[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 554-555]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
Procedure and Administration--Table of Contents
 
Sec.  1.7520-2  Valuation of charitable interests.

    (a) In general--(1) Valuation. 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), the fair market value of 
annuities, interests for life or for a term of years, remainders, and 
reversions for which an income tax charitable deduction is allowable is 
the present value of such interests determined under Sec.  1.7520-1.
    (2) Prior-month election rule. If any part of the property interest 
transferred qualifies for an income tax charitable deduction under 
section 170(c), the taxpayer may elect (under paragraph (b) of this 
section) to compute the present value of the interest transferred by use 
of the section 7520 interest rate for the month during which the 
interest is transferred or the section 7520 interest rate component for 
either of the 2 months preceding the month during which the interest is 
transferred. Paragraph (b) of this section explains how a prior-month 
election is made. The interest rate for the month so elected is the 
applicable section 7520 interest rate. If the actuarial factor for 
either or both of the 2 months preceding the month during which the 
interest is transferred is based on a mortality experience that is 
different from the mortality experience at the date of the transfer and 
if the taxpayer elects to use the section 7520 rate for a prior month 
with the different mortality experience, the taxpayer must use the 
actuarial factor derived from the mortality experience in effect during 
the month of the section 7520 rate elected. All actuarial computations 
relating to the transfer must be made by applying the interest rate 
component and the mortality component of the month elected by the 
taxpayer.
    (3) Transfers of more than one interest in the same property. If a 
taxpayer transfers more than one interest in the same property at the 
same time, for purposes of valuing the transferred interests, the 
taxpayer must use the same interest rate and mortality component for 
each interest in the property transferred. If more than one interest in 
the same property is transferred in two or more separate transfers at 
different times, the value of each interest is determined by the use of 
the interest rate component and mortality component in effect during the 
month of the transfer of that interest or, if applicable under paragraph 
(a)(2) of this section, either of the two months preceding the month of 
the transfer.
    (4) Information required with tax return. The following information 
must be attached to the income tax return (or to the amended return) if 
the taxpayer claims a charitable deduction for the present value of a 
temporary or remainder interest in property--
    (i) A complete description of the interest that is transferred, 
including a copy of the instrument of transfer;
    (ii) The valuation date of the transfer;
    (iii) The names and identification numbers of the beneficiaries of 
the transferred interest;
    (iv) The names and birthdates of any measuring lives, a description 
of any relevant terminal illness condition of any measuring life, and 
(if applicable) an explanation of how any terminal illness condition was 
taken into account in valuing the interest; and
    (v) A computation of the deduction showing the applicable section 
7520 interest rate that is used to value the transferred interest.
    (5) Place for filing returns. See section 6091 of the Internal 
Revenue Code and the regulations thereunder for the place for filing the 
return or other document required by this section.
    (b) Election of interest rate component--(1) Time for making 
election. A taxpayer makes a prior-month election under paragraph (a)(2) 
of this section by attaching the information described in paragraph 
(b)(2) of this section to the taxpayer's income tax return or to an 
amended return for that year that is filed within 24 months after the 
later of the date the original return for the

[[Page 555]]

year was filed or the due date for filing the return.
    (2) Manner of making election. A statement that the prior-month 
election under section 7520(a) of the Internal Revenue Code is being 
made and that identifies the elected month must be attached to the 
income tax return (or to the amended return).
    (3) Revocability. The prior-month election may be revoked by filing 
an amended return within 24 months after the later of the date the 
original return of tax for the year was filed or the due date for filing 
the return. The revocation must be filed in the place referred to in 
paragraph (a)(5) of this section.
    (c) Effective dates. Paragraph (a) of this section is effective as 
of May 1, 1989. Paragraph (b) of this section is effective for elections 
made after June 10, 1994.

[T.D. 8540, 59 FR 30149, June 10, 1994]