CFR > Title 26 - Internal Revenue > CHAPTER I—INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY > SUBCHAPTER B—ESTATE AND GIFT TAXES (Parts 20–27) > PART 20—ESTATE TAX; ESTATES OF DECEDENTS DYING AFTER AUGUST 16, 1954 > 20.2031-7A—Valuation of annuities, interests for life or term of years, and remainder or reversionary interests for estates of decedents for which the valuation date of the gross estate is befo

20.2031-7A—Valuation of annuities, interests for life or term of years, and remainder or reversionary interests for estates of decedents for which the valuation date of the gross estate is befo

(a) Valuation of annuities, interests for life or term of years, and remainder or reversionary interests for estates of decedents for which the valuation date of the gross estate is before January 1, 1952. Except as otherwise provided in § 20.2031-7(b), if the valuation date of the decedent's gross estate is before January 1, 1952, the present value of annuities, life estates, terms for years, remainders, and reversions is their present value determined under this section. If the valuation of the interest involved is dependent upon the continuation or termination of one or more lives or upon a term certain concurrent with one or more lives, the factor for the present value is computed on the basis of interest at the rate of 4 percent a year, compounded annually, and life contingencies as to each life involved from values that are based on the Actuaries' or Combined Experience Table of Mortality, as extended. This table and related factors are described in former § 81.10 (as contained in the 26 CFR part 81 edition revised as of April 1, 1958). The present value of an interest measured by a term of years is computed on the basis of interest at the rate of 4 percent a year.
(b) Valuation of annuities, interests for life or term of years, and remainder or reversionary interests for estates of decedents for which the valuation date of the gross estate is after December 31, 1951, and before January 1, 1971. Except as otherwise provided in § 20.2031-7(b), if the valuation date for the decedent's gross estate is after December 31, 1951, and before January 1, 1971, the present value of annuities, life estates, terms of years, remainders, and reversions is their present value determined under this section. If the valuation of the interest involved is dependent upon the continuation or termination of one or more lives, or upon a term certain concurrent with one or more lives, the factor for the present value is computed on the basis of interest at the rate of 3 1/2 percent a year, compounded annually, and life contingencies as to each life involved are taken from U.S. Life Table 38. This table and related factors are set forth in former § 20.2031-7 (as contained in the 26 CFR part 20 edition revised as of April 1, 1984). Special factors involving one and two lives may be found in or computed with the use of tables contained in the publication entitled “Actuarial Values for Estate and Gift Tax,” Internal Revenue Service Publication Number 11 (Rev. 5-59). This publication is no longer available for purchase from the Superintendent of Documents. However, it may be obtained by requesting a copy from: CC:DOM:CORP:T:R (IRS Publication 11), room 5228, Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, DC 20044. The present value of an interest measured by a term of years is computed on the basis of interest at the rate of 3 1/2 percent a year.
(c) Valuation of annuities, interests for life or term of years, and remainder or reversionary interests for estates of decedents for which the valuation date of the gross estate is after December 31, 1970, and before December 1, 1983. Except as otherwise provided in § 20.2031-7(b), if the valuation date of the decedent's gross estate is after December 31, 1970, and before December 1, 1983, the present value of annuities, life estates, terms of years, remainders, and reversions is their present value determined under this section. If the valuation of the interest involved is dependent upon the continuation of or termination of one or more lives or upon a term certain concurrent with one or more lives, the factor for the present value is computed on the basis of interest at the rate of 6 percent a year, compounded annually, and life contingencies are determined as to each male and female life involved, from values that are set forth in Table LN. Table LN contains values that are taken from the life table for total males and the life table for total females appearing as Tables 2 and 3, respectively, in United States Life Tables: 1959- 1960, published by the Department of Health and Human Services, Public Health Service. Table LN and related factors are set forth in former § 20.2031-10 (as contained in the 26 CFR part 20 edition revised as of April 1, 1994). Special factors involving one and two lives may be found in or computed with the use of tables contained in Internal Revenue Service Publication 723, “Actuarial Values I: Valuation of Last Survivor Charitable Remainders,” (12-70), and Internal Revenue Service Publication 723A, “Actuarial Values II: Factors at 6 Percent Involving One and Two Lives,” (12-70). These publications are no longer available for purchase from the Superintendent of Documents. However, a copy of each may be obtained from: CC:DOM:CORP:T:R (IRS Publication 723/723A), room 5228, Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, DC 20044.
(d) Valuation of annuities, interests for life or term of years, and remainder or reversionary interests for estates of decedents for which the valuation date of the (1) In general. Except as otherwise provided in § 20.2031-7(b), if the decedent died after November 30, 1983, and the valuation date for the gross estate is before May 1, 1989, the fair market value of annuities, life estates, terms of years, remainders, and reversions is their present value determined under this section. If the decedent died after November 30, 1983, and before August 9, 1984, or, in cases where the valuation date of the decedent's gross estate is before May 1, 1989, if, on December 1, 1983, the decedent was mentally incompetent so that the disposition of the decedent's property could not be changed, and the decedent died on or after December 1, 1983, without having regained competency to dispose of the decedent's property, or if the decedent died within 90 days of the date on which the decedent first regained competency, the fair market value of annuities, life estates, terms for years, remainders, and reversions included in the gross estate of such decedent is their present value determined under either this section or § 20.2031-7A(c), at the option of the taxpayer. The value of annuities issued by companies regularly engaged in their sale, and of insurance policies on the lives of persons other than the decedent, is determined under § 20.2031-8. 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 of this chapter. The fair market value of a life interest or term for 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 such date determined under § 1.664-4 of this chapter. The fair market value of the interests in a pooled income fund, as defined in § 1.642(c)-5 of this chapter, is their value determined under § 1.642(c)-6 of this chapter.
(ii) The present value of an annuity, life estate, remainder, or reversion determined under this section which is dependent on the continuation or termination of the life of one person is computed by the use of Table A in paragraph (d)(6) of this section. The present value of an annuity, term for years, remainder, or reversion dependent on a term certain is computed by the use of Table B in paragraph (d)(6) of this section. If the interest to be valued is dependent upon more than one life or there is a term certain concurrent with one or more lives, see paragraph (d)(5) of this section. For purposes of the computations described in this section, the age of a person is to be taken as the age of that person at his or her nearest birthday.
(iii) In all examples set forth in this section, the decedent is assumed to have died on or after August 9, 1984, with the valuation date of the decedent's gross estate before May 1, 1989, and to have been competent to change the disposition of the property on December 1, 1983.
(2) Annuities. (i) If an annuity is payable annually at the end of each year during the life of an individual (as for example if the first payment is due one year after the decedent's death), the amount payable annually is multiplied by the figure in column 2 of Table A opposite the number of years in coumn 1 nearest the age of the individual whose life measures the duration of the annuity. If the annuity is payable annually at the end of each of year for a definite number of years, the amount payable annually is multiplied by the figure in column 2 of Table B opposite the number of years in column 1 representing the duration of the annuity. The application of this paragraph (d)(2)(i) may be illustrated by the following examples:

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Example (1). The decedent received, under the terms of the decedent's father's will an annuity of $10,000 a year payable annually for the life of the decedent's elder brother. At the time the decedent died, an annual payment had just been made. The brother at the decedent's death was 40 years eight months old. By reference to Table A, the figure in column 2 opposite 41 years, the number nearest to the brother's actual age, is found to be 9.1030. The present value of the annuity at the date of the decedent's death is, therefore, $91,030 ($10,000×9.1030).

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Example (2). The decedent was entitled to receive an annuity of $10,000 a year payable annually throughout a term certain. At the time the decedent died, the annual payment had just been made and five more annual payments were still to be made. By reference to Table B, it is found that the figure in column 2 opposite five years is 3.7908. The present value of the annuity is, therefore, $37,908 ($10,000×3.7808).
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(ii) If an annuity is payable at the end of semiannual, quarterly, monthly, or weekly periods during the life of an individual (as for example if the first payment is due one month after the decedent's death), the aggregate amount to be paid within a year is first multiplied by the figure in column 2 of Table A opposite the number of years in column 1 nearest the age of the individual whose life measures the duration of the annuity. The product so obtained is then multiplied by whichever of the following factors is appropriate:
1.0244for semiannual payments,
1.0368for quarterly payments,
1.0450for monthly payments,
1.0482for weekly payments.
If the annuity is payable at the end of semiannual, quarterly, monthly, or weekly periods for a definite number of years, the aggregate amount to be paid within a year is first multiplied by the figure in column 2 of Table B opposite the number of years in column 1 representing the duration of the annuity. The product so obtained is then multiplied by whichever of the above factors is appropriate. The application of this paragraph (d)(2)(ii) may be illustrated by the following example:

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Example. The facts are the same as those contained in example (1) set forth in paragraph (d)(2)(i) of this section, except that the annuity is payable semiannually. The aggregate annual amount, $10,000, is multiplied by the factor 9.1030 and the product multiplied by 1.0244. The present value of the annuity at the date of the decedent's death is, therefore, $93,251.13 ($10,000×9.1030×1.0244).
(iii) (A) If the first payment of an annuity for the life of an individual is due at the beginning of the annual or other payment period rather than at the end (as for example if the first payment is to be made immediately after the decedent's death), the value of the annuity is the sum of (A) the first payment plus (B) 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 paragraphs (d)(2)(i) or (ii) of this section. the application of this paragraph (d)(2)(iii)(A) may be illustrated by the following example:

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Example. The decedent was entitled to receive an annuity of $50 a month during the life of another person. The decedent died on the date the payment was due. At the date of the decedent's death, the person whose life measures the duration of the annuity was 50 years of age. The value of the annuity at the date of the decedent's death is $50 plus the product of $50×12×8.4743 (see Table A)×1.0450 (See paragraph (d)(2)(ii) of this section). That is $50 plus $5,313.39, or $5,363.39.
(B) If the first payment of an annuity for a definite number of years is due at the beginning of the annual or other payment period, the applicable factor is the product of the factor shown in Table B multiplied by whichever of the following factors is appropriate:
1.1000for annual payments,
1.0744for semiannual payments,
1.0618for quarterly payments,
1.0534for monthly payments,
1.0502for weekly payments.
The application of this paragraph (d)(2)(iii)(B) may be illustrated by the following example:

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Example. The decedent was the beneficiary of an annuity of $50 a month. On the day a payment was due, the decedent died. There were 300 payments to be made, including the payment due. The value of the annuity as of the date of decedent's death is the product of $50×12×9.0770 (see Table B)×1.0534, or $5,737.03.
(3) Life estates and terms for years. If the interest to be valued is the right of a person for his or her life, or for the life of another person, to receive the income of certain property or to use nonincome-producing property, the value of the interest is the value of the property multiplied by the figure in column 3 of Table A opposite the number of years nearest to the actual age of the measuring life. If the interest to be valued is the right to receive income of property or to use nonincome-producing property for a term of years, column 3 of Table B is used. The application of this paragraph (d)(3) may be illustrated by the following example:

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Example. The decedent or the decedent's estate was entitled to receive the income from a fund of $50,000 during the life of the decedent's elder brother. Upon the brother's death, the remainder is to go to B. The brother was 31 years, five months old at the time of decedent's death. By reference to Table A the figure in column 3 opposite 31 years is found to be 0.95254. The present value of the decedent's interest is, therefore, $47,627 ($50,000×0.95254).
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(4) Remainders or reversionary interests. If a decedent had, at the time of the decedent's death, a remainder or a reversionary interest in property to take effect after an estate for the life of another, the present value of the decedent's interest is obtained by multiplying the value of the property by the figure in column 4 of Table A opposite the number of years nearest to the actual age of the person whose life measures the preceding estate. If the remainder or reversion is to take effect at the end of the term for years, column 4 of Table B is used. The application of this paragraph (d)(4) may be illustrated by the following example:

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Example. The decedent was entitled to receive certain property worth $50,000 upon the death of the decedent's elder sister, to whom the income was bequeathed for life. At the time of the decedent's death, the elder sister was 31 years five months old. By reference to Table A the figure in column 4 opposite 31 years is found to be .04746. The present value of the remainder interest at the date of the decedent's death is, therefore, $2,373 ($50,000×.04746).
(5) Actuarial computations by the Internal Revenue Service. If the valuation of the interest involved is dependent upon the continuation or the termination of more than one life or upon a term certain concurrent with one or more lives a special factor must be used. The factor is to be computed on the basis of interest at the rate of 10 percent a year, compounded annually, and life contingencies determined, as to each person involved, from the values of lx that are set forth in column 2 of Table LN of paragraph (d)(6). Table LN contains values of lx taken from the life table for the total population appearing as Table 1 of United States Life Tables: 1969-71, published by the Department of Health and Human Services, Public Health Service. Many special factors involving one and two lives may be found in or computed with the use of the tables contained in Internal Revenue Service Publication 723E, “Actuarial Values II: Factors at 10 Percent Involving One and Two Lives,” (12-83). This publication is no longer available for purchase from the Superintendent of Documents. However, it may be obtained by requesting a copy from: CC:DOM:CORP:T:R (IRS Publication 723E), room 5228, Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, DC 20044. However, if a special factor is required in the case of an actual decedent, the Commissioner will furnish the factor to the executor upon request. The request must be accompanied by a statement of the date of birth of each person, the duration of whose life may affect the value of the interest, and by copies of the relevant instruments. Special factors are not furnished for prospective transfers.
(6) Tables. The following tables shall be used in the application of the provisions of this section:
Table A—Single Life, Unisex, 10 Percent—Table Showing the Present Worth of an Annuity, of a Life Estate, and a Remainder Interest—Applicable for Transfers After November 30, 1983, and Before May 1, 1989
(1) Age (2) Annuity (3) Life estate (4) Remainder
0 9.7188 .97188 .02812
1 9.8988 .98988 .01012
2 9.9017 .99017 .00983
3 9.9008 .99008 .00992
4 9.8981 .98981 .01019
5 9.8938 .98938 .01062
6 9.8884 .98884 .01116
7 9.8822 .98822 .01178
8 9.8748 .98748 .01252
9 9.8663 .98663 .01337
10 9.8565 .98565 .01435
11 9.8453 .98453 .01547
12 9.8329 .98329 .01671
13 9.8198 .98198 .01802
14 9.8066 .98066 .01934
15 9.7937 .97937 .02063
16 9.7815 .97815 .02185
17 9.7700 .97700 .02300
18 9.7590 .97590 .02410
19 9.7480 .97480 .02520
20 9.7365 .97365 .02635
21 9.7245 .97245 .02755
22 9.7120 .97120 .02880
23 9.6986 .96986 .03014
24 9.6841 .96841 .03159
25 9.6678 .96678 .03322
26 9.6495 .96495 .03505
27 9.6290 .96290 .03710
28 9.6062 .96062 .03938
29 9.5813 .95813 .04187
30 9.5543 .95543 .04457
31 9.5254 .95254 .04746
32 9.4942 .94942 .05058
33 9.4608 .94608 .05392
34 9.4250 .94250 .05750
35 9.3868 .93868 .06132
36 9.3460 .93460 .06540
37 9.3026 .93026 .06974
38 9.2567 .92567 .07433
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39 9.2083 .92083 .07917
40 9.1571 .91571 .08429
41 9.1030 .91030 .08970
42 9.0457 .90457 .09543
43 8.9855 .89855 .10145
44 8.9221 .89221 .10779
45 8.8558 .88558 .11442
46 8.7863 .87863 .12137
47 8.7137 .87137 .12863
48 8.6374 .86374 .13626
49 8.5578 .85578 .14422
50 8.4743 .84743 .15257
51 8.3874 .83874 .16126
52 8.2969 .82969 .17031
53 8.2028 .82028 .17972
54 8.1054 .81054 .18946
55 8.0046 .80046 .19954
56 7.9006 .79006 .20994
57 7.7931 .77931 .22069
58 7.6822 .76822 .23178
59 7.5675 .75675 .24325
60 7.4491 .74491 .25509
61 7.3267 .73267 .26733
62 7.2002 .72002 .27998
63 7.0696 .70696 .29304
64 6.9352 .69352 .30648
65 6.7970 .67970 .32030
66 6.6551 .66551 .33449
67 6.5098 .65098 .34902
68 6.3610 .63610 .36390
69 6.2086 .62086 .37914
70 6.0522 .60522 .39478
71 5.8914 .58914 .41086
72 5.7261 .57261 .42739
73 5.5571 .55571 .44429
74 5.3862 .53862 .46138
75 5.2149 .52149 .47851
76 5.0441 .50441 .49559
77 4.8742 .48742 .51258
78 4.7049 .47049 .52951
79 4.5357 .45357 .54643
80 4.3659 .43659 .56341
81 4.1967 .41967 .58033
82 4.0295 .40295 .59705
83 3.8642 .38642 .61358
84 3.6998 .36998 .63002
85 3.5359 .35359 .64641
86 3.3764 .33764 .66236
87 3.2262 .32262 .67738
88 3.0859 .30859 .69141
89 2.9526 .29526 .70474
90 2.8221 .28221 .71779
91 2.6955 .26955 .73045
92 2.5771 .25771 .74229
93 2.4692 .24692 .75308
94 2.3728 .23728 .76272
95 2.2887 .22887 .77113
96 2.2181 .22181 .77819
97 2.1550 .21550 .78450
98 2.1000 .21000 .79000
99 2.0486 .20486 .79514
100 1.9975 .19975 .80025
101 1.9532 .19532 .80468
102 1.9054 .19054 .80946
103 1.8437 .18437 .81563
104 1.7856 .17856 .82144
105 1.6962 .16962 .83038
106 1.5488 .15488 .84512
107 1.3409 .13409 .86591
108 1.0068 .10068 .89932
109 .4545 .04545 .95455
Table B—Term Certain, Unisex, 10 Percent—Table Showing the Present Worth of an Annuity for a Term Certain, of an Income Interest for a Term Certain, and of a Remainder Interest Postponed for a Term Certain—Applicable for Transfers After November 30, 1983, and before May 1, 1989
(1) Number of years (2) Annuity (3) Term certain (4) Remainder
1 .9091 .090909 .909091
2 1.7355 .173554 .826446
3 2.4869 .248685 .751315
4 3.1699 .316987 .683013
5 3.7908 .379079 .620921
6 4.3553 .435526 .564474
7 4.8684 .486842 .513158
8 5.3349 .533493 .466507
9 5.7590 .575902 .424098
10 6.1446 .614457 .385543
11 6.4951 .649506 .350494
12 6.8137 .681369 .318631
13 7.1034 .710336 .289664
14 7.3667 .736669 .263331
15 7.6061 .760608 .239392
16 7.8237 .782371 .217629
17 8.0216 .802155 .197845
18 8.2014 .820141 .179859
19 8.3649 .836492 .163508
20 8.5136 .851356 .148644
21 8.6487 .864869 .135131
22 8.7715 .877154 .122846
23 8.8832 .888322 .111678
24 8.9847 .898474 .101526
25 9.0770 .907704 .092296
26 9.1609 .916095 .083905
27 9.2372 .923722 .076278
28 9.3066 .930657 .069343
29 9.3696 .936961 .063039
30 9.4269 .942691 .057309
31 9.4790 .947901 .052099
32 9.5264 .952638 .047362
33 9.5694 .956943 .043057
34 9.6086 .960857 .039143
35 9.6442 .964416 .035584
36 9.6765 .967651 .032349
37 9.7059 .970592 .029408
38 9.7327 .973265 .026735
39 9.7570 .975696 .024304
40 9.7791 .977905 .022095
41 9.7991 .979914 .020086
42 9.8174 .981740 .018260
43 9.8340 .983400 .016600
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44 9.8491 .984909 .015091
45 9.8628 .986281 .013719
46 9.8753 .987528 .012472
47 9.8866 .988662 .011338
48 9.8969 .989693 .010307
49 9.9063 .990630 .009370
50 9.9140 .991481 .008519
51 9.9226 .992256 .007744
52 9.9296 .992960 .007040
53 9.9360 .993600 .006400
54 9.9418 .994182 .005818
55 9.9471 .994711 .005289
56 9.9519 .995191 .004809
57 9.9563 .995629 .004371
58 9.9603 .996026 .003974
59 9.9639 .996387 .003613
60 9.9672 .996716 .003284
Table LN—Applicable for Transfers After November 30, 1983, and Before May 1, 1989




(1) Age X (2) lx
0 100,000