Estate may take an unlimited section 642(c) charitable deduction for income paid to charities
Plain-English summary
A decedent's will directed that, after specific bequests, taxes, debts, and
administrative costs, a percentage of the estate's residue go to organizations
that are exempt charities under Section 501(c)(3). The will did not say how the
estate's income should be treated, but the estate represented that state law,
and an order of the probate court, required income from assets not specifically
bequeathed to be paid to the residuary beneficiaries, including the charities.
The estate paid the charities their percentage of gross income and deducted
those payments under Section 642(c)(1). It asked the IRS to confirm the past
deductions and to bless the same treatment for future years. The IRS ruled the
deductions were proper, so long as the income paid to the charities was
includible in the estate's gross income for the year. Section 642(c)(1) lets an
estate or trust deduct, without limit, gross income that the governing
instrument directs be paid for a charitable purpose. This matters because
estates get a far more generous charitable deduction than individuals: no
percentage-of-income cap, as long as the payment traces to the will and state
law.
Ruling snapshot
- Question: May the estate deduct, under § 642(c)(1), the gross income it pays to charities under the will and state law, for past and future years?
- Outcome: Approved (deductible to the extent the amounts are includible in the estate's gross income)
- Key authorities: IRC § 642(c)(1); IRC § 170(c); Treas. Reg. § 1.642(c)-1(a); Rev. Rul. 68-667; Commissioner v. Estate of Bosch, 387 U.S. 456 (1967)
Full text (IRS public release)
Internal Revenue Service Department of the Treasury
Washington, DC 20224
Number: 202618006 Third Party Communication: None
Release Date: 5/1/2026 Date of Communication: Not Applicable
Index Number: 642.03-00
Person To Contact:
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------------------------------ Refer Reply To:
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PLR-114550-25
Date:
February 04, 2026
LEGEND
Estate = --------------------------------
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Decedent = -----------------------
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State = ------
Date = -------------------
Will = ---------------------------------------------------------------------------------------
n = ---
Year 1 = -------
Year 2 = -------
Dear ---------------:
This letter responds to a letter dated June 16, 2025, and subsequent
correspondence, submitted on behalf of Estate, by its authorized representatives,
requesting a ruling under § 642(c) of the Internal Revenue Code.
FACTS
The information submitted states that Decedent was a resident of State and died
on Date. Estate is Decedent's estate.
Pursuant to Decedent's Will, after payment of specific bequests and all taxes,
administrative costs, and debts, n% of the residue of Estate is payable to organizations
Estate represents are exempt from tax under § 501(c)(3) ("Charitable Organizations").
Decedent's Will does not provide for the treatment of income earned by Estate.
However, Estate represents that, under the laws of State, income not arising from a
specifically bequeathed asset must be paid to residuary beneficiaries. Further, Estate
represents that an order of the probate court administering Estate mandates that all
income arising from assets not specifically bequeathed to designated beneficiaries shall
be distributed to Estate's residuary beneficiaries, including the Charitable Organizations.
Estate represents that, during the Year 1 and Year 2 taxable years, it paid to the
Charitable Organizations n% of the gross income allocable to Estate's residuary
beneficiaries and claimed a deduction for such payments under § 642(c)(1) on its timely
filed returns for such taxable years. Further, Estate represents that, in accordance with
Decedent's Will and the laws of State, it will pay n% of the gross income to the
Charitable Organizations in subsequent taxable years during which Estate is being
administered.
Estate requests a ruling that amounts paid to the Charitable Organizations during
the Year 1 and Year 2 taxable years were properly deducted under § 642(c)(1) and that
it will be allowed a charitable contribution deduction under § 642(c)(1) in subsequent
taxable years to the extent Estate pays n% of Estate's income to the Charitable
Organizations in accordance with Decedent's Will and the laws of State.
LAW AND ANALYSIS
Section 642(c)(1) provides that in the case of an estate or trust (other than a trust
meeting the specifications of subpart B), there shall be allowed as a deduction in
computing its taxable income (in lieu of the deduction allowed by § 170(a), relating to
the deduction for charitable, etc., contributions and gifts) any amount of the gross
income, without limitation, which pursuant to the terms of the governing instrument is,
during the taxable year, paid for a purpose specified in § 170(c) (determined without
regard to § 170(c)(2)(A)).
Section 1.642(c)-1(a) of the Income Tax Regulations provides for an unlimited
deduction for any part of the gross income of an estate pursuant to the terms of the will
is paid or treated as paid during the taxable year for a purpose specified in § 170(c).
Rev. Rul. 68-667, 1968-2 C.B. 289 provides that in the absence of a
testamentary provision to the contrary, state law determines whether a bequest to a
charitable organization is paid from an estate's corpus or income.
Rev. Rul. 71-285, 1977-2 C.B. 213 provides that when a trust instrument directs
the trustee to make payments to charitable beneficiaries, but does not indicate whether
payments are to be made from income or principal, the grantor's intent is interpreted
and governed by the requirements of local law.
In Commissioner v. Estate of Bosch, 387 U.S. 456 (1967), the Court considered
whether a state trial court's characterization of property rights conclusively binds a
federal court or agency in a federal estate tax controversy. The Court concluded that
the decision of a state trial court as to an underlying issue of state law should not be
controlling when applied to a federal statute. Rather, the highest court of the state is the
best authority on the underlying substantive rule of state law to be applied in the federal
matter. If there is no decision by that court, then the federal authority must apply what it
finds to be state law after giving "proper regard" to the state trial court's determination
and to relevant rulings of other courts of the state. In this respect, the federal agency
may be said, in effect, to be sitting as a state court.
CONCLUSION
Based solely on the facts submitted and the representations made, we conclude
that the amounts Estate paid to the Charitable Organizations during the Year 1 and
Year 2 taxable years were properly deducted under § 642(c)(1) on its Year 1 and Year 2
tax returns, provided the amounts of gross income paid to the Charitable Organizations
were includible in Estate's gross income for the Year 1 and Year 2 taxable years.
Additionally, we conclude that Estate may deduct those amounts of gross income that
are paid to the Charitable Organizations under § 642(c)(1) in subsequent taxable years
to the extent that those amounts are includible in the gross income of Estate for the
taxable year.
Except as specifically set forth above, we express or imply no opinion concerning
the federal tax consequences of the facts of this case under any other provision of the
Code and the regulations thereunder.
The rulings contained in this letter are based on information and representations
submitted by the taxpayer and accompanied by a penalty of perjury statement executed
by an appropriate party. While this office has not verified any of the material submitted
in support of the ruling request, it is subject to verification on examination.
This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) of the
Code provides that it may not be used or cited as precedent.
In accordance with the Power of Attorney on file with this office, a copy of this
letter is being sent to your authorized representatives.
Sincerely,
Associate Chief Counsel
(Passthroughs, Trusts, and Estates)
By: _______________________________
Brian J. Barrett
Senior Technician Reviewer, Branch 3
Office of the Associate Chief Counsel
(Passthroughs, Trusts, and Estates)
Enclosure:
Copy of this letter for § 6110 purposes
cc: ------------------------
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