Case Studies and Articles

A Wash CRT

A Wash CRT

A “Wash CRT”

Some donors want to maximize their donations so there can be a nearly equal charitable tax deduction to offset the capital gains in a taxable sale. The following is an example of the math needed to create such a Charitable Remainder Trust(CRT).

For math wizards who will check the algebra and need some confirmation, a $617,491.40 contribution to a two life 5% CRUT generates a 36.532% deduction of $225,581.96. At the donor’s 39% tax bracket, that saves the donor $87,976.96 in tax payments. With a 23% capital gains tax rate, a $382,508.60 taxable sale requires $87,976.98 to offset that tax liability. The difference between the two numbers is due to rounding errors, but it provides a framework in the design process.