Feds Could Lighten Trust Unrelated Income Penalties

Relief could be on the way for charitable remainder trusts that intentionally or unintentionally earn substantial amounts of unrelated business taxable income.

The Internal Revenue Service has issued a notice of proposed rulemaking indicating that it may shift to penalizing charitable remainder trusts for collecting the income by taking all of it away.

Today, the IRS handles charitable remainder trusts that earn unrelated business taxable income by treating all of their income as ordinary taxable income, IRS officials note today in a notice that appears in the Federal Register.