Choice must be made between income and estate tax for charitable contributions

Article Abstract:

A greater amount of a decedent's property will be passed to the heirs if a fiduciary income tax deduction for charitable gifts is used. Whether or not the income tax deduction will be allowed will depend on whether the gift is paid out of trust or estate income. An estate or trust may deduct amounts that are paid or permanently set aside, according to the terms of the governing instrument. Estate planners can realize significant tax savings by allocating fiduciary income to a charitable bequest. The requirements for properly drafting an allocation are discussed.

Interpretation and construction, Taxation, Transfer taxes, Charitable contributions, Charitable donations

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Error correction distinguished from change in method of accounting

Article Abstract:

The Tax Court has distinguished error correction from changes in method of accounting. Errors in deductions in respect to goods distributions within a partnership can be corrected by filing amended returns that treat the transaction correctly without affecting a change in method of accounting. Taxpayers that change their method of accounting require the consent of the Internal Revenue Service. A change in the method of accounting includes a change in the overall plan of accounting for gross income or deductions or changes in the treatment of material items.

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