$111,000 QCD for 2026 ?

[RWG1950]

I have a 93 year-old wealthy widow in an assisted living facility in hospice & having only a few months to live.
She is charitably minded and has given QCD'S from her IRA each year. IRA is now worth only about $450,000.
Her 2 children (her heirs & also both well-off) and her have indicated she'd like to make QCD's totaling $111,000 in 2026 before she dies.
Her expected 2025 income (after $17,000 QCD's) was about $175,000. She had about $110,000 in itemized deductions. So about $65-K taxable.
Her expected 2026 income will depend on how long she lives but have the same approximate proportionate circumstances.
From a tax standpoint the $111,000 QCD doesn't seem to make much sense to me, but these people are also thinking what will benefit the charities.
I'm wondering how other preparers would view this situation and whether I'm missing something.
Thanks for comments.

[RAG1775]

Well, as we all know, we can't predict life. I would think about making the QCD's maybe quarterly in lieu of one large QCD. You don't mention whether any RMDs are being taken out, but based on the facts, it appears that the QCD covers any RMD; just mentioning as timing of regular RMDs and QCDs in the same year can be important.
If the kids (heirs) are well-off as you stated, and don't really need the funds, I believe the heirs can make QCD's from an inherited IRA.
This area is not my forte, but a couple of thoughts to look into and consider.

[Rapid Robert]

"From a tax standpoint the $111,000 QCD doesn't seem to make much sense to me,"

Why not? Would it be better from a tax standpoint for someone to pay tax on $111K, which is the only other option?

[RWG1950]

One of the benes is 12% marginal, the other is low 22%.

[TaxGuyBill]

Even if it doesn't save her tax, it will save her children tax when they withdraw it.

However, if the large QCD is resulting in negative income, she should also convert some of her IRS to a Roth, which could be tax-free. Then the kids won't be required to wouldn't pay tax on the Roth withdrawals.

[kathyc2]

If she wants more to go to the charity, she can set the charity up as full or partial beneficiary of IRA.

[Rapid Robert]

However, if the large QCD is resulting in negative incomes.

How could a QCD result in negative income? It is basically a non-event on the tax return, it does not affect AGI let alone taxable income. The IRA distribution is not included in income and the charitable deduction does not figure into the tax calculation.

[Rapid Robert]

If she wants more to go to the charity, she can set the charity up as full or partial beneficiary of IRA.

But then wouldn't the charity have to pay tax on distributions? I'm not sure, I've only heard of trusts being IRA beneficiaries.

We don't know the ages of the children, but given the age of the mom, they are probably close to 70.5 and some day soon they could make QCDs.

[Rapid Robert]

How could a QCD result in negative income? It is basically a non-event on the tax return, it does not affect AGI let alone taxable income. The IRA distribution is not included in income and the charitable deduction does not figure into the tax calculation.

Never mind, I figured it out. You are making the reasonable assumption that a large portion of her prior year income was an RMD which as a QCD in the currernt year would disappear from income.

[TaxGuyBill]

Never mind, I figured it out. You are making the reasonable assumption that a large portion of her prior year income was an RMD which as a QCD in the currernt year would disappear from income.

Actually, no, I hadn't thought it through and was completely wrong about my first thought about negative income. LOL. Thanks for correcting my wrong thought.

But I guess you figured out a way to make my comments possible, although maybe unlikely. But I suppose after using the Itemized deductions the "taxable income" could effectively be negative, allowing for Roth conversions.

[kathyc2]

But then wouldn't the charity have to pay tax on distributions? I'm not sure, I've only heard of trusts being IRA beneficiaries.

We don't know the ages of the children, but given the age of the mom, they are probably close to 70.5 and some day soon they could make QCDs.

No, the amount going directly to charity as a beneficiary is tax free to charity. If a person wants a certain percent or dollar amount of estate going to charity the most tax friendly way is having charity be beneficiary from accounts that would be taxable if not going to charity.

It sounded like owner wants more to go to charity rather than inherited by children.