[Code of Federal Regulations]
[Title 26, Volume 13]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR]

[Page 552-554]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
Procedure and Administration--Table of Contents
 
Sec.  1.7520-1  Valuation of annuities, unitrust interests, interests 
for life or terms of years, and remainder or reversionary interests.

    (a) General actuarial valuations. (1) Except as otherwise provided 
in this section and in Sec.  1.7520-3 (relating to exceptions to the use 
of prescribed tables under certain circumstances), in the case of 
certain transactions after April 30, 1989, subject to income tax, the 
fair market value of annuities, interests for life or for a term of 
years (including unitrust interests), remainders, and reversions is 
their present value determined under this section. See Sec.  20.2031-
7(d) (and, for certain prior periods, Sec.  20.2031-7A) of this chapter, 
Estate Tax Regulations, for the computation of the value of annuities, 
unitrust interests, life estates, terms for years, remainders, and 
reversions, other than interests described in paragraphs (a)(2) and 
(a)(3) of this section.
    (2) For a transfer to a pooled income fund after April 30, 1999, see 
Sec.  1.642(c)-6(e) (or, for certain prior periods, Sec.  1.642(c)-6A) 
with respect to the valuation of the remainder interest.
    (3) For a transfer to a charitable remainder annuity trust after 
April 30, 1989, see Sec.  1.664-2 with respect to the valuation of the 
remainder interest. See Sec.  1.664-4 with respect to the valuation of 
the remainder interest in property transferred to a charitable remainder 
unitrust.
    (b) Components of valuation--(1) Interest rate component--(i) 
Section 7520 Interest rate. The section 7520 interest rate is the rate 
of return, rounded to the nearest two-tenths of one percent, that is 
equal to 120 percent of the applicable Federal mid-term rate, compounded 
annually, for purposes of section 1274(d)(1), for the month in which the 
valuation date falls. In rounding the rate to the nearest two-tenths of 
a percent, any rate that is midway between one two-tenths of a percent 
and another is rounded up to the higher of those two rates. For example, 
if 120 percent of the applicable Federal mid-term rate is 10.30, the 
section 7520 interest rate component is 10.4. The section 7520 interest 
rate is published monthly by the Internal Revenue Service in the 
Internal Revenue Bulletin (see Sec.  601.601(d)(2)(ii)(b) of this 
chapter).
    (ii) Valuation date. Except as provided in Sec.  1.7520-2, the 
valuation date is the date on which the transaction takes place.
    (2) Mortality component. The mortality component reflects the 
mortality data most recently available from the United States census. As 
new mortality data becomes available after each decennial census, the 
mortality component described in this section will be revised 
periodically and the revised mortality component tables will be 
published in the regulations at that time. For transactions with 
valuation dates after April 30, 1999, the mortality component table 
(Table 90CM) is contained in Sec.  20.2031-7(d)(7) of this chapter. See 
Sec.  20.2031-7A of this chapter for

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mortality component tables applicable to transactions for which the 
valuation date falls before May 1, 1999.
    (c) Tables. The present value on the valuation date of an annuity, 
life estate, term of years, remainder, or reversion 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 are included in tables in these regulations and in 
publications by the Internal Revenue Service. If a special factor is 
required in order to value an interest, the Internal Revenue Service 
will furnish the factor upon a request for a ruling. 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. 94-1, 1994-1 I.R.B. 10, and subsequent updates, 
and Sec. Sec.  601.201 and 601.601(d)(2)(ii)(b) of this chapter) and 
include payment of the required user fee.
    (1) Regulation sections containing tables with interest rates 
between 4.2 and 14 percent for valuation dates after April 30, 1999. 
Section 1.642(c)-6(e)(6) contains Table S used for determining the 
present value of a single life remainder interest in a pooled income 
fund as defined in Sec.  1.642(c)-5. See Sec.  1.642(c)-6A for actuarial 
factors for one life applicable to valuation dates before May 1, 1999. 
Section 1.664-4(e)(6) contains Table F (payout factors) and Table D 
(actuarial factors used in determining the present value of a remainder 
interest postponed for a term of years). Section 1.664-4(e)(7) contains 
Table U(1) (unitrust single life remainder factors). These tables are 
used in determining the present value of a remainder interest in a 
charitable remainder unitrust as defined in Sec.  1.664-3. See Sec.  
1.664-4A for unitrust single life remainder factors applicable to 
valuation dates before May 1, 1999. Section 20.2031-7(d)(6) of this 
chapter contains Table B (actuarial factors used in determining the 
present value of an interest for a term of years), Table K (annuity end-
of-interval adjustment factors), and Table J (term certain annuity 
beginning-of-interval adjustment factors). Section 20.2031-7(d)(7) of 
this chapter contains Table S (single life remainder factors), and Table 
90CM (mortality components). These tables are used in determining the 
present value of annuities, life estates, remainders, and reversions. 
See Sec.  20.2031-7A of this chapter for single life remainder factors 
and mortality components applicable to valuation dates before May 1, 
1999.
    (2) Internal Revenue Service publications containing tables with 
interest rates between 2.2 and 22 percent for valuation dates after 
April 30, 1999. The following documents are available for purchase from 
the Superintendent of Documents, United States Government Printing 
Office, Washington, DC 20402:
    (i) Internal Revenue Service Publication 1457, ``Actuarial Values, 
Book Aleph,'' (7-1999). This publication includes tables of valuation 
factors, as well as examples that show how to compute other valuation 
factors, for determining the present value of annuities, life estates, 
terms of years, remainders, and reversions, measured by one or two 
lives. These factors may also be used in the valuation of interests in a 
charitable remainder annuity trust as defined in Sec.  1.664-2 and a 
pooled income fund as defined in Sec.  1.642(c)-5. See Sec.  20.2031-7A 
of this chapter for publications containing tables for valuation dates 
before May 1, 1999.
    (ii) Internal Revenue Service Publication 1458, ``Actuarial Values, 
Book Beth,'' (7-1999). This publication includes term certain tables and 
tables of one and two life valuation factors for determining the present 
value of remainder interests in a charitable remainder unitrust as 
defined in Sec.  1.664-3. See Sec.  1.664-4A for publications containing 
tables for valuation dates before May 1, 1999.
    (iii) Internal Revenue Service Publication 1459, ``Actuarial Values, 
Book Gimel,'' (7-1999). This publication includes tables for computing 
depreciation adjustment factors. See Sec.  1.170A-12.

[[Page 554]]

    (d) Effective date. This section applies after April 30, 1989.

[T.D. 8540, 59 FR 30149, June 10, 1994, as amended by T.D. 8819, 64 FR 
23210, 23229, Apr. 30, 1999; T.D. 8886, 65 FR 36928, 36943, June 12, 
2000]