An Overview

The value of an annuity, a unitrust interest, an estate (income or use interest) for life or term of years, or a remainder or a reversionary interest is valued for most income, estate, gift, and generation-skipping transfer tax purposes using the following valuation tables and the current IRC Section 7520 interest rate for the month in which the valuation date occurs. If a charitable deduction is involved, the taxpayer can use the interest rate for either of the two preceding months or the current month.

Selected single life and term certain annuity tables and single life and term certain unitrust remainder tables are provided here. For purposes of these tables, round the age of any person whose life is used to measure an interest to the age of such person on his birthday nearest the valuation date.

Both the single life and term certain annuity tables provide factors for annuity interests which can be converted into an income factor or a remainder factor following an income interest. An annuity factor is converted into an income factor by multiplying the annuity factor by the interest rate. An income factor is converted into a remainder factor following an income interest by subtracting the income factor from 1.

The value of an income interest or a remainder interest following an income interest is equal to the principal amount multiplied by the appropriate income or remainder factor. See Q 8097 for examples of the calculation of a remainder interest in the context of charitable pooled income funds.

The value of an annuity payable at the end of each period is equal to the aggregate payment received during the year multiplied by the annuity factor multiplied by the appropriate Table A annuity adjustment factor. The value of an annuity payable at the beginning of each period during the life of a person is equal to the sum of the value of an annuity payable at the end of each period plus the amount of one additional payment. The value of an annuity payable at the beginning of each period during a term certain is equal to the aggregate payment received during the year multiplied by the annuity factor multiplied by the appropriate annuity adjustment factor.

The value of a remainder interest following an annuity interest is equal to the value of the annuity subtracted from the value of the property transferred out of which (or in return for which) the annuity is payable.

See Q 8105for examples illustrating the calculation of the value of annuity interests and remainder interests following an annuity interest in the context of charitable lead annuity trusts, and Q 8098for examples in the context of charitable remainder annuity trusts.

Both the single life and term certain unitrust remainder tables provide factors for unitrust remainder interests which can be converted into a unitrust factor. A unitrust remainder factor is converted into a unitrust factor by subtracting the unitrust remainder factor from 1.

In general, the value of a unitrust or a unitrust remainder interest is equal to the principal amount multiplied by the appropriate unitrust or unitrust remainder factor. However, see Q 8106 for examples illustrating the calculation of unitrust and unitrust remainder interests in the context of charitable lead unitrusts, and Q 8099 for examples in the context of charitable remainder unitrusts.