[Code of Federal Regulations]
[Title 26, Volume 2]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.101-7]

[Page 368]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.101-7  Mortality table used to determine exclusion for deferred 
payments of life insurance proceeds.

    (a) Mortality table. Notwithstanding any provision of Sec. 1.101-4 
that otherwise would permit the use of a mortality table not described 
in this section, the mortality table set forth in Sec. 1.72-7(c)(1) 
must be used to determine--
    (1) The amount held by an insurer with respect to a beneficiary for 
purposes of section 101(d)(2) and Sec. 1.101-4; and
    (2) The period or periods with respect to which payments are to be 
made for purposes of section 101(d)(1) and Sec. 1.101-4.
    (b) Examples. The principles of this section may be illustrated by 
the following examples:

    Example (1). A life insurance policy provides only for the payment 
of $5,000 per year for the life of the beneficiary, A, beginning with 
the insured's death. If A is 59 years of age at the time of the 
insured's death, the period with respect to which the payments are to be 
made is 25 years. This period is determined by using the mortality table 
set forth in Sec. 1.72-7(c)(1), and is shown in Table V of Sec. 1.72-9 
(which contains life expectancy tables determined using this mortality 
table). If the present value of the proceeds, determined by reference to 
the interest rate used by the insurance company and the mortality table 
set forth in Sec. 1.72-7(c)(1), is $75,000, $3,000 of each $5,000 
payment ($75,000 divided by 25) is excluded from the gross income of A.
    Example (2). A life insurance policy provides for the payment of 
$82,500 in a lump sum to the beneficiary, A, at the death of the 
insured. Upon the insured's death, however, A selects an option for the 
payment of $2,000 per year for life and for the same amount to be paid 
after A's death to B for B's life. If A is 51 years of age and B is 28 
years of age at the death of the insured, the period with respect to 
which the payments are to be made is 55 years. This period is determined 
by using the mortality table set forth in Sec. 1.72-7(c)(1), and is 
shown in Table VI of Sec. 1.72-9 (which contains life expectancy tables 
determined using this mortality table). Accordingly $1,500 of each 
$2,000 payment ($82,500 divided by 55) is excluded from the gross income 
of the recipient.

    (c) Effective date. This section applies to amounts received with 
respect to deaths occurring after October 22, 1986, in taxable years 
ending after October 22, 1986.

[T.D. 8161, 52 FR 35415, Sept. 21, 1987. Redesignated and amended by 
T.D. 8272, 54 FR 47980, Nov. 20, 1989]