Eric, age 54, funds a Charitable Remainder Annuity Trust (CRAT) with $750,000 in case and securities. In exchange, the trust provides for an annuity (annual, of course) of 10% of the initial fair market value of the assets. Assume a Section 7520 rate of 10%. Given these facts, calculate the income interest, the remainder interest, Eric's implicit life expectancy, and the amount Eric can deduct in the year of the transfer as a charitable income tax deduction, subject to AGI limitations as identified in the textbook. Show your math in arriving at your answer.

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To solve this problem we need to calculate the income interest the remainder interest Erics implicit life expectancy and the amount Eric can deduct in ... View the full answer