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

DEPARTMENT OF THE TREASURY
Internal Revenue Service 26 CFR Parts 1, 20, and 25 [REG-103851-99]
RIN 1545-AX07

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

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking by cross-reference to
temporary regulations.

SUMMARY: These proposed regulations relate to the use of actuarial
tables in valuing annuities, interests for life or terms of years,
and remainder or reversionary interests. These regulations are
necessary because section 7520(c)(3) directs the Secretary to update
the actuarial tables to reflect the most recent mortality experience
available. These regulations will effect the valuation of inter
vivos and testamentary transfers of interest dependent on one or
more measuring lives. The text of the temporary regulations in the
Rules and Regulations section of this issue of the Federal Register
also serves as the text of these proposed regulations.

DATES: Written and electronic comments and requests for a public
hearing must be received by July 29, 1999.

ADDRESSES: Send submissions to CC:DOM:CORP:R (REG-103851-99), room
5226, Internal Revenue Service, POB 7604, Ben Franklin Station,
Washington DC 20044.

Submissions may also be hand delivered Monday through Friday between
the hours of 8 a.m. and 5 p.m. to: CC:DOM:CORP:R (REG-103851-99),
Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue,
NW., Washington, DC. Alternatively, taxpayers may submit comments
electronically via the internet by selecting the "Tax Regs" option
on the IRS Home Page, or by submitting comments directly to the IRS
internet site at
http://www.irs.ustreas.gov/prod/taxregs/comments.html.

FOR FURTHER INFORMATION CONTACT: Concerning the regulations, William
L. Blodgett, (202) 622-3090; concerning submissions, Guy Traynor,
(202) 622-7180 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

Temporary regulations in the Rules and Regulations section of this
issue of the Federal Register amend Income Tax Regulations (26 CFR
part 1) under sections 642(c)(5) and 664, Estate Tax Regulations (26
CFR part 20) under section 2031, and Gift Tax Regulations (26 CFR
part 25) under section 2512. These regulations revise actuarial
tables used for the valuation of partial interests in property under
section 7520 to reflect the mortality experience based on the 1990
United States census, the most recent mortality experience
available.

The text of those temporary regulations also serves as the text of
these proposed regulations. The preamble to the temporary
regulations explains the temporary regulations.

Special Analysis

It has been determined that this notice of proposed rulemaking is
not a significant regulatory action as defined in EO 12866.
Therefore, a regulatory assessment is not required. It also has been
determined that section 553(b) of the Administrative Procedure Act
(5 U.S.C. chapter 5) does not apply to these regulations, and
because these regulations do not impose a collection of information
requirement on small entities, the Regulatory Flexibility Act (5
U.S.C. chapter 6) does not apply.

Pursuant to section 7805(f) of the Internal Revenue Code, this
notice of proposed rulemaking will be submitted to the Chief Counsel
for Advocacy of the Small Business Administration for comment on its
impact on small business.

Proposed Effective Date

The regulations are proposed to apply to the valuation of annuities,
interests for life or terms of years, and remainder or reversionary
interests for valuation dates after April 30, 1999.

Comments and requests for a Public Hearing Before these proposed
regulations are adopted as final regulations, consideration will be
given to any electronic and written comments (a signed original and
8 copies) that are submitted timely to the IRS. All comments will be
available for public inspection and copying. A public hearing may be
scheduled if requested in writing by any person who timely submits
written comments. If a public hearing is scheduled, notice of the
date, time, and place for the hearing will be published in the
Federal Register.

Drafting Information

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

List of Subjects

26 CFR Part 1 Income taxes, Reporting and recordkeeping
requirements.

26 CFR Part 20 Estate taxes, Reporting and recordkeeping
requirements.

26 CFR Part 25 Gift taxes, Reporting and recordkeeping requirements.

Proposed Amendments to the Regulations Accordingly, 26 CFR part 1 is
proposed to be amended as follows:

PART 1--INCOME TAXES

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

Authority: 26 U.S.C. 7805 * * * Par. 2. Section 1.170A-12 is amended
by revising paragraphs (b)(2) and (b)(3) to read as follows:

�1.170A-12 Valuation of a remainder interest in real property for
contributions made after July 31, 1969.

* * * * *

(b) * * *

(2) [The text of this proposed paragraph (b)(2) is the same as the
text of �1.170A-12T(b)(2) published elsewhere in this issue of the
Federal Register].

(3) [The text of this proposed paragraph (b)(3) is the same as the
text of �1.170A-12T(b)(3) published elsewhere in this issue of the
Federal Register].

* * * * *

Par. 3. Section 1.642(c)-6 is amended by revising paragraphs (d),
(e) and (f) to read as follows:

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

* * * * *

(d) [The text of this proposed paragraph (d) is the same as the text
of �1.642(c)-6T( d) published elsewhere in this issue of the Federal
Register].

(e) [The text of this proposed paragraph (e) is the same as the text
of �1.642(c)-6T( e) published elsewhere in this issue of the Federal
Register].

(f) [The text of this proposed paragraph (f) is the same as the text
of �1.642(c)-6T( f) published elsewhere in this issue of the Federal
Register] Par. 4. Section 1.664-4 is amended by revising paragraphs
(a)(1), (d), (e) and (f) to read as follows:

�1.664-4 Calculation of the fair market value of the remainder
interest in a charitable remainder unitrust.

(a) * * *

(1) [The text of this proposed paragraph (a)(1) is the same as the
text of �1.664- 4T(a)(1) published elsewhere in this issue of the
Federal Register]

* * * * *

(d) [The text of this proposed paragraph (d) is the same as the text
of �1.664- 4T(d) published elsewhere in this issue of the Federal
Register].

(e) [The text of this proposed paragraph (e) is the same as the text
of �1.664- 4T(e) published elsewhere in this issue of the Federal
Register].

(f) [The text of this proposed paragraph (f) is the same as the text
of �1.664-4T(f) published elsewhere in this issue of the Federal
Register].

Par. 4. Section 1.7520-1 is amended by revising paragraphs (b)(2),
(c)(1), (c)(2) and (d) to read as follows:

�1.7520-1 Valuation of annuities, unitrust interest, interests for
life or terms of years, and remainder or reversionary interests.

* * * * *

(b) * * *

(2) [The text of this proposed paragraph (b)(2) is the same as the
text of �1.7520-1T(b)(2) published elsewhere in this issue of the
Federal Register].

(c) * * *

(1) [The text of this proposed paragraph (c)(1) is the same as the
text of �1.7520-1T(c)(1) published elsewhere in this issue of the
Federal Register].

(2) [The text of this proposed paragraph (c)(2) is the same as the
text of �1.7520-1T(c)(2) published elsewhere in this issue of the
Federal Register].

(d) [The text of this proposed paragraph (d) is the same as the text
of �1.7520- 1T(d) published elsewhere in this issue of the Federal
Register].

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

Par. 5. The authority citation for part 20 continues to read in part
as follows:

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

Par. 6. Section 20.2031-7 is amended by revising paragraphs (c), (d)
and (e) to read as follows:

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

* * * * *

(c) [The text of this proposed paragraph (c) is the same as the text
of �20.2031- 7T(c) published elsewhere in this issue of the Federal
Register].

(d) [The text of this proposed paragraph (d) is the same as the text
of �20.2031- 7T(d) published elsewhere in this issue of the Federal
Register].

(e) [The text of this proposed paragraph (e) is the same as the text
of �20.2031- 7T(e) published elsewhere in this issue of the Federal
Register].

Par. 7. Section 20.7520-1 is amended by revising paragraphs (a)(2),
(b)(2), (c)(1), (c)(2) and (d) to read as follows:

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

(a) * * *

(2) [The text of this proposed paragraph (a)(2) is the same as the
text of �20.7520-1T(a)(2) published elsewhere in this issue of the
Federal Register].

* * * * *

(b) * * *

(2) [The text of this proposed paragraph (b)(2) is the same as the
text of �20.7520-1T(b)(2) published elsewhere in this issue of the
Federal Register].

(c) * * *

(1) [The text of this proposed paragraph (c)(1) is the same as the
text of �20.7520-1T(c)(1) published elsewhere in this issue of the
Federal Register].

(2) [The text of this proposed paragraph (c)(2) is the same as the
text of �20.7520-1T(c)(2) published elsewhere in this issue of the
Federal Register].

(d) [The text of this proposed paragraph (d) is the same as the text
of �20.7520- 1T(d) published elsewhere in this issue of the Federal
Register].

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

Par. 8. The authority citation for part 25 continues to read in part
as follows:

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

Par. 9. Section 25.2512-5 is amended by revising paragraphs (c), (d)
and (e) to read as follows:

�25.2512-5 Valuation of annuities, unitrust interest, interests for
life or term of years, and remainder or reversionary interests.

* * * * *

(c) [The text of this proposed paragraph (c) is the same as the text
of �25.2512- 5T(c) published elsewhere in this issue of the Federal
Register].

(d) [The text of this proposed paragraph (d) is the same as the text
of �25.2512- 5T(d) published elsewhere in this issue of the Federal
Register].

(e) [The text of this proposed paragraph (e) is the same as the text
of �25.2512- 5T(e) published elsewhere in this issue of the Federal
Register].

Par. 10. Section 25.7520-1 is amended by revising paragraphs (b)(2),
(c)(1), (c)(2) and (d) to read as follows:

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

* * * * *

(b) * * *

(2) [The text of this proposed paragraph (b)(2) is the same as the
text of �25.7520-1T(b)(2) published elsewhere in this issue of the
Federal Register].

(c) * * *

(1) [The text of this proposed paragraph (c)(1) is the same as the
text of �25.7520-1T(c)(1) published elsewhere in this issue of the
Federal Register].

(2) [The text of this proposed paragraph (c)(2) is the same as the
text of �25.7520-1T(c)(2) published elsewhere in this issue of the
Federal Register]..(d) [The text of this proposed paragraph (d) is
the same as the text of �25.7520- 1T(d) published elsewhere in this
issue of the Federal Register].

Robert E. Wenzel
Deputy Commissioner of Internal Revenue

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