Republican presidential nominee Mitt Romney uses a tax shelter that Congress did away with in 1997 that permits him to use a charity’s exemption to defer taxes on capital gains from the sale of assets, according to Bloomberg.
Mr. Romney established a “charitable remainder unitrust” for the Mormon Church in June 1996. Like other wealthy individuals who used such vehicles for donations, he was allowed to keep it going when the practice was outlawed the following year.
People who establish CRUTs, as they are called, defer capital gains taxes on the trust’s profits, and they receive annuity-like payments and small charitable tax breaks through the vehicle. The principal goes to the charity upon the donor’s death, at which point it is often well below the original investment.
Jonathan Blattmachr, a lawyer who set up hundreds of such trusts in the 1990s, said they are akin to “the renting from your favorite charity of its exemption from taxation.” He added, “I used to structure them so the value dedicated to charity was as close to zero as possible without being zero.”
A spokesman for the Romney campaign said that the trust “has operated in accordance with the law.” The campaign declined to answer specific written questions from Bloomberg about the trust.