Thursday April 25, 2024

Rev. Rul. 85-57
GiftLaw Note: This ruling expands Rev. Rul. 82-38, with respect to alternative charitable remainder recipients. While the pooled income fund (PIF) is required to be maintained by a public charity, it is possible that the public charity could go out of existence. To ensure that the PIF remainder passes to a qualified exempt public charity, the PIF Declaration of Trust must make provision for an alternative qualified exempt public charity to receive PIF remainder interests.
Rev. Rul. 85-57, 1985-1 C.B. 182, 1985-18 I.R.B. 5.

Internal Revenue Service Revenue Ruling

POOLED INCOME FUND; ALTERNATIVE REMAINDERMAN
Published: May 6, 1985

Section 642.-Special Rules for Credits and Deductions, 26 CFR 1.642(c)-5: Definitions of pooled income fund.

Pooled income fund; alternative remainderman. Guidance is provided to trustees of pooled income funds so that provisions can be made in the Declaration of Trust for selection of an alternate charitable remainderman in the event that the designated public charity goes out of existence

Rev. Rul. 82-38, 1982-1 C.B. 96, serves as a guide in developing governing instruments for pooled income funds. It provides sample provisions for inclusion in a Declaration of Trust and an Instrument of Transfer that may be used to satisfy section 642(c)(5) of the Internal Revenue Code. This revenue ruling amplifies Rev. Rul. 82-38, to provide guidance to trustees so that provisions can be made in the Declaration of Trust for selection of an alternate charitable remainderman in the event that the designated public charity goes out of existence or loses its qualification.

Section 3 of Rev. Rul. 82-38 is amplified by adding the following paragraphs:

04 The governing instrument of a pooled income fund may provide for selection of an alternate charitable remainderman in the event that the designated public charity goes out of existence or loses its charitable qualification. The following sample provision for a Declaration of Trust may be used:

In the event that Y Public Charity goes out of existence or loses its qualification under clauses (i) through (vi) of section 170(b)(1)(A) of the Internal Revenue Code, the Trustee of Y Pooled Income Fund shall select another organization within 60 days after Y Public Charity ceases to exist or within 60 days after the expiration of the period specified in section 7428(b)(3) in which a pleading may be filed under section 7428(a) to contest such a loss of qualification. The organization selected to replace Y Public Charity must be a qualified public charity described under clauses (i) through (vi) of section 170(b)(1)(A). In that event, all references in this Declaration of Trust to Y Public Charity shall henceforth be construed to refer to the charitable organization so selected.

05 The following provision may be used in an Instrument of Transfer to a pooled income fund whose Declaration of Trust provides for selection of an alternate charitable remainderman in the event that the designated charity loses its qualification as a public charity under clauses (i) through (vi) of section 170(b)(1)(A) of the Code or ceases to exist:

In the event that the trustee of Y Pooled Income Fund duly selects an organization qualified as a public charity under clauses (i) through (vi) of section 170(b)(i)(A) of the Internal Revenue Code to replace Y Public Charity pursuant to the provisions of the Declaration of Trust of Y Pooled Income Fund, all references in this instrument to Y Public Charity shall henceforth be construed to refer to the replacement organization so selected.

EFFECT ON OTHER REVENUE RULINGS


Rev. Rul. 82-38 is amplified.

Revenue Ruling 85-58, setting forth the May rates, is attached and will be published in Internal Revenue Bulletin No. 1985-18, dated May 6, 1985.

Part I

Section 1274--Determination of Issue Price in the Case of Certain Debt Instruments Issued for Property
26 CFR 1.1274-6T: Alternate Method for Determining Applicable Federal Rate
(Also Sections 467, 483, 7872; 1.483-1.)

Rev. Rul. 85-57, 1985-1 C.B. 182, 1985-18 I.R.B. 5.



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