A New Caution for Advisors Using CRATs
Action Required: Review existing client CRAT structures to determine if they fall under the new 'listed transaction' definition and consult with tax counsel.
The IRS has issued final regulations designating certain charitable remainder annuity trust (CRAT) schemes as 'listed transactions,' effectively labeling them as abusive tax avoidance strategies. Financial advisors utilizing or recommending these structures must immediately review their client portfolios to ensure compliance and avoid potential penalties associated with these newly categorized transactions.
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