Life insurance can be an effective funding
vehicle for charitable gifts. This article explores such strategies as naming a
charity as beneficiary of an insurance policy, giving a
policy to charity, and using insurance with CRTs.
Author:
KEVIN D. MILLARD, Attorney
KEVIN
O. MILLARD, of the Minnesota and Colorado Bars, is a shareholder in the law
firm of Millard & Hunter, P.C., in Englewood, CO. He is also Vice-Chair of
the Insurance
Committee of the
Life insurance is often an important component of
an estate plan. Estate planners are generally familiar with using life insurance, for
example, to create an estate in the event of the insured's early death, to provide
income to a surviving spouse, or to generate liquidity for the payment of
estate taxes and other death costs. This article examines the use of life insurance for
funding a donor's charitable gifts.
The tax law
encourages philanthropy through income, gift, and estate tax deductions for
qualifying charitable gifts. An income tax deduction is allowed for charitable
contributions to or for the use of organizations described in Section
170(c) . 1 In addition, a gift
or estate tax deduction is allowed if the charity is one specified in Section
2522(a) or
2055(a) . If the contribution consists of property, rather than cash, the
contribution typically equals the fair market value of the property when
contributed. 2 In determining the
amount of the contribution that is deductible for income tax (but not gift or
estate tax) purposes, the value of the property is reduced by the gain that
would not have been long-term capital gain if the donor had sold the property
for its FMV at the time of the contribution. 3
The income
tax deduction is also subject to several “percentage limitations.” Generally,
contributions are deductible only up to 50% or 30% of the donor's “contribution
base” for the taxable year, depending on whether the donee charity is or is
not described in Section
170(b)(1)(A) . 4 (The contribution
base is the donor's adjusted gross income for the taxable year of the
contribution, computed without regard to any net operating loss carryback to
that year.) Contributions “for the use of,” rather than “to,” a charitable
organization are subject to the 30% limitation, even if the donee charity is an
organization specified in Section
170(b)(1)(A) . Excess contributions subject to either the 50% or the 30%
limitation may be carried forward for up to five years. 5 No percentage
limitations apply to the gift and estate tax charitable deductions.
A charitable
deduction is allowable for a contribution in trust that has both charitable and
noncharitable beneficiaries only if the trust qualifies as a charitable
remainder annuity trust, a charitable remainder unitrust, a pooled income fund,
or a charitable lead trust that provides either a guaranteed annuity or
unitrust interest to charity.
6 Furthermore, for
purposes of the income tax charitable deduction, a charitable lead trust must
be a grantor charitable lead trust. If a donor makes a contribution not in
trust of less than his entire interest in the property, an income tax
charitable deduction is allowed only if (1) the contribution would have been
deductible if made in trust or (2) the contribution consists of a remainder
interest in a personal residence or farm, an undivided portion of the
taxpayer's entire interest in the property, or a qualified conservation
easement. 7 A gift or estate tax
charitable deduction is permitted for contributions described in #2 above.
8 If a contribution is
subject to a condition that might prevent the gift from becoming effective, no
deduction is allowable unless the possibility that the charitable transfer will
not become effective is so remote as to be negligible. 9
In the case
of a testamentary gift, the possibility that the gift might be defeated or
reduced by the exercise of the surviving spouse's or an heir's right to a
forced share does not preclude a charitable estate tax deduction, so long as
the gift to charity
is thereby made only voidable, not void, and the right to a forced share is
not, in fact, exercised. 10 If any death taxes
are payable out of, or charged against, a gift to charity pursuant
to the estate plan or under applicable law, the charitable deduction is reduced
by those taxes. 11
An outright
gift to a charity
ordinarily does not give rise to any generation-skipping transfer tax, because
charitable organizations are generally assigned to the transferor's generation.
12 Thus, most charitable
gifts do not result in any generation- skipping transfer, although such
transfers may occur under trusts with noncharitable as well as charitable
beneficiaries if the noncharitable beneficiaries include skip persons.
The simplest
form of charitable gift funded with life insurance is the designation, by the
insured-owner of the policy, of a charity as the beneficiary of the policy. No
income tax deduction is allowed because the donor does not part with control
over the policy during life. 13 If, however, the insurance is
employer-provided group term insurance under Section
79 , the usual rule that the employee must include in income the cost
of coverage in excess of $50,000 does not apply if a charity described
in Section
170(c) is named as sole beneficiary for the entire period during the year
for which the coverage is provided. 14 Designating a charity as
beneficiary of a policy may allow a donor to make a larger gift than he could
otherwise afford, yet without giving up access to the cash value of the policy
during the insured's lifetime. At the insured's death, the policy proceeds are
includable in his gross estate, 15 but there should be
an offsetting estate tax charitable deduction. The donor's estate plan should
specifically provide that all death taxes will be paid from a source other than
the charitable gift, to negate the right of recovery under Section
2206 for death taxes “attributable” to life insurance payable to a beneficiary
other than the estate.
While the
charitable deduction can eliminate any estate tax on the life insurance death
benefit, the inclusion of the death proceeds in the insured's gross estate can
have a collateral effect on the estate's qualification for tax provisions that
depend on the size of the estate, such as a redemption of stock to pay death
taxes and funeral and administration expenses under Section
303 , or an election under Section
6166 to pay in installments death taxes attributable to an interest in
a closely held business. Moreover, depending on applicable state law, a spouse
or heir might be able to disrupt the donor's charitable gift by exercising a
right to a forced share of the decedent's estate. For example, the Uniform Probate
Code includes in the “augmented” estate (from which the surviving spouse may
take a forced share) life
insurance
owned by the decedent and payable other than to the surviving spouse. 16
Instead of
simply naming a charity
as beneficiary of a life
insurance
policy, the donor may want to transfer ownership of a policy on his life to a
charitable organization, or make cash gifts to the charity with the
understanding that the charity will use the funds to purchase insurance on the
donor's life.
Subject to the insurable interest problem discussed below, such a gift, if
properly planned, can generate a current income tax deduction and avoid
transfer taxation because of the gift and estate tax charitable deductions.
Insurable
interest. Every state requires, at the inception of the contract, the
existence of an insurable interest between the applicant-owner of an insurance policy
and the prospective insured. 17 Underlying this rule
is the public policy against wagering contracts. Some older authority held that
a charitable organization did not have an insurable interest in the life of a
voluntary contributor. 18
That changed during the 1900s, however, and it became an
acceptable practice for donors to encourage charities and other nonprofit
institutions to apply for life insurance on their lives, with the
donors providing a means of paying the premiums, often using trusts. It was
widely believed that the various state statutes regarding insurable interest
included the relationship between a charity or nonprofit organization and its
donors. 19
Ltr.
Rul.
9110016 called into question this “acceptable practice.” (Although a
private letter ruling may not be used or cited as precedent, such a ruling may
provide a useful indication of the Service's thinking on a particular issue.)
The facts of Ltr.
Rul.
9110016 were simple. A, an independent contractor of, and past contributor
to, a charity,
proposed to apply for an insurance policy on her life, naming the charity as sole
beneficiary. Upon receipt of the policy, A planned to assign it to the charity. A also
intended to pay the future premiums on the policy. Unfortunately, A conceded
that the charity
did not have an insurable interest in her life under applicable state (
The IRS ruled
that A would be entitled to neither an income tax nor a gift tax charitable
deduction for the gift of the policy and subsequent premium payments. When an
insured dies, if the insurer discovers that the requisite insurable interest
was lacking, the insurer is not required to pay the death benefit. 20 If the insurer
carries out the contract and pays the death benefit to the beneficiary,
notwithstanding the lack of insurable interest, the insured's estate may be
entitled to recover the death benefit from the beneficiary.
Because of
the possibility that the insurer might not have to pay the benefit, or if it
did, that the personal representative of A's estate might sue to recover the
proceeds, the IRS concluded that when A assigned the policy to the charity, she
would be transferring a partial interest in the policy, which was less than her
entire interest. The IRS also determined that the possibility that the charity would be
divested of its interest was not so remote as to be negligible.
According to
the Service, the policy death benefit would be includable in A's estate
regardless of when A died: either under Section
2035(a) if A died within three years or under Section
2033 if A lived for more than three years because of A's estate's right
of recovery under the insurable interest statute. In either event, A's estate
would not be entitled to an estate tax charitable deduction, because if the
death benefit, in fact, passed to charity and was not challenged by the
insurer or A's personal representative, the proceeds would not pass from A but,
in effect, from A's heirs or devisees as a result of A's personal
representative not seeking to recover the proceeds.
Ltr.
Rul.
9110016 was revoked by the IRS not long after its issuance. 21 Prior to its
revocation, however, the ruling received a great deal of publicity and led to
the adoption of a number of state statutes expressly intended to provide that a
charity
has an insurable interest in a donor, or to allow a donor, as proposed in the
ruling, to obtain a life
insurance
policy and then immediately transfer it to charity. 22
Insurable
interest is a matter of state law, and practitioners should review the
applicable law before advising a client to make a charitable gift of an insurance policy.
Furthermore, it has been suggested that another problem might exist if the
insured dies within three years even if, under state law, the charity has an
insurable interest in the donor. If the insured obtains the policy, transfers
it to the charity,
and then dies within three years, the death proceeds are includable in the
insured's estate under Section
2035(a) . Under Section
2206 , the personal representative has a right of reimbursement for
estate tax caused by that inclusion “[u]nless the decedent directs otherwise in
his will.” Thus, if state law gives a charity an insurable interest in its donor,
it may be advisable for the charity to be the initial applicant for, and
owner of, the policy. 23 At a minimum, the
estate plan should expressly provide that no death taxes will be paid out of,
or charged against, property qualifying for the charitable deduction.
The problem
in Ltr.
Rul.
9110016 ought not arise in the case of an assignment to charity of an
existing policy that was not obtained with the intent that it immediately be
given to charity.
Normally, if there is no intent to transfer the policy, no question of
insurable interest arises when the proposed insured is also the applicant and
owner of the policy. 24 One who lacks an
insurable interest may not evade the law by arranging for the insured to apply
initially for the policy and then immediately assign the policy. On the other
hand, if a policy was procured by the insured in good faith, most courts hold
that the insured may thereafter assign the policy to an assignee who does not
have an insurable interest. 25
Income
tax deduction. Assuming that the insurable interest problem discussed above can
be avoided, a gift of a life insurance policy to a qualified charity results
in an income tax charitable deduction. If the donor pays subsequent premiums on
the policy, these payments constitute additional gifts, resulting in additional
income tax deductions when made. 26 Premium payments
directly from the donor to the insurer are likely to be considered
contributions “for the use of” the charity, subject to the 30% limitation.
27 Therefore, it may be
advisable for the donor to make cash gifts to the charity
sufficient to allow the charity to pay the premiums.
To avoid
disallowance of a deduction under the partial interest rule, the gift either
must consist of the donor's entire interest in the policy or must be an
undivided interest in the policy. Consequently, there is no charitable income
tax deduction for a gift to charity of an interest in a life insurance policy
under a split-dollar arrangement. 28 Nevertheless, the
IRS, in private rulings, has approved deductions for gifts of life insurance where
the donor retained the right, in conjunction with the donee charity, to
substitute or add charitable beneficiaries, 29 and where the donor
gave the charity
a nonbinding “Letter of Intent,” which he might change from time to time,
indicating the donor's preferences as to the distributions to be made by the charity. 30
If an
existing policy is given to charity, the contribution equals the FMV of
the policy at the time of the contribution. It appears that the value of a life insurance policy
for purposes of the income tax charitable deduction is generally the same as
its value for gift tax purposes. 31 Under the gift tax
Regulations, the FMV of a policy is usually its replacement cost. 32 Hence, the value of a
newly issued policy is equal to the initial premium paid, 33 and the value of a
paid-up policy is the amount that the insurer would charge for a single premium
contract of the same specified amount on the life of a person the age of the
insured. 34 In the case of a
policy that has been in force for some time and on which further premiums are
to be paid, the replacement cost is approximated by the interpolated terminal
reserve plus the unearned premium.
In Ltr.
Rul.
8943014 , the IRS was asked to rule that the FMV of a life insurance policy
that was issued on 7/28/88 and contributed to a private foundation on 12/12/88
equalled the interpolated terminal reserve plus the unearned premium on the
date of the gift. The Service refused to rule on that point due to the
Service's policy of not providing rulings on valuation issues. The Service
pointed out, however, that the valuation method based on the interpolated
terminal reserve plus unearned premium applies to policies that “have been in
force for some time.” Because the policy in the ruling was contributed to charity less than
five months after its issue date, it was not possible to say that that was the
correct method for valuing the policy. It is somewhat curious that the taxpayer
requested a ruling that the value was the interpolated terminal reserve plus
unearned premium, because the cost of the policy would likely have been a
higher number, resulting in a larger deduction.
There is some
authority that the replacement cost method of valuation for gift tax purposes
does not always apply in valuing a policy for purposes of the income tax
charitable deduction. In Tuttle 35 the taxpayers' son,
who was an insurance
agent, donated a $50,000 policy on his own life to a church. The policy was
“paid-up,” but was subject to a large loan that reduced its net cash surrender
value to less than $1,000. Three weeks after the donation, the insured's
parents purchased the policy from the church for $1,000, and about six months
later they donated it to a community foundation, which surrendered the policy.
The Second Circuit concluded that it was reasonably predictable that the
foundation would surrender the policy and held that the appropriate measure of
the value of the policy for purposes of the income tax charitable deduction was
the cash surrender value, rather than the replacement value.
The donor's
income tax deduction must be reduced by any gain that would not have been
long-term capital gain if the donor had sold the policy for its FMV at the time
of the contribution. Gain from the sale of a life insurance policy is taxable as
ordinary income. 36 Therefore, the income
tax charitable deduction for a gift of an insurance policy is effectively the
lesser of the FMV of the policy or the donor's basis in the policy.
Under Section
72(e)(4)(C) , a gift of an annuity policy issued after 4/22/87 causes the
donor to recognize any gain inherent in the contract. But because that gain is
actually recognized, there is no reduction in the charitable gift under Section
170(e)(1)(A) , 37 and the full value of
the policy is deductible. In the case of a charitable gift of a matured annuity
contract issued before 4/23/87, the donor must recognize as income the excess
of the contract's maturity value over his investment in the contract. Because
that income is recognized (as in the case of a post-4/22/87 annuity), there is
no reduction in the income tax charitable deduction under Section
170(e)(1)(A) , and the full maturity value of the contract is deductible. A
donor who makes a charitable gift of an unmatured annuity contract issued
before 4/23/87 must include in income the gain existing at the time of the
gift, but the income is not includable until the year in which the contract is
surrendered by the donee. 38 Consequently, the
charitable contribution deduction must be reduced under Section
170(e)(1)(A) .
A charitable
gift of a life
insurance
policy is subject to the substantiation rules for charitable deductions. Accordingly,
if the deduction exceeds $5,000, a “qualified appraisal” is required, and an
“appraisal summary” must be attached to the return on which the deduction is
first claimed. 39 This seems a silly
requirement for a gift of a life insurance policy the value of which, as a
practical matter, is often taken from an IRS Form 712 prepared and furnished by
the insurance
company. Nevertheless, there is no exception to the qualified appraisal requirement
for a gift of an insurance
policy.
All
contributions of $250 or more must be substantiated by a written
acknowledgement from the donee charity. 40 If a donor makes
direct premium payments on a policy owned by a charity, the charity may not
be in a position to verify receipt of the gift, and the donor may lose the
income tax deduction because of inability to obtain written verification from
the charity.
Hence, this is another reason why it is preferable for the donor to give the charity
sufficient cash gifts to allow the charity to pay the premiums.
Gift
and estate tax deductions. If a donor transfers a life insurance policy
to a qualifying charity,
the gift is deductible for gift tax purposes under Section
2522(a) . If the donor pays subsequent premiums due on the policy, those
premium payments constitute additional gifts 41 that also qualify for
the gift tax charitable deduction. The gift equals the premium, not the
increase in the value of the policy resulting from the gift. The partial
interest rule precludes any gift tax deduction for a gift to charity under a
split-dollar life
insurance
arrangement. 42
If a donor
transfers a life
insurance
policy to a charity
and lives
more than three years after the transfer, the policy proceeds are not included
in the donor's estate. The proceeds should also be excluded from the estate if
the donor makes a cash gift to a charity and cooperates in the purchase of an
insurance
policy on his life,
so long as the charity
is the applicant for, and initial owner of, the policy. 43 If the insured owns a
policy, transfers it to a charity, and then dies within three years, the policy
proceeds are included in the insured's gross estate under Section 2035(d)(2) . In that event, though, there is
an offsetting estate tax charitable deduction under Section
2055(a) .
In most
cases, the gift of a life
insurance
policy to a charitable organization has no adverse tax consequences to the charity. If,
however, the charity
is a private foundation and the gift policy is subject to an outstanding loan,
or if the charity
borrows against the policy, several issues arise.
A gift of a life insurance policy
to a private foundation is not a jeopardy investment, because an investment
made by a donor which is later gratuitously transferred to the foundation is
not subject to the tax on jeopardy investments. 44 But the IRS has ruled
that a foundation's retaining (rather than surrendering) a life insurance policy
subject to a loan was a jeopardy investment when the combined premiums and
interest payments on the policy would be greater than the expected return to
the foundation from the death benefit if the insured lived to life expectancy.
45
Under Section
4941(d)(2)(A) , a transfer of property by a disqualified person to a private
foundation is treated as a sale or exchange of the property, and thus an act of
self-dealing, if the foundation takes the property subject to a mortgage or
similar lien that the disqualified person placed on the property within the
ten-year period ending on the date of the transfer. As a result, a gift of an
encumbered life
insurance
policy to a private foundation is an act of self-dealing if the donor is a
disqualified person and the loan was made within the ten-year period ending on
the date of the gift. Even though a loan against a life insurance policy
is not a personal obligation of the policy owner, the transfer of the policy
subject to the loan relieves the donor of the obligation to repay the loan, to
pay interest on the loan, or to suffer continued diminution in the value of the
policy as the loan interest is charged against the cash value. 46
An otherwise
income tax exempt charity
is subject to tax on its unrelated business taxable income (UBTI) pursuant to Section
511(a) . Because UBTI includes income from “debt-financed property,”
47 policy loans can
result in UBTI. In Mose & Garrison Siskin Memorial Foundation 48 a foundation borrowed
the cash values of life
insurance
policies that had been donated to it and reinvested the proceeds in marketable
securities. Although the loans resulted in interest charges of about 5.5% per
year, the foundation earned more than 10% yearly on the investments it made
with the loan proceeds.
The
foundation argued that its withdrawals from the policies were not
“indebtedness” for purposes of the debt-financed property rules, because (1) a
loan against a life
insurance
policy is not a true loan, but simply an advance against funds that the insurer
will eventually pay, (2) those advances did not create a true debtor-creditor
relationship because the foundation was not obligated to repay the loans, and
(3) the “interest” charged by the insurers was not really interest but
“charges” for maintaining the face values of the policies. The Sixth Circuit
acknowledged that a life
insurance
policy loan is different from an ordinary loan. Nevertheless, the court pointed
out that policy loans have been treated as “indebtedness” under the rules
allowing or disallowing an income tax deduction for interest on life insurance policy
loans. 49 Therefore, the court
held that the foundation's policy loans were acquisition indebtedness and that
the income earned by the investment of the loan proceeds was debt-financed
income, resulting in UBTI to the foundation. Even after paying tax on its UBTI,
the foundation did well economically because of the much greater return it
earned on the borrowed funds. As discussed below, the consequences of UBTI are
more severe for a charitable remainder trust (CRT).
The IRS has
ruled privately that a CRT may be funded with a life insurance policy. 50 Subsequent premium
payments by the donor are treated as additional contributions to the trust.
Thus, only a charitable remainder unitrust (CRUT), and not a charitable
remainder annuity trust (CRAT), is a candidate for funding with a life insurance policy
for which additional premiums must be paid out of funds provided by the donor
in the future, because additional contributions may be made to a CRUT but not
to a CRAT. 51 In Ltr.
Rul.
8745013 , the Service concluded that the purchase of a life insurance policy
by a CRT is not automatically a jeopardy investment, but the ruling refers to Rev.
Rul.
80-133 , 52 which holds that the
retention of a life
insurance
policy may be a jeopardy investment, based on the facts and circumstances. In Ltr.
Rul. 8745013
,
the Service also determined that if the trustee borrowed against the policy and
invested in other assets, the resulting income would be debt-financed income,
which would give rise to UBTI. Unlike other tax-exempt organizations, a CRT is
not taxable merely on UBTI. A CRT is exempt from income tax for a taxable year
only if it does not have UBTI for that year. 53 Accordingly, even a
nominal amount of debt-financed income could cause a CRT to be taxed on all its
income for the year.
A trust does
not qualify as a CRT unless and until neither the grantor nor any other person
is treated as the owner of the trust for income tax purposes under the grantor
trust rules. 54 (For this purpose,
however, neither the grantor nor his spouse is treated as the owner of the
trust merely because he or she is a beneficiary of the trust.) In Ltr.
Rul.
9227017 , the donor proposed to transfer a policy on his own life, as well as
other assets, to a trust designed as a CRT. The trust was a net income unitrust
with a make-up provision. 55 The unitrust amount
was the lesser of the trust income determined under Section
643(b) or 5 % of the net FMV of
the trust assets, valued annually. The trustee was also to distribute income
for a year in excess of the 5% limit to the extent that, in prior years, the
aggregate distributions were less than they would have been if the payout had
been determined without regard to the trust income.
The power of
a trustee, without the consent of any adverse party, to use trust income to pay
premiums for insurance
on the life
of the grantor normally causes the trust to be a grantor trust for income tax
purposes. 56 This rule, however,
does not apply to a policy irrevocably payable for a charitable purpose
specified in Section
170(c) . The trust agreement in Ltr.
Rul.
9227017 provided that all premiums for the life insurance policy would be charged to
principal, not income, and that all policy proceeds received either during the
insured's life
or at death would be credited to trust principal. Based on these provisions,
the Service ruled that the policy was irrevocably payable for a charitable
purpose, and the trust was not a grantor trust under Section
677(a)(3) . The Service did not specifically rule that the trust qualified
as a CRT. It is not clear from the ruling whether the taxpayer had asked for a
ruling on qualification of the trust as a CRT or only for a ruling on the
grantor trust issue.
In recent
years, there has been considerable interest in the use of a deferred annuity
contract as the funding vehicle for a net income CRUT with a make-up provision.
When a commercial annuity contract is not held by a natural person, the usual
rules for taxation of the income from the annuity do not apply. Instead, all
income on the contract for a taxable year is treated as ordinary income
received or accrued by the owner of the contract. 57 In the case of a net
income type of CRUT, the annual payout is a fixed percentage of the value of
the trust assets, valued annually, or the trust's net income, if less. For this
purpose, “net income” means income determined under the governing instrument
and local law. 58
If an annuity
is held by a CRUT, the provisions of the trust relating to allocations between
principal and income can be drafted to provide that income from the annuity
contract will be considered trust accounting income only when actually received
by the trustee. So long as this trust provision is not considered by the IRS to
“depart fundamentally from concepts of local law,” it will be respected for
federal tax purposes. 59 Assume the annuity is
the only trust asset. The value of the contract builds up over time, but until
the trustee annuitizes or makes withdrawals from the contract, the trust will
have zero “income” to be distributed. At a future time, the trustee can make
withdrawals from the contract and, because those withdrawals will be
characterized as income at that time, they can be used to pay not only the
current unitrust payments but also shortfalls from the prior years under the
make-up provision.
Consequently,
a CRUT funded with a deferred annuity contract can allow for substantial
appreciation during the period in which no withdrawals are made, and a
relatively certain source of income payments in the future for the donor or
other noncharitable beneficiary when the trustee makes withdrawals from the
annuity contract. The IRS has ruled privately that a purported CRUT that
proposed to invest in a deferred annuity contract would qualify as a CRT. 60 Use of this technique
requires careful drafting as well as close attention to state law relating to
trust principal and income.
Life insurance can be an effective funding
vehicle for charitable gifts as part of a client's estate plan. An estate
planner whose client wishes to use life insurance or annuities for charitable gifts
must become familiar with, and carefully analyze, the complex and technical
rules relating to the charitable income, gift, and estate tax deductions as
well as the tax rules applicable to charities and charitable trusts.
Reg. 1.170A-(c)(1) ; Sections
2055(a) , 2055(d)
,
and 2522(a)
.
Sections 170(d) and 170(b)(1)(B)
.
Sections 170(f)(2) , 2055(e)(2)
,
and 2522(c)(2)
.
Sections 2055(e)(2) and 2522(c)(2)
.
Regs. 1.170A- 1(e) Regs. 1.170A- 1(e) , 20.2055-2(b)
,
and 25.2522(c)-3(b)
.
Reg. 20.2055-2(e)(1)(i) , Example (6); Longue Vue Foundation, 90
TC 150 , acq. in result only.
Adler,
5 BTA
1063 .
Uniform Probate Code section 2-202(b)(2)(iii) (1990).
Graves and Hayes, eds., McGill's Life Insurance (The
American College, 1994), 774 (hereinafter “
See, e.g., Colo. Rev. Stat. §10-7-115; Md. Ann. Code
art 48A, §366; Minn. Stat. §61A.073; Ohio Rev. Code Ann. §§3911.09-.10; S.Dak.
Codified Laws Ann. §58-10-4; Va. Code §38.2-301(B)(4); Wash. Rev. Code
§48.18.030.
2A Casner and Pennell, Estate Planning (5th ed.
Supp. 1994), §§8.10.1.
Anderson, Anderson on Life Insurance
(1991), §12.3 (hereinafter “
Anderson, Note 24 supra , §12.11.
Behrend,
23
BTA 1037 ; Hunton, 1 TC
821 ; Ltr.
Ruls. 8304068 and 8708083
.
Kirschten and Neeley, 281-3rd T.M. (BNA), Charitable
Contributions: Income Tax Aspects, page A-10, n. 102; Zaritsky
and Leimberg, Tax
Planning With Life
Insurance
(Warren, Gorham & Lamont, 1992), ¶8.02[1][b] .
Rev. Rul. 76-143, 1976-1 CB 63 .
Rev. Rul. 59-195, 1959-1 CB 18 .
Rev. Rul. 58-372, 1958-2 CB 99 ; Reg.
25.2512-6(a), Example (1) .
Reg. 25.2512-6(a), Example (3) .
Tuttle,
436 F.2d 69 , 27
AFTR2d 71-354 , 71-1 USTC ¶9140 , 27
AFTR 2d 71-354
Section 72(e) ; Blum, 150 F.2d 471 , 34
AFTR 24 , 45-2 USTC ¶9343 ; Avery, 111
F.2d 19 , 24
AFTR 856 , 40- 1 USTC ¶9405 ; Bodine, 103
F.2d 982 , 22
AFTR 1156 , 39-1 USTC ¶9450 . But see Ltr.
Rul. 8943014 (“There would appear to be no current authority that an insurance policy
is not a capital asset within ... section 1221”).
Reg. 1.170 A-4(a) Reg. 1.170 A-4(a) .
Rev. Rul. 69-102, 1969-1 CB 32 ; Friedman,
41
TC 428 , 346 F.2d 506 , 15
AFTR2d 1174 , 65-2 USTC ¶9473 .
Rev. Rul. 76-200, 1976-1 CB 308 .
Estate of
Headrick, 918 F.2d 1263 , 66
AFTR2d 90-6038 , 90-2 USTC ¶60,049 , 66
AFTR 2d 90-6038 .
Rev. Rul. 80-133, 1980-1 CB 258 .
Rev.
Rul. 80-132, 1980-1 CB 255 .
Mose &
Garrison Siskin Memorial Foundation, 790
F.2d 480 , 57
AFTR2d 86-1409 , 86- 1 USTC ¶9399 , 57
AFTR 2d 86-1409
Sections 163(a) and 264
.
Regs. 1.664-3(b) and 1.664-2(b)
.
1980-1 CB 258.
Section 664(c) ; Reg.
1.664-1(c) .
See Section
664(d)(3) .
Reg. 1.664-3(b)(1) ; Section
643(b) .
Ltr. Rul. 9009047 . See also Ltr.
Rul. 9018015 (CRUT funded with a zero coupon bond); Teitell, “Some
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