A charitable trust includes a trust in which all the unexpired interests are devoted to war veterans' organizations or certain cemetery companies (or to the types of organizations listed under Scope of provisions regarding charitable trusts ). Payments to veterans' organizations and certain cemetery companies are qualifying distributions under these circumstances.
Example. Hugo Briar creates an inter vivos trust whose governing instrument provides that M, a war veterans' organization, and N, a section 501(c)(3) organization, are each to receive 50 percent of the income for 10 years. At the end of the 10-year period, the corpus will be distributed to O, also a section 501(c)(3) organization. Hugo is allowed an income tax deduction for the value of all interests placed in trust. The payments to M are qualifying distributions. Accordingly, the trust will be considered a charitable trust.