Leila G. Newhall Unitrust, Wells Fargo Bank, Trustee v. Commissioner of Internal Revenue Service

WILLIAM W SCHWARZER, Senior District Judge:

We, are called upon to decide whether a charitable remainder unitrust within 26 U.S.C. § 664(d)(2) that receives unrelated business taxable income from publicly traded limited partnerships is subject to tax on its entire income, including income otherwise exempt from tax.

FACTUAL BACKGROUND

The Leila G. Newhall Unitrust (“the Uni-trust”) was created in 1975 by a testamentary bequest from Leila G. Newhall. It is a charitable remainder unitrust, i.e., a trust which pays out a defined percentage of its net worth annually, leaving whatever remains at the…