to the IRS, and the Justice Department has shut down and penalized the promoters. According to the government, at least 70 CRATs have been ...

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