          
          
          
          An Immediate Charitable Tax Deduction:
          
          
               In addition to escaping the capital gains tax, as
          donor of property to a CRT, you will receive an
          immediate charitable tax deduction for your donated
          property in the year in which the transfer is made.
               The amount of the total tax deduction allowed is
          that of the present fair market value of the projected
          remainder interest.  This calculation is based on
          several variables: IRS life expectancy tables and the
          age of the indicated beneficiary (or the term of years
          for which the CRT is created); the current assumed IRS
          midterm discount interest rate; the fair market value
          of the property itself; the percentage or fixed payout
          rate you choose for your life income payments from the
          CRT.
               For example, take that $1 million building as a
          CRT gift.  Using a life expectancy of twenty years, a
          1992 IRS midterm discount rate, and a 10 percent payout
          rate (easy for purpose of arithmetic, but unlikely in
          today's low interest rate environment), you would have
          a $135,203 income tax deduction to be applied against a
          maximum of 30 percent of your adjusted gross income for
          the year.  If the deduction causes you to exceed the 30
          percent ceiling on total deductions, you can carry over
          the excess for up to five succeeding years.
               In an instance where the property donated to the
          CRT is only slightly increased in value (it must be
          held for at least one year in order to qualify as a
          long-term capital gain), the donor can elect to base
          his or her tax deduction on the actual cost basis, in
          which case they are allowed total deductions of up to
          50 percent of their adjusted gross income.  If the
          asset has been held for more than one year, its full
          appreciated value must be used as the basis for
          calculating the available tax deduction limited to 30
          percent.
               In some cases, as when two spouses are to be the
          beneficiaries, establishing two CRTs and splitting the
          gift, making each spouse a sole beneficiary, can
          greatly increase the income tax deduction.  If the CRT
          declaration terms permit, as they should, additional
          contributions can be made to the trust at any time, and
          the income tax deductions allowed for that year will be
          based on the current age of the beneficiary.
               Note that because of a change in federal tax law,
          any charitable gifts made after January 1, 1993 are not
          subject to the so-called "alternative minimum income
          tax."  Prior to that date, the untaxed appreciation in
          the value of the property included in the charitable
          deduction was treated as preference income and subject
          to the alternative minimum income tax.
               As a general rule, property transferred to a CRT
          will be completely free of any federal gift taxes or
          estate taxes for the donor, so long as the donor and
          his or her spouse are the sole beneficiaries.
          
          
          
