Glossary of Terms beginning with 5

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5% Probability

A test used to ensure that there will be a remainder left for the charity at the death of all of a CRAT’s beneficiaries. If there is a 5% or greater probability that the trust corpus is exhausted, a charitable deduction will be denied.

5-Year Carry-Forward Rule

A federal income tax provision that permits a donor to carry over into the five succeeding tax years the amount of an income tax deduction for a gift to a charity that exceeds the deductible amount in the year the gift is made.