IRS Designates Certain CRAT Transactions as Listed Transactions — Implications for Canadian Donors

Summary

On July 8, 2026, the Treasury Department and the IRS issued final regulations (IR-2026-82) designating certain Charitable Remainder Annuity Trust arrangements as "listed transactions" (Internal Revenue Service — "Treasury, IRS issue final regulations naming certain charitable remainder annuity trust transactions as listed transactions" — https://www.irs.gov/newsroom/treasury-irs-issue-final-regulations-naming-certain-charitable-remainder-annuity-trust-transactions-as-listed-transactions). The regulations target CRAT structures that improperly eliminate ordinary income and capital gain on property sales (Journal of Accountancy — "IRS designates certain CRAT arrangements as listed transactions" — https://www.journalofaccountancy.com/news/2026/jul/irs-designates-certain-crat-arrangements-as-listed-transactions/). Participation in a listed transaction triggers mandatory IRS disclosure obligations and potential penalties for non-compliance.

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Our Take

This regulatory change carries significant implications for high-net-worth individuals engaged in cross-border charitable planning between Canada and the US. Canadian donors who use US charitable trusts as part of their philanthropic and estate strategies should pay close attention. US Charitable Remainder Annuity Trusts have been a popular vehicle for Canadians to defer capital gains while supporting charitable causes, but the IRS's new listed-transaction designation imposes substantial reporting burdens. Affected participants must file Form 8886 (Disclosure Statement) with the IRS and may face retroactive disclosure requirements. Any cross-border donor currently involved in or considering a CRAT structure should review the arrangement with a qualified tax advisor to determine whether it falls within the scope of the new regulations.

Disclaimer: This article is general information only and does not constitute tax advice; it should not substitute professional tax counsel. Please consult a licensed CPA for advice specific to your situation.