Ezel / IRS Rulings / 1024053
Chief Counsel Advice 1024053 Released June 18, 2010 Advice

CCA 1024053: A trust owning a deferred variable annuity generally files Form 1041

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This page covers one taxpayer's ruling from 2010, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.

Currency note: this determination was released in 2010
Statutory amendments, regulation changes, court decisions, or later IRS guidance may have changed the analysis since then. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, threshold, or position mentioned here.
Not precedent. Under 26 U.S.C. § 6110(k)(3), this written determination may not be used or cited as precedent. It resolved one taxpayer's situation on its specific facts, and identifying details were redacted by the IRS before release. The official IRS release (linked on this page as a PDF) is the authoritative source.
About this page: The plain-English summary and ruling snapshot below were written by Ezel based on the official IRS release. The full text is the IRS's own document.
View official IRS release (PDF)

Plain-English summary

The Office of Chief Counsel analyzed an arrangement involving an irrevocable trust and a deferred variable annuity. It advised that the trust, as the annuity's owner, should generally file Form 1041 for years in which it has income. The trust could be a full or partial grantor trust under IRC §§ 671 through 678, depending on the terms of the individual trust. If it is a grantor trust, it may use the optional reporting rules in Treas. Reg. § 1.671-4.

Ruling snapshot

  • Question: How should an irrevocable trust owning a deferred variable annuity be classified and reported for income tax purposes?
  • Outcome: Advice given
  • Key authorities: IRC §§ 671-678; Treas. Reg. § 1.671-4

Full text (IRS public release)

ID: CCA_2010041513312047 Number: 201024053
Release Date: 6/18/2010
Office: ----------------
UILC: 7701.03-08

From: ----------------
Sent: Thursday, April 15, 2010 1:31:22 PM
To: -----------------------------------------------------------------------
Cc: ----------------------------------------------------------------------------------------------------------------------
Subject: [ --------------- ]

This email responds to your inquiry dated April 08, 2010 regarding the income tax classification
of the above-captioned arrangement.

Based on a review of the promotional materials and patent applications, we have concluded that
the arrangement involves the funding of an irrevocable trust coupled with the purchase of some
type of deferred variable annuity.

The trust, as owner of the annuity, should generally file Form 1041 for years that it has income.
However, the trust may be a full, or partial, grantor trust under §§ 671-678 of the Internal
Revenue Code depending on the terms of each individual trust created using this arrangement. If
the trust is a grantor trust, it may avail itself of the optional reporting requirements in Treas. Reg.
§ 1.671-4.

If you have any questions, or would like to discuss this matter further, please contact me.

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