# Use of Actuarial Tables in Valuing Annuities, Interests for Life or Terms of Years, and Remainder or Reversionary Interests, 49570-49643 [2011-19675]

Download as PDF## Agencies

[Federal Register Volume 76, Number 154 (Wednesday, August 10, 2011)] [Rules and Regulations] [Pages 49570-49643] From the Federal Register Online via the Government Printing Office [www.gpo.gov] [FR Doc No: 2011-19675] [[Page 49569]] Vol. 76 Wednesday, No. 154 August 10, 2011 Part III Department of the Treasury ----------------------------------------------------------------------- Internal Revenue Service ----------------------------------------------------------------------- 26 CFR Parts 1, 20, and 25 Use of Actuarial Tables in Valuing Annuities, Interests for Life or Terms of Years, and Remainder or Reversionary Interests; Final Rule Federal Register / Vol. 76 , No. 154 / Wednesday, August 10, 2011 / Rules and Regulations [[Page 49570]] ----------------------------------------------------------------------- DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Parts 1, 20, and 25 [TD 9540] RIN 1545-BH67 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 regulations and removal of temporary regulations. ----------------------------------------------------------------------- SUMMARY: This document contains final 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 will affect the valuation of inter vivos and testamentary transfers of interests dependent on one or more measuring lives. 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. DATES: Effective Date: These regulations are effective on August 10, 2011. Applicability Date: These regulations apply on August 10, 2011. FOR FURTHER INFORMATION CONTACT: Mayer R. Samuels, (202) 622-3090 (not a toll-free number). SUPPLEMENTARY INFORMATION: Background On May 7, 2009, the IRS published in the Federal Register (74 FR 21438 and 74 FR 21519) final and temporary regulations (TD 9448) and a notice of proposed rulemaking by cross reference to temporary regulations (REG-107845-08) under sections 642, 664, 2031, 2512, and 7520 relating to the use of actuarial tables in valuing annuities, interests for life or terms of years, and remainder or reversionary interests. No written comments responding to the notice of proposed rulemaking by cross reference to temporary regulations were received and, thus, no hearing was held. An example was deleted under section 2032 and it is anticipated that it instead will be included in a different regulation project under that section. The proposed regulations by cross reference to the temporary regulations, without any other substantive change, are adopted as final regulations. The following chart summarizes the applicable interest rates and the citations to textual materials and tables for the various periods covered under the current regulations: Cross Reference to Regulation Sections ---------------------------------------------------------------------------------------------------------------- Interest Valuation period rate Regulation section Table ---------------------------------------------------------------------------------------------------------------- Section 642: Valuation, in general............... ......... 1.642(c)-6................ before 01/01/52..................... 4% 1.642(c)-6A(a)............ 01/01/52-12/31/70................... 3.5% 1.642(c)-6A(b)............ 01/01/71-11/30/83................... 6% 1.642(c)-6A(c)............ 12/01/83-04/30/89................... 10% 1.642(c)-6A(d)............ Table G. 05/01/89-04/30/99................... Sec. 1.642(c)-6A(e)............ Table S (05/01/89-04/30/99). 7520 05/01/99-04/30/09................... Sec. 1.642(c)-6A(f)............ Table S (05/01/99-04/30/09). 7520 on or after 05/01/09................ Sec. 1.642(c)-6(e)............. Table S (on or after 05/01/09). 7520 Section 664: Valuation, in general............... ......... 1.664-4................... before 01/01/52..................... 4% 1.664-4A(a)............... 01/01/52-12/31/70................... 3.5% 1.664-4A(b)............... 01/01/71-11/30/83................... 6% 1.664-4A(c)............... 12/01/83-04/30/89................... 10% 1.664-4A(d)............... Table E, Table F(1). 05/01/89-04/30/99................... Sec. 1.664-4A(e)............... Table U(1) (05/01/89-04/30/99). 7520 05/01/99-04/30/09................... Sec. 1.664-4A(f)............... Table U(1) (05/01/99-04/30/09). 7520 on or after 05/01/09................ Sec. 1.664-4(e)................ Table D, Tables F(4.2)-F(14.0), 7520 and Table U(1) (on or after 05/ 01/09). Section 2031: Valuation, in general............... ......... 20.2031-7................. before 01/01/52..................... 4% 20.2031-7A(a)............. 01/01/52-12/31/70................... 3.5% 20.2031-7A(b)............. 01/01/71-11/30/83................... 6% 20.2031-7A(c)............. 12/01/83-04/30/89................... 10% 20.2031-7A(d)............. Table A, Table B, Table LN. 05/01/89-04/30/99................... Sec. 20.2031-7A(e)............. Table S (05/01/89-04/30/99) and 7520 Life Table 80CNSMT. 05/01/99-04/30/09................... Sec. 20.2031-7A(f)............. Table S (05/01/99-04/30/09) and 7520 Life Table 90CM. on or after 05/01/09................ Sec. 20.2031-7(d).............. Table B, Table J, Table K, and 7520 Table S (on or after 05/01/09) and Life Table 2000CM. Section 2512: Valuation, in general............... ......... 25.2512-5................. before 01/01/52..................... 4% 25.2512-5A(a)............. 01/01/52-12/31/70................... 3.5% 25.2512-5A(b)............. 01/01/71-11/30/83................... 6% 25.2512-5A(c)............. 12/01/83-04/30/89................... 10% 25.2512-5A(d)............. 05/01/89-04/30/99................... Sec. 25.2512-5A(e)............. 7520 05/01/99-04/30/09................... Sec. 25.2512-5A(f)............. 7520 on or after 05/01/09................ Sec. 25.2512-5(d).............. 7520 ---------------------------------------------------------------------------------------------------------------- [[Page 49571]] Effective Dates These regulations are applicable in the case of annuities, interests for life or terms of years, and remainder or reversionary interests valued as of a date on or after May 1, 2009. Special Analyses 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, the notice of proposed rulemaking preceding this regulation was 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 Mayer R. Samuels, Office of the Associate Chief Counsel (Passthroughs and Special Industries), IRS. However, other personnel from the IRS and the 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 0 Paragraph 1. The authority citation for part 1 is amended by removing the entries for 1.170A-12T, 1.642(c)-6T, 1.664-4T and 1.7520-1T to read in part as follows: Authority: 26 U.S.C. 7805 * * * 0 Par. 2. Section 1.170A-12 is amended by revising paragraphs (b)(2), (b)(3), and (f) to read as follows: Sec. 1.170A-12 Valuation of a remainder interest in real property for contributions made after July 31, 1969. * * * * * (b) * * * (2) Computation of depreciation factor. 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 Sec. 20.2031-7 of this chapter (or for periods before May 1, 2009, Sec. 20.2031-7A) 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 on or after May 1, 2009, 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 Valuations Version 3C'' (2009). This publication is available, at no charge, electronically via the IRS Internet site at http://www.irs.gov. For transfers for which the valuation date is after April 30, 1999, and before May 1, 2009, 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,'' (7-99). For transfers for which the valuation date is after April 30, 1989, and before May 1, 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, Gamma Volume,'' (8-89). These publications are no longer available for purchase from the Superintendent of Documents, United States Government Printing Office. However, they may be obtained by requesting a copy from: CC:PA:LPD:PR (IRS Publication 1459), room 5205, Internal Revenue Service, P.O.Box 7604, Ben Franklin Station, Washington, DC 20044. See, however, Sec. 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: [GRAPHIC] [TIFF OMITTED] TR10AU11.000 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 2000CM of Sec. 20.2031-7 of this chapter (or, for periods before May 1, 2009, the tables set forth under Sec. 20.2031-7A). (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 period 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 Sec. 20.2031-7(d) for a person age 62 is 0.26534. The value of the nondepreciable remainder interest is $13,267.00 (0.26534 times $50,000). The value of the depreciable remainder interest is $15,053.60 (0.18817, computed under the formula described in paragraph (b)(2) of this section, times [[Page 49572]] $80,000). Therefore, the value of the remainder interest is $28,320.60. * * * * * (f) Effective/applicability date. This section applies to contributions made after July 31, 1969, except that paragraphs (b)(2) and (b)(3) apply to all contributions made on or after May 1, 2009. Sec. 1.170A-12T [Removed] 0 Par. 3. Section 1.170A-12T is removed. 0 Par. 4. Section 1.642(c)-6 is amended by revising paragraphs (d), (e), and (f) to read as follows: Sec. 1.642(c)-6 Valuation of a remainder interest in property transferred to a pooled income fund. * * * * * (d) Valuation. The present value of the remainder interest in property transferred to a pooled income fund on or after May 1, 2009, 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, 2009, is determined under the following sections: ---------------------------------------------------------------------------------------------------------------- Valuation dates -------------------------------------------------------------- Applicable regulations After Before ---------------------------------------------------------------------------------------------------------------- --........................................... 01-01-52 1.642(c)-6A(a). 12-31-51..................................... 01-01-71 1.642(c)-6A(b). 12-31-70..................................... 12-01-83 1.642(c)-6A(c). 11-30-83..................................... 05-01-89 1.642(c)-6A(d). 04-30-89..................................... 05-01-99 1.642(c)-6A(e). 04-30-99..................................... 05-01-09 1.642(c)-6A(f). ---------------------------------------------------------------------------------------------------------------- (e) Present value of the remainder interest in the case of transfers to pooled income funds for which the valuation date is on or after May 1, 2009--(1) In general. In the case of transfers to pooled income funds for which the valuation date is on or after May 1, 2009, the present value of a remainder interest is determined under this section. See, however, Sec. 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, 2009, the decedent was mentally incompetent so that the disposition of the property could not be changed, and the decedent died on or after May 1, 2009, 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 on or after May 1, 2009, 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 or after May 1, 2009, 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 pooled income fund for which the valuation date is on or after May 1, 2009, and before July 1, 2009, the present value of the remainder interest under this section is determined by use of the appropriate yearly rate of return for the month in which the valuation date occurs (see Sec. Sec. 1.7520-1(b) and 1.7520-2(a)(2)) and the appropriate actuarial tables under either paragraph (e)(6) of this section or Sec. 1.642(c)-6A(f)(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 (e)(2)(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 Sec. 1.642(c)-6A(f)(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 (for example, 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 2000CM in Sec. 20.2031-7(d)(7) of this chapter (see Sec. 20.2031-7A 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 paragraph (c) of this section 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 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 [[Page 49573]] 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. (i) 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 Sec. 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 0.2 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 Valuations Version 3A'' (2009). This publication is available, at no charge, electronically via the IRS Internet site at http://www.irs.gov. For other situations, see paragraph (b) of this section. 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. (ii) 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 .16192 and under 9.6 percent is .15755. The present value of the remainder interest is $16,039.00, computed as follows: [GRAPHIC] [TIFF OMITTED] TR10AU11.001 (6) Actuarial tables. In the case of transfers for which the valuation date is on or after May 1, 2009, 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: BILLING CODE 4830-01-P [[Page 49574]] [GRAPHIC] [TIFF OMITTED] TR10AU11.002 [[Page 49575]] [GRAPHIC] [TIFF OMITTED] TR10AU11.003 [[Page 49576]] [GRAPHIC] [TIFF OMITTED] TR10AU11.004 [[Page 49577]] [GRAPHIC] [TIFF OMITTED] TR10AU11.005 [[Page 49578]] [GRAPHIC] [TIFF OMITTED] TR10AU11.006 [[Page 49579]] [GRAPHIC] [TIFF OMITTED] TR10AU11.007 [[Page 49580]] [GRAPHIC] [TIFF OMITTED] TR10AU11.008 [[Page 49581]] [GRAPHIC] [TIFF OMITTED] TR10AU11.009 [[Page 49582]] [GRAPHIC] [TIFF OMITTED] TR10AU11.010 [[Page 49583]] [GRAPHIC] [TIFF OMITTED] TR10AU11.011 [[Page 49584]] [GRAPHIC] [TIFF OMITTED] TR10AU11.012 [[Page 49585]] [GRAPHIC] [TIFF OMITTED] TR10AU11.013 [[Page 49586]] [GRAPHIC] [TIFF OMITTED] TR10AU11.014 [[Page 49587]] [GRAPHIC] [TIFF OMITTED] TR10AU11.015 [[Page 49588]] [GRAPHIC] [TIFF OMITTED] TR10AU11.016 [[Page 49589]] [GRAPHIC] [TIFF OMITTED] TR10AU11.017 [[Page 49590]] [GRAPHIC] [TIFF OMITTED] TR10AU11.018 [[Page 49591]] [GRAPHIC] [TIFF OMITTED] TR10AU11.019 [[Page 49592]] [GRAPHIC] [TIFF OMITTED] TR10AU11.020 [[Page 49593]] [GRAPHIC] [TIFF OMITTED] TR10AU11.021 [[Page 49594]] [GRAPHIC] [TIFF OMITTED] TR10AU11.022 BILLING CODE 4830-01-C [[Page 49595]] (f) Effective/applicability date. This section applies on and after May 1, 2009. Sec. 1.642(c)-6T [Removed] 0 Par. 5. Section 1.642(c)-6T is removed. 0 Par. 6. Section 1.664-2 is amended by revising paragraphs (c) and (e) as follows: Sec. 1.664-2 Charitable remainder annuity trust. * * * * * (c) Calculation of the fair market value of the remainder interest of a charitable remainder annuity trust. For purposes of sections 170, 2055, 2106, and 2522, the fair market value of the remainder interest of a charitable remainder annuity trust (as described in this section) is the net fair market value (as of the appropriate valuation date) of the property placed in trust less the present value of the annuity. For purposes of this section, valuation date means, in general, the date on which the property is transferred to the trust by the donor regardless of when the trust is created. In the case of transfers to a charitable remainder annuity trust for which the valuation date is after April 30, 1989, if an election is made under section 7520 and Sec. 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 transfer is made, the month so elected is the valuation date for purposes of determining the interest rate and mortality tables. For purposes of section 2055 or 2106, the valuation date is the date of death unless the alternate valuation date is elected in accordance with section 2032 in which event, and within the limitations set forth in section 2032 and the regulations under that section, 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 Sec. 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 present value of an annuity is computed under Sec. 20.2031-7(d) of this chapter for transfers for which the valuation date is on or after May 1, 2009, or under Sec. 20.2031-7A(a) through (f), whichever is applicable, for transfers for which the valuation date is before May 1, 2009. See, however, Sec. 1.7520-3(b) (relating to exceptions to the use of prescribed tables under certain circumstances). * * * * * (e) Effective/applicability date. Paragraph (c) applies after April 30, 1989. 0 Par. 7. Section 1.664-4 is amended by: 0 1. Revising paragraphs (a)(1) and (d). 0 2. Revising the heading for paragraph (e) and revising paragraphs (e)(1), (e)(2), (e)(5), (e)(7) and (f). The revisions read as follows: Sec. 1.664-4 Calculation of the fair market value of the remainder interest in a charitable remainder unitrust. (a) * * * (1) Life contingencies determined as to each life involved, from the values of lx set forth in Table 2000CM contained in Sec. 20.2031- 7(d)(7) of this chapter in the case of transfers for which the valuation date is on or after May 1, 2009; or from Table 90CM contained in Sec. 20.2031-7A(f)(4) in the case of transfers for which the valuation date is after April 30, 1999, and before May 1, 2009. See Sec. 20.2031-7A(a) through (e), whichever is applicable, for transfers for which the valuation date is before May 1, 1999; * * * * * (d) Valuation. The fair market value of a remainder interest in a charitable remainder unitrust (as described in Sec. 1.664-3) for transfers for which the valuation date is on or after May 1, 2009, 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 Sec. 1.664-3) for transfers for which the valuation date is before May 1, 2009, is its present value determined under the following sections: ------------------------------------------------------------------------ Valuation dates --------------------------------------------------------- Applicable After Before regulations ------------------------------------------------------------------------ --......................................... 01-01-52 1.664-4A(a) 12-31-51................................... 01-01-71 1.664-4A(b) 12-31-70................................... 12-01-83 1.664-4A(c) 11-30-83................................... 05-01-89 1.664-4A(d) 04-30-89................................... 05-01-99 1.664-4A(e) 04-30-99................................... 05-01-09 1.664-4A(f) ------------------------------------------------------------------------ (e) Valuation of charitable remainder unitrusts having certain payout sequences for transfers for which the valuation date is on or after May 1, 2009--(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 on or after May 1, 2009, the present value of a remainder interest is determined under paragraphs (e)(3) through (e)(7) 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 Sec. 1.664- 3(a)(1)(v) if the taxable year of the trust were to end on such date. See, however, Sec. 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, 2009, the decedent was mentally incompetent so that the disposition of the property could not be changed, and the decedent died on or after May 1, 2009, 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 on or after May 1, 2009, 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 or after May 1, 2009, 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 on or after May 1, 2009, and before July 1, 2009, 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 Sec. Sec. 1.7520-1(b) and 1.7520-2(a)(2)) and the appropriate actuarial tables under either paragraph (e)(7) of this section or Sec. 1.664-4A(f)(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 (e)(2)(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 Sec. 1.664-4A(f)(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 (for example, 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). * * * * * (5) Period is the life of one individual. (i) If the period described in Sec. 1.664- [[Page 49596]] 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 on or after May 1, 2009, 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 (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 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 paragraph (b) of this section. (ii) The application of paragraph (e)(5)(i) of this section 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 semiannually (on June 30 and December 31) 8 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 6.6 percent. Under Table F(6.6) in paragraph (e)(6) of this section, the appropriate adjustment factor is .953317 for semiannual payments payable at the end of the semiannual period. The adjusted payout rate is 7.627% (8% x .953317). Based on the remainder factors in Table U(1) in this section, the present value of the remainder interest is $11,075.00, computed as follows: [GRAPHIC] [TIFF OMITTED] TR10AU11.023 * * * * * (7) Actuarial Table U(1) for transfers for which the valuation date is on or after May 1, 2009. For transfers for which the valuation date is on or after May 1, 2009, the present value of a charitable remainder unitrust interest that is dependent on the termination of a life interest is determined by using the section 7520 rate, Table U(1) in this paragraph (e)(7) and Table F(4.2) through (14.0) in paragraph (e)(6) of this section. See, however, Sec. 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 Valuations Version 3B'' (2009). This publication is available, at no charge, electronically via the IRS Internet site at http://www.irs.gov. BILLING CODE 4830-01-P [[Page 49597]] [GRAPHIC] [TIFF OMITTED] TR10AU11.024 [[Page 49598]] [GRAPHIC] [TIFF OMITTED] TR10AU11.025 [[Page 49599]] [GRAPHIC] [TIFF OMITTED] TR10AU11.026 [[Page 49600]] [GRAPHIC] [TIFF OMITTED] TR10AU11.027 [[Page 49601]] [GRAPHIC] [TIFF OMITTED] TR10AU11.028 [[Page 49602]] [GRAPHIC] [TIFF OMITTED] TR10AU11.029 [[Page 49603]] [GRAPHIC] [TIFF OMITTED] TR10AU11.030 [[Page 49604]] [GRAPHIC] [TIFF OMITTED] TR10AU11.031 [[Page 49605]] [GRAPHIC] [TIFF OMITTED] TR10AU11.032 [[Page 49606]] [GRAPHIC] [TIFF OMITTED] TR10AU11.033 [[Page 49607]] [GRAPHIC] [TIFF OMITTED] TR10AU11.034 [[Page 49608]] [GRAPHIC] [TIFF OMITTED] TR10AU11.035 [[Page 49609]] [GRAPHIC] [TIFF OMITTED] TR10AU11.036 [[Page 49610]] [GRAPHIC] [TIFF OMITTED] TR10AU11.037 [[Page 49611]] [GRAPHIC] [TIFF OMITTED] TR10AU11.038 BILLING CODE 4830-01-C (f) Effective/applicability date. This section applies on and after May 1, 2009. Sec. 1.664-4T [Removed] 0 Par. 8. Section 1.664-4T is removed. 0 Par. 9. Section 1.7520-1 is amended by revising the section heading and revising paragraphs (a)(1), (a)(2), (b)(2), (c)(1), (c)(2) and (d) to read as follows: Sec. 1.7520-1 Valuation of annuities, unitrust interests, interests for life or terms of years, and remainder or reversionary interests. (a) General actuarial valuations. (1) Except as otherwise provided in this section and in Sec. 1.7520-3 (relating to exceptions to the use of prescribed tables under certain circumstances), in the case of certain transactions after April 30, 1989, subject to income tax, the fair market value of annuities, interests for life or for a term of years (including unitrust interests), remainders, and reversions is their present value determined under this [[Page 49612]] section. See Sec. 20.2031-7(d) of this chapter (and, for periods prior to May 1, 2009, Sec. 20.2031-7A) for the computation of the value of annuities, unitrust interests, life estates, terms for years, remainders, and reversions, other than interests described in paragraphs (a)(2) and (a)(3) of this section. (2) For a transfer to a pooled income fund, see Sec. 1.642(c)-6(e) (or, for periods prior to May 1, 2009, Sec. 1.642(c)-6A) with respect to the valuation of the remainder interest. * * * * * (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 and the revised mortality component tables will be published in the regulations at that time. For transactions with valuation dates on or after May 1, 2009, the mortality component table (Table 2000CM) is contained in Sec. 20.2031-7(d)(7) of this chapter. See Sec. 20.2031- 7A for mortality component tables applicable to transactions for which the valuation date falls before May 1, 2009. (c) * * * (1) Regulation sections containing tables with interest rates between 0.2 and 14 percent for valuation dates on or after May 1, 2009. Section 1.642(c)-6(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 Sec. 1.642(c)-5. See Sec. 1.642(c)-6A for actuarial factors for one life applicable to valuation dates before May 1, 2009. 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). Section 1.664- 4(e)(7) contains Table U(1) (unitrust single life remainder factors). These tables are used in determining the present value of a remainder interest in a charitable remainder unitrust as defined in Sec. 1.664- 3. See Sec. 1.664-4A for unitrust single life remainder factors applicable to valuation dates before May 1, 2009. 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 J (term certain annuity beginning-of-interval adjustment factors), and Table K (annuity end-of-interval adjustment factors). Section 20.2031-7(d)(7) contains Table S (single life remainder factors), and Table 2000CM (mortality components). These tables are used in determining the present value of annuities, life estates, remainders, and reversions. See Sec. 20.2031-7A for single life remainder factors for one life and mortality components applicable to valuation dates before May 1, 2009. (2) Internal Revenue Service publications containing tables with interest rates between 0.2 and 22 percent for valuation dates on or after May 1, 2009. The following documents are available, at no charge, electronically via the IRS Internet site at http://www.irs.gov: (i) Internal Revenue Service Publication 1457, ``Actuarial Valuations Version 3A'' (2009). 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 must also be used in the valuation of interests in a charitable remainder annuity trust as defined in Sec. 1.664-2 and a pooled income fund as defined in Sec. 1.642(c)-5. (ii) Internal Revenue Service Publication 1458, ``Actuarial Valuations Version 3B'' (2009). 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 Sec. 1.664-3. (iii) Internal Revenue Service Publication 1459, ``Actuarial Valuations Version 3C'' (2009). This publication includes tables for computing depreciation adjustment factors. See Sec. 1.170A-12. (d) Effective/applicability date. This section applies on and after May 1, 2009. Sec. 1.7520-1T [Removed] 0 Par. 10. Section 1.7520-1T is removed. 0 Par. 10A. For each section listed in the table below, remove the language in the ``Remove'' column and add in its place the language in the ``Add'' column as set forth below: ------------------------------------------------------------------------ Section Remove Add ------------------------------------------------------------------------ Sec. 1.170A-12(e)(2), Sec. 20.2031-7T... Sec. 20.2031-7. following the formula. Sec. 1.642(c)- Sec. 1.642(c)- Sec. 1.642(c)- 6A(f)(3)(ii), last sentence. 6T(e)(3)(ii). 6(e)(3)(ii). Sec. 1.642(c)-6A(f)(4).... Sec. 1.642(c)- Sec. 1.642(c)- 6T(e)(4). 6(e)(4). Sec. 1.642(c)-6A(f)(5), Sec. 1.642(c)- Sec. 1.642(c)- last sentence. 6T(e)(5). 6(e)(5). Sec. 1.664-1(a)(6), Sec. Sec. 1.664- Sec. Sec. 1.664- introductory text. 4T(e). 4(e). Sec. 1.664-4(e)(6), second Sec. 1.664- Paragraph (e)(5) of sentence. 4T(e)(5). this section. Sec. 1.664-4A(f)(5), Sec. 1.664- Sec. 1.664- fourth sentence. 4T(e)(5). 4(e)(5). Sec. 1.664-4A(f)(5), last Sec. 1.664- Sec. 1.664- sentence. 4T(e)(5). 4(e)(5). ------------------------------------------------------------------------ PART 20--ESTATE TAX; ESTATES OF DECEDENTS DYING AFTER AUGUST 16, 1954 0 Par. 11. The authority citation for part 20 is amended by removing entries for 20.2031-7T and 20.7520-1T to read as follows: Authority: 26 U.S.C. 7805 * * * 0 Par. 12. Section 20.2031-0 is amended by removing the entry for Sec. 20.2031-7T from the table. 0 Par. 13. Section 20.2031-7 is amended by revising paragraphs (c), (d)(1), (d)(2), (d)(3), (d)(4), (d)(5), (d)(7), and (e) to read as follows: Sec. 20.2031-7 Valuation of annuities, interests for life or term of years, and remainder or reversionary interests. * * * * * (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 on or after May 1, 2009, 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, 2009, is determined under the following sections: [[Page 49613]] ------------------------------------------------------------------------ Valuation date ---------------------------------------------------- Applicable After Before regulations ------------------------------------------------------------------------ --............................... 01-01-52........ 20.2031-7A(a). 12-31-51......................... 01-01-71........ 20.2031-7A(b). 12-31-70......................... 12-01-83........ 20.2031-7A(c). 11-30-83......................... 05-01-89........ 20.2031-7A(d). 04-30-89......................... 05-01-99........ 20.2031-7A(e). 04-30-99......................... 05-01-09........ 20.2031-7A(f). ------------------------------------------------------------------------ (d) Actuarial valuations on or after May 1, 2009--(1) In general. Except as otherwise provided in paragraph (b) of this section and Sec. 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 on or after May 1, 2009, 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. For purposes of the computations described in this section, the age of an individual is the age of that individual at the individual's nearest birthday. See Sec. Sec. 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 Sec. 1.642(c)-5 of this chapter, is its value determined under Sec. 1.642(c)-6(e). The fair market value of a remainder interest in a charitable remainder annuity trust, as defined in Sec. 1.664-2(a), is the present value determined under Sec. 1.664-2(c). The fair market value of a remainder interest in a charitable remainder unitrust, as defined in Sec. 1.664-3, is its present value determined under Sec. 1.664-4(e). 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 Sec. 1.664-4(e)(4) and (5). (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 in Table S (for one measuring life), as the case may be. Table B is contained in paragraph (d)(6) of this section and Table S (for one measuring life when the valuation date is on or after May 1, 2009) is contained in paragraph (d)(7) of this section and in Internal Revenue Service Publication 1457. See Sec. 20.2031-7A containing Table S for valuation of interests before May 1, 2009. 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 a remainder interest after a term of years in Table B and after the life of one individual in Table S (for one measuring life when the valuation date is on or after May 1, 2009). However, term-of-years and life interest actuarial factors are not included in Table B in paragraph (d)(6) of this section or Table S in paragraph (d)(7) of this section (or in Sec. 20.2031-7A). If Internal Revenue Service Publication 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 paragraph (d)(6) of this section 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 for a remainder interest in Table B (after an annuity payable for a term of years) and in Table S (after an annuity payable for the life of one individual when the valuation date is on or after May 1, 2009). However, annuity actuarial factors are not included in Table B in paragraph (d)(6) of this section or Table S in paragraph (d)(7) of this section (or in Sec. 20.2031-7A). 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 paragraph (d)(6) of this section or in Table S (in the case of a one-life annuity when the valuation date is on or after May 1, 2009) 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 paragraph (d)(6) of this section 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 [[Page 49614]] 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 5.6 percent. Under Table S in paragraph (d)(7) of this section, the remainder factor at 5.6 percent for an individual aged 72 is .53243. By converting the remainder factor to an annuity factor, as described above, the annuity factor at 5.6 percent for an individual aged 72 is 8.3495 (1.000000 minus .53243, divided by .056). Under Table K in paragraph (d)(6) of this section, the adjustment factor under the column for payments made at the end of each monthly period at the rate of 5.6 percent is 1.0254. The aggregate annual amount, $15,000, is multiplied by the factor 8.3495 and the product is multiplied by 1.0254. The present value of the annuity at the date of the decedent's death is, therefore, $128,423.66 ($15,000 x 8.3495 x 1.0254). (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 paragraph (d)(6) of this section 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 Sec. 25.2512-5(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 on or after May 1, 2009, and if on May 1, 2009, 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 examples, see Sec. 20.2031-7A(d). (ii) If a decedent dies on or after May 1, 2009, and before July 1, 2009, 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 Sec. Sec. 20.7520-1(b) and 20.7520- 2(a)(2)) and the appropriate actuarial tables under either paragraph (d)(7) of this section or Sec. 20.2031-7A(f)(4), at the option of the decedent's executor. (iii) For purposes of paragraphs (d)(3)(i) and (d)(3)(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 Sec. 20.2031-7A(f)(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. For example, 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 paragraph (d)(6) or (d)(7) of this section are included in Internal Revenue Service Publication 1457, ``Actuarial Valuations Version 3A'' (2009). Publication 1457 also includes examples that illustrate how to compute many special factors for more unusual situations. This publication is available, at no charge, electronically via the Internal Revenue Service Internet site at http://www.irs.gov. 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 Revenue Bulletin (see Sec. Sec. 601.201 and 601.601(d)(2)(ii)(b) of this chapter) and must 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 and 5 months old. In the month in which the decedent died, the section 7520 rate was 6.2 percent. Under Table S in paragraph (d)(7) of this section, the remainder factor at 6.2 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 .18672. The present value of the remainder interest at the date of the decedent's death is, therefore, $9,336.00 ($50,000 x .18672). 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 and 10 months old. The section 7520 rate at the time of the parent's death was 6.2 percent. Under Table S in paragraph (d)(7) of this section, the remainder factor at 6.2 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 .08697. 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 .91303. The present value of A's interest at the time of the parent's death is, therefore, $45,651.50 ($50,000 x .91303). 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 per 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 and 7 months old. Also, at A's death, the section 7520 rate was 4.8 percent. Under Table S in paragraph (d)(7) of this section, the factor at 4.8 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 .24774. 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 15.6721 (1.000000 minus .24774, divided by .048). The adjustment factor from Table K in paragraph (d)(6) of this section at an interest rate of 4.8 percent for semiannual annuity payments made at the end of the period is 1.0119. The present value of the annuity at the date of A's death is, therefore, $158,585.98 ($10,000 x 15.6721 x 1.0119). 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 per year payable in equal quarterly installments at the end of each quarter [[Page 49615]] throughout a term certain. At the time of the decedent's death, the section 7520 rate was 9.8 percent. A quarterly payment had been made immediately prior to the decedent's death and payments were to continue for 5 more years. Under Table B in paragraph (d)(6) of this section 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 (1.000000 minus .626597, divided by .098). The adjustment factor from Table K in paragraph (d)(6) of this section 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 x 3.8102 x 1.0360). * * * * * (7) Actuarial Table S and Table 2000CM where the valuation date is on or after May 1, 2009. Except as provided in Sec. 20.7520-2(b) (pertaining to certain limitations on the use of prescribed tables), for determination of the present value of an interest that is dependent on the termination of a life interest, Table 2000CM and Table S (single life remainder factors applicable where the valuation date is on or after May 1, 2009) contained in this paragraph (d)(7) and Table J and Table K contained in paragraph (d)(6) of this section, must be used in the application of the provisions of this section when the section 7520 interest rate component is between 0.2 and 14 percent. [GRAPHIC] [TIFF OMITTED] TR10AU11.039 [[Page 49616]] [GRAPHIC] [TIFF OMITTED] TR10AU11.040 [[Page 49617]] [GRAPHIC] [TIFF OMITTED] TR10AU11.041 [[Page 49618]] [GRAPHIC] [TIFF OMITTED] TR10AU11.042 [[Page 49619]] [GRAPHIC] [TIFF OMITTED] TR10AU11.043 [[Page 49620]] [GRAPHIC] [TIFF OMITTED] TR10AU11.044 [[Page 49621]] [GRAPHIC] [TIFF OMITTED] TR10AU11.045 [[Page 49622]] [GRAPHIC] [TIFF OMITTED] TR10AU11.046 [[Page 49623]] [GRAPHIC] [TIFF OMITTED] TR10AU11.047 [[Page 49624]] [GRAPHIC] [TIFF OMITTED] TR10AU11.048 [[Page 49625]] [GRAPHIC] [TIFF OMITTED] TR10AU11.049 [[Page 49626]] [GRAPHIC] [TIFF OMITTED] TR10AU11.050 [[Page 49627]] [GRAPHIC] [TIFF OMITTED] TR10AU11.051 [[Page 49628]] [GRAPHIC] [TIFF OMITTED] TR10AU11.052 [[Page 49629]] [GRAPHIC] [TIFF OMITTED] TR10AU11.053 [[Page 49630]] [GRAPHIC] [TIFF OMITTED] TR10AU11.054 [[Page 49631]] [GRAPHIC] [TIFF OMITTED] TR10AU11.055 [[Page 49632]] [GRAPHIC] [TIFF OMITTED] TR10AU11.056 [[Page 49633]] [GRAPHIC] [TIFF OMITTED] TR10AU11.057 [[Page 49634]] [GRAPHIC] [TIFF OMITTED] TR10AU11.058 [[Page 49635]] [GRAPHIC] [TIFF OMITTED] TR10AU11.059 [[Page 49636]] [GRAPHIC] [TIFF OMITTED] TR10AU11.060 [[Page 49637]] (e) Effective/applicability date. This section applies on and after May 1, 2009. Sec. 20.2031-7T [Removed] 0 Par. 14. Section 20.2031-7T is removed. Sec. 20.2031-7A [Amended] 0 Par. 14A. Section 20.2031-7A(f)(1) is amended by removing ``Sec. 20.2031-7T(d)'' from the first sentence and adding ``Sec. 20.2031- 7(d)'' in its place. 0 Par. 15. Section 20.2055-2 is amended by: 0 1. Revising the heading in paragraph (e)(3) and revising paragraphs (e)(3)(iii) and (f)(4). 0 2. Adding paragraph (f)(6). The revisions and addition read as follows: Sec. 20.2055-2 Transfers not exclusively for charitable purposes. * * * * * (e) * * * (3) Effective/applicability date. * * * (iii) The rule in paragraphs (e)(2)(vi)(a) and (e)(2)(vii)(a) of this section that guaranteed annuity interests or unitrust interests, respectively, may be payable for a specified term of years or for the life or lives of only certain individuals is generally effective in the case of transfers pursuant to wills and revocable trusts when the decedent dies on or after April 4, 2000. Two exceptions from the application of this rule in paragraphs (e)(2)(vi)(a) and(e)(2)(vii)(a) of this section are provided in the case of transfers pursuant to a will or revocable trust executed before April 4, 2000. One exception is for a decedent who dies on or before July 5, 2001, without having