Written By: Alex Kuzmik, J.D.
Jul 24, 2025
Trusts and estates often make charitable contributions as part of their administration. When done thoughtfully, these contributions can provide not only philanthropic impact but also meaningful tax benefits. One powerful, but under-utilized, planning tool available to fiduciaries is the election under Internal Revenue Code 642(c)(1)which allows a trust or estate to treat a charitable contribution made in the following year as if it were made in the prior year.
In contrast to individuals, charitable deductions by trusts and estates are not subject to AGI limitations. That means a fiduciary can use a charitable contribution to eliminate or substantially reduce taxable income. However, fiduciaries often don't know the trust or estate’s tax liability for the year until after year-end, making it difficult to determine the exact amount to contribute for tax planning purposes.
The 642(c) election solves this problem.
The election is simple but must be made on a timely filed return (including extended returns).
For example, if a trust generates significant income in 2024 but calculates its tax liability in mid-2025, the trustee can donate an equivalent amount to qualified charities in July 2025 (assuming the trust tax return was extended). By making a 642(c) election, this donation can be considered a deduction for 2024, reducing that year's tax liability and preserving more funds for future charitable donations.
For information on making a 642(c) election and other tax planning tips for trusts and estates, please contact Alex Kuzmik of Pease Bell CPAs at akuzmik@peasebell.com
