SECTION 1. PURPOSE

This revenue procedure contains a sample provision that may be included in the governing instrument of a charitable remainder annuity trust (CRAT) providing for annuity payments payable for one or more measuring lives followed by the distribution of trust assets to one or more charitable remaindermen. The Internal Revenue Service (IRS) will treat the sample provision as a qualified contingency within the meaning of § 664(f) of the Internal Revenue Code. Thus, inclusion of the sample provision in the trust instrument does not cause the trust to fail to qualify as a charitable remainder trust under § 664. Any CRAT containing the sam

ple provision will not be subject to the “probability of exhaustion” test set forth in Rev. Rul. 70–452, 1970–2 C.B. 199, and applied in Rev. Rul. 77–374, 1977–2 C.B. 329. The “probability of exhaustion” test is used to determine whether a CRAT complies with the regulatory requirement applicable to all contingent charitable transfers that only a negligible chance exists that the charity will receive nothing. See § 1.170A–1(e) of the Income Tax Regulations, § 20.2055–2(b) of the Estate Tax Regulations, and § 25.2522(c)– 3(b)(1) of the Gift Tax Regulations.