26806 Federal Register / Vol. 87, No. 87 / Thursday, May 5, 2022 / Proposed Rules 

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. 

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cannot be edited or withdrawn.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. 


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Federal Register / Vol. 87, No. 87 / Thursday, May 5, 2022 / Proposed Rules 26807 

CROSS REFERENCE TO REGULATION SECTIONS

Valuation period Interest 

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 §§ 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 


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26808 Federal Register / Vol. 87, No. 87 / Thursday, May 5, 2022 / Proposed Rules 

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 

■ 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: 

■ 1. Revising paragraphs (b)(2) and (3). 

■ 2. Adding paragraph (b)(4). 

■ 3. Revising paragraphs (e)(2) and (f) 

The revisions and addition read as 

follows: 

§ 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 § 20.2031– 

7 of this chapter (or for periods before 

[applicability date of the Treasury 

decision adopting these regulations as 

final regulations], § 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 

§ 20.2031–7(d)(7)(ii) of this chapter, and 

using the formula provided in this 


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

(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 § 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: 


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Figure 1 to paragraph (b)(2) - Formula for determining single life remainder interest in 

depreciable property 

where: 

n = the estimated number of years ofuseft.d life; 

i = the applicableJnterest rate under section 7520 of the Internal Revenue Code; 

V ::::; 1 / (1 + i) .~ 

tllx =1--·'zt 

x = the age ofthe measuring life (detemiined as age atnear~st t>irthday); and 

lx = the·number associated withage~{a$ setforth in the prescribed 01ortality·table, 

rjpteseriting·the number· of persons alive at age x. 
26810 Federal Register / Vol. 87, No. 87 / Thursday, May 5, 2022 / Proposed Rules 

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 § 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/actuarialtables, 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 § 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 § 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. 


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Figure 2 to paragraph (e)(2)(i) - Formula for determining two-life remainder interest in 

depreciable property 

where: 

n = the estimated number of years of useful life; 

= the applicable interest rate under section 7520 of the Internal Revenue Code; 

V = 1 / (1 + i); 

= 1 - lx•+t 

tqx . lx , 

x and y are the ages of the measuring lives (determined as age at nearest birthday); and 

lx = the number associated with age x as set forth in the prescribed mortality table, 

representing the number of persons alive at age x. 
Federal Register / Vol. 87, No. 87 / Thursday, May 5, 2022 / Proposed Rules 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]. 

■ Par. 3. Section 1.170A–14 is 

amended: 

■ 1. In paragraph (h)(4) by designating 

Example 1 through 12 as paragraphs 

(h)(4)(i) through (xii), respectively. 

■ 2. By revising newly designated 

paragraph (h)(4)(ii). 

■ 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. 

■ 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. 

■ 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. 

■ 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. 

■ 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. 

■ 8. By revising paragraph (j). 

The revisions read as follows: 

§ 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 

§ 1.170A–12(b), the value of a remainder 

interest in real property following one 

life is determined under § 25.2512–5 of 

this chapter (Gift Tax Regulations). (See 

§ 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 

§ 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 × 

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]. 

■ Par. 4. Section 1.642(c)–6 is amended 

by: 

■ 1. Revising paragraph (d). 

■ 2. Redesignating paragraph (e) as 

paragraph (g) of § 1.642(c)–6A. 

■ 3. Adding new paragraph (e) and 

revising paragraph (f). 

The revisions and addition read as 

follows: 

§ 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 

regulations After Before 

................. 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, § 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 § 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 §§ 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 

§ 20.2031–7(d)(7)(ii) of this chapter or 

Table 2000CM in § 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 


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26812 Federal Register / Vol. 87, No. 87 / Thursday, May 5, 2022 / Proposed Rules 

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 § 20.2031–7(d)(7)(ii) of this 

chapter (see § 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 § 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 

§ 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 

§ 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 


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

(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 § 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]. 

■ Par. 5. The undesignated center 

heading immediately preceding 

§ 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] 

■ Par. 6. Section 1.642(c)–6A is 

amended by: 

■ 1. Revising the section heading. 

■ 2. In newly redesignated paragraph 

(g): 

■ i. The heading and paragraphs (g)(1) 

through (5) and (g)(6) introductory text 

are revised. 

■ ii. Paragraph (g)(7) is added. 

The revisions and addition read as 

follows: 

§ 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, § 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 


lotter on DSK11XQN23PROD with PROPOSALS2EP05MY22.004</GPH>

Figure 1 to paragraph (e)(S)(iii) - Illustration of interpolation method 

A. Remainder Factor at 5.4 percent for age 55 

B. Less: Remainder Factor at 5.6 percent for age 55 

C. Difference: A - B 

D. lnte~polation Adjustment: 

5.43% - 5.40% z 

-----=--- 5.60%-5.40% 0.01079 

0.28442 

- 0.27363 

0.01079 

E. 5.43% - 5.40% 

5 .. 60% _ 5.40% • 0.01079 = z = 0.00162 

F. Remainder Factor at 5.4 percent for age 55 0.28442 

G. Less: Interpolation Adjustment z -· 0.00162 

H. Interpolated Factor: F - G 0.28280 

I. Amount Transferred $ 100,000 

J. Present Value of Remainder Interest: H x I $ 28,280 
26814 Federal Register / Vol. 87, No. 87 / Thursday, May 5, 2022 / Proposed Rules 

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 §§ 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 § 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 § 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 

§ 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 § 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 § 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 § 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 § 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 

§ 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]. 

■ Par. 7. Section 1.664–2 is amended by 

revising paragraphs (c) and (e) as 

follows: 

§ 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 § 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 

§ 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 § 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 


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Federal Register / Vol. 87, No. 87 / Thursday, May 5, 2022 / Proposed Rules 26815 

regulations as final regulations], or 

under § 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, § 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]. 

■ Par. 8. Section 1.664–4 is amended 

by: 

■ 1. Revising paragraphs (a)(1) and (d). 

■ 2. In paragraph (e): 

■ i. Redesignating the paragraph 

heading as the heading for § 1.664–4A(g) 

and paragraphs (e)(1), (2), (5), and (7) as 

§ 1.664–4A(g)(1), (2), (5), and (6), 

respectively. 

■ ii. Adding a new paragraph heading 

and new paragraphs (e)(1), (2), and (5). 

■ iii. Revising the heading for paragraph 

(e)(6). 

■ iv. Redesignating the text of paragraph 

(e)(6) as paragraph (e)(6)(iii). 

■ v. Adding paragraphs (e)(6)(i) and (ii). 

■ vi. Revising the introductory text of 

newly redesignated paragraph (e)(6)(iii), 

preceding Table D. 

■ vii. Adding a new paragraph (e)(7). 

■ 3. Revising paragraph (f). 

The additions and revisions read as 

follows: 

§ 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 

§ 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 § 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 § 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 

§ 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 

§ 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 

regulations After Before 

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 § 1.664–3(a)(1)(v). See, 

however, § 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 §§ 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 § 20.2031–7(d)(7)(ii) of 

this chapter or Table 2000CM in 

§ 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 § 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 

§ 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 § 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/ 


lotter on DSK11XQN23PROD with PROPOSALS2
26816 Federal Register / Vol. 87, No. 87 / Thursday, May 5, 2022 / Proposed Rules 

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 § 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. 

(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 


lotter on DSK11XQN23PROD with PROPOSALS2EP05MY22.005</GPH>

Figure 1 to paragraph (e)(5)(i) - Formula for determining unitrust remainder factors 

00 

L 

t=O 

where: 

r = the adjusted payout rate; 

V = 1 - r; 

= r I (1 - r) 

=1-

) 

x = the age of the measuring life (determined as age at nearest birthday); and 

lx = the number associated with age x as set forth in the prescribed mortality table, 

representing the number of persons alive at age x. 
Federal Register / Vol. 87, No. 87 / Thursday, May 5, 2022 / Proposed Rules 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% × 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). 

(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, § 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 


lotter on DSK11XQN23PROD with PROPOSALS2EP05MY22.007</GPH>

Figure 2 to paragraph (e)(S)(iii) - Illustration of unitrust interpolation method 

A. Table U(1) Factor at 4.8 percent for age 77 

8. Less: Table U(1) Factor at 5.0 percent for age 77 

C. Difference: A- 8 

D. Interpolation Adjustment: 

4.8834% - 4.80% 

5.0%-4.80% 

E. 4.8834% - 4.80% 

5.0%-4.80% 

z =----

0.01148 

. 0.01148 

F. Table U(1) Factor at 4.8 percent for age 77 

G. Less: Interpolation Adjustment z 

H. Interpolated Factor: F - G 

I. Amount Transferred 

J. Present Value of Remainder Interest: H x I 

= z 

0.61491 

- 0.60343 

0.01148 

= 0.00479 

0.61491 

- 0.00479 

0.61012 

$ 100,000 

$ 61,012 
26818 Federal Register / Vol. 87, No. 87 / Thursday, May 5, 2022 / Proposed Rules 

interest rates from 4.2 to 14 percent, 

inclusive. 

(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, § 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]. 

■ Par. 9. The undesignated center 

heading immediately preceding § 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] 

■ Par. 10. Section 1.664–4A is amended 

by: 

■ 1. Revising the section heading. 

■ 2. In newly redesignated paragraph 

(g): 

■ i. Revising the heading and 

paragraphs (g)(1) and (2). 

■ ii. Adding paragraphs (g)(3) and (4). 

■ iii. Revising paragraph (g)(5). 

■ iv. In paragraph (g)(6), revising the 

introductory text. 

■ v. Adding paragraph (g)(7). 

The additions and revisions read as 

follows: 

§ 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 § 1.664–3(a)(1)(v) if the 

taxable year of the trust were to end on 

such date. See, however, § 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 


lotter on DSK11XQN23PROD with PROPOSALS2EP05MY22.008</GPH>

Figure 4 to paragraph (e)(6)(ii) - Formula for determining unitrust payout rate 

adjustment factors 

(1 + i)C1/p) • i . vCd/12) 

p (1 + i)[(l + i)C1tp) - 1] 

where: 

p = the number of payments per year; 

i = the applicable interest rate under section 7520 of the Internal Revenue Code; 

v = 1 / ( 1 + i) ; and 

d = the number of months between the annual valuation date and the regular 

first payout date of a standard full year of the trust. 
Federal Register / Vol. 87, No. 87 / Thursday, May 5, 2022 / Proposed Rules 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 §§ 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 § 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 § 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 § 1.664–4(b). 

See § 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 § 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 § 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/actuarialtables (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 

§ 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 § 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 § 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 § 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 § 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/actuarialtables (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 

§ 1.664–4(e)(5)(i)) or a linear 

interpolation must be used, provided 

whichever method used is applied 

consistently. The rules provided in 

§ 1.664–4(e)(5) apply for determining 

the present value of the remainder 

interest. See § 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 

§ 1.664–4(e)(6)(iii). See, however, 

§ 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 § 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 


lotter on DSK11XQN23PROD with PROPOSALS2
26820 Federal Register / Vol. 87, No. 87 / Thursday, May 5, 2022 / Proposed Rules 

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]. 

■ 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: 

§ 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 

§ 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 § 20.2031–7(d) of this 

chapter (and, for periods prior to 

[applicability date of the Treasury 

decision adopting these regulations as 

final regulations], § 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 § 1.642(c)–6(e) (or, for periods 

prior to [applicability date of the 

Treasury decision adopting these 

regulations as final regulations], 

§ 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 

§ 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 § 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 § 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 § 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 

§§ 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 § 1.664–2 and a pooled 

income fund as defined in § 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-ofinterval adjustment factors), and Table 

K (annuity end-of-interval adjustment 

factors). See earlier versions of the 

publication, § 1.642(c)–6A, or 

§ 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 § 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 

§ 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 § 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 § 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 § 1.664– 

4(e)(6)(iii), but only for interest rates 

from 4.2 to 14 percent, inclusive. 


lotter on DSK11XQN23PROD with PROPOSALS2
Federal Register / Vol. 87, No. 87 / Thursday, May 5, 2022 / Proposed Rules 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 § 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 § 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 

§ 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 

■ Par. 12. The authority citation for part 

20 continues to read in part as follows: 

Authority: 26 U.S.C. 7805. 

* * * * * 

■ Par. 13. Section 20.2031–0 is revised 

to read as follows: 

§ 20.2031–0 Table of contents. 

This section lists the section headings 

and undesignated center headings that 

appear in the regulations under section 

2031. 

§ 20.2031–1 Definition of gross estate; 

valuation of property. 

§ 20.2031–2 Valuation of stocks and bonds. 

§ 20.2031–3 Valuation of interests in 

businesses. 

§ 20.2031–4 Valuation of notes. 

§ 20.2031–5 Valuation of cash on hand or 

on deposit. 

§ 20.2031–6 Valuation of household and 

personal effects. 

§ 20.2031–7 Valuation of annuities, 

interests for life or a term of years, and 

remainder or reversionary interests. 

§ 20.2031–8 Valuation of certain life 

insurance and annuity contracts; 

valuation of shares in an open-end 

investment company. 

§ 20.2031–9 Valuation of other property. 

Actuarial Tables Applicable Before 

[Applicability Date of the Treasury 

Decision Adopting These Regulations as 

Final Regulations] 

§ 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]. 

■ Par. 14. Section 20.2031–7 is 

amended by: 

■ 1. Revising paragraph (c), the heading 

of paragraph (d), and paragraphs (d)(1) 

through (5). 

■ 2. Redesignating paragraph (d)(7) as 

paragraph (g)(4) of § 20.2031–7A. 

■ 3. Adding new paragraph (d)(7). 

■ 4. Revising paragraph (e). 

The revisions and addition read as 

follows: 

§ 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 

regulations After Before 

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 § 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 §§ 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 § 1.642(c)–5 of this 

chapter, is its value determined under 

§ 1.642(c)–6(e). The fair market value of 

a remainder interest in a charitable 

remainder annuity trust, as defined in 

§ 1.664–2(a), is the present value 

determined under § 1.664–2(c). The fair 

market value of a remainder interest in 


lotter on DSK11XQN23PROD with PROPOSALS2
26822 Federal Register / Vol. 87, No. 87 / Thursday, May 5, 2022 / Proposed Rules 

a charitable remainder unitrust, as 

defined in § 1.664–3, is its present value 

determined under § 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 § 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. 

(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 § 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. 


lotter on DSK11XQN23PROD with PROPOSALS2EP05MY22.009</GPH>

Figure 1 to paragraph (d)(2)(ii)(A) - Formula for determining term certain remainder 

factors 

where: 

n = the term of years; and 

i = the interest rate specified under section 7520 of the Internal Revenue Code. 
Federal Register / Vol. 87, No. 87 / Thursday, May 5, 2022 / Proposed Rules 26823 

(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 

§ 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 

§ 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 


lotter on DSK11XQN23PROD with PROPOSALS2EP05MY22.010</GPH>

Figure 2 to paragraph (d)(2)(ii)(B) - Formula for determining single life remainder 

factors 

where: 

= the applicable interest rate under section 7520 of the Internal Revenue Code; 

V = 1 / (1 + i); 

l 

q - 1- ..!±! 

t.x - l ' X 

x = the age of the measuring life (determined as age at nearest birthday); and. 

lx = the.number associated with age x as set forth in the prescribed mortality table, 

representing the number of persons alive at age x. 
26824 Federal Register / Vol. 87, No. 87 / Thursday, May 5, 2022 / Proposed Rules 

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. 

(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 × 9.4053 

× 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. 


lotter on DSK11XQN23PROD with PROPOSALS2EP05MY22.011</GPH>

Figure 3 to paragraph (d)(2)(iv)(B) - Formula for determining annuity adjustment factor 

at the end of the specified period 

I 

where: 

p = the number of payments per year; and 

i = the interest rate specified under section 7520 of the Internal Revenue Code. 
Federal Register / Vol. 87, No. 87 / Thursday, May 5, 2022 / Proposed Rules 26825 

(v) Annuity and unitrust interests for 

a term of years or until the prior death 

of an individual. See § 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 §§ 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 § 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 §§ 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: 


lotter on DSK11XQN23PROD with PROPOSALS2EP05MY22.012</GPH>

Figure 4 to paragraph (d)(2)(iv)(C) - Formula for determining annuity adjustment factor 

at the beginning of the specified period 

i 

p [{1 - v){1/p)] 

where: 

p = the number of payments per year; 

v = 1 / ( 1 + i); and 

i = the interest rate specified under section 7520 of the Internal Revenue Code. 
26826 Federal Register / Vol. 87, No. 87 / Thursday, May 5, 2022 / Proposed Rules 

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 × 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 × 20.0146 × 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 × 4.6325 × 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 § 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 


lotter on DSK11XQN23PROD with PROPOSALS2
Federal Register / Vol. 87, No. 87 / Thursday, May 5, 2022 / Proposed Rules 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 

§ 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] 

■ Par. 16. Section 20.2031–7A is 

amended by: 

■ 1. Revising the section heading. 

■ 2. Adding paragraphs (g) heading and 

(g)(1) through (3). 

■ 3. In newly redesignated paragraph 

(g)(4), the heading and introductory text 

are revised. 

■ 4. Adding paragraph (g)(5). 

The revisions and additions read as 

follows: 

§ 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 §§ 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 § 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 

§§ 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 


lotter on DSK11XQN23PROD with PROPOSALS2
26828 Federal Register / Vol. 87, No. 87 / Thursday, May 5, 2022 / Proposed Rules 

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 §§ 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 

§ 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 § 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 

§ 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 § 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 § 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 § 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 §§ 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 § 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 

§ 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/actuarialtables. 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]. 

■ Par. 17. Section 20.2032–1 is 

amended by revising paragraphs (f)(1) 

and (h) to read as follows: 

§ 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 

§ 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 § 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/actuarialtables (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: 


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Federal Register / Vol. 87, No. 87 / Thursday, May 5, 2022 / Proposed Rules 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 § 20.2031–7(d)(5)(i), be $22,931.00 

($50,000 × 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 × 

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] 

■ Par. 18. Section 20.2032–1T is 

removed. 

■ Par. 19. Section 20.2036–1 is 

amended: 

■ 1. In paragraph (c)(2)(iv) by 

designating Examples 1 through 8 as 

paragraphs (c)(2)(iv)(A) through (H), 

respectively. 

■ 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), (E), and (F) ........................................... (c)(2)(iv)(G)(3)(i), (ii), (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), (v), (vi), and (vii) ........................................... (c)(2)(iv)(H)(1), (2), (3), (4), (5), (6), and (7) 

■ 3. By revising newly designated 

paragraph (c)(2)(iv)(C). 

The revision reads as follows: 

§ 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 § 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 × 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 


lotter on DSK11XQN23PROD with PROPOSALS2
26830 Federal Register / Vol. 87, No. 87 / Thursday, May 5, 2022 / Proposed Rules 

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 § 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. 

* * * * * 

■ Par. 20. Section 20.2055–2 is 

amended by revising paragraphs 

(e)(3)(iii) and (f)(4) and (6) to read as 

follows: 

§ 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 § 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 § 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/actuarialtables (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 


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TABLE 1 TO PARAGRAPH (e)(3)(iii)(B)—Continued 

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 § 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 § 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]. 

■ Par. 21. Section 20.2056A–4 is 

amended by: 

■ 1. Revising paragraph (c)(4)(ii)(B). 

■ 2. In paragraph (d), designating 

Examples 1 through 5 as paragraphs 

(d)(1) through (5), respectively. 

■ 3. Revising the headings in newly 

designated paragraphs (d)(1) through 

(3). 

■ 4. Revising newly designated 

paragraph (d)(4), newly designated 

paragraph (d)(5) heading, and paragraph 

(e). 

The revisions read as follows: 

§ 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 

§ 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 § 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 § 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 § 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 


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TABLE 2 TO PARAGRAPH (d)(4)—Continued 

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 × 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 × 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]. 

■ 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: 

§ 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 

§ 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 § 20.2031–7(d) (and, for periods 

prior to [applicability date of the 

Treasury decision adopting these 

regulations as final regulations], 

§ 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 § 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], 

§ 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 § 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 § 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 


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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 § 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 

§ 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 

§§ 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 § 1.664–2 of this chapter and 

a pooled income fund as defined in 

§ 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-ofinterval adjustment factors), and Table 

K (annuity end-of-interval adjustment 

factors). See earlier versions of the 

publication, § 1.642(c)–6A of this 

chapter, or § 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 § 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 

§ 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 

§ 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 § 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 § 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 

§ 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 § 20.2031– 

7(d)(2)(ii)(B) is used to determine the 

remainder factor for pooled income 

funds and the actuarial formula in 

§ 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 

■ Par. 23. The authority citation for part 

25 continues to read in part as follows: 

Authority: 26 U.S.C. 7805. 

* * * * * 

■ Par. 24. Section 25.2512–0 is revised 

to read as follows: 

§ 25.2512–0 Table of contents. 

This section lists the section headings 

that appear in the regulations under 

section 2512. 

§ 25.2512–1 Valuation of property; in 

general. 

§ 25.2512–2 Stocks and bonds. 

§ 25.2512–3 Valuation of interests in 

businesses. 

§ 25.2512–4 Valuation of notes. 

§ 25.2512–5 Valuation of annuities, 

interests for life or a term of years, and 

remainder or reversionary interests. 

§ 25.2512–6 Valuation of certain life 

insurance and annuity contracts; 

valuation of shares in an open-end 

investment company. 

§ 25.2512–7 Effect of excise tax. 

§ 25.2512–8 Transfers for insufficient 

consideration. 

Actuarial Tables Applicable Before 

[Applicability Date of the Treasury 

Decision Adopting These Regulations as 

Final Regulations] 

§ 25.2512–5A Valuation of annuities, 

interests for life or a term of years, and 

remainder or reversionary interests 

transferred before [applicability date of 


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the Treasury decision adopting these 

regulations as final regulations]. 

■ Par. 25. Section 25.2512–5 is 

amended by revising paragraphs (c), (d), 

and (e) to read as follows: 

§ 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 

regulations After Before 

................. 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 § 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 § 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 § 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 § 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 §§ 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 § 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 

§ 1.642(c)–5 of this chapter, is its value 

determined under § 1.642(c)–6(e) of this 

chapter (see § 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 § 1.664–2(a) of this 

chapter, is its present value determined 

under § 1.664–2(c) of this chapter. The 

fair market value of a remainder interest 

in a charitable remainder unitrust, as 

defined in § 1.664–3 of this chapter, is 

its present value determined under 

§ 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 § 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 § 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 § 20.2031–7(d)(2)(ii)(B) of 

this chapter to derive factors from the 


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

§ 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 

§ 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 § 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/actuarialtables. Table B and Table S are 

referenced and explained in IRS 

Publication 1457 ‘‘Actuarial Valuations 

Version 4A’’. See § 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 § 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 

Estate 

Remainder 

68 .......... 12.2552 0.39217 0.60783 

Factors from Table K 

Adjustment Factors for Annuities Payable at 

the End of Each Interval 

Interest 

Rate 

SemiAnnually Quarterly Monthly 

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 


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26836 Federal Register / Vol. 87, No. 87 / Thursday, May 5, 2022 / Proposed Rules 

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 × 

12.2552 × 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 § 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 § 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 § 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]. 


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Figure 1 to paragraph (d)(2)(v)(A)( 1)(i)- Formulas for determining commutation factors 

~ 

Nx+l = L Dx+t 

t=1 

vx+t+1 • d x+t 

o l 

Nx = Nx+1 + zMx 

where: 

= the applicable interest rate under Section 7520 of the Internal Revenue Code; 

V = 1 / (1 + i); 

dx ;:;: lx-

:X = is the age of the measuring life (determined as age at nearest birthday); and 

lx = the number associated with age x as set forth in the prescribed mortality table, 

representing the number of persons alive at age x. 
Federal Register / Vol. 87, No. 87 / Thursday, May 5, 2022 / Proposed Rules 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 § 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 

SemiAnnually Quarterly Monthly 

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). 

(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 

§ 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. 


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Figure 2 to paragraph (d)(2)(v)(A)(2) - Illustration of calculation of present value of the 

donor's retained annuity interest for the shorter of life or term 

A. Initial age 60 

B. Plus: Term of years 10 

C. Sum (Terminal age) 70 

0 

D. Nx factor, Table H(2.8), age 60 271,994.30 

0 

E. less: Nx factor, Table H(2.8), age 70 1331677.80 

F. Difference 138,316.50 

G. Dx factor, Table H(2.8), age 60 16,911.03 

H. Required Annuity Factor: F / G 8.1791 

I. Table K factor, semiannual payments at 2.8% 1.0070 

J. Annual Annuity Amount $10,000 

K. Present value of retained interest: H x I x J $82,363.54 
26838 Federal Register / Vol. 87, No. 87 / Thursday, May 5, 2022 / Proposed Rules 

(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) UDx UNx-factor UMx-factor 

60 ................................................................................................................................................. 4,634.189 58,509.09 1,684.151 

70 ................................................................................................................................................. 2,491.406 24,541.74 1,254.007 


lotter on DSK11XQN23PROD with PROPOSALS2EP05MY22.015</GPH>

Figure 3 to paragraph (d)(2)(v)(B)( 1)(i) - Formulas for determining unitrust commutation 

factors 

I::('~ 

uMx = L uvx+t+1 • dxH 

t=O 

where: 

r = the adjusted payout rate; 

UV =1-r; 

ui = r / (1 - r); 

dx = l'I( - li+1 ; 

x = is the age of the measuring life (determined as age at nearest birthday); and 

lx = the number associated with age x as set forth in the prescribed mortality table, 

representing the number of persons alive at age x. 
Federal Register / Vol. 87, No. 87 / Thursday, May 5, 2022 / Proposed Rules 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) UDx UNx-factor UMx-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% × 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). 

(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). 


lotter on DSK11XQN23PROD with PROPOSALS2EP05MY22.016</GPH> EP05MY22.017</GPH>

Figure 4 to paragraph (d)(2)(v)(B)(2)(i)-lllustration of determination of terminal age 

A. Initial age 

B. Plus: Term of years 

C. Sum (Terminal ~e} 

60 

10 

70 

Figure 5 to paragraph (d)(2)(v)(B)(2)(ii)-lllustration of determination of payout interest 

factors 

D. Payout Rate 4.80% 5.00% 

E. Equivalent Interest Rate Factor: DI (1 - D) 0.05042 0.05263 

Cl 

F. uNx factor, Table Z, age 60 58,509.09 50,451.77 

G. Less: uNx factor, TableZ, age 70 241541.74 201823.44 

H. Difference 33,967.35 29,628.33 

I. uDx factor, Table Z, age 60 4,634.189 4,084.822 

J. Intermediate Factor: H / I 7.32973 7.25327 

K. Payout Interest Factor: Ex. J 0.36956 0.38174 
26840 Federal Register / Vol. 87, No. 87 / Thursday, May 5, 2022 / Proposed Rules 

(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). 

(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 §§ 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 § 20.2031–7(d)(7)(ii) of this 

chapter or Table 2000CM in § 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 

§ 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 § 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 

§ 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 § 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 § 20.2031– 


lotter on DSK11XQN23PROD with PROPOSALS2EP05MY22.018</GPH>

Figure 6 to paragraph (d)(2)(v)(B)(2)(iii)-lllustration of interpolation 

L. Payout Interest Factor at 5.00% 0.38174 

M. Less: Payout Interest Factor at 4.8% 0.36956 

N. Difference: L - M 0.01218 

0. Adjusted Payout Rate 4.876% 

P. Interpolation Adjustment: 

5.00% - 4.876% z 

= 5.00% - 4.80% 0.01218 

5.00% - 4.876% 

• 0.01218 = z = 0.00755 5.00% - 4.80% 

Q. Payout Interest Factor at 5.00% 0.38174 

R. Less: Interpolation Adjustment z 0.00755 

S. Interpolated Payout Interest Factor: Q - R 0.37419 

T. Amount Transferred $100,000 

U. Present Value of Retained Payout Interest: S x T $37,419 
Federal Register / Vol. 87, No. 87 / Thursday, May 5, 2022 / Proposed Rules 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 § 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 §§ 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]. 

■ Par. 26. The undesignated center 

heading immediately preceding 

§ 25.2512–5A is revised to read as 

follows: 

Actuarial Tables Applicable Before 

[Applicability Date of the Treasury 

Decision Adopting These Regulations] 

■ Par. 27. Section 25.2512–5A is 

amended by revising the section 

heading and adding paragraph (g) to 

read as follows: 

§ 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 §§ 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 § 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 §§ 25.7520–1(b) and 

25.7520–2(a)(2)) and the appropriate 

actuarial tables under either § 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 

§ 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 § 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 

§ 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 § 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 

§ 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 § 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 

§ 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 §§ 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]. 

■ Par. 28. Section 25.2522(c)–3 is 

amended by: 

■ 1. Designating Examples 1 through 3 

of paragraph (d)(2)(iv) as paragraphs 

(d)(2)(iv)(A) through (C), respectively. 

■ 2. Revising the headings for newly 

designated paragraphs (d)(2)(iv)(A) and 

(B), newly designated paragraph 

(d)(2)(iv)(C), and paragraph (e). 

■ 3. Adding paragraph (f). 

The revisions and addition read as 

follows: 


lotter on DSK11XQN23PROD with PROPOSALS2
26842 Federal Register / Vol. 87, No. 87 / Thursday, May 5, 2022 / Proposed Rules 

§ 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 

§ 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 § 25.2512–5(d)(2)(v)(A)(1), the section 

7520 rate, and Table 2010CM as set 

forth in § 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 × 8.1791), as 

determined pursuant to § 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 × 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). 


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Federal Register / Vol. 87, No. 87 / Thursday, May 5, 2022 / Proposed Rules 26843 

* * * * * 

(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 

§ 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 § 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/actuarialtables. 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 


lotter on DSK11XQN23PROD with PROPOSALS2EP05MY22.019</GPH>

Figure 1 to paragraph (d)(2)(iv)(C)(3) - Illustration of calculation of annuity factor for 

shorter of term or life 

A. Initial age 60 

B. Plus: Term of years 10 

C. Sum (Terminal age) 70 

0 

D. Nx factor, Table H(2.8), age 60 271,994.30 

0 

E. Less: Nx factor, Table H(2.8), age 70 1331677.80 

F. Difference 138,316.50 

G. Dx factor, Table H(2.8), age 60 16,911.03 

H. Required Annuity Factor: F / G 8.1791 
26844 Federal Register / Vol. 87, No. 87 / Thursday, May 5, 2022 / Proposed Rules 

(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 § 25.7520–3(b)(2)(v)(E).) 

(f) Applicability date. This section 

applies only to gifts made after July 31, 

1969. 

■ 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: 

§ 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 

§ 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 § 20.2031–7(d) of this chapter (and, 

for periods prior to [applicability date of 

the Treasury decision adopting these 

regulations as final regulations], 

§ 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 § 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], 

§ 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 

§ 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 § 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 § 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 

§ 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 

§§ 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 § 1.664–2 of this chapter and 

a pooled income fund as defined in 

§ 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-ofinterval adjustment factors), and Table 

K (annuity end-of-interval adjustment 

factors). See earlier versions of the 

publication, § 1.642(c)–6A of this 

chapter, or § 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 § 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 

§ 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 

§ 1.664–4A of this chapter for Table U(1) 

applicable to valuation dates before 


lotter on DSK11XQN23PROD with PROPOSALS2
Federal Register / Vol. 87, No. 87 / Thursday, May 5, 2022 / Proposed Rules 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 § 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 § 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 

§ 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 § 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 

§ 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]. 

■ Par. 30. Section 25.7520–3 is 

amended by: 

■ 1. Designating Examples 1 through 5 

of paragraph (b)(2)(v) as paragraphs 

(b)(2)(v)(A) through (E), respectively. 

■ 2. Revising the heading of newly 

designated paragraphs (b)(2)(v)(A). 

■ 3. In newly designated paragraph 

(b)(2)(v)(B): 

■ i. Revising the heading. 

■ 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. 

■ 4. Revising the heading for newly 

designated paragraph (b)(2)(v)(C). 

■ 5. In newly designated paragraph 

(b)(2)(v)(D): 

■ i. Revising the heading. 

■ ii. Removing ‘‘Example 3’’ and adding 

‘‘paragraph (b)(2)(v)(C) of this section 

(Example 3)’’ in its place. 

■ 6. Revising newly designated 

paragraph (b)(2)(v)(E) and paragraphs 

(b)(4) and (c). 

The revisions read as follows: 

§ 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 

§ 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 § 25.2512–5(d)(2)(v)(A)(1), the section 

7520 rate, and Table 2010CM as set 

forth in § 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 


lotter on DSK11XQN23PROD with PROPOSALS2
26846 Federal Register / Vol. 87, No. 87 / Thursday, May 5, 2022 / Proposed Rules 

TABLE 1 TO PARAGRAPH (b)(2)(v)(E)(1)—Continued 

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). 

(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). 


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Figure 1 to paragraph (b)(2)(v)(E)(2) - Illustration of determining present value of term 

certain annuity 

A. Highest age possible under mortality table 

B. Less: age of the measuring life at date of transfer 

C. Difference: number of years annuity obligation may continue 

D. Annual annuity payment 

E. Table B annuity factor for 50 years at 4.4 percent 

F. Present value of term certain annuity: D x E 

110 

- 60 

50 

$100,000 

20.0878 

$2,008,780 
Federal Register / Vol. 87, No. 87 / Thursday, May 5, 2022 / Proposed Rules 26847 

(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). 

(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 × 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 × 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 § 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/ 


lotter on DSK11XQN23PROD with PROPOSALS2EP05MY22.021</GPH> EP05MY22.022</GPH>

Figure 2 to paragraph (b)(2)(v)(E)(5) - Illustration of determining annuity factor for 

shorter of life or 13 years 

G. Initial age 60 

H. Plus: Term of years + 13 

I. Sum (Terminal age) 73 

0 

J. Nx factor, Table H(4.4), age 60 90,259.34 

0 

K. less: Nx factor, Table H(4.4), age 73 - 29,432.25 

L. Difference 60,827.09 

M. Dx factor, Table H(4.4), age 60 6,694.64 

N. Required Annuity Factor: l / M 9.0859 

Figure 3 to paragraph (b)(2)(v)(E)(6) - Illustration of determining annuity factor for 

shorter of life or 14 years 

0. Initial age 

P .. Plus:.Terrnofyears 

Q. Sum (TerrriinaFage) 

0 

R. Nx factor, Table H(2.8)1 age 60 

0 

s~ Less: Nx factor; table H(2~8J; age 74 

t. Difference 

u~ Dx factor; Table H(2.8); age 60 

v~ RequiredAnnuity Fac1or: TIU 

60 

+ 14 

74 

90,259.34 

;;,·· .. 26A52.50 

63,806.84 

6,694,64 

9.5310 
26848 Federal Register / Vol. 87, No. 87 / Thursday, May 5, 2022 / Proposed Rules 

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 

Estate 

Remainder 

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 × 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 


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