Donating Cryptocurrency

 

I was reading something recently, and it reminded me how muddled our tax Code is.

Let’s talk about cryptocurrency. I know that there is bad odor to this topic after Sam Bankman-Fried and FTX, but cryptocurrencies and their exchanges are likely a permanent fixture in the financial landscape.

I admit that I think of cryptos – at least the main ones such as Bitcoin, Ethereum or Binance Coin – as akin to publicly traded stock. You go to www.finance.yahoo.com , enter the ticker symbol and see Bitcoin’s trading price. If you want to buy Bitcoin, you will need around $23 grand as I write this.

Sounds a lot like buying stock to me.   

The IRS reinforced that perspective in 2014 when it explained that virtual currency is to be treated as property for federal income tax purposes. The key here is that crypto is NOT considered a currency. If you buy something at Lululemon, you do not have gain or loss from the transaction. Both parties are transacting in American dollars, and there is no gain or loss from exchanging the same currency.

COMMENT: Mind you, this is different from a business transaction involving different currencies. Say that my business buys from a Norwegian supplier, and the terms require payment in krone within 20 days. Next say that the dollar appreciates against the krone (meaning that it takes fewer dollars to purchase the same amount of krone). I bought something costing XX dollars. Had I paid for it then and there, the conversation is done. But I did not. I am paying 20 days later, and I pay XX minus Y dollars. That “Y” is a currency gain, and it is taxable.

So, what happens if crypto is considered property rather than currency?

It would be like selling Proctor and Gamble stock (or a piece of P&G stock) when I pay my Norwegian supplier. I would have gain or loss. The tax Code is not concerned with the use of cash from the sale.

Let’s substitute Bitcoin for P&G. You have a Bitcoin-denominated wallet. On your way to work you pick-up and pay for dry cleaning, a cup of coffee and donuts for the office. What have you done? You just racked up more taxable trades before 9 a.m. than most people will all day, that is what you have done.

Got it. We can analogize using crypto to trading stock.

Let’s set up a tax trap involving crypto.

I donate Bitcoin.

The tax Code requires a qualified appraisal when donating property worth over $5,000.

I go to www.marketwatch.com.

I enter BTC-USD.

I see that it closed at $22,987 on January 27, 2023. I print out the screen shot and attach it to my tax return as substantiation for my donation.

Where is the trap?

The IRS has previously said crypto is property, not cash.

A donation of property worth over $5 grand generally requires an appraisal. Not all property, though. Publicly-traded securities do not require an appraisal.

So is Bitcoin a publicly-traded security?

Let’s see. It trades. There is an organized market. We can look up daily prices and volumes.

Sounds publicly-traded.

Let’s look at Section 165(g)(2), however:

    (2)  Security defined.

For purposes of this subsection, the term "security" means-

(A)  a share of stock in a corporation;

(B)  a right to subscribe for, or to receive, a share of stock in a corporation; or

(C)  a bond, debenture, note, or certificate, or other evidence of indebtedness, issued by a corporation or by a government or political subdivision thereof, with interest coupons or in registered form.

The IRS Office of Chief Counsel looked at this and concluded that it could not see crypto fitting the above categories.

Crypto could therefore not be considered a security.

As property not a security, any donation over $5 grand would require a qualified appraisal.

There was no qualified appraisal in our example. All I did was take a screen shot and include it with the return.

That means no charitable deduction.

I have not done a historical dive on Section 165(g)(2), but I know top-of-mind that it has been in the Code since at least 1986.

Do you know what did not exist in 1986?

The obvious.

Time to update the law, me thinks.

This time we were discussing CCA 202302012.

No Deduction For African Sculpture

 

You can anticipate the final decision when you read the following sentence:

One does not need to be a tax expert to open his eyes and read plain English.”

This time we are talking about art. Expensive art. And donations of said expensive art.

I am not a fan of the minutiae in this area. It strikes me as a deliberate gambit to blow-up an otherwise laudable donation for what one could consider ministerial oversight, but such is the state of tax law.

Then again, the taxpayer side of these transactions tends to have access to high-powered professional advice, so perhaps the IRS is not being intractable.

Still, one likes to see reasonable application of the rules, with acknowledgement that not everyone has advanced degrees and decades of experience in tax practice. Even if one does, there can be disagreement in reading a sentence, the interpretation of a comma, the precedence of a prior case, or the interplay - or weighting - of related tax provisions. Or maybe someone is overworked, exhausted, running the kids to activities, attending to aging parents and simply made - excuse a human foible - a mistake. 

It used to be known as reasonable cause and can be grounds for penalty abatement. I remember it existing when I was a younger tax practitioner. Today? Not so much.

One way to (almost certainly) blow reasonable cause?

Be an expert. I doubt the IRS would ever allow reasonable cause on my personal return, for example.

Let’s look at the Schweizer case.

Heinrich Schweizer was a high-powered art advisor.

He better not get into it with the IRS about art donations, then.

Schweizer received a law degree in Germany. He then worked an internship with Sotheby’s in New York City. When the internship ended, he returned to Germany to pursue a PhD, a goal interrupted when Sotheby’s recruited him for a position in their African art department. He there served as Director of African and Oceanic Art from 2006 to 2015. He increased the value of the annual auctions and provided price estimates at which customers might sell their art at auction. He also worked closely with Sotheby’s appraisal department in providing customers with formal appraisals.

Schweizer filed his first US tax return in 2007. He hired a CPA firm to help with the tax return. He continued this relationship to our year in question.

In 2011 Schweizer made a substantial donation to the Minneapolis Institute of Art (MIA). He donated a Dogon sculpture that he had acquired in Paris in 2003. The deduction was $600 grand.

The accountants filed for an extension and contacted the IRS Art Appraisal Services (AAS) unit.

COMMENT: One can spend a career in tax and never do this. AAS provides advice and assistance to the IRS and taxpayers on valuation questions. A reason to contact AAS is to obtain a statement of value (SOV) after donating but before filing a tax return. The donor can rely on the SOV as support for the value deducted on the tax return. It is – by the way – not easy to get into AAS. The minimum ticket is a $50 grand donation as well as a filing fee for time and attention.

Schweizer obtained his SOV. All he had to do now was file his return and include the magic forms (Form 8283 with all the required signatures and secret handshakes, a copy of the appraisal, yada yada).

Guess what he did not do?

No properly completed Form 8283, no copy of the appraisal, nothing.

Remember: form is everything in this area of the tax law.

Off to Tax Court they went.

His argument?

His failure to meet the documentation requirements was due to reasonable cause and not willful neglect.

 Move me with a story.

He received and reasonably relied on advice from the accounting firm that it was unnecessary to include either a qualified appraisal or a fully completed Form 8283 with his 2011 return.

Why would I believe this?

Because the IRS already had these documents through the SOV process.

I know the conclusion is wrong, but it gives me pause.

OK, reliance on tax advice can be grounds for reasonable cause. He will of course need the firm to back up his story ….

The spokesman for the firm testified but did not corroborate, in any respect, Schweizer’s testimony about the alleged advice.”

Well, that seems to be prompting a malpractice suit.

Schweizer’s attorney will have to cross-examine aggressively.

And petitioner’s counsel asked no questions of […] squarely directed to this point.”

Huh? Why not?

The fact that petitioner did not seek corroborative testimony from the person who might have supplied it weighs against him.”

Well, yeah. If someone can bail you out and they fail to do so, the Court will double-down on its skepticism.

Now it became a matter of whom the Court believed.

To tighten the screws even further, the Court noted that – even if the firm had told Schweizer that he need not include a phonebook with his tax return - the Court did not believe that Schweizer would have relied on such advice in good faith.

Why not, pray tell?

Schweizer was a high-powered art advisor. He was also trained in law. He had done this - or something very similar - for clients at Sotheby’s over the years. The Court said: he knew. He may not have been an expert in tax, but he had been up and down this stretch of road enough to know the rules.

There was no deduction for Schweizer.

Our case this time was Schweizer v Commissioner, T.C. Memo 2022-102.

This Is Why We Cannot Have Nice Things

I am looking at a case involving a conservation easement.

We have talked about easements before. There is nothing innately sinister about them, but unfortunately they have caught the eye of people who have … stretched them beyond recognition.

I’ll give you an example of an easement:

·      You own land in a bucolic setting.

·      It is your intention to never part with the land.

·      It is liturgy to the beauty and awe of nature. You will never develop it or allow it to be developed.

If you feel that strongly, you might donate an easement to a charitable organization who can see to it that the land is never developed. It can protect and defend long after you are gone.

Question: have you made a donation?

I think you have. You kept the land, but you have donated one of your land-related legal rights – the right to develop the land.

What is this right worth?

That is the issue driving this area of tax controversy.

What if the land is on the flight path for eventual population growth and development? There was a time when Houston’s Galleria district, for example, was undeveloped land. Say you had owned the land back when. What would that easement have been worth?

You donated a potential fortune.

Let’s look at a recent case.

Plateau Holdings LLC (Plateau) owned two parcels of land in Tennessee. In fact, those parcels were the only things it owned. The land had been sold and resold, mined, and it took a while to reunite the surface and mineral rights to obtain full title to the land. It had lakes, overlooks, waterfalls and sounded postcard-worthy; it was also a whole lot out-of-the-way between Nashville and Chattanooga. Just to get utilities to the property would probably require the utility company to issue bonds to cover the cost.

Enter the investor.

He bought the two parcels (actually 98.99%, which is close enough) for approximately $5.8 million.

He worked out an arrangement with a tax-exempt organization named Foothills Land Conservancy. The easement would restrict much of the land, with the remainder available for development, commercial timber, hunting, fishing and other recreational use.

Routine stuff, methinks.

The investor donated the easement to Foothills eight days after purchasing the land.

Next is valuing the easement

Bring in the valuation specialist. Well, not actually him, as he had died before the trial started, but others who would explain his work. He had valued the easement at slightly over $25 million.

Needless to say, the IRS jumped all over this.

The case goes on for 40 pages.

The taxpayer argument was relatively straightforward. The value of the easement is equal to the reduction in the best and highest use value of the land before and after the granting of the easement.

And how do you value an undeveloped “low density mountain resort residential development”? The specialist was looking at properties in North Carolina, Georgia, and elsewhere in Tennessee. He had to assume government zoning, that financing would be available, that utilities and roads would be built, that consumer demand would exist.

There is a flight of fancy to this “best and highest” line of reasoning.

For example, I would have considered my best and highest professional “use” to be a long and successful career in the NFL. I probably would have been a strong safety, a moniker no longer used in today’s NFL (think tackling). Rather than playing on Sundays, I have instead been a tax practitioner for more than three decades.

According to this before-and-after reasoning, I should be able to deduct the difference between my earning power as a successful NFL Hall of Famer and my actual career as a tax CPA. I intend to donate that difference to the CTG Foundation for Impoverished Accountants.

Yeah, that is snark.

What do I see here?

·      Someone donated less than 100% of something.

·      That something cost about $6 million.

·      Someone waited a week and gave some of that something away.

·      That some of something was valued at more than four times the cost of the entire something. 

Nah, not buying it.

Neither did the Court.

Here is one of the biggest slams I have read in tax case in a while:

           We give no weight to the opinion of petitioner’s experts.”

The taxpayer pushed it too far.

Our case this time for the home gamers was Plateau Holdings LLC v Commissioner.

New York And State Donation Programs

You may have read that the new tax law will limit your itemized tax deduction beginning this year (2018).

This is of no concern to you if you do not itemize deductions on your personal return.

If you do itemize, then this might be a concern.

Here is the calculation:

        *  state income taxes plus

        *  local income taxes plus

        *  real estate taxes plus

        *  personal property taxes

There is a spiff in there if you live in a state without an income tax, but let’s skip that for now.

You have a sum. You next compare that sum to $10,000, and

… you take the smaller number. That is the maximum you can deduct.

Folks, if you live in New Jersey odds are that real estate taxes on anything is going to be at least $10 grand. That leaves you with no room to deduct New Jersey income taxes. You have maxed.

Same for New York, Connecticut, California and other high tax states.

Governor Cuomo said the new tax law would “destroy” New York.

Stepping around the abuse of the language, New York did put out an idea – two, in fact:

·       Establish a charitable fund to which one could make payments in lieu of state income taxes. When preparing one’s individual tax return, one could treat contributions to that fund as state taxes paid. To make this plausible, New York would not make the ratio one-to-one. For example, if you paid $100 to the charitable fund, your state tax credit might be $90. Surely no one would then argue that you had magically converted your taxes into a charitable deduction. The only one on the short end is the IRS, but hey … New York.

·      Have employers pay a new payroll tax on employee compensation, replacing employee withholding on that compensation.  Of course, to get this to work the employee would probably have to reduce his/her pay, as the employer is not going to keep his/her salary the same and pay this new tax.

Other states put out ideas, by the way. New York was not alone.

I somewhat like the second idea. I do however see the issue with subsequent raises (a smaller base means a smaller raise), possibly reduced social security benefits, possible employer reluctance to hire, and the psychological punch of taking a cut in pay. Ouch.

The first idea however has a sad ending.

You see, many states for many years thought that there were good causes that they were willing to subsidize.

·       Indiana has the School Scholarship Credit. You donate to a scholarship-granting charity and Indiana gives you a tax credit equal to 50% of the donation on your personal return.

·       South Carolina has something similar (the Exceptional SC), but the state tax credit is 100%.

New York and its cohorts saw these and said “What is the difference between what Indiana or South Carolina is doing and what we are proposing?”

Well, for one thing money is actually going to a charitable cause, but let’s continue.

This past summer the IRS pointed out the obvious: there was no charity under New York’s plan., The person making the “donation” was simultaneously receiving a tax benefit. That is hardly the hallmark of a charitable contribution.

Wait, wait, New York said. We are not giving him/her a dollar-for-dollar credit, so …..

Fine, said the IRS. Here is what you do. Subtract the credit from the “donation.” We will allow the difference as a deductible contribution.

In fact, continued the IRS, if the spread is 15% or less, we will spot you the full donation. You do not have to reduce the deduction for the amount you get back. We can be lenient.

So what have New York and cohorts done to Indiana, to South Carolina and other states with similar programs?

You got it: they have blown up their donation programs.

Way to go.

Why did the IRS not pursue this issue before?

Well, before it did not matter whether one considered the donation to be a tax or a deductible contribution. Both were deductible as itemized deductions. There was no vig for the IRS to chase.

This changed when deductible taxes were limited to $10,000. Now there was vig.

There are about 30 states with programs like Indiana and South Carolina, so do not be surprised if this reaches back to you.

Keep It Believable

Our protagonists this time are the Ohdes from West Virginia. The issue concerns charitable contributions. The Ohdes claimed they made dozens of trips to Frederick, Maryland and donated over 20,000 distinct items in 2011.

Half of this would have been clothing. There was furniture. There also were over 3,000 books.

They did at least get that minimalist Goodwill receipt that says:

Goodwill does not return goods or services in exchange for donations of property.”

The receipt doesn’t provide detail of the items, their count or their condition, but at least it is a start.

At the end of the year they entered this information into TurboTax.

And according to TurboTax they donated over $146,000.

You know what else?

They should have expected the almost-certain notice from the IRS. Donate a piece of real estate and a $100,000-plus donation makes sense. Donate 20,000-plus items of men’s and women’s clothing – and not so much.

There are rules for noncash donations. The IRS knows the scam. The rules tighten-up as the donations get more expensive.

If you donate property worth $250 or more, you have to get “contemporaneous written acknowledgement” (CWA). This does not mean the same day, but it does mean within a reasonable time. The CWA must include a description of the property.  That Goodwill receipt should be adequate here, as it has pre-printed categories for

·      Clothing

·      Shoes

·      Media

·      Furniture

·      Household items

Go over $500 and there are more requirements. In addition to a description of the property, you also have to provide:

·      How you acquired it

·      When you acquired it

·      How much you paid for it

That Goodwill receipt is no longer enough. You are going to have to supplement it somehow. Some tax practitioners advise taking photographs and including them with the tax records for the year.

Go over $5,000 and you get into appraisal territory, unless you donated publicly-traded stocks.

Where were the Ohdes on this spectrum? Their lowest donation was $830; their highest was $14,999.

They were therefore dealing with the $500 and $5,000 rules.

What did they have?

They had that lean and skinny receipt from Goodwill. You know, the receipt that is good enough for $250 donations.

But they had no $250 donations.

They had a problem. Their paperwork was inadequate. It would help to have a sympathetic Court.

Here is the Court:

Petitioners claimed large deductions for charitable contributions of property, not only for 2011 but also for years before and after 2011.”

Where was the Court going with this?

 For 2007—2010 they claimed deductions in the aggregate amount of $292,143 for noncash charitable contributions."

Are you hearing skepticism?

For 2012-2013 they claimed deductions in the amount of $104,970 for noncash charitable contributions.”

Yep, skepticism.

The Court had a whole range of options to bounce the deduction.

Petitioners did not maintain contemporaneous records establishing any of these facts.”     

That is one option.

Stay within the lines and the Court might cut you some slack.  Deduct half a million dollars over a few years and …. Let’s just say you had better make a lot of money to even get to the realm of possible.

Many of those aggregate dollar figures are suspect on their face.”

The Court spotted them a $250 deduction.

Leaving approximately $33 grand in tax and over $6 grand in penalties.

Keep it believable, folks.

Walk The Walk, Talk The Talk

We have another not-for-profit story.

Spoiler Alert: it failed.

Why did it fail?

Sometimes there is a great story, the churning of technical arcana and the tease of suspense.

This is not one of those times.

Our homespun protagonist this time is the Community Education Foundation. It had changed names several times over its life, but that appears to have been its last nom de jour.

It began life as a doe-eyed and enthusiastic 501(c)(3) back in 2001. It was going to change the world:

The …. is a conservative research and educational institute focusing on public policy issues that have particular impact on African Americans, Hispanic Americans, Asian Americans, Native Americans and heritage groups (the ‘Target Groups’).”

                COMMENT: “Heritage” groups?

Anyway …

The Foundation’s guiding principle is to encourage open inquiry about public policy issues that are of particular interest and educational values for the Target Groups and the public in general and to provide programs that highlight and educate the Target Groups and the public about these germane subjects and/or public policy issues.”

Wow. Good thing someone jumped on “educating” all those “target” groups on “germane” subjects.

The (c)(3) obviously had to do stuff to bring enlightenment to the benighted and wretched, including:

(1) Town hall meetings

(2) National workshops

(3) Congressional forums

(4) Billboards, radio, television, and other media, such as town criers, bodypainting and soothing rap music drifting through open car windows while waiting at a traffic light.

Fast forward. To 2012. Eleven years later. The IRS took a look at said (c)(3). It wanted to know how it was doing.

The IRS revoked the (c)(3).

Whoa. That seemed a bit strong.

What pray tell provoked such a response?

The Community Education Foundation had done nothing – zip, zero, the square root of nada – for 11 years.

The (c)(3) disagreed and took the matter to Tax Court.

It did have an argument: it turns out that it tried but failed to do some things in 2009 and 2010, including a “Presidential Inaugural Ball” to honor veterans.

COMMENT: I too have no idea what one has to do with the other.

The Tax Court pointed out the obvious: if you want to be a (c)(3), you have to …

·      Talk the talk, and

·      Walk the walk

In eleven years, the organization had performed none of the activities it had said it would when it applied for exempt status.

There was no walk to the talk.

The (c)(3) status was revoked.

Would You Believe?

It is a specialized issue, but I am going to write about it anyway.

Why?

Because I believe this may be the only time I have had this issue, and I have been in practice for over thirty years. There isn’t a lot in the tax literature either.

As often happens, I am minding my own business when someone – someone who knows I am a tax geek – asks:

          “Steve, do you know the tax answer to ….”

For future reference: “Whatever it is - I don’t. By the way, I am leaving the office today on time and I won’t have time this weekend to research as I am playing golf and sleeping late.”

You know who you are, Mr. to-remain-unnamed-and-anonymous-of-course-Brian-the-name-will-never-pass-my-lips.

Here it is:

Can a trust make a charitable donation?

Doesn’t sound like much, so let’s set-up the issue.

A trust is generally a three-party arrangement:

·      Party of the first part sets up and funds the trust.

·      Party of the second part receives money from the trust, either now or later.

·      Party of the third part administrates the trust, including writing checks.

The party of the third part is called the “trustee” or “fiduciary.” This is a unique relationship, as the trustee is trying to administer according to the wishes of the party of the first part, who may or may not be deceased. The very concept of “fiduciary” means that you are putting someone’s interest ahead of yours: in this case, you are prioritizing the party of the second part, also called the beneficiary.

There can be more than one beneficiary, by the way.

There can also be beneficiaries at different points in time.

For example, I can set-up a trust with all income to my wife for her lifetime, with whatever is left over (called the “corpus” or “principal”) going to my daughter.

This sets up an interesting tension: the interests of the first beneficiary may not coincide with the interests of the second beneficiary. Consider my example. Whatever my wife draws upon during her lifetime will leave less for my daughter when her mom dies. Now, this tension does not exist in the Hamilton family, but you can see how it could for other families. Take for example a second marriage, especially one later in life. The “steps” my not have that “we are all one family” perspective when the dollars start raining.

Back to our fiduciary: how would you like to be the one who decides where the dollars rain? That sounds like a headache to me.

How can the trustmaker make this better?

A tried-and-true way is to have the party of the first part leave instructions, standards and explanations of his/her wishes. For example, I can say “my wife can draw all the income and corpus she wants without having to explain anything to anybody. If there is anything left over, our daughter can have it. If not, too bad.”

Pretty clear, eh?

That is the heart of the problem with charitable donations by a trust.

Chances are, some party-of-the-second-part is getting less money at the end of the day because of that donation. Has to, as the money is not going to a beneficiary.

Which means the party of the first part had better leave clear instructions as to the who/what/when of the donation.

Our case this week is a trust created when Harvey Hubbell died. He died in 1957, so this trust has been around a while. The trust was to distribute fixed amounts to certain individuals for life. Harvey felt strongly about it, because - if there was insufficient income to make the payment – the trustee was authorized to reach into trust principal to make up the shortfall.

Upon the last beneficiary to die, the trust had 10 years to wrap up its affairs.

Then there was this sentence:

All unused income and the remainder of the principal shall be used and distributed, in such proportion as the Trustees deem best, for such purpose or purposes, to be selected by them as the time of such distribution, as will make such uses and distributions exempt from Ohio inheritance and Federal estate taxes and for no other purpose.”  

This trust had been making regular donations for a while. The IRS picked one year – 2009 – and disallowed a $64,279 donation.

Here is IRC Sec 642(c):

(c)Deduction for amounts paid or permanently set aside for a charitable purpose

(1)General rule

In the case of an estate or trust (other than a trust meeting the specifications of subpart B), there shall be allowed as a deduction in computing its taxable income (in lieu of the deduction allowed by section 170(a), relating to deduction for charitable, etc., contributions and gifts) any amount of the gross income, without limitation, which pursuant to the terms of the governing instrument is, during the taxable year, paid for a purpose specified in section 170(c) (determined without regard to section 170(c)(2)(A)). If a charitable contribution is paid after the close of such taxable year and on or before the last day of the year following the close of such taxable year, then the trustee or administrator may elect to treat such contribution as paid during such taxable year. The election shall be made at such time and in such manner as the Secretary prescribes by regulations.

The key here is the italicized part:        

“which pursuant to the terms of the governing instrument…”

The Code wants to know what the party of the first part intended, phrased in tax-speak as “pursuant to the terms of the governing instrument.”

The trustees argued that they could make donations via the following verbiage:

in such proportion as the Trustees deem best, for such purposes or purposes, to be selected by them as the time of such distribution….”

Problem, said the IRS. That verbiage refers to a point in time: the time when the trust enters its ten-year wrap-up and not before then. The trustees had to abide by the governing instrument, and said instrument did not say they could distribute monies to charity before that time.

The trustees had to think of something fast.

Here is something: there is a “latent ambiguity” in the will. That ambiguity allows for the trustees’ discretion on the charitable donations issue.

Nice argument, trustees. We at CTG are impressed.

They are referring to a judicial doctrine that cuts trustees some slack when the following happens:

(1) The terms of the trust are crystal-clear when read in the light of normal day: when it snows in Cincinnati during this winter, the trust will ….

(2) However, the terms of the trust can also be read differently in the light of abnormal day: it did not snow in Cincinnati during this winter, so the trust will ….

The point is that both readings are plausible (would you believe “possible?”).

It is just that no one seriously considered scenario (2) when drafting the document. This is the “latent ambiguity” in the trust instrument.

Don’t think so, said the Court. That expanded authority was given the trustees during that ten-year period and not before.

In fact, prior to the ten years the trustees were to invade principal to meet the annual payouts, if necessary. The trustmaker was clearly interested that the beneficiaries receive their money every year. It is very doubtful he intended that any money not go their way.

It was only upon the death of the last beneficiary that the trustees had some free play.

The Court decided there was no latent ambiguity. They were pretty comfortable they understood what the trustmaker wanted. He wanted the beneficiaries to get paid every year.

And the trust lost its charitable deduction.

For the home gamers, our case this time was Harvey C. Hubbell Trust v Commissioner.