Calculator
Quickly Determine the IMMEDIATE Charitable Deduction
& TAX SAVINGS Generated by an iCLAT
An "iCLAT" is simply a trust that makes annual distributions to charity for a specified term of years and then, at the end of the term, distributes the remaining trust assets back to its grantor (i.e. the donor or the client). For legal and IRS purposes, an iCLAT is known as a "reversionary" charitable lead annuity trust, which is treated as a "grantor trust" for federal income tax purposes. Importantly, an iCLAT has nothing to do with saving estate taxes, or estate planning for that matter. Think of an iCLAT as an "Income Tax Savings CLAT"
HOW does an iCLAT generate IMMEDIATE TAX SAVINGS?
The IMMEDIATE YEAR 1 charitable tax deduction generated by an iCLAT is equal to the "present value" of it's annual payments to charity - using the IRS §7520 interest rate, which is released each month. Since the IRS §7520 interest rate remains at low levels (4.2% for June 2023), the resulting IMMEDIATE charitable tax deductions from iCLATs are extremely large! Use the iCLAT Calculator Tool to instantly determine the IMMEDIATE charitable tax deduction and tax savings that a particular iCLAT can generate for you, your clients, or your donors.
An iCLAT will work best for someone who regularly gives at least $10,000 per year to one or more charities (including their place of worship)
AND EITHER:
(1) has a spike income event of $250,000 or more;
OR
(2) has a high current level of income that is expected to end within the next two years from retirement, or other reasons.
WHO can most benefit from an iCLAT?
WHY is 2023 is one of the best years to create an iCLAT?
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The IRS 7520 interest rate remains at historically low levels (the rate is only 4.2% for June 2023). The low IRS discount rate is what allows iCLATs to generate such large IMMEDIATE charitable income tax deductions and resulting tax savings!
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As a result of the recent DOUBLING OF THE STANDARD DEDUCTION, it is now harder than ever to receive any income tax savings from charitable gifts under $13,850/yr. for single persons and $27,700/yr. married persons.
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The realistic possibility of increased income tax rates and changes to the charitable deduction in the near future.
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The prior overall limitation on itemized deductions for high-income individuals, the so-called "Pease Limitation," is currently suspended (until December 31, 2025). As a result, an iCLAT's large immediate charitable deduction will produce significantly more income tax savings now in comparison to prior years.