Trust and Estate Charitable Deductions

An estate or complex trust can deduct charitable contributions paid from the current year’s gross income if the will, trust instrument, or local law specifically requires the payment. Charitable contributions from principal are not deductible unless made from amounts included in the current year’s gross income. Charitable contributions must be reduced by the proportion of tax-exempt income included in gross accounting income. Unless the will, trust agreement, or state law requires payment from taxable income; charitable contributions are deemed to be paid from all types of income. [Reg. §1.642(c)-3(b)(2)]

Set-Aside: Estates are also allowed a current deduction for amounts included in gross income permanently set-aside for qualifying charities. Only a few trusts are allowed a set-aside deduction: (1) Pooled income funds, (2) trusts created before 10/10/69 or by will executed before 10/10/69. [Reg. §1.642(c)-2]

Push-Back: A trust or estate may elect to push-back all or part of a charitable contribution paid during the current tax year to the immediately preceding tax year. The election must be made by the due date of the current year’s tax return (including extensions). To make the election, attach a statement to the original or amended return for the year to which the charitable contribution is pushed back. 

Include:
• Fiduciary’s name, address, and identification number,
• Name and address of the charitable organization receiving the charitable contribution,
• Amount and payment date of the charitable contribution, and
• Statement that the election is being made under IRC §642(c)(1).

Form 1041-A, Trust Accumulation of Charitable Contribution Amounts: