They established annuity rates based on the interest rates in effect at that time. This happened to be almost the very low point for interest rates and they established rates that were correspondingly low. As I mentioned, the committee will probably offer rates that are competitive based on current interest rates. Many of you may be familiar with Revenue Ruling 93-12. On the other hand, for estate tax purposes, the value of stock is the aggregate amount of stock that the decedent owned at the time of death.
Gift tax is imposed on property that passes from the donor to the donee.
The IRS has further ruled that the value of the gift is the price at which the asset would change hands between a willing buyer and a willing seller. The IRS recently issued a technical advice memorandum which involved a person that owned all of the shares of a closely-held corporation. He made simultaneous gifts of equal value to all of his 11 children. The IRS valued each individual gift as a separate transaction allowing a minority discount rather than grouping all the gifts together or aggregating the gifts to determine the value. In other words, the sum of the various gifts were valued less than the whole corporation.