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Final Regs on Income Ordering Rules for Payments to Charitable Beneficiaries

For a trust to qualify for the charitable deduction, a charitable contribution must be made from gross income. [ See IRC § 642(c) .] IRC Section 642 requires tracing since the source of the charitable contribution must be gross income rather than principal. The provisions of the governing instrument...

Substantial Economic Effect

By Matthew Cavitch, J.D. Tax allocations in a partnership agreement will not be honored if they lack "substantial economic effect." [ IRC § 704(b)(2) ; Treas. Reg. § 1.704-1(b)(1)(I) ] Treasury has defined "substantial economic effect" in some of the most intricate regulations...