Official source: Federal Register (GovInfo) (https://www.govinfo.gov/content/pkg/FR-1999-04-30/pdf/99-10533.pdf), retrieved 2026-10-03. U.S. Government work (17 U.S.C. § 105).

---

Federal Register / Vol. 64, No. 83 / Friday, April 30, 1999 / Rules and Regulations 23187

Authority: 21 U.S.C. 321, 331, 351, 352, 353, 360b, 371, 379e.

2. Section 510.600 is amended in the table in paragraph (c)(1) by alphabetically adding an entry for ‘‘Pliva d.d.’’ and in the table in paragraph (c)(2) by numerically adding an entry for ‘‘011722’’ to read as follows:

§ 510.600 Names, addresses, and drug labeler codes of sponsors of approved applications.

• • • • (c) * - (1) * -

a.m. and 4 p.m., Monday through Friday.

The agency has determined under 21 CFR 25.33(a)(1) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required.

List of Subjects

21 CFR Part 510

Administrative practices and procedures, Animal drugs, Labeling,

Reporting and recordkeeping requirements.

21 CFR Part 522 Animal drugs. Therefore, under the Federal Food, Drug, and Cosmetic Act and under authority delegated to the Commissioner of Food and Drugs and redelegated to the Center for Veterinary Medicine, 21 CFR parts 510 and 522 are amended as follows:

PART 510—NEW ANIMAL DRUGS

1. The authority citation for 21 CFR part 510 continues to read as follows:

Firm name and address Drug labeler code

---

Pliva d.d., Ulica grada Vukovara 49, 10000 Zagreb, Croatia 011722

---

(2) * -

Drug labeler code Firm name and address

---

011722 Pliva d.d., Ulica grada Vukovara 49, 10000 Zagreb, Croatia

---

PART 522—IMPLANTATION OR INJECTABLE DOSAGE FORM NEW ANIMAL DRUGS

1. The authority citation for 21 CFR part 522 continues to read as follows:

Authority: 21 U.S.C. 360b.

§ 522.1660 [Amended]

2. Section 522.1660 Oxytetracycline injection is amended in paragraphs (b) and (d)(2)(iii) by adding the number ‘‘011722,’’ after ‘‘000069’’.

Dated: April 21, 1999. George A. Mitchell, Acting Director, Center for Veterinary Medicine.

[FR Doc. 99–10793 Filed 4–29–99; 8:45 am]

BILLING CODE 4160–01–F

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 1, 20, and 25

[TD 8819]

RIN 1545–AX14

Use of Actuarial Tables in Valuing Annuities, Interests for Life or Terms of Years, and Remainder or Reversionary Interests

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final and temporary regulations.

SUMMARY: This document contains regulations relating to the use of actuarial tables in valuing annuities, interests for life or terms of years, and remainder or reversionary interests. These regulations are necessary because section 7520(c)(3) directs the Secretary to update the actuarial tables to reflect the most recent mortality experience available. These regulations will effect the valuation of inter vivos and

testamentary transfers of interests dependent on one or more measuring lives. The text of the temporary regulations also serves as the text of the proposed regulations set forth in the notice of proposed rulemaking on this subject elsewhere in this issue of the Federal Register.

DATES: These regulations are effective May 1, 1999.

FOR FURTHER INFORMATION CONTACT: Concerning the regulations, William L. Blodgett, (202) 622–3090 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

This document contains amendments to the regulations revising certain tables used for the valuation of partial interests in property under section 7520 of the Internal Revenue Code of 1986 (Code) to reflect the most recent mortality experience available.

In General

Section 7520, effective for transfers for which the valuation date is after

23188 Federal Register / Vol. 64, No. 83 / Friday, April 30, 1999 / Rules and Regulations

April 30, 1989, provides that the value of an annuity, an interest for life or a term of years, and a remainder or reversionary interest is to be determined under tables published by the Internal Revenue Service based on a discount rate (rounded to the nearest two-tenths of one percent) equal to 120 percent of the applicable Federal mid-term rate in effect under section 1274(d)(1) for the month in which the valuation date falls. Section 7520(c)(3) directed the Secretary to issue tables not later than December 31, 1989, utilizing the then most recent mortality experience. Thereafter, the Secretary is directed to revise the tables used in valuing interests dependent on mortality experience not less frequently than once each 10 years to take into

account the most recent mortality experience available as of the time of the revision.

These regulations incorporate revised Table S (Single Life Remainder Factors) and Table U(1) (Unitrust Single Life Remainder Factors) based on data compiled from the 1990 census as set forth in Life Table 90CM, and make conforming amendments to various sections to reflect the revised tables. The current tables are moved to sections containing actuarial material for historical reference. Table B, Table D, Tables F(4.2) through F(14.0), Table J, and Table K, which are not based on mortality experience, are not changed. Internal Revenue Service Publications 1457 ‘‘Actuarial Values, Book Aleph’’ (forthcoming 1999), 1458 ‘‘Actuarial

Values, Book Beth’’ (forthcoming 1999), and 1459 ‘‘Actuarial Values, Book Gimel’’ (forthcoming 1999) will contain a complete set of actuarial tables that include factors not contained in the regulations (for example, annuity and life interest factors). Although not available on May 1, 1999, IRS anticipates these publications will be available by July 1, 1999. These publications will be available for purchase from the Superintendent of Documents, United States Government Printing Office, Washington, DC 20402.

The following chart summarizes the applicable interest rates and the citations to textual materials and tables for the various periods covered under the regulations:

April 30, 1999, but before July 1, 1999, the value of any interest (and/or any applicable charitable deduction) may be determined under tables based on either Table 80CNSMT or Table 90CM, at the option of the decedent’s executor. However, the section 7520 interest rate utilized is the appropriate rate for the month in which the valuation date occurs. In accordance with this transitional rule and those contained in

Effective Dates

These regulations are applicable in the case of annuities, interests for life or terms of years, and remainder or reversionary interests created after April 30, 1999.

Transitional Rules

The regulations provide certain transitional rules intended to alleviate

any adverse consequences resulting from the proposed regulatory change. For gift tax purposes, if the valuation date of a transfer is after April 30, 1999, but before July 1, 1999, the donor may determine the value of the gift (and/or any applicable charitable deduction) under tables based on either Life Table 80CNSMT or Table 90CM (at the donor’s option). Similarly, for estate tax purposes, if the decedent dies after

Federal Register / Vol. 64, No. 83 / Friday, April 30, 1999 / Rules and Regulations 23189

§ 1.170A–6 Charitable contributions in trust.

• • • • (c) * - (5) * -

Example 2. - - (b) The section 7520 rate at the time of the transfer was 6.0 percent. By reference to Table F(6.0) in § 1.664–4(e)(6), the adjusted payout rate is 4.717% (5% × 0.943396). The present value of the reversion is $6,473.75, computed by reference to Table D in § 1.664– 4(e)(6), as follows:

• • • • Par. 3. Section 1.170A–12T is added to read as follows:

§ 1.170A–12T Valuation of a remainder interest in real property for contributions made after July 31, 1969 (temporary).

(a) through (b)(1) [Reserved] For further guidance see § 1.170A–12(a) through (b)(1).

(b)(2) Computation of depreciation factor after April 30, 1999. If the valuation of the remainder interest in depreciable property is dependent upon the continuation of one life, a special factor must be used. The factor determined under this paragraph (b)(2) is carried to the fifth decimal place. The special factor is to be computed on the basis of the interest rate and life contingencies prescribed in § 20.2031– 7T (or for certain prior periods, § 20.2031–7A) of this chapter (Estate Tax Regulations) and on the assumption that the property depreciates on a straight-line basis over its estimated useful life. For transfers for which the valuation date is after April 30, 1999, special factors for determining the present value of a remainder interest following one life and an example describing the computation are contained in Internal Revenue Service Publication 1459, ‘‘Actuarial Values, Book Gimel,’’ (1999). A copy of this publication is available for purchase from the Superintendent of Documents, United States Government Printing Office, Washington, DC 20402. See, however, § 1.7520–3(b) (relating to exceptions to the use of prescribed tables under certain circumstances). Otherwise, in the case of the valuation of a remainder interest following one life, the special factor may be obtained through use of the following formula:

§§ 1.7520–2(a)(2), 20.7520–2(a)(2) and 25.7520–2(a)(2), in cases involving a charitable deduction, if the valuation date occurs after April 30, 1999, and before July 1, 1999, and the executor or donor elects under section 7520(a) to use the section 7520 interest rate for March 1999 or April 1999, then the mortality experience contained in 80CNSMT must be used. If the executor or donor uses the section 7520 interest rate for May 1999 or for June 1999, then the tables based on either Table 80CNSMT or Table 90CM may be used. However, if the valuation date occurs after June 30, 1999, the executor or donor must use the new mortality experience contained in Table 90CM even if a prior month interest rate election under section 7520(a) is made.

In addition, for estate tax purposes, the estate of a mentally incompetent decedent may elect to value the property interest included in the gross estate under the mortality table and interest rate in effect at the time the decedent became mentally incompetent or the mortality table and interest rate in effect on the decedent’s date of death if the decedent was under a mental incapacity that existed on May 1, 1999, and continued uninterrupted until the decedent’s death, or the decedent died within 90 days of regaining competency after April 30, 1999.

Special Analysis

It has been determined that this Treasury decision is not a significant regulatory action as defined in EO 12866. Therefore, a regulatory assessment is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations, and because these regulations do not impose a collection of information requirement on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Therefore, a Regulatory Flexibility Analysis is not required. Pursuant to section 7805(f) of the Internal Revenue Code, these regulations will be submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.

Drafting information. The principal author of these regulations is William L. Blodgett, Office of Assistant Chief Counsel (Passthroughs and Special Industries), IRS. However, other personnel from the IRS and Treasury Department participated in their development.

List of Subjects

26 CFR Part 1

Income taxes, Reporting and recordkeeping requirements.

26 CFR Part 20

Estate taxes, Reporting and recordkeeping requirements.

26 CFR Part 25

Gift taxes, Reporting and recordkeeping requirements.

Adoption of Amendments to the Regulations

Accordingly, 26 CFR parts 1, 20, and 25 are amended as follows:

PART 1—INCOME TAXES

Paragraph 1. The authority citation for part 1 is amended by adding entries in numerical order to read in part as follows:

Authority: 26 U.S.C. 7805 * - Section 1.170A–12 also issued under 26 U.S.C. 170(f)(4). * - Section 1.642(c)–6 also issued under 26 U.S.C. 642(c)(5).

Section 1.642(c)–6T also issued under 26 U.S.C. 642(c)(5).

Section 1.642(c)–6A also issued under 26 U.S.C. 642(c)(5).

Section 1.664–1 also issued under 26 U.S.C. 664(a).

Section 1.664–2 also issued under 26 U.S.C. 664(a).

Section 1.664–3 also issued under 26 U.S.C. 664(a).

Section 1.664–4 also issued under 26 U.S.C. 664(a).

Section 1.664–4T also issued under 26 U.S.C. 664(a).

Section 1.664–4A also issued under 26 U.S.C. 664(a). * - Section 1.7520–1T also issued under 26 U.S.C. 7520(c)(2). * -

Par. 2. Section 1.170A–6 is amended by revising paragraph (c)(5), Example ( 2 )(b) introductory text to read as follows:

i n - 1 (t + 1) 1x + t + 1

n

1
⁻

(t

(t + 1)

n - 1 (t + 1)

x

x

1

1 - 2n

i n - 1 (t + 1) 1x + t + 1 1x + t 1

i n - 1 (t + 1) 1x + t + 1 1x + t 1

t n

1 - 1x + t + 1 1 - 1x + t

1x ⁻ 1x

x + t

x + t

t

t =

0

23190 Federal Register / Vol. 64, No. 83 / Friday, April 30, 1999 / Rules and Regulations

(ii) For purposes of sections 170, 2055, 2106, 2522, or 2624, in the case of transfers to a pooled income fund for which the valuation date is after April 30, 1999, and before July 1, 1999, the present value of the remainder interest under this section is determined by use of the section 7520 interest rate for the month in which the valuation date occurs (See §§ 1.7520–1(b) and 1.7520– 2(a)(2)) and the appropriate actuarial tables under either paragraph (e)(6) of this section or § 1.642(c)–6A(e)(5), at the option of the donor or the decedent’s executor, as the case may be.

(iii) For purposes of paragraphs (e)(2)(i) and (ii) of this section, where the donor or decedent’s executor is given the option to use the appropriate actuarial tables under either paragraph (e)(6) of this section or § 1.642(c)– 6A(e)(5), the donor or decedent’s executor must use the same actuarial table with respect to each individual transaction and with respect to all transfers occurring on the valuation date (e.g., gift and income tax charitable deductions with respect to the same transfer must be determined based on the same tables, and all assets includible in the gross estate and/or estate tax deductions claimed must be valued based on the same tables).

(3) Present value of a remainder interest. The present value of a remainder interest in property transferred to a pooled income fund is computed on the basis of—

(i) Life contingencies determined from the values of lx that are set forth in Table 90CM in § 20.2031–7T(d)(7) of this chapter (Estate Tax Regulations) (See § 20.2031–7A of this chapter for certain prior periods); and

(ii) Discount at a rate of interest, compounded annually, equal to the highest yearly rate of return of the pooled income fund for the 3 taxable years immediately preceding its taxable year in which the transfer of property to the fund is made. For purposes of this paragraph (e), the yearly rate of return of a pooled income fund is determined as provided in § 1.642(c)–6(c) unless the highest rate of return is deemed to be the rate described in paragraph (e)(4) of this section for funds in existence less than 3 taxable years. For purposes of this paragraph (e)(3)(ii), the first taxable year of a pooled income fund is considered a taxable year even though the taxable year consists of less than 12 months. However, appropriate adjustments must be made to annualize the rate of return earned by the fund for that period. Where it appears from the facts and circumstances that the highest yearly rate of return of the fund for the 3 taxable years immediately preceding

Where: n=the estimated number of years of

useful life, i=the applicable interest rate under

section 7520 of the Internal Revenue Code, v=1 divided by the sum of 1 plus the

applicable interest rate under section 7520 of the Internal Revenue Code, x=the age of the life tenant, and lx=number of persons living at age x as

set forth in Table 90CM of § 20.2031–7T (or, for prior periods, the tables set forth under § 20.2031– 7A) of this chapter. (3) The following example illustrates the provisions of this paragraph (b):

Example. A, who is 62, donates to Y University a remainder interest in a personal residence, consisting of a house and land, subject to a reserved life estate in A. At the time of the gift, the land has a value of $30,000 and the house has a value of $100,000 with an estimated useful life of 45 years, at the end of which the value of the house is expected to be $20,000. The portion of the property considered to be depreciable is $80,000 (the value of the house ($100,000) less its expected value at the end of 45 years ($20,000)). The portion of the property considered to be nondepreciable is $50,000 (the value of the land at the time of the gift ($30,000) plus the expected value of the house at the end of 45 years ($20,000)). At the time of the gift, the interest rate prescribed under section 7520 is 8.4 percent. Based on an interest rate of 8.4 percent, the remainder factor for $1.00 prescribed in § 20.2031–7T(d) of this chapter for a person age 62 is 0.27925. The value of the nondepreciable remainder interest is $13,962.50 (0.27925 times $50,000). The value of the depreciable remainder interest is $16,148.80 (0.20186, computed under the formula described in paragraph (b)(2) of this section, times $80,000). Therefore, the value of the remainder interest is $30,111.30.

(c) through (e) [Reserved]. For further guidance see § 1.170A–12 (c) through (e).

Par. 4. Section 1.642(c)–6 is amended as follows:

1. Revise the section heading.

2. Paragraph (d) is removed.

3. Paragraph (e) is redesignated as paragraph (e) of § 1.642(c)–6A.

4. New paragraphs (d) and (e) are added.

5. Paragraph (f) is revised. The revisions and addition read as follows:

§ 1.642(c)–6 Valuation of a remainder interest in property transferred to a pooled income fund.

• • • • (d) and (e) [Reserved]. For further guidance, see § 1.642(c)–6T(d) and (e).

(f) Effective dates. This section applies after April 30, 1989, and before May 1, 1999.

Par. 5. Section 1.642(c)–6T is added to read as follows:

§ 1.642(c)–6T Valuation of a remainder interest in property transferred to a pooled income fund (temporary).

(a) through (c) [Reserved]. For further guidance, see § 1.642(c)–6(a) through (c).

(d) Valuation. The present value of the remainder interest in property transferred to a pooled income fund after April 30, 1999, is determined under paragraph (e) of this section. The present value of the remainder interest in property transferred to a pooled income fund for which the valuation date is before May 1, 1999, is determined under the following

sections:

(e) Present value of the remainder interest in the case of transfers to pooled income funds for which the valuation date is after April 30, 1999 —(1) In general. In the case of transfers to pooled income funds for which the valuation date is after April 30, 1999, the present value of a remainder interest is determined under this section. See, however, § 1.7520–3(b) (relating to exceptions to the use of prescribed tables under certain circumstances). The present value of a remainder interest that is dependent on the termination of the life of one individual is computed by the use of Table S in paragraph (e)(6) of this section. For purposes of the computations under this section, the age of an individual is the age at the individual’s nearest birthday.

(2) Transitional rules for valuation of transfers to pooled income funds. (i) For purposes of sections 2055, 2106, or 2624, if on May 1, 1999, the decedent was mentally incompetent so that the disposition of the property could not be changed, and the decedent died after April 30, 1999, without having regained competency to dispose of the decedent’s property, or the decedent died within 90 days of the date that the decedent first regained competency after April 30, 1999, the present value of a remainder interest is determined as if the valuation date with respect to the decedent’s gross estate is either before May 1, 1999, or after April 30, 1999, at the option of the decedent’s executor.

Federal Register / Vol. 64, No. 83 / Friday, April 30, 1999 / Rules and Regulations 23191

the taxable year in which the transfer of property is made has been purposely manipulated to be substantially less than the rate of return that would otherwise be reasonably anticipated with the purpose of obtaining an excessive charitable deduction, that rate of return may not be used. In that case, the highest yearly rate of return of the fund is determined by treating the fund as a pooled income fund that has been in existence for less than 3 preceding taxable years.

(4) Pooled income funds in existence less than 3 taxable years. If a pooled income fund has been in existence less than 3 taxable years immediately preceding the taxable year in which the transfer is made to the fund and the transfer to the fund is made after April 30, 1989, the highest rate of return is deemed to be the interest rate (rounded to the nearest two-tenths of one percent) that is 1 percent less than the highest annual average of the monthly section 7520 rates for the 3 calendar years immediately preceding the calendar year in which the transfer to the pooled income fund is made. The deemed rate of return for transfers to new pooled income funds is recomputed each calendar year using the monthly section 7520 rates for the 3-year period immediately preceding the calendar year in which each transfer to the fund is made until the fund has been in existence for 3 taxable years and can compute its highest rate of return for the 3 taxable years immediately preceding the taxable year in which the transfer of

property to the fund is made in accordance with the rules set forth in the first sentence of paragraph (e)(3)(ii) of this section.

(5) Computation of value of remainder interest. The factor that is used in determining the present value of a remainder interest that is dependent on the termination of the life of one individual is the factor from Table S in paragraph (e)(6) of this section under the appropriate yearly rate of return opposite the number that corresponds to the age of the individual upon whose life the value of the remainder interest is based (See § 1.642(c)–6A for certain prior periods). The tables in paragraph (e)(6) of this section include factors for yearly rates of return from 4.2 to 14 percent. Many actuarial factors not contained in the tables in paragraph (e)(6) of this section are contained in Table S in Internal Revenue Service Publication 1457, ‘‘Actuarial Values, Book Aleph,’’ (1999). A copy of this publication is available for purchase from the Superintendent of Documents, United States Government Printing Office, Washington, DC 20402. For other situations, see § 1.642(c)–6(b). If the yearly rate of return is a percentage that is between the yearly rates of return for which factors are provided, a linear interpolation must be made. The present value of the remainder interest is determined by multiplying the fair market value of the property on the valuation date by the appropriate remainder factor. This paragraph (e)(5)

may be illustrated by the following example:

Example. A, who is 54 years and 8 months, transfers $100,000 to a pooled income fund, and retains a life income interest in the property. The highest yearly rate of return earned by the fund for its 3 preceding taxable years is 9.47 percent. In Table S, the remainder factor opposite 55 years under 9.4 percent is .17449 and under 9.6 percent is .17001. The present value of the remainder interest is $17,292.00, computed as follows: Factor at 9.4 percent for age 55 .... .17449 Factor at 9.6 percent for age 55 .... .17001

Difference ....................................... .00448

Interpolation adjustment:

9.47% − 9.4% ×

=

0 2%. .00448

.47% − 9.4%

=

0 2%. .

− 9.4% ×

× =

.00157

Factor at 9.4 percent for age

55 ........................................ .17449 Less: Interpolation adjust ment .................................... .00157

Interpolated factor ................. .17292

Present value of remainder

interest: ($100,000 × .17292) ................................ $17,292.00

(6) Actuarial tables. In the case of transfers for which the valuation date is after April 30, 1999, the present value of a remainder interest dependent on the termination of one life in the case of a transfer to a pooled income fund is determined by use of the following Table S:

TABLE S.—SINGLE LIFE REMAINDER FACTORS APPLICABLE AFTER APRIL 30, 1999 BASED ON LIFE TABLE 90CM

[Interest rate]

Age 4.2% 4.4% 4.6% 4.8% 5.0% 5.2% 5.4% 5.6% 5.8% 6.0%

0 ............................................... .06752 .06130 .05586 .05109 .04691 .04322 .03998 .03711 .03458 .03233 1 ............................................... .06137 .05495 .04932 .04438 .04003 .03620 .03283 .02985 .02721 .02487 2 ............................................... .06325 .05667 .05088 .04580 .04132 .03737 .03388 .03079 .02806 .02563 3 ............................................... .06545 .05869 .05275 .04752 .04291 .03883 .03523 .03203 .02920 .02668 4 ............................................... .06784 .06092 .05482 .04944 .04469 .04048 .03676 .03346 .03052 .02791 5 ............................................... .07040 .06331 .05705 .05152 .04662 .04229 .03845 .03503 .03199 .02928 6 ............................................... .07310 .06583 .05941 .05372 .04869 .04422 .04025 .03672 .03357 .03076 7 ............................................... .07594 .06849 .06191 .05607 .05089 .04628 .04219 .03854 .03528 .03236 8 ............................................... .07891 .07129 .06453 .05853 .05321 .04846 .04424 .04046 .03709 .03407 9 ............................................... .08203 .07423 .06731 .06115 .05567 .05079 .04643 .04253 .03904 .03592 10 ............................................... .08532 .07734 .07024 .06392 .05829 .05326 .04877 .04474 .04114 .03790 11 ............................................... .08875 .08059 .07331 .06683 .06104 .05587 .05124 .04709 .04336 .04002 12 ............................................... .09233 .08398 .07653 .06989 .06394 .05862 .05385 .04957 .04572 .04226 13 ............................................... .09601 .08748 .07985 .07304 .06693 .06146 .05655 .05214 .04816 .04458 14 ............................................... .09974 .09102 .08322 .07624 .06997 .06435 .05929 .05474 .05064 .04694 15 ............................................... .10350 .09460 .08661 .07946 .07303 .06725 .06204 .05735 .05312 .04930 16 ............................................... .10728 .09818 .09001 .08268 .07608 .07014 .06479 .05996 .05559 .05164 17 ............................................... .11108 .10179 .09344 .08592 .07916 .07306 .06755 .06257 .05807 .05399 18 ............................................... .11494 .10545 .09691 .08921 .08227 .07601 .07034 .06521 .06057 .05636 19 ............................................... .11889 .10921 .10047 .09259 .08548 .07904 .07322 .06794 .06315 .05880 20 ............................................... .12298 .11310 .10417 .09610 .08881 .08220 .07622 .07078 .06584 .06135 21 ............................................... .12722 .11713 .10801 .09976 .09228 .08550 .07935 .07375 .06866 .06403 22 ............................................... .13159 .12130 .11199 .10354 .09588 .08893 .08260 .07685 .07160 .06682 23 ............................................... .13613 .12563 .11612 .10748 .09964 .09250 .08601 .08009 .07468 .06975 24 ............................................... .14084 .13014 .12043 .11160 .10357 .09625 .08958 .08349 .07793 .07284

23192 Federal Register / Vol. 64, No. 83 / Friday, April 30, 1999 / Rules and Regulations

Federal Register / Vol. 64, No. 83 / Friday, April 30, 1999 / Rules and Regulations 23193

Age 4.2% 4.4% 4.6% 4.8% 5.0% 5.2% 5.4% 5.6% 5.8% 6.0%

99 ............................................... .90217 .89803 .89393 .88987 .88585 .88187 .87793 .87402 .87016 .86633 100 ............................................... .90738 .90344 .89953 .89567 .89183 .88804 .88428 .88056 .87687 .87322 101 ............................................... .91250 .90876 .90504 .90137 .89772 .89412 .89054 .88699 .88348 .88000 102 ............................................... .91751 .91396 .91045 .90696 .90350 .90007 .89668 .89331 .88997 .88666 103 ............................................... .92247 .91912 .91579 .91249 .90922 .90598 .90276 .89957 .89640 .89326

23194 Federal Register / Vol. 64, No. 83 / Friday, April 30, 1999 / Rules and Regulations

Age 8.2% 8.4% 8.6% 8.8% 9.0% 9.2% 9.4% 9.6% 9.8% 10.0%

0 ............................................... .01906 .01845 .01790 .01740 .01694 .01652 .01613 .01578 .01546 .01516 1 ............................................... .01098 .01034 .00977 .00924 .00876 .00833 .00793 .00756 .00722 .00691 2 ............................................... .01113 .01046 .00986 .00930 .00880 .00834 .00791 .00753 .00717 .00684 3 ............................................... .01155 .01084 .01020 .00962 .00909 .00860 .00816 .00775 .00737 .00702 4 ............................................... .01211 .01137 .01069 .01008 .00952 .00900 .00853 .00810 .00770 .00733 5 ............................................... .01279 .01201 .01130 .01065 .01006 .00952 .00902 .00856 .00814 .00775 6 ............................................... .01356 .01274 .01199 .01131 .01068 .01011 .00959 .00910 .00865 .00824 7 ............................................... .01442 .01356 .01277 .01205 .01140 .01079 .01023 .00972 .00925 .00881 8 ............................................... .01536 .01446 .01363 .01287 .01218 .01154 .01096 .01041 .00991 .00945 9 ............................................... .01641 .01546 .01460 .01380 .01307 .01240 .01178 .01120 .01068 .01019 10 ............................................... .01758 .01659 .01567 .01484 .01407 .01336 .01270 .01210 .01154 .01103 11 ............................................... .01886 .01781 .01686 .01598 .01517 .01442 .01373 .01310 .01251 .01196 12 ............................................... .02024 .01915 .01814 .01721 .01636 .01558 .01485 .01419 .01357 .01299 13 ............................................... .02168 .02054 .01948 .01851 .01762 .01679 .01603 .01533 .01467 .01407 14 ............................................... .02313 .02193 .02083 .01981 .01887 .01801 .01721 .01646 .01578 .01514 15 ............................................... .02456 .02330 .02214 .02107 .02009 .01918 .01834 .01756 .01684 .01617 16 ............................................... .02593 .02462 .02340 .02229 .02126 .02030 .01942 .01860 .01785 .01714 17 ............................................... .02728 .02590 .02463 .02346 .02238 .02138 .02046 .01960 .01880 .01806 18 ............................................... .02861 .02717 .02584 .02462 .02348 .02243 .02146 .02056 .01972 .01894 19 ............................................... .02998 .02847 .02708 .02580 .02461 .02351 .02249 .02154 .02066 .01984 20 ............................................... .03142 .02984 .02839 .02704 .02580 .02465 .02357 .02258 .02165 .02079

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Age 8.2% 8.4% 8.6% 8.8% 9.0% 9.2% 9.4% 9.6% 9.8% 10.0%

95 ............................................... .78899 .78500 .78106 .77715 .77329 .76947 .76569 .76195 .75826 .75460 96 ............................................... .79928 .79544 .79165 .78790 .78418 .78050 .77686 .77326 .76970 .76617 97 ............................................... .80883 .80514 .80149 .79787 .79430 .79075 .78725 .78377 .78033 .77693 98 ............................................... .81781 .81427 .81075 .80727 .80382 .80041 .79703 .79368 .79036 .78708 99 ............................................... .82661 .82320 .81982 .81648 .81316 .80988 .80662 .80340 .80020 .79704 100 ............................................... .83519 .83192 .82868 .82547 .82228 .81913 .81600 .81290 .80982 .80678 101 ............................................... .84368 .84055 .83744 .83437 .83131 .82829 .82529 .82231 .81936 .81643 102 ............................................... .85203 .84904 .84607 .84313 .84021 .83731 .83444 .83159 .82876 .82596 103 ............................................... .86034 .85748 .85465 .85184 .84906 .84629 .84355 .84082 .83812 .83544

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Age 12.2% 12.4% 12.6% 12.8% 13.0% 13.2% 13.4% 13.6% 13.8% 14.0%

0 ............................................... .01298 .01285 .01273 .01261 .01250 .01240 .01230 .01221 .01212 .01203 1 ............................................... .00468 .00455 .00443 .00431 .00420 .00410 .00400 .00391 .00382 .00374 2 ............................................... .00448 .00435 .00421 .00409 .00398 .00387 .00376 .00366 .00357 .00348 3 ............................................... .00452 .00437 .00423 .00410 .00398 .00386 .00375 .00365 .00355 .00345 4 ............................................... .00468 .00452 .00437 .00423 .00410 .00397 .00386 .00375 .00364 .00354 5 ............................................... .00493 .00476 .00460 .00445 .00431 .00418 .00405 .00393 .00382 .00371 6 ............................................... .00524 .00506 .00489 .00473 .00458 .00444 .00430 .00418 .00406 .00394 7 ............................................... .00562 .00543 .00525 .00508 .00492 .00477 .00462 .00449 .00436 .00423 8 ............................................... .00606 .00586 .00566 .00548 .00531 .00515 .00499 .00485 .00471 .00458 9 ............................................... .00659 .00637 .00616 .00597 .00579 .00561 .00545 .00529 .00514 .00500 10 ............................................... .00721 .00698 .00676 .00655 .00636 .00617 .00600 .00583 .00567 .00552 11 ............................................... .00792 .00767 .00744 .00722 .00701 .00682 .00663 .00645 .00628 .00612 12 ............................................... .00871 .00845 .00821 .00797 .00775 .00754 .00735 .00716 .00698 .00681 13 ............................................... .00955 .00928 .00902 .00877 .00854 .00831 .00810 .00790 .00771 .00753 14 ............................................... .01038 .01009 .00981 .00955 .00930 .00907 .00885 .00864 .00843 .00824 15 ............................................... .01116 .01085 .01056 .01028 .01002 .00977 .00954 .00932 .00910 .00890 16 ............................................... .01186 .01153 .01123 .01094 .01066 .01040 .01015 .00992 .00969 .00948

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interpolation must be made. The present value of the remainder interest is determined by multiplying the fair market value of the property on the valuation date by the appropriate remainder factor. For an example of a computation of the present value of a remainder interest requiring a linear interpolation adjustment, see § 1.642(c)6T(e)(5). (5) Actuarial tables. In the case of transfers for which the valuation date is after April 30, 1989, and before May 1, 1999, the present value of a remainder interest dependent on the termination of one life in the case of a transfer to a pooled income fund is determined by use of the following tables:

TABLE S.—BASED ON LIFE TABLE 80CNSMT SINGLE LIFE REMAINDER FACTORS

[Applicable After April 30, 1989, and Before

May 1, 1999]

---

PAR. 8. Section 1.664–4 is amended as follows:

1. Paragraph (a)(1) is revised.

2. Paragraph (d) is removed.

3. Paragraphs (e) heading, (e)(1) through (e)(5), and (e)(6) heading, introductory text, and Table U(1) are redesignated as § 1.664–4A(e) heading, (e)(1) through (e)(5) and (e)(6) heading, introductory text, and Table U(1), respectively.

4. New paragraphs (d) through (e)(5) are added.

5. New paragraph heading and introductory text are added to remaining paragraph (e)(6) preceding Table D.

6. Paragraph (f) is revised. The additions and revision read as follows:

(f) Effective dates. This section applies after April 30, 1999.

PAR. 6. Immediately following § 1.643(d)-2, the undesignated centerheading is revised to read as follows:

POOLED INCOME FUND ACTUARIAL TABLES

APPLICABLE BEFORE MAY 1, 1999

PAR. 7. Section 1.642(c)-6A is amended by:

1. Revising the section heading.
2. Amending newly designated paragraph (e) as follows:

a. Paragraph (e) heading is revised. b. Paragraph (e)(1), first sentence is revised.

c. Paragraph (e)(2)(ii) is revised. d. Paragraph (e)(3) is revised. e. Paragraph (e)(4) is revised. f. Paragraph (e)(5) introductory text is revised.

g. Paragraph (e)(5), the heading for Table S is revised.

The revisions read as follows:

§ 1.642(c)-6A Valuation of charitable remainder interests for which the valuation date is before May 1, 1999.

• • • • (e) Present value of the remainder interest in the case of transfers to pooled income funds for which the valuation date is after April 30, 1989, and before May 1, 1999—(1) In general. In the case of transfers to pooled income funds for which the valuation date is after April 30, 1989, and before May 1, 1999, the present value of a remainder interest is determined under this section. * - (2) * - (ii) Discount at a rate of interest, compounded annually, equal to the highest yearly rate of return of the pooled income fund for the 3 taxable years immediately preceding its taxable year in which the transfer of property to the fund is made. The provisions of

§ 1.642(c)-6(c) apply for determining the yearly rate of return. However, where the taxable year is less than 12 months, the provisions of § 1.642(c)-6T(e)(3)(ii) apply for the determining the yearly rate of return.

(3) Pooled income funds in existence less than 3 taxable years. The provisions of § 1.642(c)-6T(e)(4) apply for determining the highest yearly rate of return when the pooled income fund has been in existence less than three taxable years.

(4) Computation of value of remainder interest. The factor that is used in determining the present value of a remainder interest that is dependent on the termination of the life of one individual is the factor from Table S in paragraph (e)(5) of this section under the appropriate yearly rate of return opposite the number that corresponds to the age of the individual upon whose life the value of the remainder interest is based. Table S in paragraph (e)(5) of this section includes factors for yearly rates of return from 4.2 to 14 percent. Many actuarial factors not contained in Table S in paragraph (e)(5) of this section are contained in Table S in Internal Revenue Service Publication 1457, ‘‘Actuarial Values, Alpha Volume,’’ (8–89). Publication 1457 is no longer available for purchase from the Superintendent of Documents, United States Government Printing Office, Washington, DC 20402. However, pertinent factors in this publication may be obtained by a written request to: CC:DOM:CORP:R (IRS Publication 1457), room 5226, Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, DC 20044. For other situations, see § 1.642(c)-6(b). If the yearly rate of return is a percentage that is between the yearly rates of return for which factors are provided, a linear

23200 Federal Register / Vol. 64, No. 83 / Friday, April 30, 1999 / Rules and Regulations

§ 1.664–4 Calculation of the fair market value of the remainder interest in a charitable remainder unitrust.

(a) * - (1) [Reserved]. For further guidance, see § 1.664–4T(a)(1).

• • • • (d) through (e)(5) [Reserved]. For further guidance, see § 1.664–4T(d) through (e)(5).

(6) Actuarial Table D and F (4.2 through 14.0) for transfers for which the valuation date is after April 30, 1989. For transfers for which the valuation date is after April 30, 1989, the present value of a charitable remainder unitrust interest that is dependent upon a term of years is determined by using the section 7520 rate and the tables in this paragraph (e)(6). For transfers for which the valuation date is after April 30, 1999, where the present value of a charitable remainder unitrust interest is dependent on the termination of a life interest, see § 1.664–4T(e)(7). See, however, § 1.7520–3(b) (relating to exceptions to the use of prescribed tables under certain circumstances). Many actuarial factors not contained in the following tables are contained in Internal Revenue Service Publication 1458, ‘‘Actuarial Values, Book Beth,’’ (1999). A copy of this publication is available for purchase from the Superintendent of Documents, United States Government Printing Office, Washington, DC 20402.

• • • • (f) Effective dates. This section applies after April 30, 1989, and before May 1, 1999.

Par. 9. Section 1.664–4T is added to read as follows:

§ 1.664–4T Calculation of the fair market value of the remainder interest in a charitable remainder unitrust (temporary).

(a) [Reserved] For further guidance, see § 1.664–4(a).

(1) Life contingencies determined as to each life involved, from the values of lx set forth in Table 90CM contained in § 20.2031–7T(d)(7) of this chapter (Estate Tax Regulations) in the case of transfers for which the valuation date is after April 30, 1999; or from Table 80CNSMT contained § 20.2031–7A(e)(4) of this chapter in the case of transfer for which the valuation date is after April 30, 1989, and before May 1, 1999. See § 20.2031–7A(a) through (d) of this chapter, whichever is applicable, for transfers for which the valuation date is before May 1, 1989;

(a)(2) through (c) [Reserved] For further guidance, see § 1.664–4(a)(2) through (c).

(d) Valuation. The fair market value of a remainder interest in a charitable

remainder unitrust (as described in § 1.664–3) for transfers for which the valuation date is after April 30, 1999, is its present value determined under paragraph (e) of this section. The fair market value of a remainder interest in a charitable remainder unitrust (as described in § 1.664–3) for transfers for which the valuation date is before May 1, 1999, is its present value determined under the following sections:

(e) Valuation of charitable remainder unitrusts having certain payout sequences for transfers for which the valuation date is after April 30, 1999 (1) In general. Except as otherwise provided in paragraph (e)(2) of this section, in the case of transfers for which the valuation date is after April 30, 1999, the present value of a remainder interest is determined under paragraphs (e)(3) through (e)(6) of this section, provided that the amount of the payout as of any payout date during any taxable year of the trust is not larger than the amount that the trust could distribute on such date under § 1.664– 3(a)(1)(v) if the taxable year of the trust were to end on such date. See, however, § 1.7520–3(b) (relating to exceptions to the use of the prescribed tables under certain circumstances).

(2) Transitional rules for valuation of charitable remainder unitrusts. (i) For purposes of sections 2055, 2106, or 2624, if on May 1, 1999, the decedent was mentally incompetent so that the disposition of the property could not be changed, and the decedent died after April 30, 1999, without having regained competency to dispose of the decedent’s property, or the decedent died within 90 days of the date that the decedent first regained competency after April 30, 1999, the present value of a remainder interest under this section is determined as if the valuation date with respect to the decedent’s gross estate is either before May 1, 1999, or after April 30, 1999, at the option of the decedent’s executor.

(ii) For purposes of sections 170, 2055, 2106, 2522, or 2624, in the case of transfers to a charitable remainder unitrust for which the valuation date is after April 30, 1999, and before July 1, 1999, the present value of a remainder interest based on one or more measuring lives is determined under this section

by use of the section 7520 interest rate for the month in which the valuation date occurs (See §§ 1.7520–1(b) and 1.7520–2(a)(2)) and the appropriate actuarial tables under either paragraph (e)(7) of this section or § 1.664–4A(e)(6), at the option of the donor or the decedent’s executor, as the case may be.

(iii) For purposes of paragraphs (e)(2)(i) and (ii) of this section, where the donor or decedent’s executor is given the option to use the appropriate actuarial tables under either paragraph (e)(7) of this section or § 1.664–4A(e)(6), the donor or decedent’s executor must use the same actuarial table with respect to each individual transaction and with respect to all transfers occurring on the valuation date (e.g., gift and income tax charitable deductions with respect to the same transfer must be determined based on the same tables, and all assets includible in the gross estate and/or estate tax deductions claimed must be valued based on the same tables).

(3) Adjusted payout rate. For transfers for which the valuation date is after April 30, 1989, the adjusted payout rate is determined by using the appropriate Table F in § 1.664–4(e)(6), for the section 7520 interest rate applicable to the transfer. If the interest rate is between 4.2 and 14 percent, see § 1.664– 4(e)(6). If the interest rate is below 4.2 percent or greater than 14 percent, see § 1.664–4(b). The adjusted payout rate is determined by multiplying the fixed percentage described in § 1.664– 3(a)(1)(i)( a ) by the factor describing the payout sequence of the trust and the number of months by which the valuation date for the first full taxable year of the trust precedes the first payout date for such taxable year. If the governing instrument does not prescribe when the distribution or distributions shall be made during the taxable year of the trust, see § 1.664–4(a). In the case of a trust having a payout sequence for which no figures have been provided by the appropriate table, and in the case of a trust that determines the fair market value of the trust assets by taking the average of valuations on more than one date during the taxable year, see § 1.664–4(b).

(4) Period is a term of years. If the period described in § 1.664–3(a)(5) is a term of years, the factor that is used in determining the present value of the remainder interest for transfers for which the valuation date is after November 30, 1983, is the factor under the appropriate adjusted payout rate in Table D of § 1.664–4(e)(6) corresponding to the number of years in the term. If the adjusted payout rate is an amount that is between adjusted payout rates for which factors are provided in Table D,

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a linear interpolation must be made. The present value of the remainder interest is determined by multiplying the net fair market value (as of the appropriate valuation date) of the property placed in trust by the factor determined under this paragraph. For purposes of this section, the valuation date is, in the case of an inter vivos transfer, the date on which the property is transferred to the trust by the donor. However, if an election is made under section 7520 and § 1.7520–2(b) to compute the present value of the charitable interest by use of the interest rate component for either of the 2 months preceding the month in which the date of transfer falls, the month so elected is the valuation date for purposes of determining the interest rate and mortality tables. In the case of a testamentary transfer under section 2055, 2106, or 2624, the valuation date is the date of death, unless the alternate valuation date is elected under section 2032, in which event, and within the limitations set forth in section 2032 and the regulations thereunder, the valuation date is the alternate valuation date. If the decedent’s estate elects the alternate valuation date under section 2032 and also elects, under section 7520 and § 1.7520–2(b), to use the interest rate component for one of the 2 months preceding the alternate valuation date, the month so elected is the valuation date for purposes of determining the interest rate and mortality tables. The application of this paragraph (e)(4) may be illustrated by the following example:

Example. D transfers $100,000 to a charitable remainder unitrust on January 1. The trust instrument requires that the trust pay 8 percent of the fair market value of the trust assets as of January 1st for a term of 12 years to D in quarterly payments (March 31, June 30, September 30, and December 31). The section 7520 rate for January (the month that the transfer occurred) is 9.6 percent. Under Table F(9.6) in § 1.664–4(e)(6), the appropriate adjustment factor is .944628 for quarterly payments payable at the end of each quarter. The adjusted payout rate is 7.557 (8% X .944628). Based on the remainder factors in Table D in § 1.664– 4(e)(6), the present value of the remainder interest is $38,950.30, computed as follows:

years .................................. .397495 Less: Interpolation adjust ment .................................. .007992

Interpolated factor ............... .389503 Present value of remainder

interest: ($100,000 X .389503) ............................ $38,950.30 (5) Period is the life of one individual. If the period described in § 1.664–3(a)(5) is the life of one individual, the factor that is used in determining the present value of the remainder interest for transfers for which the valuation date is after April 30, 1999, is the factor in Table U(1) in paragraph (e)(7) of this section under the appropriate adjusted payout. For purposes of the computations described in this paragraph, the age of an individual is the age of that individual at the individual’s nearest birthday. If the adjusted payout rate is an amount that is between adjusted payout rates for which factors are provided in the appropriate table, a linear interpolation must be made. The present value of the remainder interest is determined by multiplying the net fair market value (as of the valuation date as determined in paragraph (e)(4) of this section) of the property placed in trust by the factor determined under this paragraph (e)(5). If the adjusted payout rate is between 4.2 and 14 percent, see paragraph (e)(7) of this section. If the adjusted payout rate is below 4.2 percent or greater than 14 percent, see § 1.664–4(b). The application of this paragraph (e)(5) may be illustrated by the following example:

Example. A, who is 44 years and 11 months old, transfers $100,000 to a charitable remainder unitrust on January 1st. The trust instrument requires that the trust pay to A

Factor at 7.4 percent for 12 years .397495 Factor at 7.6 percent for 12 years .387314

Difference ..................................... .010181 Interpolation adjustment:

7 557%. − 7.4% ×

=

0 2%. .010181

7 557%. − 7.4%

=

0 2%. .

− 7.4% ×

× =

Factor at 7.4 percent for 12

.007992

semiannually (on June 30 and December 31) 9 percent of the fair market value of the trust assets as of January 1st during A’s life. The section 7520 rate for January is 9.6 percent. Under Table F(9.6) in § 1.664–4(e)(6), the appropriate adjustment factor is .933805 for semiannual payments payable at the end of the semiannual period. The adjusted payout rate is 8.404 (9% X .933805). Based on the remainder factors in Table U(1) in this section, the present value of the remainder interest is $10,109.00, computed as follows:

Factor at 8.4 percent at age 45 ...... .10117 Factor at 8.6 percent at age 45 ...... .09715

Difference ....................................... .00402

Interpolation adjustment:

8.404% − 8.4% ×

=

0 2%. .00402

.404% − 8.4%

=

0 2%. .

− 8.4% ×

× =

.00008

Factor at 8.4 percent at age 45 .10117 Less: Interpolation adjustment .00008

Interpolated Factor .................. .10109 Present value of remainder in terest: ($100,000 X .10109) .. $10,109.00

(6) [Reserved]. (7) Actuarial Table U(1) for transfers for which the valuation date is after April 30, 1999. For transfers for which the valuation date is after April 30, 1999, the present value of a charitable remainder unitrust interest that is dependent on a term of years or the termination of a life interest is determined by using the section 7520 rate, Table U(1) in this paragraph (e)(7), and Table D and Table F(4.2) through (14.0) in § 1.664–4(e)(6). See, however, § 1.7520–3(b) (relating to exceptions to the use of prescribed tables under certain circumstances). Many actuarial factors not contained in the following tables are contained in Internal Revenue Service Publication 1458, ‘‘Actuarial Values, Book Beth,’’ (1999). A copy of this publication is available for purchase from the Superintendent of Documents, United States Government Printing Office, Washington, DC 20402.

TABLE U(1).—UNITRUST SINGLE LIFE REMAINDER FACTORS APPLICABLE FOR TRANSFERS AFTER APRIL 30, 1999 BASED

ON LIFE TABLE 90CM

[Adjusted payout rate]

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Age 4.2% 4.4% 4.6% 4.8% 5.0% 5.2% 5.4% 5.6% 5.8% 6.0%

81 ............................................... .72975 .71950 .70946 .69961 .68995 .68047 .67117 .66205 .65310 .64433 82 ............................................... .74250 .73263 .72293 .71342 .70407 .69490 .68589 .67705 .66837 .65984 83 ............................................... .75493 .74542 .73608 .72690 .71788 .70902 .70031 .69175 .68333 .67506 84 ............................................... .76712 .75798 .74900 .74016 .73147 .72292 .71451 .70624 .69810 .69010 85 ............................................... .77913 .77037 .76175 .75326 .74491 .73668 .72859 .72061 .71276 .70503 86 ............................................... .79086 .78248 .77423 .76610 .75808 .75019 .74241 .73474 .72719 .71974 87 ............................................... .80218 .79418 .78628 .77850 .77083 .76326 .75580 .74844 .74118 .73402 88 ............................................... .81307 .80544 .79790 .79047 .78313 .77589 .76874 .76169 .75473 .74786 89 ............................................... .82355 .81628 .80909 .80200 .79500 .78808 .78125 .77450 .76783 .76125 90 ............................................... .83360 .82668 .81985 .81309 .80642 .79982 .79330 .78685 .78048 .77418 91 ............................................... .84308 .83650 .83000 .82357 .81721 .81092 .80470 .79855 .79246 .78645 92 ............................................... .85182 .84556 .83937 .83325 .82718 .82119 .81525 .80937 .80356 .79780 93 ............................................... .85985 .85390 .84800 .84215 .83637 .83064 .82497 .81936 .81379 .80829 94 ............................................... .86732 .86164 .85601 .85044 .84491 .83944 .83402 .82865 .82333 .81806 95 ............................................... .87437 .86895 .86359 .85827 .85300 .84778 .84260 .83746 .83237 .82733 96 ............................................... .88097 .87582 .87070 .86563 .86060 .85561 .85066 .84575 .84088 .83605 97 ............................................... .88708 .88216 .87727 .87243 .86762 .86285 .85811 .85341 .84875 .84413 98 ............................................... .89280 .88810 .88343 .87880 .87420 .86964 .86511 .86061 .85614 .85171 99 ............................................... .89836 .89388 .88943 .88501 .88062 .87626 .87193 .86763 .86336 .85911 100 ............................................... .90375 .89948 .89525 .89103 .88685 .88269 .87856 .87445 .87037 .86632 101 ............................................... .90905 .90500 .90097 .89696 .89298 .88902 .88509 .88118 .87729 .87342 102 ............................................... .91424 .91040 .90658 .90278 .89900 .89524 .89150 .88778 .88408 .88040 103 ............................................... .91939 .91575 .91214 .90854 .90496 .90139 .89785 .89432 .89081 .88732 104 ............................................... .92485 .92144 .91805 .91467 .91131 .90796 .90463 .90131 .89800 .89471 105 ............................................... .93020 .92701 .92383 .92067 .91751 .91437 .91125 .90813 .90502 .90193 106 ............................................... .93701 .93411 .93122 .92834 .92546 .92260 .91974 .91689 .91405 .91122 107 ............................................... .94522 .94268 .94013 .93760 .93507 .93254 .93002 .92750 .92499 .92249 108 ............................................... .95782 .95583 .95385 .95187 .94989 .94791 .94593 .94396 .94199 .94002 109 ............................................... .97900 .97800 .97700 .97600 .97500 .97400 .97300 .97200 .97100 .97000

Age 6.2% 6.4% 6.6% 6.8% 7.0% 7.2% 7.4% 7.6% 7.8% 8.0%

0 ............................................... .02693 .02534 .02395 .02271 .02161 .02063 .01976 .01898 .01828 .01765 1 ............................................... .01922 .01756 .01610 .01480 .01365 .01263 .01171 .01090 .01017 .00951 2 ............................................... .01975 .01802 .01650 .01514 .01393 .01286 .01190 .01104 .01028 .00959 3 ............................................... .02056 .01876 .01717 .01575 .01449 .01336 .01235 .01145 .01064 .00992 4 ............................................... .02155 .01967 .01800 .01652 .01520 .01401 .01296 .01201 .01116 .01039 5 ............................................... .02266 .02071 .01896 .01741 .01603 .01479 .01368 .01269 .01179 .01098 6 ............................................... .02389 .02184 .02003 .01841 .01696 .01566 .01450 .01345 .01251 .01166 7 ............................................... .02522 .02309 .02120 .01950 .01799 .01663 .01540 .01431 .01332 .01242 8 ............................................... .02665 .02444 .02246 .02069 .01910 .01768 .01640 .01524 .01420 .01326 9 ............................................... .02821 .02590 .02384 .02199 .02033 .01884 .01750 .01629 .01520 .01421 10 ............................................... .02990 .02750 .02535 .02342 .02169 .02013 .01872 .01745 .01631 .01526 11 ............................................... .03172 .02922 .02698 .02497 .02316 .02153 .02006 .01872 .01752 .01643 12 ............................................... .03365 .03106 .02872 .02663 .02474 .02303 .02149 .02010 .01884 .01769 13 ............................................... .03566 .03297 .03054 .02835 .02638 .02460 .02299 .02154 .02021 .01901 14 ............................................... .03770 .03490 .03237 .03010 .02804 .02619 .02450 .02298 .02159 .02033 15 ............................................... .03973 .03682 .03419 .03182 .02968 .02775 .02599 .02439 .02294 .02162 16 ............................................... .04173 .03871 .03598 .03352 .03129 .02926 .02743 .02576 .02424 .02286 17 ............................................... .04372 .04059 .03775 .03519 .03287 .03076 .02884 .02710 .02551 .02406 18 ............................................... .04573 .04248 .03953 .03686 .03444 .03224 .03024 .02842 .02676 .02524 19 ............................................... .04780 .04443 .04137 .03859 .03607 .03378 .03169 .02978 .02804 .02646 20 ............................................... .04997 .04647 .04329 .04040 .03778 .03539 .03321 .03122 .02940 .02773 21 ............................................... .05226 .04862 .04532 .04232 .03958 .03709 .03481 .03274 .03083 .02909 22 ............................................... .05465 .05088 .04745 .04432 .04148 .03888 .03650 .03433 .03234 .03052 23 ............................................... .05716 .05325 .04969 .04645 .04348 .04077 .03830 .03603 .03394 .03203 24 ............................................... .05983 .05578 .05208 .04871 .04562 .04280 .04021 .03784 .03566 .03367 25 ............................................... .06266 .05846 .05463 .05112 .04791 .04497 .04227 .03980 .03752 .03543 26 ............................................... .06566 .06131 .05734 .05369 .05035 .04729 .04448 .04189 .03951 .03732 27 ............................................... .06887 .06436 .06024 .05646 .05298 .04979 .04686 .04416 .04168 .03939 28 ............................................... .07225 .06758 .06331 .05938 .05577 .05245 .04940 .04658 .04398 .04159 29 ............................................... .07581 .07099 .06656 .06248 .05873 .05528 .05210 .04916 .04645 .04394 30 ............................................... .07956 .07457 .06998 .06575 .06186 .05827 .05495 .05189 .04906 .04644 31 ............................................... .08348 .07833 .07358 .06920 .06515 .06142 .05797 .05478 .05182 .04908 32 ............................................... .08761 .08228 .07736 .07282 .06863 .06475 .06116 .05783 .05475 .05189 33 ............................................... .09195 .08645 .08136 .07666 .07231 .06828 .06454 .06108 .05786 .05488 34 ............................................... .09651 .09082 .08557 .08070 .07619 .07200 .06812 .06452 .06117 .05805 35 ............................................... .10131 .09545 .09002 .08498 .08030 .07596 .07193 .06818 .06469 .06144 36 ............................................... .10635 .10031 .09470 .08949 .08465 .08015 .07596 .07206 .06842 .06503 37 ............................................... .11165 .10542 .09963 .09424 .08923 .08457 .08022 .07617 .07238 .06885 38 ............................................... .11722 .11081 .10484 .09927 .09409 .08926 .08475 .08054 .07661 .07293 39 ............................................... .12308 .11648 .11032 .10458 .09922 .09422 .08955 .08518 .08109 .07726 40 ............................................... .12925 .12246 .11612 .11020 .10466 .09949 .09465 .09011 .08587 .08189 41 ............................................... .13575 .12877 .12225 .11614 .11043 .10508 .10007 .09537 .09097 .08683

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Age 8.2% 8.4% 8.6% 8.8% 9.0% 9.2% 9.4% 9.6% 9.8% 10.0%

0 ............................................... .01709 .01658 .01612 .01570 .01532 .01497 .01466 .01437 .01410 .01386 1 ............................................... .00892 .00839 .00791 .00747 .00708 .00672 .00639 .00609 .00582 .00557 2 ............................................... .00896 .00840 .00790 .00744 .00702 .00664 .00629 .00598 .00569 .00542

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Age 8.2% 8.4% 8.6% 8.8% 9.0% 9.2% 9.4% 9.6% 9.8% 10.0%

77 ............................................... .48718 .47979 .47255 .46547 .45853 .45175 .44511 .43861 .43225 .42601 78 ............................................... .50467 .49735 .49017 .48314 .47626 .46951 .46290 .45643 .45008 .44386 79 ............................................... .52239 .51515 .50806 .50110 .49427 .48758 .48102 .47459 .46828 .46209 80 ............................................... .54018 .53304 .52603 .51916 .51242 .50580 .49930 .49292 .48666 .48052 81 ............................................... .55788 .55085 .54396 .53718 .53053 .52399 .51757 .51126 .50507 .49898 82 ............................................... .57540 .56851 .56173 .55506 .54851 .54207 .53574 .52951 .52339 .51737 83 ............................................... .59274 .58598 .57933 .57279 .56635 .56001 .55378 .54765 .54161 .53567 84 ............................................... .61002 .60341 .59690 .59049 .58418 .57796 .57184 .56582 .55988 .55403 85 ............................................... .62734 .62090 .61454 .60828 .60211 .59603 .59004 .58414 .57832 .57258 86 ............................................... .64455 .63828 .63210 .62600 .61999 .61406 .60821 .60244 .59675 .59113 87 ............................................... .66139 .65531 .64930 .64337 .63752 .63175 .62605 .62043 .61488 .60939 88 ............................................... .67783 .67194 .66612 .66037 .65469 .64908 .64354 .63807 .63267 .62733 89 ............................................... .69387 .68817 .68254 .67698 .67148 .66605 .66068 .65537 .65012 .64493 90 ............................................... .70947 .70398 .69855 .69318 .68786 .68261 .67742 .67228 .66719 .66217 91 ............................................... .72437 .71908 .71385 .70867 .70354 .69847 .69345 .68848 .68357 .67870 92 ............................................... .73823 .73314 .72810 .72310 .71816 .71326 .70841 .70361 .69886 .69415 93 ............................................... .75109 .74618 .74132 .73650 .73173 .72700 .72232 .71768 .71308 .70852 94 ............................................... .76312 .75839 .75370 .74905 .74445 .73988 .73536 .73087 .72643 .72202 95 ............................................... .77459 .77004 .76552 .76104 .75660 .75220 .74783 .74350 .73920 .73494 96 ............................................... .78543 .78105 .77670 .77238 .76810 .76386 .75964 .75546 .75131 .74720 97 ............................................... .79550 .79128 .78709 .78293 .77880 .77470 .77063 .76659 .76258 .75860 98 ............................................... .80498 .80091 .79687 .79286 .78888 .78492 .78099 .77709 .77322 .76937 99 ............................................... .81428 .81036 .80647 .80261 .79877 .79496 .79117 .78741 .78367 .77995 100 ............................................... .82336 .81959 .81586 .81214 .80845 .80478 .80113 .79751 .79390 .79032 101 ............................................... .83234 .82873 .82515 .82158 .81804 .81451 .81101 .80753 .80406 .80062 102 ............................................... .84119 .83774 .83431 .83089 .82750 .82412 .82076 .81742 .81409 .81078 103 ............................................... .84999 .84670 .84342 .84016 .83691 .83368 .83046 .82726 .82408 .82091 104 ............................................... .85944 .85632 .85321 .85011 .84703 .84396 .84090 .83786 .83483 .83182 105 ............................................... .86866 .86570 .86276 .85982 .85690 .85399 .85109 .84820 .84532 .84245 106 ............................................... .88065 .87792 .87520 .87248 .86978 .86708 .86440 .86172 .85905 .85638 107 ............................................... .89530 .89286 .89042 .88799 .88557 .88315 .88073 .87833 .87592 .87352 108 ............................................... .91849 .91654 .91460 .91266 .91072 .90879 .90685 .90492 .90299 .90106 109 ............................................... .95900 .95800 .95700 .95600 .95500 .95400 .95300 .95200 .95100 .95000

Age 10.2% 10.4% 10.6% 10.8% 11.0% 11.2% 11.4% 11.6% 11.8% 12.0%

0 ............................................... .01363 .01342 .01323 .01305 .01288 .01272 .01258 .01244 .01231 .01219 1 ............................................... .00534 .00512 .00493 .00474 .00458 .00442 .00427 .00414 .00401 .00389 2 ............................................... .00518 .00495 .00474 .00455 .00437 .00421 .00405 .00391 .00377 .00365 3 ............................................... .00526 .00502 .00480 .00459 .00440 .00422 .00406 .00391 .00376 .00363 4 ............................................... .00546 .00521 .00497 .00475 .00455 .00436 .00419 .00402 .00387 .00373 5 ............................................... .00576 .00549 .00524 .00501 .00479 .00459 .00440 .00423 .00406 .00391 6 ............................................... .00613 .00584 .00557 .00532 .00509 .00488 .00468 .00449 .00432 .00415 7 ............................................... .00657 .00626 .00598 .00571 .00547 .00524 .00502 .00482 .00464 .00446 8 ............................................... .00707 .00675 .00644 .00616 .00590 .00565 .00542 .00521 .00501 .00482 9 ............................................... .00766 .00732 .00699 .00669 .00641 .00615 .00591 .00568 .00547 .00527 10 ............................................... .00835 .00798 .00764 .00732 .00702 .00675 .00649 .00624 .00602 .00580 11 ............................................... .00913 .00874 .00838 .00804 .00772 .00743 .00715 .00689 .00665 .00642 12 ............................................... .01000 .00959 .00920 .00884 .00851 .00819 .00790 .00762 .00737 .00712 13 ............................................... .01091 .01048 .01007 .00969 .00933 .00900 .00869 .00840 .00813 .00787 14 ............................................... .01181 .01135 .01092 .01052 .01014 .00979 .00947 .00916 .00887 .00860 15 ............................................... .01267 .01218 .01173 .01130 .01091 .01054 .01019 .00987 .00956 .00928 16 ............................................... .01345 .01294 .01246 .01201 .01160 .01121 .01084 .01050 .01018 .00988 17 ............................................... .01418 .01364 .01313 .01266 .01222 .01181 .01143 .01107 .01073 .01041 18 ............................................... .01486 .01429 .01375 .01326 .01279 .01236 .01196 .01158 .01122 .01088 19 ............................................... .01554 .01494 .01438 .01385 .01336 .01291 .01248 .01208 .01170 .01135 20 ............................................... .01626 .01562 .01503 .01448 .01396 .01348 .01303 .01260 .01220 .01183 21 ............................................... .01702 .01635 .01573 .01514 .01460 .01409 .01361 .01316 .01274 .01235 22 ............................................... .01782 .01711 .01645 .01584 .01526 .01472 .01422 .01374 .01330 .01288 23 ............................................... .01868 .01793 .01724 .01658 .01597 .01540 .01487 .01437 .01390 .01345 24 ............................................... .01962 .01883 .01809 .01740 .01675 .01615 .01558 .01505 .01455 .01408 25 ............................................... .02065 .01981 .01903 .01830 .01762 .01698 .01638 .01581 .01528 .01478 26 ............................................... .02178 .02089 .02006 .01929 .01856 .01789 .01725 .01665 .01609 .01556 27 ............................................... .02303 .02209 .02122 .02040 .01963 .01891 .01824 .01760 .01700 .01644 28 ............................................... .02439 .02339 .02247 .02160 .02079 .02002 .01931 .01863 .01800 .01740 29 ............................................... .02585 .02480 .02382 .02290 .02204 .02123 .02047 .01976 .01908 .01845 30 ............................................... .02742 .02631 .02527 .02430 .02339 .02253 .02172 .02096 .02025 .01957 31 ............................................... .02910 .02793 .02683 .02579 .02482 .02391 .02306 .02225 .02149 .02077 32 ............................................... .03089 .02965 .02849 .02739 .02636 .02540 .02449 .02363 .02282 .02206 33 ............................................... .03282 .03151 .03028 .02912 .02803 .02701 .02604 .02513 .02427 .02346 34 ............................................... .03489 .03350 .03220 .03097 .02982 .02873 .02771 .02674 .02583 .02497 35 ............................................... .03713 .03567 .03429 .03299 .03177 .03061 .02953 .02850 .02753 .02661 36 ............................................... .03953 .03798 .03653 .03515 .03386 .03263 .03148 .03039 .02936 .02838 37 ............................................... .04211 .04048 .03894 .03748 .03611 .03481 .03359 .03243 .03134 .03030

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(f) Effective dates. This section applies after April 30, 1999.

Par. 10. The undesignated center heading immediately preceding § 1.664– 4A is revised to read as follows:

Unitrust Actuarial Tables Applicable Before May 1, 1999

Par. 11. Section 1.664–4A is amended as follows:

1. The section heading is revised.

2. In paragraph (d)(4), the first sentence is revised.

3. In paragraph (d)(6), the introductory text is revised and Table D is removed.

4. The heading of newly designated paragraph (e) is revised.

5. In newly designated paragraph (e)(1), the first sentence is revised.

6. Newly designated paragraphs (e)(3) through (e)(5) are revised.

7. In newly designated paragraph (e)(6), the heading and the first sentence of the introductory text are revised and the last sentence of introductory text is removed and two new sentences are added in its place.

8. The heading of Table U(1) is revised.

The addition and revisions read as follows:

§ 1.664–4A Valuation of charitable remainder interests for which the valuation date is before May 1, 1999.

• • • • (d) * - (4) Period is a term of years. If the period described in § 1.664–3(a)(5) is a term of years, the factor which is used in determining the present value of the remainder interest is the factor under the appropriate adjusted payout rate in Table D in § 1.664–4(e)(6) that corresponds to the number of years in the term. * -
• • • • (6) Actuarial tables for transfers for which the valuation date is after November 30, 1983, and before May 1, 1989. Table D in § 1.664–4(e)(6) and the following tables shall be used in the application of the provisions of this section:
• • • • (e) Valuation of charitable remainder unitrusts having certain payout sequences for transfers for which the valuation date is after April 30, 1989, and before May 1, 1999 —(1) In general. Except as otherwise provided in

paragraph (e)(2) of this section, in the case of transfers for which the valuation date is after April 30, 1989, and before May 1, 1999, the present value of a remainder interest is determined under paragraphs (e)(3) through (e)(6) of this section, provided that the amount of the payout as of any payout date during any taxable year of the trust is not larger than the amount that the trust could distribute on such date under § 1.664– 3(a)(1)(v) if the taxable year of the trust were to end on such date. * -

• • • • (3) Adjusted payout rate. For transfers for which the valuation date is after April 30, 1989, and before May 1, 1999, the adjusted payout rate is determined by using the appropriate Table F, contained in § 1.664–4(e)(6), for the section 7520 interest rate applicable to the transfer. If the interest rate is between 4.2 and 14 percent, see § 1.664– 4(e)(6). If the interest rate is below 4.2 percent or greater than 14 percent, see § 1.664–4(b). See § 1.664–4(e) for rules applicable in determining the adjusted payout rate.

(4) Period is a term of years. If the period described in § 1.664–3(a)(5) is a term of years, the factor that is used in

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determining the present value of the remainder interest for transfers for which the valuation date is after April 30, 1989, and before May 1, 1999, is the factor under the appropriate adjusted payout rate in Table D in § 1.664–4(e)(6) corresponding to the number of years in the term. If the adjusted payout rate is an amount that is between adjusted payout rates for which factors are provided in Table D, a linear interpolation must be made. The present value of the remainder interest is determined by multiplying the net fair market value (as of the appropriate valuation date) of the property placed in trust by the factor determined under this paragraph. Generally, for purposes of this section, the valuation date is, in the case of an inter vivos transfer, the date on which the property is transferred to the trust by the donor, and, in the case of a testamentary transfer under sections 2055, 2106, or 2624, the valuation date is the date of death. See § 1.664–4T(e)(4) for additional rules regarding the valuation date. See § 1.664–4T(e)(4) for an example that illustrates the application of this paragraph (e)(4).

(5) Period is the life of one individual. If the period described in § 1.664–3(a)(5) is the life of one individual, the factor that is used in determining the present value of the remainder interest for transfers for which the valuation date is after April 30, 1989, and before May 1, 1999, is the factor in Table U(1) in paragraph (e)(6) of this section under the appropriate adjusted payout. For purposes of the computations described in this paragraph (e)(5), the age of an individual is the age of that individual at the individual’s nearest birthday. If the adjusted payout rate is an amount that is between adjusted payout rates for which factors are provided in the appropriate table, a linear interpolation must be made. The rules provided in § 1.664–4T(e)(5) apply for determining the present value of the remainder interest. See § 1.664–4T(e)(5) for an example illustrating the application of this paragraph (e)(5)(using current actuarial tables).

(6) Actuarial tables for transfers for which the valuation date is after April 30, 1989, and before May 1, 1999. For transfers for which the valuation date is after April 30, 1989, and before May 1, 1999, the present value of a charitable remainder unitrust interest that is dependent on a term of years or the termination of a life interest is determined by using the section 7520 rate and Table D, Tables F(4.2) through F(14.0) in § 1.664–4(e)(6) and Table U(1) of this paragraph (e)(6), as applicable.

• • • Publication 1458 is no longer available for purchase from the

Superintendent of Documents, United States Government Printing Office, Washington, DC 20402. However, pertinent factors in this publication may be obtained by a written request to: CC:DOM:CORP:R (IRS Publication 1458), room 5226, Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, DC 20044.

TABLE U(1).—UNITRUST SINGLE LIFE

REMAINDER FACTORS—BASED ON LIFE TABLE 80CNSMT

[Applicable for Transfers After April 30, 1989,

and Before May 1, 1999]

• • • • Par. 12. Section 1.7520–1 is amended by:

1. Revising the last two sentences of paragraph (b)(2).

2. Revising the headings for paragraphs (c)(1) and (c)(2).

3. Revising the introductory text of paragraph (c)(2).

4. Removing the first two sentences of paragraph (c)(2)(iii) and adding one sentence in their place.

5. Revising paragraph (d). The revisions and addition read as follows:

§ 1.7520–1 Valuation of annuities, unitrust interests, interests for life or terms of years, and remainder or reversionary interests.

• • • • (b) * - (2) * - - For transactions with valuation dates after April 30, 1989, and before May 1, 1999, the mortality component table (80CNSMT) is contained in § 20.2031–7A(e)(4) of this chapter. See § 20.2031–7A(a) through (d) of this chapter for mortality component tables applicable to transactions for which the valuation date falls before May 1, 1989.

(c) * - (1) Regulations sections containing tables with interest rates between 4.2 and 14 percent for valuation dates after April 30, 1989, and before May 1, 1999.

* * * (2) Internal Revenue Service publications containing tables with interest rates between 2.2 and 26 percent for valuation dates after April 30, 1989, and before May 1, 1999. The following publications are no longer available for purchase from the Superintendent of Documents, however, they may be obtained from CC:DOM:CORP:R, room 5226, Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, DC 20044:

---

(iii) Internal Revenue Service Publication 1459, ‘‘Actuarial Values, Gamma Volume,’’ (8–89). * - (d) Effective date. This section applies after April 30, 1989, and before May 1, 1999. Par. 13. Section 1.7520–1T is added to read as follows:

§ 1.7520–1T Valuation of annuities, unitrust interests, interests for life or terms of years, and remainder or reversionary interests (temporary).

(a) through (b)(1) [Reserved] For further guidance, see § 1.7520–1(a) through (b)(1).

(2) Mortality component. The mortality component reflects the mortality data most recently available from the United States census. As new mortality data becomes available after each decennial census, the mortality component described in this section will be revised periodically and the revised mortality component tables will be published in the regulations at that time. For transactions with valuation dates after April 30, 1999, the mortality component table (Table 90CM) is contained in § 20.2031–7T(d)(7) of this chapter. See § 20.2031–7A of this chapter for mortality component tables applicable to transactions for which the valuation date falls before May 1, 1999.

(c) [Reserved]. For further guidance, see § 1.7520–1(c).

(1) Regulation sections containing tables with interest rates between 4.2 and 14 percent for valuation dates after April 30, 1999. Section 1.642(c)–6T(e)(6) contains Table S used for determining the present value of a single life remainder interest in a pooled income fund as defined in § 1.642(c)–5. See § 1.642(c)–6A for actuarial factors for one life applicable to valuation dates before May 1, 1999. Section 1.664– 4(e)(6) contains Table F (payout factors) and Table D (actuarial factors used in determining the present value of a remainder interest postponed for a term of years). Section1.664–4T(e)(7) contains Table U(1) (actuarial factors for one life). These tables are used in determining the present value of a remainder interest in a charitable remainder unitrust as defined in § 1.664–3. See § 1.664–4A for actuarial factors for one life applicable to valuation dates before May 1, 1999. Section 20.2031–7(d)(6) of this chapter contains Table B (actuarial factors used in determining the present value of an interest for a term of years), Table K (annuity end-of-interval adjustment factors), and Table J (term certain annuity beginning-of-interval adjustment factors). Section 20.2031– 7T(d)(7) of this chapter contains Table

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S (actuarial factors for one life), and Table 90CM (mortality components). These tables are used in determining the present value of annuities, life estates, remainders, and reversions. See § 20.2031–7A of this chapter for actuarial factors for one life and mortality components applicable to valuation dates before May 1, 1999.

(2) Internal Revenue Service publications containing tables with interest rates between 2.2 and 26 percent for valuation dates after April 30, 1999. The following documents are available for purchase from the Superintendent of Documents, United States Government Printing Office, Washington, DC 20402:

(i) Internal Revenue Service Publication 1457, ‘‘Actuarial Values, Book Aleph,’’ (1999). This publication includes tables of valuation factors, as well as examples that show how to compute other valuation factors, for determining the present value of annuities, life estates, terms of years, remainders, and reversions, measured by one or two lives. These factors may also be used in the valuation of interests in a charitable remainder annuity trust as defined in § 1.664–2 and a pooled income fund as defined in § 1.642(c)–5.

(ii) Internal Revenue Service Publication 1458, ‘‘Actuarial Values, Book Beth,’’ (1999). This publication includes term certain tables and tables of one and two life valuation factors for determining the present value of remainder interests in a charitable remainder unitrust as defined in § 1.664–3.

(iii) Internal Revenue Service Publication 1459, ‘‘Actuarial Values, Book Gimel,’’ (1999). This publication includes tables for computing deprecation adjustment factors. See § 1.170A–12T.

(d) Effective date. This section applies after April 30, 1999.

PART 20—ESTATE TAX; ESTATES OF DECEDENTS DYING AFTER AUGUST 16, 1954

Par. 14. The authority citation for part 20 is amended by adding entries in numerical order to read in part as follows:

Authority: 26 U.S.C. 7805 * - Section 20.2031–7T also issued under 26 U.S.C. 7520(c)(2). * - Section 20.7520–1T also issued under 26 U.S.C. 7520(c)(2). * -

Par. 15. Section 20.2031–0 is revised to read as follows:

§ 20.2031–0 Table of contents. This section lists the section headings and undesignated center headings that

appear in the regulations under section 2031.

§ 20.2031–1 Definition of gross estate; valuation of property. § 20.2031–2 Valuation of stocks and bonds. § 20.2031–3 Valuation of interests in businesses. § 20.2031–4 Valuation of notes. § 20.2031–5 Valuation of cash on hand or on deposit. § 20.2031–6 Valuation of household and personal effects. § 20.2031–7 Valuation of annuities, interests for life or term of years, and remainder or reversionary interests. § 20.2031–7T Valuation of annuities, interests for life or term of years, and remainder or reversionary interests (temporary). § 20.2031–8 Valuation of certain life insurance and annuity contracts; valuation of shares in an open-end investment company. § 20.2031–9 Valuation of other property.

Actuarial Tables Applicable Before

May 1, 1999

§ 20.2031–7A Valuation of annuities, interests for life or term of years, and remainder or reversionary interests for estates of decedents for which the valuation date of the gross estate is before May 1, 1999.

Par. 16. The undesignated centerheading immediately following § 20.2046–1 is revised to read as follows:

Actuarial Tables Applicable Before

May 1, 1999

Par. 17. Section 20.2031–7A is amended by:

1. Revising the section heading.
2. Adding paragraph (e). The revision and addition read as follows:

§ 20.2031–7A Valuation of annuities, interests for life or term of years, and remainder or reversionary interests for estates of decedents for which the valuation date of the gross estate is before May 1, 1999.

• • • • (e) Valuation of annuities, interests for life or term of years, and remainder or reversionary interests for estates of decedents for which the valuation date of the gross estate is after April 30,1989, and before May 1, 1999 —(1) In general. Except as otherwise provided in § 20.2031–7(b) and § 20.7520–3(b) (pertaining to certain limitations on the use of prescribed tables), if the valuation date for the gross estate of the decedent is after April 30, 1989, and before May 1, 1999, the fair market value of annuities, life estates, terms of years, remainders, and reversionary interests is the present value of the interests determined by use of standard or special

section 7520 actuarial factors and the valuation methodology described in § 20.2031–7T(d). These factors are derived by using the appropriate section 7520 interest rate and, if applicable, the mortality component for the valuation date of the interest that is being valued. See §§ 20.7520–1 through 20.7520–4. See paragraph (e)(4) of this section for determination of the appropriate table for use in valuing these interests.

(2) Transitional rule. (i) If the valuation date is after April 30, 1989, and before June 10, 1994, a taxpayer can rely on Notice 89–24 (1989–1 C.B. 660), or Notice 89–60 (1989–1 C.B. 700 ). See § 601.601(d)(2)(ii)( b ) of this chapter.

(ii) If a decedent dies after April 30, 1989, and if on May 1, 1989, the decedent was mentally incompetent so that the disposition of the decedent’s property could not be changed, and the decedent dies without having regained competency to dispose of the decedent’s property or dies within 90 days of the date on which the decedent first regains competency, the fair market value of annuities, life estates, terms for years, remainders, and reversions included in the gross estate of the decedent is their present value determined either under this section or under the corresponding section applicable at the time the decedent became mentally incompetent, at the option of the decedent’s executor. For example, see paragraph (d) of this section.

(3) Publications and actuarial computations by the Internal Revenue Service. Many standard actuarial factors not included in paragraph (e)(4) of this section or in § 20.2031–7(d)(6) are included in Internal Revenue Service Publication 1457, ‘‘Actuarial Values, Alpha Volume,’’ (8–89). Publication 1457 also includes examples that illustrate how to compute many special factors for more unusual situations. Publication 1457 is no longer available for purchase from the Superintendent of Documents, United States Government Printing Office, Washington, DC 20402. However, pertinent factors in this publication may be obtained from: CC:DOM:CORP:R (IRS Publication 1457), room 5226, Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, DC 20044. If a special factor is required in the case of an actual decedent, the Internal Revenue Service may furnish the factor to the executor upon a request for a ruling. The request for a ruling must be accompanied by a recitation of the facts including a statement of the date of birth for each measuring life, the date of the decedent’s death, any other applicable dates, and a copy of the will, trust, or other relevant documents. A

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request for a ruling must comply with the instructions for requesting a ruling published periodically in the Internal Revenue Bulletin (see §§ 601.201 and 601.601(d)(2)(ii)( b ) of this chapter) and include payment of the required user fee.

(4) Actuarial tables. Except as provided in § 20.7520–3(b) (pertaining to certain limitations on the use of prescribed tables), Life Table 80CNSMT and Table S (Single life remainder factors applicable where the valuation date is after April 30, 1989, and before May 1, 1999), contained in this paragraph (b)(4), and Table B, Table J, and Table K set forth in § 20.2031– 7(d)(6) must be used in the application of the provisions of this section when the section 7520 interest rate component is between 4.2 and 14 percent. Table S and Table 80CNSMT are as follows:

Par. 17a. Section 20.2031–7A is further amended by redesignating Table S and Table 80CNSMT in § 20.2031– 7(d)(6) as Table S and Table 80CNSMT in § 20.2031–7A(e)(4) and revising the table headings to read as follows:

• • • • (e) * - (4) * -

TABLE S.—BASED ON LIFE ON LIFE TABLE 80CNSMT SINGLE LIFE REMAINDER FACTORS

[Applicable After April 30, 1989, and Before

May 1, 1999]

---

TABLE 80CNSMT.—APPLICABLE AFTER APRIL 30, 1989, AND BEFORE MAY 1, 1999

• • • • Par. 18. Section 20.2031–7 is amended by:

1. Revising the section heading.

2. Revising paragraphs (c) through (d)(5).

3. Revising paragraph (d)(6) heading and introductory text.

4. Revising paragraph (e). The revisions read as follows:

§ 20.2031–7 Valuation of annuities, interests for life or term of years, and remainder or reversionary interests.

• • • • (c) through (d)(5) [Reserved]. For further guidance, see § 20.2031–7T(c) through (d)(5).

(d)(6) Actuarial Table B, Table J, and Table K where the valuation date is after April 30, 1989. Except as provided in § 20.7520–3(b) (pertaining to certain limitations on prescribed tables), the

tables in this paragraph (d)(6) and either Table S and Table 80CNSMT in § 20.2031–7A(e)(4) (for valuation dates after April 30, 1989, and before May 1, 1999), or Table S and Table 90CM in § 20.2031–7T(d)(7) (for valuation dates after May 1, 1999) must be used in the application of the provisions of this section when the section 7520 interest rate component is between 4.2 and 14 percent.

• • • • (e) Effective date. This section applies after April 30, 1989, and before May 1,

Par. 19. Section 20.2031–7T is added to read as follows:

§ 20.2031–7T Valuation of annuities, interests for life or term of years, and remainder or reversionary interests (temporary).

(a) through (b) [Reserved]. For further information see § 20.2031–7(a) through (b).

(c) Actuarial valuations . The present value of annuities, life estates, terms of years, remainders, and reversions for estates of decedents for which the valuation date of the gross estate is after April 30, 1999, is determined under paragraph (d) of this section. The present value of annuities, life estates, terms of years, remainders, and reversions for estates of decedents for which the valuation date of the gross estate is before May 1, 1999, is determined under the following

sections:

(d) Actuarial valuations after April 30, 1999 —(1) In general. Except as otherwise provided in paragraph (b) of this section and § 20.7520–3(b) (pertaining to certain limitations on the use of prescribed tables), if the valuation date for the gross estate of the decedent is after April 30, 1999, the fair market value of annuities, life estates, terms of years, remainders, and reversionary interests is the present value determined by use of standard or special section 7520 actuarial factors. These factors are derived by using the appropriate section 7520 interest rate and, if applicable, the mortality component for the valuation date of the interest that is being valued. See §§ 20.7520–1 through 20.7520–4.

(2) Specific interests —(i) Charitable remainder trusts . The fair market value

of a remainder interest in a pooled income fund, as defined in § 1.642(c)–5 of this chapter, is its value determined under § 1.642(c)–6T(e) of this chapter. The fair market value of a remainder interest in a charitable remainder annuity trust, as defined in § 1.664–2(a) of this chapter, is the present value determined under § 1.664–2(c) of this chapter. The fair market value of a remainder interest in a charitable remainder unitrust, as defined in § 1.664–3 of this chapter, is its present value determined under § 1.664–4T(e) of this chapter. The fair market value of a life interest or term of years in a charitable remainder unitrust is the fair market value of the property as of the date of valuation less the fair market value of the remainder interest on that date determined under § 1.664–4T(e)(4) and (5) of this chapter.

(ii) Ordinary remainder and reversionary interests . If the interest to be valued is to take effect after a definite number of years or after the death of one individual, the present value of the interest is computed by multiplying the value of the property by the appropriate remainder interest actuarial factor (that corresponds to the applicable section 7520 interest rate and remainder interest period) in Table B (for a term certain) or the appropriate Table S (for one measuring life), as the case may be. Table B is contained in § 20.2031– 7(d)(6) and Table S (for one measuring life when the valuation date is after April 30, 1999) is contained in paragraph (d)(7) of this section and in Internal Revenue Service Publication 1457. For information about obtaining actuarial factors for other types of remainder interests, see paragraph (d)(4) of this section.

(iii) Ordinary term-of-years and life interests . If the interest to be valued is the right of a person to receive the income of certain property, or to use certain nonincome-producing property, for a term of years or for the life of one individual, the present value of the interest is computed by multiplying the value of the property by the appropriate term-of-years or life interest actuarial factor (that corresponds to the applicable section 7520 interest rate and term-of-years or life interest period). Internal Revenue Service Publication 1457 includes actuarial factors for an interest for a term of years in Table B and for the life of one individual in Table S (for one measuring life when the valuation date is after April 30, 1999). However, term-of-years and life interest actuarial factors are not included in Table B in § 20.2031–7(d)(6) or Table S in paragraph (d)(7) of this section. If Internal Revenue Service Publication

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1457 (or any other reliable source of term-of-years and life interest actuarial factors) is not conveniently available, an actuarial factor for the interest may be derived mathematically. This actuarial factor may be derived by subtracting the correlative remainder factor (that corresponds to the applicable section 7520 interest rate and the term of years or the life) in Table B (for a term of years) in § 20.2031–7(d)(6) or in Table S (for the life of one individual) in paragraph (d)(7) of this section, as the case may be, from 1.000000. For information about obtaining actuarial factors for other types of term-of-years and life interests, see paragraph (d)(4) of this section.

(iv) Annuities . (A) If the interest to be valued is the right of a person to receive an annuity that is payable at the end of each year for a term of years or for the life of one individual, the present value of the interest is computed by multiplying the aggregate amount payable annually by the appropriate annuity actuarial factor (that corresponds to the applicable section 7520 interest rate and annuity period). Internal Revenue Publication 1457 includes actuarial factors in Table B (for an annuity payable for a term of years) and in Table S (for an annuity payable for the life of one individual when the valuation date is after April 30, 1999). However, annuity actuarial factors are not included in Table B in § 20.2031– 7(d)(6) or Table S in paragraph (d)(7) of this section. If Internal Revenue Service Publication 1457 (or any other reliable source of annuity actuarial factors) is not conveniently available, a required annuity factor for a term of years or for one life may be mathematically derived. This annuity factor may be derived by subtracting the applicable remainder factor (that corresponds to the applicable section 7520 interest rate and annuity period) in Table B (in the case of a term-of-years annuity) in § 20.2031– 7(d)(6) or in Table S (in the case of a one-life annuity when the valuation date is after April 30, 1999) in paragraph (d)(7) of this section, as the case may be, from 1.000000 and then dividing the result by the applicable section 7520 interest rate expressed as a decimal number.

(B) If the annuity is payable at the end of semiannual, quarterly, monthly, or weekly periods, the product obtained by multiplying the annuity factor by the aggregate amount payable annually is then multiplied by the applicable adjustment factor as contained in Table K in § 20.2031–7(d)(6) for payments made at the end of the specified periods. The provisions of this paragraph

(d)(2)(iv)(B) are illustrated by the following example:

Example . At the time of the decedent’s death, the survivor/annuitant, age 72, is entitled to receive an annuity of $15,000 a year for life payable in equal monthly installments at the end of each period. The section 7520 rate for the month in which the decedent died is 9.6 percent. Under Table S in paragraph (d)(7) of this section, the remainder factor at 9.6 percent for an individual aged 72 is .38438. By converting the remainder factor to an annuity factor, as described above, the annuity factor at 9.6 percent for an individual aged 72 is 6.4127 (1.00000 minus .38438, divided by .096). Under Table K in § 20.2031–7(d)(6), the adjustment factor under the column for payments made at the end of each monthly period at the rate of 9.6 percent is 1.0433. The aggregate annual amount, $15,000, is multiplied by the factor 6.4127 and the product multiplied by 1.0433. The present value of the annuity at the date of the decedent’s death is, therefore, $100,355.55 ($15,000 x 6.4127 x 1.0433).

(C) If an annuity is payable at the beginning of annual, semiannual, quarterly, monthly, or weekly periods for a term of years, the value of the annuity is computed by multiplying the aggregate amount payable annually by the annuity factor described in paragraph (d)(2)(iv)(A) of this section; and the product so obtained is then multiplied by the adjustment factor in Table J in § 20.2031–7(d)(6) at the appropriate interest rate component for payments made at the beginning of specified periods. If an annuity is payable at the beginning of annual, semiannual, quarterly, monthly, or weekly periods for one or more lives, the value of the annuity is the sum of the first payment plus the present value of a similar annuity, the first payment of which is not to be made until the end of the payment period, determined as provided in this paragraph (d)(2)(iv).

(v) Annuity and unitrust interests for a term of years or until the prior death of an individual. See § 25.2512– 5T(d)(2)(v) of this chapter for examples explaining how to compute the present value of an annuity or unitrust interest that is payable until the earlier of the lapse of a specific number of years or the death of an individual.

(3) Transitional rule. (i) If a decedent dies after April 30, 1999, and if on May 1, 1999, the decedent was mentally incompetent so that the disposition of the decedent’s property could not be changed, and the decedent dies without having regained competency to dispose of the decedent’s property or dies within 90 days of the date on which the decedent first regains competency, the fair market value of annuities, life estates, terms for years, remainders, and

reversions included in the gross estate of the decedent is their present value determined either under this section or under the corresponding section applicable at the time the decedent became mentally incompetent, at the option of the decedent’s executor. For example, see § 20.2031–7A(e)(2).

(ii) If a decedent dies after April 30, 1999, and before July 1, 1999, the fair market value of annuities, life estates, remainders, and reversions based on one or more measuring lives included in the gross estate of the decedent is their present value determined under this section by use of the section 7520 interest rate for the month in which the valuation date occurs (See §§ 20.7520– 1(b) and 20.7520–2(a)(2)) and the appropriate actuarial tables under either paragraph (d)(7) of this section or § 20.2031–7A(e)(4), at the option of the decedent’s executor.

(iii) For purposes of paragraphs (d)(3) (i) and (ii) of this section, where the decedent’s executor is given the option to use the appropriate actuarial tables under either paragraph (d)(7) of this section or § 20.2031–7A(e)(4), the decedent’s executor must use the same actuarial table with respect to each individual transaction and with respect to all transfers occurring on the valuation date (e.g., gift and income tax charitable deductions with respect to the same transfer must be determined based on the same tables, and all assets includible in the gross estate and/or estate tax deductions claimed must be valued based on the same tables).

(4) Publications and actuarial computations by the Internal Revenue Service. Many standard actuarial factors not included in § 20.2031–7(d)(6) or in paragraph (d)(7) of this section are included in Internal Revenue Service Publication 1457, ‘‘Actuarial Values, Book Aleph,’’ (1999). Publication 1457 also includes examples that illustrate how to compute many special factors for more unusual situations. A copy of this publication is available for purchase from the Superintendent of Documents, United States Government Printing Office, Washington, DC 20402. If a special factor is required in the case of an actual decedent, the Internal Revenue Service may furnish the factor to the executor upon a request for a ruling. The request for a ruling must be accompanied by a recitation of the facts including a statement of the date of birth for each measuring life, the date of the decedent’s death, any other applicable dates, and a copy of the will, trust, or other relevant documents. A request for a ruling must comply with the instructions for requesting a ruling published periodically in the Internal

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at the end of each quarter throughout a term certain. At the time of the decedent’s death, the section 7520 rate was 9.8 percent. A quarterly payment had just been made prior to the decedent’s death and payments were to continue for 5 more years. Under Table B in § 20.2031–7(d)(6) for the interest rate of 9.8 percent, the factor for the present value of a remainder interest due after a term of 5 years is .626597. Converting the factor to an annuity factor, as described in paragraph (d)(2)(iv)(A) of this section, the factor for the present value of an annuity for a term of 5 years is 3.8102. The adjustment factor from Table K in § 20.2031–7(d)(6) at an interest rate of 9.8 percent for quarterly annuity payments made at the end of the period is 1.0360. The present value of the annuity is, therefore, $39,473.67 ($10,000 × 3.8102 × 1.0360).

(6) [Reserved]. For further guidance, see § 20.2031–7(d)(6).

(7) Actuarial Table S and Table 90CM where the valuation date is after April 30, 1999. Except as provided in § 20.7520–2(b) (pertaining to certain limitations on the use of prescribed tables), the following Table 90CM and Table S (single life remainder factors applicable where the valuation date is after April 30, 1999) and Table B, Table J, and Table K contained in § 20.2031– 7(d)(6), must be used in the application of the provisions of this section when the section 7520 interest rate component is between 4.2 and 14 percent.

Revenue Bulletin (see §§ 601.201 and 601.601(d)(2)(ii)( b ) of this chapter) and include payment of the required user fee.

(5) Examples. The provisions of this section are illustrated by the following examples:

Example 1. Remainder payable at an individual’s death. The decedent, or the decedent’s estate, was entitled to receive certain property worth $50,000 upon the death of A, to whom the income was bequeathed for life. At the time of the decedent’s death, A was 47 years 5 months old. In the month in which the decedent died, the section 7520 rate was 9.8 percent. Under Table S in paragraph (d)(7) of this section, the remainder factor at 9.8 percent for determining the present value of the remainder interest due at the death of a person aged 47, the number of years nearest A’s actual age at the decedent’s death, is .10317. The present value of the remainder interest at the date of the decedent’s death is, therefore, $5,158.50 ($50,000 × .10317).

Example 2. Income payable for an individual’s life. A’s parent bequeathed an income interest in property to A for life, with the remainder interest passing to B at A’s death. At the time of the parent’s death, the value of the property was $50,000 and A was 30 years 10 months old. The section 7520 rate at the time of the parent’s death was 10.2 percent. Under Table S in paragraph (d)(7) of this section, the remainder factor at 10.2 percent for determining the present value of the remainder interest due at the death of a person aged 31, the number of years closest

to A’s age at the decedent’s death, is .03583. Converting this remainder factor to an income factor, as described in paragraph (d)(2)(iii) of this section, the factor for determining the present value of an income interest for the life of a person aged 31 is .96417. The present value of A’s interest at the time of the parent’s death is, therefore, $48,208.50 ($50,000 × .96417).

Example 3. Annuity payable for an individual’s life. A purchased an annuity for the benefit of both A and B. Under the terms of the annuity contract, at A’s death, a survivor annuity of $10,000 a year payable in equal semiannual installments made at the end of each interval is payable to B for life. At A’s death, B was 45 years 7 months old. Also, at A’s death, the section 7520 rate was 9.6 percent. Under Table S in paragraph (d)(7) of this section, the factor at 9.6 percent for determining the present value of the remainder interest at the death of a person age 46 (the number of years nearest B’s actual age) is .10013. By converting the factor to an annuity factor, as described in paragraph (d)(2)(iv)(A) of this section, the factor for the present value of an annuity payable until the death of a person age 46 is 9.3736 (1.00000 minus .10013, divided by .096). The adjustment factor from Table K in § 20.2031– 7(d)(6) at an interest rate of 9.6 percent for semiannual annuity payments made at the end of the period is 1.0235. The present value of the annuity at the date of A’s death is, therefore, $95,938.80 ($10,000 × 9.3736 × 1.0235). Example 4. Annuity payable for a term of years. The decedent, or the decedent’s estate, was entitled to receive an annuity of $10,000 a year payable in equal quarterly installments

TABLE S.—SINGLE LIFE REMAINDER FACTORS APPLICABLE AFTER APRIL 30, 1999 BASED ON LIFE TABLE 90CM

[Interest rate]

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23216 Federal Register / Vol. 64, No. 83 / Friday, April 30, 1999 / Rules and Regulations

Age 4.2% 4.4% 4.6% 4.8% 5.0% 5.2% 5.4% 5.6% 5.8% 6.0%

Federal Register / Vol. 64, No. 83 / Friday, April 30, 1999 / Rules and Regulations 23217

Age 8.2% 8.4% 8.6% 8.8% 9.0% 9.2% 9.4% 9.6% 9.8% 10.0%

0 ............................................... .01906 .01845 .01790 .01740 .01694 .01652 .01613 .01578 .01546 .01516 1 ............................................... .01098 .01034 .00977 .00924 .00876 .00833 .00793 .00756 .00722 .00691 2 ............................................... .01113 .01046 .00986 .00930 .00880 .00834 .00791 .00753 .00717 .00684 3 ............................................... .01155 .01084 .01020 .00962 .00909 .00860 .00816 .00775 .00737 .00702 4 ............................................... .01211 .01137 .01069 .01008 .00952 .00900 .00853 .00810 .00770 .00733 5 ............................................... .01279 .01201 .01130 .01065 .01006 .00952 .00902 .00856 .00814 .00775 6 ............................................... .01356 .01274 .01199 .01131 .01068 .01011 .00959 .00910 .00865 .00824 7 ............................................... .01442 .01356 .01277 .01205 .01140 .01079 .01023 .00972 .00925 .00881 8 ............................................... .01536 .01446 .01363 .01287 .01218 .01154 .01096 .01041 .00991 .00945 9 ............................................... .01641 .01546 .01460 .01380 .01307 .01240 .01178 .01120 .01068 .01019 10 ............................................... .01758 .01659 .01567 .01484 .01407 .01336 .01270 .01210 .01154 .01103 11 ............................................... .01886 .01781 .01686 .01598 .01517 .01442 .01373 .01310 .01251 .01196 12 ............................................... .02024 .01915 .01814 .01721 .01636 .01558 .01485 .01419 .01357 .01299 13 ............................................... .02168 .02054 .01948 .01851 .01762 .01679 .01603 .01533 .01467 .01407 14 ............................................... .02313 .02193 .02083 .01981 .01887 .01801 .01721 .01646 .01578 .01514 15 ............................................... .02456 .02330 .02214 .02107 .02009 .01918 .01834 .01756 .01684 .01617 16 ............................................... .02593 .02462 .02340 .02229 .02126 .02030 .01942 .01860 .01785 .01714 17 ............................................... .02728 .02590 .02463 .02346 .02238 .02138 .02046 .01960 .01880 .01806 18 ............................................... .02861 .02717 .02584 .02462 .02348 .02243 .02146 .02056 .01972 .01894 19 ............................................... .02998 .02847 .02708 .02580 .02461 .02351 .02249 .02154 .02066 .01984 20 ............................................... .03142 .02984 .02839 .02704 .02580 .02465 .02357 .02258 .02165 .02079 21 ............................................... .03295 .03130 .02978 .02837 .02706 .02585 .02473 .02368 .02271 .02180 22 ............................................... .03455 .03283 .03124 .02976 .02839 .02712 .02594 .02484 .02382 .02286 23 ............................................... .03626 .03446 .03279 .03124 .02981 .02847 .02723 .02608 .02500 .02400 24 ............................................... .03809 .03620 .03446 .03283 .03133 .02993 .02863 .02741 .02628 .02522 25 ............................................... .04005 .03808 .03625 .03456 .03298 .03151 .03014 .02887 .02768 .02656

23218 Federal Register / Vol. 64, No. 83 / Friday, April 30, 1999 / Rules and Regulations

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Age 8.2% 8.4% 8.6% 8.8% 9.0% 9.2% 9.4% 9.6% 9.8% 10.0%

100 ............................................... .83519 .83192 .82868 .82547 .82228 .81913 .81600 .81290 .80982 .80678 101 ............................................... .84368 .84055 .83744 .83437 .83131 .82829 .82529 .82231 .81936 .81643 102 ............................................... .85203 .84904 .84607 .84313 .84021 .83731 .83444 .83159 .82876 .82596 103 ............................................... .86034 .85748 .85465 .85184 .84906 .84629 .84355 .84082 .83812 .83544

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Age 12.2% 12.4% 12.6% 12.8% 13.0% 13.2% 13.4% 13.6% 13.8% 14.0%

0 ............................................... .01298 .01285 .01273 .01261 .01250 .01240 .01230 .01221 .01212 .01203 1 ............................................... .00468 .00455 .00443 .00431 .00420 .00410 .00400 .00391 .00382 .00374 2 ............................................... .00448 .00435 .00421 .00409 .00398 .00387 .00376 .00366 .00357 .00348 3 ............................................... .00452 .00437 .00423 .00410 .00398 .00386 .00375 .00365 .00355 .00345 4 ............................................... .00468 .00452 .00437 .00423 .00410 .00397 .00386 .00375 .00364 .00354 5 ............................................... .00493 .00476 .00460 .00445 .00431 .00418 .00405 .00393 .00382 .00371 6 ............................................... .00524 .00506 .00489 .00473 .00458 .00444 .00430 .00418 .00406 .00394 7 ............................................... .00562 .00543 .00525 .00508 .00492 .00477 .00462 .00449 .00436 .00423 8 ............................................... .00606 .00586 .00566 .00548 .00531 .00515 .00499 .00485 .00471 .00458 9 ............................................... .00659 .00637 .00616 .00597 .00579 .00561 .00545 .00529 .00514 .00500 10 ............................................... .00721 .00698 .00676 .00655 .00636 .00617 .00600 .00583 .00567 .00552 11 ............................................... .00792 .00767 .00744 .00722 .00701 .00682 .00663 .00645 .00628 .00612 12 ............................................... .00871 .00845 .00821 .00797 .00775 .00754 .00735 .00716 .00698 .00681 13 ............................................... .00955 .00928 .00902 .00877 .00854 .00831 .00810 .00790 .00771 .00753 14 ............................................... .01038 .01009 .00981 .00955 .00930 .00907 .00885 .00864 .00843 .00824 15 ............................................... .01116 .01085 .01056 .01028 .01002 .00977 .00954 .00932 .00910 .00890 16 ............................................... .01186 .01153 .01123 .01094 .01066 .01040 .01015 .00992 .00969 .00948 17 ............................................... .01250 .01215 .01183 .01152 .01124 .01096 .01070 .01045 .01022 .00999 18 ............................................... .01308 .01272 .01238 .01206 .01175 .01147 .01119 .01093 .01068 .01044 19 ............................................... .01367 .01329 .01293 .01259 .01227 .01196 .01167 .01140 .01113 .01088 20 ............................................... .01428 .01388 .01350 .01314 .01280 .01248 .01217 .01188 .01161 .01134 21 ............................................... .01494 .01451 .01411 .01373 .01337 .01303 .01271 .01240 .01211 .01183

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TABLE 90 CM.—LIFE TABLE APPLICABLE AFTER APRIL 30, 1999

(e) Effective dates. This section applies after April 30, 1999.

Par. 20 Section 20.2055–2 is amended by revising paragraph (f)(4) to read as follows:

§ 20.2055–2 Transfers not exclusively for charitable purposes.

• • • • (f) * -

(4) Other decedents. The present value of an interest not described in paragraph (f)(2) of this section is to be determined under § 20.2031–7T(d) in the case of decedents where the valuation date of the gross estate is after April 30, 1999, or under § 20.2031–7A in the case of decedents where the

valuation date of the gross estate is before May 1, 1999.

• • • • Par. 21. Section 20.7520–1 is amended as follows:

1. Paragraph (b)(2), last two sentences are revised.

2. Headings for paragraphs (c)(1) and (c)(2) are revised.

3. Paragraph (c)(2) introductory text is revised.

Federal Register / Vol. 64, No. 83 / Friday, April 30, 1999 / Rules and Regulations 23223

(i) Internal Revenue Service Publication 1457, ‘‘Actuarial Values, Book Aleph,’’ (1999). This publication includes tables of valuation factors, as well as examples that show how to compute other valuation factors, for determining the present value of annuities, life estates, terms of years, remainders, and reversions, measured by one or two lives. These factors may also be used in the valuation of interests in a charitable remainder annuity trust as defined in § 1.664–2 of this chapter (Income Tax Regulations) and a pooled income fund as defined in § 1.642(c)–5 of this chapter.

(ii) Internal Revenue Service Publication 1458, ‘‘Actuarial Values, Book Beth,’’ (1999). This publication includes term certain tables and tables of one and two life valuation factors for determining the present value of remainder interests in a charitable remainder unitrust as defined in § 1.664–3 of this chapter.

(iii) Internal Revenue Service Publication 1459, ‘‘Actuarial Values, Book Gimel,’’ (1999). This publication includes tables for computing depreciation adjustment factors. See § 1.170A–12T of this chapter.

(d) Effective date. This section applies after April 30, 1999.

PART 25—GIFT TAX; GIFTS MADE AFTER DECEMBER 31, 1954

Par. 23. The authority citation for part 25 is amended by adding entries in numerical order to read in part as follows:

Authority: 26 U.S.C. 7805 * - Section 25.2512–5T also issued under 26 U.S.C. 7520(c)(2). * - Section 25.7520–1T also issued under 26 U.S.C. 7520(c)(2). * - Par. 24. Section 25.2512–0 is revised to read as follows:

§ 25.2512–0 Table of contents. This section lists the section headings that appear in the regulations under section 2512.

§ 25.2512–1 Valuation of property; in general. § 25.2512–2 Stocks and bonds. § 25.2512–3 Valuation of interest in businesses. § 25.2512–4 Valuation of notes. § 25.2512–5 Valuation of annuities, unitrust interests, interests for life or term of years, and remainder or reversionary interests. § 25.2512–5T Valuation of annuities, unitrust interests, interests for life or term of years, and remainder or reversionary interests (temporary). § 25.2512–6 Valuation of certain life insurance and annuity contracts; valuation of shares in an open-end investment company.

4. Paragraph (c)(2)(iii) is amended by removing the first two sentences and adding one sentence in their place.

5. Paragraph (d) is revised. The revised and added provisions read as follows:

§ 20.7520–1 Valuation of annuities, unitrust interests, interests for life or term of years, and remainder or reversionary interests.

• • • • (b) * - (2) * - - For decedents’ estates with valuation dates after April 30, 1989, and before May 1, 1999, the mortality component table (Table 80CNSMT) is included in § 20.2031–7A(e)(4). See § 20.2031–7A(a) through (d) for mortality component tables applicable to decedents’ estates with valuation dates before May 1, 1989.

(c) * - (1) Regulations sections containing tables with interest rates between 4.2 and 14 percent for valuation dates after April 30, 1989, and before May 1, 1999.

• • (2) Internal Revenue Service publications containing tables with interest rates between 2.2. and 26 percent for valuation dates after April 30, 1989, and before May 1, 1999. The following publications are no longer available from the Superintendent of Documents, however, they may be obtained from: CC:DOM:CORP:R, room 5226, Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, DC 20044:
• • • • (iii) Internal Revenue Service Publication 1459, ‘‘Actuarial Values, Gamma Volume,’’ (8–89). * - (d) Effective date. This section applies after April 30, 1989, and before May 1,

Par. 22. Section 20.7520–1T is added to read as follows:

§ 20.7520–1T Valuation of annuities, unitrust interests, interests for life or term of years, and remainder or reversionary interests (temporary).

(a)(1) [Reserved]. For further guidance, see § 20.7520–1(a)1.

(2) In the case of a transfer to a pooled income fund with a valuation date after April 30, 1999, see § 1.642(c)–6T(e) (or, for certain prior periods, § 1.642(c)–6A) of this chapter (Income Tax Regulations) with respect to the valuation of the remainder interest.

(a)(3) through (b)(1) [Reserved]. For further guidance, see § 20.7520–1(a)(3) through (b)(1).

(b)(2) Mortality component. The mortality component reflects the mortality data most recently available

from the United States Census. As new mortality data becomes available after each decennial census, the mortality component described in this section will be revised periodically and the mortality component tables will be published in the regulations at that time. For decedents’ estates with valuation dates after April 30, 1999, the mortality component table (Table 90CM) is included in § 20.2031–7T(d)(7). See § 20.2031–7A for mortality component tables applicable to decedent’s estates with valuation dates before May 1, 1999.

(c) [Reserved]. For further guidance, see § 20.7520–1(c).

(1) Regulation sections containing tables with interest rates between 4.2 and 14 percent for valuation dates after April 30, 1999. Section 1.642(c)–6T(e)(6) of this chapter contains Table S used for determining the present value of a single life remainder interest in a pooled income fund as defined in § 1.642(c)–5 of this chapter. See § 1.642(c)–6A of this chapter for actuarial factors for one life applicable to valuation dates before May 1, 1999. Section 1.664–4(e)(6) of this chapter contains Table F (payout factors) and Table D (actuarial factors used in determining the present value of a remainder interest postponed for a term of years). Section 1.664–4T(e)(7) of this chapter contains Table U(1) (actuarial factors for one life). These tables are used in determining the present value of a remainder interest in a charitable remainder unitrust as defined in § 1.664–3 of this chapter. See § 1.664–4A of this chapter for actuarial factors for one life applicable to valuation dates before May 1, 1999. Section 20.2031–7(d)(6) contains Table B (actuarial factors used in determining the present value of an interest for a term of years), Table K (annuity end-ofinterval adjustment factors), and Table J (term certain annuity beginning-ofinterval adjustment factors). Section 20.2031–7T(d)(7) contains Table S (actuarial factors for one life) and Table 90CM (mortality components). These tables are used in determining the present value of annuities, life estates, remainders, and reversions. See § 20.2031–7A for actuarial factors for one life and mortality components applicable to valuation dates before May 1, 1999. (2) Internal Revenue Service publications containing tables with interest rates between 2.2 and 26 percent for valuation dates after April 30, 1999. The following documents are available for purchase from the Superintendent of Documents, United States Government Printing Office, Washington, DC 20402:

23224 Federal Register / Vol. 64, No. 83 / Friday, April 30, 1999 / Rules and Regulations

§ 25.2512–7 Effect of excise tax. § 25.2512–8 Transfers for insufficient consideration.

Actuarial Tables Applicable Before

May 1, 1999 § 25.2512–5A Valuation of annuities, unitrust interests, interests for life or term of years, and remainder or reversionary interests transferred before May 1, 1999.

Par. 25. Section 25.2512–5 is amended as follows:

1. The section heading is revised.
2. Paragraphs (c) and (d) are revised.
3. Paragraph (e) is revised. The revised provisions read as follows:

§ 25.2512–5 Valuation of annuities, unitrust interests, interests for life or term of years, and remainder or reversionary interests.

• • • • (c) and (d) [Reserved]. For further guidance, see § 25.2512–5T(c) and (d).

(e) Effective date. This section applies after April 30, 1989, and before May 1, 1999. Par. 26. Section 25.2512–5T is added to read as follows:

§ 25.2512–5T Valuation of annuities, unitrust interests, interests for life or term of years, and remainder or reversionary interests (temporary).

(a) and (b) [Reserved]. For further guidance, see § 25.2512–5(a) and (b).

(c) Actuarial valuations. The present value of annuities, unitrust interests, life estates, terms of years, remainders, and reversions transferred by gift after April 30, 1999, is determined under paragraph (d) of this section. The present value of annuities, unitrust interests, life estates, terms of years, remainders, and reversions transferred by gift before May 1, 1999, is determined under the following sections:

(d) Actuarial valuations after April 30, 1999 —(1) In general. Except as otherwise provided in paragraph (b) of this section and § 25.7520–3(b) (relating to exceptions to the use of prescribed tables under certain circumstances), if the valuation date for the gift is after April 30, 1999, the fair market value of annuities, life estates, terms of years, remainders, and reversions transferred after April 30, 1999, is the present value of such interests determined under

paragraph (d)(2) of this section and by use of standard or special section 7520 actuarial factors. These factors are derived by using the appropriate section 7520 interest rate and, if applicable, the mortality component for the valuation date of the interest that is being valued. See §§ 25.7520–1 through 25.7520–4. The fair market value of a qualified annuity interest described in section 2702(b)(1) and a qualified unitrust interest described in section 2702(b)(2) is the present value of such interests determined under § 25.7520–1(c).

(2) Specific interests. When the donor transfers property in trust or otherwise and retains an interest therein, generally, the value of the gift is the value of the property transferred less the value of the donor’s retained interest. However, if the donor transfers property after October 8, 1990, to or for the benefit of a member of the donor’s family, the value of the gift is the value of the property transferred less the value of the donor’s retained interest as determined under section 2702. If the donor assigns or relinquishes an annuity, life estate, remainder, or reversion that the donor holds by virtue of a transfer previously made by the donor or another, the value of the gift is the value of the interest transferred. However, see section 2519 for a special rule in the case of the assignment of an income interest by a person who received the interest from a spouse.

(i) Charitable remainder trusts. The fair market value of a remainder interest in a pooled income fund, as defined in § 1.642(c)–5 of this chapter, is its value determined under § 1.642(c)–6T(e) of this chapter (see § 1.642(c)–6A for certain prior periods). The fair market value of a remainder interest in a charitable remainder annuity trust, as described in § 1.664–2(a) of this chapter, is its present value determined under § 1.664–2(c) of this chapter. The fair market value of a remainder interest in a charitable remainder unitrust, as defined in § 1.664–3 of this chapter, is its present value determined under § 1.664–4T(e) of this chapter. The fair market value of a life interest or term for years in a charitable remainder unitrust is the fair market value of the property as of the date of transfer less the fair market value of the remainder interest, determined under § 1.664–4T(e)(4) and (5) of this chapter.

(ii) Ordinary remainder and reversionary interests. If the interest to be valued is to take effect after a definite number of years or after the death of one individual, the present value of the interest is computed by multiplying the value of the property by the appropriate remainder interest actuarial factor (that

corresponds to the applicable section 7520 interest rate and remainder interest period) in Table B (for a term certain) or the appropriate Table S (for one measuring life), as the case may be. Table B is contained in § 20.2031–7(d) of this chapter and Table S (for one measuring life when the valuation date is after April 30, 1999) is included in § 20.2031–7T(d)(7) of this chapter and Internal Revenue Service Publication 1457. See § 20.2031–7A(e)(4) of this chapter containing Table S and Life Table 80CNSMT for valuation of interests after April 30, 1989, and before May 1, 1999. For information about obtaining actuarial factors for other types of remainder interests, see paragraph (d)(4) of this section.

(iii) Ordinary term-of-years and life interests. If the interest to be valued is the right of a person to receive the income of certain property, or to use certain nonincome-producing property, for a term of years or for the life of one individual, the present value of the interest is computed by multiplying the value of the property by the appropriate term-of-years or life interest actuarial factor (that corresponds to the applicable section 7520 interest rate and term-of-years or life interest period). Internal Revenue Service Publication 1457 includes actuarial factors for an interest for a term of years in Table B and for the life of one individual in Table S (for one measuring life when the valuation date is after April 30, 1999). However, term-of-years and life interest actuarial factors are not included in Table B in § 20.2031–7(d)(6) or Table S in § 20.2031–7T(d)(7) (or in § 20.2031– 7A(e)(4)) of this chapter. If Internal Revenue Service Publication 1457 (or any other reliable source of term-ofyears and life interest actuarial factors) is not conveniently available, an actuarial factor for the interest may be derived mathematically. This actuarial factor may be derived by subtracting the correlative remainder factor (that corresponds to the applicable section 7520 interest rate and the term of years or the life) in Table B (for a term of years) in § 20.2031–7(d)(6) of this chapter or in Table S (for the life of one individual) in § 20.2031–7T(d)(7) of this chapter, as the case may be, from 1.000000. For information about obtaining actuarial factors for other types of term-of-years and life interests, see paragraph (d)(4) of this section.

(iv) Annuities. (A) If the interest to be valued is the right of a person to receive an annuity that is payable at the end of each year for a term of years or for the life of one individual, the present value of the interest is computed by multiplying the aggregate amount

Federal Register / Vol. 64, No. 83 / Friday, April 30, 1999 / Rules and Regulations 23225

payable annually by the appropriate annuity actuarial factor (that corresponds to the applicable section 7520 interest rate and annuity period). Internal Revenue Service Publication 1457 includes actuarial factors in Table B (for an annuity payable for a term of years) and in Table S (for an annuity payable for the life of one individual when the valuation date is after April 30, 1999). However, annuity actuarial factors are not included in Table B in § 20.2031–7(d)(6) of this chapter or Table S in § 20.2031–7T(d)(7) (or in § 20.2031–7A(e)(4)) of this chapter. If Internal Revenue Service Publication 1457 (or any other reliable source of annuity actuarial factors) is not conveniently available, an annuity factor for a term of years or for one life may be derived mathematically. This annuity factor may be derived by subtracting the applicable remainder factor (that corresponds to the applicable section 7520 interest rate and annuity period) in Table B (in the case of a term-of-years annuity) in § 20.2031– 7(d)(6) of this chapter or in Table S (in the case of a one-life annuity) in § 20.2031–7T(d)(7) of this chapter, as the case may be, from 1.000000 and then dividing the result by the applicable section 7520 interest rate expressed as a decimal number. See § 20.2031–7T(d)(2)(iv) of this chapter for an example that illustrates the computation of the present value of an annuity.

(B) If the annuity is payable at the end of semiannual, quarterly, monthly, or weekly periods, the product obtained by multiplying the annuity factor by the aggregate amount payable annually is then multiplied by the applicable adjustment factor set forth in Table K in § 20.2031–7(d)(6) of this chapter at the appropriate interest rate component for payments made at the end of the specified periods. The provisions of this

paragraph (d)(2)(iv)(B) are illustrated by the following example:

Example. In July, the donor agreed to pay the annuitant the sum of $10,000 per year, payable in equal semiannual installments at the end of each period. The semiannual installments are to be made on each December 31st and June 30th. The annuity is payable until the annuitant’s death. On the date of the agreement, the annuitant is 68 years and 5 months old. The donee annuitant’s age is treated as 68 for purposes of computing the present value of the annuity. The section 7520 rate on the date of the agreement is 10.6 percent. Under Table S in § 20.2031–7T(d)(7) of this chapter, the factor at 10.6 percent for determining the present value of a remainder interest payable at the death of an individual aged 68 is .29691. Converting the remainder factor to an annuity factor, as described above, the annuity factor for determining the present value of an annuity transferred to an individual age 68 is 6.6329 (1.00000 minus .29691 divided by .106). The adjustment factor from Table K in § 20.2031–7(d)(6) of this chapter in the column for payments made at the end of each semiannual period at the rate of 10.6 percent is 1.0258. The aggregate annual amount of the annuity, $10,000, is multiplied by the factor 6.6329 and the product multiplied by 1.0258. The present value of the donee’s annuity is, therefore, $68,040.29 ($10,000 × 6.6329 × 1.0258). (C) If an annuity is payable at the beginning of annual, semiannual, quarterly, monthly, or weekly periods for a term of years, the value of the annuity is computed by multiplying the aggregate amount payable annually by the annuity factor described in paragraph (d)(2)(iv)(A) of this section; and the product so obtained is then multiplied by the adjustment factor in Table J in § 20.2031–7(d)(6) of this chapter at the appropriate interest rate component for payments made at the beginning of specified periods. If an annuity is payable at the beginning of annual, semiannual, quarterly, monthly, or weekly periods for one or more lives,

the value of the annuity is the sum of the first payment plus the present value of a similar annuity, the first payment of which is not to be made until the end of the payment period, determined as provided in paragraph (d)(2)(iv)(B) of this section.

(v) Annuity and unitrust interests for a term of years or until the prior death of an individual —(A) Annuity interests. The present value of an annuity interest that is payable until the earlier to occur of the lapse of a specific number of years or the death of an individual may be computed with values from the tables in §§ 20.2031–7(d)(6) and 20.2031– 7T(d)(7) of this chapter as described in the following example:

Example. The donor transfers $100,000 into a trust and retains the right to receive an annuity from the trust in the amount of $6,000 per year, payable in equal semiannual installments at the end of each period. The semiannual installments are to be made on each June 30th and December 31st. The annuity is payable for 10 years or until the donor’s prior death. At the time of the transfer, the donor is 59 years and 6 months old. The donor’s age is taken as 60 for purposes of computing the present value of the retained annuity. The section 7520 rate for the month in which the transfer occurred is 9.8 percent. The present value of the donor’s retained interest is $35,709.13, determined as follows:

TABLE S value at 9.8 per cent, age 60 ...................... .21669 TABLE S value at 9.8 per cent, age 70 ...................... .34762 TABLE 90CM value at age

70 ...................................... 71357 TABLE 90CM value at age

60 ...................................... 85537 TABLE B value at 9.8 per cent, 10 years ................... .392624 TABLE K value at 9.8 per cent ................................... 1.0239

Factor for donor’s retained interest at 9.8 percent:

(100000. − .21669) − (.392624 × (71357 85537/ ) × (100000. − .34762)) = 5 8126. .098

Present value of donor’s re tained interest: ($6,000 × 5.8126 × 1.0239) ............... $35,709.13 (B) Unitrust interests. The present value of a unitrust interest that is payable until the earlier to occur of the lapse of a specific number of years or the death of an individual may be computed with values from the tables in §§ 1.664–4(e)(6) and 1.664-4T(e)(7) of this chapter as described in the following example:

Example. The donor who, as of the nearest birthday, is 60 years old, transfers $100,000

to a unitrust on January 1st. The trust instrument requires that each year the trust pay to the donor, in equal semiannual installments on June 30th and December 31st, 6 percent of the fair market value of the trust assets, valued as of January 1st each year, for 10 years or until the prior death of the donor. The section 7520 rate for the January in which the transfer occurred is 9.8 percent. Under Table F(9.8) in § 1.664–4(e)(6) of this chapter, the appropriate adjustment factor is .932539 for semiannual payments payable at the end of the semiannual period. The adjusted payout rate is 5.595 percent (6% × .932539). The present value of the

donor’s retained interest is $40,848.00 determined as follows:

TABLE U(1) value at 5.6 per cent, age 60 .......................... .35375 TABLE U(1) value at 5.6 per cent, age 70 .......................... .49342 TABLE 90CM value at age 70 71357 TABLE 90CM value at age 60 85537 TABLE D value at 5.6 percent,

10 years ................................ .561979

Factor for donor’s retained interest at 5.6 percent:

23226 Federal Register / Vol. 64, No. 83 / Friday, April 30, 1999 / Rules and Regulations

(1.000000¥.35375)¥(.561979 × (71357/

85537. × (1.000000¥.49342)) = .40876

TABLE U(1) value at 5.4 per cent, age 60 .......................... .36542 TABLE U(1) value at 5.4 per cent, age 70 .......................... .50473 TABLE 90CM value at age 70 71357

TABLE 90CM value at age 60 85537 TABLE D value at 5.4 percent,

10 years ................................ .573999

Factor for donor’s retained interest at 5.4 percent:

(1000000. - .36542) - (.573999 × (71357 85537/ ) × (1000000. - .50473)) = .39742

Difference... .01134

Interpolation adjustment:

Factor at 5.4 percent, age 60 .39742 Plus: Interpolation adjust ment .................................. .01106 Interpolated Factor .............. .40848 Present value of donor’s re tained interest: ($100,000 × .40848) ........................... $40,848.00

(3) Transitional rule. If the valuation date of a transfer of property by gift is after April 30, 1999, and before July 1, 1999, the fair market value of the interest transferred is determined by use of the section 7520 interest rate for the month in which the valuation date occurs (See §§ 25.7520–1(b) and 25.7520–2(a)(2)) and the appropriate actuarial tables under either paragraph (d)(2) of this section or § 25.2512–5A(e), at the option of the donor. However, with respect to each individual transaction and with respect to all transfers occurring on the valuation date, the donor must use the same actuarial tables (e.g., gift and income tax charitable deductions with respect to the same transfer must be determined based on the same tables, and all transfers made on the same date must be valued based on the same tables).

(4) Publications and actuarial computations by the Internal Revenue Service. Many standard actuarial factors not included in § 20.2031–7(d)(6) or § 20.2031–7T(d)(7) of this chapter are included in Internal Revenue Service Publication 1457, ‘‘Actuarial Values, Book Aleph,’’ (1999). Internal Revenue Service Publication 1457 also includes examples that illustrate how to compute many special factors for more unusual situations. A copy of this publication is available for purchase from the Superintendent of Documents, United States Government Printing Office, Washington, DC 20402. If a special factor is required in the case of a completed gift, the Service may furnish the factor to the donor upon a request for a ruling. The request for a ruling

must be accompanied by a recitation of the facts including a statement of the date of birth for each measuring life, the date of the gift, any other applicable dates, and a copy of the will, trust, or other relevant documents. A request for a ruling must comply with the instructions for requesting a ruling published periodically in the Internal Revenue Bulletin (see §§ 601.201 and 601.601(d)(2)(ii)( b ) of this chapter) and include payment of the required user fee.

(e) Effective dates. This section applies after April 30, 1999.

Par. 27. The undesignated centerheading immediately following § 25.2518–3 is revised to read as follows:

Actuarial Tables Applicable Before

May 1, 1999

Par. 28. Section 25.2512–5A is amended by:

1. Revising the section heading.
2. Adding paragraph (e). The revision and addition read as follows:

§ 25.2512–5A Valuation of annuities, unitrust interests, interests for life or term of years, and remainder or reversionary interests transferred before May 1, 1999.

• • • • (e) Valuation of annuities, unitrust interests, interests for life or term of years, and remainder or reversionary interests transferred after April 30, 1989, and before May 1, 1999 —(1) In general. Except as otherwise provided in §§ 25.2512–5(b) and 25.7520–3(b) (pertaining to certain limitations on the use of prescribed tables), if the valuation date of the transferred interest is after April 30, 1989, and before May 1, 1999, the fair market value of annuities, unitrust interests, life estates, terms of years, remainders, and reversions transferred by gift is the present value of the interests determined by use of

5 595%. − 5.4% ×

=

0 2%. .01134

5 595%. − 5.4%

=

0 2%. .

− 5.4% ×

× =

.01106

standard or special section 7520 actuarial factors and the valuation methodology described in § 25.2512– 5T(d). Sections 20.2031–7(d)(6) and 20.2031–7A(e)(4) of this chapter and related sections provide tables with standard actuarial factors and examples that illustrate how to use the tables to compute the present value of ordinary annuity, life, and remainder interests in property. These sections also refer to standard and special actuarial factors that may be necessary to compute the present value of similar interests in more unusual fact situations. These factors and examples are also generally applicable for gift tax purposes in computing the values of taxable gifts.

(2) Transitional rule. (i) If the valuation date of a transfer of an interest in property by gift is after April 30, 1989, and before June 10, 1994, a donor can rely on Notice 89–24 (1989–1 C.B. 660), or Notice 89–60 (1989–1 C.B. 700), in valuing the transferred interest. (See § 601.601(d)(2)(ii)( b ) of this chapter.)

(ii) If a donor transferred an interest in property by gift after December 31, 1988, and before May 1, 1989, retaining an interest in the same property, and after April 30, 1989, and before January 1, 1990, transferred the retained interest in property, the donor may, at the option of the donor, value the transfer of the retained interest under this paragraph (e) or paragraph (d) of this section.

(3) Publications and actuarial computations by the Internal Revenue Service. Many standard actuarial factors not included in §§ 20.2031–7(d)(6) and 20.2031–7A(e)(4) of this chapter are included in Internal Revenue Service Publication 1457, ‘‘Actuarial Values, Alpha Volume,’’ (8–89). Internal Revenue Service Publication 1457 also includes examples that illustrate how to compute many special factors for more unusual situations. Publication 1457 is

Federal Register / Vol. 64, No. 83 / Friday, April 30, 1999 / Rules and Regulations 23227

1, 1999. Section 20.2031–7(d)(6) of this chapter contains Table B (actuarial factors used in determining the present value of an interest for a term of years), Table K (annuity end-of-interval adjustment factors), Table J (term certain annuity beginning-of-interval adjustment factors). Section 20.2031– 7T(d)(7) of this chapter contains Table S (actuarial factors for one life) and Table 90CM (mortality components). These tables are used in determining the present value of annuities, life estates, remainders, and reversions. See § 20.2031–7A of this chapter for actuarial factors for one life and mortality components applicable to valuation dates before May 1, 1999.

(2) Internal Revenue Service publications containing tables with interest rates between 2.2 and 26 percent for valuation dates after April 30, 1999. The following documents are available for purchase from the Superintendent of Documents, United States Government Printing Office, Washington, DC 20402:

(i) Internal Revenue Service Publication 1457, ‘‘Actuarial Values, Book Aleph,’’ (1999). This publication includes tables of valuation factors, as well as examples that show how to compute other valuation factors, for determining the present value of annuities, life estates, terms of years, remainders, and reversions, measured by one or two lives. These factors may also be used in the valuation of interests in a charitable remainder annuity trust as defined in § 1.664–2 of this chapter (Income Tax Regulations) and a pooled income fund as defined in § 1.642(c)–5 of this chapter.

(ii) Internal Revenue Service Publication 1458, ‘‘Actuarial Values, Book Beth,’’ (1999). This publication includes term certain tables and tables of one and two life valuation factors for determining the present value of remainder interests in a charitable remainder unitrust as defined in § 1.664–3 of this chapter.

(iii) Internal Revenue Service Publication 1459, ‘‘Actuarial Values, Book Gimel,’’ (1999). This publication includes tables for computing depreciation adjustment factors. See § 1.170A–12T of this chapter.

(d) Effective date. This section applies after April 30, 1999.

Par. 31. Section 25.7520–3 is amended as follows:

1. In paragraph (b)(2)(v), Example 5 is revised.

2. In paragraph (b)(4), the Example is revised.

The revised examples read as follows:

no longer available for purchase from the Superintendent of Documents, United States Government Printing Office, Washington, DC 20402. However, pertinent factors in this publication may be obtained from: CC:DOM:CORP:R (IRS Publication 1457), room 5226, Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, DC 20044. If a special factor is required in the case of a completed gift, the Internal Revenue Service may furnish the factor to the donor upon a request for a ruling. The request for a ruling must be accompanied by a recitation of the facts including a statement of the date of birth for each measuring life, the date of the gift, any other applicable dates, and a copy of the will, trust, or other relevant documents. A request for a ruling must comply with the instructions for requesting a ruling published periodically in the Internal Revenue Bulletin (see §§ 601.201 and 601.601(d)(2)(ii)( b ) of this chapter) and include payment of the required user fee.

Par. 29. Section 25.7520–1 is amended as follows:

1. Paragraph (b)(2), the last two sentences are revised.

2. The headings for paragraphs (c)(1) and (c)(2) are revised.

3. Paragraph (c)(2) introductory text is revised.

4. Paragraph (c)(2)(iii) is amended by removing the first two sentences and adding one sentence in their place.

5. Paragraph (d) is revised. The revised and added provisions read as follows:

§ 25.7520–1 Valuation of annuities, unitrust interests, interests for life or term of years, and remainder or reversionary interests.

• • • • (b) * - (2) * - - For gifts with valuation dates after April 30, 1989, and before May 1, 1999, the mortality component table (Table 80CNSMT) is included in § 20.2031–7A(e)(4) of this chapter. See § 20.2031–7A(a) through (d) of this chapter for mortality component tables applicable to decedents’ estates with valuation dates before May 1, 1989.

(c) * - (1) Regulations sections containing tables with interest rates between 4.2 and 14 percent for valuation dates after April 30, 1989, and before May 1, 1999.

• • (2) Internal Revenue Service publications containing tables with interest rates between 2.2. and 26 percent for valuation dates after April 30, 1989, and before May 1, 1999. The

following publications are no longer available from the Superintendent of Documents, however, they may be obtained from: CC:DOM:CORP:R, room 5226, Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, DC 20044:

• • • • (iii) Internal Revenue Service Publication 1459, ‘‘Actuarial Values, Gamma Volume,’’ (8–89). * - (d) Effective date. This section applies after April 30, 1989, and before May 1,

Par. 30. Section 25.7520–1T is added to read as follows:

§ 25.7520–1T Valuation of annuities, unitrust interests, interests for life or term of years, and remainder or reversionary interests (temporary).

(a) through (b) (1) [Reserved]. For further guidance, see § 25.7520–1(a) through (b)(1).

(b)(2) Mortality component. The mortality component reflects the mortality data most recently available from the United States Census. As new mortality data becomes available after each decennial census, the mortality component described in this section will be revised periodically and the mortality component tables will be published in the regulations at that time. For gifts with valuation dates after April 30, 1999, the mortality component table (Table 90CM) is included in § 20.2031–7T(d)(7) of this chapter. See § 20.2031–7A of this chapter for mortality component tables applicable to decedent’s estates with valuation dates before May 1, 1999.

(c) [Reserved]. For further guidance, see § 25.7520–1(c).

(1) Regulation sections containing tables with interest rates between 4.2 and 14 percent for valuation dates after April 30, 1999. Section 1.642(c)–6T(e)(6) of this chapter contains Table S used for determining the present value of a single life remainder interest in a pooled income fund as defined in § 1.642(c)–5 of this chapter. See § 1.642(c)–6A for actuarial factors for one life applicable to valuation dates before May 1, 1999. Section 1.664–4(e)(6) of this chapter contains Table F (payout factors) and Table D (actuarial factors used in determining the present value of a remainder interest postponed for a term of years). Section 1.664–4T(e)(7) of this chapter contains, Table U(1) (actuarial factors for one life). These tables are used in determining the present value of a remainder interest in a charitable remainder unitrust as defined in § 1.664–3 of this chapter. See § 1.664– 4A for actuarial factors for one life applicable to valuation dates before May

23228 Federal Register / Vol. 64, No. 83 / Friday, April 30, 1999 / Rules and Regulations

§ 25.7520–3 Limitation on the application of section 7520.

• • • • (b) * - (2) * - (v) * -

Example 5. Eroding corpus in an annuity trust. (i) The donor, who is age 60 and in normal health, transfers property worth

$1,000,000 to a trust. The trust will pay a 10 percent ($100,000 per year) annuity to a charitable organization for the life of the donor, payable annually at the end of each period, and the remainder will be distributed to the donor’s child. The section 7520 rate for the month of the transfer is 6.8 percent. First, it is necessary to determine whether the annuity may exhaust the corpus before all

annuity payments are made. Because it is assumed that any measuring life may survive until age 110, any life annuity could require payments until the measuring life reaches age 110. Based on a section 7520 interest rate of 6.8 percent, the determination of whether the annuity may exhaust the corpus before the annuity payments are made is computed as follows:

Age to which life annuity may continue ...................................................................................................................................... 110 less: Age of measuring life at date of transfer .............................................................................................................................. 60

Number of years annuity may continue .................................................................................................................................... 50 Annual annuity payment ............................................................................................................................................................... $100,000.00 Times: Annuity factor for 50 years derived from Table B ........................................................................................................... 14.1577

Present value of term certain annuity .................................................................................................................................... $1,415,770.00

(ii) Since the present value of an annuity for a term of 50 years exceeds the corpus, the annuity may exhaust the trust before all payments are made. Consequently, the annuity must be valued as an annuity payable for a term of years or until the prior death of the annuitant, with the term of years determined by when the fund will be exhausted by the annuity payments.

(iii) Using factors based on Table 90CM at 6.8 percent (see § 20.2031– 7T(d)(7) of this chapter), it is determined that the fund will be sufficient to make 17 annual payments, but not to make the entire 18th payment. Specifically, the initial corpus will be able to make payments of $67,287.26 per year for 17 years plus payments of $32,712.74 per year for 18 years. The annuity is valued by adding the value of the two separate temporary annuities.

(iv) Based on Table H of Publication 1457 (a copy of this publication may be

purchased from the Superintendent of Documents, United States Government Printing Office, Washington, DC 20402), the present value of an annuity of $67,287.26 per year payable for 17 years or until the prior death of a person aged 60 is $588,016.64 ($67,287.26 × 8.7389). The present value of an annuity of $32,712.74 per year payable for 18 years or until the prior death of a person aged 60 is $292,196.74 ($32,712.74 × 8.9322). Thus, the present value of the charitable annuity interest is $880,213.38 ($588,016.64 + $292,196.74).

• • • • (4) * -

Example. Terminal illness. The donor transfers property worth $1,000,000 to a child in exchange for the child’s promise to pay the donor $103,000 per year for the donor’s life, payable annually at the end of each period. The donor is age 60 but has been diagnosed with an incurable illness and has

at least a 50 percent probability of dying within 1 year. The section 7520 interest rate for the month of the transfer is 10.6 percent, and the standard annuity factor at that interest rate for a person age 60 in normal health is 7.5590. Thus, if the donor were not terminally ill, the present value of the annuity would be $778,577 ($103,000 × 7.5590). Assuming the presumption provided in paragraph (b)(3) of this section does not apply, because there is at least a 50 percent probability that the donor will die within 1 year, the standard section 7520 annuity factor may not be used to determine the present value of the donor’s annuity interest. Instead, a special section 7520 annuity factor must be computed that takes into account the projection of the donor’s actual life expectancy.

• • • • Par. 32. In the list below, for each section indicated in the left column, remove the language in the middle column and add the language in the right column:

Section Remove Add

1.170A–6(c)(5), Example (1), first and last sentence ............................. 1970 ............................................... 1971. 1.170A–6(c)(5), Example (2)(a), first sentence ....................................... 1970 ............................................... 1.170A–6(c)(5), Example (3)(a), first, sixth, seventh and eighth sen- 1970 ............................................... 1971. tences.

1970 ............................................... 1971.

1.170A–6(c)(5), Example (3)(a), seventh and eighth sentences ............ 1971 ............................................... 1972. 1.170A–6(c)(5), Example (3)(a), seventh and eighth sentences ........... 1972 ............................................... 1973. 1.170A–6(c)(5), Example (3)(b), introductory text .................................. 1970 ............................................... 1971. 1.170A–6(c)(5), Example (3)(b), Table headings ................................... Jan. 1, 1970 ................................... Jan. 1, 1971. 1.170A–6(c)(5), Example (3)(b), column 1 of table ................................ Dec. 31, 1970 ................................ Dec. 31, 1971. 1.170A–6(c)(5), Example (3)(b), column 1 of table ................................ Dec. 31, 1971 ................................ Dec. 31, 1972. 1.170A–6(c)(5), Example (3)(b), column 1 of table ................................ Dec. 31, 1972 ................................ Dec. 31, 1973. 1.170A–6(c)(5), Example (3)(c) ............................................................... 1972 ............................................... 1973. 1.170A–6(c)(5), Example (3)(d) .............................................................. 1972 ............................................... 1973. 1.170A–12(b)(2), paragraph heading ...................................................... Factor ............................................. Factor before May 1, 1999. 1.170A–12(b)(2), fourth sentence ........................................................... April 30, 1989, ............................... April 30, 1989, and before May 1,

1.170A–12(b)(2), sixth sentence ............................................................. CC:DOM:CORP:T:R ...................... CC:DOM:CORP:R. 1.170A–12(b)(2), sixth sentence ............................................................. Room 5228 .................................... Room 5226. 1.170A–12(c), first sentence ................................................................... Paragraph (f) of such sections ...... § 20.2031–7(d)(6) of this chapter. 1.170A–12(e)(2), following the formula ................................................... Table 80CNSMT in § 20.2031–7 ... Table 90CM in § 20.2031–7T. 1.170A–12(e)(3), last sentence ............................................................... E:A:G ............................................. OP:E:EP:A:1. 1.170A–14(h)(4), Example 2, fourth sentence ........................................ December 1, 1983 ......................... May 1, 1999. 1.642(c)–A6(e)(2)(i) ................................................................................. § 20.2031–7(d)(6) .......................... § 20.2031–7A(e)(4). 1.664–1(a)(5)(ii)(b)(1) .............................................................................. Column 2 of Table D In § 1.664– Table D in § 1.664–4(e)(6).

Column 2 of Table D In § 1.664– Table D in § 1.664–4(e)(6).

4A(d)(6).

1.664–1(a)(5)(iv), introductory text .......................................................... (iii) of this section: ......................... (ii) of this section.

Federal Register / Vol. 64, No. 83 / Friday, April 30, 1999 / Rules and Regulations 23229

Robert E. Wenzel, Deputy Commissioner of Internal Revenue.

Approved: April 21, 1999. Donald C. Lubick, Assistant Secretary of the Treasury.

[FR Doc. 99–10533 Filed 4–29–99; 8:45 am]

BILLING CODE 4830–01–U

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 51

[CC Docket No. 98–147; FCC 99–48]

Deployment of Wireline Services Offering Advanced Telecommunications Capability

AGENCY: Federal Communications Commission.

ACTION: Final rule.

SUMMARY: This document adopts several measures designed to promote competition in the advanced services markets. The intended effect is to

remove barriers to competition so that competing providers are able to compete effectively with incumbent local exchange carriers (LECs) and their affiliates in the provision of advanced services. An additional effect of the First Report and Order is to ensure that incumbent LECs are able to make their decisions to invest in, and deploy, advanced telecommunications services based on market demand and their own strategic business plans, rather than on regulatory requirements.

DATES: Effective June 1, 1999, except for 47 CFR 51.321(f) and 51.321(h) and 51.323(b) and (i)(3), which contain information collection requirements that are not effective until approved by the Office of Management and Budget. The FCC will publish a document in the Federal Register announcing the effective date for those sections. Written comments regarding the Paperwork Reduction Act requirements should be submitted on or before May 13, 1999.

FOR FURTHER INFORMATION CONTACT: Staci Pies, Attorney, Common Carrier Bureau, Policy and Program Planning Division, (202) 418–1580 or via the Internet at spies@fcc.gov. Further information may also be obtained by calling the Common Carrier Bureau’s TTY number: 202–418–0484. For additional information concerning the information collections contained in this Order contact Judy Boley at (202) 418–0214, or via the Internet at jboley@fcc.gov.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission’s First Report and Order adopted March 18, 1999, and released March 31, 1999. The full text of this First Report and Order is available for inspection and copying during normal business hours in the FCC Reference Center, 445 12th Street, S.W., Room CY–A257, Washington, D.C. The complete text also may be obtained through the World Wide Web, at http:/ /www.fcc.gov/Bureaus/Common Carrier/Orders/fcc9948.wp, or may be purchased from the Commission’s copy