[Code of Federal Regulations]
[Title 26, Volume 14]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR25.2522(a)-2]

[Page 594]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 25_GIFT TAX; GIFTS MADE AFTER DECEMBER 31, 1954--Table of Contents
 
Sec.  25.2522(a)-2  Transfers not exclusively for charitable, etc., purposes in the case of gifts made before August 1, 1969.

    (a) Remainders and similar interests. If a trust is created or 
property is transferred for both a charitable and a private purpose, 
deduction may be taken of the value of the charitable beneficial 
interest only insofar as that interest is presently ascertainable, and 
hence severable from the noncharitable interest. The present value of a 
remainder or other deferred payment to be made for a charitable purpose 
is to be determined in accordance with the rules stated in Sec.  
25.2512-5. Thus, if money or property is placed in trust to pay the 
income to an individual during his life, or for a term of years, and 
then to pay the principal to a charitable organization, the present 
value of the remainder is deductible. If the interest involved is such 
that its value is to be determined by a special computation, see Sec.  
25.2512-5(d)(4). If the Commissioner does not furnish the factor, the 
claim for deduction must be supported by a full statement of the 
computation of the present value made in accordance with the principles 
set forth in the applicable paragraph of Sec.  25.2512-5.
    (b) Transfers subject to a condition or a power. If, as of the date 
of the gift, a transfer for charitable purposes is dependent upon the 
performance of some act or the happening of a precedent event in order 
that it might become effective, no deduction is allowable unless the 
possibility that the charitable transfer will not become effective is so 
remote as to be negligible. If an estate or interest passes to or is 
vested in charity on the date of the gift and the estate or interest 
would be defeated by the performance of some act or the happening of 
some event, the occurrence of which appeared to have been highly 
improbable on the date of the gift, the deduction is allowable. If the 
donee or trustee is empowered to divert the property or fund, in whole 
or in part, to a use or purpose which would have rendered it, to the 
extent that it is subject to such power, not deductible had it been 
directly so given by the donor, the deduction will be limited to that 
portion of the property or fund which is exempt from the exercise of the 
power. The deduction is not allowed in the case of a transfer in trust 
conveying to charity a present interest in income if by reason of all 
the conditions and circumstances surrounding the transfer it appears 
that the charity may not receive the beneficial enjoyment of the 
interest. For example, assume that assets placed in trust by the donor 
consists of stock in a corporation, the fiscal policies of which are 
controlled by the donor and his family, that the trustees and 
remaindermen are likewise members of the donor's family, and that the 
governing instrument contains no adequate guarantee of the requisite 
income to the charitable organization. Under such circumstances, no 
deduction will be allowed. Similarly, if the trustees are not members of 
the donor's family but have no power to sell or otherwise dispose of 
closely held stock, or otherwise insure the requisite enjoyment of 
income to the charitable organization, no deduction will be allowed.
    (c) Effective date. This section applies only to gifts made before 
August 1, 1969. In the case of gifts made after July 31, 1969, see Sec.  
25.2522(c)-2.

[T.D. 6334, 23 FR 8904, Nov. 15, 1958; 25 FR 14021 Dec. 31, 1960, as 
amended by T.D. 7318, 39 FR 25457, July 11, 1974; T.D. 8540, 59 FR 
30177, June 10, 1994]

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