Proposed Reg on Reporting Requirement Removal for Trusts with Pass-through Entity Charitable Contributions
At the end of last month, the IRS issued a proposed regulation impacting private trust charitable contribution reporting requirements. The bottom line is that the proposed rule would get rid of extant reporting requirement for trusts whose charitable contribution deductions are solely for contributions made by pass-through entities.
From the notice:
“The Treasury Department and IRS believe that an administrative exception should be created for trusts whose section 642(c) deductions consist solely of the trust’s allocable share of a contribution made by a partnership or S corporation in which the trust holds an interest, because these trusts do not fall within the purpose of the information reporting requirement of section 6034(b). The Treasury Department and the IRS propose to remove the section 6034 reporting requirements for trusts whose charitable deduction is exclusively the result of contributions made by a passthrough entity in which the trust directly or indirectly holds an interest.”
So, what would the proposed rule do in practice? Well, the practical effect is primarily administrative: Affected trustees and their advisers would lose a duplicative filing obligation. Maybe that’s a good thing for donors and their planners. Charities receiving gifts from partnerships and S corporations shouldn’t see a change in the underlying charitable contribution rules, while trusts investing through pass-through entities may face somewhat simpler compliance.
But the exception appears to be narrow. If a trust makes its own charitable contribution or otherwise claims a section 642(c) deduction apart from amounts passed through from a partnership or S corporation, the Form 1041-A requirement remains.
Comments are due October 16, 2026.