Treasury Designates Certain CRAT-Annuity Arrangements as Listed Transactions: What to Review Now

Short summary

The U.S. Treasury and IRS issued final regulations designating certain CRAT-annuity arrangements as listed transactions, targeting strategies that use a CRAT-owned commercial annuity to report beneficiary payments under Section 72 instead of Section 664(b). Donors, trustees, and advisors involved in these arrangements face near-term disclosure obligations and potential penalty exposure. Charities named solely as remainder beneficiaries are protected from reporting and excise tax liability.

• •Treasury designates CRAT-annuity arrangements using Section 72 reporting as listed transactions
• •Donors and advisors face disclosure obligations; charities merely named as remainder beneficiaries are protected
• •Prompt review of existing CRATs with appreciated property and annuity purchases is recommended

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