Use of a CRT for Retirement Income - Update

Published on: 07:33AM Dec 21, 2011

In my post yesterday, I need to clarify one tax aspect of the post.  When a farmer contributes all ordinary income assets such as unsold grain, farm equipment, etc. the deduction that the farmer may get is limited to his cost basis in the assets.  Since unsold grain for a cash basis taxpayer has a basis of zero and most farm equipment has been fully depreciated, there may be little or no tax deduction by creating the CRT.

However, the power of the CRT is the deferral of the income from the sale of the grain and the equipment, not the income tax deduction on creating it.

Thanks to a reader for catching this for me.