Split-interest trusts make distributions to both

Transcription

1 Data Release Split-interest trusts make distributions to both charitable and noncharitable beneficiaries. While the Internal Revenue Service does not classify split-interest trusts as tax-exempt entities, or charities, the trusts offer many of the same benefits to their donors [1]. There are three distinct types of split-interest trusts: charitable remainder trusts, charitable lead trusts, and pooled income trusts. All such trusts are required to complete a Split-Interest Trust Information Return, Form 227, each year. The purpose of Form 227 is to disclose the financial activities of the trust, as well as to determine if the trust is a private foundation. The Split-Interest Trust Information Return is not used to determine the taxability of trust income. A total of 121,309 split-interest trust returns were filed for 2002, an increase of 1.2 percent over the number filed for 2001 (Figure A). In contrast, total net income and asset values fell dramatically between 2001 and The total net income reported by charitable remainder trusts, which is the sum of net ordinary income and net short- and long-term capital gains or losses, decreased by.7 percent to $.3 billion in This is largely due to a large decrease in the total net capital gains component of income. Between 2001 and 2002, total net capital gains decreased 9.9 percent, from $9.3 billion in 2001 to $2.8 billion. This sharp drop is consistent with the decline of international stock markets, including those in the United States, which began during the first quarter of 2000 and continued into The decrease in value of the U.S. stock market resulted in a loss of nearly $7.0 trillion in equity wealth [2]. This decline translated into substantial increases in capital losses claimed, which would appear on Form 227 as a decrease in the net amount of capital gains. The total book value of assets for all split-interest trusts was $10. billion at the end of 2002, a decrease of.0 percent from Distributions to beneficiaries, which totaled more than $7.1 million in 2002, decreased by 11.7 percent from 2001 totals. This data release was written by Lisa M. Schreiber, an economist with the Special Studies Special Projects Section, the direction of Barry Johnson, Chief. Charitable Remainder Trusts An income stream is distributed by the trust to one or more noncharitable beneficiaries for a defined period of time a charitable remainder trust agreement. After the completion of the time period, which is not to exceed the lesser of 20 years or the life of the income beneficiary, the remaining value of the trust is transferred to a charitable beneficiary. At the time of trust creation, the donor receives a tax deduction based on an estimate of the charitable distribution, which must be at least 10.0 percent of the fair market value of the initial trust assets [3]. The two forms of charitable remainder trusts, annuity trusts and unitrusts, differ in the structure of payments made by the trusts to beneficiaries. An annuity trust pays a series of fixed payments, while a unitrust pays a fixed percentage of the fair market value of the trust each year. The number of annuity trusts that filed in 2002 decreased slightly from 2001, while there was a slight increase in the number of filing unitrusts. Net ordinary income of annuity trusts fell by 23.3 percent (to $0.2 billion), and net capital gains fell by 2. percent (to $0. billion). In contrast, net ordinary income of unitrusts rose by 7.8 percent (to $2.3 billion), while net capital gains or losses fell by 73. percent (to $2.3 billion). Distributions paid by annuity trusts fell by 17. percent (to $809.1 million), while distributions of unitrusts fell by 13.0 percent (to $.3 billion). Book value of total assets at the end of the year decreased marginally for both types of trusts in 2002, falling by.7 percent for annuity trusts, and by 3.2 percent for unitrusts. Fair market value of unitrusts declined by 1. percent. Charitable Lead Trusts Charitable lead trusts are essentially the reverse of charitable remainder trusts. Lead trusts distribute a sequence of payments to a charitable beneficiary for a period of time, after which the remaining trust assets are transferred to a noncharitable beneficiary. The lead trust may be an annuity trust that distributes a fixed amount or a unitrust that distributes a payment that fluctuates with the value of the assets in the trust. Between 2001 and 2002, charitable lead trusts filings increased 3. percent, more than any other type of split-interest trust. Distributions for these trusts changed very little, increasing from 89

2 Figure A Profile of Split-Interest Trusts, by Type of Trust, 2001 and 2002 [All money amounts are in thousands of dollars] Charitable remainder trusts Percentage change Annuity trusts Percentage change Unitrusts Percentage change (1) (2) (3) () () () (7) (8) (9) Number of returns , , ,98 22, ,87 91, net income ¹... N/A N/A N/A 1,02,7 73, ,1,93,2,1-7. Net ordinary income ²... N/A N/A N/A 30,7 23, ,09,723 2,27, net capital gains (losses) ³.. N/A N/A N/A 719,080 29, ,,79 2,28,3-73. Value of distributions... 8,070,99 7,12, ,39 809, ,03,09,27, assets at end of year: Book value ,230,212 10,20, ,177, 9,9, ,282,00 81,, Fair market value... N/A N/A N/A N/A N/A N/A 100,28,78 8,97, Charitable lead trusts Percentage change Pooled income funds Percentage change (10) (11) (12) (13) (1) (1) Number of returns...,292, ,98 1,7-1. net income ¹... N/A N/A N/A N/A N/A N/A Net ordinary income ²... N/A N/A N/A N/A N/A N/A net capital gains (losses) ³... N/A N/A N/A N/A N/A N/A Value of distributions ,700 90, , , assets at end of year: Book value... 1,07,33 12,781, ,9,183 1,78,2-1.0 Fair market value... N/A N/A N/A N/A N/A N/A N/A--Not applicable. ¹ Calculated as the sum of "net ordinary income" (line 13), "net short-term capital gain (loss)" (line 1), and "net long-term capital gain (loss)" (line 19). ² Taken from "ordinary income less deductions" on line 13 of Form 227. This amount may not equal "total ordinary income" (line 8) less "total deductions allocable to ordinary income" (line 12) due to taxpayer reporting discrepancies. ³ Calculated as the sum of "net short-term capital gain (loss)" (line 1) and "net long-term capital gain (loss)" (line 19). In the case of charitable remainder annuity trusts, distributions are taken from 'total annuity amounts for all recipients' (line 8b) in Part V-A of Form 227. For charitable remainder unitrusts, distributions are taken from 'unitrust distributions' (line 2) in Part V-B. In the case of charitable lead trusts, distributions have been calculated as the sum of "excess income required to be paid for charitable purposes" (line 2), "annuity or unitrust payment required to be paid to charitable beneficiaries" (line 3), and "annuity or unitrust payments required to be paid to private beneficiaries" (line ) from Form 227, Part VII, Section A, the Questionnaire for Charitable Lead Trusts. In the case of pooled income funds, distributions were calculated as "amount required to be distributed to satisfy the remainder interest" (line 2), less "amounts required to be distributed to the remainder beneficiary that remain undistributed" (line 3), plus "amount required to be paid to private beneficiaries" (line ), plus "amount required to be paid to the charitable remainder beneficiary" (line ) from Form 227, Part VII, Section B, the Questionnaire for Pooled Income Funds. Taken from Form 227, (see footnote # of Table 3) Part IV, line 37, column (b). For charitable remainder unitrusts, taken from an estimated end-of-year fair market value. 90 $917.7 million to $90.2 million (2. percent) in The book value of assets at the end of the year decreased by 1.2 percent, resulting in $12.8 billion in This is the largest percentage decrease in the book value of assets of all the split-interest trust types. Pooled Income Funds Pooled income funds are similar to mutual funds and are created and maintained by charitable organizations. Donors to the charity contribute assets to the fund and receive income payments for the remainder of their lifetimes. The pooled assets are invested as a group, and the income stream to each donor is based on the ratio of his or her contribution to the total value of the investment pool. After the death of the donor, his or her prorated share of the investment pool is withdrawn and given to the charitable organization. The donor receives a tax deduction based on the estimated final contribution to charity. The number of pooled income returns decreased by 23, or 1. percent, in The value of distributions fell by 9.1 percent to $117.1 million. The end-of-year book value of assets decreased by 1.0 percent between 2001 and 2002.

3 Data Sources and Limitations The data presented in this article were extracted from a sample of Forms 227, Split-Interest Trust Information Return, filed during Calendar Year All charitable remainder trusts, charitable lead trusts, and pooled income funds that had financial activity during Calendar Year 2002 were required to file this form. Partial-year returns, for either initial or final reporting periods, were included in the sample. The sample also includes returns for reporting periods other than 2002, including any late-filed returns for prior reporting periods, as well as early-filed returns for subsequent reporting periods. All returns included in the sample were computer-designated at the IRS Ogden Submission Processing Center after posting to the IRS Master File. For Study Year 2002, a sample of 11,313 returns was drawn from a population of 121,717 trusts that filed Form 227. The sample size excludes returns that were selected for the sample but later rejected. Returns could be rejected if they were not one of the four types of trusts included in the study, if no money amounts were reported, or if there were overwhelming reporting errors. The sample was drawn based on the type of the trust (charitable remainder annuity trust, charitable remainder unitrust, charitable lead trust, or pooled income fund) and on the reported end-of-year total assets (book value). Each of the types of trusts was divided into four separate asset strata, resulting in 1 total strata. The four asset strata were based on the size of total assets: less than $1.0 million, $1.0 million to less than $10.0 million, and $10.0 million or more in total assets. A fourth asset category included all trusts that reported end-of-year book value of total assets as less than $10.0 million, but reported end-of-year fair market value of total assets in excess of $0.0 million. There were an estimated 22,783 charitable remainder annuity trusts, which were sampled at rates ranging from.2 percent (for the smallest) to percent (for the largest), resulting in a sample of 2,081 returns. There were an estimated 91,371 charitable remainder unitrusts, sampled at rates from.2 percent to percent, creating a sample of 8, returns. There were an estimated,81 charitable lead trusts, from which a sample of 07 was drawn. Lead trusts were sampled at rates ranging from 1. percent to percent. There were 1,7 pooled income funds, of which 179 were included in the sample. Pooled income funds had sample rates from 3.9 percent to percent. For all trust types, trusts in the fourth asset category were sampled at percent. The magnitude of sampling error for selected items, measured by coefficients of variation, is shown in Figure B. All samples were designed to provide reliable estimates of financial activity. All data were collected from original returns as they were filed. All edited returns were subject to comprehensive testing and data verification procedures to ensure the highest quality of data. Changes that were made to the return after filing, either by the taxpayer in the form of amended returns or by IRS administrative processing, were not generally incorporated. A complete discussion of the reliability of estimates based on samples, methods for evaluating the magnitude for both sampling and nonsampling error, and the precision of the sample estimates can be found in the Appendix in this issue of the SOI Bulletin. Figure B Coefficients of Variation for Selected s of Split-Interest Trusts, by Type of Trust, 2002 (1) (2) (3) () Net ordinary income ¹ N/A N/A Net short-term capital gain (loss) ² N/A N/A Net long-term capital gain (loss) ³ N/A N/A End-of-year: assets: Book value FMV... N/A 0. N/A N/A liabilities Book value FMV... N/A.3 N/A N/A market value. N/A--Not applicable. 1 Taken from Form 227, Part I, line Taken from Form 227, Part I, line 1. Charitable remainder trusts Annuity trusts 7 Taken from estimated end-of-year fair market value. NOTE: "FMV" is the abbreviation for fair market value. Unitrusts Charitable lead trusts Percentages 3 Taken from Form 227, Part I, line 19. Taken from Form 227, Part IV, line 37, column (b). For charitable remainder unitrusts, taken from an estimated end-of-year fair Taken from Form 227, Part IV, line 3, column (b). Pooled income funds 91

4 92 92 Explanation of Selected Terms Annuity trust.--an annuity trust is a trust in which the payments for the duration of the trust, either to a private or charitable beneficiary, are of a fixed amount. In the context of this article, an annuity trust can be either a charitable remainder trust (with a noncharitable (private) income beneficiary) or charitable lead trust (with a charitable income beneficiary). The payment amount is determined by multiplying a specified percentage by the fair market value of the assets initially placed in the trust. Beneficiary(ies).--Beneficiary(ies) refers to the person, persons, or organization that receive payments or assets from a trust. Recipient is used interchangeably with beneficiary. Beneficiaries can be either charitable or noncharitable (private), and can be either an income beneficiary or a remainder beneficiary. Book value.--book value is generally the cost basis of an asset, or the price at which an asset is acquired. All trusts must report the beginning and end-of-year book values of their assets on Part IV, Balance Sheet, Columns A and B, of Form 227. All book value amounts referred to in this article are endof-year book value amounts. Charitable lead trusts.--charitable lead trusts are split-interest trusts in which a designated charitable organization receives an income stream from the assets in trust; one or more private beneficiaries receive the remainder interest of the trust. Charitable remainder annuity trust.--a charitable remainder annuity trust is a charitable remainder trust in which the annual income payments to the private beneficiary are fixed. The payment amount is calculated by multiplying the designated percentage by the fair market value of the assets initially placed in the trust. Charitable remainder trusts.--charitable remainder trusts are split-interest trusts in which a private, or noncharitable, beneficiary receives a stream of income for the duration of the trust, and a designated charity receives the remainder interest of the trust. Charitable remainder trusts can be either annuity trusts or unitrusts, depending on the method used to calculate the payment amounts. Further, unitrusts can have special provisions allowing them to distribute only their net income given certain situations. Charitable remainder unitrust.--a charitable remainder unitrust is a charitable remainder trust in which the income payments to the private beneficiary fluctuate with the annual value of the assets in the trust. The payment amount is calculated by multiplying the designated percentage by the fair market value of the assets as they are valued each year. Unitrusts can have special provisions allowing them to distribute only their net income given certain situations. Charity or charitable organization.--a charity or charitable organization refers to a tax-exempt organization with purposes that are charitable, educational, scientific, literary, or religious in nature, or it otherwise qualifies as 01(c)(3) organization. Donor.--A donor, also referred to as a grantor or contributor, is the individual who transfers personal assets into the trust or fund. Income beneficiary.--the income beneficiary of a split-interest trust is the recipient of the stream of payments made over the duration of the trust. The income beneficiary of charitable remainder trusts and pooled income funds is the private (noncharitable) beneficiary; in charitable lead trusts, the income beneficiary is the designated charitable organization. Income interest.--income interest refers to the payments made to beneficiaries during the life of the trust. Income is paid to the income beneficiary. Pooled income fund.--a pooled income fund is a fund established and maintained by a charity to invest and manage assets donated by multiple donors. Income from the assets is distributed annually on a prorated basis to the named beneficiaries. On the termination of an income interest (due to the death of one of the beneficiaries), a prorated part of the basis of the fund is removed and given to the charity. Remainder beneficiary.--the remainder beneficiary of a split-interest trust is the recipient of the trust s assets at the termination of the trust. In the case of charitable remainder trusts, the remainder beneficiary is the selected charity; in charitable lead trusts, the remainder beneficiary is the designated private beneficiary. Remainder interest.--the remainder interest of a trust is the assets remaining at the termination of the trust, after all liabilities have been settled and prior payments to beneficiaries have been made. This interest is then distributed to the remainder beneficiary. Split-interest trust.--according to the 2002 Instructions for Form 227, a split-interest trust is a trust that is not exempt from tax Internal Revenue Code section 01(a); has some unexpired

5 interests that are devoted to purposes other than religious, charitable, or similar purposes described in Code section 170(c)(2)(B); and has amounts transferred in trust after May 2, 199, for which a deduction was allowed one of the Code sections listed in section 97(a)(2). Trust.--A trust is a legal arrangement between its creator (donor or grantor), the manager of the trust (trustee), and the beneficiary or beneficiaries of the trust. Trusts are legal entities in their own right, and can be responsible for any tax liabilities separate from the liabilities of the grantor and beneficiary. The conditions and provisions of a trust are defined in the trust document. Unitrust.--A unitrust is a trust in which the income interest, paid either to a private or charitable beneficiary, varies with the annual fair market value of the total assets of the trust in a given year. In the context of this article, a unitrust can be either a charitable remainder trust (with income payments to a private beneficiary) or a charitable lead trust (with income payments to a charitable beneficiary). The payment amount is determined by multiplying a specified percentage by the fair market value of the assets of the trust as they are valued annually. Notes and References [1] For all split-interest trusts, at the time of trust creation, the donor receives an income tax deduction in the amount of the charitable contribution. For charitable lead trusts, which distribute to charity at the time of creation, this is the value of the contribution. For trusts that distribute to charity at some date in the future, the amount of the contribution must be calculated using annuity tables provided by the IRS. [2] Economic Report of the President, February 2003, United States Government Printing Office, Washington, DC, p.28. [3] Directions for estimating the future charitable distribution of a charitable remainder trust are detailed in Internal Revenue Code Section

6 Table 1.--Charitable Remainder Annuity Trusts: Income and Deduction Information, by Size of Book Value of Assets, 2002 Zero or not reported 1 $1 or more (1) (2) (3) () () () (7) Number of returns... 22,783 1,283 17, 2,1 1, net income ²... 73,83 383,712 1,7 23,011,92 8,13 17,811 Net ordinary income ³... 23,0-79,18 37,73 0,97 8,0,8 ordinary income ,73 2,22 70,373 8,3 3,192,30 2,38 Interest income... 18,90 1,2 3,072 28,88 30,8 28,02 3,3 Dividends and business income (loss)... 11,77 1,031 30,920 17,780 27, 19,03 19,33 Other Income... 19,083 *-1,380 *1,98,701 9,71-2,9 deductions allocable to ordinary income... 9,229 3,31 1,21 10,898 12,9 8,8 7,20 Interest *33 * *113 9 Taxes... 1, * Other deductions... 7,89 3,31 1,12 10,03 12,81 8,337 7,30 7 Net short-term capital gain (loss)... -9, ,909-17,0-23,03-1,83-23,8 short-term capital gain (loss)... -9, ,892-17,0-23,028-1,78-23,72 Deductions allocable to short-term capital gain (loss)... 1 * * 11 8 Net long-term capital gain (loss)... 2,80 38,39,22 2,319 27,238 1,01 1,80 9 long-term capital gain (loss)... 28,07 38,39,932 2,18 27,81 2,389 1,898 Deductions allocable to long-term capital gain (loss)... 2, Size of end-of-year book value of total assets 1 Includes returns that reported their end-of-year book value of total assets (line 37, column (b)) from the balance sheet as zero. Often, this amount is reported as zero for those trusts filing a final return. In those cases, the trusts reported having assets at the beginning of the year, but nothing at the end of the year. 2 Calculated as the sum of "net ordinary income" (line 13), "net short-term capital gain (loss)" (line 1), and "net long-term capital gain (loss)" (line 19). 3 Taken from "ordinary income less deductions" on line 13 of Form 227. This amount may not equal "total ordinary income" (line 8) less "total deductions allocable to ordinary 9 income" (line 12) due to taxpayer reporting discrepancies. Taken from Form 227, Part I, line 8 Calculated as the sum of "rents, royalties, partnerships, other estates, and trusts" (line ), "farm income or loss" (line ), "ordinary gain or loss" (line ), and "other income" (line 7). Taken from Form 227, Part I, line Taken from Form 227, Part I, line 1. Includes losses. 8 Taken from Form 227, Part I, line 19. Includes losses. 9 Taken from Form 227, Part I, line 17a. Includes losses. 9

7 Table 2.--Charitable Remainder Annuity Trusts: Accumulation and Distribution Information, by Size of Book Value of Assets, 2002 [All figures are estimates based on samples--money amounts are in thousandsof dollars] Size of book value of total assets Zero or not reported 1 $1 or more (1) (2) (3) () () () (7) Number of returns... 22,783 1,283 17, 2,1 1, accumulations ²...,00,322 1,03 1,09, ,39 1,22,3 1,093,18 1,309,182 Net ordinary income...,199 19,17 98,028 0,92 112,003 12,19 121,910 Net short-term capital gain (loss) ,77 2,278-1,10-17,32-23,90-11,820-18,900 Net long-term capital gain (loss)...,30,213 2,19 90,21 73,300 1,080, 90,02 1,191,381 Nontaxable income... 21,8 8,0 8,17 1,0,8 8,217 1,791 Prior-year undistributed income ³...,2, ,8 1,0,98 77,322 1,12,38 1,000,700 1,133,3 Net ordinary income ,93 19,970 3,870 13,187 1,0 9,11 77,0 Net short-term capital gain (loss)... 2,93 3,1 1, ,28,872 Net long-term capital gain (loss)...,98,28 39,77 97,309 73,8 1,08,29 8,032 1,03,0 Nontaxable income ,19 7,7 38,072 7,7 3,02 8,270 8,9 Current-year net income... 81,78 38,73 3,97 33,8 7,18 93,9 182,133 Net ordinary income , ,2 3,97 8,990,83,8 Net short-term capital gain (loss)... -9, ,09-17,308-22,02-13,93-23,8 Net long-term capital gain (loss)... 29,92 38,38,991,83 27,787 1,098 1,80 Nontaxable income... 8, ,103 8,929 12,0 9,97,322 Undistributed at end of year...,87,97 8,29 923,31 89,83 1,088,018 99,3 1,172,01 Net ordinary income ,398 *9 39,11 11,273 1,38 93,01 3,778 Net short-term capital gain (loss)... -3,331 * ,30-10,81-3,3-13,912 Net long-term capital gain (loss)...,8,7 8,129 83,31 7,7 991,38 81,920 1,112,1 Nontaxable income... 1,0 *8 39,9 8,097,82 2,9 9,0 ¹ Includes returns that reported their end-of-year book value of total assets (line 37, column (b)) from the balance sheet as zero. Often, this amount is reported as zero for those trusts filing a final return. In those cases, the trusts reported having assets at the beginning of the year, but nothing at the end of the year. ² Taken from Form 227, Part II, Line 22. ³ Taken from Form 227, Part II, Line 20. Taken from Form 227, Part II, Line 21. Taken from Form 227, Part II, Line 23. 9

8 Table 3.--Charitable Remainder Annuity Trusts: Book Value Balance Sheet Information, by Size of Book Value of Assets, 2002 Size of end-of-year book value of total assets Under 1 or more 9 (1) (2) (3) () () () Number of returns... 22,783 18,827 2,1 1, net assets ²... 9,1,131 2,09,97 1,7,3 2,18,019 1,3,78 2,11,00 liabilities and net assets ³... 9,00,12 2,119,70 1,8,809 2,193,9 1,7,377 2,1,901 assets... 9,9,83 2,11,8 1,8,809 2,19,7 1,7,723 2,1,901 Cash... 12,032 2,32 2,873 32,27 30,23 9,327 Savings and temporary cash investments... 70,03 112,7 9, 19,220 17,0 21,937 Receivables due... 17, 107,81 118,000 3,2 9,781 78,928 Inventories and prepaid expenses *32 -- *10 *11 -- investments... 8,11,13 1,812,71 1,338, 1,871, 1,277,7 1,81,29 Securities...,9,2 1,37,99 1,1,22 1,1,1 1,0,87 1,30,309 Government obligations... 1,92,7 27,93 29,78 37, ,310 30,727 Corporate stock... 3,8,38 838,013,79 901,081 2,10 78,399 Corporate bonds... 1,208, ,2 191, , 202,1 21,183 Land, buildings, and equipment... 99,78 28,9 -- 9,8 *21,3 * Other investments... 1,,300 08,78 193, ,08 199,3 7,981 Charitable purpose land, buildings, and equipment... 31,3 *10, ,17 *1,3 -- Other assets... 17,923,21,82 9,203 22,99 2,1 liabilities ,3,99 10,3 22,838 13,98 17,93 Accounts payable, accrued expenses, and deferred revenue...,388 22,7,32 8,007 9,73 8,78 Loans from disqualified persons, mortgages, and notes payable... 7,822 *,0 *7 *2,888 *17 -- Other liabilities...,1 27,9 3,9 11,93 3,7 *8,7 1 Includes 1,283 returns that did not report end-of-year book value of total assets (line 37, column (b)), or that reported the amount as zero. Often, this amount is reported as zero for those trusts filing a final return. In those cases, the trusts reported having assets at the beginning of the year, but nothing at the end of the year. 2 Taken from Form 227, Part IV, line, column (b). 3 Taken from "total liabilities and net assets" (line 7, column (b)) of Form 227. This amount may not equal "total liabilities" (line 3, column (b)), plus "total net assets" (line, column (b)) due to taxpayer reporting discrepancies. Taken from Form 227, Part IV, line 37, column (b). Calculated as the sum of "accounts receivable" (line 27), "receivables due from officers, directors, trustees, and other disqualified persons" (line 28), and "other notes and loans receivable" (line 29). Taken from Form 227, Part IV, line 3, column (b). 9

9 Table.--Charitable Remainder Unitrusts: Income and Deduction Information, by Size of Book Value of Assets, 2002 Size of end-of-year book value of total assets Zero or not reported 1 $1 or more (1) (2) (3) () () () (7) Number of returns... 91,371 2,119 1,71 1,782 9,311 2,737 1 net income ²...,2,1 270,1 8,19 21,19 38,2 39,90 3,1,283 Net ordinary income ³... 2,27,780 17,0 21, ,80 319,392 30,3 1,13,08 ordinary income... 2,918,31 2,8 337,8 319,72 18,9 379,01 1,38,393 Interest income ,287 17,08 127,32 127,79 182,098 1,97 39,02 Dividend and business income (loss)... 1,2,0,82 178,9 19, , ,1 797,827 Other income... 38,38 *31 31, 3,13 2,31 2,290 2,93 deductions allocable to ordinary income... 0,8,998 9,387 80,922 99,27 73,77 303,308 Interest..., ,219 1,279 1, 1,39 1,3 Taxes... 8,207 * , ,928 Other deductions... 9,728,99 9,282 78,903 9,03 71,97 28,013 7 Net short-term capital gain (loss) ,28 70,2-139, , , ,23 1, short-term capital gain (loss) ,93 97, , ,23-238,287-22,837 9,9 Deductions allocable to short-term capital gain (loss)... 37,03 *2, , ,02 8 Net long-term capital gain (loss)... 2,9, ,77-3,882 1,179 30,17 317,191 1,88,3 9 long-term capital gain (loss)... 2,3,93 18,080-37,883 13,80 311,2 322,77 1,99,937 Deductions allocable to long-term capital gain (loss)... 39,9 *2,03,999 8,81,091,8 11,28 1 Includes returns that reported their end-of-year book value of total assets (line 37, column (b)) from the balance sheet as zero. Often, this amount is reported as zero for those trusts filing a final return. In those cases, the trusts reported having assets at the beginning of the year, but nothing at the end of the year. 2 Calculated as the sum of "net ordinary income" (line 13), "net short-term capital gain (loss)" (line 1), and "net long-term capital gain (loss)" (line 19). 3 Taken from "ordinary income less deductions" on line 13 of Form 227. This amount may not equal "total ordinary income" (line 8) less "total deductions allocable to ordinary income" (line 12) due to taxpayer reporting discrepancies. Taken from Form 227, Part I, line 8 Calculated as the sum of "rents, royalties, partnerships, other estates, and trusts" (line ), "farm income or loss" (line ), "ordinary gain or loss" (line ), and "other income" (line 7). Taken from Form 227, Part I, line Taken from Form 227, Part I, line 1. Includes losses. 8 Taken from Form 227, Part I, line 19. Includes losses. 9 Taken from Form 227, Part I, line 17a. Includes losses. 97

10 Table.--Charitable Remainder Unitrusts: Accumulation and Distribution Information, by Size of Book Value of Assets, 2002 Size of book value of total assets Zero or not reported 1 $1 or more 98 (1) (2) (3) () () () (7) Number of returns... 91,371 2,119 1,71 1,782 9,311 2,737 1 accumulations ²...,10,82 1,391,92,79,9 7,177,93 10,18,7 10,90,91 27,197,8 Net ordinary income... 3,20,33 38,072 3,1 33,90 78,9 8,832 1,93,88 Net short-term capital gain (loss)... 1,72,33 80,23-10,07-7, ,21-88,30 2,03,9 Net long-term capital gain (loss)... 8,30,81 1,27,78,79,98,8,32 10,13,9 10,,77 23,18,20 Nontaxable income ,802 2,833 39,93,311 10,309 98,97 7,900 Prior year undistributed income ³... 9,832,80 1,122,001,71,03,938,133 10,280,230 10,2,087 2,12,2 Net ordinary income... 1,32,72 20,22 10,282 9,0 19, , ,799 Net short-term capital gain (loss)... 1,979,93 9,810 33,192 7, , ,88 1,93, Net long-term capital gain (loss)...,197,99 1,0,28,,0,73,811 9,907,087 10,231,21 21,711,018 Nontaxable income ,039 2,00 30,80 30,33 8,031 7,72,9 Current year net income...,8,37 271,09,1 2,078 03,1 12,12 3,18,137 Net ordinary income... 2,232,212 17,1 237,31 23,99 31, 303,3 1,123,92 Net short-term capital gain (loss) ,83 70,2-137, ,289-23,31-22,2 1,08 Net long-term capital gain (loss)... 2,88,9 182,77-2,903 1, ,1 309,189 1,90,980 Nontaxable income... 80,73 *33 8,91 13,98 21,278 2,21 11,9 Undistributed at end of year...,2,10 11,093,99,099,30,383 9,,373 10,12,28 23,037,28 Net ordinary income... 1,977,28 1,777 9,078 9,32 138,93 229,209 1,28, Net short-term capital gain (loss)... 2,027,19 *,37 -,981 17,127 2,3 27,9 1,997,980 Net long-term capital gain (loss)... 0,91,8-12,339,91,110,283,989 9,387,8 9,782,27 19,8,989 Nontaxable income ,3 *118 30,891 33,92 93,381 87,219 2,113 ¹ Includes returns that reported their end-of-year book value of total assets (line 37, column (b)) from the balance sheet as zero. Often, this amount is reported as zero for those trusts filing a final return. In those cases, the trusts reported having assets at the beginning of the year, but nothing at the end of the year. ² Taken from Form 227, Part II, Line 22. ³ Taken from Form 227, Part II, Line 20. Taken from Form 227, Part II, Line 21. Taken from Form 227, Part II, Line

11 Table.--Charitable Remainder Unitrusts: Book Value Balance Sheet Information, by Size of Book Value of Assets, 2002 Size of end-of-year book value of total assets Under 1 or more (1) (2) (3) () () () Number of returns... 91,371 3,880 1,782 9,311 2,737 1 net assets (end-of-year) ²... 77,7,33 11,29,7 10,302,1 1,87,98 13,70,7 27,7,9 liabilities and net assets (end-of-year) ³... 81,39,038 11,30,89 10,397,8 1,072,9 13,700,190 30,837,710 assets (end-of-year)... 81,,12 11,,37 10,7,328 1,11, 13,9,9 30,839,38 Cash... 1,307,88 220,21 183,02 29,93 22,891 3,7 Savings and temporary cash investments... 8,297,297 70,29 709,12 1,011,77 1,19,9,7,911 Receivables due... 2,0,101,388 1,0 2,99 31,8 300,72 Inventories and prepaid expenses... 3,0 *19 *1 1, investments...,1,13 9,28,70 8,88, 12,83,22 11,28,73 2,817,71 Securities...,73,9 7,2,287 7,122,028 10,072,2 8,390,80 13,907,3 Government obligations...,009,20 09,20 70,92 1,08,221 1,07,779 1,0,09 Corporate stock... 33,8,87,33,03,27,912 7,391,2,10,022 9,7,082 Corporate bonds... 7,872,87 1,381,78 1,17,17 1,9,791 1,217,039 2,21,393 Land, buildings, and equipment... 82,02 113,22 13,0 230,8 231,309 11,28 Other investments... 18,999,17 1,92,92 1,31,72 2,180,303 2,,87 10,79,7 Charitable purpose land, buildings, and equipment , 0,70 *2,8 87,709 1, ,380 Other assets... 2,2,287 19, 333,2 73,821 38,8 8,732 liabilities (end of year)... 97,1 110, ,7 197,73 213,09 312,809 Accounts payable, accrued expenses, and deferred revenue... 33,383,30,381,302 8,91 97,80 Loans from disqualified persons, mortgages, and notes payable... 79,71 2,021 *23,01 9,91 *21,301 23,390 Other liabilities... 2,317 1,738,23 121,10 133,27 191,9 ¹ Includes 2,119 returns that did not report end-of-year book value of total assets (line 37, column (b)), or that reported the amount as zero. Often, this amount is reported as zero for those trusts filing a final return. In those cases, the trusts reported having assets at the beginning of the year, but nothing at the end of the year. ² Taken from Form 227, Part IV, line, column (b). This is the excess of total assets over total liabilities. ³ Taken from "total liabilities and net assets" (line 7, column (b)) of Form 227. This amount may not equal "total liabilities" (line 3, column (b)), plus "total net assets" (line, column (b)) due to taxpayer reporting discrepancies. Calculated as the sum of "accounts receivable" (line 27), "receivables due from officers, directors, trustees, and other disqualified persons" (line 28), and "other notes and loans receivable" (line 29). 99

12 Table 7.--Charitable Remainder Unitrusts: Fair Market Value Balance Sheet Information, by Size of Book Value of Assets, 2002 Size of end-of-year book value of total assets Under 1 or more (1) (2) (3) () () () 100 Number of returns... 91,371 3,880 1,782 9,311 2,737 1 assets ²... 8,97,79 12,323,78 10,38,710 1,022,329 13,317,010 33,7,92 Cash... 1,323, ,3 18,223 29,23 27,3 30,783 Savings and temporary cash investments... 8,289,83 728,00 707,1 999,38 1,182,89,72,1 Receivables due ³... 2,27,232 33,31 8,230 1, ,19 300,83 Inventories and prepaid expenses... 2,9 *18 *1 1, investments... 9,1,379 9,928,12 8,17,93 12,71,87 10,9,902 27,31,071 Securities... 8,23,897 7,322,923 7,032,2 9,973,10 8,193,2 1,002,000 Government obligations...,199,89 0,097 72,08 1,130,10 1,10,873 1,3,22 Corporate stock... 3,12,8,1,071,131,192 7,202,82,89,82 11,2,7 Corporate bonds... 8,199,23 1,3,7 1,17,9 1,39,89 1,192,901 2,82,031 Land, buildings, and equipment... 1,33,772 0,30 17,39 321,9 283,0 10,892 Other investments... 19,72,710 2,101,38 1,38,23 2,177,17 2,87,73 11,22,179 Charitable purpose land, buildings, and equipment... 27,887 17,097 *3,19 90,23 8,72 18,1 Other assets... 2,2,18 77, ,387 7,97 8,82 71,780 liabilities... 1,08,02 100, ,2 203,71 213,033 11,2 Accounts payable, accrued expenses, and deferred revenue... 33,31 2,707 3,717,98 7,73 107,21 Loans from disqualified persons, mortgages, and notes payable... 79,900 2,021 *23,01 9,91 *21,8 23,390 Other liabilities... 2,10,0 2,9 128,82 133, ,9 ¹ Includes 2,119 returns that did not report end-of-year book value of total assets (line 37, column (b)), or that reported the amount as zero. Often, this amount is reported as zero for those trusts filing a final return. In those cases, the trusts reported having assets at the beginning of the year, but nothing at the end of the year. ² Taken from Form 227, Part IV, line 37, column (b). ³ Calculated as the sum of "accounts receivable" (line 27), "receivables due from officers, directors, trustees, and other disqualified persons" (line 28), and "other notes and loans receivable" (line 29). Taken from Form 227, Part IV, line 3, column (b). 100

13 Table 8.--Charitable Lead Trusts: Book Value Balance Sheet Information, by Size of Book Value of Assets, 2002 Size of end-of-year book value of total assets Under 1 or more (1) (2) (3) () () () Number of returns...,81 2,73 1,208 1,00 18 net assets ²... 12,210,9 72,29 90,39 1,730,290 2,300,1,917,1 liabilities and net assets ³... 12,78,11 7,898 90,82 1,78,208 2,3,889 7,13,93 assets... 12,781,399 7, ,31 1,787,09 2,3,889 7,1,73 Cash... 18,98 9,312 *1,083 1,280 11,77 0,70 Savings and temporary cash investments ,0 7,98 17,301 1,1 12,11 8,2 Receivables due ,1 *11,23 *23,300 0,78 13,09 71,22 Inventories and prepaid expenses... 1,728 *0 -- *1 *1,21 11 investments... 10,21,8 80, ,801 1,90,323 2,01,01,922,70 Securities...,730,0 32,917 8,971 1,1,288 1,31,083 3,339,2 Government obligations ,23 32,82 *10,28 10,170 12,927 9,02 Corporate stock...,0,900 37,807 0,22 898,289 1,011,717 2,77, Corporate bonds... 37,372 *23,28 *3,13 97, ,39 202, Other investments... 3,891,179 7,921 22,830 33,03 700,933 2,83,9 7 Other assets... 7,9 *,87 *1 8,82 7,82 1,29 8 liabilities... 8,778 3,02 *21,29,918 9,797 23,032 ¹ Includes returns that did not report end-of-year book value of total assets (line 37, column (b)), or that reported the amount as zero. Often, this amount is reported as zero for those trusts filing a final return. In those cases, the trusts reported having assets at the beginning of the year, but nothing at the end of the year. 2 Taken from Form 227, Part IV, line, column (b). This is the excess of total assets over total liabilities. 3 Taken from "total liabilities and net assets" (line 7, column (b)) of Form 227. This amount may not equal "total liabilities" (line 3, column (b)), plus "total net assets" (line, column (b)) due to taxpayer reporting discrepancies. Taken from Form 227, Part IV, line 37, column (b). Calculated as the sum of "accounts receivable" (line 27), "receivables due from officers, directors, trustees, and other disqualified persons" (line 28), and "other notes and loans receivable" (line 29). Calculated as the sum of "investments--land, buildings, and equipment" (line 33) and "investments--other" (line 3). 7 Calculated as the sum of "charitable purpose land, buildings, and equipment" (line 3) and "other assets" (line 3). 8 Taken from Form 227, Part IV, line 3, column (b). 101

14 Table 9.--Pooled Income Funds: Book Value Balance Sheet Information, by Size of Book Value of Assets, 2002 Size of end-of-year book value of total assets Under 1 or more (1) (2) (3) () () () Number of returns... 1,7 1,309 * net assets (end-of-year) ²... 1,10,399 1,23 *79,29 237,121 38,8 88,90 liabilities and net assets (end-of-year) ³... 1,78,19 10,00 *79,29 27,820 3,77 7,397 assets (end-of-year)... 1,78,2 10,00 *79,29 27,883 3,77 7,397 Cash... 10, ,32,372 2,827 Savings and temporary cash investments... 81,917,7 -- 7,78 1,832 2,71 Receivables due...,3 *19 -- *3,309 *39 *783 Inventories and prepaid expenses *19 *0 investments... 1,22,073 13,898 *1,113 20,1 0,312 80,309 Securities... 97,30 9,028 *3,30 17,71 32,1 31,3 Government obligations... 19,10 *11,3 *22,1 18,087,87 97,7 Corporate stock... 33,701 21, ,28 12,22 17,33 Corporate bonds... 1,97 1,77 *21,3 101,31 13,32 7,27 Other investments... 7,79 0,89 *17,83 72,770 77, ,77 Other assets... 9,08 *,2 *18,182 *1,01 *10,3 9,90 liabilities (end-of-year)... 18,217 * ,012 12,021 assets at end of year: 1 Includes returns that did not report end-of-year book value of total assets (line 37, column (b)), or that reported the amount as zero. Often, this amount is reported as zero for those trusts filing a final return. In those cases, the trusts reported having assets at the beginning of the year, but nothing at the end of the year. 2 Taken from Form 227, Part IV, line, column (b) Taken from "total liabilities and net assets" (line 7, column (b)) of Form 227. This amount may not equal "total liabilities" (line 3, column (b)), plus "total net assets" (line, column (b)) due to taxpayer reporting discrepancies. Calculated as the sum of "accounts receivable" (line 27), "receivables due from officers, directors, trustees, and other disqualified persons" (line 28), and "other notes and loans receivable" (line 29). Calculated as the sum of "investments--land, buildings, and equipment" (line 33) and "investments--other" (line 3). Calculated as the sum of "charitable purpose land, buildings, and equipment" (line 3) and "other assets" (line 3). 102

15 SOURCE: IRS, Statistics of Income Winter Bulletin, Publication 113.