News Alert! IRS Changes Its Mind.

The IRS recently issued Notice 2006-15, which extends the grandfather date for the spousal election problem they identified last year in Revenue Procedure 2005-24. The grandfather date is extended from June 28, 2005 until such time as further guidance is issued by the IRS. This basically means that the difficult provisions of Rev. Proc. 2005-24 will be treated as though they never existed until that further guidance is issued. Without this notice, all new CRTs would be subject to an undue burden. Rev. Proc. 2005-24 still applies where a surviving spouse actually does exercise the spousal right of election and receives a statutory share that includes the CRT.

Background: Last Spring, the IRS issued Rev. Proc. 2005-24, which required all CRTs created after June 28, 2005 to keep a copy of the donor's spouse's written promise to not elect a spousal share against the CRT. After a large outcry from many practitioners, bar associations, the American Bar Association, the AICPA, National Committee on Planned Giving, the American Council on Gift Annuities, and others, the IRS issued Notice 2006-15, which effectively rescinded the Revenue Procedure except for abusive situations as noted above. A copy of the IRS notice is available at: http://www.irs.gov/pub/irs-drop/n-06-15.pdf

Ted R. Batson, Jr., MBA, CPA
Senior Vice President Professional Services Renaissance 6100 W. 96th St., Ste. 100 Indianapolis, IN 46278
800-479-5142 ext. 5286
317-843-5417 (fax)