[Federal Register Volume 87, Number 87 (Thursday, May 5, 2022)]
[Proposed Rules]
[Pages 26806-26848]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-02303]



[[Page 26805]]

Vol. 87

Thursday,

No. 87

May 5, 2022

Part II





Department of the Treasury





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Internal Revenue Service





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26 CFR Parts 1, 20, and 25





Use of Actuarial Tables in Valuing Annuities, Interests for Life or a 
Term of Years, and Remainder or Reversionary Interests; Proposed Rule

  Federal Register / Vol. 87, No. 87 / Thursday, May 5, 2022 / Proposed 
Rules  

[[Page 26806]]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 1, 20, and 25

[REG-122770-18]
RIN 1545-BP00


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

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This document contains proposed regulations relating to the 
use of actuarial tables in valuing annuities, interests for life or a 
term 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 applicable law requires the actuarial 
tables to be updated to reflect the most recent mortality experience 
available.

DATES: Written or electronic comments and requests for a public hearing 
must be received by July 5, 2022. Requests for a public hearing must be 
submitted as prescribed in the ``Comments and Requests for a Public 
Hearing'' section.

ADDRESSES: Commenters are strongly encouraged to submit public comments 
electronically. Submit electronic submissions via the Federal 
eRulemaking Portal at www.regulations.gov (indicate IRS and REG-122770-
18) by following the online instructions for submitting comments. Once 
submitted to the Federal eRulemaking Portal, comments cannot be edited 
or withdrawn. The IRS expects to have limited personnel available to 
process public comments that are submitted on paper through mail. Until 
further notice, any comments submitted on paper will be considered to 
the extent practicable. The Department of the Treasury (Treasury 
Department) and the IRS will publish for public availability any 
comment submitted electronically, and to the extent practicable on 
paper, to its public docket. Send paper submissions to: CC:PA:LPD:PR 
(REG-122770-18), Room 5203, Internal Revenue Service, P.O. Box 7604, 
Ben Franklin Station, Washington, DC 20044.

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
Mayer R. Samuels of the Office of Associate Chief Counsel (Passthroughs 
and Special Industries), (202) 317-6859; concerning the submission of 
comments or requests for a public hearing, Regina L. Johnson, (202) 
317-5177 (not toll-free numbers).

SUPPLEMENTARY INFORMATION: 

Background

    This document contains amendments to the Income Tax Regulations (26 
CFR part 1), the Estate Tax Regulations (26 CFR part 20), and the Gift 
Tax Regulations (26 CFR part 25) to reflect revisions to certain tables 
used for the valuation of 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 on or after May 1, 1989, generally 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 
Secretary of the Treasury or her delegate (Secretary) by using an 
interest rate (rounded to the nearest two-tenths of one percent) equal 
to 120 percent of the Federal midterm rate in effect under section 
1274(d)(1) for the month in which the valuation date falls. If a 
charitable contribution is allowable for any part of the property 
transferred, the taxpayer may elect under section 7520(a) to use such 
Federal midterm rate for either of the two months preceding the month 
in which the valuation date falls. Section 7520(c)(2), as it existed on 
May 1, 1989, 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 these tables 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 proposed regulations contain Table 2010CM that is based on 
data compiled from the 2010 census. For transfers for which the 
valuation date is on or after the applicability date of the Treasury 
decision adopting these regulations as final regulations (published as 
the final rule in the Federal Register), the appropriate actuarial 
factors based on Table 2010CM may be computed by taxpayers. However, 
for the convenience of taxpayers, actuarial factors may be found on IRS 
websites and publications referenced in these proposed regulations. 
These proposed regulations also make conforming amendments to various 
sections of the existing regulations to provide the references to these 
revised actuarial factors. The updated actuarial tables will be 
available beginning May 5, 2022, at no charge, electronically via the 
IRS website at https://www.irs.gov/retirement-plans/actuarial-tables. 
IRS Publications 1457 ``Actuarial Valuations Version 4A'' (forthcoming 
2022), 1458 ``Actuarial Valuations Version 4B'' (forthcoming 2022), and 
1459 ``Actuarial Valuations Version 4C'' (forthcoming 2022) will 
provide additional references and explanations to the actuarial tables 
that are published on the IRS website. These publications will be 
available after the applicability date of the Treasury decision 
adopting these regulations as final regulations. Table S (Single Life 
Remainder Factors) and Table U(1) (Unitrust Single Life Remainder 
Factors), which are referenced and explained in Publications 1457 and 
1458, respectively, will no longer be published in these regulations. 
Furthermore, the current Table S and Table U(1), effective for 
transfers for which the valuation date is after April 30, 2009, and 
before the applicability date of the Treasury decision adopting these 
regulations as final regulations is published in the Federal Register, 
will be moved to sections containing actuarial material for historical 
reference. Table B, Table D, Tables F(0.2) through F(20.0), Table J, 
and Table K, which are not based on mortality experience, are not 
changed.
    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. For purposes of this chart, 
``DPAD'' is the day prior to the applicability date of the Treasury 
decision adopting these regulations as final regulations and ``AD'' is 
the applicability date of the Treasury decision adopting these 
regulations as final regulations.

[[Page 26807]]



                                     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..................       7520  1.642(c)-6A(e)............  Table S (5/1/89-4/30/99).
    05/01/99--04/30/09..................       7520  1.642(c)-6A(f)............  Table S (5/1/99-4/30/09).
    05/01/09--DPAD......................       7520  1.642(c)-6A(g)............  Table S (5/1/09-DPAD).
    on or after AD......................       7520  1.642(c)-6(e).............  Table S (on or after AD).
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...................       7520  1.664-4A(e)...............  Table U(1) (5/1/89-4/30/99).
    05/01/99-04/30/09...................       7520  1.664-4A(f)...............  Table U(1) (5/1/99-4/30/09).
    05/01/09-DPAD.......................       7520  1.664-4A(g)...............  Table U(1) (5/1/09-DPAD).
    on or after AD......................       7520  1.664-4(e)................  Table U(1) (on or after AD),
                                                                                  Table D, and Table F See Pub.
                                                                                  1458, ver. 4A
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...................       7520  20.2031-7A(e).............  Table S (5/1/89-4/30/99), Table
                                                                                  80CNSMT.
    05/01/99-04/30/09...................       7520  20.2031-7A(f).............  Table S (5/1/99-4/30/09), Table
                                                                                  90CM.
    05/01/09-DPAD.......................       7520  20.2031-7A(g).............  Table S (5/1/09-DPAD), Table
                                                                                  2000CM.
    on or after AD......................       7520  20.2031-7(d)..............  Table S (on or after AD) Table
                                                                                  2010CM, Table B, Table J,
                                                                                  Table K see Pub. 1457, ver.
                                                                                  4A.
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...................       7520  25.2512-5A(e).............
    05/01/99-04/30/09...................       7520  25.2512-5A(f).............
    05/01/09-DPAD.......................       7520  25.2512-5A(g).............
    on or after AD......................       7520  25.2512-5(d)..............
----------------------------------------------------------------------------------------------------------------

Applicability Dates

    These regulations are proposed to be applicable in the case of 
annuities, interests for life or a term of years, and remainder or 
reversionary interests that are valued as of a date on or after the 
first day of the month following the date on which the Treasury 
decision adopting these regulations as final regulations is published 
in the Federal Register.

Transitional Rules

    The regulations provide certain rules to facilitate the transition 
to the new actuarial tables. For gift tax purposes, if the date of a 
transfer is on or after January 1, 2021, and before the applicability 
date of the Treasury decision adopting these regulations as final 
regulations, the donor may choose to determine the value of the gift 
(and/or any applicable charitable deduction) under tables based on 
either Table 2000CM or Table 2010CM. Similarly, for estate tax 
purposes, if the decedent dies on or after January 1, 2021, and before 
the applicability date of the Treasury decision adopting these 
regulations as final regulations, the value of any interest (and/or any 
applicable charitable deduction) may be determined in the discretion of 
the decedent's executor under tables based on either Table 2000CM or 
Table 2010CM, provided that the decedent's executor must use the same 
mortality table to value all interests in the same property. However, 
the section 7520 interest rate to be utilized is the appropriate rate 
for the month in which the valuation date occurs, subject to the 
following special rule for certain charitable transfers. Specifically, 
in accordance with this transitional rule and the rules contained in 
Sec. Sec.  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 on 
or after January 1, 2021, but before the applicability date of the 
Treasury decision adopting these regulations as final regulations, and 
the executor or donor elects under section 7520(a) to use the section 
7520 interest rate for a month that is prior to January 1, 2021, then 
the mortality experience contained in Table 2000CM must be used. If the 
executor or donor uses the section 7520 interest rate for a month that 
is on or after January 1, 2021, but before the applicability date of 
the Treasury decision adopting these regulations as final regulations, 
then the tables based on either Table 2000CM or Table 2010CM may be 
used. However, if the valuation date occurs on or after the 
applicability date of the Treasury decision adopting these regulations 
as

[[Page 26808]]

final regulations, the executor or donor must use the new mortality 
experience contained in Table 2010CM even if the use of a prior month's 
interest rate is elected under section 7520(a).
    In addition, the regulations no longer will provide that the estate 
of a decedent who was under a mental disability that prevented a change 
in the disposition of the decedent's property may elect to value the 
property interest included in the gross estate either under the 
mortality table and interest rate in effect at the time the decedent 
first became subject to the mental disability or under the mortality 
table and interest rate in effect on the decedent's date of death. The 
taxpayer decedent, during life and before the advent of the mental 
disability, would not know, beforehand, what the market interest rate 
would be at his or her future date of death, but can reasonably be 
expected to have understood that the property interest would be valued 
at the then-applicable market rate, whatever it might be. Becoming 
incapacitated should not alter the effect of that understanding. 
Therefore, a special rule permitting an election to use the interest 
rate in effect at the time the decedent first became subject to the 
mental disability is not necessary. The same is true with respect to 
mortality rates. Accordingly, estates of decedents with a mental 
disability who die after the applicability date of the Treasury 
decision adopting these regulations as final regulations will be 
required to use the mortality table and interest rate in effect on the 
decedent's date of death or the alternate valuation date under section 
2032, if elected.

Special Analyses

    These proposed regulations are not subject to review under section 
6(b) of Executive Order 12866 pursuant to the Memorandum of Agreement 
(April 11, 2018) between the Treasury Department and the Office of 
Management and Budget (OMB) regarding review of tax regulations. 
Therefore, a regulatory impact assessment is not required.
    Pursuant to the Regulatory Flexibility Act (5 U.S.C. chapter 6), it 
is hereby certified that this proposed rule will not have a significant 
economic impact on a substantial number of small entities. This 
document proposes to implement statutorily required periodic updates to 
actuarial tables used in valuing various interests in property that are 
affected by a person's life expectancy. The updates would not impose 
any direct compliance requirements on any entities other than the time 
to read and understand the proposed updates. Notwithstanding this 
certification, the Treasury Department and the IRS invite comment on 
the impact this proposed rule would have on small entities.
    The Treasury Department and the IRS have assessed that the proposed 
regulations do not establish a new collection of information nor modify 
an existing collection that requires the approval of the Office of 
Management and Budget under the Paperwork Reduction Act (44 U.S.C. 
chapter 35). The Treasury Department and the IRS seek comments on this 
assessment.
    Pursuant to section 7805(f), this notice of proposed rulemaking has 
been submitted to the Chief Counsel for the Office of Advocacy of the 
Small Business Administration for comment on its impact on small 
business.

Statement of Availability of IRS Documents

    IRS Revenue Procedures, Revenue Rulings, Notices, and other 
guidance cited in this preamble are published in the Internal Revenue 
Bulletin (or Cumulative Bulletin) and are available from the 
Superintendent of Documents, U.S. Government Publishing Office, 
Washington, DC 20402, or by visiting the IRS website at https://www.irs.gov.

Comments and Requests for Public Hearing

    The Treasury Department and the IRS request comments on all aspects 
of the proposed rules.
    Before these proposed amendments to the regulations are adopted as 
final regulations, consideration will be given to comments that are 
submitted timely to the IRS as prescribed in the preamble under the 
ADDRESSES section. Any electronic comments submitted, and to the extent 
practicable any paper comments submitted, will be made available at 
www.regulations.gov or upon request.
    A public hearing will be scheduled if requested in writing by any 
person who timely submits electronic or written comments. Requests for 
a public hearing also are encouraged to be made electronically. If a 
public hearing is scheduled, notice of the date and time for the public 
hearing will be published in the Federal Register. Announcement 2020-4, 
2020-17 I.R.B 1, provides that, until further notice, public hearings 
conducted by the IRS will be held telephonically. Any telephonic 
hearing will be made accessible to people with disabilities.

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 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.

Proposed Amendments to the Regulations

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

PART 1--INCOME TAXES

0
Paragraph 1. The authority citation for part 1 continues to read in 
part as follows:

    Authority:  26 U.S.C. 7805 * * *

0
Par. 2. Section 1.170A-12 is amended by:
0
1. Revising paragraphs (b)(2) and (3).
0
2. Adding paragraph (b)(4).
0
3. Revising paragraphs (e)(2) and (f)
    The revisions and addition 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 contingency rates from the mortality table 
prescribed in Sec.  20.2031-7 of this chapter (or for periods before 
[applicability date of the Treasury decision adopting these regulations 
as final regulations], Sec.  20.2031-7A of this chapter) 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 [applicability date of the Treasury decision adopting 
these regulations as final regulations], special factors for 
determining the present value of a remainder interest following one 
life may be computed by taxpayers based on Table 2010CM, found in Sec.  
20.2031-7(d)(7)(ii) of this chapter, and using the formula provided in 
this

[[Page 26809]]

paragraph (b)(2). Alternatively, taxpayers may use the actuarial 
factors provided in Table C to determine the special factor for the 
remainder interest following one life. Table C will be available 
beginning May 5, 2022, at no charge, electronically via the IRS website 
at https://www.irs.gov/retirement-plans/actuarial-tables (or a 
corresponding URL as may be updated from time to time). IRS Publication 
1459, ``Actuarial Valuations Version 4C'' (2022), references and 
explains Table C and provides examples describing the computation. This 
publication will be available after [date of publication of the final 
rule in the in the Federal Register]. For transfers for which the 
valuation date is on or after May 1, 2009, and before [applicability 
date of the Treasury decision adopting these regulations as final 
regulations], special factors for determining the present value of a 
remainder interest following one life and an example describing the 
computation are contained in the previous version of Table C, which is 
currently available, at no charge, electronically via the IRS website 
at https://www.irs.gov/retirement-plans/actuarial-tables. IRS 
Publication 1459, ``Actuarial Valuations Version 3C'' (2009), 
references and explains this version of Table C and provides examples 
describing the computation. 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 formula in Figure 1 to this paragraph (b)(2). The prescribed 
mortality table is Table 2010CM as set forth in Sec.  20.2031-
7(d)(7)(ii) of this chapter, or for periods before [applicability date 
of the Treasury decision adopting these regulations as final 
regulations], the appropriate table found in Sec.  20.2031-7A of this 
chapter. Table 2010CM is referenced by IRS Publication 1459, 
``Actuarial Values Version 4C.'' The mortality tables prescribed for 
periods before [applicability date of the Treasury decision adopting 
these regulations as final regulations] are referenced by prior 
versions of IRS Publication 1459.
[GRAPHIC] [TIFF OMITTED] TP05MY22.000

    (3) Sample factors from actuarial Table S. The present value of a 
remainder interest dependent on the termination of one life is 
determined by using the formula in Sec.  20.2031-7(d)(2)(ii)(B) of this 
chapter to derive factors from the appropriate mortality table. For the 
convenience of taxpayers, actuarial factors have been computed by IRS 
and appear in Table S. The complete Table S can be found on the IRS 
website at https://www.irs.gov/retirement-plans/actuarial-tables. For 
purposes of the example in paragraph (b)(4) of this section, the 
following factors from Table S will be used:

[[Page 26810]]



                       Table 1 to Paragraph (b)(3)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Factors from Table S--Based on Table 2010CM
------------------------------------------------------------------------
Interest at 3.2 Percent
------------------------------------------------------------------------
Age                      Annuity       Life Estate         Remainder
------------------------------------------------------------------------
           62            14.6131           0.46762           0.53238
------------------------------------------------------------------------

    (4) Example. After [applicability date of the Treasury decision 
adopting these regulations as final regulations], 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 28 years, at 
the end of which period the value of the house is expected to be 
$10,000. The portion of the property considered to be depreciable is 
$90,000 (the value of the house ($100,000) less its expected value at 
the end of 28 years ($10,000)). The portion of the property considered 
to be nondepreciable is $40,000 (the value of the land at the time of 
the gift ($30,000) plus the expected value of the house at the end of 
28 years ($10,000)). At the time of the gift, the interest rate 
prescribed under section 7520 is 3.2 percent. Based on an interest rate 
of 3.2 percent, the remainder factor for $1.00 prescribed in Sec.  
20.2031-7(d) and found in Table S for a person age 62 is 0.53238. The 
value of the nondepreciable remainder interest is $21,295.20 (0.53238 
times $40,000). The factor for the remainder interest in depreciable 
property is computed under the formula described in paragraph (b)(2) of 
this section and is 0.19392. (This factor, 0.19392, may instead be 
determined by using Table C, which can be found on the IRS website at 
https://www.irs.gov/retirement-plans/actuarial-tables, and following 
the method provided in IRS Publication 1459, ``Actuarial Values Version 
4C''.) The value of the depreciable remainder interest is $17,452.80 
(0.19392 times $90,000). Therefore, the value of the remainder interest 
is $38,748.00 ($21,295.20 plus $17,452.80).
* * * * *
    (e) * * *
    (2) In the case of the valuation of a remainder interest following 
two lives, the special factor may be obtained through use of the 
formula in Figure 2 to this paragraph (e)(2). The prescribed mortality 
table is Table 2010CM as set forth in Sec.  20.2031-7(d)(7)(ii) of this 
chapter, or for periods before [applicability date of the Treasury 
decision adopting these regulations as final regulations], the 
appropriate table found in Sec.  20.2031-7A of this chapter. Table 
2010CM is referenced by IRS Publication 1459, ``Actuarial Values 
Version 4C.'' The mortality tables prescribed for periods before 
[applicability date of the Treasury decision adopting these regulations 
as final regulations] are referenced by prior versions of IRS 
Publication 1459.
[GRAPHIC] [TIFF OMITTED] TP05MY22.002


[[Page 26811]]


* * * * *
    (f) Applicability date. This section applies to contributions made 
after July 31, 1969, except that paragraphs (b)(2), (3), and (4) and 
(e)(2) of this section apply to all contributions made on or after 
[applicability date of the Treasury decision adopting these regulations 
as final regulations].
0
Par. 3. Section 1.170A-14 is amended:
0
1. In paragraph (h)(4) by designating Example 1 through 12 as 
paragraphs (h)(4)(i) through (xii), respectively.
0
2. By revising newly designated paragraph (h)(4)(ii).
0
3. In newly designated paragraphs (h)(4)(iii) and (iv) by removing 
``Example 2'' and adding ``paragraph (h)(4)(ii) of this section 
(Example 2)'' in its place.
0
4. In newly designated paragraph (h)(4)(v) by removing ``Example 4'' 
and adding ``paragraph (h)(4)(iv) of this section (Example 4)'' in its 
place.
0
5. In newly designated paragraph (h)(4)(vi) by removing ``Example 2'' 
and adding ``paragraph (h)(2)(ii) of this section (Example 2)'' in its 
place.
0
6. In newly designated paragraph (h)(4)(viii) by removing ``Example 7'' 
and adding ``paragraph (h)(4)(vii) of this section (Example 7)'' in its 
place.
0
7. In newly designated paragraph (h)(4)(xi) by removing ``example 
(10)'' and adding ``paragraph (h)(4)(x) of this section (Example 10)'' 
in its place.
0
8. By revising paragraph (j).
    The revisions read as follows:


Sec.  1.170A-14  Qualified conservation contributions.

* * * * *
    (h) * * *
    (4) * * *
    (ii) Example 2. In 1984 B, who is 62, donates a remainder interest 
in Greenacre to a qualifying organization for conservation purposes. 
Greenacre is a tract of 200 acres of undeveloped woodland that is 
valued at $200,000 at its highest and best use. Under Sec.  1.170A-
12(b), the value of a remainder interest in real property following one 
life is determined under Sec.  25.2512-5 of this chapter (Gift Tax 
Regulations). (See Sec.  25.2512-5A of this chapter with respect to the 
valuation of annuities, interests for life or a term of years, and 
remainder or reversionary interests transferred before [applicability 
date of the Treasury decision adopting these regulations as final 
regulations].) For transfers occurring after November 30, 1983, and 
before May 1, 1989, the single life remainder factors, valued at 10 
percent, can be found in Table A of Sec.  20.2031-7A(d)(6) of this 
chapter. Accordingly, the value of the remainder interest, and thus the 
amount eligible for an income tax deduction under section 170(f), is 
$55,996 ($200,000 x 0.27998).
* * * * *
    (j) Applicability dates. Except as otherwise provided in paragraph 
(g)(4)(ii) and paragraph (i) of this section, this section applies only 
to contributions made on or after December 18, 1980. Paragraph 
(h)(4)(ii) of this section applies on and after [applicability date of 
the Treasury decision adopting these regulations as final regulations].
0
Par. 4. Section 1.642(c)-6 is amended by:
0
1. Revising paragraph (d).
0
2. Redesignating paragraph (e) as paragraph (g) of Sec.  1.642(c)-6A.
0
3. Adding new paragraph (e) and revising paragraph (f).
    The revisions and addition 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 [applicability 
date of the Treasury decision adopting these regulations as final 
regulations], 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 
[applicability date of the Treasury decision adopting these regulations 
as final regulations] is determined under the following sections:

                        Table 6 to Paragraph (d)
------------------------------------------------------------------------
                  Valuation dates
---------------------------------------------------      Applicable
             After                     Before            regulations
------------------------------------------------------------------------
                                 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)
04-30-09.......................  AD...............  1.642(c)-6A(g)
------------------------------------------------------------------------
AD = [applicability date of the Treasury decision adopting these
  regulations as final regulations].

    (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 [applicability date of the Treasury decision adopting these 
regulations as final regulations]--(1) In general. In the case of 
transfers to pooled income funds for which the valuation date is on or 
after [applicability date of the Treasury decision adopting these 
regulations as final regulations], 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 using the formula in Sec.  20.2031-7(d)(2)(ii)(B) of this 
chapter to derive factors from the appropriate mortality table. For the 
convenience of taxpayers, actuarial factors have been computed by IRS 
and appear in Table S. Table S will be available beginning May 5, 2022, 
at no charge, electronically via the IRS website at https://www.irs.gov/retirement-plans/actuarial-tables (or a corresponding URL 
as may be updated from time to time). Table S is referenced and 
explained by IRS Publication 1457 ``Actuarial Valuations Version 4A,'' 
which will be available after [date of publication of the final rule in 
the in the Federal Register]. For purposes of the computations under 
this section, the age of an individual is the age at the individual's 
nearest birthday.
    (2) Transitional rule for valuation of transfers to pooled income 
funds. For purposes of section 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 January 1, 2021, and before [applicability date of the 
Treasury decision adopting these regulations as final regulations], the 
present value of the remainder interest under this section is 
determined by using 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 factors derived from the 
selected mortality table, either Table 2010CM in Sec.  20.2031-
7(d)(7)(ii) of this chapter or Table 2000CM in Sec.  20.2031-7A(g)(4) 
of this chapter, at the option of the donor or the decedent's executor, 
as the case may be. For the convenience of taxpayers, actuarial factors 
based on Table 2010CM appear in the proposed version of Table S, and 
actuarial factors based on Table 2000CM appear in the current version 
of Table S, which will be available beginning May 5, 2022, at no 
charge, electronically via the IRS website at https://www.irs.gov/retirement-plans/actuarial-tables (or a corresponding URL as may be 
updated from time to time). The donor or decedent's executor must 
consistently use the same mortality basis with respect to each interest 
(income, remainder, partial, etc.) in the same

[[Page 26812]]

property, 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 factors with 
the same mortality basis, and all assets includible in the gross estate 
and/or estate tax deductions claimed must be valued based on factors 
with the same mortality basis.
    (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 2010CM in Sec.  20.2031-7(d)(7)(ii) of this 
chapter (see Sec.  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 
three 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 three 
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 otherwise would 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 three preceding taxable years.
    (4) Pooled income funds in existence less than three taxable years. 
If a pooled income fund has been in existence less than three taxable 
years immediately preceding the taxable year in which the transfer is 
made to the fund and the transfer to the fund is made on or after May 
1, 1989, the highest rate of return is deemed to be the interest rate 
(rounded to the nearest two-tenths of one percent) that is one percent 
less than the highest annual average of the monthly section 7520 rates 
for the three 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 three year 
period immediately preceding the calendar year in which each transfer 
to the fund is made until the fund has been in existence for three 
taxable years and can compute its highest rate of return for the three 
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) Factor. 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 obtained through use of the formula in Sec.  
20.2031-7(d)(2)(ii)(B) of this chapter to derive factors from the 
appropriate mortality table. For the convenience of taxpayers, 
actuarial factors have been computed by IRS and appear in Table S. 
Table S will be available beginning May 5, 2022, at no charge, 
electronically via the IRS website at https://www.irs.gov/retirement-plans/actuarial-tables. Table S is referenced and explained in IRS 
Publication 1457 ``Actuarial Valuations Version 4A,'' which will be 
available after [date of publication of the final rule in the Federal 
Register]. In using the section of Table S for the interest rate equal 
to the appropriate yearly rate of return, the appropriate remainder 
factor is 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 
referenced by IRS Publication 1457 ``Actuarial Valuations Version 4A'' 
include factors for yearly rates of return from 0.2 to 20 percent, 
inclusive, in increments of two-tenths of one percent. 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 by Table S, an exact method of obtaining the 
applicable factors (such as through software using the actual rate of 
return and the actuarial formulas provided in Sec.  20.2031-
7(d)(2)(ii)(B) of this chapter) or a linear interpolation must be used, 
provided whichever method used is applied consistently. 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) Sample factors from actuarial Table S. For purposes of the 
example in paragraph (e)(5)(iii) of this section, the following factors 
from Table S will be used:

                     Table 7 to Paragraph (e)(5)(ii)
------------------------------------------------------------------------
       Age              Annuity          Life Estate        Remainder
------------------------------------------------------------------------
Factors from Table S--Based on Table 2010CM
------------------------------------------------------------------------
Interest at 5.4 Percent
------------------------------------------------------------------------
           55            13.2515           0.71558           0.28442
------------------------------------------------------------------------
Interest at 5.6 Percent
------------------------------------------------------------------------
           55            12.9710           0.72637           0.27363
------------------------------------------------------------------------

    (iii) Example of interpolation. After [applicability date of the 
Treasury decision adopting these regulations as final regulations], A, 
whose age 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 5.43 percent. In Table S, the remainder factor 
opposite 55 years under 5.4 percent is 0.28442 and under

[[Page 26813]]

5.6 percent is 0.27363. The present value of the remainder interest is 
$28,280, computed as illustrated in Figure 1 to this paragraph 
(e)(5)(iii).
[GRAPHIC] [TIFF OMITTED] TP05MY22.004

    (6) Actuarial tables. In the case of transfers for which the 
valuation date is on or after [applicability date of the Treasury 
decision adopting these regulations as final regulations], 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 
using the formula in Sec.  20.2031-7(d)(2)(ii)(B) of this chapter to 
derive factors from the appropriate mortality table. For the 
convenience of taxpayers, actuarial factors have been computed by IRS 
and appear in Table S. Table S will be available beginning May 5, 2022, 
at no charge, electronically via the IRS website at https://www.irs.gov/retirement-plans/actuarial-tables. Table S is referenced 
and explained in IRS Publication 1457 ``Actuarial Valuations Version 
4A,'' which will be available after [date of publication of the final 
rule in the Federal Register].
    (f) Applicability date. This section applies on and after 
[applicability date of the Treasury decision adopting these regulations 
as final regulations].
0
Par. 5. The undesignated center heading immediately preceding Sec.  
1.642(c)-6A is revised to read as follows: Pooled Income Fund Actuarial 
Tables Applicable Before [Applicability Date of the Treasury Decision 
Adopting These Regulations as Final Regulations]
0
Par. 6. Section 1.642(c)-6A is amended by:
0
1. Revising the section heading.
0
2. In newly redesignated paragraph (g):
0
i. The heading and paragraphs (g)(1) through (5) and (g)(6) 
introductory text are revised.
0
ii. Paragraph (g)(7) is added.
    The revisions and addition read as follows:


Sec.  1.642(c)-6A  Valuation of charitable remainder interests for 
which the valuation date is before [applicability date of the Treasury 
decision adopting these regulations as final regulations].

* * * * *
    (g) 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, and before [applicability date of the Treasury 
decision adopting these regulations as final regulations]--(1) In 
general. In the case of transfers to pooled income funds for which the 
valuation date is on or after May 1, 2009, and before [applicability 
date of the Treasury decision adopting these regulations as final 
regulations], 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 (g)(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 section 2055, 2106, or 2624, if on May 1, 
2009, the decedent was under a mental disability so that the 
disposition of the property could not be changed, and the decedent died 
on or after May 1, 2009, but before [applicability date of the Treasury 
decision adopting these regulations as final regulations] without 
having regained the ability to dispose of the

[[Page 26814]]

decedent's property, or if the decedent died within 90 days of the date 
that the decedent first regained that ability on or after May 1, 2009, 
but before [applicability date of the Treasury decision adopting these 
regulations as final regulations], 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, 2009, or after April 
30, 2009, at the option of the decedent's executor.
    (ii) For purposes of section 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 using 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 (f)(6) or (g)(6) of 
this section, at the option of the donor or the decedent's executor, as 
the case may be.
    (iii) For purposes of paragraphs (g)(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 (f)(6) or 
(g)(6) of this section, the donor or decedent's executor must 
consistently use the same mortality basis with respect to each interest 
(income, remainder, partial, etc.) in the same property, 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 factors with the same mortality 
basis, and all assets includible in the gross estate and/or estate tax 
deductions claimed must be valued based on factors with the same 
mortality basis.
    (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.  20.2031-7A(g)(4) of this 
chapter; 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 
three taxable years immediately preceding its taxable year in which the 
transfer of property to the fund is made. The provisions of Sec.  
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 Sec.  
1.642(c)-6(e)(3)(ii) apply for the determining the yearly rate of 
return.
    (4) Pooled income funds in existence less than three taxable years. 
The provisions of Sec.  1.642(c)-6(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.
    (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 (g)(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. Table S in paragraph (g)(6) of this section includes 
factors for yearly rates of return from 0.2 to 14 percent, inclusive, 
in increments of two-tenths of one percent. Actuarial factors that do 
not appear in paragraph (g)(6) of this section may be computed directly 
by using the formula in Sec.  20.2031-7(d)(2)(ii)(B) of this chapter to 
derive factors from the appropriate mortality table. For the 
convenience of taxpayers, actuarial factors have been computed by IRS 
and appear in Table S that is referenced and explained by IRS 
Publication 1457, ``Actuarial Valuations Version 3A'' (2009). The table 
is available at no charge, electronically via the IRS website at 
https://www.irs.gov/retirement-plans/actuarial-tables (or a 
corresponding URL as may be updated from time to time). For other 
situations, see Sec.  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 by Table S, an exact method of obtaining the applicable 
factors (such as through software using the actual rate of return and 
actuarial formulas provided in Sec.  20.2031-7(d)(2)(ii)(B) of this 
chapter) or a linear interpolation must be used, provided whichever 
method used is applied consistently. 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 Sec.  
1.642(c)-6(e)(5).
    (6) Actuarial tables. In the case of transfers for which the 
valuation date is on or after May 1, 2009, and before [applicability 
date of the Treasury decision adopting these regulations as final 
regulations], and without regard to the headings in the tables in this 
paragraph (g)(6) that do not contain this termination date for the 
applicability of the tables, 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 using the following tables:
* * * * *
    (7) Applicability dates. Paragraphs (g)(1) through (6) of this 
section apply on and after May 1, 2009, and before [applicability date 
of the Treasury decision adopting these regulations as final 
regulations].
0
Par. 7. 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, 
1999, if an election is made under section 7520 and Sec.  1.7520-2(b) 
to compute the present value of the charitable interest by using 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 in this part under 
section 2032, 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 
[applicability date of the Treasury decision adopting these

[[Page 26815]]

regulations as final regulations], or under Sec.  20.2031-7A(a) through 
(g) of this chapter, whichever is applicable, for transfers for which 
the valuation date is before [applicability date of the Treasury 
decision adopting these regulations as final regulations]. See, 
however, Sec.  1.7520-3(b) (relating to exceptions to the use of 
prescribed tables under certain circumstances).
* * * * *
    (e) Applicability date. Paragraph (c) of this section applies on 
and after [applicability date of the Treasury decision adopting these 
regulations as final regulations].
0
Par. 8. Section 1.664-4 is amended by:
0
1. Revising paragraphs (a)(1) and (d).
0
2. In paragraph (e):
0
i. Redesignating the paragraph heading as the heading for Sec.  1.664-
4A(g) and paragraphs (e)(1), (2), (5), and (7) as Sec.  1.664-4A(g)(1), 
(2), (5), and (6), respectively.
0
ii. Adding a new paragraph heading and new paragraphs (e)(1), (2), and 
(5).
0
iii. Revising the heading for paragraph (e)(6).
0
iv. Redesignating the text of paragraph (e)(6) as paragraph 
(e)(6)(iii).
0
v. Adding paragraphs (e)(6)(i) and (ii).
0
vi. Revising the introductory text of newly redesignated paragraph 
(e)(6)(iii), preceding Table D.
0
vii. Adding a new paragraph (e)(7).
0
3. Revising paragraph (f).
    The additions and 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 2010CM in Sec.  20.2031-
7(d)(7)(ii) of this chapter in the case of transfers for which the 
valuation date is on or after [applicability date of the Treasury 
decision adopting these regulations as final regulations]; or from 
Table 2000CM contained in Sec.  20.2031-7A(g)(4) of this chapter in the 
case of transfers for which the valuation date is on or after May 1, 
2009, and before [applicability date of the Treasury decision adopting 
these regulations as final regulations]. See Sec.  20.2031-7A(a) 
through (f) of this chapter, whichever is applicable, for transfers for 
which the valuation date is before May 1, 2009;
* * * * *
    (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 [applicability 
date of the Treasury decision adopting these regulations as final 
regulations], 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 [applicability date of 
the Treasury decision adopting these regulations as final regulations], 
is its present value determined under the following sections:

                        Table 1 to Paragraph (d)
------------------------------------------------------------------------
                  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)
04-30-09.......................  AD...............  1.664-4A(g)
------------------------------------------------------------------------
AD = [applicability date of the Treasury decision adopting these
  regulations as final regulations].

    (e) Valuation of charitable remainder unitrusts having certain 
payout sequences for transfers for which the valuation date is on or 
after [applicability date of the Treasury decision adopting these 
regulations as final regulations]--(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 [applicability date of the 
Treasury decision adopting these regulations as final regulations], the 
present value of a remainder interest is determined under paragraphs 
(e)(3) through (7) of this section, provided that, in a short taxable 
year, the trustee shall prorate the unitrust amount as provided in 
Sec.  1.664-3(a)(1)(v). See, however, Sec.  1.7520-3(b) (relating to 
exceptions to the use of the prescribed tables under certain 
circumstances).
    (2) Transitional rule for valuation of charitable remainder 
unitrusts. For purposes of section 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 January 1, 2021, and before 
[applicability date of the Treasury decision adopting these regulations 
as final regulations], the present value of a remainder interest based 
on one or more measuring lives is determined under this section by 
using 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 factors derived from the selected 
mortality table, either Table 2010CM in Sec.  20.2031-7(d)(7)(ii) of 
this chapter or Table 2000CM in Sec.  20.2031-7A(g)(4) of this chapter, 
at the option of the donor or the decedent's executor, as the case may 
be. For the convenience of taxpayers, actuarial factors based on Table 
2010CM appear in the proposed version of Table U(1), and actuarial 
factors based on Table 2000CM appear in the current version of Table 
U(1), which will be available beginning May 5, 2022, at no charge, 
electronically via the IRS website at https://www.irs.gov/retirement-plans/actuarial-tables (or a corresponding URL as may be updated from 
time to time). The donor or decedent's executor must consistently use 
the same mortality basis with respect to each interest (income, 
remainder, partial, etc.) in the same property, 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 factors with the same mortality basis, and all 
assets includible in the gross estate and/or estate tax deductions 
claimed must be valued based on factors with the same mortality basis.
* * * * *
    (5) Period is the life of one individual--(i) Factor. If the period 
described in Sec.  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 on or after 
[insert the applicability date of the Treasury decision adopting these 
regulations as final regulations] is the factor obtained through the 
use of the formula in Figure 1 to this paragraph (e)(5)(i). The 
prescribed mortality table is Table 2010CM as set forth in Sec.  
20.2031-7(d)(7)(ii) of this chapter, or for periods before 
[applicability date of the Treasury decision adopting these regulations 
as final regulations], the appropriate table found in Sec.  20.2031-7A 
of this chapter. Table 2010CM is referenced by IRS Publication 1458, 
``Actuarial Values Version 4B.'' The mortality tables prescribed for 
periods before [applicability date of the Treasury decision adopting 
these regulations as final regulations] are referenced by prior 
versions of IRS Publication 1458. Alternatively, the remainder factors 
have been determined for the convenience of taxpayers and appear in 
Table U(1) under the appropriate adjusted payout rate. Table U(1) will 
be available beginning May 5, 2022, at no charge, electronically via 
the IRS website at https://www.irs.gov/

[[Page 26816]]

retirement-plans/actuarial-tables (or a corresponding URL as may be 
updated from time to time). Table U(1) is referenced and explained by 
IRS Publication 1458 ``Actuarial Valuations Version 4B,'' which will be 
available after [date of publication of the final rule in the Federal 
Register]. 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, an exact method of obtaining the applicable 
factors (such as through software using the actual adjusted payout rate 
and the actuarial formula in this paragraph (e)(5)) or a linear 
interpolation must be used, provided whichever method used is applied 
consistently. The present value of the remainder interest is determined 
by multiplying the net fair market value (as of the valuation date as 
determined in Sec.  1.664-4(e)(4)) of the property placed in trust by 
the factor determined under this paragraph (e)(5). If the adjusted 
payout rate is from 0.2 to 20.0 percent, inclusive, taxpayers may see 
the actuarial tables referenced and explained by IRS Publication 1458 
``Actuarial Valuations Version 4B''. Alternatively, the Commissioner 
may supply a factor upon a request for a ruling. See paragraph (b) of 
this section.
[GRAPHIC] [TIFF OMITTED] TP05MY22.005

    (ii) Sample factors from actuarial Table U(1). For purposes of the 
example in paragraph (e)(5)(iii) of this section, the following factors 
from Table U(1) and Table F(3.2) (see paragraph (e)(6)(ii) of this 
section) will be used:

                     Table 2 to Paragraph (e)(5)(ii)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Factors from Table U(1)--Based on Table 2010CM
------------------------------------------------------------------------
Adjusted Payout Rate
------------------------------------------------------------------------
Age                         4.8%              5.0%              5.2%
------------------------------------------------------------------------
           77            0.61491           0.60343           0.59223
------------------------------------------------------------------------
Factors from Table F(3.2)
------------------------------------------------------------------------
Factors for Computing Adjusted Payout Rates for Unitrusts
------------------------------------------------------------------------
Interest at 3.2 Percent
------------------------------------------------------------------------
# of Months from Annual Valuation to
 First Payout       Adjustment Factors for Payments at
                              End of Period
------------------------------------------------------------------------
At Least           But Less Than            Annual        Semiannual
------------------------------------------------------------------------
            6                  7          0.984374          0.976683
------------------------------------------------------------------------


[[Page 26817]]

    (iii) Example of interpolation. After [applicability date of the 
Treasury decision adopting these regulations as final regulations], A, 
whose age is 76 years and 11 months, 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) 5 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 3.2 percent. Under Table 
F(3.2), the appropriate adjustment factor is 0.976683 for semiannual 
payments payable at the end of the semiannual period. The adjusted 
payout rate is 4.8834% (5% x 0.976683). Based on interpolating between 
the remainder factors in Table U(1), the present value of the remainder 
interest is $61,012, computed as illustrated in Figure 2 to this 
paragraph (e)(5)(iii).
[GRAPHIC] [TIFF OMITTED] TP05MY22.007

    (6) Actuarial Table D and Tables F (0.2) through F(20.0) for 
transfers for which the valuation date is on or after May 1, 1989--(i) 
Remainder factors for charitable remainder unitrusts. For transfers for 
which the valuation date is on or after May 1, 1989, the present value 
of a charitable remainder unitrust interest that is dependent upon a 
term of years is determined by using the formula in Figure 3 to this 
paragraph (e)(6)(i). For the convenience of taxpayers, actuarial 
factors have been computed by IRS and appear in Table D. Table D can be 
found on the IRS website at https://www.irs.gov/retirement-plans/actuarial-tables (or a corresponding URL as may be updated from time to 
time). Table D is referenced and explained in IRS Publication 1458 
``Actuarial Valuations Version 4B,'' which will be available after 
[date of publication of the final rule in the Federal Register]. The 
remainder factors from Table D also can be found in paragraph 
(e)(6)(iii) of this section, but only for adjusted payout rates from 
4.2 to 14 percent, inclusive. For transfers for which the valuation 
date is on or after [applicability date of the Treasury decision 
adopting these regulations as final regulations], where the present 
value of a charitable remainder unitrust interest is dependent on the 
termination of a life interest, see paragraph (e)(5) of this section. 
See, however, Sec.  1.7520-3(b) (relating to exceptions to the use of 
prescribed tables under certain circumstances).

Figure 3 to Paragraph (e)(6)(i)--Formula for Determining Term Certain 
Unitrust Remainder Factors

(1-r)\N\

where:
n = the term in years or fractions of a year; and
r = the adjusted payout rate.

    (ii) Unitrust payout rate adjustment factors. For transfers for 
which the valuation date is on or after May 1, 1989, the unitrust 
payout rate adjustment factors are determined by using the formula in 
Figure 4 to this paragraph (e)(6)(ii). For the convenience of 
taxpayers, actuarial factors have been computed by IRS, for interest 
rates from 0.2 to 20 percent, inclusive, and appear in Tables F(0.2) 
through F(20.0). Tables F(0.2) through F(20.0) can be found on the IRS 
website at https://www.irs.gov/retirement-plans/actuarial-tables (or a 
corresponding URL as may be updated from time to time). Tables F(0.2) 
through F(20.0) are referenced and explained in IRS Publication 1458 
``Actuarial Valuations Version 4B,'' which will be available after 
[date of publication of the final rule in the Federal Register]. The 
factors from Table F also can be found in paragraph (e)(6)(iii) of this 
section, but only for

[[Page 26818]]

interest rates from 4.2 to 14 percent, inclusive.
[GRAPHIC] [TIFF OMITTED] TP05MY22.008

    (iii) Table D and Tables F(4.2) through F(14.0). The unitrust 
remainder factors from Table D, for interest rates from 4.2 to 14 
percent, inclusive, and the unitrust payout factors from Tables F(4.2) 
through F(14.0) are as follows:
* * * * *
    (7) Actuarial Table U(1) for transfers for which the valuation date 
is on or after [applicability date of the Treasury decision adopting 
these regulations as final regulations]. The present value of a 
remainder interest in a charitable remainder unitrust that is dependent 
on the termination of a life interest is determined by using the 
section 7520 rate, Tables F(0.2) through (20.0) (see paragraph 
(e)(6)(ii) of this section), and the formula in paragraph (e)(5)(i) of 
this section to derive factors from the appropriate mortality table. 
For the convenience of taxpayers, actuarial factors have been computed 
by IRS and appear in Table U(1). For transfers for which the valuation 
date is on or after [applicability date of the Treasury decision 
adopting these regulations as final regulations], the actuarial tables 
will be available beginning May 5, 2022, at no charge, electronically 
via the IRS website at https://www.irs.gov/retirement-plans/actuarial-tables. These actuarial tables are referenced and explained by IRS 
Publication 1458, ``Actuarial Valuations Version 4B'' (2022). This 
publication will be available after [date of publication of the final 
rule in the Federal Register]. See, however, Sec.  1.7520-3(b) 
(relating to exceptions to the use of prescribed tables under certain 
circumstances).
    (f) Applicability date. This section applies on and after 
[applicability date of the Treasury decision adopting these regulations 
as final regulations].
0
Par. 9. The undesignated center heading immediately preceding Sec.  
1.664-4A is revised to read as follows:
    Unitrust Actuarial Tables Applicable Before [Applicability Date of 
the Treasury Decision Adopting These Regulations as Final Regulations]
0
Par. 10. Section 1.664-4A is amended by:
0
1. Revising the section heading.
0
2. In newly redesignated paragraph (g):
0
i. Revising the heading and paragraphs (g)(1) and (2).
0
ii. Adding paragraphs (g)(3) and (4).
0
iii. Revising paragraph (g)(5).
0
iv. In paragraph (g)(6), revising the introductory text.
0
v. Adding paragraph (g)(7).
    The additions and revisions read as follows:


Sec.  1.664-4A  Valuation of charitable remainder interests for which 
the valuation date is before [applicability date of the Treasury 
decision adopting these regulations as final regulations].

* * * * *
    (g) Valuation of charitable remainder unitrusts having certain 
payout sequences for transfers for which the valuation date is on or 
after May 1, 2009, and before [applicability date of the Treasury 
decision adopting these regulations as final regulations]--(1) In 
general. Except as otherwise provided in paragraph (g)(2) of this 
section, in the case of transfers for which the valuation date is on or 
after May 1, 2009, and before [applicability date of the Treasury 
decision adopting these regulations as final regulations], the present 
value of a remainder interest is determined under paragraphs (g)(3) 
through (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 
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 under a mental disability so that the 
disposition of the property could not be changed, and the decedent died 
on or after May 1, 2009, but before [applicability date of the Treasury 
decision adopting these regulations as final regulations], without 
having regained the ability to dispose of the

[[Page 26819]]

decedent's property, or if the decedent died within 90 days of the date 
that the decedent first regained that ability on or after May 1, 2009, 
but before [applicability date of the Treasury decision adopting these 
regulations as final regulations], 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, 2009, or 
after April 30, 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 using 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 (f)(6) or (g)(6) of this 
section, at the option of the donor or the decedent's executor, as the 
case may be.
    (iii) For purposes of paragraphs (g)(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 (f)(6) or 
(g)(6) of this section, the donor or decedent's executor must 
consistently use the same mortality basis with respect to each interest 
(income, remainder, partial, etc.) in the same property, 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 factors with the same mortality 
basis, and all assets includible in the gross estate and/or estate tax 
deductions claimed must be valued based on factors with the same 
mortality basis.
    (3) Adjusted payout rate. The adjusted payout rate is determined by 
applying the formula in Sec.  1.664-4(e)(6)(ii) for the section 7520 
interest rate applicable to the transfer to derive a factor. For the 
convenience of taxpayers, actuarial factors have been computed by IRS, 
for interest rates from 0.2 to 20 percent, inclusive, and appear in 
Tables F(0.2) through F(20.0). Tables F(0.2) through F(20.0) can be 
found on the IRS website at https://www.irs.gov/retirement-plans/actuarial-tables (or a corresponding URL as may be updated from time to 
time). Tables F(0.2) through F(20.0) are referenced and explained in 
IRS Publication 1458 ``Actuarial Valuations Version 3B.'' The payout 
adjustment factors from Table F can also be found in Sec.  1.664-
4(e)(6)(iii), but only for interest rates from 4.2 to 14 percent, 
inclusive. Alternatively, the Commissioner may supply a factor upon a 
request for a ruling. See Sec.  1.664-4(b). See Sec.  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 Sec.  
1.664-3(a)(5) is a term of years, the factor that is used in 
determining the present value of the remainder interest is determined 
by applying the formula in Sec.  1.664-4(e)(6)(i) under the appropriate 
adjusted payout rate corresponding to the number of years in the term. 
For the convenience of taxpayers, actuarial factors have been computed 
by IRS and appear in Table D. Table D can be found on the IRS website 
at https://www.irs.gov/retirement-plans/actuarial-tables (or a 
corresponding URL as may be updated from time to time). Table D is 
referenced and explained in IRS Publication 1458 ``Actuarial Valuations 
Version 3B.'' The remainder factors from Table D also can be found in 
Sec.  1.664-4(e)(6)(iii), but only for adjusted payout rates from 4.2 
to 14 percent, inclusive. If the adjusted payout rate is a percentage 
that is between the adjusted payout rate for which factors are provided 
by Table D, an exact method of obtaining the applicable factors (such 
as through software using the actual rate of return and the actuarial 
formula provided in Sec.  1.664-4(e)(6)(i)) or a linear interpolation 
must be used, provided whichever method used is applied consistently. 
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 (g)(4). 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 Sec.  1.664-4(e)(4) for 
additional rules regarding the valuation date, and for an example that 
illustrates the application of this paragraph (g)(4).
    (5) Period is the life of one individual. If the period described 
in Sec.  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 on or after May 1, 2009, and 
before [applicability date of the Treasury decision adopting these 
regulations as final regulations], may be computed directly by using 
the formula in Sec.  1.664-4(e)(5)(i) to derive factors from the 
appropriate mortality table. For the convenience of taxpayers, 
actuarial factors have been computed by IRS and appear in Table U(1). 
Table U(1) can be found on the IRS website at https://www.irs.gov/retirement-plans/actuarial-tables (or a corresponding URL as may be 
updated from time to time). Table U(1) is referenced and explained in 
IRS Publication 1458 ``Actuarial Valuations Version 3B.'' The remainder 
factors from Table U(1) also can be found in paragraph (g)(6) of this 
section, but only for adjusted payout rates from 4.2 to 14 percent, 
inclusive. For purposes of the computations described in this paragraph 
(g)(5), the age of an individual is the age of that individual at the 
individual's nearest birthday. If the adjusted payout rate is a 
percentage that is between the adjusted payout rate for which factors 
are provided by Table U(1), an exact method of obtaining the applicable 
factors (such as through software using the actual rate of return and 
the actuarial formula provided in Sec.  1.664-4(e)(5)(i)) or a linear 
interpolation must be used, provided whichever method used is applied 
consistently. The rules provided in Sec.  1.664-4(e)(5) apply for 
determining the present value of the remainder interest. See Sec.  
1.664-4(e)(5) for an example illustrating the application of this 
paragraph (g)(5) (using current actuarial tables).
    (6) Actuarial Table U(1) for transfers for which the valuation date 
is on or after May 1, 2009, and before [applicability date of the 
Treasury decision adopting these regulations as final regulations]. For 
transfers for which the valuation date is on or after May 1, 2009, and 
before [applicability date of the Treasury decision adopting these 
regulations as final regulations], and without regard to the headings 
in the tables in this paragraph (g)(6) that do not contain this 
termination date for the applicability of the tables, 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 (g)(6), and Tables F(4.2) through 
F(14.0) in Sec.  1.664-4(e)(6)(iii). See, however, Sec.  1.7520-3(b) 
(relating to exceptions to the use of prescribed tables under certain 
circumstances). Actuarial factors that do not appear in the following 
tables may be computed directly by using the formula in Sec.  1.664-
4(e)(5)(i) to derive factors from the appropriate mortality table. For 
the convenience of taxpayers, actuarial factors have been computed by 
IRS and appear in Table U(1) that is referenced and explained by IRS 
Publication 1458, ``Actuarial

[[Page 26820]]

Valuations Version 3B'' (2009). The table is available at no charge, 
electronically via the IRS website at https://www.irs.gov/retirement-plans/actuarial-tables (or a corresponding URL as may be updated from 
time to time).
* * * * *
    (7) Applicability dates. Paragraphs (g)(1) through (6) of this 
section apply on and after May 1, 2009, and before [applicability date 
of the Treasury decision adopting these regulations as final 
regulations].
0
Par. 11. Section 1.7520-1 is amended by revising paragraphs (a)(1) and 
(2), (b)(2), (c), and (d) and adding paragraphs (e) and (f) to read as 
follows:


Sec.  1.7520-1  Valuation of annuities, interests for life or a term of 
years, and remainder or reversionary interests.

    (a) * * * (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 a term of years (including unitrust 
interests), and remainder or reversionary interests is their present 
value determined under this section. See Sec.  20.2031-7(d) of this 
chapter (and, for periods prior to [applicability date of the Treasury 
decision adopting these regulations as final regulations], Sec.  
20.2031-7A of this chapter) for the computation of the value of 
annuities, interests for life or a term of years, and remainder or 
reversionary interests other than interests described in paragraphs 
(a)(2) and (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 [applicability date of the Treasury decision 
adopting these regulations as final regulations], 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 IRS 
publications at that time. For transactions with valuation dates on or 
after [applicability date of the Treasury decision adopting these 
regulations as final regulations], the mortality component table (Table 
2010CM) is in Sec.  20.2031-7(d)(7)(ii) of this chapter, is referenced 
by IRS Publication 1457, ``Actuarial Valuations Version 4A,'' and can 
be found on the IRS website at https://www.irs.gov/retirement-plans/actuarial-tables (or a corresponding URL as may be updated from time to 
time). See Sec.  20.2031-7A of this chapter for mortality component 
tables applicable to transactions for which the valuation date falls 
before [applicability date of the Treasury decision adopting these 
regulations as final regulations].
    (c) Actuarial factors. The present value on the valuation date of 
an annuity, an interest for life or a term of years, and a remainder or 
reversionary interest is computed by using the section 7520 interest 
rate component that is described in paragraph (b)(1) of this section 
and the mortality component that is described in paragraph (b)(2) of 
this section. Actuarial factors for determining these present values 
may be calculated by taxpayers using the actuarial formulas in Sec.  
20.2031-7(d)(2) of this chapter but, for the convenience of taxpayers, 
are included in tables that are referenced and explained by 
publications of the Internal Revenue Service. If a special factor is 
required in order to value an interest, the special factor may be 
calculated by taxpayers using the actuarial formulas in Sec.  20.2031-
7(d)(2) of this chapter or the taxpayer may request a ruling to obtain 
the factor from the Internal Revenue Service. The request for a ruling 
must be accompanied by a recitation of the facts, including the date of 
birth for each measuring life and copies of relevant instruments. A 
request for a ruling must comply with the instructions for requesting a 
ruling published periodically in the Internal Revenue Bulletin (see 
Rev. Proc. 2021-1, 2021-1 I.R.B. 1, and subsequent updates, and 
Sec. Sec.  601.201 and 601.601(d)(2)(ii)(b) of this chapter) and must 
include payment of the required user fee.
    (d) IRS publications referencing and explaining actuarial tables 
with rates from 0.2 to 20 percent, inclusive, at intervals of two-
tenths of one percent, for valuation dates on or after [applicability 
date of the Treasury decision adopting these regulations as final 
regulations]. The publications listed in paragraphs (d)(1) through (3) 
of this section will be available after [date of publication of the 
final rule in the Federal Register]. The underlying actuarial tables 
referenced and explained by these publications will be available May 5, 
2022, at no charge, electronically via the IRS website at https://www.irs.gov/retirement-plans/actuarial-tables:
    (1) IRS Publication 1457, ``Actuarial Valuations Version 4A'' 
(2022). This publication references tables of valuation factors and 
provides examples that show how to compute other valuation factors, for 
determining the present value of annuities, interests for life or a 
term of years, and remainder or reversionary interests, 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 Sec.  
1.664-2 and a pooled income fund as defined in Sec.  1.642(c)-5. This 
publication references and explains Table S (single life remainder 
factors), Table R(2) (two-life last-to-die remainder factors), Table B 
(actuarial factors used in determining the present value of an interest 
for a term of years), Table H (commutation factors), Table J (term 
certain annuity beginning-of-interval adjustment factors), and Table K 
(annuity end-of-interval adjustment factors). See earlier versions of 
the publication, Sec.  1.642(c)-6A, or Sec.  20.2031-7A of this chapter 
for Table S applicable to valuation dates before [applicability date of 
the Treasury decision adopting these regulations as final regulations]. 
Earlier versions of the publication also contain earlier versions of 
Table R(2). Table B, Table J, and Table K also can be found in Sec.  
20.2031-7(d)(6) of this chapter, but only for interest rates from 4.2 
to 14 percent, inclusive.
    (2) IRS Publication 1458, ``Actuarial Valuations Version 4B'' 
(2022). This publication references and explains 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. This publication references Table U(1) 
(unitrust single life remainder factors), Table U(2) (unitrust two-life 
last-to-die remainder factors), Table D (actuarial factors used in 
determining the present value of a remainder interest postponed for a 
term of years), Table F (adjustment payout rate factors), and Table Z 
(unitrust commutation factors). See earlier versions of the publication 
or Sec.  1.664-4A for Table U(1) applicable to valuation dates before 
[applicability date of the Treasury decision adopting these regulations 
as final regulations]. Earlier versions of the publication also contain 
earlier versions of Table U(2). Table D also can be found in Sec.  
1.664-4(e)(6)(iii), but only for adjusted payout rates from 4.2 to 14 
percent, inclusive. Table F also can be found in Sec.  1.664-
4(e)(6)(iii), but only for interest rates from 4.2 to 14 percent, 
inclusive.

[[Page 26821]]

    (3) IRS Publication 1459, ``Actuarial Valuations Version 4C'' 
(2022). This publication references and explains Table C, which 
provides factors for making adjustments to the standard remainder 
factor for valuing gifts of depreciable property. See Sec.  1.170A-12.
    (4) The publications identified in paragraphs (d)(1) through (3) of 
this section also reference Table 2010CM, the mortality component 
table.
    (e) Use of approximation methods for obtaining factors when the 
required valuation rate falls between two listed rates. For certain 
cases, this part and IRS publications provide approximation methods 
(for example, interpolation) for obtaining factors when the required 
valuation rate falls between two listed rates (such as in the case of a 
pooled income fund's rate of return or a unitrust's adjusted payout 
rate). In general, exact methods of obtaining the applicable factors 
are allowed, such as through software using the applicable interest 
rate and the proper actuarial formula, provided such direct methods are 
applied consistently. The actuarial formula in Sec.  20.2031-
7(d)(2)(ii)(B) of this chapter is used to determine the remainder 
factor for pooled income funds and the actuarial formula in Sec.  
1.664-4(e)(5)(i) is used to determine the remainder factor for 
unitrusts. The approximation method provided in this part must be used 
if more exact methods are not available.
    (f) Applicability date. This section applies on and after 
[applicability date of the Treasury decision adopting these regulations 
as final regulations].

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

0
Par. 12. The authority citation for part 20 continues to read in part 
as follows:

    Authority:  26 U.S.C. 7805.
* * * * *
0
Par. 13. Section 20.2031-0 is revised to read as follows:


Sec.  20.2031-0  Table of contents.

    This section lists the section headings and undesignated center 
headings that appear in the regulations under section 2031.

Sec.  20.2031-1 Definition of gross estate; valuation of property.
Sec.  20.2031-2 Valuation of stocks and bonds.
Sec.  20.2031-3 Valuation of interests in businesses.
Sec.  20.2031-4 Valuation of notes.
Sec.  20.2031-5 Valuation of cash on hand or on deposit.
Sec.  20.2031-6 Valuation of household and personal effects.
Sec.  20.2031-7 Valuation of annuities, interests for life or a term 
of years, and remainder or reversionary interests.
Sec.  20.2031-8 Valuation of certain life insurance and annuity 
contracts; valuation of shares in an open-end investment company.
Sec.  20.2031-9 Valuation of other property.
Actuarial Tables Applicable Before [Applicability Date of the 
Treasury Decision Adopting These Regulations as Final Regulations]
Sec.  20.2031-7A Valuation of annuities, interests for life or a 
term of years, and remainder or reversionary interests for estates 
of decedents for which the valuation date of the gross estate is 
before [applicability date of the Treasury decision adopting these 
regulations as final regulations].

0
Par. 14. Section 20.2031-7 is amended by:
0
1. Revising paragraph (c), the heading of paragraph (d), and paragraphs 
(d)(1) through (5).
0
2. Redesignating paragraph (d)(7) as paragraph (g)(4) of Sec.  20.2031-
7A.
0
3. Adding new paragraph (d)(7).
0
4. Revising paragraph (e).
    The revisions and addition read as follows:


Sec.  20.2031-7  Valuation of annuities, interests for life or a term 
of years, and remainder or reversionary interests.

* * * * *
    (c) Actuarial valuations. The present value of annuities, interests 
for life or a term of years, and remainder or reversionary interests 
for estates of decedents for which the valuation date of the gross 
estate is on or after [applicability date of the Treasury decision 
adopting these regulations as final regulations], is determined under 
paragraph (d) of this section. The present value of annuities, 
interests for life or a term of years, and remainder or reversionary 
interests for estates of decedents for which the valuation date of the 
gross estate is before [applicability date of the Treasury decision 
adopting these regulations as final regulations], is determined under 
the following sections:

                        Table 1 to Paragraph (c)
------------------------------------------------------------------------
                  Valuation dates
---------------------------------------------------      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)
04-30-09.......................  AD...............  20.2031-7A(g)
------------------------------------------------------------------------
AD = [applicability date of the Treasury decision adopting these
  regulations as final regulations].

    (d) Actuarial valuations on or after [applicability date of the 
Treasury decision adopting these regulations as final regulations]--(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 [applicability date of the 
Treasury decision adopting these regulations as final regulations], the 
fair market value of annuities, interests for life or a term of years, 
and remainder or reversionary interests is the present value determined 
by using standard or special section 7520 actuarial factors. These 
factors are derived by using the actuarial formulas provided in 
paragraph (d)(2) of this section, 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. For the 
convenience of taxpayers, paragraph (d)(2) of this section provides for 
published tables of factors for specific types of interests. These 
published tables provide factors for rates from 0.2 to 20 percent, 
inclusive, at intervals of two-tenths of one percent. In general, 
appropriate factors instead may be computed directly from the actuarial 
formulas provided in paragraph (d)(2) of this section. In some cases, 
specific examples in this part and IRS publications illustrate 
approximation methods (for example, interpolation) for obtaining 
factors when the required valuation rate falls between two listed rates 
(such as in the case of a pooled income fund's rate of return or a 
unitrust's adjusted payout rate). Exact methods of obtaining the 
applicable actuarial factors are allowed, such as through software 
using the actual rate of return and the actuarial formulas provided in 
paragraph (d)(2) of this section; the approximation method provided in 
this part must be used if more exact methods are not available. See 
Sec. Sec.  20.7520-1 through 20.7520-4.
    (2) Specific interests--(i) Pooled income funds and 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

[[Page 26822]]

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 an interest for a 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--(A) Remainder 
and reversionary interests for a term of years. If the interest to be 
valued is a remainder or reversionary interest to take effect after a 
definite number of years, the present value of the interest is computed 
by multiplying the value of the property by the appropriate remainder 
factor (that corresponds to the applicable section 7520 interest rate 
and the stated term). The factor for an ordinary remainder interest 
following a term certain may be found using the formula in Figure 1 to 
this paragraph (d)(2)(ii)(A). For the convenience of taxpayers, 
actuarial factors have been computed by IRS and appear in Table B. 
Table B can be found on the IRS website at https://www.irs.gov/retirement-plans/actuarial-tables (or a corresponding URL as may be 
updated from time to time). Table B is referenced and explained in IRS 
Publication 1457 ``Actuarial Valuations Version 4A,'' which will be 
available after [date of publication of the final rule in the Federal 
Register]. The remainder factors from Table B also can be found in 
paragraph (d)(6) of this section, but only for interest rates from 4.2 
to 14 percent, inclusive. For information about obtaining special 
factors for other situations, see paragraph (d)(4) of this section.
[GRAPHIC] [TIFF OMITTED] TP05MY22.009

    (B) Remainder and reversionary interests dependent on the life of 
one individual. If the interest to be valued is a remainder or 
reversionary interest to take effect 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 factor (that corresponds 
to the applicable section 7520 interest rate and the age of the 
measuring life of the life interest that precedes the remainder 
interest). The factor for an ordinary remainder interest following the 
death of one individual may be found using the formula in Figure 2 to 
this paragraph (d)(2)(ii)(B). The prescribed mortality table is Table 
2010CM as set forth in paragraph (d)(7)(ii) of this section, or for 
periods before [applicability date of the Treasury decision adopting 
these regulations as final regulations], the appropriate table found in 
Sec.  20.2031-7A. For the convenience of taxpayers, actuarial factors 
have been computed by IRS and appear in Table S. Table S will be 
available beginning May 5, 2022, at no charge, electronically via the 
IRS website at https://www.irs.gov/retirement-plans/actuarial-tables 
(or a corresponding URL as may be updated from time to time). Table S 
is referenced and explained by IRS Publication 1457 ``Actuarial 
Valuations Version 4A,'' which will be available after [date of 
publication of the final rule in the Federal Register]. For information 
about obtaining special factors for other situations, see paragraph 
(d)(4) of this section.

[[Page 26823]]

[GRAPHIC] [TIFF OMITTED] TP05MY22.010

    (iii) Ordinary interests for a 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 the use of certain 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 actuarial factor for an interest for a term of years or 
for a life interest (that corresponds to the applicable section 7520 
interest rate and the durational period). The actuarial factor for an 
ordinary income interest for a term certain may be found by subtracting 
from 1.000000 the factor for an ordinary remainder interest following 
the same term certain that is determined under the formula in paragraph 
(d)(2)(ii)(A) of this section. For the convenience of taxpayers, 
actuarial factors have been computed by IRS and appear in the ``Income 
Interest'' column of Table B which can be found on the IRS website at 
https://www.irs.gov/retirement-plans/actuarial-tables (or a 
corresponding URL as may be updated from time to time). The actuarial 
factor for an ordinary income interest for the life of one individual 
may be found by subtracting from 1.00000 the factor for an ordinary 
remainder interest following the life of the same individual that is 
determined in paragraph (d)(2)(ii)(B) of this section. For the 
convenience of taxpayers, actuarial factors have been computed by IRS 
and appear in the ``Life Estate'' column of Table S. Table S 
(applicable when the valuation date is on or after [applicability date 
of the Treasury decision adopting these regulations as final 
regulations]) can be found on the IRS website at https://www.irs.gov/retirement-plans/actuarial-tables. Table B and Table S are referenced 
and explained by IRS Publication 1457 ``Actuarial Valuations Version 
4A''. See Sec.  20.2031-7A or earlier versions of Publication 1457 for 
valuation of interests before [applicability date of the Treasury 
decision adopting these regulations as final regulations]. For 
information about obtaining special factors for other situations, 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 factor (that corresponds to 
the applicable section 7520 interest rate and annuity period). The 
appropriate annuity factor for an annuity payable for a term of years 
is computed by subtracting from 1.000000 the factor for an ordinary 
remainder interest following the same term certain that is determined 
under the formula in paragraph (d)(2)(ii)(A) of this section and then 
dividing the result by the applicable section 7520 interest rate 
expressed as a number with at least four decimal places. For the 
convenience of taxpayers, actuarial factors have been computed by IRS 
and appear in the ``Annuity'' column of Table B which can be found on 
the IRS website at https://www.irs.gov/retirement-plans/actuarial-tables (or a corresponding URL as may be updated from time to time). 
The appropriate annuity factor for an annuity payable for the life of 
one individual is computed by subtracting from 1.00000 the factor for 
an ordinary remainder interest following the life of the same 
individual that is determined under the formula in paragraph 
(d)(2)(ii)(B) of this section and then dividing the result by the 
applicable section 7520 interest rate expressed as a number with four 
decimal places. For the convenience of taxpayers, actuarial factors 
have been computed by IRS and appear in the ``Annuity'' column of Table 
S. Table S (applicable when the valuation date is on or after 
[applicability date of the Treasury decision adopting these regulations 
as final regulations]) can be found on the IRS website at https://www.irs.gov/retirement-plans/actuarial-tables. Table B and Table S are 
referenced and explained in IRS Publication 1457 ``Actuarial Valuations 
Version 4A''. See Sec.  20.2031-7A or earlier versions of Publication 
1457 for valuation of interests before [applicability date of the 
Treasury decision adopting these regulations as final regulations]. For 
information about obtaining special factors for other situations, see 
paragraph (d)(4) of this section.
    (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

[[Page 26824]]

then multiplied by the applicable adjustment factor at the appropriate 
interest rate component for payments made at the end of the specified 
periods. The applicable adjustment factor may be found using the 
formula in Figure 3 to this paragraph (d)(2)(iv)(B). For the 
convenience of taxpayers, actuarial factors have been computed by IRS 
and appear in Table K. Table K, which is referenced and explained by 
Publication 1457, can be found on the IRS website at https://www.irs.gov/retirement-plans/actuarial-tables. The provisions of this 
paragraph (d)(2)(iv)(B) are illustrated by the example in paragraph 
(d)(2)(iv)(B)(2) of this section.
[GRAPHIC] [TIFF OMITTED] TP05MY22.011

    (1) Sample factors from actuarial Table S and Table K. For purposes 
of the example in paragraph (d)(2)(iv)(B)(2) of this section, the 
following factors from Table S and Table K will be used:

                  Table 2 to Paragraph (d)(2)(iv)(B)(1)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Factors from Table S--Based on Table 2010CM
Interest at 3.2 Percent
------------------------------------------------------------------------
Age                        Annuity        Life Estate         Remainder
------------------------------------------------------------------------
             75             9.4053            0.30097           0.69903
------------------------------------------------------------------------
Factors from Table K
Adjustment Factors for Annuities Payable at the End of Each Interval
------------------------------------------------------------------------
Interest Rate        Semi-Annually          Quarterly           Monthly
------------------------------------------------------------------------
           3.2%             1.0079             1.0119            1.0146
------------------------------------------------------------------------

    (2) Example. At the time of the decedent's death, the survivor/
annuitant, age 75, is entitled to receive an annuity of $15,000 per 
year for life payable in equal monthly installments at the end of each 
month. The section 7520 rate for the month in which the decedent died 
is 3.2 percent. Under Table S, the annuity factor at 3.2 percent for an 
individual aged 75 is 9.4053. Under Table K, the adjustment factor 
under the column for payments made at the end of each monthly period at 
the rate of 3.2 percent is 1.0146. The aggregate annual amount, 
$15,000, is multiplied by the factor 9.4053 and the product then is 
multiplied by 1.0146. The present value of the annuity at the date of 
the decedent's death is, therefore, $143,139.26 ($15,000 x 9.4053 x 
1.0146).
    (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 then is 
multiplied by the applicable adjustment factor at the appropriate 
interest rate component for payments made at the beginning of specified 
periods. The applicable adjustment factor may be found using the 
formula in Figure 4 to this paragraph (d)(2)(iv)(C). For the 
convenience of taxpayers, actuarial factors have been computed by IRS 
and appear in Table J. Table J, which is referenced and explained by 
Publication 1457, can be found on the IRS website at https://www.irs.gov/retirement-plans/actuarial-tables. 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.

[[Page 26825]]

[GRAPHIC] [TIFF OMITTED] TP05MY22.012

    (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. If a decedent dies on or after January 1, 
2021, and before [applicability date of the Treasury decision adopting 
these regulations as final regulations], the fair market value of 
annuities, interests for life or a term of years, and remainder or 
reversionary interests based on one or more measuring lives included in 
the gross estate of the decedent is their present value determined 
under this section by using 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 factors derived from the selected mortality 
table, either Table 2010CM in paragraph (d)(7)(ii) of this section or 
Table 2000CM in Sec.  20.2031-7A(g)(4), at the option of the donor or 
the decedent's executor, as the case may be. For the convenience of 
taxpayers, actuarial factors based on Table 2010CM appear in the 
proposed version of Table S, and actuarial factors based on Table 
2000CM appear in the current version of Table S, which will be 
available as provided in paragraph (d)(4) of this section. The 
decedent's executor must consistently use the same mortality basis with 
respect to each interest (income, remainder, partial, etc.) in the same 
property, 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 factors with 
the same mortality basis, and all assets includible in the gross estate 
and/or estate tax deductions claimed must be valued based on factors 
with the same mortality basis.
    (4) Publications and actuarial computations by the Internal Revenue 
Service. The factor for determining the present value of a remainder 
interest that is dependent on the termination of the life of one 
individual may be computed by using the formula in paragraph 
(d)(2)(ii)(B) of this section to derive factors from the appropriate 
mortality table. For the convenience of taxpayers, actuarial factors 
have been computed by IRS and appear in Table S. The factor for 
determining the present value of a remainder interest following a term 
certain may be computed by using the formula in paragraph (d)(2)(ii)(A) 
of this section. For the convenience of taxpayers, actuarial factors 
have been computed by IRS and appear in Table B. Adjustment factors for 
term certain annuities payable at the beginning of each interval may be 
computed by using the formula in paragraph (d)(2)(iv)(C) of this 
section. For the convenience of taxpayers, actuarial factors have been 
computed by IRS and appear in Table J. Adjustment factors for annuities 
payable at the end of each interval may be computed by using the 
formula in paragraph (d)(2)(iv)(B) of this section. For the convenience 
of taxpayers, actuarial factors have been computed by IRS and appear in 
Table K. These tables will be available beginning May 5, 2022, at no 
charge, electronically via the IRS website at https://www.irs.gov/retirement-plans/actuarial-tables (or a corresponding URL as may be 
updated from time to time). IRS Publication 1457, ``Actuarial 
Valuations Version 4A'' (2022), references and explains the factors 
contained in the actuarial tables and also includes examples that 
illustrate how to compute many special factors for more unusual 
situations. This publication will be available after [date the Treasury 
decision adopting these regulations as final regulations is published 
in the Federal Register]. Table B, Table J, and Table K also can be 
found in paragraph (d)(6) of this section, but only for interest rates 
from 4.2 to 14 percent, inclusive. If a special factor is required in 
the case of an actual decedent, the special factor may be calculated by 
the executor using the actuarial formulas in paragraph (d)(2) of this 
section or the executor may request a ruling to obtain the factor from 
the Internal Revenue Service. 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 
examples in this paragraph (d)(5). For purposes of these examples, the 
following factors from Table S, Table B, and Table K will be used:

[[Page 26826]]



                       Table 3 to Paragraph (d)(5)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Factors from Table S--Based on Table 2010CM
Interest at 3.2 Percent
------------------------------------------------------------------------
Age                        Annuity        Life Estate         Remainder
------------------------------------------------------------------------
             31            23.8334            0.76267           0.23733
             46            20.0146            0.64047           0.35953
------------------------------------------------------------------------
Interest at 4.6 Percent
------------------------------------------------------------------------
             65            11.7691            0.54138           0.45862
------------------------------------------------------------------------
Factors from Table B
Annuity, Income, and Remainder Interests for a Term Certain
Interest at 2.6 Percent
------------------------------------------------------------------------
Years                      Annuity    Income Interest         Remainder
------------------------------------------------------------------------
              5             4.6325           0.120445          0.879555
------------------------------------------------------------------------
Factors from Table K
Adjustment Factors for Annuities Payable at the End of Each Interval
------------------------------------------------------------------------
Interest Rate        Semi-Annually          Quarterly           Monthly
------------------------------------------------------------------------
           2.6%             1.0065             1.0097            1.0119
           3.2%             1.0079             1.0119            1.0146
------------------------------------------------------------------------

    (i) 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 65 
years and 5 months old. In the month in which the decedent died, the 
section 7520 rate was 4.6 percent. Under Table S, the remainder factor 
at 4.6 percent for determining the present value of the remainder 
interest due at the death of a person aged 65, A's age at A's nearest 
birthday to the date of the decedent's death, is 0.45862. The present 
value of the remainder interest at the date of the decedent's death is, 
therefore, $22,931 ($50,000 times 0.45862).
    (ii) 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 3.2 percent. Under Table S, the factor at 3.2 
percent for determining the present value of the life estate given to a 
person aged 31, A's age at A's nearest birthday to the date of the 
decedent's death, is 0.76267. The present value of A's income interest 
at the time of the parent's death is, therefore, $38,133.50 ($50,000.00 
x 0.76267).
    (iii) 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 3.2 
percent. Under Table S, the factor at 3.2 percent for determining the 
present value of an annuity interest payable until the death of a 
person age 46 (B's age at B's nearest birthday to the date of A's 
death) is 20.0146. The adjustment factor from Table K at an interest 
rate of 3.2 percent for semiannual annuity payments made at the end of 
the period is 1.0079. The present value of the annuity at the date of 
A's death is, therefore, $201,727.15 ($10,000 x 20.0146 x 1.0079).
    (iv) 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 throughout a term certain. At the time of the decedent's death, 
the section 7520 rate was 2.6 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 for the interest rate of 2.6 
percent, the factor for the present value of an annuity with a term of 
5 years is 4.6325. The adjustment factor from Table K at an interest 
rate of 2.6 percent for quarterly annuity payments made at the end of 
the quarter is 1.0097. The present value of the annuity is, therefore, 
$46,774.35 ($10,000 x 4.6325 x 1.0097).
* * * * *
    (7) Actuarial Table S and Table 2010CM where the valuation date is 
on or after [applicability date of the Treasury decision adopting these 
regulations as final regulations]--(i) Determination of required 
factors. Except as provided in Sec.  20.7520-3(b) (pertaining to 
certain limitations on the use of prescribed tables), for determination 
of the present value of a remainder interest that is dependent on the 
termination of a life interest, where the valuation date is on or after 
[applicability date of the Treasury decision adopting these regulations 
as final regulations], actuarial factors computed directly by using the 
formula in paragraph (d)(2)(ii)(B) of this section, Table 2010CM, and 
the section 7520 rate are used in the application of the provisions of 
this section. For the convenience of taxpayers, the actuarial factors, 
when the section 7520 interest rate component is from 0.2 to 20 
percent, inclusive, have been computed by IRS and can be found in Table 
S. Table S will be available beginning May 5, 2022, at no charge, 
electronically via the IRS website at https://www.irs.gov/retirement-plans/actuarial-tables. Table S is also referenced and explained by IRS 
Publication 1457 ``Actuarial Valuations Version 4A,'' which will be 
available after [date the Treasury decision adopting these regulations 
as

[[Page 26827]]

final regulations is published in the Federal Register].
    (ii) Table 2010CM.

                                         Table 4 to Paragraph (d)(7)(ii)
----------------------------------------------------------------------------------------------------------------
      Age x                lx               Age x                lx               Age x                lx
----------------------------------------------------------------------------------------------------------------
               0         100,000.00                 37          97,193.66                 74          71,177.55
               1          99,382.28                 38          97,058.84                 75          69,174.83
               2          99,341.16                 39          96,915.25                 76          67,044.59
               3          99,313.80                 40          96,761.20                 77          64,773.93
               4          99,292.72                 41          96,595.51                 78          62,366.05
               5          99,276.45                 42          96,416.30                 79          59,795.50
               6          99,261.55                 43          96,220.61                 80          57,080.84
               7          99,248.33                 44          96,005.41                 81          54,213.71
               8          99,236.50                 45          95,768.60                 82          51,205.27
               9          99,226.09                 46          95,509.98                 83          48,059.88
              10          99,217.03                 47          95,229.06                 84          44,808.51
              11          99,208.80                 48          94,923.45                 85          41,399.79
              12          99,199.98                 49          94,589.88                 86          37,895.25
              13          99,188.21                 50          94,225.50                 87          34,313.98
              14          99,170.64                 51          93,828.33                 88          30,700.82
              15          99,145.34                 52          93,398.01                 89          27,106.68
              16          99,111.91                 53          92,934.52                 90          23,586.75
              17          99,070.69                 54          92,438.08                 91          20,198.02
              18          99,021.50                 55          91,907.95                 92          16,996.17
              19          98,964.16                 56          91,342.02                 93          14,032.08
              20          98,898.61                 57          90,737.24                 94          11,348.23
              21          98,824.20                 58          90,090.97                 95          8,975.661
              22          98,741.32                 59          89,401.06                 96          6,931.559
              23          98,652.16                 60          88,665.95                 97          5,218.261
              24          98,559.87                 61          87,883.66                 98          3,823.642
              25          98,466.80                 62          87,051.88                 99          2,722.994
              26          98,373.71                 63          86,167.86                100          1,882.108
              27          98,280.09                 64          85,226.77                101          1,261.083
              28          98,185.51                 65          84,221.59                102           818.2641
              29          98,089.05                 66          83,142.34                103           513.7236
              30          97,989.90                 67          81,978.28                104           311.8784
              31          97,887.47                 68          80,728.83                105           183.0200
              32          97,781.58                 69          79,387.95                106           103.8046
              33          97,672.13                 70          77,957.53                107           56.91106
              34          97,559.20                 71          76,429.84                108           30.17214
              35          97,442.53                 72          74,797.63                109           15.47804
              36          97,321.14                 73          73,049.33                110           0.000000
----------------------------------------------------------------------------------------------------------------

    (e) Applicability date. This section applies on and after 
[applicability date of the Treasury decision adopting these regulations 
as final regulations].
    Par. 15. The undesignated center heading immediately preceding 
Sec.  20.2031-7A is revised to read as follows:
Actuarial Tables Applicable Before [Applicability Date of the Treasury 
Decision Adopting These Regulations as Final Regulations]
0
Par. 16. Section 20.2031-7A is amended by:
0
1. Revising the section heading.
0
2. Adding paragraphs (g) heading and (g)(1) through (3).
0
3. In newly redesignated paragraph (g)(4), the heading and introductory 
text are revised.
0
4. Adding paragraph (g)(5).
    The revisions and additions read as follows:


Sec.  20.2031-7A   Valuation of annuities, interests for life or a term 
of years, and remainder or reversionary interests for estates of 
decedents for which the valuation date of the gross estate is before 
[applicability date of the Treasury decision adopting these regulations 
as final regulations].

* * * * *
    (g) Valuation of annuities, interests for life or a term of years, 
and remainder or reversionary interests for estates of decedents for 
which the valuation date of the gross estate is on or after May 1, 
2009, and before [applicability date of the Treasury decision adopting 
these regulations as final regulations]--(1) In general. Except as 
otherwise provided in Sec. Sec.  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 on or after 
May 1, 2009, and before [applicability date of the Treasury decision 
adopting these regulations as final regulations], the fair market value 
of annuities, interests for life or a term of years, and remainder or 
reversionary interests is the present value of the interests determined 
by using standard or special section 7520 actuarial factors and the 
valuation methodology described in Sec.  20.2031-7(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 Sec. Sec.  20.7520-1 through 
20.7520-4. See paragraph (g)(4) of this section for determination of 
the appropriate table for use in valuing these interests.
    (2) Transitional rules. (i) If a decedent dies on or after May 1, 
2009, and if, on May 1, 2009, the decedent was under a mental 
disability so that the disposition of the decedent's property could not 
be changed, and the decedent dies before [applicability date of the 
Treasury decision adopting these regulations as final regulations] 
either without having regained the ability to dispose of the decedent's 
property or within 90 days of

[[Page 26828]]

the date on which the decedent first regains that ability, the fair 
market value of annuities, interests for life or a term of years, and 
remainder or reversionary interests 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 
first became subject to the mental disability, at the option of the 
decedent's executor. For example, see paragraph (d) of this section.
    (ii) If a decedent dies on or after May 1, 2009, and before July 1, 
2009, the fair market value of annuities, interests for life or a term 
of years, and remainder or reversionary interests based on one or more 
measuring lives included in the gross estate of the decedent is their 
present value determined under this section by using 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 (f)(4) or (g)(4) of this 
section, at the option of the decedent's executor.
    (iii) For purposes of paragraphs (g)(2)(i) and (ii) of this 
section, where the decedent's executor is given the option to use the 
appropriate actuarial tables under either paragraph (f)(4) or (g)(4) of 
this section, the decedent's executor must consistently use the same 
mortality basis with respect to each interest (income, remainder, 
partial, etc.) in the same property, 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 factors with the same mortality basis, and all 
assets includible in the gross estate and/or estate tax deductions 
claimed must be valued based on factors with the same mortality basis.
    (3) Publications and actuarial computations by the Internal Revenue 
Service. The factor for determining the present value of a remainder 
interest that is dependent on the termination of the life of one 
individual may be computed by using the formula in Sec.  20.2031-
7(d)(2)(ii)(B) to derive factors from the appropriate mortality table. 
For the convenience of taxpayers, actuarial factors have been computed 
by IRS and appear in Table S. The factor for determining the present 
value of a remainder interest following a term certain may be computed 
by using the formula in Sec.  20.2031-7(d)(2)(ii)(A). For the 
convenience of taxpayers, actuarial factors have been computed by IRS 
and appear in Table B. Adjustment factors for term certain annuities 
payable at the beginning of each interval may be computed by using the 
formula in Sec.  20.2031-7(d)(2)(iv)(C). For the convenience of 
taxpayers, actuarial factors have been computed by IRS and appear in 
Table J. Adjustment factors for annuities payable at the end of each 
interval may be computed by using the formula in Sec.  20.2031-
7(d)(2)(iv)(B). For the convenience of taxpayers, actuarial factors 
have been computed by IRS and appear in Table K. These tables are 
referenced and explained by IRS Publication 1457, ``Actuarial Values 
Version 3A,'' (2009). Publication 1457 includes examples that 
illustrate how to compute many special factors for more unusual 
situations. The actuarial tables are available, at no charge, 
electronically via the IRS website at https://www.irs.gov/retirement-plans/actuarial-tables (or a corresponding URL as may be updated from 
time to time). Table S also can be found in paragraph (g)(4) of this 
section, but only for interest rates from 0.2 to 14 percent, inclusive. 
Table B, Table J, and Table K also can be found in Sec.  20.2031-
7(d)(6), but only for interest rates from 4.2 to 14 percent, inclusive. 
If a special factor is required in the case of an actual decedent, the 
special factor may be calculated by the executor using the actuarial 
formulas in Sec.  20.2031-7(d)(2) or the executor may request a ruling 
to obtain the factor from the Internal Revenue Service. 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.
    (4) Actuarial tables. Except as provided in Sec.  20.7520-3(b) 
(pertaining to certain limitations on the use of prescribed tables), 
actuarial factors based on Table 2000CM must be used in the application 
of the provisions of this section. The factor for determining the 
present value of a remainder interest that is dependent on the 
termination of the life of one individual may be computed by using the 
formula in Sec.  20.2031-7(d)(2)(ii)(B) to derive factors from the 
appropriate mortality table. For the convenience of taxpayers, 
actuarial factors, when the section 7520 interest rate component is 
from 0.2 to 20 percent, inclusive, have been computed by IRS and appear 
in Table S (applicable on and after May 1, 2009, and before 
[applicability date of the Treasury decision adopting these regulations 
as final regulations]). These actuarial tables, as referenced and 
explained by IRS Publication 1457 ``Actuarial Valuations Version 3A,'' 
are available, at no charge, electronically via the IRS website at 
https://www.irs.gov/retirement-plans/actuarial-tables. Table S 
(notwithstanding the lack of the applicable termination date in its 
heading), where the section 7520 interest rate component is from 0.2 to 
14 percent, inclusive, and Table 2000CM are as follows:
* * * * *
    (5) Applicability dates. Paragraphs (g)(1) through (4) of this 
section apply on and after May 1, 2009, and before [applicability date 
of the Treasury decision adopting these regulations as final 
regulations].
0
Par. 17. Section 20.2032-1 is amended by revising paragraphs (f)(1) and 
(h) to read as follows:


Sec.  20.2032-1   Alternate valuation.

* * * * *
    (f) * * *
    (1) Life estates, remainders, and similar interests--(i) In 
general. The values of life estates, remainders, and similar interests 
are to be obtained by applying the methods prescribed in Sec.  20.2031-
7, using the age of each person, the duration of whose life may affect 
the value of the interest, as of the date of the decedent's death, and 
the value of the property as of the alternate valuation date.
    (ii) Sample factors from actuarial Table S. The present value of a 
remainder interest dependent on the termination of one life is 
determined by using the formula in Sec.  20.2031-7(d)(2)(ii)(B) to 
derive factors from the appropriate mortality table. For the 
convenience of taxpayers, actuarial factors have been computed by IRS 
and appear in Table S. Table S can be found on the IRS website at 
https://www.irs.gov/retirement-plans/actuarial-tables (or a 
corresponding URL as may be updated from time to time). For purposes of 
the example in paragraph (e)(5)(iii) of this section, the following 
relevant factors from Table S is used:

[[Page 26829]]



                     Table 2 to Paragraph (f)(1)(ii)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                     Table S--Based on Table 2010CM
 Interest at 4.2
     Percent
------------------------------------------------------------------------
            Age            Annuity        Life Estate         Remainder
             65            12.2128            0.51294           0.48706
------------------------------------------------------------------------
                         Interest at 4.6 Percent
------------------------------------------------------------------------
            Age            Annuity        Life Estate         Remainder
             65            11.7691            0.54138           0.45862
------------------------------------------------------------------------

    (iii) Example. Assume that the decedent, or the decedent's estate, 
was entitled to receive certain property worth $50,000 upon the death 
of A, who was entitled to the income for life. At the time of the 
decedent's death, A was 65 years and 5 months old, and the section 7520 
rate was 4.6 percent. The value of the decedent's remainder interest at 
the date of the decedent's death would, as illustrated in Example 1 of 
Sec.  20.2031-7(d)(5)(i), be $22,931.00 ($50,000 x 0.45862). On the 
date that is 6 months after the decedent's death, A was 65 years and 11 
months old, and the section 7520 rate was 4.2 percent. If, because of 
economic conditions, the property declined in value and was worth only 
$40,000 on the date that was 6 months after the date of the decedent's 
death, and the decedent's executor elected to use the alternate 
valuation date, the value of the remainder interest would be $19,482.40 
($40,000 x 0.48706). When the alternate valuation date is elected, the 
age of A, and other aspects of valuation which change by reason of the 
mere passage of time, is determined as of the date of the decedent's 
death, while the value of the property and the relevant section 7520 
interest rate is determined as of the alternate valuation date. Thus, 
the computation uses A's age of 65 years old at the date of the 
decedent's death, even though A would be closest to 66 years old on the 
alternate valuation date.
* * * * *
    (h) Applicability date. Paragraph (b) of this section is applicable 
to decedents dying on or after January 4, 2005. However, pursuant to 
section 7805(b)(7), taxpayers may elect to apply paragraph (b) of this 
section retroactively if the period of limitations for filing a claim 
for a credit or refund of Federal estate or generation-skipping 
transfer tax under section 6511 has not expired. Paragraph (f)(1) of 
this section applies on and after [applicability date of the Treasury 
decision adopting these regulations as final regulations].

Section 20.2032-1T [Removed]

0
Par. 18. Section 20.2032-1T is removed.
0
Par. 19. Section 20.2036-1 is amended:
0
1. In paragraph (c)(2)(iv) by designating Examples 1 through 8 as 
paragraphs (c)(2)(iv)(A) through (H), respectively.
0
2. In newly designated paragraphs (c)(2)(iv)(A), (B), (C), (G), and (H) 
by further redesignating the paragraphs in the first column as 
paragraphs in the second column:

------------------------------------------------------------------------
             Old paragraphs                       New paragraphs
------------------------------------------------------------------------
(c)(2)(iv)(A)(i) and (ii)..............  (c)(2)(iv)(A)(1) and (2)
(c)(2)(iv)(B)(i) and (ii)..............  (c)(2)(iv)(B)(1) and (2)
(c)(2)(iv)(C)(i), (ii), and (iii)......  (c)(2)(iv)(C)(1), (2), and (3)
(c)(2)(iv)(G)(i), (ii), and (iii)......  (c)(2)(iv)(G)(1), (2), and (3)
(c)(2)(iv)(G)(3)(A), (B), (C), (D),      (c)(2)(iv)(G)(3)(i), (ii),
 (E), and (F).                            (iii), (iv), (v), and (vi)
(c)(2)(iv)(G)(iv), (v), and (vi).......  (c)(2)(iv)(G)(4), (5), and (6)
(c)(2)(iv)(H)(i), (ii), (iii), (iv),     (c)(2)(iv)(H)(1), (2), (3),
 (v), (vi), and (vii).                    (4), (5), (6), and (7)
------------------------------------------------------------------------

0
3. By revising newly designated paragraph (c)(2)(iv)(C).
    The revision reads as follows:


Sec.  20.2036-1   Transfers with retained life estate.

* * * * *
    (c) * * *
    (2) * * *
    (iv) * * *
    (C) Example 3. (1) D created a CRUT within the meaning of section 
664(d)(2). The trust instrument directs the trustee to hold, invest, 
and reinvest the corpus of the trust and to pay to D for D's life, and 
then to D's child (C) for C's life, in equal quarterly installments 
payable at the end of each calendar quarter, an amount equal to 6 
percent of the fair market value of the trust as valued on December 15 
of the prior taxable year of the trust. At the termination of the 
trust, the then-remaining corpus, together with any and all accrued 
income, is to be distributed to N, a charitable organization described 
in sections 170(c), 2055(a), and 2522(a). D dies six years later, 
survived by C, who was then age 55. The value of the trust assets on 
D's death was $300,000. D's executor does not elect to use the 
alternate valuation date and D's executor does not choose to use the 
section 7520 interest rate for either of the two months prior to D's 
death.
    (2) The amount of the corpus with respect to which D retained the 
right to the income, and thus the amount includible in D's gross estate 
under section 2036(a)(1), is that amount of corpus necessary to yield 
the unitrust payments as interest on the corpus. In this case, such 
amount of corpus is determined by dividing the trust's equivalent 
income interest rate by the section 7520 rate (which was 5.4 percent at 
the time of D's death). The equivalent income interest rate is 
determined by dividing the trust's adjusted payout rate by the excess 
of 1 over the adjusted payout rate. Based on Table F(5.4) in Sec.  
1.664-4(e)(6)(iii) of this chapter, the appropriate adjusted payout 
rate for the trust at D's death is 5.807 percent (6 percent x 
0.967769). Thus, the equivalent income interest rate is 6.165 percent 
(5.807 percent/(1--5.807 percent)). The ratio of the equivalent 
interest rate to the assumed interest rate under section 7520 is 114.17 
percent (6.165 percent/5.4 percent). Because this

[[Page 26830]]

exceeds 100 percent, D's retained payout interest exceeds a full income 
interest in the trust, and D effectively retained the income from all 
the assets transferred to the trust. Accordingly, because D retained 
for life an interest at least equal to the right to all income from all 
the property transferred by D to the CRUT, the entire value of the 
corpus of the CRUT is includible in D's gross estate under section 
2036(a)(1). (The result would be the same if D had retained, instead, 
an interest in the CRUT for a term of years and had died during the 
term.) Under the facts presented, section 2039 does not apply to 
include any amount in D's gross estate by reason of D's retained 
unitrust interest. See Sec.  20.2039-1(e).
    (3) If, instead, D had retained the right to a unitrust amount 
having an adjusted payout for which the corresponding equivalent 
interest rate would have been less than the 5.4 percent assumed 
interest rate of section 7520, then a correspondingly reduced 
proportion of the trust corpus would be includible in D's gross estate 
under section 2036(a)(1). Alternatively, if the interest retained by D 
was instead only one-half of the 6 percent unitrust interest, then the 
amount included in D's estate would be the amount needed to produce a 3 
percent unitrust interest. All of the results in this paragraph 
(c)(2)(iv)(C)(3) (Example 3) would be the same if the trust had been a 
grantor retained unitrust instead of a CRUT.
* * * * *
0
Par. 20. Section 20.2055-2 is amended by revising paragraphs 
(e)(3)(iii) and (f)(4) and (6) to read as follows:


Sec.  20.2055-2   Transfers not exclusively for charitable purposes.

* * * * *
    (e) * * *
    (3) * * *
    (iii)(A) 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 generally is 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 the rule in paragraphs (e)(2)(vi)(a) and (e)(2)(vii)(a) 
of this section are provided for transfers pursuant to a will or 
revocable trust executed on or before April 4, 2000. One exception is 
for a decedent who dies on or before July 5, 2001, without having 
republished the will (or amended the trust) by codicil or otherwise. 
The other exception is for a decedent who was, on April 4, 2000, under 
a mental disability that prevented a change in the disposition of the 
decedent's property, and who either does not regain competence to 
dispose of such property before the date of death, or dies prior to the 
later of 90 days after the date on which the decedent first regains 
competence, or July 5, 2001, without having republished the will (or 
amended the trust) by codicil or otherwise. If a guaranteed annuity 
interest or unitrust interest created pursuant to a will or revocable 
trust when the decedent dies on or after April 4, 2000, uses an 
individual other than one permitted in paragraphs (e)(2)(vi)(a) and 
(e)(2)(vii)(a) of this section, and the interest does not qualify for 
this transitional relief, the interest may be reformed into a lead 
interest payable for a specified term of years. The term of years is 
determined by taking the factor for valuing the annuity or unitrust 
interest for the named individual measuring life and identifying the 
term of years (rounded up to the next whole year) that corresponds to 
the equivalent term of years factor for an annuity or unitrust 
interest. A judicial reformation must be commenced prior to the later 
of July 5, 2001, or the date prescribed by section 2055(e)(3)(C)(iii). 
Any judicial reformation must be completed within a reasonable time 
after it is commenced. A non-judicial reformation is permitted if 
effective under state law, provided it is completed by the date on 
which a judicial reformation must be commenced. In the alternative, if 
a court, in a proceeding that is commenced on or before July 5, 2001, 
declares any transfer made pursuant to a will or revocable trust where 
the decedent dies on or after April 4, 2000, and on or before March 6, 
2001, null and void ab initio, the Internal Revenue Service will treat 
such transfers in a manner similar to that described in section 
2055(e)(3)(J).
    (B) The appropriate annuity factor for an annuity payable for a 
term of years is computed by subtracting from 1.000000 the factor for 
an ordinary remainder interest following the same term certain that is 
determined under the formula in Sec.  20.2031-7(d)(2)(ii)(A) and then 
dividing the result by the applicable section 7520 interest rate 
expressed as a number with at least four decimal places. For the 
convenience of taxpayers, actuarial factors have been computed by IRS 
and appear in the ``Annuity'' column of Table B. The appropriate 
annuity factor for an annuity payable for the life of one individual is 
computed by subtracting from 1.00000 the factor for an ordinary 
remainder interest following the life of the same individual that is 
determined under the formula in Sec.  20.2031-7(d)(2)(ii)(B) and then 
dividing the result by the applicable section 7520 interest rate 
expressed as a number with four decimal places. For the convenience of 
taxpayers, actuarial factors have been computed by IRS and appear in 
the ``Annuity'' column of Table S. Table B and Table S can be found on 
the IRS website at https://www.irs.gov/retirement-plans/actuarial-tables (or a corresponding URL as may be updated from time to time). 
For purposes of the example in paragraph (e)(3)(iii)(C) of this 
section, the following relevant factors from Table B and Table S are 
used:

                   Table 1 to Paragraph (e)(3)(iii)(B)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                          Factors from Table B
       Annuity, Income, and Remainder Interests for a Term Certain
                         Interest at 3.2 Percent
------------------------------------------------------------------------
          Years            Annuity    Income Interest         Remainder
------------------------------------------------------------------------
             37            21.5068           0.688218          0.311782
             38            21.8089           0.697886          0.302114
------------------------------------------------------------------------
               Factors from Table S--Based on Table 2010CM
                         Interest at 3.2 Percent
------------------------------------------------------------------------
            Age            Annuity        Life Estate         Remainder
------------------------------------------------------------------------

[[Page 26831]]

 
             40            21.7045            0.69454           0.30546
------------------------------------------------------------------------

    (C) The following example illustrates how to determine the term of 
years for a reformed interest as discussed in paragraph (e)(3)(iii)(A) 
of this section. Assume an annuity interest payable for the life of an 
individual age 40 at the time of the transfer on or after 
[applicability date of the Treasury decision adopting these regulations 
as final regulations], with an interest rate of 3.2 percent under 
section 7520. Under Table S, the annuity factor at 3.2 percent for the 
life of an individual age 40 is 21.7045. Based on Table B at 3.2 
percent, the factor 21.7045 corresponds to a term of years between 37 
and 38 years. Accordingly, the annuity interest must be reformed into 
an interest payable for a term of 38 years.
* * * * *
    (f) * * *
    (4) Other decedents. The present value of an interest not described 
in paragraph (f)(2) of this section is to be determined under Sec.  
20.2031-7(d) in the case of decedents where the valuation date of the 
gross estate is on or after [applicability date of the Treasury 
decision adopting these regulations as final regulations], or under 
Sec.  20.2031-7A in the case of decedents where the valuation date of 
the gross estate is before [applicability date of the Treasury decision 
adopting these regulations as final regulations].
* * * * *
    (6) Applicability date. Paragraphs (e)(3)(iii) and (f)(4) of this 
section apply on and after [applicability date of the Treasury decision 
adopting these regulations as final regulations].
0
Par. 21. Section 20.2056A-4 is amended by:
0
1. Revising paragraph (c)(4)(ii)(B).
0
2. In paragraph (d), designating Examples 1 through 5 as paragraphs 
(d)(1) through (5), respectively.
0
3. Revising the headings in newly designated paragraphs (d)(1) through 
(3).
0
4. Revising newly designated paragraph (d)(4), newly designated 
paragraph (d)(5) heading, and paragraph (e).
    The revisions read as follows:


Sec.  20.2056A-4   Procedures for conforming marital trusts and 
nontrust marital transfers to the requirements of a qualified domestic 
trust.

* * * * *
    (c) * * *
    (4) * * *
    (ii) * * *
    (B) The total present value of the nonassignable annuity or other 
payment is the present value of the annuity or other payment as of the 
date of the decedent's death, determined in accordance with the 
interest rates and mortality table prescribed by section 7520. The 
expected annuity term is the number of years that would be required for 
the scheduled payments to exhaust a hypothetical fund equal to the 
present value of the scheduled payments. This is determined by first 
dividing the total present value of the payments by the annual payment. 
From the quotient so obtained, the expected annuity term is derived by 
identifying the term of years that corresponds to the lowest annuity 
factor that is equal to or greater than the quotient. The annuity 
factor is computed by subtracting from 1.000000 the factor for an 
ordinary remainder interest following the same term certain that is 
determined under the formula in Sec.  20.2031-7(d)(2)(ii)(A) and then 
dividing the result by the applicable section 7520 interest rate 
expressed as a number with at least four decimal places. For the 
convenience of taxpayers, actuarial factors have been computed by IRS 
and appear in the ``Annuity'' column of Table B which can be found on 
the IRS website at https://www.irs.gov/retirement-plans/actuarial-tables (or a corresponding URL as may be updated from time to time). If 
the quotient obtained falls between two terms, the longer term is used.
* * * * *
    (d) * * *
    (1) Example 1. Transfer and assignment of probate and nonprobate 
property to QDOT. * * *
    (2) Example 2. Formula assignment. * * *
    (3) Example 3. Jointly owned property. * * *
    (4) Example 4. Computation of corpus portion of annuity payment. 
(i) The appropriate annuity factor for an annuity payable for the life 
of one individual is computed by subtracting from 1.00000 the factor 
for an ordinary remainder interest following the life of the same 
individual that is determined under the formula in Sec.  20.2031-
7(d)(2)(ii)(B) and then dividing the result by the applicable section 
7520 interest rate expressed as a number with four decimal places. For 
the convenience of taxpayers, actuarial factors have been computed by 
IRS and appear in the ``Annuity'' column of Table S. The appropriate 
annuity factor for an annuity payable for a term of years is computed 
by subtracting from 1.000000 the factor for an ordinary remainder 
interest following the same term certain that is determined under the 
formula in Sec.  20.2031-7(d)(2)(ii)(A) and then dividing the result by 
the applicable section 7520 interest rate expressed as a number with at 
least four decimal places. For the convenience of taxpayers, actuarial 
factors have been computed by IRS and appear in the ``Annuity'' column 
of Table B. The applicable adjustment factor for annuities that are 
payable at the end of semiannual, quarterly, monthly, or weekly periods 
is computed by use of the formula in Sec.  20.2031-7(d)(2)(iv)(B). For 
the convenience of taxpayers, actuarial factors have been computed by 
IRS and appear in Table K. These actuarial tables can be found on the 
IRS website at https://www.irs.gov/retirement-plans/actuarial-tables. 
For purposes of the example in this paragraph (d)(4), the relevant 
factors from Table S, Table B, and Table K are:

                       Table 2 to Paragraph (d)(4)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
               Factors from Table S--Based on Table 2010CM
                         Interest at 3.6 Percent
------------------------------------------------------------------------
            Age            Annuity        Life Estate         Remainder
------------------------------------------------------------------------
             60            14.6908            0.52887           0.47113
------------------------------------------------------------------------

[[Page 26832]]

 
                          Factors from Table B
       Annuity, Income, and Remainder Interests for a Term Certain
                         Interest at 3.6 Percent
------------------------------------------------------------------------
          Years            Annuity    Income interest         Remainder
------------------------------------------------------------------------
             21            14.5605           0.524177          0.475823
             22            15.0198           0.540712          0.459288
------------------------------------------------------------------------
                          Factors from Table K
  Adjustment Factors for Annuities Payable at the End of Each Interval
------------------------------------------------------------------------
  Interest Rate      Semi-Annually          Quarterly           Monthly
------------------------------------------------------------------------
           3.6%             1.0089             1.0134            1.0164
------------------------------------------------------------------------

    (ii) At the time of D's death, on or after [applicability date of 
the Treasury decision adopting these regulations as final regulations], 
D is a participant in an employees' pension plan described in section 
401(a). On D's death, D's spouse S, a resident of the United States, 
becomes entitled to receive a survivor's annuity of $72,000 per year, 
payable monthly, for life. At the time of D's death, S is age 60. 
Assume that under section 7520, the appropriate discount rate to be 
used for valuing annuities in the case of this decedent is 3.6 percent. 
Under Table S, the annuity factor at 3.6 percent for a person age 60 is 
14.6908. The adjustment factor at 3.6 percent in Table K for monthly 
payments is 1.0164. Accordingly, the right to receive $72,000 per year 
on a monthly basis is equal to the right to receive $73,180.80 ($72,000 
x 1.0164) on an annual basis.
    (iii) The corpus portion of each annuity payment received by S is 
determined as follows:
    (A) The first step is to determine the present value of S's annuity 
payments under the plan ($73,180.80 x 14.6908 = $1,075,084.50).
    (B) The second step is to determine the number of years that would 
be required for S's annuity to exhaust a hypothetical fund of 
$1,075,084.50. The annuity factor of 14.6908 falls between the Table B 
term certain annuity factors for 21 and 22 years at an interest rate of 
3.6 percent. Accordingly, the expected annuity term is 22 years.
    (C) The third step is to determine the corpus amount of the annual 
payment by dividing the expected term of 22 years into the present 
value of the hypothetical fund ($1,075,084.50/22 = $48,867.48).
    (D) In the fourth step, the corpus portion of each annuity payment 
is determined by dividing the corpus amount of each annual payment by 
the annual annuity payment (adjusted for payments more frequently than 
annually as in paragraph (d)(4)(i) of this section) ($48,867.48/
73,180.80 = 0.67).
    (iv) Accordingly, 67 percent of each payment to S is deemed to be a 
distribution of corpus. A marital deduction is allowed for 
$1,075,084.50, the present value of the annuity as of D's date of 
death, if either: S agrees to roll over the corpus portion of each 
payment to a QDOT and the executor files the Information Statement 
described in paragraph (c)(5) of this section and the Roll Over 
Agreement described in paragraph (c)(7) of this section; or S agrees to 
pay the tax due on the corpus portion of each payment and the executor 
files the Information Statement described in paragraph (c)(5) of this 
section and the Payment Agreement described in paragraph (c)(6) of this 
section.
    (5) Example 5. Transfer to QDOT subject to gift tax. * * *
* * * * *
    (e) Applicability date. Paragraphs (c)(4)(ii)(B) and (d)(4) of this 
section are applicable with respect to decedents dying on or after 
[applicability date of the Treasury decision adopting these regulations 
as final regulations].
0
Par. 22. Section 20.7520-1 is amended by revising paragraphs (a)(1) and 
(2), (b)(2), (c), and (d) and adding paragraphs (e) and (f) to read as 
follows:


Sec.  20.7520-1   Valuation of annuities, interests for life or a term 
of years, and remainder or reversionary interests.

    (a) * * * (1) Except as otherwise provided in this section and in 
Sec.  20.7520-3 (relating to exceptions to the use of prescribed tables 
under certain circumstances), in the case of estates of decedents with 
valuation dates after April 30, 1989, the fair market value of 
annuities, interests for life or a term of years (including unitrust 
interests), and remainder or reversionary interests is their present 
value determined under this section. See Sec.  20.2031-7(d) (and, for 
periods prior to [applicability date of the Treasury decision adopting 
these regulations as final regulations], Sec.  20.2031-7A) for the 
computation of the value of annuities, interests for life or a term of 
years, and remainder or reversionary interests, other than interests 
described in paragraphs (a)(2) and (3) of this section.
    (2) For a transfer to a pooled income fund, see Sec.  1.642(c)-6(e) 
of this chapter (or, for periods prior to [applicability date of the 
Treasury decision adopting these regulations as final regulations], 
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 IRS 
publications at that time. For decedents' estates with valuation dates 
on or after [applicability date of the Treasury decision adopting these 
regulations as final regulations], the mortality component table (Table 
2010CM) is in Sec.  20.2031-7(d)(7)(ii) and is referenced by IRS 
Publication 1457, ``Actuarial Valuations Version 4A,'' and can be found 
on the IRS website at https://www.irs.gov/retirement-plans/actuarial-tables (or a corresponding URL as may be updated from time to time). 
See Sec.  20.2031-7A for mortality component tables applicable to 
decedents' estates with valuation dates before [applicability date of 
the Treasury decision adopting these regulations as final regulations].
    (c) Actuarial factors. The present value on the valuation date of 
an annuity, an interest for life or a term of years, and a remainder or 
reversionary interest is computed by using the

[[Page 26833]]

section 7520 interest rate component that is described in paragraph 
(b)(1) of this section and the mortality component that is described in 
paragraph (b)(2) of this section. Actuarial factors for determining 
these present values may be calculated by using the formulas in Sec.  
20.2031-7(d)(2). For the convenience of taxpayers, the IRS has computed 
actuarial factors and displayed them on tables that are referenced and 
explained by publications of the Internal Revenue Service. If a special 
factor is required in order to value an interest, the special factor 
may be calculated by the taxpayer using the actuarial formulas in Sec.  
20.2031-7(d)(2) or the taxpayer may request a ruling to obtain the 
factor from the Internal Revenue Service. The request for a ruling must 
be accompanied by a recitation of the facts, including the date of 
birth for each measuring life and copies of relevant instruments. A 
request for a ruling must comply with the instructions for requesting a 
ruling published periodically in the Internal Revenue Bulletin (see 
Rev. Proc. 2021-1, 2021-1 I.R.B. 1, and subsequent updates, and 
Sec. Sec.  601.201 and 601.601(d)(2)(ii)(b) of this chapter) and must 
include payment of the required user fee.
    (d) IRS publications referencing and explaining actuarial tables 
with rates from 0.2 to 20 percent, inclusive, at intervals of two-
tenths of one percent, for valuation dates on and after [applicability 
date of the Treasury decision adopting these regulations as final 
regulations]. The publications listed in paragraphs (d)(1) through (3) 
of this section will be available after [date the Treasury decision 
adopting these regulations as final regulations is published in the 
Federal Register]. The underlying actuarial tables reference and 
explained by these publications will be available beginning May 5, 
2022, at no charge, electronically via the IRS website at https://www.irs.gov/retirement-plans/actuarial-tables:
    (1) IRS Publication 1457, ``Actuarial Valuations Version 4A'' 
(2022). This publication references tables of valuation factors and 
provides examples that show how to compute other valuation factors, for 
determining the present value of annuities, interests for life or a 
term of years, and remainder or reversionary interests, measured by one 
or two lives. These factors also may be used in the valuation of 
interests in a charitable remainder annuity trust as defined in Sec.  
1.664-2 of this chapter and a pooled income fund as defined in Sec.  
1.642(c)-5 of this chapter. This publication references and explains 
Table S (single life remainder factors), Table R(2) (two-life last-to-
die remainder factors), Table B (actuarial factors used in determining 
the present value of an interest for a term of years), Table H 
(commutation factors), Table J (term certain annuity beginning-of-
interval adjustment factors), and Table K (annuity end-of-interval 
adjustment factors). See earlier versions of the publication, Sec.  
1.642(c)-6A of this chapter, or Sec.  20.2031-7A for Table S applicable 
to valuation dates before [applicability date of the Treasury decision 
adopting these regulations as final regulations]. See earlier versions 
of the publication for Table R(2) applicable to valuation dates before 
[applicability date of the Treasury decision adopting these regulations 
as final regulations]. Earlier versions of the publication also contain 
earlier versions of Table R(2). Table B, Table J, and Table K also can 
be found in Sec.  20.2031-7(d)(6), but only for interest rates from 4.2 
to 14 percent, inclusive.
    (2) IRS Publication 1458, ``Actuarial Valuations Version 4B'' 
(2022). This publication references and explains 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 of this chapter. This publication 
references Table U(1) (unitrust single life remainder factors), Table 
U(2) (unitrust two-life last-to-die remainder factors), Table D 
(actuarial factors used in determining the present value of a remainder 
interest postponed for a term of years), Table F (adjustment payout 
rate factors), and Table Z (unitrust commutation factors). See earlier 
versions of the publication or Sec.  1.664-4A of this chapter for Table 
U(1) applicable to valuation dates before [applicability date of the 
Treasury decision adopting these regulations as final regulations]. 
Earlier versions of the publication also contain earlier versions of 
Table U(2). Table D also can be found in Sec.  1.664-4(e)(6)(iii) of 
this chapter, but only for adjusted payout rates from 4.2 to 14 
percent, inclusive. Table F also can be found in Sec.  1.664-
4(e)(6)(iii) of this chapter, but only for interest rates from 4.2 to 
14 percent, inclusive.
    (3) IRS Publication 1459, ``Actuarial Valuations Version 4C''
    (2022). This publication references and explains Table C, which 
provides factors for making adjustments to the standard remainder 
factor for valuing gifts of depreciable property. See Sec.  1.170A-12 
of this chapter.
    (4) The publications identified in paragraphs (d)(1) through (3) of 
this section also reference Table 2010CM, the mortality component 
table.
    (e) Use of approximation methods for obtaining factors when the 
required valuation rate falls between two listed rates. For certain 
cases, this part and IRS publications provide approximation methods 
(for example, interpolation) for obtaining factors when the required 
valuation rate falls between two listed rates (such as in the case of a 
pooled income fund's rate of return or a unitrust's adjusted payout 
rate). In general, exact methods of obtaining the applicable factors 
are allowed, such as through software using the actual rate of return 
and the proper actuarial formulas used for the published factors at the 
listed rates, provided such direct methods are applied consistently. 
The actuarial formula in Sec.  20.2031-7(d)(2)(ii)(B) is used to 
determine the remainder factor for pooled income funds and the 
actuarial formula in Sec.  1.664-4(e)(5)(i) of this chapter is used to 
determine the remainder factor for unitrusts. The approximation method 
provided in this part must be used if more exact methods are not 
available.
    (f) Applicability date. This section applies on and after 
[applicability date of the Treasury decision adopting these regulations 
as final regulations].

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

0
Par. 23. The authority citation for part 25 continues to read in part 
as follows:

    Authority:  26 U.S.C. 7805.
* * * * *
0
Par. 24. Section 25.2512-0 is revised to read as follows:


Sec.  25.2512-0   Table of contents.

    This section lists the section headings that appear in the 
regulations under section 2512.

Sec.  25.2512-1 Valuation of property; in general.
Sec.  25.2512-2 Stocks and bonds.
Sec.  25.2512-3 Valuation of interests in businesses.
Sec.  25.2512-4 Valuation of notes.
Sec.  25.2512-5 Valuation of annuities, interests for life or a term 
of years, and remainder or reversionary interests.
Sec.  25.2512-6 Valuation of certain life insurance and annuity 
contracts; valuation of shares in an open-end investment company.
Sec.  25.2512-7 Effect of excise tax.
Sec.  25.2512-8 Transfers for insufficient consideration.
Actuarial Tables Applicable Before [Applicability Date of the 
Treasury Decision Adopting These Regulations as Final Regulations]
Sec.  25.2512-5A Valuation of annuities, interests for life or a 
term of years, and remainder or reversionary interests transferred 
before [applicability date of

[[Page 26834]]

the Treasury decision adopting these regulations as final 
regulations].

0
Par. 25. Section 25.2512-5 is amended by revising paragraphs (c), (d), 
and (e) to read as follows:


Sec.  25.2512-5   Valuation of annuities, interests for life or a term 
of years, and remainder or reversionary interests.

* * * * *
    (c) Actuarial valuations. The present value of annuities, interests 
for life or a term of years, and remainder or reversionary interests 
transferred by gift on or after [applicability date of the Treasury 
decision adopting these regulations as final regulations], is 
determined under paragraph (d) of this section. The present value of 
annuities, interests for life or a term of years, and remainder or 
reversionary interests transferred by gift before [applicability date 
of the Treasury decision adopting these regulations as final 
regulations], is determined under the following sections:

                        Table 1 to Paragraph (c)
------------------------------------------------------------------------
                     Transfers
---------------------------------------------------      Applicable
             After                     Before            regulations
------------------------------------------------------------------------
                                 01-01-52.........  25.2512-5A(a)
12-31-51.......................  01-01-71.........  25.2512-5A(b)
12-31-70.......................  12-01-83.........  25.2512-5A(c)
11-30-83.......................  05-01-89.........  25.2512-5A(d)
04-30-89.......................  05-01-99.........  25.2512-5A(e)
04-30-99.......................  05-01-09.........  25.2512-5A(f)
04-30-09.......................  AD...............  25.2512-5A(g)
------------------------------------------------------------------------
AD = [applicability date of the Treasury decision adopting these
  regulations as final regulations].

    (d) Actuarial valuations on or after [applicability date of the 
Treasury decision adopting these regulations as final regulations]--(1) 
In general. Except as otherwise provided in paragraph (b) of this 
section and Sec.  25.7520-3(b) (relating to exceptions to the use of 
prescribed tables under certain circumstances), the fair market value 
of annuities, interests for life or a term of years, and remainder or 
reversionary interests transferred on or after [applicability date of 
the Treasury decision adopting these regulations as final regulations], 
is the present value of such interests determined under paragraph 
(d)(2) of this section and by using standard or special section 7520 
actuarial factors. These factors are derived by using the actuarial 
formulas provided in Sec.  20.2031-7(d)(2) of this chapter, 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. For the convenience of taxpayers, paragraph (d)(2) of this 
section provides for published tables of factors for specific types of 
interests. These published tables provide factors for rates from 0.2 to 
20 percent, inclusive, at intervals of two-tenths of one percent. In 
general, appropriate factors instead may be computed directly from the 
actuarial formulas provided in Sec.  20.2031-7(d)(2) of this chapter. 
In some cases, specific examples in this part and IRS publications 
illustrate approximation methods (for example, interpolation) for 
obtaining factors when the required valuation rate falls between two 
listed rates (such as in the case of a pooled income fund's rate of 
return or a unitrust's adjusted payout rate). Exact methods of 
obtaining the applicable actuarial factors are allowed, such as through 
software using the actual rate of return and the actuarial formulas 
provided in Sec.  20.2031-7(d)(2) of this chapter; the approximation 
method provided in this part must be used if more exact methods are not 
available. See Sec. Sec.  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 Sec.  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, an 
interest for life or a term of years, a remainder or reversionary 
interest 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) Pooled income funds and 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) of this chapter (see Sec.  1.642(c)-6A of 
this chapter for certain prior periods). The fair market value of a 
remainder interest in a charitable remainder annuity trust, as 
described in Sec.  1.664-2(a) of this chapter, is its present value 
determined under Sec.  1.664-2(c) of this chapter. The fair market 
value of a remainder interest in a charitable remainder unitrust, as 
defined in Sec.  1.664-3 of this chapter, is its present value 
determined under Sec.  1.664-4(e) of this chapter. The fair market 
value of a life interest or term for years interest 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 Sec.  1.664-4(e)(4) and (5) of this chapter.
    (ii) Ordinary remainder and reversionary interests--(A) Remainder 
and reversionary interests for a term of years. If the interest to be 
valued is a remainder or reversionary interest to take effect after a 
definite number of years, the present value of the interest is computed 
by multiplying the value of the property by the appropriate remainder 
factor (that corresponds to the applicable section 7520 interest rate 
and the stated term). The factor for an ordinary remainder interest 
following a term certain may be found using the formula in Sec.  
20.2031-7(d)(2)(ii)(A) of this chapter. For the convenience of 
taxpayers, actuarial factors have been computed by IRS and appear in 
Table B. Table B can be found on the IRS website at https://www.irs.gov/retirement-plans/actuarial-tables (or a corresponding URL 
as may be updated from time to time). Table B is referenced and 
explained in IRS Publication 1457 ``Actuarial Valuations Version 4A,'' 
which will be available after [date the Treasury decision adopting 
these regulations as final regulations is published in the Federal 
Register]. The remainder factors from Table B also can be found in 
paragraph (d)(6) of this section, but only for interest rates from 4.2 
to 14 percent, inclusive. For information about obtaining special 
factors for other situations, see paragraph (d)(4) of this section.
    (B) Remainder and reversionary interests dependent on the life of 
one individual. If the interest to be valued is a remainder or 
reversionary interest to take effect 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 factor (that corresponds 
to the applicable section 7520 interest rate and the age of the 
measuring life of the life interest that precedes the remainder 
interest). The factor for an ordinary remainder interest following the 
death of one individual may be found by using the formula in Sec.  
20.2031-7(d)(2)(ii)(B) of this chapter to derive factors from the

[[Page 26835]]

appropriate mortality table. For the convenience of taxpayers, 
actuarial factors have been computed by IRS and appear in Table S. 
Table S will be available beginning May 5, 2022, at no charge, 
electronically via the IRS website at https://www.irs.gov/retirement-plans/actuarial-tables (or a corresponding URL as may be updated from 
time to time). Table S is referenced and explained by IRS Publication 
1457 ``Actuarial Valuations Version 4A,'' which will be available after 
[date of publication of the final rule in the Federal Register]. For 
information about obtaining special factors for other situations, see 
paragraph (d)(4) of this section.
    (iii) Ordinary interests for a 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 the use of certain 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 actuarial factor for an interest for a term of years or 
for a life interest (that corresponds to the applicable section 7520 
interest rate and the durational period). The actuarial factor for an 
ordinary income interest for a term certain may be found by subtracting 
from 1.000000 the factor for an ordinary remainder interest following 
the same term certain that is determined under the formula in Sec.  
20.2031-7(d)(2)(ii)(A) of this chapter. For the convenience of 
taxpayers, actuarial factors have been computed by IRS and appear in 
the ``Income Interest'' column of Table B which can be found on the IRS 
website at https://www.irs.gov/retirement-plans/actuarial-tables (or a 
corresponding URL as may be updated from time to time). The actuarial 
factor for an ordinary income interest for the life of one individual 
may be found by subtracting from 1.00000 the factor for an ordinary 
remainder interest following the life of the same individual that is 
determined in Sec.  20.2031-7(d)(2)(ii)(B) of this chapter. For the 
convenience of taxpayers, actuarial factors have been computed by IRS 
and appear in the ``Life Estate'' column of Table S. Table S 
(applicable when the valuation date is on or after [applicability date 
of the Treasury decision adopting these regulations as final 
regulations]) can be found on the IRS website at https://www.irs.gov/retirement-plans/actuarial-tables. Table B and Table S are referenced 
and explained by IRS Publication 1457 ``Actuarial Valuations Version 
4A''. See Sec.  20.2031-7A of this chapter or earlier versions of 
Publication 1457 for valuation of interests before [applicability date 
of the Treasury decision adopting these regulations as final 
regulations]. For information about obtaining special factors for other 
situations, 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 factor (that corresponds to 
the applicable section 7520 interest rate and annuity period). The 
appropriate annuity factor for an annuity payable for a term of years 
is computed by subtracting from 1.000000 the factor for an ordinary 
remainder interest following the same term certain that is determined 
under the formula in Sec.  20.2031-7(d)(2)(ii)(A) of this chapter and 
then dividing the result by the applicable section 7520 interest rate 
expressed as a number with at least four decimal places. For the 
convenience of taxpayers, actuarial factors have been computed by IRS 
and appear in the ``Annuity'' column of Table B which can be found on 
the IRS website at https://www.irs.gov/retirement-plans/actuarial-tables (or a corresponding URL as may be updated from time to time). 
The appropriate annuity factor for an annuity payable for the life of 
one individual is computed by subtracting from 1.00000 the factor for 
an ordinary remainder interest following the life of the same 
individual that is determined in Sec.  20.2031-7(d)(2)(ii)(B) of this 
chapter and then dividing the result by the applicable section 7520 
interest rate expressed as a number with four decimal places. For the 
convenience of taxpayers, actuarial factors have been computed by IRS 
and appear in the ``Annuity'' column of Table S. Table S (applicable 
when the valuation date is on or after [applicability date of the 
Treasury decision adopting these regulations as final regulations]) can 
be found on the IRS website at https://www.irs.gov/retirement-plans/actuarial-tables. Table B and Table S are referenced and explained in 
IRS Publication 1457 ``Actuarial Valuations Version 4A''. See Sec.  
20.2031-7A of this chapter or earlier versions of Publication 1457 for 
valuation of interests before [applicability date of the Treasury 
decision adopting these regulations as final regulations]. For 
information about obtaining special factors for other situations, see 
paragraph (d)(4) of this section.
    (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 then is 
multiplied by the applicable adjustment factor at the appropriate 
interest rate component for payments made at the end of the specified 
period. The applicable adjustment factor may be found using the formula 
in Sec.  20.2031-7(d)(2)(iv)(B) of this chapter. For the convenience of 
taxpayers, actuarial factors have been computed by IRS and appear in 
Table K. Table K, which is referenced and explained by Publication 
1457, can be found on the IRS website at https://www.irs.gov/retirement-plans/actuarial-tables. The provisions of this paragraph 
(d)(2)(iv)(B) are illustrated by the example in paragraph 
(d)(2)(iv)(B)(2) of this section.
    (1) Sample factors from actuarial Table S and Table K. For purposes 
of the example in paragraph (d)(2)(iv)(B)(2) of this section, the 
relevant factors from Table S and Table K are:

                  Table 2 to Paragraph (d)(2)(iv)(B)(1)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Factors from Table S--Based on Table 2010CM
Interest at 3.2 Percent
------------------------------------------------------------------------
Age                                        Annuity       Life  Remainder
                                                       Estate
------------------------------------------------------------------------
68.....................................    12.2552    0.39217    0.60783
------------------------------------------------------------------------
Factors from Table K
Adjustment Factors for Annuities Payable at the End of Each Interval
------------------------------------------------------------------------
Interest Rate                                Semi-  Quarterly    Monthly
                                          Annually
------------------------------------------------------------------------
3.2%...................................     1.0079     1.0119     1.0146
------------------------------------------------------------------------

    (2) Example. On July 1 of a year after 2021, the donor agrees 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 3.2 percent. Under Table S, the factor at 3.2 percent for 
determining the present value of an annuity payable until the death of 
a person aged 68 is 12.2552. The

[[Page 26836]]

adjustment factor from Table K in the column for payments made at the 
end of each semiannual period at the rate of 3.2 percent is 1.0079. The 
aggregate annual amount of the annuity, $10,000, is multiplied by the 
factor 12.2552 and the product is multiplied by 1.0079. The present 
value of the donee's annuity is, therefore, $123,520.16 ($10,000 x 
12.2552 x 1.0079).
    (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 then is 
multiplied by the applicable adjustment factor at the appropriate 
interest rate component for payments made at the beginning of specified 
periods. The applicable adjustment factor may be found using the 
formula in Sec.  20.2031-7(d)(2)(iv)(C) of this chapter. For the 
convenience of taxpayers, actuarial factors have been computed by IRS 
and appear in Table J. Table J, which is referenced and explained by 
Publication 1457, can be found on the IRS website at https://www.irs.gov/retirement-plans/actuarial-tables. 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 and 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--(1) In general. 
(i) 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 the use of commutation 
factors and an applicable adjustment factor. The commutation factors 
are computed directly with the set of formulas in Figure 1 to this 
paragraph (d)(2)(v)(A)(1)(i). The prescribed mortality table is Table 
2010CM as set forth in Sec.  20.2031-7(d)(7)(ii) of this chapter, or 
for periods before [applicability date of the Treasury decision 
adopting these regulations as final regulations], the appropriate table 
found in Sec.  20.2031-7A of this chapter. For the convenience of 
taxpayers, actuarial factors have been computed by IRS and appear in 
Table H. Table H will be available May 5, 2022, at no charge, 
electronically via the IRS website at https://www.irs.gov/retirement-plans/actuarial-tables (or a corresponding URL as may be updated from 
time to time). Table H is referenced and explained by IRS Publication 
1457 ``Actuarial Valuations Version 4A,'' which will be available after 
[date of publication of the final rule in the Federal Register].
[GRAPHIC] [TIFF OMITTED] TP05MY22.013


[[Page 26837]]


    (ii) The applicable adjustment factor for annuities that are 
payable at the end of semiannual, quarterly, monthly, or weekly periods 
is computed by use of the formula in Sec.  20.2031-7(d)(2)(iv)(B) of 
this chapter. For the convenience of taxpayers, actuarial factors have 
been computed by IRS and appear in Table K. Table K can be found on the 
IRS website at https://www.irs.gov/retirement-plans/actuarial-tables. 
For purposes of the example in paragraph (d)(2)(v)(A)(2) of this 
section, the relevant factors from Table H(2.8) and Table K are:

                Table 3 to Paragraph (d)(2)(v)(A)(1)(ii)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Factors from Table H(2.8)
Commutation Factors--Based on Table 2010CM
Interest Rate of 2.8 Percent
------------------------------------------------------------------------
Age (x)                                         DX  NX-factor  MX-factor
------------------------------------------------------------------------
60.....................................  16,911.03  271,994.3  9,295.187
70.....................................  11,280.80  133,677.8  7,537.826
------------------------------------------------------------------------
Factors from Table K
Adjustment Factors for Annuities Payable at the End of Each Interval
------------------------------------------------------------------------
Interest Rate                                Semi-  Quarterly    Monthly
                                          Annually
------------------------------------------------------------------------
2.8%...................................     1.0070     1.0104     1.0128
------------------------------------------------------------------------

    (2) Example. The donor transfers $100,000 into a trust on January 
1, 2022 and retains the right to receive an annuity from the trust in 
the amount 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 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 
deemed to be 60 for purposes of computing the present value of the 
retained annuity. If the section 7520 rate for the month in which the 
transfer occurred is 2.8 percent, the present value of the donor's 
retained annuity interest for the shorter of life or term would be is 
$82,363.54, determined in Figure 2 to this paragraph (d)(2)(v)(A)(2).
[GRAPHIC] [TIFF OMITTED] TP05MY22.014

    (B) Unitrust interests--(1) In general. (i) 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 the use of an adjusted payout rate factor and a 
unitrust commutation factor. The adjusted payout rate factor is 
determined by applying the formula in Sec.  1.664-4(e)(6)(ii) of this 
chapter for the section 7520 interest rate applicable to the transfer. 
For the convenience of taxpayers, actuarial factors have been computed 
by IRS, for interest rates from 0.2 to 20 percent, inclusive, and 
appear in Tables F(0.2) through F(20.0). The unitrust commutation 
factors are computed directly with the set of formulas in Figure 3 to 
this paragraph (d)(2)(v)(B)(1)(i). For the convenience of taxpayers, 
actuarial factors have been computed by IRS and appear in Table Z. 
Table F and Table Z can be found on the IRS website at https://www.irs.gov/retirement-plans/actuarial-tables.

[[Page 26838]]

[GRAPHIC] [TIFF OMITTED] TP05MY22.015

    (ii) For purposes of the example in paragraph (d)(2)(v)(B)(2) of 
this section, the relevant factors from Table F(3.4), Table Z(4.8), and 
Table Z(5.0) are:

                                    Table 4 to Paragraph (d)(2)(v)(B)(1)(ii)
----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
Factors From Table F(3.4)
Factors for Computing Adjusted Payout Rates for Unitrusts
Interest at 3.4 Percent
----------------------------------------------------------------------------------------------------------------
# of Months from Annual Valuation to First Payout.....................Adjustment Factors for
                                                                     Payments at End of Period
----------------------------------------------------------------------------------------------------------------
At Least                                                           But less than          Annual      Semiannual
----------------------------------------------------------------------------------------------------------------
6...............................................................               7        0.983422        0.975270
----------------------------------------------------------------------------------------------------------------
Factors from Table Z(4.8)
Unitrust Commutation Factors--Based on Table 2010CM
Adjusted Payout Rate of 4.8 Percent
----------------------------------------------------------------------------------------------------------------
Age (x)                                                                    \U\Dx    \U\Nx-factor    \U\Mx-factor
----------------------------------------------------------------------------------------------------------------
60..............................................................       4,634.189       58,509.09       1,684.151
70..............................................................       2,491.406       24,541.74       1,254.007
----------------------------------------------------------------------------------------------------------------


[[Page 26839]]


                               Table 4 to Paragraph (d)(2)(v)(B)(1)(ii)--Continued
----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
Factors from Table Z(5.0)
Unitrust Commutation Factors--Based on Table 2010CM
Adjusted Payout Rate of 5.0 Percent
----------------------------------------------------------------------------------------------------------------
Age (x)                                                                    \U\Dx    \U\Nx-factor    \U\Mx-factor
----------------------------------------------------------------------------------------------------------------
60..............................................................       4,084.822       50,451.77       1,429.466
70..............................................................       2,150.356       20,823.44       1,054.386
----------------------------------------------------------------------------------------------------------------

    (2) Example of interpolation. The donor who, as of the nearest 
birthday, is 60 years old, transfers $100,000 to a unitrust on January 
1st of a year after 2021. The trust instrument requires that each year 
the trust pay to the donor, in equal semiannual installments on June 
30th and December 31st, 5 percent of the fair market value of the trust 
assets, valued as of January 1st of that 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 3.4 percent. Under Table F(3.4), the 
appropriate adjustment factor is 0.975270 for semiannual payments 
payable at the end of the semiannual period. The adjusted payout rate 
is 4.876 percent (5% x 0.975270). The present value of the donor's 
retained interest is $37,419.00 determined in paragraphs 
(d)(2)(v)(B)(2)(i) through (iii) of this section. Using Table Z, the 
method required is to prepare two computations, one at a payout rate of 
4.8 percent, and one at 5.0 percent, and interpolate between these two 
in order to get the result at the adjusted payout rate of 4.876 
percent. As an alternative to using an interpolation method, it also is 
acceptable to compute the remainder factor directly from the root 
actuarial formulas using the actual adjusted payout rate of 4.876%.
    (i) Determine the terminal age, as illustrated in Figure 4 to this 
paragraph (d)(2)(v)(B)(2)(i).
[GRAPHIC] [TIFF OMITTED] TP05MY22.016

    (ii) Determine the Payout Interest Factor at the Table Z payout 
rates immediately below and above the adjusted payout rate, as 
illustrated in Figure 5 to this paragraph (d)(2)(v)(B)(2)(ii).
[GRAPHIC] [TIFF OMITTED] TP05MY22.017


[[Page 26840]]


    (iii) Interpolate between the Payout Interest Factors at 4.8% and 
5.0% to determine the Payout Interest Factor at the adjusted rate of 
4.876%, as illustrated in Figure 6 to this paragraph 
(d)(2)(v)(B)(2)(iii).
[GRAPHIC] [TIFF OMITTED] TP05MY22.018

    (3) Transitional rule. If the valuation date of a transfer of 
property by gift is on or after January 1, 2021, and before 
[applicability date of the Treasury decision adopting these regulations 
as final regulations], the fair market value of the interest 
transferred is determined by using the section 7520 interest rate for 
the month in which the valuation date occurs (see Sec. Sec.  25.7520-
1(b) and 25.7520-2(a)(2)) and the appropriate actuarial factors derived 
from the selected mortality table, either Table 2010CM in Sec.  
20.2031-7(d)(7)(ii) of this chapter or Table 2000CM in Sec.  20.2031-
7A(g)(4) of this chapter, at the option of the donor or the decedent's 
executor, as the case may be. For the convenience of taxpayers, 
actuarial factors based on Table 2010CM appear in the proposed version 
of Table S, and actuarial factors based on Table 2000CM appear in the 
current version of Table S, which will be available as provided in 
paragraph (d)(4) of this section. With respect to each individual 
transaction, the donor must consistently use the same mortality basis 
with respect to each interest (income, remainder, partial, etc.) in the 
same property, 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 factors 
with the same mortality basis, and all assets includible in the gross 
estate and/or estate tax deductions claimed must be valued based on 
factors with the same mortality basis.
    (4) Publications and actuarial computations by the Internal Revenue 
Service. The factor for determining the present value of a remainder 
interest that is dependent on the termination of the life of one 
individual may be computed by using the formula in Sec.  20.2031-
7(d)(2)(ii)(B) of this chapter to derive factors from the appropriate 
mortality table. For the convenience of taxpayers, actuarial factors 
have been computed by IRS and appear in Table S. The factor for 
determining the present value of a remainder interest following a term 
certain may be computed by using the formula in Sec.  20.2031-
7(d)(2)(ii)(A) of this chapter. For the convenience of taxpayers, 
actuarial factors have been computed by IRS and appear in Table B. 
Adjustment factors for term certain annuities payable at the beginning 
of each interval may be computed by using the formula in Sec.  20.2031-
7(d)(2)(iv)(C) of this chapter. For the convenience of taxpayers, 
actuarial factors have been computed by IRS and appear in Table J. 
Adjustment factors for annuities payable at the end of each interval 
may be computed by using the formula in Sec.  20.2031-7(d)(2)(iv)(B) of 
this chapter. For the convenience of taxpayers, actuarial factors have 
been computed by IRS and appear in Table K. These tables will be 
available beginning May 5, 2022, at no charge, electronically via the 
IRS website at https://www.irs.gov/retirement-plans/actuarial-tables 
(or a corresponding URL as may be updated from time to time). IRS 
Publication 1457, ``Actuarial Valuations Version 4A'' (2022), 
references and explains the factors contained in the actuarial tables 
and also includes examples that illustrate how to compute many special 
factors for more unusual situations. This publication will be available 
after [date of publication of the final rule in the Federal Register]. 
Table B, Table J, and Table K also can be found in Sec.  20.2031-

[[Page 26841]]

7(d)(6) of this chapter, but only for interest rates from 4.2 to 14 
percent, inclusive. If a special factor is required, the special factor 
may be calculated by the taxpayer using the actuarial formula in Sec.  
20.2031-7(d)(2) of this chapter or the taxpayer may request a ruling to 
obtain the factor from the Internal Revenue Service. 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 Sec. Sec.  601.201 and 
601.601(d)(2)(ii)(b) of this chapter and Rev. Proc. 2021-1, 2021-1 
I.R.B. 1, and subsequent updates) and must include payment of the 
required user fee.
    (e) Applicability date. This section applies on and after 
[applicability date of the Treasury decision adopting these regulations 
as final regulations].
0
Par. 26. The undesignated center heading immediately preceding Sec.  
25.2512-5A is revised to read as follows:
    Actuarial Tables Applicable Before [Applicability Date of the 
Treasury Decision Adopting These Regulations]
0
Par. 27. Section 25.2512-5A is amended by revising the section heading 
and adding paragraph (g) to read as follows:


Sec.  25.2512-5A   Valuation of annuities, interests for life or a term 
of years, and remainder or reversionary interests transferred before 
[applicability date of the Treasury decision adopting these regulations 
as final regulations].

* * * * *
    (g) Valuation of annuities, interests for life or a term of years, 
and remainder or reversionary interests transferred on or after May 1, 
2009, and before [applicability date of the Treasury decision adopting 
these regulations as final regulations]--(1) In general. Except as 
otherwise provided in Sec. Sec.  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 on or after May 1, 
2009, and before [applicability date of the Treasury decision adopting 
these regulations as final regulations], the fair market value of 
annuities, interests for life or a term of years, and remainder or 
reversionary interests transferred by gift is the present value of the 
interests determined by using standard or special section 7520 
actuarial factors and the valuation methodology described in Sec.  
25.2512-5(d). Sections 20.2031-7(d)(6) and 20.2031-7A(g)(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, term, and remainder 
interests in property. Sections 20.2031-7(d)(6) and 20.2031-7A(g)(4) 
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 also generally are 
applicable for gift tax purposes in computing the values of taxable 
gifts.
    (2) Transitional rule. If the valuation date of a transfer of 
property by gift is on or after May 1, 2009, and before July 1, 2009, 
the fair market value of the interest transferred is determined by 
using the section 7520 interest rate for the month in which the 
valuation date occurs (see Sec. Sec.  25.7520-1(b) and 25.7520-2(a)(2)) 
and the appropriate actuarial tables under either Sec.  20.2031-
7A(f)(4) or (g)(4) of this chapter, 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 
consistently use the same mortality basis with respect to each interest 
(income, remainder, partial, etc.) in the same property, 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 factors with the same mortality 
basis, and all assets includible in the gross estate and/or estate tax 
deductions claimed must be valued based on factors with the same 
mortality basis.
    (3) Publications and actuarial computations by the Internal Revenue 
Service. The factor for determining the present value of a remainder 
interest that is dependent on the termination of the life of one 
individual may be computed by using the formula in Sec.  20.2031-
7(d)(2)(ii)(B) of this chapter to derive factors from the appropriate 
mortality table. For the convenience of taxpayers, actuarial factors 
have been computed by IRS and appear in Table S. The factor for 
determining the present value of a remainder interest following a term 
certain may be computed by using the formula in Sec.  20.2031-
7(d)(2)(ii)(A) of this chapter. For the convenience of taxpayers, 
actuarial factors have been computed by IRS and appear in Table B. 
Adjustment factors for term certain annuities payable at the beginning 
of each interval may be computed by using the formula in Sec.  20.2031-
7(d)(2)(iv)(C) of this chapter. For the convenience of taxpayers, 
actuarial factors have been computed by IRS and appear in Table J. 
Adjustment factors for annuities payable at the end of each interval 
may be computed by using the formula in Sec.  20.2031-7(d)(2)(iv)(B) of 
this chapter. For the convenience of taxpayers, actuarial factors have 
been computed by IRS and appear in Table K. These tables are referenced 
and explained by IRS Publication 1457, ``Actuarial Values Version 3A,'' 
(2009). Publication 1457 includes examples that illustrate how to 
compute many special factors for more unusual situations. The actuarial 
tables are available, at no charge, electronically via the IRS website 
at https://www.irs.gov/retirement-plans/actuarial-tables (or a 
corresponding URL as may be updated from time to time). Table S also 
can be found in Sec.  20.2031-7A(g)(4) of this chapter, but only for 
interest rates from 0.2 to 14 percent, inclusive. Table B, Table J, and 
Table K also can be found in Sec.  20.2031-7(d)(6) of this chapter, but 
only for interest rates from 4.2 to 14 percent, inclusive. If a special 
factor is required in the case of a completed gift, the special factor 
may be calculated by the donor using the actuarial formulas in Sec.  
20.2031-7(d)(2) of this chapter or the donor may request a ruling to 
obtain the factor from the Internal Revenue Service. 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 Sec. Sec.  601.201 and 
601.601(d)(2)(ii)(b) of this chapter) and must include payment of the 
required user fee.
    (4) Applicability dates. Paragraphs (g)(1) through (3) of this 
section apply on and after May 1, 2009, and before [applicability date 
of the Treasury decision adopting these regulations as final 
regulations].
0
Par. 28. Section 25.2522(c)-3 is amended by:
0
1. Designating Examples 1 through 3 of paragraph (d)(2)(iv) as 
paragraphs (d)(2)(iv)(A) through (C), respectively.
0
2. Revising the headings for newly designated paragraphs (d)(2)(iv)(A) 
and (B), newly designated paragraph (d)(2)(iv)(C), and paragraph (e).
0
3. Adding paragraph (f).
    The revisions and addition read as follows:

[[Page 26842]]

Sec.  25.2522(c)-3   Transfers not exclusively for charitable, etc., 
purposes in the case of gifts made after July 31, 1969.

* * * * *
    (d) * * *
    (2) * * *
    (iv) * * *
    (A) Example 1. * * *
    (B) Example 2. * * *
    (C) Example 3--(1) Factors. The appropriate annuity factor for an 
annuity payable for a term of years is computed by subtracting from 
1.000000 the factor for an ordinary remainder interest following the 
same term certain that is determined under the formula in Sec.  
20.2031-7(d)(2)(ii)(A) of this chapter and then dividing the result by 
the applicable section 7520 interest rate expressed as a number with at 
least four decimal places. For the convenience of taxpayers, actuarial 
factors have been computed by IRS and appear in the ``Annuity'' column 
of Table B. The actuarial commutation factors can be computed directly 
by using the formulas in Sec.  25.2512-5(d)(2)(v)(A)(1), the section 
7520 rate, and Table 2010CM as set forth in Sec.  20.2031-7(d)(7)(ii) 
of this chapter. For the convenience of taxpayers, actuarial factors 
have been computed by IRS and appear in Table H. Table B and Table H 
can be found on the IRS website at https://www.irs.gov/retirement-plans/actuarial-tables (or a corresponding URL as may be updated from 
time to time). For purposes of the example in paragraph 
(d)(2)(iv)(C)(2) of this section, the relevant factors from Table B and 
Table H are:

                  Table 1 to Paragraph (d)(2)(iv)(C)(1)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                          Factors from Table B
       Annuity, Income, and Remainder Interests for a Term Certain
                         Interest at 2.8 Percent
------------------------------------------------------------------------
          Years            Annuity    Income Interest         Remainder
             10             8.6179           0.241302          0.758698
------------------------------------------------------------------------
                        Factors from Table H(2.8)
               Commutation Factors--Based on Table 2010CM
                      Interest Rate of 2.8 Percent
------------------------------------------------------------------------
        Age (x)                 Dx          Nx-factor         Mx-factor
             60          16,911.03          271,994.3         9,295.187
             70          11,280.80          133,677.8         7,537.826
------------------------------------------------------------------------

    (2) Application. In a year after 2021, D transfers $65,000 in trust 
with the requirement that a guaranteed annuity interest (as defined in 
paragraph (c)(2)(vi) of this section) of $5,000 a year, payable 
annually at the end of each year, be paid to Y Charity for a period of 
10 years and that a guaranteed annuity interest (as defined in 
paragraph (c)(2)(vi) of this section) of $5,000 a year, payable 
annually at the end of each year, be paid to W, D's wife, aged 60, for 
10 years or until her prior death. The annuities are to be paid 
simultaneously, and the remainder is to be paid to D's children. The 
section 7520 interest rate for the date of transfer is 2.8 percent, and 
the taxpayer elects not to use the interest rate from either of the two 
preceding months. The fair market value of the private annuity is 
$40,895.50 ($5,000 x 8.1791), as determined pursuant to Sec.  25.2512-
5(d)(2)(v)(A) and by the use of factors derived from Table H and 
illustrated in paragraph (d)(2)(iv)(C)(3) of this section. The fair 
market value of the charitable annuity is $43,089.50 ($5,000 x 8.6179), 
determined using the annuity factor from Table B. It is not evident 
from the governing instrument of the trust or from local law that the 
trustee would be required to apportion the trust fund between the wife 
and charity in the event the fund were insufficient to pay both 
annuities in a given year. Accordingly, the deduction with respect to 
the charitable annuity will be limited to $24,104.50 ($65,000 less 
$40,895.50 [the value of the private annuity]), which is the minimum 
amount it is evident the charity will receive.
    (3) In paragraph (d)(2)(iv)(C)(2) of this section, the actuarial 
factor for determining the value of the private annuity is derived by 
the use of factors involving one life and a term of years. The factor 
is determined as illustrated in Figure 1 to this paragraph 
(d)(2)(iv)(C)(3).

[[Page 26843]]

[GRAPHIC] [TIFF OMITTED] TP05MY22.019

* * * * *
    (e) Guaranteed annuity and unitrust interests reformed as an 
interest for a term of years--(1) In general. The rule in paragraphs 
(c)(2)(vi)(a) and (c)(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 applies to transfers made on or after April 4, 2000. If a 
transfer is made on or after April 4, 2000, that uses an individual 
other than one permitted in paragraphs (c)(2)(vi)(a) and (c)(2)(vii)(a) 
of this section, the interest may be reformed into a lead interest 
payable for a specified term of years. The term of years is determined 
by taking the factor for valuing the annuity or unitrust interest for 
the named individual measuring life and identifying the term of years 
(rounded up to the next whole year) that corresponds to the equivalent 
term of years factor for an annuity or unitrust interest. See paragraph 
(e)(4) of this section for an example.
    (2) Judicial and non-judicial reformations. A judicial reformation 
must be commenced prior to October 15th of the year following the year 
in which the transfer is made and must be completed within a reasonable 
time after it is commenced. A non-judicial reformation is permitted if 
effective under state law, provided it is completed by the date on 
which a judicial reformation must be commenced. In the alternative, if 
a court, in a proceeding that is commenced on or before July 5, 2001, 
declares any transfer, made on or after April 4, 2000, and on or before 
March 6, 2001, null and void ab initio, the Internal Revenue Service 
will treat such transfers in a manner similar to that described in 
section 2055(e)(3)(J).
    (3) Sample factors from actuarial Table B and Table S. The 
appropriate annuity factor for an annuity payable for a term of years 
is computed by subtracting from 1.000000 the factor for an ordinary 
remainder interest following the same term certain that is determined 
under the formula in Sec.  20.2031-7(d)(2)(ii)(A) of this chapter and 
then dividing the result by the applicable section 7520 interest rate 
expressed as a number with at least four decimal places. For the 
convenience of taxpayers, actuarial factors have been computed by IRS 
and appear in the ``Annuity'' column of Table B. The appropriate 
annuity factor for an annuity payable for the life of one individual is 
computed by subtracting from 1.00000 the factor for an ordinary 
remainder interest following the life of the same individual that is 
determined under the formula in Sec.  20.2031-7(d)(2)(ii)(B) of this 
chapter and then dividing the result by the applicable section 7520 
interest rate expressed as a number with four decimal places. For the 
convenience of taxpayers, actuarial factors have been computed by IRS 
and appear in the ``Annuity'' column of Table S. Table B and Table S 
can be found on the IRS website at https://www.irs.gov/retirement-plans/actuarial-tables. For purposes of the example in paragraph (e)(4) 
of this section, the relevant factors from Table B and Table S are:

                       Table 2 to Paragraph (e)(3)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                          Factors from Table B
       Annuity, Income, and Remainder Interests for a Term Certain
                         Interest at 2.4 Percent
------------------------------------------------------------------------
          Years            Annuity    Income Interest         Remainder
             38            24.7471           0.593929          0.406071
             39            25.1436           0.603447          0.396553
------------------------------------------------------------------------
               Factors from Table S--Based on Table 2010CM
                         Interest at 2.4 Percent
------------------------------------------------------------------------
            Age            Annuity        Life Estate         Remainder
             40            24.9063            0.59775           0.40225
------------------------------------------------------------------------


[[Page 26844]]

    (4) Example. An annuity interest payable for the life of an 
individual age 40 at the time of the transfer that occurs on or after 
[applicability date of the Treasury decision adopting these regulations 
as final regulations] assuming an interest rate of 2.4 percent under 
section 7520, has an annuity factor reported in Table S of 24.9063. 
Based on Table B at 2.4 percent, the factor 24.9063 corresponds to a 
term of years between 38 and 39 years. Accordingly, the annuity 
interest must be reformed into an interest payable for a term of 39 
years. (To determine the value of a charitable remainder interest 
payable after this annuity interest, the taxpayer then must satisfy the 
test illustrated in Sec.  25.7520-3(b)(2)(v)(E).)
    (f) Applicability date. This section applies only to gifts made 
after July 31, 1969.
0
Par. 29. Section 25.7520-1 is amended by revising paragraphs (a)(1) and 
(2), (b)(2), (c), and (d) and adding paragraphs (e) and (f) to read as 
follows:


Sec.  25.7520-1   Valuation of annuities, interests for life or a term 
of years, and remainder or reversionary interests.

    (a) * * * (1) Except as otherwise provided in this section and in 
Sec.  25.7520-3(b) (relating to exceptions to the use of prescribed 
tables under certain circumstances), in the case of certain gifts after 
April 30, 1989, the fair market value of annuities, interests for life 
or a term of years (including unitrust interests), and remainder or 
reversionary interests is their present value determined under this 
section. See Sec.  20.2031-7(d) of this chapter (and, for periods prior 
to [applicability date of the Treasury decision adopting these 
regulations as final regulations], Sec.  20.2031-7A of this chapter) 
for the computation of the value of annuities, interests for life or a 
term of years, and remainder or reversionary interests, other than 
interests described in paragraphs (a)(2) and (3) of this section.
    (2) In the case of a gift to a pooled income fund on or after 
[applicability date of the Treasury decision adopting these regulations 
as final regulations], see Sec.  1.642(c)-6(e) of this chapter (or, for 
periods prior to [applicability date of the Treasury decision adopting 
these regulations as final regulations], Sec.  1.642(c)-6A of this 
chapter) 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 IRS 
publications at that time. For gifts with valuation dates on or after 
[applicability date of the Treasury decision adopting these regulations 
as final regulations], the mortality component table (Table 2010CM) is 
in Sec.  20.2031-7(d)(7)(ii) of this chapter, and is referenced by IRS 
Publication 1457, ``Actuarial Valuations Version 4A,'' and can be found 
on the IRS website at https://www.irs.gov/retirement-plans/actuarial-tables (or a corresponding URL as may be updated from time to time). 
See Sec.  20.2031-7A of this chapter for mortality component tables 
applicable to gifts for which the valuation date falls before 
[applicability date of the Treasury decision adopting these regulations 
as final regulations].
    (c) Actuarial factors. The present value on the valuation date of 
an annuity, an interest for life or a term of years, and a remainder or 
reversionary interest is computed by using the section 7520 interest 
rate component that is described in paragraph (b)(1) of this section 
and the mortality component that is described in paragraph (b)(2) of 
this section. Actuarial factors for determining these present values 
may be calculated using the formulas in Sec.  20.2031-7(d)(2) of this 
chapter. For the convenience of taxpayers, the IRS has computed 
actuarial factors and displayed them on tables that are referenced and 
explained by publications of the Internal Revenue Service. If a special 
factor is required in order to value an interest, the special factor 
may be calculated by the taxpayer using the actuarial formulas in Sec.  
20.2031-7(d)(2) of this chapter or the taxpayer may request a ruling to 
obtain the factor from the Internal Revenue Service. The request for a 
ruling must be accompanied by a recitation of the facts, including the 
date of birth for each measuring life and copies of relevant 
instruments. A request for a ruling must comply with the instructions 
for requesting a ruling published periodically in the Internal Revenue 
Bulletin (see Rev. Proc. 2021-1, 2021-1 I.R.B. 1, and subsequent 
updates, and Sec. Sec.  601.201 and 601.601(d)(2)(ii)(b) of this 
chapter) and must include payment of the required user fee.
    (d) IRS publications referencing and explaining actuarial tables 
with rates from 0.2 to 20 percent, inclusive, at intervals of two-
tenths of one percent, for valuation dates on or after [applicability 
date of the Treasury decision adopting these regulations as final 
regulations]. The publications listed in paragraphs (d)(1) through (3) 
of this section will be available after [date of publication of the 
final rule in the Federal Register]. The underlying actuarial tables 
referenced and explained by these publications will be available 
beginning May 5, 2022, at no charge, electronically via the IRS website 
at https://www.irs.gov/retirement-plans/actuarial-tables:
    (1) IRS Publication 1457, ``Actuarial Valuations Version 4A'' 
(2022). This publication references tables of valuation factors and 
provides examples that show how to compute other valuation factors, for 
determining the present value of annuities, interests for life or a 
term of years, and remainder or reversionary interests, 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 Sec.  
1.664-2 of this chapter and a pooled income fund as defined in Sec.  
1.642(c)-5 of this chapter. This publication references and explains 
Table S (single life remainder factors), Table R(2) (two-life last-to-
die remainder factors), Table B (actuarial factors used in determining 
the present value of an interest for a term of years), Table H 
(commutation factors), Table J (term certain annuity beginning-of-
interval adjustment factors), and Table K (annuity end-of-interval 
adjustment factors). See earlier versions of the publication, Sec.  
1.642(c)-6A of this chapter, or Sec.  20.2031-7A of this chapter for 
Table S applicable to valuation dates before [applicability date of the 
Treasury decision adopting these regulations as final regulations]. 
Earlier versions of the publication also contain earlier versions of 
Table R(2). Table B, Table J, and Table K also can be found in Sec.  
20.2031-7(d)(6) of this chapter, but only for interest rates from 4.2 
to 14 percent, inclusive.
    (2) IRS Publication 1458, ``Actuarial Valuations Version 4B'' 
(2022). This publication references and explains 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 of this chapter. This publication 
references Table U(1) (unitrust single life remainder factors), Table 
U(2) (unitrust two-life last-to-die remainder factors), Table D 
(actuarial factors used in determining the present value of a remainder 
interest postponed for a term of years), Table F (adjustment payout 
rate factors), and Table Z (unitrust commutation factors). See earlier 
versions of the publication or Sec.  1.664-4A of this chapter for Table 
U(1) applicable to valuation dates before

[[Page 26845]]

[applicability date of the Treasury decision adopting these regulations 
as final regulations]. Earlier versions of the publication also contain 
earlier versions of Table U(2). Table D also can be found in Sec.  
1.664-4(e)(6)(iii) of this chapter, but only for adjusted payout rates 
from 4.2 to 14 percent, inclusive. Table F also can be found in Sec.  
1.664-4(e)(6)(iii) of this chapter, but only for interest rates from 
4.2 to 14 percent, inclusive.
    (3) IRS Publication 1459, ``Actuarial Valuations Version 4C''
    (2022). This publication references and explains Table C, which 
provides factors for making adjustments to the standard remainder 
factor for valuing gifts of depreciable property. See Sec.  1.170A-12 
of this chapter.
    (4) The publications identified in paragraphs (d)(1) through (3) of 
this section also reference Table 2010CM, the mortality component 
table.
    (e) Use of approximation methods for obtaining factors when the 
required valuation rate falls between two listed rates. For certain 
cases, this part and IRS publications provide approximation methods 
(for example, interpolation) for obtaining factors when the required 
valuation rate falls between two listed rates (such as in the case of a 
pooled income fund's rate of return or a unitrust's adjusted payout 
rate). In general, exact methods of obtaining the applicable factors 
are allowed, such as through software using the actual rate of return 
and the proper actuarial formula, provided such direct methods are 
applied consistently. The actuarial formula in Sec.  20.2031-
7(d)(2)(ii)(B) of this chapter is used to determine the remainder 
factor for pooled income funds and the actuarial formula in Sec.  
1.664-4(e)(5)(i) of this chapter is used to determine the remainder 
factor for unitrusts. The approximation method provided in this part 
must be used if more exact methods are not available.
    (f) Applicability date. This section applies on and after 
[applicability date of the Treasury decision adopting these regulations 
as final regulations].
0
Par. 30. Section 25.7520-3 is amended by:
0
1. Designating Examples 1 through 5 of paragraph (b)(2)(v) as 
paragraphs (b)(2)(v)(A) through (E), respectively.
0
2. Revising the heading of newly designated paragraphs (b)(2)(v)(A).
0
3. In newly designated paragraph (b)(2)(v)(B):
0
i. Revising the heading.
0
ii. Removing ``Example 1'' and ``this paragraph'' and adding in their 
places ``paragraph (b)(2)(v)(A) of this section (Example 1)'' and 
``this paragraph (b)(2)(v)(B)'', respectively.
0
4. Revising the heading for newly designated paragraph (b)(2)(v)(C).
0
5. In newly designated paragraph (b)(2)(v)(D):
0
i. Revising the heading.
0
ii. Removing ``Example 3'' and adding ``paragraph (b)(2)(v)(C) of this 
section (Example 3)'' in its place.
0
6. Revising newly designated paragraph (b)(2)(v)(E) and paragraphs 
(b)(4) and (c).
    The revisions read as follows:


Sec.  25.7520-3   Limitation on the application of section 7520.

* * * * *
    (b) * * *
    (2) * * *
    (v) * * *
    (A) Example 1. Unproductive property. * * *
    (B) Example 2. Beneficiary's right to make trust productive. * * *
    (C) Example 3. Annuity trust funded with unproductive property. * * 
*
    (D) Example 4. Unitrust funded with unproductive property. * * *
    (E) Example 5: Eroding corpus in an annuity payable from a trust or 
other limited fund. (1) The present value of an annuity interest (and 
any other interest dependent on the present value of an annuity), when 
the annuity is paid from an eroding and limited fund, is determined by 
actuarial factors reflecting the term certain period to the exhaustion 
of the fund, as shown in Table 1 to this paragraph (b)(2)(v)(E)(1). The 
period to exhaustion is determined using annuity factors. The 
appropriate annuity factors for an annuity payable for a term of years 
is computed by subtracting from 1.000000 the factor for an ordinary 
remainder interest following the same term certain that is determined 
under the formula in Sec.  20.2031-7(d)(2)(ii)(A) of this chapter and 
then dividing the result by the applicable section 7520 interest rate 
expressed as a number with at least four decimal places. For the 
convenience of taxpayers, actuarial factors have been computed by IRS 
and appear in the ``Annuity'' column of Table B. If the annuity is for 
life (or for a period depending in part on life) and the period to 
exhaustion is shorter than the possible life period, actuarial 
commutation factors may be used in determining the present value. The 
actuarial commutation factors can be computed directly by using the 
formulas in Sec.  25.2512-5(d)(2)(v)(A)(1), the section 7520 rate, and 
Table 2010CM as set forth in Sec.  20.2031-7(d)(7)(ii) of this chapter. 
For the convenience of taxpayers, actuarial factors have been computed 
by IRS and appear in Table H. Table B and Table H can be found on the 
IRS website at https://www.irs.gov/retirement-plans/actuarial-tables 
(or a corresponding URL as may be updated from time to time). After 
determining the point of exhaustion of funds, the approximation method 
for determining the present value of annuity payments so limited by 
exhaustion in the example in Table 1 to this paragraph (b)(2)(v)(E)(1) 
is to be used if a more exact method (for example, computing the year-
by-year present value of each payment until the fund is exhausted) is 
not used. For purposes of this example, the relevant factors from Table 
B and Table H(4.4) are:

                  Table 1 to Paragraph (b)(2)(v)(E)(1)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                          Factors from Table B
       Annuity, Income, and Remainder Interests for a Term Certain
                         Interest at 4.4 Percent
------------------------------------------------------------------------
          Years            Annuity    Income Interest         Remainder
             13             9.7423           0.428661          0.571339
             14            10.2896           0.452741          0.547259
             50            20.0878           0.883862          0.116138
------------------------------------------------------------------------
                        Factors from Table H(4.4)
               Commutation Factors--Based on Table 2010CM
                      Interest Rate of 4.4 Percent
------------------------------------------------------------------------
        Age (x)                 Dx          Nx-factor         Mx-factor
             60          6,694.636          90,259.34         2,723.225
             73          3,151.228          29,432.25         1,856.209

[[Page 26846]]

 
             74          2,941.075          26,452.50         1,777.165
------------------------------------------------------------------------

    (2) The donor, who is age 60 and in normal health, transfers 
property worth $1,000,000 to a trust on or after [applicability date of 
the Treasury decision adopting these regulations as final regulations]. 
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 then will be distributed to 
the donor's child. The section 7520 rate for the month of the transfer 
is 4.4 percent. First, it is necessary to determine whether the annuity 
may exhaust the corpus before all annuity payments are made. Because it 
is assumed under the prescribed mortality component, Table 2010CM, that 
any measuring life may survive until age 110, any life annuity could 
require payments until the measuring life reaches age 110. The 
determination of whether the annuity may exhaust the corpus before the 
annuity payments terminate is computed with values from Table B as 
illustrated in Figure 1 to this paragraph (b)(2)(v)(E)(2).
[GRAPHIC] [TIFF OMITTED] TP05MY22.020

    (3) Because 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, assuming earnings at the section 
7520 rate of 4.4 percent.
    (4) If an annuity of $100,000 payable at the end of each year for a 
period had an annuity factor of 10.0, it would have a present value 
exactly equal to the principal available to pay the annuity over the 
term. The annuity factor for 13 years at 4.4 percent in Table B is 
9.7423 and the annuity factor for 14 years at 4.4 percent is 10.2896. 
Thus, it is determined that the $1,000,000 initial transfer will be 
sufficient to make 13 annual payments of $100,000, but not to make the 
entire 14th payment. The present value of an annuity of $100,000 
payable at the end of each year for 13 years certain is $100,000 times 
9.7423 or $974,230. The remaining amount is $25,770. Of the initial 
transfer amount, $25,770 is not needed to make payments for 13 years, 
so this amount, as accumulated for 14 years, will be available for the 
final payment. The 14-year accumulation factor is 1.8273 ((1 + 
0.044)\14\ = 1.8273), so the amount available in 14 years is $25,770 
times 1.8273 or $47,089.52. Therefore, for purposes of this present 
value determination, the annuity obligation is treated as being 
composed of two distinct annuity components. The two annuity components 
taken together must equal the total annual amount of $100,000. The 
first annuity component is the exact amount that the trust will have 
available for the final payment, $47,089.52. The second annuity 
component then must be $100,000 minus $47,089.52, or $52,910.48. 
Specifically, the initial corpus will be able to make payments of 
$52,910.48 per year for 13 years plus payments of $47,089.52 per year 
for 14 years. The total annuity is valued by adding the present value 
of the two separate temporary component annuities.
    (5) The actuarial factor for determining the value of the annuity 
of $52,910.48 per year payable for 13 years or until the prior death of 
a person aged 60 is derived by the use of factors involving one life 
and a term of years, derived from Table H. The factor is determined as 
illustrated in Figure 2 to this paragraph (b)(2)(v)(E)(5).

[[Page 26847]]

[GRAPHIC] [TIFF OMITTED] TP05MY22.021

    (6) The actuarial factor for determining the value of the annuity 
$47,089.52 per year payable for 14 years or until the prior death of a 
person aged 60 is derived by the use of factors involving one life and 
a term of years, derived from Table H. The factor is determined as 
illustrated in Figure 3 to this paragraph (b)(2)(v)(E)(6).
[GRAPHIC] [TIFF OMITTED] TP05MY22.022

    (7) Based on the calculations of paragraph (b)(2)(v)(E)(5) of this 
section, the present value of an annuity of $52,910.48 per year payable 
for 13 years or until the prior death of a person aged 60 is 
$480,739.33 ($52,910.48 x 9.0859). Based on the calculations of 
paragraph (b)(2)(v)(E)(6) of this section, the present value of an 
annuity of $47,089.52 per year payable for 14 years or until the prior 
death of a person aged 60 is $448,810.22 ($47,089.52 x 9.5310). Thus, 
the present value of the charitable annuity interest is the sum of the 
two component annuities, $929,549.55 ($480,739.33 + $448,810.22).
* * * * *
    (4) Example--terminal illness--(i) Sample factors from actuarial 
Table S. The provisions of paragraph (b)(3) of this section are 
illustrated by the example in paragraph (b)(4)(ii) of this section. The 
appropriate annuity factor for an annuity payable for the life of one 
individual is computed by subtracting from 1.00000 the factor for an 
ordinary remainder interest following the life of the same individual 
that is determined under the formula in Sec.  20.2031-7(d)(2)(ii)(B) of 
this chapter and then dividing the result by the applicable section 
7520 interest rate expressed as a number with four decimal places. For 
the convenience of taxpayers, actuarial factors have been computed by 
IRS and appear in the ``Annuity'' column of Table S. Table S can be 
found on the IRS website at https://www.irs.gov/

[[Page 26848]]

retirement-plans/actuarial-tables. For purposes of the example in 
paragraph (b)(4)(ii) of this section, the relevant factor from Table S 
is:

                     Table 2 to Paragraph (b)(4)(i)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Factors from Table S--Based on Table 2010CM
Interest at 4.4 Percent
------------------------------------------------------------------------
Age                                     Annuity        Life   Remainder
                                                     Estate
------------------------------------------------------------------------
75..................................     8.6473     0.38048     0.61952
------------------------------------------------------------------------

    (ii) Example of donor with terminal illness. The donor transfers 
property worth $1,000,000 to a child on or after [applicability date of 
the Treasury decision adopting these regulations as final regulations], 
in exchange for the child's promise to pay the donor $80,000 per year 
for the donor's life, payable annually at the end of each period. The 
section 7520 interest rate for the month of the transfer is 4.4 
percent. The donor is age 75 but has been diagnosed with an incurable 
illness and has at least a 50 percent probability of dying within 1 
year. Under Table S, the annuity factor at 4.4 percent for a person age 
75 in normal health is 8.6473. Thus, if the donor were not terminally 
ill, the present value of the annuity would be $691,784 ($80,000 x 
8.6473). 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.
* * * * *
    (c) Applicability dates. Section 25.7520-3(a) is applicable as of 
May 1, 1989. The provisions of paragraph (b) of this section, except 
paragraphs (b)(2)(v)(E) and (b)(4) of this section, are applicable to 
gifts made after December 13, 1995. Paragraphs (b)(2)(v)(E) and (b)(4) 
of this section are applicable to gifts made on or after [applicability 
date of the Treasury decision adopting these regulations as final 
regulations].

Douglas W. O'Donnell,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 2022-02303 Filed 5-4-22; 8:45 am]
BILLING CODE 4830-01-P