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Rev. Rul. 68-417


Rev. Rul. 68-417; 1968-2 C.B. 103

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Citations: Rev. Rul. 68-417; 1968-2 C.B. 103
Rev. Rul. 68-417

Under the terms of an irrevocable trust agreement, the remainder interest in stocks and bonds transferred to a trust is required to ultimately go to organizations described in section 170 of the Internal Revenue Code of 1954, as presently constituted. However, the grantor retained a special testamentary power of appointment to name such organizations, including types other than those described in section 170(b)(1)(A) of the Code, that may receive the corpus of the trust. The trust agreement further provides that if the grantor fails to exercise the power of appointment or it becomes void for any reason, the remainder will go to the X university, if it is then in existence and exempt from Federal income tax, or if not, then to the city of Y .

Held, the grantor's retention of the power of appointment does not defeat the deduction under section 170 of the Code, subject to the 20-percent limitation contained in section 170(b)(1)(B), for the present value of the remainder interest in the taxable year in which the stocks and bonds were transferred to the trust.

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