and that is exactly how federal tax law views the gift annuity.What is a Charitable Gift Annuity?
A charitable gift annuity (CGA) is a contractual agreement between a donor and the charity issuing the gift annuity under which the donor makes an irrevocable gift of cash or property (often long-term appreciated stock) to a qualified charity, or makes a direct IRA distribution to create a new CGA. In exchange for the donated property, the charity agrees to pay a fixed amount periodically (monthly, quarterly, semiannually or annually) for the lifetime of one or two annuitant(s).
The gift annuity transaction is not a straight quid pro quo, however. The present value of the annuity received from charity is less than the value of the property transferred. Thus, the transfer is in part a gift to charity and in part the purchase of an annuityand that is exactly how federal tax law views the gift annuity.
Only qualified charitable organizations may issue gift annuities. When so required by state law, the issuing charity must register with the states in which it solicits gift annuities. The solicitation process itself may be subject to state regulations. And state laws often require issuing charities to maintain segregated reserves to cover their potential obligations to annuitants under gift annuity agreements.
Click here to look at a diagram of "How Charitable Gift Annuities Work."
Click here to jump to a discussion of CGAs funded with an IRA distribution.
Benefits of Gift Annuities to the Donor
A charitable gift annuity offers many benefits to the donor:
It provides an immediate income tax charitable deduction to donors who itemize in the year the property is transferred to charity (subject to limitations).
It pays a lifetime income to one or two individuals (one of whom may be the donor), part of which is federal income tax free until the annuitant(s) reaches the age of life expectancy.
The income payout from the gift annuity can begin immediately or can be deferred until some future start date.
The charity's promise to pay the annuity is backed by the general assets of the charity.
When appreciated property is transferred in exchange for a gift annuity, the resulting capital gains tax liability (recognized because the transfer is in part a taxable exchange of property) can be spread over life expectancy if the donor is the annuitant.
It removes the transferred assets from donor's potential gross estate for federal estate tax purposes.
Click here for an example of how a gift annuity can benefit both donor and charity.
Bertie is a 70-year-old widow and a long-time contributor to the JKL Hospital annual fund. She transfers $20,000 in cash to the hospital in exchange for a gift annuity of $1,260 a year for life. JKL Hospital uses the suggested payout rates of the American Council on Gift Annuities. At her age and assuming a 4.6% AFR, an annual payout, and that she has already reached her 0.5%-of-AGI giving floor through other charitable gifts for the year, she can deduct $7,150 on her income tax return. If her marginal federal income tax bracket is 35%, the charitable deduction will provide an immediate tax savings of $2,502 if she itemizes. Bertie's net after-tax outlay is only $17,498. What's more, about $829 of her annual payout is income tax-free until Bertie reaches her life expectancy (and all ordinary income thereafter). Best of all, she has the personal satisfaction of making a current gift to the hospital.
Click here for limitations on the charitable income tax deduction.
Deduction amounts are limited in the following ways:
Donation amounts that surpass 0.5% of a donor's adjusted gross income qualify for a charitable deduction.
Donors in the 37% tax bracket have the tax benefit of their deduction limited to 35%.
The maximum deduction is limited to a percentage of the donor's adjusted gross income, based on the type of assets donated. Any excess deduction can be carried over up to five years.
Ground Rules for Issuing Gift Annuities
Gift annuities are an exception to the general rule [IRC Sec. 501(m)] that charitable organizations cannot issue commercial insurance contracts if they want to keep their income tax-exempt status. To qualify for the exception, charities that issue gift annuities must comply with the "Clay-Brown" rules [IRC Sec. 514(c)(5)] to avoid being taxed on the revenues they receive from gift annuities. These rules are:
The present value of the annuity must be less than 90% of the total value of the property transferred in exchange for the annuity.
The annuity cannot be payable over more than two lives, and the life or lives must be in being at the time the gift annuity is set up.
The gift annuity agreement between the donor and charity must not specify either a guaranteed minimum or a maximum number of annuity payments.
The amount of the periodic annuity payments cannot be adjusted according to the actual income produced by the transferred property or any other property.
Income Tax Charitable Deduction for Gift Annuities
A charitable gift annuity is technically part-gift and part-sale (i.e., a bargain sale) since the donor contributes the property in exchange for annuity payments from the charity. The donor receives an up front income tax charitable deduction for the gift portion of the transfer (i.e., the value of the contributed cash or property less the present value of the annuity payments).
An income tax charitable deduction may be claimed in the year of the gift. Any excess deduction (over the applicable percentage limitation) may be taken in the five following tax years. If cash is transferred for the annuity, the percentage limitation is 60% of adjusted gross income (AGI). If long-term appreciated property is transferred, the percentage limitation is generally 30% of AGI. The donor may make the special election to reduce the amount of his contribution by the appreciation in the property in order to be eligible for the 50% limitation. Additionally, only donation amounts that surpass 0.5% of a donor's AGI qualify for a charitable deduction. Donors in the top 37% tax bracket have the tax benefit of their deduction capped at 35%.
The donor's deduction, as well as the payout rate, is higher in the case of a deferred gift annuity (where payments begin at least one year after the date of the gift) than they are for a comparable immediate annuity (where payments begin within one year).
A gift annuity payable to two annuitants for their joint lives will result in a reduced income tax charitable deduction since the payout period to the two annuitants can be expected to last longer than payments would last for a single annuitant.
Click here for an example of the income tax charitable deduction for a one-life, immediate gift annuity.
Gertrude is a widow, age 85, who has been a long-time supporter of Old Ivy University. She is in good health and is eager to convert some of her locked-in capital gains to a higher current income.
She transfers $20,000 of appreciated XYZ stock that she has owned for several years to Old Ivy in exchange for a one-life gift annuity payable to her. Her basis in the stock is $4,000. At her age, the ACGA payout rate is 9.1%, or $1,820 every year for the rest of her life. Assume that the most favorable AFR among those available at the time of the transaction is 4.6%.
Based on a quarterly payment of the gift annuity amount, Gertrude's $20,000 gift annuity will generate an income tax charitable deduction of up to $10,363 (subject to limitations). In her 35% marginal federal income tax bracket, she will save $3,627 in taxes in the year of the contribution, assuming she itemizes.
Her annual payout will be about $1,820, of which $1,134 will be taxed as long-term capital gain, $437 as ordinary income, and $284 will be income tax-free (rounded to whole dollars). This tax regime will continue until Gertrude reaches her life expectancy, after which all payments will be taxed as ordinary income.
Selecting the Applicable Federal Rate (AFR)
The tax code requires an "applicable federal rate" (AFR) to be used in calculating the charitable deduction for gifts of partial interests in property, including gift annuities. Toward the end of each month, the government issues a revenue ruling that provides a table of rates to be used in the following month for various tax purposes. The pertinent rate from the table for charitable giving purposes is:
120% of the applicable midterm rate, rounded to the nearest two-tenths of one percent
The rates in the government's monthly tables are adjusted for monthly, quarterly, semiannual or annual payouts.
The donor has a choice of AFRs. The rate for the month of the gift may be used, or the rate for either of the two preceding months. This selection is tricky for gift annuities because there's a tradeoff involved. The donor who wants to maximize his or her deduction will select the highest rate available. This reduces the value of the annuity and increases the amount of the charitable gift. But the donor who wants to maximize the income tax-free portion of the annuity payments will select the lowest available rate, keeping in mind that this will reduce the upfront charitable deduction.
Click here to jump to a more detailed explanation of the "applicable federal rate" (AFR).
The annuitant is the individual designated by the donor to receive the income payouts from a gift annuity. The donor can name himself as the sole annuitant, or another individual as sole annuitant, or choose joint-and-survivor annuitants, or select consecutive annuitants. A maximum of two annuitants is allowed for gift annuities.
The income payout period of a charitable gift annuity must be measured by one or two lives. The annuity cannot be:
Payable for a fixed term of years rather than life
Guaranteed for a minimum number of years (should the annuitant die early)
Terminated when a maximum number of years is reached (should the annuitant live a long life)
The fixed annuity amount paid by the charity to the annuitant is based on a payout rate established by the particular charity. The payout rates, in turn, are based on the age of the annuitant. Generally, the older the annuitant, the higher the payout rate. The present value of the annuity must be less than 90% of the value of the property transferred in exchange for the annuity.
The American Council on Gift Annuities (ACGA), a voluntary organization with charitable organizations as its members, publishes a set of recommended payout rates. These rates are reviewed and revised periodically as prevailing interest rates fluctuate, the financial markets shift, and secular trends in mortality change.
The ACGA payout rates for a single life are higher than for an annuity with two lives since the payments will not be expected to last as long, on average, when only one life is involved.
Click here to see the ACGA's payout rates for one-life, immediate gift annuities.
Income Taxation of Gift Annuity Payouts
The annuity paid by the charity under a gift annuity contract may be taxable as:
A tax-free return of principal
Long-term capital gain income
Ordinary income
A particular annuity payment could be comprised of all three categories.
A portion of each payment received by the donor or other beneficiary will be a tax-free return of principal until the assumed cost of the annuity (as determined under IRS tables) has been fully recovered, upon the annuitant's attainment of life expectancy.
The assumed cost of the annuity does not include the portion of the transferred property's value that is assigned to the gift portion of the transaction. The donor's cost basis must be allocated between the gift and sale portions of the transaction in accordance with their respective proportions of the value of the property transferred. For example, if the gift portion represents 60% of the total transfer, then 60% of the donor's basis must be allocated to the gift and is not available to offset the gain on the sale portion.
If long-term appreciated property is transferred in exchange for a gift annuity, a portion of each payment will be taxed as long-term capital gain. This will reduce the income tax-free portion of the annuity payments.
Capital gain is recognized only on the sale portion of the transaction (and with the basis allocation just described). Under general tax rules, this gain would be recognized all at once in the year of the transaction. But the gain may be spread over the donor's life expectancy if:
The donor is the sole annuitant, or
The donor and another individual are the only annuitants.
Click here for an example that emphasizes the capital gains consequences if the donor does not name himself or herself as sole or joint annuitant after setting up a gift annuity with long-term appreciated property.
If the donor established a gift annuity with appreciated property, naming her aunt as sole annuitant, the entire capital gain on the sale portion of the transaction would have been reported by the donor in the year the property was transferred to charity in exchange for the aunt's annuity.
Even if the donor is the sole or joint annuitant, the annuity either must be nonassignable to any third party, or it must be assignable only to the charity that issued it. If this prohibition against assignment is not incorporated into the terms of the gift annuity agreement, the entire gain will be recognized by the donor immediately.
Click on the following for a more detailed discussion of the capital gains tax liability:
Donor as sole annuitant
If the donor is the annuitant and appreciated property is transferred for a gift annuity, the cost basis and appreciation are allocated between the sale and gift portions of the transfer. Recognition of gain on the sale portion is spread ratably over the years of the donor's life expectancy.
If the donor lives past his or her life expectancy, the capital gain treatment ends and all of the remaining annuity payments are taxed as ordinary income.
Third party as annuitant
If the donor is not the sole or joint annuitant, or if the annuity income is assignable by the donor to an individual third party, then all of the gain is recognized in the year of the original transfer. This is true even if the annuitant is the donor's spouse.
Donor and spouse as annuitant
If joint property is transferred by husband and wife for a two-life annuity for them, the gain may be spread ratably over their joint life expectancy. If separately owned property is given by one spouse for a two-life annuity for both spouses, the gain is recognized ratably over the first life. The return-of-principal portion of the annuity may be 100% gain until all of the gain realized on the sale portion has been recognized.
Donor and non-spouse as annuitant
If the donor names a non-spouse party as a joint, consecutive and/or successor annuitant, gain is recognized ratably over the first life. The return-of-principal portion of the annuity may be 100% gain until all of the gain realized on the sale portion has been recognized.
After the capital gain and tax-free portions of an annuity payment have been determined, the balance of the payment represents ordinary income.
If and when the annuitant(s) attain life expectancy, all principal attributable to the sale portion will have been recovered income tax-free and all capital gain attributable to the sale portion will have been recognized. Thereafter, all of the annuity income will be taxable as ordinary income.
Gift Taxation of a Charitable Gift Annuity
The creation of a gift annuity results in a gift to charity and to any annuitant the donor names. If donors name themselves as annuitants, they do not make a gift to themselves.
The present value of the charity's interest in a gift annuity is eligible for the gift tax charitable deduction. This deduction is unlimited in amount, unlike the income tax charitable deduction (which is subject to percentage limitations that may cap the deduction in a particular year).
If the third-party annuitant is the donor's spouse, or if the spouse is named as a concurrent and/or successor annuitant with the donor, the gift tax marital deduction may be taken for the life-income gift made to the spouse.
If the third-party annuitant is someone other than the donor and/or the donor's spouse, a gift is made at the time the gift annuity is established equal to the present value of the individual's lifetime annuity. This gift is of a present interest and qualifies for the gift tax annual exclusion.
If the annuity is payable to the donor for life, then to another (non-spouse), a power of revocation reserved by the donor will avoid a completed gift until the donor's death—assuming that no actual revocation occurs and that the other annuitant survives the donor.
Estate Taxation of a Charitable Gift Annuity
The estate tax consequences of a gift annuity generally depend upon whether the donor names himself/herself or another as annuitant, and whether the annuity is for one or two lives.
Generally, the present value of any individual survivor annuity is included in the deceased donor's gross estate. If there is no remaining annuity payable at the donor's death, then nothing is includible in the gross estate. Any taxable gift that the donor made at the time the gift annuity was set upthat is, the value of an annuitant's interestwill come back into the donor's estate tax base at death as an "adjusted taxable gift."
For purpose of the estate tax treatment of gift annuities, the charitable gift portion of the original transfer is not included in the donor's gross estate. This contrasts with the treatment of the charitable remainder annuity trust (CRAT)—a gift vehicle in certain respects similar to the gift annuityin which the full value of the trust is includible in the donor's gross estate if the donor retained a life-income interest in the trust or a power to revoke the income interest of another. The present value of the CRAT's charitable remainder washes out of the estate tax base as an estate tax charitable deduction.
Click on the following for a more detailed discussion of the estate taxation of gift annuities.
Estate taxation of one-life annuities
If the donor designated himself as sole annuitant, the amount includible in his gross estate at death is the value of any annuity payment due but not yet received at the time of death.
If the donor designated a third party as sole annuitant, and did not retain the power to revoke the annuitant's interest, then the remaining value of the annuity at the donor's death is excluded from the donor's gross estate. However, the taxable gift that resulted at the time the gift annuity was set up will be made part of the donor's estate tax base as an "adjusted taxable gift". Plus any gift tax paid if the death occurs within the previous three years [IRC Secs. 2001(b), 2035(b)].
Suppose the donor did retain a power to revoke the individual annuitant's interest to avoid making a taxable gift at the time the gift annuity was set up. The donor's revocation power is a "string" that pulls the annuity back into his gross estate at death. The present value of the remaining payments under the annuity is the amount includible. If and to the extent that the annual payments received by the annuitant during the donor's life constituted taxable gifts as received, they will show up in the donor's estate tax base at death as "adjusted taxable gifts."
If, however, the annuitant is the donor's spouse, the value of the remaining annuity qualifies for the estate tax marital deduction, according to tax regulations, even though it seems to be a terminable interest of the type that is usually disqualified for the estate tax marital deduction [Reg. Sec. 20.2056(b)-1(g), example (3)].
Estate taxation of two-life annuities
Suppose the donor transfers her separate property in exchange for a gift annuity, and names herself and her husband as joint-and-survivor annuitants. She reserves a power to revoke his interest in order to avoid making a taxable gift when the transfer occurs. If her husband outlives her, the present value of his survivor annuity will be includible in her gross estate and eligible for the marital deduction. If she is the last to die, no survivor annuity remains to be taxed at her death—only the value of any payment due and unreceived when she dies.
How Deferred Gift Annuities Work
In the conventional gift annuity arrangement, annuity payments begin no later than one year after the gift has been made. However, many high-earning donors do not need or want an immediate additional income for themselves or loved ones. Indeed, relief afforded by the income tax deduction may be more important to them.
A deferred gift annuity lets donors defer the starting date of annuity payments and thereby significantly increase both the annuity amount and the income tax charitable deductionwhich is still available in the year of the contribution.
The ACGA publishes a table of factors for adjusting the annuity payout in the case of a deferred gift annuity. These factors are based on the length of the deferral period. Gift calculators build these factors into their software so the adjustments are made automatically when deferred gift annuity illustrations are run.
The upshot is that the donor can get more tax relief during the high income years and a higher income stream later on when, presumably, the donor will have a greater need for the annuity income.
Advantages of the deferred gift annuity include:
A current federal income tax deduction
Additional income for retirement, or a grandchild's college tuition, or other purposes
A favorably taxed lifetime income after payments begin
Deferred gift annuities are an attractive supplement to IRAs or other retirement plans, and can be used to increase retirement income in a timely manner. However, if the donor wants to fund the gift annuity with a one-time distribution from a retirement account as allowed under SECURE 2.0, the annuity must be an immediate gift annuity and may not be deferred.
Flexible Start Date for Deferred Gift Annuities
Deferred gift annuities may include a provision in the gift annuity agreement that allows the annuity starting date to be determined in the future. The IRS has approved a deferred gift annuity that did not specify a firm starting date for the annuity payments [Ltr. Rul. 9743054]. The donor established the annuity at age 50, and could elect to have payments begin at any time after age 55 and before age 80.
The gift annuity agreement between the donor and the charity specified a different payment amount (rising with the deferral of the start date) for each possible age at which payments might begin. The income tax charitable deduction allowed for the gift was based on the lowest possible deduction that would be available at the earliest annuity starting date (i.e., age 55 in this case).
This letter ruling technically applies only to the particular donor, but it is generally believed that the IRS will look with favor upon similar cases in which donors seek to preserve some flexibility in setting their annuity starting date—and who are willing to take a lower up front deduction.
The IRS confirmed the flexible start date a second time in a ruling requested by a charity. The charity wanted assurance that (1) the contracts it issued in exchange for the property transferred would be deemed gift annuities; (2) its issuance of deferred gift annuities would not result in unrelated business income; and (3) income earned by the charity on the property transferred would not be treated as debt-financed income. The IRS ruled favorably for the charity on all three issues [Ltr. Rul. 200449003]. Under the facts of this ruling, the donor had an eight-year period in which to elect a start date, and the annuity amount would depend on the actual start date selected by the donor. The amount of the donor's charitable contribution is the lowest potential value of the charitable gift, based on the earliest date the donor could choose to begin receiving annuity payments.
College Funding with Deferred Gift Annuities
Deferred gift annuities may include a clause, known as a commutation clause, that allows the deferred income to be paid in a shortened period of time rather than for an entire lifetime. This option may be helpful when the annuitant needs more income during a particular period of time, such as during the college years.
Types of Property Contributed for a Gift Annuity
Cash: The contribution to the charitable gift annuity may be in cash. Cash gifts for a gift annuity result in more tax-free income than non-cash gifts.
Long-term Appreciated Stock or Mutual Funds: If appreciated property held for more than one year is used to fund a gift annuity, the appreciation that has never been taxed will generate a higher charitable deduction and a higher annuity payout. This will produce a more favorable result than selling the appreciated property, paying the tax on the gain, and then using only the net proceeds to make a cash transfer.
Illiquid Property: Generally, "hard-to-market" or "hard-to-value" property, such as tangible personal property, closely held stock or real estate, is not appropriate to fund a gift annuity, at least not from the charity's point of view. The charity is obligated to pay a fixed amount to the annuitant based on the valuation at the time the gift annuity is established, even if the property is subsequently sold for less than the original value—or no ready buyer can be found at all.
Real Estate: All states now permit a charity to issue a gift annuity in exchange for real estate.
Mortgaged Property: Transferring property that is subject to a mortgage or other encumbrance for a gift annuity can create tax problems for both the donor (e.g., debt forgiven is added to the donor's recognized gain) and the charity (e.g., unrelated business taxable income from debt-financed property).
Rules Governing CGAs Funded from an IRA
Under SECURE 2.0 legislation, IRA owners age 70½ or older can choose to make a one-time, tax-free distribution up to $55,000 (in 2026) from an IRA to fund a new charitable gift annuity. These gift annuities have a few different rules that apply to them:
The IRA distribution must go directly from the IRA to fund a new immediate CGA (not a deferred CGA).
There is no charitable income tax deduction allowed for the CGA, but the distribution counts toward the donor's required minimum distribution (if one is due) and the donor owes no tax on the distribution.
Spouses may each direct up to $55,000 from individually held IRAs to create one joint-life CGA.
The CGA may not make payments to anyone but the IRA owner and/or the owner's spouse.
While there is no charitable income tax deduction allowed, the CGA must otherwise qualify for a charitable deduction by passing the 10% minimum income tax charitable deduction test and having a minimum 5% payout rate.
The CGA must be nonassignable.
All annuity payments are taxed at ordinary income tax rates.
Click here for an example of using a QCD to create a CGA under SECURE 2.0.
Anisa left a corporate IT position to start her own IT service firm, and the firm immediately began growing. Before long, Anisa hired her husband, Niam, and both benefited from the company's success. After many years, they both reaped a significant windfall when a major tech company purchased the firm.
After the successful sale of the company, Anisa and Niam decided to retire (both at age 75). They both have IRAs that they started when they were young and working freelance jobs, both of which have accumulated a significant balance. They are both subject to taking required minimum distributions from their IRAs. Since they are both charitably inclined and financially savvy, they decide to use a qualified charitable distribution of $55,000 from each of their IRAs to create a CGA, as allowed by SECURE 2.0.
Working with their favorite charity, they create a new immediate CGA with a gift annuity rate of 6.2% (complying with IRC requirements). The immediate gift annuity will benefit the charity, provide Anisa and Niam with additional income as they travel the world in retirement, and the $55,000 each will satisfy their respective RMDs for the year.
Comparing Gift Annuities with Charitable Remainder Trusts
The view has been expressed in planned giving circles that too many donors have used CRTs when gift annuities could have accomplished the same results with less expense and complexity. Some of the disadvantages associated with CRTs include:
Attorneys' fees to research any tax issues and prepare the CRT instrument
Trust administration hassles and fees, including accounting for trust income, filing tax returns, and reporting income to beneficiaries
Possible management fees for CRT investments
However, certain donor objectives are not possible with a gift annuity and may only be achieved with a CRT:
The donor wants to be able to change the charitable remainderman or to designate more than one charitable remainderman.
The donor wants the payout period to be measured by a term of years (up to 20), rather than by the income beneficiary's life expectancy (perhaps to boost the amount of the charitable deduction).
The donor wants to fund the gift with real estate, closely held stock or other illiquid asset that may not be suitable for a gift annuity.
The donor wants the payout to grow with the value of trust assets, which is possible only in a unitrust.
The donor wants the flexible payout schedule possible with a net income unitrust, NIMCRUT or flip unitrust.
The donor wants to serve as trustee of the CRT.
Beyond these general considerations, the following specific areas could affect the donor's selection of a life income gift vehicle.
A charitable gift annuity provides the greatest income security for a donor or other income beneficiary in the sense that a charity's entire assets stand behind its promise to pay the annuity. By contrast, with a CRT, only the trust assets stand behind payment of the annuity, and the payouts will vary with investment performance in a unitrust.
A charitable gift annuity must make payouts measured by the life of one or two annuitants, whereas the duration of CRTs can be measured by a term of years (up to 20), as well as by the life or lives of the noncharitable beneficiaries. Moreover, CRTs can be arranged to last for more than two lives if the 10% minimum charitable remainder test is satisfied at trust inception (and for each addition to the corpus in the case of a unitrust).
Donors may feel less intimidated by the relatively simple charitable gift annuity arrangement than by a lengthy, complicated CRT document and strange new vocabulary such as "unitrust amount" and "remainderman." Implementation of a CRT requires the assistance and expense of an attorney. Likewise, the administration of a CRT may require professional expertise.
CRTs, however, offer the donor greater flexibility in gift design (especially in payout alternatives) than is available with a charitable gift annuity. The unitrust, in particular, offers several planning options that can be adapted to the donor's individual circumstances and philanthropic goals.
Similarly, a CRUT of the net income, NIMCRUT or flip variety can receive assets that would not be suitable for a charitable gift annuity. For example, some charities do not accept a gift of real estate in exchange for a gift annuity. But real estate might be appropriate for funding one of the CRUT options.
In most cases, a charitable remainder unitrust is feasible only for larger gifts. A minimum funding level of $100,000 is generally recommended. The charitable gift annuity can be funded with smaller amounts (each issuing charity establishes its own minimum), and gift annuity donors often make repeat gifts. Additions to the corpus are possible with unitrusts but not annuity trusts.
Finally, favorable taxation of payouts is more or less automatic for gift annuities but not CRTs. The four-tier system for taxing CRT distributions presumes that the most heavily taxed income is the first to be distributed from the trust. So the income beneficiary will not receive long-term capital gain, tax-free income or return of corpus until all ordinary income and short-term capital gain have been distributed.
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