Internal Revenue Bulletin 1999-20 (PDF rendition): IRS Announcements

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INCOME TAX
Rev. Rul. 99–23, page 3.
Start-up expenditures, business expenses, capital ex-
penditures.Guidance is provided on the types of expendi-
tures that will qualify as investigatory costs that are eligible
for amortization as start-up expenditures under section 195
of the Code when a taxpayer acquires the assets of an ac-
tive trade or business.
ESTATE AND GIFT TAX
T.D. 8819, page 5.
REG–103851–99, page 93.
Use of actuarial tables in valuing annuities, interests
for life or terms of years, and remainder or reversion-
ary interests.Proposed, temporary and final regulations
under section 7520 of the Code relate to the use of actuar-
ial tables in valuing annuities, interests for life or terms of
years, and remainder or reversionary interests.
ADMINISTRATIVE
REG–106004–98, page 77.
Proposed regulations under section 355 of the Code relate
to recognition of gain on certain distributions of stock or se-
curities of a controlled corporation. A public hearing is
scheduled for September 21, 1999.
Notice 99–23, page 73.
This notice effects interim revisions to Schedule P of Form
1120–FSC (1998) and its instructions, filed by foreign sales
corporations. The notice also solicits public comments by
June 30, 1999, on certain proposed revisions to Schedule P
for subsequent tax years.
Notice 99–24, page 74.
This notice informs taxpayers of the intent of Treasury and
the Service to include in final regulations a one-year exten-
sion of the time for foreign sales corporations and their re-
lated suppliers to file grouping redeterminations under the
transition rule for Temp. Treas. Reg. section 1.925(a)–
1T(c)(8)(i).
Notice 99–25, page 75.
The Service will extend the effective date of the nonresident
alien withholding regulations under section 1441 of the
Code that were published in T.D. 8734, 1997–2 C.B. 109.
As extended, those regulations will apply to certain pay-
ments made to foreign persons after December 31, 2000.
Announcement 99–53, page 95.
This document contains a correction to Notice 99–18,
1999–16 I.R.B. 4, in which the underlying calculation given
to determine the nonconventional source fuel credit amount
contained an erroneous number. However, the amount of the
credit itself was not erroneous.
Internal Revenue
bbuulllleettiinn
Bulletin No. 1999–20
May 17, 1999
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
Department of the Treasury
Internal Revenue Service
Finding Lists begin on page 97.

The Internal Revenue Bulletin is the authoritative instrument
of the Commissioner of Internal Revenue for announcing offi-
cial rulings and procedures of the Internal Revenue Service
and for publishing Treasury Decisions, Executive Orders, Tax
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stantive rulings necessary to promote a uniform application
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ternal management are not published; however, statements
of internal practices and procedures that affect the rights
and duties of taxpayers are published.
Revenue rulings represent the conclusions of the Service on
the application of the law to the pivotal facts stated in the
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The Bulletin is divided into four parts as follows:
Part I.—1986 Code.
This part includes rulings and decisions based on provisions
of the Internal Revenue Code of 1986.
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To the extent practicable, pertinent cross references to
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istrative Rulings. Bank Secrecy Act Administrative Rulings
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annual period, respectively.
Mission of the Service
Provide America’s taxpayers top quality service by help-
ing them understand and meet their tax responsibilities
and by applying the tax law with integrity and fairness to
all.
2
Introduction
The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402.

Section 162.—Trade or
Business Expenses
26 CFR 1.162–1: Business expenses.
What types of expenditures will qualify as inves-
tigatory costs that are eligible for amortization as
start-up expenditures under section 195 of the Code
when a taxpayer acquires the assets of an active
trade or business? See Rev. Rul. 99–23, on this page.
Section 195.—Start-up
Expenditures
(Also sections 162, 263; 26 CFR 1.162–1,
1.263(a)–1)
Start-up expenditures, business ex-
penses, capital expenditures. Guidance
is provided on the types of expenditures
that will qualify as investigatory costs that
are eligible for amortization as start-up
expenditures under section 195 of the
Code when a taxpayer acquires the assets
of an active trade or business.
Rev. Rul. 99–23
ISSUE
When a taxpayer acquires the assets of
an active trade or business, which expen-
ditures will qualify as investigatory costs
that are eligible for amortization as start-
up expenditures under § 195 of the Inter-
nal Revenue Code?
FACTS
Situation 1
In April 1998, corporation Uhired an
investment banker to evaluate the possi-
bility of acquiring a trade or business un-
related to U’s existing business. The in-
vestment banker conducted research on
several industries and evaluated publicly
available financial information relating to
several businesses. Eventually, Unar-
rowed its focus to one industry. The in-
vestment banker evaluated several busi-
nesses within the industry, including
corporation Vand several of V’s competi-
tors. The investment
banker then commissioned appraisals
of V’s assets and an in-depth review of V’s
books and records in order to determine a
fair acquisition price. On November
1,1998, Uentered into an acquisition
agreement with Vto purchase all the as-
sets of V. Udid not prepare and submit a
letter of intent, or any other preliminary
agreement or written document evidenc-
ing an intent to acquire Vprior to execut-
ing the acquisition agreement.
Situation 2
In May 1998, corporation Wbegan
searching for a trade or business to ac-
quire. In anticipation of finding a suitable
target to acquire, Whired an investment
banker to evaluate three potential busi-
nesses and a law firm to begin drafting
regulatory approval documents for a tar-
get. Eventually, Wdecided to purchase
all the assets of corporation X. Wand X
entered into an acquisition agreement on
December 1, 1998.
Situation 3
In June 1998, corporation Yhired a law
firm and an accounting firm to assist in
the potential acquisition of corporation Z
by performing certain services that the
parties labeled as “preliminary due dili-
gence.” These “due diligence” services
included conducting research on Z’s in-
dustry (including information relating to
competitors of Z), and analyzing financial
projections for Zfor 1998 and 1999. In
September 1998, at Y’s request, the law
firm prepared and submitted a letter of in-
tent to Z. The offer contained in the letter
of intent resulted from prior discussions
between Yand Z, and specifically stated
that a binding commitment with respect to
the proposed transaction would result
only upon execution of an acquisition
agreement. Thereafter, the law firm and
accounting firm continued to provide ser-
vices labeled as “due diligence,” includ-
ing a review of Z’s internal documents re-
lating to insurance policies, employee
agreements, and lease agreements, an in-
depth review of Z’s books and records,
and preparation of an acquisition agree-
ment. On October 10, 1998, Yentered
into an acquisition agreement with Zto
purchase all the assets of Z.
In each of the three situations, the
trades or businesses of the targets are ac-
tive trades or businesses unrelated to the
trades or businesses of U, W, and Y. U,
W, and Yeach use an accrual method of
accounting and a calendar taxable year.
Each of the acquisition agreements en-
tered into by U, W, and Ywere subject to
customary conditions of closing. Finally,
U, W, and Yeach completed the acquisi-
tions in 1998 and timely elected on their
1998 federal income tax returns to amor-
tize start-up expenditures over a period of
not less than 60 months under § 195(b).
LAW AND ANALYSIS
Section 195(a) provides that, except as
otherwise provided in § 195, no deduction
is allowed for start-up expenditures.
Section 195(b) provides that start-up
expenditures may, at the election of the
taxpayer, be treated as deferred expenses
that are allowed as a deduction prorated
equally over a period of not less than 60
months (beginning with the month in
which the active trade or business begins).
Section 195(c)(1) defines “start-up ex-
penditure,” in part, as any amount (A)
paid or incurred in connection with inves-
tigating the creation or acquisition of an
active trade or business, and (B) which, if
paid or incurred in connection with the
operation of an existing active trade or
business (in the same field as the trade or
business referred to in subparagraph (A)),
would be allowable as a deduction for the
taxable year in which paid or incurred.
Thus, in order to qualify as start-up ex-
penditures under § 195(c)(1), a taxpayer’s
“investigatory costs” must satisfy the re-
quirements in both §§ 195(c)(1)(A) and
(B). In addition, the term “start-up expen-
diture” does not include any amount with
respect to which a deduction is allowable
under §163(a), 164, or 174.
Sections 162 and 1.162–1(a) of the In-
come Tax Regulations allow a deduction
for all the ordinary and necessary ex-
penses paid or incurred during the taxable
year in carrying on any trade or business.
Courts generally have construed § 162 as
containing five conditions that an expen-
diture must meet to qualify for deduction.
The expenditure must be (1) an expense,
(2) ordinary, (3) necessary, (4) paid or in-
curred during the taxable year, and (5)
made to carry on a trade or business. See
Commissioner v. Lincoln Savings and
Loan Ass’n.,403 U.S. 345 (1971).
1999–20 I.R.B.3May 17, 1999
Part I. Rulings and Decisions Under the Internal Revenue Code of 1986

May 17, 199941999–20 I.R.B.
Sections 263 and 1.263(a)–1(a) provide
that no deduction is allowed for any
amounts paid out for new buildings or for
permanent improvements or betterments
made to increase the value of any prop-
erty or estate. Section 1.263(a)–2(a) pro-
vides that capital expenditures include the
cost of acquisition, construction, or erec-
tion of buildings, machinery and equip-
ment, furniture and fixtures, and similar
property having a useful life substantially
beyond the taxable year.
Through provisions such as §§ 162(a)
and 263(a), the Code generally endeavors
to match expenses with the revenues of
the taxable period to which the expenses
are properly attributable, thereby re-
sulting in a more accurate calculation of
net income for tax purposes. See, e.g.,
INDOPCO, Inc. v. Commissioner,503
U.S. 79 (1992).
In describing the law prior to § 195,
Congress explained that “investigatory
expenses,” which were “costs incurred in
seeking and reviewing prospective busi-
nesses prior to reaching a decision to ac-
quire or enter any business,” normally
were not deductible because they were
not incurred in carrying on a trade or busi-
ness within the meaning of § 162. See
H.R. Rep. No. 1278, 96th Cong., 2d Sess.
9 (1980) (House Report); S. Rep. No.
1036, 96th Cong., 2d Sess 10 (1980)
(Senate Report). The “carrying on a trade
or business” requirement was not met
where investigatory expenses were in-
curred by a taxpayer who was not yet car-
rying on any trade or business, or where a
taxpayer was carrying on a trade or busi-
ness but incurred costs to investigate the
creation or acquisition of another, unre-
lated trade or business. Id.However, a
taxpayer incurring costs to investigate the
expansion of an existing business gener-
ally could deduct those costs under § 162,
assuming the other requirements of that
section were met. This disparity in the
tax treatment of investigatory expenses
resulting from the “carrying on a trade or
business” requirement discouraged tax-
payers from investigating the creation or
acquisition of new trades or businesses.
Section 195 was enacted, in part, to mini-
mize this disparity and thereby encourage
formation of new businesses by providing
an amortization deduction for eligible in-
vestigatory expenses.
Accordingly, under § 195(c)(1)(B), ex-
penditures described in § 195(c)(1)(A)
that are incurred before the establishment
of an active business are deemed to be
paid or incurred in the operation of an ex-
isting active trade or business (in the same
field as the business that the taxpayer is
investigating whether to create or ac-
quire), i.e.,they are deemed to satisfy the
carrying on a trade or business require-
ment. However, because § 195(c)(1)(B)
also requires that an expenditure de-
scribed in § 195(c)(1)(A) be allowable as
a deduction for the taxable year in which
paid or incurred, the expenditure still
must meet all the other requirements of
§162. Thus, the expenditure must be an
ordinary expense under § 162, and not a
capital expenditure, to be a start-up ex-
penditure under § 195. “Section 195 did
not create a new class of deductible ex-
penditures for existing businesses. . . .
[I]n order to qualify under section
195(c)(1)(B), an expenditure must be one
that would have been allowable as a de-
duction by an existing trade or business
when it was paid or incurred.” FMR
Corp. v. Commissioner,110 T.C. No. 30
(June 18, 1998). See also§§ 161 and 261
(deductions are allowed, subject to capi-
talization provisions). Whether an expen-
diture is an ordinary expense or is capital
in nature is a question of fact that depends
on the context in which the expenditure is
incurred. See Commissioner v. Idaho
Power Co.,418 U.S. 1 (1974); Deputy v.
duPont,308 U.S. 488 (1940); Welch v.
Helvering,290 U.S. 111 (1933).
The legislative history of § 195 pro-
vides the following guidance regarding
whether an expenditure is an ordinary in-
vestigatory cost that is an eligible start-up
expenditure, or a capital acquisition cost:
Eligible expenses consist of investigatory costs
incurred prior to reaching a final decision to acquire
or enter that business. These costs include expenses
incurred for the analysis or survey of potential mar-
kets, products, labor supply, transportation facilities,
etc.
Start-up expenditures eligible for amortization do
not include any amount with respect to which a de-
duction would not be allowed to an existing trade or
business for the taxable year in which the expendi-
ture was paid or incurred. . . . In addition, the amor-
tization election for start-up expenditures does not
apply to amounts paid or incurred as part of the ac-
quisition cost of a trade or business. Also, start-up
expenditures do not include amounts paid or in-
curred for the acquisition of property to be held for
sale or property which may be depreciated or amor-
tized based on its useful life. . . Whether an amount
is consideration paid to acquire a business depends
upon the facts and circumstances of the situation.
House Report at pages 10–11; Senate Re-
port at pages 11–12.
Rev. Rul. 77–254, 1977–2 C.B. 63,
which is specifically referenced by the
legislative history of § 195 (House Report
at 9, Senate Report at 10), considers
which costs incurred in the potential ac-
quisition of a new business are capital ac-
quisition costs for purposes of §§ 165 and
263. That ruling provides that expenses
incurred in the course of a general search
for, or an investigation of, a business that
relate to the decisions whetherto pur-
chase a business and whichbusiness to
purchase are investigatory costs. How-
ever, once a taxpayer has focused on the
acquisition of a specific business, ex-
penses that are related to an attempt to ac-
quire that business are capital in nature.
Thus, the “final decision” referred to in
the legislative history of § 195 is the point
at which a taxpayer makes its decision
whetherto acquire a business, and which
business to acquire, rather than the point
at which a taxpayer and seller are legally
obligated to complete the transaction.
Courts have long held that legal, bro-
kerage, accounting, appraisal, and similar
costs incurred to acquire a capital asset
are capital expenditures under § 263.
Woodward v. Commissioner,397 U.S. 572
(1970) (when property is acquired by pur-
chase, nothing is more clearly a part of
the process of acquisition than the estab-
lishment of a purchase price); United
States v. Hilton Hotels Corp.,397 U.S.
580 (1970); Beneficial Industrial Loan
Corp. v. Handy,16 F. Supp. 110, 112 (D.
Del. 1936), aff ’d,92 F.2d 74 (3d Cir.
1937); Rev. Rul. 73–580, 1973–2 C.B. 86.
For example, in Ellis Banking Corp. v.
Commissioner,T.C. Memo. 1981–123,
aff ’d in part & rem’d in part,688 F.2d
1376 (11th Cir. 1982), the taxpayer in-
curred expenses for office supplies, filing
fees, travel, and accounting services in
connection with its examination of tar-
get’s books and records. The examination
was performed pursuant to an acquisition
agreement for the purchase of target’s
stock that was contingent on several terms
and conditions, such as regulatory ap-
proval. The Tax Court concluded that the

expenses were nondeductible capital ex-
penditures incurred in the acquisition of a
capital asset. The Court of Appeals for
the Eleventh Circuit substantially af-
firmed, noting that the requirement that
costs be capitalized extends beyond the
price payable to include any costs in-
curred by the buyer in connection with the
purchase, such as appraisals of the prop-
erty or the costs of meeting any condi-
tions of sale.
Accordingly, expenditures incurred in
the course of a general search for, or an
investigation of, an active trade or busi-
ness, i.e.,expenditures paid or incurred in
order to determine whetherto enter a new
business and whichnew business to enter
(other than costs incurred to acquire capi-
tal assets that are used in the search or in-
vestigation), are investigatory costs that
are start-up expenditures under § 195. Al-
ternatively, costs incurred in the attempt
to acquire a specific business are capital
in nature and thus, are not start-up expen-
ditures under § 195. The nature of the
cost must be analyzed based on all the
facts and circumstances of the transaction
to determine whether it is an investigatory
cost incurred to facilitate the whetherand
whichdecisions, or an acquisition cost in-
curred to facilitate consummation of the
acquisition. The label that the parties use
to describe the cost and the point in time
at which the cost is incurred do not neces-
sarily determine the nature of the cost.
In Situation 1,an examination of the
nature of the costs incurred indicates that
Umade its decision to acquire Vafter the
investment banker conducted research on
several industries and evaluated publicly
available financial information. The costs
incurred to conduct industry research and
review public financial information are
typical of the costs related to a general in-
vestigation. Accordingly, the costs in-
curred to conduct industry research and to
evaluate publicly available financial in-
formation are investigatory costs eligible
for amortization as start-up expenditures
under § 195. However, the costs relating
to the appraisals of V’s assets and an in-
depth review of V’s books and records to
establish the purchase price facilitate con-
summation of the acquisition, and thus,
are capital acquisition costs. The costs in-
curred to evaluate Vand V’s competitors
also may be investigatory costs, but only
to the extent they were incurred to assist
Uin determining whether to acquire a
business and which business to acquire.
If the evaluation of Vand V’s competitors
occurred after Uhad made its decision to
acquire V(for example, in an effort to es-
tablish the purchase price for V), such
evaluation costs are capital acquisition
costs.
In Situation 2,the costs incurred to
evaluate potential businesses are investi-
gatory costs eligible for amortization as
start-up expenditures under § 195 to the
extent they relate to the whetherand
whichdecisions. However, the costs in-
curred to draft regulatory approval docu-
ments prior to the time Wdecided to ac-
quire Xare not start-up expenditures under
§ 195. The costs related to such activities,
even if the activities occurred during the
period Wis engaged in a general search
for a business, were not incurred in order
to investigate whether to acquire a busi-
ness and which business to acquire, but
rather to facilitate an acquisition.
In Situation 3,an examination of the
nature of the costs incurred by Yindicates
that Ymade its decision to acquire Zin
September 1998, around the time that Y
instructed the law firm to prepare and
submit the letter of intent. The costs re-
lated to the “preliminary due diligence”
services provided prior to that time (in-
cluding the costs of conducting research
on Z’s industry and in reviewing financial
projections of Z) are typical of the costs
incurred during an investigation to deter-
mine whether to acquire a new business
and which new business to acquire. Thus,
these costs are investigatory costs that are
eligible for amortization as start-up ex-
penditures under § 195. The costs related
to “due diligence” services provided after
that time, however, relate to the attempt to
acquire the business and must be capital-
ized under § 263 as acquisition costs.
Thus, the “due diligence” costs incurred
to review T’s internal documents, books
and records, and to draft the acquisition
agreements are not eligible for amortiza-
tion under § 195.
HOLDING
Expenditures incurred in the course of
a general search for, or investigation of,
an active trade or business in order to de-
termine whetherto enter a new business
and whichnew business to enter (other
than costs incurred to acquire capital as-
sets that are used in the search or investi-
gation) qualify as investigatory costs that
are eligible for amortization as start-up
expenditures under § 195. However, ex-
penditures incurred in the attempt to ac-
quire a specific business do not qualify as
start-up expenditures because they are ac-
quisition costs under § 263. The nature of
the cost must be analyzed based on all the
facts and circumstances of the transaction
to determine whether it is an investigatory
cost incurred to facilitate the whetherand
whichdecisions, or an acquisition cost in-
curred to facilitate consummation of an
acquisition.
DRAFTING INFORMATION
The principal author of this revenue
ruling is Susie K. Bird of the Office of
Assistant Chief Counsel (Income Tax and
Accounting). For further information re-
garding this revenue ruling contact Ms.
Bird on (202) 622-4950 (not a toll-free
call).
Section 7520.—Valuation Tables
26 CFR 20.7520–1: Valuation of annuities, unitrust
interests, interests for life or term of years, and
remainder or reversionary interests.
T.D. 8819
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 1, 20, and 25
Use of Actuarial Tables in
Valuing Annuities, Interests for
Life or Terms of Years, and
Remainder or Reversionary
Interests
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final and temporary regula-
tions.
SUMMARY: This document contains
regulations relating to the use of actuarial
tables in valuing annuities, interests for
life or terms of years, and remainder or
reversionary interests. These regulations
are necessary because section 7520(c)(3)
directs the Secretary to update the actuar-
1999–20 I.R.B.5May 17, 1999

ial tables to reflect the most recent mortal-
ity experience available. These regula-
tions will effect the valuation of inter
vivos and testamentary transfers of inter-
ests dependent on one or more measuring
lives. The text of the temporary regula-
tions also serves as the text of the pro-
posed regulations REG–103851–99, page
93 in this Bulletin.
DATES: These regulations are effective
May 1, 1999.
FOR FURTHER INFORMATION CON-
TACT: Concerning the regulations,
William L. Blodgett, (202) 622-3090 (not
a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
This document contains amendments to
the regulations revising certain tables
used for the valuation of partial interests
in property under section 7520 of the In-
ternal Revenue Code of 1986 (Code) to
reflect the most recent mortality experi-
ence available.
In General
Section 7520, effective for transfers for
which the valuation date is after April 30,
1989, provides that the value of an annu-
ity, an interest for life or a term of years,
and a remainder or reversionary interest is
to be determined under tables published
by the Internal Revenue Service based on
a discount rate (rounded to the nearest
two-tenths of one percent) equal to 120
percent of the applicable Federal mid-term
rate in effect under section 1274(d)(1) for
the month in which the valuation date
falls. Section 7520(c)(3) directed the Sec-
retary to issue tables not later than Decem-
ber 31, 1989, utilizing the then most recent
mortality experience. Thereafter, the Sec-
retary is directed to revise the tables used
in valuing interests dependent on mortality
experience 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 regulations incorporate revised
Table S (Single Life Remainder Factors)
and Table U(1) (Unitrust Single Life Re-
mainder Factors) based on data compiled
from the 1990 census as set forth in Life
Table 90CM, and make conforming
amendments to various sections to reflect
the revised tables. The current tables are
moved to sections containing actuarial
material for historical reference. Table B,
Table D, Tables F(4.2) through F(14.0),
Table J, and Table K, which are not based
on mortality experience, are not changed.
Internal Revenue Service Publications
1457 “Actuarial Values, Book Aleph”
(forthcoming 1999), 1458 “Actuarial Val-
ues, Book Beth” (forthcoming 1999), and
1459 “Actuarial Values, Book Gimel”
(forthcoming 1999) will contain a com-
plete set of actuarial tables that include
factors not contained in the regulations
(for example, annuity and life interest fac-
tors). Although not available on May 1,
1999, IRS anticipates these publications
will be available by July 1, 1999. These
publications will be available for pur-
chase from the Superintendent of Docu-
ments, United States Government Print-
ing Office, Washington, DC 20402.
The following chart summarizes the ap-
plicable interest rates and the citations to
textual materials and tables for the various
periods covered under the regulations:
May 17, 199961999–20 I.R.B.
Cross Reference to Regulation Sections
ValuationInterest Regulation
PeriodRateSectionTable
Section 642:
Valuation, in general—1.642(c)–6
before 01/01/524%1.642(c)–6A(a)
01/01/52 – 12/31/703.5%1.642(c)–6A(b)
01/01/71 – 11/30/836%1.642(c)–6A(c)
12/01/83 – 04/30/8910%1.642(c)–6A(d)Table G
05/01/89 – 04/30/99§75201.642(c)–6A(e)Table S (5/1/89 – 4/30/99)
after 04/30/99§75201.642(c)–6T(e)Table S (after 04/30/99)
Section 664:
Valuation, in general—1.664–4
before 01/01/524%1.664–4A(a)
01/01/52 – 12/31/703.5%1.664–4A(b)
01/01/71 – 11/30/836%1.664–4A(c)
12/01/83 – 04/30/8910%1.664–4A(d) Table E, Table F(1)
05/01/89 – 04/30/99§75201.664–4A(e)Table U(1) (5/1/89 – 4/30/99)
after 04/30/99 §75201.664–4T(e)Table U(1) (after 04/30/99)
1.664–4(e)Table D and
Tables F(4.2) – F(14.0)
Section 2031:
Valuation, in general—20.2031–7
before 01/01/524%20.2031–7A(a)
01/01/52 – 12/31/703.5%20.2031–7A(b)
01/01/71 – 11/30/836%20.2031–7A(c)

Cross Reference to Regulation Sections (Continued)
ValuationInterest Regulation
PeriodRateSectionTable
12/01/83 – 04/30/8910%20.2031–7A(d)Table A, Table B, Table LN
05/01/89 – 04/30/99§752020.2031–7A(e)Table S (5/1/89 – 4/30/99)
Life Table 80CNSMT
after 04/30/99 §752020.2031–7T(d)Table S (after 04/30/99) and
Life Table 90CM
20.2031–7(d) Table B, Table J, Table K,
Section 2512:
Valuation, in general25.2512–5
before 01/01/524%25.2512–5A(a)
01/01/52 – 12/31/703.5%25.2512–5A(b)
01/01/71 – 11/30/836%25.2512–5A(c)
12/01/83 – 04/30/8910%25.2512–5A(d)
05/01/89 – 04/30/99§752025.2512–5A(e)
after 04/30/99 §752025.2512–5T(d)
1999–20 I.R.B.7May 17, 1999
Effective Dates
These regulations are applicable in the
case of annuities, interests for life or
terms of years, and remainder or rever-
sionary interests created after April 30,
1999.
Transitional Rules
The regulations provide certain transi-
tional rules intended to alleviate any ad-
verse consequences resulting from the
proposed regulatory change. For gift tax
purposes, if the valuation date of a trans-
fer is after April 30, 1999, but before July
1, 1999, the donor may determine the
value of the gift (and/or any applicable
charitable deduction) under tables based
on either Life Table 80CNSMT or Table
90CM (at the donor’s option). Similarly,
for estate tax purposes, if the decedent
dies after April 30, 1999, but before July
1, 1999, the value of any interest (and/or
any applicable charitable deduction) may
be determined under tables based on ei-
ther Table 80CNSMT or Table 90CM, at
the option of the decedent’s executor.
However, the section 7520 interest rate
utilized is the appropriate rate for the
month in which the valuation date occurs.
In accordance with this transitional rule
and those 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 after April 30,
1999, and before July 1, 1999, and the ex-
ecutor or donor elects under section
7520(a) to use the section 7520 interest
rate for March 1999 or April 1999, then
the mortality experience contained in
80CNSMT must be used. If the executor
or donor uses the section 7520 interest
rate for May 1999 or for June 1999, then
the tables based on either Table
80CNSMT or Table 90CM may be used.
However, if the valuation date occurs
after June 30, 1999, the executor or donor
must use the new mortality experience
contained in Table 90CM even if a prior
month interest rate election under section
7520(a) is made.
In addition, for estate tax purposes, the
estate of a mentally incompetent decedent
may elect to value the property interest in-
cluded in the gross estate under the mor-
tality table and interest rate in effect at the
time the decedent became mentally in-
competent or the mortality table and inter-
est rate in effect on the decedent’s date of
death if the decedent was under a mental
incapacity that existed on May 1, 1999,
and continued uninterrupted until the
decedent’s death, or the decedent died
within 90 days of regaining competency
after April 30, 1999.
Special Analysis
It has been determined that this Trea-
sury decision is not a significant regula-
tory action as defined in EO 12866.
Therefore, a regulatory assessment is not
required. It also has been determined that
section 553(b) of the Administrative Pro-
cedure Act (5 U.S.C. chapter 5) does not
apply to these regulations, and because
these regulations do not impose a collec-
tion of information requirement on small
entities, the Regulatory Flexibility Act (5
U.S.C. chapter 6) does not apply. There-
fore, a Regulatory Flexibility Analysis is
not required. Pursuant to section 7805(f)
of the Internal Revenue Code, these regu-
lations will be submitted to the Chief
Counsel for Advocacy of the Small Busi-
ness Administration for comment on its
impact on small business.
Drafting Information
The principal author of these regulations
is William L. Blodgett, Office of Assistant
Chief Counsel (Passthroughs and Special
Industries), IRS. However, other person-
nel from the IRS and Treasury Department
participated in their development.
*****
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR parts 1, 20, and
25 are amended as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 is amended by adding entries in
numerical order to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Section 1.170A–12 also issued under 26
U.S.C. 170(f)(4). * * *
Section 1.642(c)–6 also issued under 26
U.S.C. 642(c)(5).
Section 1.642(c)–6T also issued under 26
U.S.C. 642(c)(5).
Section 1.642(c)–6A also issued under 26
U.S.C. 642(c)(5).

Section 1.664–1 also issued under 26
U.S.C. 664(a).
Section 1.664–2 also issued under 26
U.S.C. 664(a).
Section 1.664–3 also issued under 26
U.S.C. 664(a).
Section 1.664–4 also issued under 26
U.S.C. 664(a).
Section 1.664–4T also issued under 26
U.S.C. 664(a).
Section 1.664–4A also issued under 26
U.S.C. 664(a). * * *
Section 1.7520–1T also issued under 26
U.S.C. 7520(c)(2). * * *
Par. 2. Section 1.170A–6 is amended
by revising paragraph (c)(5), Example
(2)(b) introductory text to read as follows:
§1.170A–6 Charitable contributions in
trust.
* * * * *
(c) * * *
(5) * * *
Example 2. * * *
(b) The section 7520 rate at the time of
the transfer was 6.0 percent. By reference
to Table F(6.0) in §1.664–4(e)(6), the ad-
justed payout rate is 4.717% (5% 3
0.943396). The present value of the re-
version is $6,473.75, computed by refer-
ence to Table D in §1.664–4(e)(6), as fol-
lows:
* * * * *
Par. 3. Section 1.170A–12T is added to
read as follows:
§1.170A–12T Valuation of a remainder
interest in real property for contributions
made after July 31, 1969 (temporary).
(a) through (b)(1) [Reserved] For fur-
ther guidance see §1.170A–12(a) through
(b)(1).
(b)(2) Computation of depreciation
factor after April 30, 1999.If the valua-
tion of the remainder interest in deprecia-
ble property is dependent upon the contin-
uation of one life, a special factor must be
used. The factor determined under this
paragraph (b)(2) is carried to the fifth dec-
imal place. The special factor is to be
computed on the basis of the interest rate
and life contingencies prescribed in
§20.2031–7T (or for certain prior periods,
§20.2031–7A) of this chapter (Estate Tax
Regulations) 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
after April 30, 1999, special factors for
determining the present value of a re-
mainder interest following one life and an
example describing the computation is
contained in Internal Revenue Service
Publication 1459, “Actuarial Values,
Book Gimel,” (1999). A copy of this pub-
lication is available for purchase from the
Superintendent of Documents, United
States Government Printing Office,
Washington, DC 20402. 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 fol-
lowing one life, the special factor may be
obtained through use of the following
formula:
May 17, 199981999–20 I.R.B.
Where:
n = the estimated number of years of useful life,
i = the applicable interest rate under section 7520
of the Internal Revenue Code,
v = 1 divided by the sum of 1 plus the applicable
interest rate under section 7520 of the Internal
Revenue Code,
x = the age of the life tenant, and
lx = number of persons living at age x as set forth
in Table 90CM of §20.2031–7T (or, for prior
periods, the tables set forth under §20.2031–
7A) of this chapter.
(3) The following example illustrates the provi-
sions of this paragraph (b):
Example.A, who is 62, donates to Y University a
remainder interest in a personal residence, consist-
ing of a house and land, subject to a reserved life es-
tate 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 45 years, at the end
of which the value of the house is expected to be
$20,000. The portion of the property considered to
be depreciable is $80,000 (the value of the house
($100,000) less its expected value at the end of 45
years ($20,000)). The portion of the property con-
sidered to be nondepreciable is $50,000 (the value of
the land at the time of the gift ($30,000) plus the ex-
pected value of the house at the end of 45 years
($20,000)). At the time of the gift, the interest rate
prescribed under section 7520 is 8.4 percent. Based
on an interest rate of 8.4 percent, the remainder fac-
tor for $1.00 prescribed in §20.2031–7T(d) of this
chapter for a person age 62 is 0.27925. The value of
the nondepreciable remainder interest is $13,962.50
(0.27925 times $50,000). The value of the deprecia-
ble remainder interest is $16,148.80 (0.20186, com-
puted under the formula described in paragraph
(b)(2) of this section, times $80,000). Therefore, the
value of the remainder interest is $30,111.30.
(c) through (e) [Reserved]. For further
guidance see §1.170A–12(c) through (e).
Par. 4. Section 1.642(c)–6 is amended
as follows:
1. Revise the section heading.
2. Paragraph (d) is removed.
3. Paragraph (e) is redesignated as
paragraph (e) of §1.642(c)–6A.
4. New paragraphs (d) and (e) are
added.
5. Paragraph (f) is revised.
The revisions and addition read as fol-
lows:
§1.642(c)–6 Valuation of a remainder
interest in property transferred to a
pooled income fund.
* * * * *
(d) and (e) [Reserved]. For further
guidance, see §1.642(c)–6T(d) and (e).
(f) Effective dates. This section applies
after April 30, 1989, and before May 1,
1999.
Par. 5. Section 1.642(c)–6T is added to
read as follows:
§1.642(c)–6T Valuation of a remainder
interest in property transferred to a
pooled income fund (temporary).
(a) through (c) [Reserved]. For further
guidance, see §1.642(c)–6(a) through (c).
(d) Valuation. The present value of the
remainder interest in property transferred
to a pooled income fund after April 30,
1999, 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 May 1, 1999, is
determined under the following sections:

Valuation DatesApplicable
AfterBeforeRegulations
—01-01-521.642(c)–6A(a)
12-31-5101-01-711.642(c)-6A(b)
2-31-702-01-831.642(c)–6A(c)
11-30-8305-01-891.642(c)–6A(d)
04-30-8905-01-991.642(c)–6A(e)
(e) Present value of the remainder in-
terest in the case of transfers to pooled in-
come funds for which the valuation date is
after April 30, 1999—(1) In general.In
the case of transfers to pooled income
funds for which the valuation date is after
April 30, 1999, the present value of a re-
mainder interest is determined under this
section. See, however, §1.7520–3(b) (re-
lating to exceptions to the use of pre-
scribed tables under certain circum-
stances). The present value of a
remainder interest that is dependent on
the termination of the life of one individ-
ual is computed by the use of Table S in
paragraph (e)(6) of this section. For pur-
poses of the computations under this sec-
tion, 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 sections 2055, 2106, or 2624,
if on May 1, 1999, the decedent was men-
tally incompetent so that the disposition
of the property could not be changed, and
the decedent died after April 30, 1999,
without having regained competency to
dispose of the decedent’s property, or the
decedent died within 90 days of the date
that the decedent first regained compe-
tency after April 30, 1999, the present
value of a remainder interest is deter-
mined as if the valuation date with respect
to the decedent’s gross estate is either be-
fore May 1, 1999, or after April 30, 1999,
at the option of the decedent’s executor.
(ii) For purposes of sections 170, 2055,
2106, 2522, or 2624, in the case of trans-
fers to a pooled income fund for which
the valuation date is after April 30, 1999,
and before July 1, 1999, the present value
of the remainder interest under this sec-
tion is determined by use of 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 appro-
priate actuarial tables under either para-
graph (e)(6) of this section or
§1.642(c)–6A(e)(5), at the option of the
donor or the decedent’s executor, as the
case may be.
(iii) For purposes of paragraphs (e)(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 (e)(6) of this section or
§1.642(c)–6A(e)(5), the donor or dece-
dent’s executor must use the same actuar-
ial table with respect to each individual
transaction and with respect to all transfers
occurring on the valuation date (e.g., gift
and income tax charitable deductions with
respect to the same transfer must be deter-
mined based on the same tables, and all
assets includible in the gross estate and/or
estate tax deductions claimed must be val-
ued based on the same tables).
(3) Present value of a remainder inter-
est.The present value of a remainder in-
terest in property transferred to a pooled
income fund is computed on the basis
of—
(i) Life contingencies determined from
the values of lxthat are set forth in Table
90CM in §20.2031–7T(d)(7) of this chap-
ter (Estate Tax Regulations) (See
§ 20.2031–7A of this chapter for certain
prior periods); and
(ii) Discount at a rate of interest, com-
pounded annually, equal to the highest
yearly rate of return of the pooled income
fund for the 3 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
§1.642(c)–6(c) 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, appropri-
ate adjustments must be made to annual-
ize 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 3
taxable years immediately preceding the
taxable year in which the transfer of prop-
erty is made has been purposely manipu-
lated to be substantially less than the rate
of return that would otherwise be reason-
ably anticipated with the purpose of ob-
taining 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 3 preceding
taxable years.
(4) Pooled income funds in existence
less than 3 taxable years. If a pooled in-
come fund has been in existence less than
3 taxable years immediately preceding the
taxable year in which the transfer is made
to the fund and the transfer to the fund is
made after April 30, 1989, the highest rate
of return is deemed to be the interest rate
(rounded to the nearest two-tenths of one
percent) that is 1 percent less than the
highest annual average of the monthly
section 7520 rates for the 3 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 3-
year period immediately preceding the
calendar year in which each transfer to the
fund is made until the fund has been in ex-
istence for 3 taxable years and can com-
pute its highest rate of return for the 3 tax-
able years immediately preceding the
taxable year in which the transfer of prop-
erty 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.The factor that is used in deter-
mining the present value of a remainder
interest that is dependent on the termina-
tion of the life of one individual is the fac-
tor from Table S in paragraph (e)(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 remain-
der interest is based (See §1.642(c)–6A
for certain prior periods). The tables in
paragraph (e)(6) of this section include
factors for yearly rates of return from 4.2
to 14 percent. Many actuarial factors not
contained in the tables in paragraph (e)(6)
of this section is contained in Table S in
Internal Revenue Service Publication
1457, “Actuarial Values, Book Aleph,”
(1999). A copy of this publication is
available for purchase from the Superin-
tendent of Documents, United States
Government Printing Office, Washington,
1999–20 I.R.B.9May 17, 1999

DC 20402. 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 pro-
vided, a linear interpolation must be
made. 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 remain-
der factor. This paragraph (e)(5) may be
illustrated by the following example:
Example.A, who is 54 years and 8 months,
transfers $100,000 to a pooled income fund, and re-
tains a life income interest in the property. The
highest yearly rate of return earned by the fund for
its 3 preceding taxable years is 9.47 percent. In
Table S, the remainder factor opposite 55 years
under 9.4 percent is .17449 and under 9.6 percent is
.17001. The present value of the remainder interest
is $17,292.00, computed as follows:
Factor at 9.4 percent for age 55 . . . . . . . .17449
Factor at 9.6 percent for age 55 . . . . . . . .17001
Difference . . . . . . . . . . . . . . . . . . . . . . . .00448
Interpolation adjustment:
9.47% – 9.4%
=
x
0.2%.00448
x=.00157
Factor at 9.4 percent for age 55 . . . . . . . .17449
Less: Interpolation adjustment . . . . . . . .00157
Interpolated factor . . . . . . . . . . . . . . . . . .17292
Present value of remainder interest:
($100,000 3 .17292) . . . . . . . . . . . . $17,292.00
(6) Actuarial tables. In the case of
transfers for which the valuation date is
after April 30, 1999, the present value of a
remainder interest dependent on the ter-
mination of one life in the case of a trans-
fer to a pooled income fund is determined
by use of the following Table S:
May 17, 1999101999–20 I.R.B.
TABLE S
BASED ON LIFE TABLE 90CM
SINGLE LIFE REMAINDER FACTORS
APPLICABLE AFTER APRIL 30, 1999
INTEREST RATE
AGE4.2%4.4%4.6%4.8%5.0%5.2%5.4%5.6%5.8%6.0%
0.06752.06130.05586.05109.04691.04322.03998.03711.03458.03233
1.06137.05495.04932.04438.04003.03620.03283.02985.02721.02487
2.06325.05667.05088.04580.04132.03737.03388.03079.02806.02563
3.06545.05869.05275.04752.04291.03883.03523.03203.02920.02668
4.06784.06092.05482.04944.04469.04048.03676.03346.03052.02791
5.07040.06331.05705.05152.04662.04229.03845.03503.03199.02928
6.07310.06583.05941.05372.04869.04422.04025.03672.03357.03076
7.07594.06849.06191.05607.05089.04628.04219.03854.03528.03236
8.07891.07129.06453.05853.05321.04846.04424.04046.03709.03407
9.08203.07423.06731.06115.05567.05079.04643.04253.03904.03592
10.08532.07734.07024.06392.05829.05326.04877.04474.04114.03790
11.08875.08059.07331.06683.06104.05587.05124.04709.04336.04002
12.09233.08398.07653.06989.06394.05862.05385.04957.04572.04226
13.09601.08748.07985.07304.06693.06146.05655.05214.04816.04458
14.09974.09102.08322.07624.06997.06435.05929.05474.05064.04694
15.10350.09460.08661.07946.07303.06725.06204.05735.05312.04930
16.10728.09818.09001.08268.07608.07014.06479.05996.05559.05164
17.11108.10179.09344.08592.07916.07306.06755.06257.05807.05399
18.11494.10545.09691.08921.08227.07601.07034.06521.06057.05636
19.11889.10921.10047.09259.08548.07904.07322.06794.06315.05880
20.12298.11310.10417.09610.08881.08220.07622.07078.06584.06135
21.12722.11713.10801.09976.09228.08550.07935.07375.06866.06403
22.13159.12130.11199.10354.09588.08893.08260.07685.07160.06682
23.13613.12563.11612.10748.09964.09250.08601.08009.07468.06975
24.14084.13014.12043.11160.10357.09625.08958.08349.07793.07284
25.14574.13484.12493.11591.10768.10018.09334.08708.08135.07611
26.15084.13974.12963.12041.11199.10431.09728.09085.08496.07956
27.15615.14485.13454.12513.11652.10865.10144.09484.08878.08322
28.16166.15016.13965.13004.12124.11319.10580.09901.09279.08706
29.16737.15567.14497.13516.12617.11792.11035.10339.09699.09109

TABLE S
BASED ON LIFE TABLE 90CM
SINGLE LIFE REMAINDER FACTORS
APPLICABLE AFTER APRIL 30, 1999
INTEREST RATE
AGE4.2%4.4%4.6%4.8%5.0%5.2%5.4%5.6%5.8%6.0%
30.17328.16138.15048.14047.13129.12286.11510.10796.10138.09532
31.17938.16728.15618.14599.13661.12799.12004.11272.10597.09974
32.18568.17339.16210.15171.14214.13333.12520.11769.11076.10435
33.19220.17972.16824.15766.14790.13889.13058.12289.11578.10920
34.19894.18627.17460.16383.15388.14468.13618.12831.12102.11426
35.20592.19307.18121.17025.16011.15073.14204.13399.12652.11958
36.21312.20010.18805.17691.16658.15701.14814.13990.13225.12514
37.22057.20737.19514.18382.17331.16356.15450.14608.13825.13096
38.22827.21490.20251.19100.18031.17038.16113.15253.14452.13705
39.23623.22270.21013.19845.18759.17747.16805.15927.15108.14344
40.24446.23078.21805.20620.19516.18487.17527.16631.15795.15013
41.25298.23915.22626.21425.20305.19259.18282.17368.16514.15715
42.26178.24782.23478.22262.21125.20062.19069.18138.17267.16450
43.27087.25678.24360.23129.21977.20898.19888.18941.18053.17220
44.28025.26603.25273.24027.22860.21766.20740.19777.18873.18023
45.28987.27555.26212.24953.23772.22664.21622.20644.19724.18858
46.29976.28533.27179.25908.24714.23591.22536.21542.20606.19725
47.30987.29535.28171.26889.25682.24546.23476.22468.21518.20621
48.32023.30563.29190.27897.26678.25530.24447.23425.22460.21549
49.33082.31615.30234.28931.27702.26543.25447.24412.23434.22509
50.34166.32694.31306.29995.28756.27586.26479.25432.24441.23502
51.35274.33798.32404.31085.29838.28658.27541.26482.25479.24528
52.36402.34924.33525.32200.30946.29757.28630.27561.26547.25584
53.37550.36070.34668.33339.32078.30882.29746.28667.27643.26669
54.38717.37237.35833.34500.33234.32031.30888.29801.28766.27782
55.39903.38424.37019.35683.34413.33205.32056.30961.29918.28925
56.41108.39631.38227.36890.35617.34405.33250.32149.31099.30097
57.42330.40857.39455.38118.36844.35629.34469.33363.32306.31297
58.43566.42098.40699.39364.38089.36873.35710.34600.33538.32522
59.44811.43351.41956.40623.39350.38133.36968.35855.34789.33768
60.46066.44613.43224.41896.40624.39408.38243.37127.36058.35033
61.47330.45887.44505.43182.41914.40699.39535.38418.37347.36318
62.48608.47175.45802.44485.43223.42011.40848.39732.38660.37629
63.49898.48478.47115.45807.44550.43343.42184.41069.39997.38966
64.51200.49793.48442.47143.45895.44694.43539.42427.41357.40326
65.52512.51121.49782.48495.47255.46062.44912.43805.42738.41709
66.53835.52461.51137.49862.48634.47449.46307.45206.44143.43118
67.55174.53818.52511.51250.50034.48860.47727.46633.45576.44556
68.56524.55188.53899.52654.51452.50291.49168.48083.47034.46020
69.57882.56568.55299.54071.52885.51737.50627.49552.48513.47506
70.59242.57951.56703.55495.54325.53193.52096.51034.50004.49007
1999–20 I.R.B.11May 17, 1999

TABLE S
BASED ON LIFE TABLE 90CM
SINGLE LIFE REMAINDER FACTORS
APPLICABLE AFTER APRIL 30, 1999
INTEREST RATE
AGE4.2%4.4%4.6%4.8%5.0%5.2%5.4%5.6%5.8%6.0%
71.60598.59332.58106.56918.55767.54651.53569.52520.51503.50516
72.61948.60707.59504.58338.57206.56108.55043.54009.53004.52029
73.63287.62073.60895.59751.58640.57561.56513.55495.54505.53543
74.64621.63435.62282.61162.60073.59015.57985.56984.56009.55061
75.65953.64796.63671.62575.61510.60473.59463.58480.57523.56591
76.67287.66160.65063.63995.62954.61940.60952.59989.59050.58135
77.68622.67526.66459.65419.64404.63415.62450.61509.60590.59694
78.69954.68892.67856.66845.65858.64895.63955.63036.62140.61264
79.71278.70250.69246.68265.67308.66372.65457.64563.63690.62836
80.72581.71588.70618.69668.68740.67833.66945.66077.65227.64396
81.73857.72899.71962.71045.70147.69268.68408.67566.66741.65933
82.75101.74178.73274.72389.71522.70672.69840.69024.68225.67441
83.76311.75423.74553.73700.72864.72044.71240.70451.69678.68919
84.77497.76645.75809.74988.74183.73393.72618.71857.71110.70377
85.78665.77848.77047.76260.75487.74728.73982.73250.72530.71823
86.79805.79025.78258.77504.76764.76036.75320.74617.73925.73245
87.80904.80159.79427.78706.77998.77301.76615.75940.75277.74624
88.81962.81251.80552.79865.79188.78521.77865.77220.76584.75958
89.82978.82302.81636.80980.80335.79699.79072.78455.77847.77248
90.83952.83309.82676.82052.81437.80831.80234.79645.79064.78492
91.84870.84260.83658.83064.82479.81902.81332.80771.80217.79671
92.85716.85136.84563.83998.83441.82891.82348.81812.81283.80761
93.86494.85942.85396.84858.84326.83801.83283.82771.82266.81767
94.87216.86690.86170.85657.85149.84648.84153.83664.83181.82704
95.87898.87397.86902.86412.85928.85450.84977.84510.84049.83592
96.88537.88060.87587.87121.86659.86203.85751.85305.84864.84427
97.89127.88672.88221.87775.87335.86898.86467.86040.85618.85200
98.89680.89245.88815.88389.87968.87551.87138.86730.86326.85926
99.90217.89803.89393.88987.88585.88187.87793.87402.87016.86633
100.90738.90344.89953.89567.89183.88804.88428.88056.87687.87322
101.91250.90876.90504.90137.89772.89412.89054.88699.88348.88000
102.91751.91396.91045.90696.90350.90007.89668.89331.88997.88666
103.92247.91912.91579.91249.90922.90598.90276.89957.89640.89326
104.92775.92460.92148.91839.91532.91227.90924.90624.90326.90031
105.93290.92996.92704.92415.92127.91841.91558.91276.90997.90719
106.93948.93680.93415.93151.92889.92628.92370.92113.91857.91604
107.94739.94504.94271.94039.93808.93579.93351.93124.92899.92675
108.95950.95767.95585.95404.95224.95045.94867.94689.94512.94336
109.97985.97893.97801.97710.97619.97529.97438.97348.97259.97170
May 17, 1999121999–20 I.R.B.

TABLE S
BASED ON LIFE TABLE 90CM
SINGLE LIFE REMAINDER FACTORS
APPLICABLE AFTER APRIL 30, 1999
INTEREST RATE
AGE6.2%6.4%6.6%6.8%7.0%7.2%7.4% 7.6%7.8%8.0%
0.03034.02857.02700.02559.02433.02321.02220.02129.02047.01973
1.02279.02094.01929.01782.01650.01533.01427.01331.01246.01168
2.02347.02155.01983.01829.01692.01569.01458.01358.01268.01187
3.02444.02243.02065.01905.01761.01632.01516.01412.01317.01232
4.02558.02349.02163.01996.01846.01712.01590.01481.01382.01292
5.02686.02469.02275.02101.01945.01804.01677.01562.01458.01364
6.02825.02600.02398.02217.02053.01906.01773.01653.01544.01445
7.02976.02742.02532.02343.02172.02019.01880.01754.01640.01536
8.03137.02894.02675.02479.02301.02140.01995.01864.01744.01635
9.03311.03059.02832.02627.02442.02274.02122.01985.01859.01745
10.03499.03237.03001.02788.02595.02420.02262.02118.01987.01867
11.03700.03428.03183.02961.02760.02578.02413.02262.02125.02000
12.03913.03632.03377.03146.02937.02748.02575.02418.02275.02144
13.04135.03843.03579.03339.03122.02924.02744.02580.02431.02294
14.04359.04057.03783.03534.03308.03102.02915.02744.02587.02444
15.04584.04270.03986.03728.03493.03279.03083.02905.02742.02593
16.04806.04482.04187.03919.03674.03452.03248.03063.02892.02736
17.05029.04692.04387.04108.03855.03623.03411.03218.03040.02877
18.05253.04905.04588.04299.04036.03795.03574.03373.03187.03017
19.05484.05124.04796.04496.04222.03972.03742.03532.03339.03161
20.05726.05354.05013.04702.04418.04158.03919.03700.03498.03313
21.05980.05595.05242.04920.04625.04354.04105.03877.03667.03473
22.06246.05847.05482.05147.04841.04559.04301.04063.03844.03642
23.06524.06112.05734.05387.05069.04777.04508.04260.04032.03821
24.06819.06392.06001.05642.05312.05008.04728.04470.04232.04012
25.07131.06690.06285.05913.05570.05255.04964.04695.04447.04218
26.07460.07005.06586.06200.05845.05518.05215.04936.04677.04438
27.07810.07340.06907.06508.06140.05800.05485.05195.04925.04676
28.08179.07693.07246.06833.06451.06098.05772.05469.05189.04929
29.08566.08065.07603.07176.06780.06414.06075.05761.05469.05198
30.08973.08456.07978.07536.07127.06748.06396.06069.05766.05483
31.09398.08865.08372.07915.07491.07098.06733.06394.06078.05785
32.09843.09294.08785.08313.07875.07468.07089.06737.06409.06103
33.10310.09745.09220.08732.08279.07858.07466.07100.06759.06441
34.10799.10217.09676.09173.08705.08269.07862.07483.07129.06798
35.11314.10715.10157.09638.09155.08704.08283.07890.07522.07179
36.11852.11236.10662.10127.09628.09162.08726.08319.07938.07581
37.12416.11783.11193.10641.10126.09645.09194.08772.08377.08006
38.13009.12359.11751.11183.10652.10155.09689.09253.08843.08459
39.13629.12962.12338.11753.11206.10693.10212.09761.09337.08938
1999–20 I.R.B.13May 17, 1999

TABLE S
BASED ON LIFE TABLE 90CM
SINGLE LIFE REMAINDER FACTORS
APPLICABLE AFTER APRIL 30, 1999
INTEREST RATE
AGE6.2%6.4%6.6%6.8%7.0%7.2%7.4% 7.6%7.8%8.0%
40.14281.13597.12955.12355.11791.11262.10766.10299.09860.09447
41.14966.14264.13606.12989.12409.11864.11352.10870.10417.09989
42.15685.14966.14291.13657.13061.12500.11972.11475.11006.10564
43.16437.15702.15010.14360.13747.13171.12627.12115.11631.11174
44.17224.16472.15764.15098.14469.13876.13317.12789.12290.11819
45.18042.17274.16550.15867.15223.14615.14040.13496.12982.12496
46.18893.18110.17370.16671.16011.15387.14796.14238.13708.13207
47.19775.18975.18220.17505.16830.16190.15584.15010.14466.13950
48.20688.19873.19102.18373.17682.17027.16406.15817.15258.14727
49.21633.20804.20018.19274.18568.17898.17262.16658.16084.15539
50.22612.21769.20969.20210.19490.18805.18155.17536.16948.16388
51.23625.22769.21955.21182.20448.19749.19084.18452.17849.17275
52.24669.23799.22973.22186.21438.20726.20047.19400.18784.18196
53.25742.24861.24022.23222.22461.21735.21043.20383.19753.19151
54.26845.25952.25101.24290.23516.22777.22072.21399.20756.20140
55.27978.27074.26212.25389.24604.23853.23136.22450.21793.21166
56.29140.28227.27355.26522.25725.24963.24233.23535.22867.22227
57.30333.29411.28529.27686.26879.26106.25365.24656.23976.23324
58.31551.30621.29731.28878.28061.27278.26528.25807.25116.24453
59.32790.31854.30956.30095.29269.28477.27716.26986.26284.25610
60.34050.33107.32202.31334.30500.29699.28929.28190.27478.26794
61.35331.34384.33473.32598.31757.30948.30170.29422.28701.28007
62.36639.35688.34772.33892.33044.32229.31443.30687.29958.29255
63.37974.37020.36101.35216.34363.33542.32750.31986.31250.30539
64.39334.38378.37456.36568.35711.34884.34087.33317.32574.31857
65.40718.39761.38838.37947.37087.36257.35455.34681.33932.33208
66.42128.41172.40249.39357.38496.37663.36858.36079.35326.34597
67.43569.42616.41694.40803.39941.39107.38299.37518.36761.36028
68.45038.44089.43170.42281.41419.40585.39777.38994.38235.37499
69.46531.45587.44672.43786.42927.42094.41286.40503.39743.39006
70.48040.47103.46194.45312.44456.43626.42820.42038.41278.40540
71.49558.48629.47727.46851.46000.45174.44371.43591.42832.42095
72.51082.50162.49268.48399.47554.46733.45934.45157.44401.43666
73.52607.51697.50813.49952.49114.48299.47506.46733.45981.45249
74.54139.53241.52367.51515.50686.49879.49092.48325.47578.46849
75.55683.54798.53936.53095.52276.51477.50698.49938.49197.48474
76.57243.56373.55524.54696.53888.53100.52330.51579.50846.50130
77.58819.57965.57132.56318.55523.54747.53988.53247.52523.51815
78.60408.59572.58755.57957.57177.56414.55668.54939.54225.53527
79.62001.61184.60385.59604.58840.58092.57360.56644.55943.55256
May 17, 1999141999–20 I.R.B.

TABLE S
BASED ON LIFE TABLE 90CM
SINGLE LIFE REMAINDER FACTORS
APPLICABLE AFTER APRIL 30, 1999
INTEREST RATE
AGE6.2%6.4%6.6%6.8%7.0%7.2%7.4% 7.6%7.8%8.0%
80.63582.62786.62007.61244.60497.59765.59048.58347.57659.56985
81.65142.64367.63608.62864.62135.61421.60721.60034.59361.58701
82.66673.65920.65182.64458.63748.63052.62368.61698.61041.60395
83.68175.67444.66728.66024.65334.64656.63991.63338.62696.62066
84.69657.68950.68256.67574.66904.66246.65599.64964.64340.63727
85.71128.70446.69775.69116.68467.67830.67204.66587.65982.65386
86.72576.71919.71272.70636.70010.69394.68789.68193.67606.67029
87.73981.73349.72726.72114.71511.70917.70333.69757.69190.68632
88.75342.74735.74137.73548.72968.72396.71833.71279.70732.70194
89.76658.76076.75503.74938.74381.73832.73290.72757.72231.71712
90.77928.77371.76823.76281.75748.75221.74702.74190.73684.73186
91.79131.78600.78075.77557.77046.76542.76044.75553.75068.74589
92.80246.79737.79235.78740.78250.77767.77290.76818.76353.75893
93.81274.80788.80307.79832.79363.78899.78441.77989.77542.77100
94.82232.81766.81306.80850.80401.79956.79517.79082.78653.78228
95.83141.82695.82254.81818.81387.80961.80539.80122.79710.79302
96.83996.83569.83147.82729.82316.81907.81503.81103.80707.80315
97.84787.84378.83973.83573.83176.82784.82396.82012.81632.81255
98.85530.85138.84750.84366.83985.83609.83236.82867.82502.82140
99.86255.85880.85508.85140.84776.84415.84057.83703.83353.83005
100.86960.86601.86246.85894.85546.85200.84858.84519.84183.83849
101.87655.87313.86974.86638.86305.85975.85648.85324.85003.84684
102.88338.88012.87689.87369.87052.86738.86426.86116.85809.85505
103.89015.88706.88399.88095.87793.87494.87197.86903.86611.86321
104.89737.89446.89157.88871.88586.88304.88024.87745.87469.87195
105.90443.90170.89898.89628.89360.89094.88830.88568.88307.88049
106.91351.91101.90852.90605.90359.90115.89873.89632.89392.89154
107.92452.92230.92010.91791.91573.91356.91141.90927.90714.90502
108.94161.93987.93814.93641.93469.93298.93128.92958.92790.92622
109.97081.96992.96904.96816.96729.96642.96555.96468.96382.96296
1999–20 I.R.B.15May 17, 1999

TABLE S
BASED ON LIFE TABLE 90CM
SINGLE LIFE REMAINDER FACTORS
APPLICABLE AFTER APRIL 30, 1999
INTEREST RATE
AGE8.2%8.4%8.6%8.8%9.0% 9.2%9.4%9.6%9.8%10.0%
0.01906.01845.01790.01740.01694.01652.01613.01578.01546.01516
1.01098.01034.00977.00924.00876.00833.00793.00756.00722.00691
2.01113.01046.00986.00930.00880.00834.00791.00753.00717.00684
3.01155.01084.01020.00962.00909.00860.00816.00775.00737.00702
4.01211.01137.01069.01008.00952.00900.00853.00810.00770.00733
5.01279.01201.01130.01065.01006.00952.00902.00856.00814.00775
6.01356.01274.01199.01131.01068.01011.00959.00910.00865.00824
7.01442.01356.01277.01205.01140.01079.01023.00972.00925.00881
8.01536.01446.01363.01287.01218.01154.01096.01041.00991.00945
9.01641.01546.01460.01380.01307.01240.01178.01120.01068.01019
10.01758.01659.01567.01484.01407.01336.01270.01210.01154.01103
11.01886.01781.01686.01598.01517.01442.01373.01310.01251.01196
12.02024.01915.01814.01721.01636.01558.01485.01419.01357.01299
13.02168.02054.01948.01851.01762.01679.01603.01533.01467.01407
14.02313.02193.02083.01981.01887.01801.01721.01646.01578.01514
15.02456.02330.02214.02107.02009.01918.01834.01756.01684.01617
16.02593.02462.02340.02229.02126.02030.01942.01860.01785.01714
17.02728.02590.02463.02346.02238.02138.02046.01960.01880.01806
18.02861.02717.02584.02462.02348.02243.02146.02056.01972.01894
19.02998.02847.02708.02580.02461.02351.02249.02154.02066.01984
20.03142.02984.02839.02704.02580.02465.02357.02258.02165.02079
21.03295.03130.02978.02837.02706.02585.02473.02368.02271.02180
22.03455.03283.03124.02976.02839.02712.02594.02484.02382.02286
23.03626.03446.03279.03124.02981.02847.02723.02608.02500.02400
24.03809.03620.03446.03283.03133.02993.02863.02741.02628.02522
25.04005.03808.03625.03456.03298.03151.03014.02887.02768.02656
26.04216.04010.03819.03641.03476.03322.03178.03044.02919.02802
27.04444.04229.04029.03843.03670.03508.03357.03217.03085.02962
28.04687.04463.04254.04059.03877.03708.03550.03402.03263.03133
29.04946.04712.04493.04289.04099.03922.03756.03600.03455.03318
30.05221.04976.04748.04534.04335.04149.03975.03812.03659.03515
31.05511.05255.05017.04794.04585.04390.04208.04037.03876.03725
32.05818.05551.05302.05069.04851.04647.04455.04276.04107.03948
33.06144.05866.05606.05363.05135.04921.04720.04532.04355.04188
34.06489.06200.05928.05674.05436.05212.05002.04805.04619.04444
35.06857.06555.06273.06007.05758.05524.05304.05097.04902.04718
36.07246.06932.06638.06361.06101.05856.05626.05409.05205.05012
37.07659.07332.07025.06737.06466.06210.05969.05742.05528.05325
38.08098.07758.07439.07138.06855.06588.06336.06099.05874.05662
39.08563.08210.07878.07565.07270.06992.06729.06480.06245.06023
May 17, 1999161999–20 I.R.B.

TABLE S
BASED ON LIFE TABLE 90CM
SINGLE LIFE REMAINDER FACTORS
APPLICABLE AFTER APRIL 30, 1999
INTEREST RATE
AGE8.2%8.4%8.6%8.8%9.0% 9.2%9.4%9.6%9.8%10.0%
40.09059.08692.08347.08021.07714.07423.07149.06889.06643.06411
41.09586.09206.08848.08509.08189.07886.07600.07329.07072.06828
42.10147.09753.09381.09029.08696.08381.08083.07800.07531.07277
43.10742.10334.09948.09583.09237.08909.08598.08304.08024.07758
44.11373.10950.10551.10172.09813.09472.09148.08841.08549.08272
45.12035.11599.11185.10792.10420.10066.09730.09410.09106.08817
46.12732.12281.11853.11447.11061.10694.10345.10013.09696.09395
47.13460.12995.12553.12133.11733.11353.10991.10646.10317.10004
48.14223.13743.13287.12853.12439.12046.11671.11313.10972.10646
49.15020.14526.14056.13608.13181.12774.12385.12015.11661.11322
50.15855.15347.14862.14401.13960.13540.13138.12754.12388.12037
51.16727.16205.15707.15232.14777.14344.13929.13532.13153.12789
52.17634.17098.16587.16097.15630.15183.14755.14345.13953.13577
53.18576.18027.17501.16999.16518.16057.15616.15194.14789.14400
54.19552.18990.18451.17935.17441.16968.16514.16078.15661.15260
55.20564.19989.19437.18908.18402.17915.17449.17001.16571.16157
56.21613.21025.20461.19919.19400.18901.18422.17962.17519.17093
57.22698.22098.21522.20968.20436.19925.19434.18961.18507.18069
58.23816.23204.22616.22051.21507.20984.20481.19996.19530.19080
59.24962.24339.23740.23163.22608.22073.21558.21062.20584.20123
60.26136.25502.24892.24304.23738.23192.22666.22158.21669.21196
61.27339.26695.26075.25477.24900.24343.23806.23288.22787.22304
62.28578.27925.27295.26687.26100.25533.24985.24456.23945.23451
63.29854.29192.28553.27935.27339.26762.26205.25666.25145.24641
64.31164.30494.29846.29221.28615.28030.27463.26915.26384.25870
65.32508.31831.31177.30543.29930.29336.28761.28203.27663.27140
66.33891.33208.32547.31906.31285.30684.30101.29536.28987.28456
67.35318.34630.33963.33316.32689.32081.31491.30918.30363.29823
68.36785.36093.35422.34770.34138.33524.32928.32349.31787.31240
69.38290.37595.36920.36265.35628.35009.34408.33824.33256.32703
70.39823.39127.38450.37791.37151.36529.35924.35335.34762.34204
71.41378.40681.40003.39343.38701.38076.37467.36875.36298.35736
72.42950.42253.41575.40914.40271.39644.39034.38438.37858.37293
73.44535.43840.43162.42502.41858.41231.40619.40022.39440.38872
74.46139.45446.44771.44112.43469.42842.42230.41632.41049.40479
75.47769.47080.46408.45752.45111.44485.43874.43277.42693.42123
76.49430.48747.48079.47427.46790.46167.45558.44963.44380.43811
77.51123.50447.49786.49139.48506.47888.47282.46690.46111.45543
78.52845.52177.51523.50884.50257.49645.49044.48457.47881.47317
79.54584.53926.53282.52650.52032.51426.50833.50251.49681.49122
1999–20 I.R.B.17May 17, 1999

TABLE S
BASED ON LIFE TABLE 90CM
SINGLE LIFE REMAINDER FACTORS
APPLICABLE AFTER APRIL 30, 1999
INTEREST RATE
AGE8.2%8.4%8.6%8.8%9.0% 9.2%9.4%9.6%9.8%10.0%
80.56325.55678.55044.54423.53813.53216.52630.52056.51492.50939
81.58054.57419.56797.56186.55587.54999.54422.53856.53300.52754
82.59762.59140.58530.57931.57343.56766.56198.55641.55094.54557
83.61448.60840.60243.59657.59081.58515.57958.57411.56874.56346
84.63124.62531.61949.61376.60813.60259.59715.59179.58652.58134
85.64800.64224.63657.63099.62550.62010.61478.60955.60441.59934
86.66461.65902.65351.64810.64276.63751.63233.62724.62222.61728
87.68083.67541.67008.66483.65965.65455.64953.64458.63970.63489
88.69663.69140.68624.68116.67615.67121.66634.66154.65680.65213
89.71201.70696.70199.69708.69224.68747.68276.67811.67353.66900
90.72694.72209.71730.71257.70791.70330.69876.69427.68984.68547
91.74117.73650.73190.72735.72286.71842.71404.70972.70545.70123
92.75439.74991.74548.74110.73678.73251.72829.72412.72000.71593
93.76664.76233.75806.75385.74969.74557.74150.73748.73350.72957
94.77809.77394.76983.76578.76177.75780.75388.75000.74616.74237
95.78899.78500.78106.77715.77329.76947.76569.76195.75826.75460
96.79928.79544.79165.78790.78418.78050.77686.77326.76970.76617
97.80883.80514.80149.79787.79430.79075.78725.78377.78033.77693
98.81781.81427.81075.80727.80382.80041.79703.79368.79036.78708
99.82661.82320.81982.81648.81316.80988.80662.80340.80020.79704
100.83519.83192.82868.82547.82228.81913.81600.81290.80982.80678
101.84368.84055.83744.83437.83131.82829.82529.82231.81936.81643
102.85203.84904.84607.84313.84021.83731.83444.83159.82876.82596
103.86034.85748.85465.85184.84906.84629.84355.84082.83812.83544
104.86923.86653.86385.86119.85855.85593.85333.85074.84818.84563
105.87792.87537.87283.87032.86782.86534.86287.86042.85799.85557
106.88918.88683.88450.88218.87987.87758.87530.87304.87079.86855
107.90291.90082.89873.89666.89460.89255.89051.88849.88647.88447
108.92455.92288.92123.91958.91794.91630.91468.91306.91145.90984
109.96211.96125.96041.95956.95872.95788.95704.95620.95537.95455
May 17, 1999181999–20 I.R.B.

TABLE S
BASED ON LIFE TABLE 90CM
SINGLE LIFE REMAINDER FACTORS
APPLICABLE AFTER APRIL 30, 1999
INTEREST RATE
AGE10.2%10.4%10.6%10.8%11.0% 11.2%11.4%11.6%11.8%12.0%
0.01488.01463.01439.01417.01396.01377.01359.01343.01327.01312
1.00662.00636.00612.00589.00568.00548.00530.00513.00497.00482
2.00654.00626.00600.00576.00554.00533.00514.00496.00479.00463
3.00670.00641.00613.00588.00564.00542.00522.00502.00484.00468
4.00699.00668.00639.00612.00587.00563.00542.00521.00502.00484
5.00739.00706.00675.00646.00620.00595.00571.00550.00529.00510
6.00786.00751.00718.00687.00659.00633.00608.00585.00563.00543
7.00841.00803.00769.00736.00706.00678.00652.00627.00604.00582
8.00902.00863.00826.00791.00759.00730.00702.00675.00651.00628
9.00973.00931.00892.00856.00822.00790.00760.00733.00706.00682
10.01055.01010.00969.00930.00894.00861.00829.00799.00772.00746
11.01146.01099.01055.01014.00976.00940.00907.00875.00846.00818
12.01246.01196.01150.01106.01066.01028.00993.00960.00928.00899
13.01351.01298.01249.01204.01161.01121.01084.01049.01016.00985
14.01455.01400.01348.01300.01255.01213.01173.01136.01102.01069
15.01555.01497.01443.01392.01345.01300.01259.01220.01183.01148
16.01648.01587.01530.01477.01427.01380.01336.01295.01257.01220
17.01737.01673.01612.01556.01504.01455.01408.01365.01324.01286
18.01822.01754.01691.01632.01576.01525.01476.01430.01387.01347
19.01908.01837.01770.01708.01650.01595.01544.01495.01450.01407
20.01999.01924.01854.01788.01726.01669.01615.01564.01516.01471
21.02096.02017.01943.01874.01809.01748.01691.01637.01586.01539
22.02197.02114.02036.01963.01895.01830.01770.01713.01660.01610
23.02306.02218.02136.02059.01987.01919.01855.01795.01739.01686
24.02424.02331.02245.02163.02087.02016.01948.01885.01825.01769
25.02552.02455.02364.02278.02197.02122.02051.01984.01920.01861
26.02692.02589.02493.02403.02318.02238.02162.02091.02025.01961
27.02846.02738.02636.02541.02451.02367.02287.02212.02141.02074
28.03012.02898.02791.02690.02595.02506.02422.02342.02267.02196
29.03190.03070.02957.02851.02751.02656.02567.02483.02404.02329
30.03381.03254.03135.03023.02917.02817.02723.02634.02551.02471
31.03583.03450.03324.03206.03094.02989.02890.02796.02707.02623
32.03799.03659.03527.03402.03284.03173.03068.02968.02874.02785
33.04031.03883.03744.03612.03488.03371.03260.03155.03055.02961
34.04279.04123.03976.03838.03707.03583.03465.03354.03249.03149
35.04545.04382.04227.04081.03943.03812.03688.03571.03459.03354
36.04830.04658.04495.04341.04196.04058.03927.03803.03685.03573
37.05134.04953.04782.04620.04467.04321.04183.04052.03928.03809
38.05462.05272.05092.04921.04760.04606.04461.04322.04191.04066
39.05812.05613.05424.05245.05075.04913.04760.04614.04475.04343
1999–20 I.R.B.19May 17, 1999

TABLE S
BASED ON LIFE TABLE 90CM
SINGLE LIFE REMAINDER FACTORS
APPLICABLE AFTER APRIL 30, 1999
INTEREST RATE
AGE10.2%10.4%10.6%10.8%11.0% 11.2%11.4%11.6%11.8%12.0%
40.06190.05981.05782.05594.05415.05245.05083.04929.04783.04643
41.06597.06378.06170.05972.05784.05605.05435.05272.05118.04970
42.07035.06806.06587.06380.06182.05994.05815.05644.05481.05326
43.07505.07265.07036.06818.06611.06414.06225.06045.05874.05710
44.08008.07757.07518.07290.07072.06865.06667.06478.06298.06125
45.08542.08279.08029.07791.07563.07346.07138.06940.06750.06569
46.09108.08834 .08573.08324.08085.07858.07640.07432.07233.07043
47.09705.09419.09147.08886.08637.08399.08172.07954.07745.07545
48.10335.10038.09754.09482.09222.08973.08735.08507.08288.08078
49.10999.10690.10394.10111.09840.09581.09332.09093.08864.08644
50.11701.11380.11073.10778.10496.10225.09965.09716.09477.09247
51.12441.12108.11789.11482.11189.10907.10636.10376.10126.09886
52.13217.12871.12540.12222.11916.11623.11341.11071.10810.10560
53.14028.13670.13327.12997.12680.12375.12082.11801.11529.11268
54.14875.14505.14150.13808.13480.13163.12859.12566.12284.12012
55.15760.15378.15011.14657.14317.13989.13674.13370.13077.12794
56.16684.16290.15911.15546.15194.14855.14528.14213.13909.13615
57.17648.17242.16851.16474.16111.15760.15422.15096.14781.14477
58.18647.18229.17827.17438.17064.16702.16353.16015.15689.15374
59.19678.19249.18835.18435.18049.17676.17316.16968.16631.16305
60.20740.20300.19875.19464.19066.18682.18311.17952.17604.17268
61.21837.21385.20949.20527.20119.19724.19341.18971.18613.18266
62.22973.22511.22064.21631.21212.20807.20414.20033.19664.19306
63.24152.23680.23222.22779.22350.21934.21530.21139.20760.20392
64.25372.24890.24422.23969.23529.23103.22690.22289.21899.21521
65.26633.26141.25664.25201.24752.24316.23893.23482.23083.22695
66.27940.27439.26953.26481.26023.25577.25145.24724.24316.23918
67.29299.28790.28296.27815.27348.26894.26453.26024.25606.25200
68.30709.30193.29691.29202.28728.28265.27816.27378.26952.26537
69.32166.31643.31134.30639.30157.29687.29230.28785.28351.27928
70.33661.33133.32618.32116.31628.31152.30688.30235.29794.29364
71.35188.34654.34134.33627.33133.32651.32181.31722.31275.30838
72.36742.36204.35679.35168.34668.34181.33706.33241.32788.32345
73.38317.37776.37248.36733.36229.35738.35257.34788.34330.33882
74.39923.39380.38849.38330.37823.37328.36844.36370.35908.35455
75.41566.41021.40489.39968.39459.38961.38474.37997.37531.37074
76.43254.42709.42176.41655.41144.40645.40156.39677.39208.38749
77.44988.44444.43912.43391.42880.42380.41891.41411.40940.40479
78.46765.46224.45694.45174.44665.44166.43677.43197.42726.42265
79.48574.48037.47510.46993.46487.45990.45502.45024.44554.44094
May 17, 1999201999–20 I.R.B.

TABLE S
BASED ON LIFE TABLE 90CM
SINGLE LIFE REMAINDER FACTORS
APPLICABLE AFTER APRIL 30, 1999
INTEREST RATE
AGE10.2%10.4%10.6%10.8%11.0% 11.2%11.4%11.6%11.8%12.0%
80.50397.49865.49343.48830.48327.47834.47349.46873.46406.45947
81.52219.51693.51176.50669.50171.49682.49201.48729.48265.47809
82.54029.53510.53000.52499.52007.51523.51047.50580.50120.49667
83.55826.55315.54813.54319.53834.53356.52886.52424.51969.51522
84.57624.57123.56629.56144.55666.55195.54732.54277.53828.53386
85.59435.58944.58460.57984.57516.57054.56599.56151.55710.55275
86.61241.60762.60289.59824.59365.58913.58468.58029.57596.57170
87.63015.62548.62087.61633.61185.60744.60309.59880.59456.59039
88.64753.64299.63851.63409.62973.62543.62118.61700.61287.60879
89.66454.66013.65579.65150.64726.64308.63895.63488.63086.62689
90.68115.67689.67268.66853.66442.66037.65637.65241.64851.64465
91.69706.69294.68887.68486.68089.67696.67309.66925.66547.66173
92.71190.70792.70399.70011.69627.69247.68872.68501.68134.67771
93.72569.72184.71804.71429.71057.70689.70326.69967.69611.69259
94.73861.73490.73123.72759.72400.72044.71692.71344.71000.70659
95.75097.74739.74384.74033.73686.73342.73002.72665.72331.72001
96.76267.75922.75579.75240.74905.74572.74243.73917.73595.73275
97.77356.77022.76691.76363.76039.75718.75399.75084.74772.74463
98.78382.78059.77740.77423.77110.76799.76491.76186.75884.75584
99.79390.79079.78771.78465.78162.77862.77565.77270.76978.76688
100.80376.80076.79779.79485.79193.78904.78617.78333.78051.77771
101.81353.81066.80780.80497.80217.79938.79662.79388.79117.78847
102.82318.82042.81768.81496.81227.80960.80694.80431.80170.79911
103.83278.83014.82752.82491.82233.81977.81723.81470.81220.80971
104.84310.84059.83810.83563.83317.83073.82831.82591.82352.82115
105.85318.85079.84843.84607.84374.84142.83911.83682.83455.83229
106.86633.86413.86193.85975.85758.85543.85329.85116.84904.84694
107.88247.88049.87852.87656.87460.87266.87073.86881.86690.86500
108.90825.90666.90507.90350.90193.90037.89881.89727.89572.89419
109.95372.95290.95208.95126.95045.94964.94883.94803.94723.94643
1999–20 I.R.B.21May 17, 1999

TABLE S
BASED ON LIFE TABLE 90CM
SINGLE LIFE REMAINDER FACTORS
APPLICABLE AFTER APRIL 30, 1999
INTEREST RATE
AGE12.2%12.4%12.6%12.8%13.0% 13.2%13.4%13.6%13.8%14.0%
0.01298.01285.01273.01261.01250.01240.01230.01221.01212.01203
1.00468.00455.00443.00431.00420.00410.00400.00391.00382.00374
2.00448.00435.00421.00409.00398.00387.00376.00366.00357.00348
3.00452.00437.00423.00410.00398.00386.00375.00365.00355.00345
4.00468.00452.00437.00423.00410.00397.00386.00375.00364.00354
5.00493.00476.00460.00445.00431.00418.00405.00393.00382.00371
6.00524.00506.00489.00473.00458.00444.00430.00418.00406.00394
7.00562.00543.00525.00508.00492.00477.00462.00449.00436.00423
8.00606.00586.00566.00548.00531.00515.00499.00485.00471.00458
9.00659.00637.00616.00597.00579.00561.00545.00529.00514.00500
10.00721.00698.00676.00655.00636.00617.00600.00583.00567.00552
11.00792.00767.00744.00722.00701.00682.00663.00645.00628.00612
12.00871.00845.00821.00797.00775.00754.00735.00716.00698.00681
13.00955.00928.00902.00877.00854.00831.00810.00790.00771.00753
14.01038.01009.00981.00955.00930.00907.00885.00864.00843.00824
15.01116.01085.01056.01028.01002.00977.00954.00932.00910.00890
16.01186.01153.01123.01094.01066.01040.01015.00992.00969.00948
17.01250.01215.01183.01152.01124.01096.01070.01045.01022.00999
18.01308.01272.01238.01206.01175.01147.01119.01093.01068.01044
19.01367.01329.01293.01259.01227.01196.01167.01140.01113.01088
20.01428.01388.01350.01314.01280.01248.01217.01188.01161.01134
21.01494.01451.01411.01373.01337.01303.01271.01240.01211.01183
22.01562.01517.01475.01435.01397.01361.01326.01294.01263.01233
23.01635.01588.01543.01501.01460.01422.01386.01351.01319.01287
24.01716.01665.01618.01573.01530.01489.01451.01415.01380.01347
25.01804.01751.01701.01653.01608.01565.01524.01485.01448.01413
26.01902.01845.01792.01741.01693.01648.01604.01563.01524.01487
27.02011.01951.01895.01841.01790.01742.01696.01652.01610.01571
28.02129.02066.02006.01949.01895.01844.01795.01748.01704.01662
29.02258.02191.02127.02067.02009.01955.01903.01853.01806.01762
30.02396.02325.02257.02193.02132.02074.02019.01966.01916.01869
31.02543.02467.02396.02328.02263.02201.02143.02087.02034.01983
32.02701.02621.02545.02472.02404.02338.02276.02217.02160.02106
33.02871.02786.02706.02629.02556.02487.02420.02357.02297.02240
34.03054.02964.02879.02797.02720.02646.02576.02509.02445.02383
35.03253.03158.03067.02981.02898.02820.02745.02674.02606.02541
36.03467.03366.03269.03178.03090.03007.02928.02852.02779.02710
37.03697.03590.03488.03391.03298.03209.03125.03044.02967.02893
38.03947.03833.03725.03622.03524.03430.03340.03254.03172.03094
39.04217.04096.03982.03873.03768.03669.03573.03482.03395.03312
May 17, 1999221999–20 I.R.B.

TABLE S
BASED ON LIFE TABLE 90CM
SINGLE LIFE REMAINDER FACTORS
APPLICABLE AFTER APRIL 30, 1999
INTEREST RATE
AGE12.2%12.4%12.6%12.8%13.0% 13.2%13.4%13.6%13.8%14.0%
40.04510.04383.04262.04146.04035.03930.03828.03732.03639.03550
41.04830.04695.04567.04445.04327.04215.04108.04005.03907.03812
42.05177.05035.04900.04770.04646.04527.04413.04304.04200.04100
43.05553.05404.05261.05123.04992.04866.04746.04630.04520.04413
44.05960.05802.05651.05506.05368.05235.05107.04985.04867.04754
45.06395.06229.06069.05917.05770.05630.05495.05365.05241.05121
46.06860.06685.06517.06356.06202.06053.05911.05774.05643.05516
47.07353.07169.06992.06823.06660.06504.06353.06209.06070.05936
48.07877.07684.07498.07320.07149.06984.06826.06673.06527.06385
49.08433.08231.08036.07849.07669.07495.07329.07168.07013.06864
50.09026.08814.08609.08413.08224.08042.07867.07698.07535.07378
51.09655.09433.09219.09013.08815.08624.08440.08262.08091.07926
52.10318.10086.09863.09647.09439.09239.09046.08860.08680.08506
53.11017.10774.10541.10315.10098.09888.09686.09491.09302.09120
54.11750.11498.11254.11019.10792.10572.10361.10156.09958.09767
55.12522.12258.12005.11759.11522.11294.11072.10859.10652.10451
56.13332.13059.12794.12539.12292.12054.11823.11599.11383.11174
57.14183.13899.13624.13359.13102.12853.12613.12380.12154.11936
58.15070.14775.14490.14215.13948.13689.13439.13197.12962.12734
59.15990.15685.15389.15103.14826.14558.14298.14046.13801.13564
60.16942.16626.16321.16024.15737.15459.15189.14927.14673.14426
61.17929.17603.17287.16981.16684.16395.16115.15844.15580.15324
62.18960.18623.18297.17980.17673.17375.17085.16803.16530.16264
63.20035.19688.19352.19025.18708.18400.18100.17809.17525.17250
64.21154.20797.20451.20114.19787.19469.19159.18859.18566.18281
65.22318.21951.21595.21249.20912.20584.20265.19955.19652.19358
66.23532.23156.22790.22434.22088.21751.21422.21102.20791.20487
67.24804.24419.24044.23679.23324.22977.22640.22311.21990.21678
68.26133.25740.25356.24983.24618.24263.23917.23579.23250.22929
69.27516.27114.26723.26341.25969.25605.25251.24905.24567.24237
70.28945.28536.28137.27747.27367.26996.26633.26279.25934.25596
71.30412.29996.29590.29193.28806.28427.28057.27696.27343.26998
72.31913.31491.31078.30675.30281.29895.29519.29150.28790.28438
73.33444.33016.32597.32188.31788.31396.31013.30638.30271.29913
74.35012.34579.34155.33741.33335.32938.32549.32168.31795.31430
75.36628.36190.35762.35343.34932.34530.34136.33750.33372.33001
76.38299.37858.37427.37004.36589.36183.35784.35394.35011.34636
77.40028.39585.39151.38725.38307.37898.37496.37103.36716.36337
78.41812.41368.40933.40506.40086.39675.39271.38874.38485.38103
79.43641.43198.42762.42334.41914.41502.41096.40698.40308.39924
1999–20 I.R.B.23May 17, 1999

TABLE S
BASED ON LIFE TABLE 90CM
SINGLE LIFE REMAINDER FACTORS
APPLICABLE AFTER APRIL 30, 1999
INTEREST RATE
AGE12.2%12.4%12.6%12.8%13.0% 13.2%13.4%13.6%13.8%14.0%
80.45496.45054.44619.44192.43772.43360.42954.42556.42164.41779
81.47360.46920.46487.46061.45643.45231.44827.44429.44038.43653
82.49223.48785.48355.47932.47516.47106.46703.46307.45916.45532
83.51081.50648.50221.49802.49388.48982.48581.48187.47799.47416
84.52951.52523.52101.51686.51277.50874.50477.50086.49701.49321
85.54847.54425.54009.53600.53196.52798.52406.52019.51638.51262
86.56749.56335.55926.55523.55126.54734.54348.53966.53591.53220
87.58627.58221.57820.57425.57035.56650.56270.55895.55526.55161
88.60477.60079.59688.59301.58919.58542.58170.57802.57439.57081
89.62297.61909.61527.61149.60776.60408.60044.59685.59330.58979
90.64084.63707.63335.62968.62604.62246.61891.61540.61194.60851
91.65803.65437.65076.64719.64366.64017.63672.63330.62993.62659
92.67412.67058.66707.66360.66017.65678.65342.65010.64682.64357
93.68911.68567.68227.67890.67557.67227.66901.66578.66258.65942
94.70321.69988.69657.69330.69006.68686.68369.68055.67744.67437
95.71674.71351.71031.70713.70399.70088.69781.69476.69174.68875
96.72959.72646.72335.72028.71724.71422.71123.70828.70534.70244
97.74156.73853.73552.73254.72959.72666.72376.72089.71804.71522
98.75287.74993.74702.74413.74126.73842.73561.73282.73006.72732
99.76401.76117.75834.75555.75277.75002.74730.74459.74191.73926
100.77494.77219.76946.76676.76408.76142.75878.75616.75357.75099
101.78580.78315.78052.77791.77532.77275.77021.76768.76517.76268
102.79654.79399.79146.78894.78645.78397.78152.77908.77666.77426
103.80724.80479.80236.79994.79755.79517.79280.79046.78813.78582
104.81879.81646.81413.81183.80954.80726.80501.80276.80054.79832
105.83005.82782.82560.82340.82121.81904.81688.81474.81260.81049
106.84485.84277.84071.83866.83662.83459.83257.83057.82857.82659
107.86311.86124.85937.85751.85566.85382.85199.85017.84835.84655
108.89266.89114.88963.88812.88662.88513.88364.88216.88068.87922
109.94563.94484.94405.94326.94248.94170.94092.94014.93937.93860
May 17, 1999241999–20 I.R.B.
(f) Effective dates.This section applies
after April 30, 1999.
Par. 6. Immediately following
§1.643(d)–2, the undesignated center-
heading is revised to read as follows:
Pooled Income Fund Actuarial Tables
Applicable Before May 1, 1999
Par. 7. Section 1.642(c)–6A is amended
by:
1. Revising the section heading.
2. Amending newly designated para-
graph (e) as follows:
a. Paragraph (e) heading is revised.
b. Paragraph (e)(1), first sentence is
revised.
c. Paragraph (e)(2)(ii) is revised.
d. Paragraph (e)(3) is revised.
e. Paragraph (e)(4) is revised.
f. Paragraph (e)(5) introductory text is
revised.
g. Paragraph (e)(5), the heading for
Table S is revised.
The revisions read as follows:
§1.642(c)–6A Valuation of charitable
remainder interests for which the
valuation date is before May 1, 1999.
* * * * *
(e) Present value of the remainder in-
terest in the case of transfers to pooled in-
come funds for which the valuation date is
after April 30, 1989, and before May 1,
1999—(1) In general.In the case of
transfers to pooled income funds for
which the valuation date is after April 30,
1989, and before May 1, 1999, the present
value of a remainder interest is deter-
mined under this section. * * *
(2) * * *
(ii) Discount at a rate of interest, com-
pounded annually, equal to the highest

yearly rate of return of the pooled income
fund for the 3 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)–6T(e)(3)(ii) apply for the de-
termining the yearly rate of return.
(3) Pooled income funds in existence
less than 3 taxable years.The provisions
of §1.642(c)–6T(e)(4) apply for determin-
ing the highest yearly rate of return when
the pooled income fund has been in exis-
tence less than three taxable years.
(4) Computation of value of remainder
interest.The factor that is used in deter-
mining the present value of a remainder
interest that is dependent on the termina-
tion of the life of one individual is the fac-
tor from Table S in paragraph (e)(5) 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 remain-
der interest is based. Table S in paragraph
(e)(5) of this section includes factors for
yearly rates of return from 4.2 to 14 per-
cent. Many actuarial factors not con-
tained in Table S in paragraph (e)(5) of
this section are contained in Table S in In-
ternal Revenue Service Publication 1457,
“Actuarial Values, Alpha Volume,”
(8–89). Publication 1457 is no longer
available for purchase from the Superin-
tendent of Documents, United States
Government Printing Office, Washington,
DC 20402. However, pertinent factors in
this publication may be obtained by a
written request to: CC:DOM:CORP:R
(IRS Publication 1457), room 5226,Inter-
nal Revenue Service, POB 7604, Ben
Franklin Station, Washington, DC 20044.
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, a linear in-
terpolation must be made. The present
value of the remainder interest is deter-
mined 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 pre-
sent value of a remainder interest requir-
ing a linear interpolation adjustment, see
§1.642(c)–6T(e)(5).
(5) Actuarial tables. In the case of
transfers for which the valuation date is
after April 30, 1989, and before May 1,
1999, the present value of a remainder in-
terest dependent on the termination of one
life in the case of a transfer to a pooled in-
come fund is determined by use of the fol-
lowing tables:
TABLE S.—BASED ON LIFE TABLE
80CNSMT SINGLE LIFE REMAINDER
FACTORS
[Applicable After April 30, 1989, and Be-
fore May 1, 1999]
* * * * *
Par. 8. Section 1.664–4 is amended as
follows:
1. Paragraph (a)(1) is revised.
2. Paragraph (d) is removed.
3. Paragraphs (e) heading, (e)(1)
through (e)(5), and (e)(6) heading, intro-
ductory text , and Table U(1) are redesig-
nated as §1.664–4A(e) heading, (e)(1)
through (e)(5) and (e)(6) heading, intro-
ductory text, and Table U(1), respectively.
4. New paragraphs (d) through (e)(5)
are added.
5. New paragraph heading and intro-
ductory text are added to remaining para-
graph (e)(6) preceding Table D.
6. Paragraph (f) is revised.
The additions and revision read as fol-
lows:
§1.664–4 Calculation of the fair market
value of the remainder interest in a
charitable remainder unitrust.
(a) * * *
(1) [Reserved]. For further guidance,
see §1.664–4T(a)(1).
* * * * *
(d) through (e)(5) [Reserved]. For fur-
ther guidance, see §1.664–4T(d) through
(e)(5).
(6) Actuarial Table D and F (4.2
through 14.0) for transfers for which the
valuation date is after April 30, 1989. For
transfers for which the valuation date is
after April 30, 1989, the present value of a
charitable remainder unitrust interest that
is dependent upon a term of years is deter-
mined by using the section 7520 rate and
the tables in this paragraph (e)(6). For
transfers for which the valuation date is
after April 30, 1999, where the present
value of a charitable remainder unitrust
interest is dependent on the termination
of a life interest , see §1.664–4T(e)(7).
See, however, §1.7520–3(b) (relating to
exceptions to the use of prescribed tables
under certain circumstances). Many ac-
tuarial factors not contained in the follow-
ing tables are contained in Internal Rev-
enue Service Publication 1458, “Actuarial
Values, Book Beth,” (1999). A copy of
this publication is available for purchase
from the Superintendent of Documents,
United States Government Printing Of-
fice, Washington, DC 20402.
* * * * *
(f) Effective dates.This section applies
after April 30, 1989, and before May 1,
1999.
Par. 9 Section 1.664–4T is added to
read as follows:
§1.664–4T Calculation of the fair market
value of the remainder interest in a
charitable remainder unitrust
(temporary).
(a) [Reserved] For further guidance,
see §1.664–4(a).
(1) Life contingencies determined as to
each life involved, from the values of lx
set forth in Table 90CM contained in
§20.2031–7T(d)(7) of this chapter (Estate
Tax Regulations) in the case of transfers
for which the valuation date is after April
30, 1999; or from Table 80CNSMT con-
tained §20.2031–7A(e)(4) of this chapter
in the case of transfer for which the valua-
tion date is after April 30, 1989, and be-
fore May 1, 1999. See §20.2031–7A(a)
through (d) of this chapter, whichever is
applicable, for transfers for which the val-
uation date is before May 1, 1989;
(a)(2) through (c) [Reserved] For fur-
ther guidance, see §1,664–4(a)(2) through
(c).
(d) Valuation.The fair market value of
a remainder interest in a charitable re-
mainder unitrust (as described in §1.664–
3) for transfers for which the valuation
date is after April 30, 1999, is its present
value determined under paragraph (e) of
this section. The fair market value of a
remainder interest in a charitable remain-
der unitrust (as described in §1.664–3) for
transfers for which the valuation date is
before May 1, 1999, is its present value
determined under the following sections:
1999–20 I.R.B.25May 17, 1999

Valuation DatesApplicable
AfterBeforeRegulations
—01-01-521.664-4A(a)
12-31-5101-01-711.664–4A(b)
12-31-7012-01-831.664–4A(c)
11-30-8305-01-891.664–4A(d)
04-30-8905-01-991.664–4A(e)
(e) Valuation of charitable remainder
unitrusts having certain payout sequences
for transfers for which the valuation date
is after April 30, 1999—(1) In general.
Except as otherwise provided in para-
graph (e)(2) of this section, in the case of
transfers for which the valuation date is
after April 30, 1999, the present value of a
remainder interest is determined under
paragraphs (e)(3) through (e)(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 cir-
cumstances).
(2) Transitional rules for valuation of
charitable remainder unitrusts. (i) For
purposes of sections 2055, 2106, or 2624,
if on May 1, 1999, the decedent was men-
tally incompetent so that the disposition
of the property could not be changed, and
the decedent died after April 30, 1999,
without having regained competency to
dispose of the decedent’s property, or the
decedent died within 90 days of the date
that the decedent first regained compe-
tency after April 30, 1999, 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, 1999, or
after April 30, 1999, at the option of the
decedent’s executor.
(ii) For purposes of sections 170, 2055,
2106, 2522, or 2624, in the case of trans-
fers to a charitable remainder unitrust for
which the valuation date is after April 30,
1999, and before July 1, 1999, the present
value of a remainder interest based on one
or more measuring lives is determined
under this section by use of 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 appro-
priate actuarial tables under either para-
graph (e)(7) of this section or §1.664–
4A(e)(6), at the option of the donor or the
decedent’s executor, as the case may be.
(iii) For purposes of paragraphs
(e)(2)(i) and (ii) of this section, where the
donor or decedent’s executor is given the
option to use the appropriate actuarial ta-
bles under either paragraph (e)(7) of this
section or §1.664–4A(e)(6), the donor or
decedent’s executor must use the same ac-
tuarial table with respect to each individ-
ual transaction and with respect to all
transfers occurring on the valuation date
(e.g., gift and income tax charitable de-
ductions with respect to the same transfer
must be determined based on the same ta-
bles, and all assets includible in the gross
estate and/or estate tax deductions
claimed must be valued based on the
same tables).
(3) Adjusted payout rate.For transfers
for which the valuation date is after April
30, 1989, the adjusted payout rate is de-
termined by using the appropriate Table F
in §1.664–4(e)(6), for the section 7520 in-
terest rate applicable to the transfer. If the
interest rate is between 4.2 and 14 per-
cent, see §1.664–4(e)(6). If the interest
rate is below 4.2 percent or greater than
14 percent, see §1.664–4(b). The ad-
justed payout rate is determined by multi-
plying the fixed percentage described in
§1.664–3(a)(1)(i)(a) by the factor describ-
ing the payout sequence of the trust and
the number of months by which the valua-
tion date for the first full taxable year of
the trust precedes the first payout date for
such taxable year. If the governing instru-
ment does not prescribe when the distrib-
ution or distributions shall be made dur-
ing the taxable year of the trust, see
§1.664–4(a). In the case of a trust having
a payout sequence for which no figures
have been provided by the appropriate
table, and in the case of a trust that deter-
mines the fair market value of the trust as-
sets by taking the average of valuations
on more than one date during the taxable
year, see §1.664–4(b).
(4) Period is a term of years.If the pe-
riod described in §1.664–3(a)(5) is a term
of years, the factor that is used in deter-
mining the present value of the remainder
interest for transfers for which the valua-
tion date is after November 30, 1983, is
the factor under the appropriate adjusted
payout rate in Table D of §1.664–4(e)(6)
corresponding to the number of years in
the term. If the adjusted payout rate is an
amount that is between adjusted payout
rates for which factors are provided in
Table D, a linear interpolation must be
made. The present value of the remainder
interest is determined by multiplying the
net fair market value (as of the appropri-
ate valuation date) of the property placed
in trust by the factor determined under
this paragraph. For purposes of this sec-
tion, 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. However, if an election is
made under section 7520 and §1.7520–
2(b) to compute the present value of the
charitable interest by use of the interest
rate component for either of the 2 months
preceding the month in which the date of
transfer falls, the month so elected is the
valuation date for purposes of determin-
ing the interest rate and mortality tables.
In the case of a testamentary transfer
under section 2055, 2106, or 2624, the
valuation date is the date of death, unless
the alternate valuation date is elected
under section 2032, in which event, and
within the limitations set forth in section
2032 and the regulations thereunder, the
valuation date is the alternate valuation
date. If the decedent’s estate elects the al-
ternate 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 pre-
ceding the alternate valuation date, the
month so elected is the valuation date for
purposes of determining the interest rate
and mortality tables. The application of
this paragraph (e)(4) may be illustrated by
the following example:
Example. D transfers $100,000 to a charitable re-
mainder unitrust on January 1. The trust instrument
requires that the trust pay 8 percent of the fair mar-
ket value of the trust assets as of January 1st for a
term of 12 years to D in quarterly payments (March
31, June 30, September 30, and December 31). The
section 7520 rate for January (the month that the
transfer occurred) is 9.6 percent. Under Table F(9.6)
in §1.664–4(e)(6), the appropriate adjustment factor
is .944628 for quarterly payments payable at the end
of each quarter. The adjusted payout rate is 7.557
(8% 3.944628). Based on the remainder factors in
Table D in §1.664–4(e)(6), the present value of the
remainder interest is $38,950.30, computed as fol-
lows:
Factor at 7.4 percent for 12 years ......... .397495
Factor at 7.6 percent for 12 years ......... .387314
Difference ............................................. .010181
May 17, 1999261999–20 I.R.B.

Interpolation adjustment:
7.557% – 7.4%= x
0.2%.010181
x=.007992
Factor at 7.4 percent for 12 years ......... .397495
Less: Interpolation adjustment ............... .007992
Interpolated factor .................................. .389503
Present value of remainder interest:
($100,000 3.389503) . . . . . . . . . . . $38,950.30
(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 after April 30,
1999, is the factor in Table U(1) in para-
graph (e)(7) of this section under the ap-
propriate adjusted payout. For purposes
of the computations described in this
paragraph, 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 pro-
vided in the appropriate table, a linear in-
terpolation must be made. The present
value of the remainder interest is deter-
mined by multiplying the net fair market
value (as of the valuation date as deter-
mined in paragraph (e)(4) of this section)
of the property placed in trust by the fac-
tor determined under this paragraph
(e)(5). If the adjusted payout rate is be-
tween 4.2 and 14 percent, see paragraph
(e)(7) of this section. If the adjusted pay-
out rate is below 4.2 percent or greater
than 14 percent, see §1.664–4(b). The ap-
plication of this paragraph (e)(5) may be
illustrated by the following example:
Example. A, who is 44 years and 11 months old,
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 De-
cember 31) 9 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 9.6 percent. Under
Table F(9.6) in §1.664–4(e)(6), the appropriate ad-
justment factor is .933805 for semiannual payments
payable at the end of the semiannual period. The ad-
justed payout rate is 8.404 (9% 3.933805). Based
on the remainder factors in Table U(1) in this sec-
tion, the present value of the remainder interest is
$10,109.00, computed as follows:
Factor at 8.4 percent at age 45 . . . . . . . . .10117
Factor at 8.6 percent at age 45 . . . . . . . . .09715
Difference. . . . . . . . . . . . . . . . . . . . . . . . .00402
Interpolation adjustment:
8.404% – 8.4%
= x
0.2%.00402
x=.00008
Factor at 8.4 percent at age 45 . . . . . . . . .10117
Less: Interpolation adjustment . . . . . . . . .00008
Interpolated Factor . . . . . . . . . . . . . . . . .10109
Present value of remainder interest:
($100,000 3.10109) . . . . . . . . $10,109.00
(6) [Reserved].
(7) Actuarial Table U(1) for transfers
for which the valuation date is after April
30, 1999.For transfers for which the val-
uation date is after April 30, 1999, the
present value of a charitable remainder
unitrust interest that is dependent on a
term of years or the termination of a life
interest is determined by using the section
7520 rate, Table U(1) in this paragraph
(e)(7), and Table D and Table F(4.2)
through (14.0) in §1.664–4(e)(6). See,
however, §1.7520–3(b) (relating to excep-
tions to the use of prescribed tables under
certain circumstances). Many actuarial
factors not contained in the following ta-
bles are contained in Internal Revenue
Service Publication 1458, “Actuarial Val-
ues, Book Beth,” (1999). A copy of this
publication is available for purchase from
the Superintendent of Documents, United
States Government Printing Office,
Washington, DC 20402.
1999–20 I.R.B.27May 17, 1999
TABLE U(1)
BASED ON LIFE TABLE 90CM
UNITRUST SINGLE LIFE REMAINDER FACTORS
APPLICABLE FOR TRANSFERS AFTER APRIL 30, 1999
ADJUSTED PAYOUT RATE
AGE4.2%4.4%4.6%4.8%5.0%5.2%5.4%5.6%5.8%6.0%
0.06177.05580.05061.04609.04215.03871.03570.03307.03075.02872
1.05543.04925.04388.03919.03509.03151.02838.02563.02321.02109
2.05716.05081.04528.04045.03622.03252.02927.02642.02391.02170
3.05920.05268.04699.04201.03765.03382.03046.02750.02490.02260
4.06143.05475.04889.04376.03926.03530.03182.02876.02605.02366
5.06384.05697.05095.04567.04103.03694.03334.03016.02735.02487
6.06637.05933.05315.04771.04292.03870.03497.03168.02876.02618
7.06905.06183.05547.04987.04494.04058.03673.03332.03029.02761
8.07186.06445.05792.05216.04708.04258.03859.03506.03192.02914
9.07482.06722.06052.05460.04936.04471.04060.03694.03369.03079
10.07793.07015.06327.05718.05179.04700.04274.03896.03559.03259
11.08120.07323.06617.05991.05435.04942.04502.04111.03762.03450
12.08461.07645.06920.06277.05706.05197.04744.04339.03978.03655
13.08812.07976.07234.06574.05985.05461.04993.04576.04202.03867
14.09168.08313.07552.06874.06269.05729.05247.04815.04428.04081

BASED ON LIFE TABLE 90CM
UNITRUST SINGLE LIFE REMAINDER FACTORS
APPLICABLE FOR TRANSFERS AFTER APRIL 30, 1999
ADJUSTED PAYOUT RATE
AGE4.2%4.4%4.6%4.8%5.0%5.2%5.4%5.6%5.8%6.0%
15.09527.08652.07872.07176.06554.05999.05501.05055.04655.04296
16.09886.08991.08192.07478.06839.06267.05754.05294.04880.04508
17.10249.09334.08515.07782.07126.06537.06008.05533.05105.04720
18.10616.09680.08842.08090.07415.06809.06264.05774.05332.04933
19.10994.10037.09178.08407.07714.07091.06529.06023.05566.05153
20.11384.10406.09527.08737.08025.07383.06805.06283.05811.05384
21.11790.10790.09891.09080.08349.07690.07094.06555.06068.05626
22.12208.11188.10267.09436.08686.08008.07395.06839.06336.05879
23.12643.11601.10659.09808.09038.08342.07710.07138.06618.06146
24.13095.12031.11069.10197.09408.08692.08042.07452.06915.06427
25.13567.12481.11497.10605.09795.09060.08392.07784.07230.06726
26.14058.12950.11945.11032.10202.09447.08760.08134.07563.07042
27.14571.13442.12415.11481.10631.09856.09149.08505.07916.07379
28.15104.13953.12904.11949.11078.10284.09558.08895.08288.07733
29.15656.14484.13414.12438.11546.10731.09986.09304.08679.08106
30.16229.15034.13943.12946.12034.11198.10433.09732.09089.08498
31.16821.15605.14493.13474.12541.11685.10900.10179.09517.08909
32.17433.16196.15063.14023.13069.12193.11387.10647.09966.09339
33.18068.16810.15655.14595.13620.12723.11897.11137.10437.09791
34.18724.17446.16270.15189.14193.13275.12430.11650.10930.10265
35.19405.18107.16910.15808.14791.13853.12987.12187.11448.10764
36.20109.18791.17574.16451.15414.14456.13569.12749.11990.11287
37.20838.19500.18263.17120.16062.15083.14177.13337.12558.11835
38.21593.20236.18979.17816.16739.15739.14813.13953.13154.12412
39.22374.20998.19723.18540.17443.16423.15477.14597.13779.13017
40.23183.21789.20496.19294.18177.17138.16172.15272.14434.13653
41.24021.22611.21299.20079.18943.17885.16899.15980.15123.14322
42.24889.23463.22134.20896.19741.18665.17660.16721.15845.15025
43.25786.24344.23000.21744.20572.19477.18453.17496.16601.15762
44.26712.25257.23896.22625.21435.20322.19281.18305.17391.16534
45.27665.26196.24821.23534.22328.21198.20139.19145.18213.17338
46.28644.27163.25774.24472.23251.22105.21028.20018.19068.18174
47.29647.28155.26754.25438.24201.23040.21947.20919.19952.19041
48.30676.29173.27760.26431.25181.24004.22896.21852.20868.19941
49.31729.30217.28794.27453.26190.24999.23876.22817.21817.20873
50.32808.31289.29856.28505.27229.26026.24889.23814.22799.21839
51.33912.32387.30946.29585.28299.27083.25933.24845.23815.22840
52.35038.33507.32060.30691.29395.28168.27005.25904.24861.23872
53.36185.34651.33198.31821.30517.29280.28106.26993.25937.24934
54.37352.35815.34358.32976.31664.30418.29234.28110.27042.26026
May 17, 1999281999–20 I.R.B.

BASED ON LIFE TABLE 90CM
UNITRUST SINGLE LIFE REMAINDER FACTORS
APPLICABLE FOR TRANSFERS AFTER APRIL 30, 1999
ADJUSTED PAYOUT RATE
AGE4.2%4.4%4.6%4.8%5.0%5.2%5.4%5.6%5.8%6.0%
55.38539.37002.35542.34155.32836.31583.30390.29256.28177.27149
56.39746.38209.36748.35358.34034.32774.31574.30431.29342.28303
57.40971.39437.37976.36584.35257.33992.32785.31634.30536.29488
58.42212.40682.39222.37829.36500.35231.34019.32862.31756.30699
59.43464.41939.40482.39090.37759.36488.35272.34109.32996.31932
60.44726.43207.41754.40364.39034.37761.36542.35375.34257.33186
61.45999.44488.43041.41655.40326.39053.37833.36662.35540.34463
62.47286.45785.44345.42964.41639.40367.39146.37974.36848.35767
63.48589.47098.45667.44293.42972.41703.40484.39311.38184.37100
64.49903.48426.47005.45638.44324.43060.41843.40671.39544.38458
65.51229.49766.48357.47001.45694.44435.43223.42054.40927.39841
66.52568.51121.49726.48381.47084.45833.44626.43461.42337.41252
67.53924.52495.51115.49784.48498.47256.46056.44898.43778.42696
68.55293.53883.52521.51205.49932.48701.47511.46360.45246.44169
69.56671.55283.53940.52640.51382.50165.48985.47844.46738.45666
70.58052.56687.55365.54084.52843.51639.50473.49342.48245.47181
71.59431.58091.56791.55529.54306.53118.51966.50847.49761.48707
72.60804.59490.58213.56973.55768.54598.53461.52357.51283.50239
73.62168.60881.59629.58411.57227.56076.54955.53866.52806.51774
74.63528.62268.61042.59848.58686.57555.56453.55380.54335.53316
75.64887.63657.62458.61290.60151.59041.57959.56904.55875.54872
76.66249.65049.63880.62739.61625.60538.59478.58443.57432.56446
77.67612.66446.65307.64194.63108.62046.61009.59995.59005.58037
78.68975.67843.66736.65654.64596.63561.62548.61558.60590.59643
79.70330.69233.68160.67109.66081.65074.64088.63123.62178.61253
80.71666.70605.69566.68548.67550.66573.65615.64676.63755.62853
81.72975.71950.70946.69961.68995.68047.67117.66205.65310.64433
82.74250.73263.72293.71342.70407.69490.68589.67705.66837.65984
83.75493.74542.73608.72690.71788.70902.70031.69175.68333.67506
84.76712.75798.74900.74016.73147.72292.71451.70624.69810.69010
85.77913.77037.76175.75326.74491.73668.72859.72061.71276.70503
86.79086.78248.77423.76610.75808.75019.74241.73474.72719.71974
87.80218.79418.78628.77850.77083.76326.75580.74844.74118.73402
88.81307.80544.79790.79047.78313.77589.76874.76169.75473.74786
89.82355.81628.80909.80200.79500.78808.78125.77450.76783.76125
90.83360.82668.81985.81309.80642.79982.79330.78685.78048.77418
91.84308.83650.83000.82357.81721.81092.80470.79855.79246.78645
92.85182.84556.83937.83325.82718.82119.81525.80937.80356.79780
93.85985.85390.84800.84215.83637.83064.82497.81936.81379.80829
94.86732.86164.85601.85044.84491.83944.83402.82865.82333.81806
1999–20 I.R.B.29May 17, 1999

BASED ON LIFE TABLE 90CM
UNITRUST SINGLE LIFE REMAINDER FACTORS
APPLICABLE FOR TRANSFERS AFTER APRIL 30, 1999
ADJUSTED PAYOUT RATE
AGE4.2%4.4%4.6%4.8%5.0%5.2%5.4%5.6%5.8%6.0%
95.87437.86895.86359.85827.85300.84778.84260.83746.83237.82733
96.88097.87582.87070.86563.86060.85561.85066.84575.84088.83605
97.88708.88216.87727.87243.86762.86285.85811.85341.84875.84413
98.89280.88810.88343.87880.87420.86964.86511.86061.85614.85171
99.89836.89388.88943.88501.88062.87626.87193.86763.86336.85911
100.90375.89948.89525.89103.88685.88269.87856.87445.87037.86632
101.90905.90500.90097.89696.89298.88902.88509.88118.87729.87342
102.91424.91040.90658.90278.89900.89524.89150.88778.88408.88040
103.91939.91575.91214.90854.90496.90139.89785.89432.89081.88732
104.92485.92144.91805.91467.91131.90796.90463.90131.89800.89471
105.93020.92701.92383.92067.91751.91437.91125.90813.90502.90193
106.93701.93411.93122.92834.92546.92260.91974.91689.91405.91122
107.94522.94268.94013.93760.93507.93254.93002.92750.92499.92249
108.95782.95583.95385.95187.94989.94791.94593.94396.94199.94002
109.97900.97800.97700.97600.97500.97400.97300.97200.97100.97000
May 17, 1999301999–20 I.R.B.

TABLE U(1)
BASED ON LIFE TABLE 90CM
UNITRUST SINGLE LIFE REMAINDER FACTORS
APPLICABLE FOR TRANSFERS AFTER APRIL 30, 1999
ADJUSTED PAYOUT RATE
AGE6.2%6.4%6.6%6.8%7.0%7.2%7.4%7.6%7.8%8.0%
0.02693.02534.02395.02271.02161.02063.01976.01898.01828.01765
1.01922.01756.01610.01480.01365.01263.01171.01090.01017.00951
2.01975.01802.01650.01514.01393.01286.01190.01104.01028.00959
3.02056.01876.01717.01575.01449.01336.01235.01145.01064.00992
4.02155.01967.01800.01652.01520.01401.01296.01201.01116.01039
5.02266.02071.01896.01741.01603.01479.01368.01269.01179.01098
6.02389.02184.02003.01841.01696.01566.01450.01345.01251.01166
7.02522.02309.02120.01950.01799.01663.01540.01431.01332.01242
8.02665.02444.02246.02069.01910.01768.01640.01524.01420.01326
9.02821.02590.02384.02199.02033.01884.01750.01629.01520.01421
10.02990.02750.02535.02342.02169.02013.01872.01745.01631.01526
11.03172.02922.02698.02497.02316.02153.02006.01872.01752.01643
12.03365.03106.02872.02663.02474.02303.02149.02010.01884.01769
13.03566.03297.03054.02835.02638.02460.02299.02154.02021.01901
14.03770.03490.03237.03010.02804.02619.02450.02298.02159.02033
15.03973.03682.03419.03182.02968.02775.02599.02439.02294.02162
16.04173.03871.03598.03352.03129.02926.02743.02576.02424.02286
17.04372.04059.03775.03519.03287.03076.02884.02710.02551.02406
18.04573.04248.03953.03686.03444.03224.03024.02842.02676.02524
19.04780.04443.04137.03859.03607.03378.03169.02978.02804.02646
20.04997.04647.04329.04040.03778.03539.03321.03122.02940.02773
21.05226.04862.04532.04232.03958.03709.03481.03274.03083.02909
22.05465.05088.04745.04432.04148.03888.03650.03433.03234.03052
23.05716.05325.04969.04645.04348.04077.03830.03603.03394.03203
24.05983.05578.05208.04871.04562.04280.04021.03784.03566.03367
25.06266.05846.05463.05112.04791.04497.04227.03980.03752.03543
26.06566.06131.05734.05369.05035.04729.04448.04189.03951.03732
27.06887.06436.06024.05646.05298.04979.04686.04416.04168.03939
28.07225.06758.06331.05938.05577.05245.04940.04658.04398.04159
29.07581.07099.06656.06248.05873.05528.05210.04916.04645.04394
30.07956.07457.06998.06575.06186.05827.05495.05189.04906.04644
31.08348.07833.07358.06920.06515.06142.05797.05478.05182.04908
32.08761.08228.07736.07282.06863.06475.06116.05783.05475.05189
33.09195.08645.08136.07666.07231.06828.06454.06108.05786.05488
34.09651.09082.08557.08070.07619.07200.06812.06452.06117.05805
35.10131.09545.09002.08498.08030.07596.07193.06818.06469.06144
36.10635.10031.09470.08949.08465.08015.07596.07206.06842.06503
37.11165.10542.09963.09424.08923.08457.08022.07617.07238.06885
38.11722.11081.10484.09927.09409.08926.08475.08054.07661.07293
39.12308.11648.11032.10458.09922.09422.08955.08518.08109.07726
1999–20 I.R.B.31May 17, 1999

TABLE U(1)
BASED ON LIFE TABLE 90CM
UNITRUST SINGLE LIFE REMAINDER FACTORS
APPLICABLE FOR TRANSFERS AFTER APRIL 30, 1999
ADJUSTED PAYOUT RATE
AGE6.2%6.4%6.6%6.8%7.0%7.2%7.4%7.6%7.8%8.0%
40.12925.12246.11612.11020.10466.09949.09465.09011.08587.08189
41.13575.12877.12225.11614.11043.10508.10007.09537.09097.08683
42.14259.13542.12871.12243.11654.11101.10583.10097.09640.09210
43.14977.14242.13552.12905.12298.11729.11193.10690.10217.09771
44.15731.14976.14269.13604.12979.12391.11838.11318.10828.10367
45.16516.15743.15017.14334.13691.13086.12516.11979.11472.10994
46.17334.16544.15800.15099.14438.13816.13228.12674.12150.11656
47.18184.17375.16613.15895.15217.14576.13972.13400.12860.12349
48.19066.18240.17461.16724.16029.15371.14749.14161.13604.13077
49.19981.19138.18342.17588.16875.16201.15562.14956.14383.13839
50.20931.20072.19259.18489.17759.17067.16412.15790.15199.14639
51.21917.21042.20212.19426.18679.17971.17299.16660.16054.15477
52.22933.22043.21198.20395.19633.18909.18220.17566.16943.16350
53.23981.23076.22216.21399.20621.19881.19176.18506.17867.17258
54.25060.24141.23267.22434.21642.20886.20166.19480.18826.18201
55.26171.25239.24351.23504.22697.21927.21192.20491.19821.19182
56.27313.26369.25468.24608.23787.23003.22254.21538.20854.20199
57.28487.27531.26618.25746.24912.24114.23351.22621.21923.21254
58.29688.28722.27798.26914.26067.25257.24481.23738.23025.22343
59.30913.29937.29002.28107.27249.26427.25639.24882.24157.23461
60.32159.31175.30231.29325.28457.27623.26823.26055.25317.24608
61.33429.32437.31485.30571.29692.28848.28037.27257.26507.25786
62.34728.33730.32770.31847.30960.30106.29285.28495.27734.27001
63.36057.35053.34087.33157.32262.31400.30569.29769.28998.28255
64.37412.36404.35433.34498.33596.32726.31887.31078.30298.29545
65.38794.37783.36809.35868.34961.34085.33239.32422.31633.30871
66.40205.39193.38216.37272.36361.35479.34628.33804.33008.32238
67.41650.40639.39661.38715.37800.36915.36059.35230.34428.33651
68.43126.42117.41139.40193.39277.38390.37530.36697.35890.35108
69.44628.43622.42648.41703.40787.39898.39037.38201.37391.36604
70.46150.45149.44178.43236.42321.41433.40571.39735.38922.38132
71.47683.46689.45723.44785.43873.42987.42126.41290.40476.39685
72.49225.48238.47279.46346.45439.44556.43697.42862.42048.41257
73.50770.49793.48841.47915.47013.46135.45280.44447.43635.42844
74.52324.51358.50416.49498.48603.47731.46880.46051.45242.44454
75.53894.52939.52008.51100.50214.49349.48505.47681.46877.46092
76.55483.54543.53624.52728.51852.50996.50160.49344.48546.47766
77.57091.56167.55263.54380.53516.52671.51845.51038.50247.49475
78.58716.57809.56922.56053.55203.54372.53557.52760.51980.51216
79.60346.59459.58590.57738.56904.56086.55286.54501.53732.52978
May 17, 1999321999–20 I.R.B.

TABLE U(1)
BASED ON LIFE TABLE 90CM
UNITRUST SINGLE LIFE REMAINDER FACTORS
APPLICABLE FOR TRANSFERS AFTER APRIL 30, 1999
ADJUSTED PAYOUT RATE
AGE6.2%6.4%6.6%6.8%7.0%7.2%7.4%7.6%7.8%8.0%
80.61969.61102.60252.59419.58601.57800.57014.56243.55487.54745
81.63571.62726.61897.61082.60283.59499.58729.57974.57232.56503
82.65146.64324.63515.62722.61942.61176.60423.59683.58957.58242
83.66693.65893.65108.64335.63575.62828.62093.61371.60660.59962
84.68222.67447.66684.65934.65195.64468.63753.63049.62356.61674
85.69742.68993.68255.67528.66812.66106.65411.64727.64053.63389
86.71241.70517.69805.69102.68410.67727.67054.66390.65736.65091
87.72696.72000.71313.70635.69967.69307.68656.68014.67381.66756
88.74108.73438.72777.72125.71480.70845.70217.69597.68985.68380
89.75475.74832.74198.73571.72951.72339.71734.71137.70547.69963
90.76796.76180.75572.74971.74376.73788.73207.72633.72065.71503
91.78049.77460.76878.76302.75732.75168.74610.74058.73512.72972
92.79211.78647.78089.77537.76990.76449.75913.75383.74858.74338
93.80283.79743.79208.78679.78154.77634.77119.76610.76105.75604
94.81283.80765.80253.79744.79240.78741.78247.77756.77270.76789
95.82233.81737.81245.80757.80274.79795.79320.78849.78382.77918
96.83126.82651.82180.81712.81248.80788.80332.79880.79431.78985
97.83953.83498.83046.82597.82152.81710.81271.80836.80404.79976
98.84731.84294.83860.83429.83002.82577.82155.81737.81321.80908
99.85490.85071.84656.84243.83832.83425.83020.82618.82219.81822
100.86229.85828.85431.85035.84642.84252.83864.83478.83095.82714
101.86958.86575.86195.85818.85442.85069.84698.84329.83962.83597
102.87674.87310.86947.86587.86229.85873.85518.85166.84815.84466
103.88384.88038.87694.87351.87010.86671.86334.85998.85663.85331
104.89143.88817.88492.88169.87847.87526.87207.86889.86573.86258
105.89885.89578.89272.88967.88664.88361.88060.87760.87461.87163
106.90840.90559.90278.89999.89720.89442.89165.88888.88613.88338
107.91999.91750.91501.91253.91005.90758.90511.90265.90019.89774
108.93805.93609.93412.93216.93020.92824.92629.92434.92239.92044
109.96900.96800.96700.96600.96500.96400.96300.96200.96100.96000
1999–20 I.R.B.33May 17, 1999

TABLE U(1)
BASED ON LIFE TABLE 90CM
UNITRUST SINGLE LIFE REMAINDER FACTORS
APPLICABLE FOR TRANSFERS AFTER APRIL 30, 1999
ADJUSTED PAYOUT RATE
AGE 8.2%8.4%8.6%8.8%9.0%9.2%9.4%9.6%9.8%10.0%
0.01709.01658.01612.01570.01532.01497.01466.01437.01410.01386
1.00892.00839.00791.00747.00708.00672.00639.00609.00582.00557
2.00896.00840.00790.00744.00702.00664.00629.00598.00569.00542
3.00926.00867.00814.00765.00721.00681.00644.00611.00580.00552
4.00970.00908.00851.00800.00753.00711.00672.00636.00604.00574
5.01026.00960.00900.00846.00796.00751.00710.00672.00637.00606
6.01089.01019.00956.00899.00846.00799.00755.00715.00678.00644
7.01161.01088.01021.00960.00905.00854.00808.00765.00726.00690
8.01241.01163.01093.01029.00970.00917.00867.00822.00781.00743
9.01331.01249.01175.01107.01045.00988.00936.00889.00845.00804
10.01432.01346.01268.01196.01131.01071.01016.00965.00918.00875
11.01543.01453.01370.01295.01226.01162.01104.01051.01001.00956
12.01664.01569.01482.01403.01330.01263.01202.01145.01093.01045
13.01791.01691.01600.01516.01440.01369.01304.01245.01190.01139
14.01918.01813.01717.01629.01548.01474.01406.01343.01285.01231
15.02041.01931.01831.01738.01653.01576.01504.01437.01376.01320
16.02160.02044.01938.01841.01752.01670.01595.01525.01460.01401
17.02274.02152.02041.01940.01846.01760.01680.01607.01539.01476
18.02386.02258.02142.02035.01936.01846.01762.01685.01613.01547
19.02500.02367.02245.02132.02029.01933.01845.01764.01689.01619
20.02621.02481.02353.02235.02126.02025.01933.01847.01768.01694
21.02749.02603.02468.02344.02229.02124.02026.01936.01852.01774
22.02884.02730.02589.02458.02338.02227.02124.02029.01940.01859
23.03028.02867.02718.02581.02454.02337.02229.02128.02035.01949
24.03183.03013.02857.02713.02580.02456.02342.02236.02138.02047
25.03350.03172.03008.02857.02717.02587.02467.02355.02251.02155
26.03530.03344.03172.03013.02865.02729.02602.02484.02375.02273
27.03727.03532.03351.03183.03028.02885.02751.02627.02511.02404
28.03937.03732.03543.03367.03204.03052.02911.02780.02658.02545
29.04162.03947.03748.03564.03392.03233.03084.02946.02818.02698
30.04401.04176.03967.03773.03593.03425.03269.03124.02988.02861
31.04654.04419.04200.03996.03807.03630.03466.03312.03169.03035
32.04923.04676.04447.04233.04034.03849.03676.03514.03363.03221
33.05210.04952.04711.04487.04278.04083.03901.03731.03571.03422
34.05515.05245.04993.04758.04538.04333.04142.03962.03794.03637
35.05841.05558.05295.05048.04818.04603.04401.04212.04035.03869
36.06187.05892.05616.05358.05116.04890.04678.04480.04293.04118
37.06555.06247.05958.05688.05435.05198.04975.04766.04570.04385
38.06949.06627.06325.06043.05777.05528.05295.05075.04868.04674
39.07368.07032.06717.06421.06143.05882.05637.05406.05189.04984
May 17, 1999341999–20 I.R.B.

TABLE U(1)
BASED ON LIFE TABLE 90CM
UNITRUST SINGLE LIFE REMAINDER FACTORS
APPLICABLE FOR TRANSFERS AFTER APRIL 30, 1999
ADJUSTED PAYOUT RATE
AGE 8.2%8.4%8.6%8.8%9.0%9.2%9.4%9.6%9.8%10.0%
40.07816.07465.07137.06827.06537.06263.06006.05764.05535.05320
41.08295.07930.07587.07264.06960.06674.06405.06150.05910.05683
42.08807.08427.08069.07733.07415.07116.06833.06567.06315.06077
43.09352.08957.08585.08233.07902.07589.07294.07014.06750.06500
44.09932.09521.09134.08768.08423.08096.07787.07495.07218.06956
45.10543.10117.09715.09334.08974.08634.08311.08005.07716.07441
46.11189.10747.10329.09933.09559.09204.08867.08548.08245.07958
47.11866.11408.10974.10564.10174.09805.09454.09121.08805.08504
48.12577.12103.11654.11228.10823.10439.10074.09727.09397.09083
49.13323.12833.12368.11926.11506.11107.10728.10366.10022.09695
50.14107.13601.13120.12663.12228.11813.11419.11043.10685.10344
51.14928.14407.13910.13437.12987.12558.12149.11758.11386.11031
52.15785.15248.14735.14247.13781.13337.12913.12508.12122.11752
53.16678.16124.15597.15093.14612.14153.13714.13294.12893.12509
54.17606.17037.16493.15974.15478.15004.14550.14116.13700.13302
55.18570.17986.17428.16893.16382.15893.15424.14976.14546.14134
56.19573.18974.18400.17851.17325.16821.16338.15875.15430.15004
57.20613.20000.19412.18848.18307.17789.17291.16814.16355.15914
58.21688.21060.20458.19880.19325.18792.18280.17788.17316.16861
59.22793.22151.21535.20943.20374.19827.19301.18795.18309.17840
60.23927.23272.22642.22036.21454.20893.20354.19834.19334.18851
61.25092.24425.23782.23163.22567.21993.21440.20907.20393.19898
62.26295.25616.24961.24329.23721.23134.22568.22021.21494.20985
63.27538.26847.26180.25537.24916.24316.23738.23179.22639.22117
64.28817.28116.27438.26783.26150.25539.24949.24377.23825.23291
65.30134.29423.28735.28069.27426.26803.26201.25618.25054.24508
66.31493.30772.30075.29399.28746.28113.27500.26906.26331.25774
67.32899.32170.31464.30780.30118.29475.28852.28248.27663.27095
68.34349.33614.32901.32209.31538.30887.30256.29643.29047.28469
69.35841.35100.34381.33683.33005.32346.31707.31085.30481.29894
70.37366.36620.35896.35193.34509.33844.33197.32568.31957.31362
71.38916.38167.37440.36732.36043.35372.34720.34084.33466.32864
72.40486.39736.39006.38295.37602.36927.36270.35629.35005.34396
73.42074.41323.40591.39878.39182.38504.37843.37198.36568.35955
74.43685.42934.42202.41488.40791.40110.39446.38798.38165.37547
75.45326.44577.43846.43132.42435.41754.41088.40438.39802.39181
76.47004.46259.45530.44818.44122.43442.42776.42125.41488.40865
77.48718.47979.47255.46547.45853.45175.44511.43861.43225.42601
78.50467.49735.49017.48314.47626.46951.46290.45643.45008.44386
79.52239.51515.50806.50110.49427.48758.48102.47459.46828.46209
1999–20 I.R.B.35May 17, 1999

TABLE U(1)
BASED ON LIFE TABLE 90CM
UNITRUST SINGLE LIFE REMAINDER FACTORS
APPLICABLE FOR TRANSFERS AFTER APRIL 30, 1999
ADJUSTED PAYOUT RATE
AGE 8.2%8.4%8.6%8.8%9.0%9.2%9.4%9.6%9.8%10.0%
80.54018.53304.52603.51916.51242.50580.49930.49292.48666.48052
81.55788.55085.54396.53718.53053.52399.51757.51126.50507.49898
82.57540.56851.56173.55506.54851.54207.53574.52951.52339.51737
83.59274.58598.57933.57279.56635.56001.55378.54765.54161.53567
84.61002.60341.59690.59049.58418.57796.57184.56582.55988.55403
85.62734.62090.61454.60828.60211.59603.59004.58414.57832.57258
86.64455.63828.63210.62600.61999.61406.60821.60244.59675.59113
87.66139.65531.64930.64337.63752.63175.62605.62043.61488.60939
88.67783.67194.66612.66037.65469.64908.64354.63807.63267.62733
89.69387.68817.68254.67698.67148.66605.66068.65537.65012.64493
90.70947.70398.69855.69318.68786.68261.67742.67228.66719.66217
91.72437.71908.71385.70867.70354.69847.69345.68848.68357.67870
92.73823.73314.72810.72310.71816.71326.70841.70361.69886.69415
93.75109.74618.74132.73650.73173.72700.72232.71768.71308.70852
94.76312.75839.75370.74905.74445.73988.73536.73087.72643.72202
95.77459.77004.76552.76104.75660.75220.74783.74350.73920.73494
96.78543.78105.77670.77238.76810.76386.75964.75546.75131.74720
97.79550.79128.78709.78293.77880.77470.77063.76659.76258.75860
98.80498.80091.79687.79286.78888.78492.78099.77709.77322.76937
99.81428.81036.80647.80261.79877.79496.79117.78741.78367.77995
100.82336.81959.81586.81214.80845.80478.80113.79751.79390.79032
101.83234.82873.82515.82158.81804.81451.81101.80753.80406.80062
102.84119.83774.83431.83089.82750.82412.82076.81742.81409.81078
103.84999.84670.84342.84016.83691.83368.83046.82726.82408.82091
104.85944.85632.85321.85011.84703.84396.84090.83786.83483.83182
105.86866.86570.86276.85982.85690.85399.85109.84820.84532.84245
106.88065.87792.87520.87248.86978.86708.86440.86172.85905.85638
107.89530.89286.89042.88799.88557.88315.88073.87833.87592.87352
108.91849.91654.91460.91266.91072.90879.90685.90492.90299.90106
109.95900.95800.95700.95600.95500.95400.95300.95200.95100.95000
May 17, 1999361999–20 I.R.B.

TABLE U(1)
BASED ON LIFE TABLE 90CM
UNITRUST SINGLE LIFE REMAINDER FACTORS
APPLICABLE FOR TRANSFERS AFTER APRIL 30, 1999
ADJUSTED PAYOUT RATE
AGE 10.2%10.4%10.6%10.8%11.0%11.2%11.4%11.6%11.8%12.0%
0.01363.01342.01323.01305.01288.01272.01258.01244.01231.01219
1.00534.00512.00493.00474.00458.00442.00427.00414.00401.00389
2.00518.00495.00474.00455.00437.00421.00405.00391.00377.00365
3.00526.00502.00480.00459.00440.00422.00406.00391.00376.00363
4.00546.00521.00497.00475.00455.00436.00419.00402.00387.00373
5.00576.00549.00524.00501.00479.00459.00440.00423.00406.00391
6.00613.00584.00557.00532.00509.00488.00468.00449.00432.00415
7.00657.00626.00598.00571.00547.00524.00502.00482.00464.00446
8.00707.00675.00644.00616.00590.00565.00542.00521.00501.00482
9.00766.00732.00699.00669.00641.00615.00591.00568.00547.00527
10.00835.00798.00764.00732.00702.00675.00649.00624.00602.00580
11.00913.00874.00838.00804.00772.00743.00715.00689.00665.00642
12.01000.00959.00920.00884.00851.00819.00790.00762.00737.00712
13.01091.01048.01007.00969.00933.00900.00869.00840.00813.00787
14.01181.01135.01092.01052.01014.00979.00947.00916.00887.00860
15.01267.01218.01173.01130.01091.01054.01019.00987.00956.00928
16.01345.01294.01246.01201.01160.01121.01084.01050.01018.00988
17.01418.01364.01313.01266.01222.01181.01143.01107.01073.01041
18.01486.01429.01375.01326.01279.01236.01196.01158.01122.01088
19.01554.01494.01438.01385.01336.01291.01248.01208.01170.01135
20.01626.01562.01503.01448.01396.01348.01303.01260.01220.01183
21.01702.01635.01573.01514.01460.01409.01361.01316.01274.01235
22.01782.01711.01645.01584.01526.01472.01422.01374.01330.01288
23.01868.01793.01724.01658.01597.01540.01487.01437.01390.01345
24.01962.01883.01809.01740.01675.01615.01558.01505.01455.01408
25.02065.01981.01903.01830.01762.01698.01638.01581.01528.01478
26.02178.02089.02006.01929.01856.01789.01725.01665.01609.01556
27.02303.02209.02122.02040.01963.01891.01824.01760.01700.01644
28.02439.02339.02247.02160.02079.02002.01931.01863.01800.01740
29.02585.02480.02382.02290.02204.02123.02047.01976.01908.01845
30.02742.02631.02527.02430.02339.02253.02172.02096.02025.01957
31.02910.02793.02683.02579.02482.02391.02306.02225.02149.02077
32.03089.02965.02849.02739.02636.02540.02449.02363.02282.02206
33.03282.03151.03028.02912.02803.02701.02604.02513.02427.02346
34.03489.03350.03220.03097.02982.02873.02771.02674.02583.02497
35.03713.03567.03429.03299.03177.03061.02953.02850.02753.02661
36.03953.03798.03653.03515.03386.03263.03148.03039.02936.02838
37.04211.04048.03894.03748.03611.03481.03359.03243.03134.03030
38.04490.04318.04155.04001.03856.03719.03589.03466.03350.03239
39.04791.04609.04437.04274.04120.03975.03837.03707.03583.03466
1999–20 I.R.B.37May 17, 1999

TABLE U(1)
BASED ON LIFE TABLE 90CM
UNITRUST SINGLE LIFE REMAINDER FACTORS
APPLICABLE FOR TRANSFERS AFTER APRIL 30, 1999
ADJUSTED PAYOUT RATE
AGE 10.2%10.4%10.6%10.8%11.0%11.2%11.4%11.6%11.8%12.0%
40.05116.04924.04742.04571.04408.04254.04108.03970.03839.03714
41.05469.05267.05075.04894.04722.04559.04405.04258.04119.03987
42.05851.05638.05436.05245.05063.04891.04728.04573.04425.04285
43.06263.06039.05827.05625.05433.05252.05079.04915.04759.04610
44.06707.06472.06248.06035.05834.05642.05459.05286.05121.04963
45.07180.06933.06698.06474.06262.06059.05867.05684.05509.05342
46.07685.07425.07178.06943.06720.06507.06304.06110.05926.05750
47.08218.07946.07687.07440.07205.06981.06768.06564.06369.06183
48.08784.08499.08228.07969.07722.07487.07262.07047.06842.06646
49.09382.09085.08801.08530.08271.08024.07788.07562.07346.07140
50.10018.09707.09410.09127.08856.08597.08349.08112.07885.07667
51.10691.10367.10057.09761.09477.09206.08946.08697.08459.08231
52.11399.11061.10738.10429.10132.09849.09577.09316.09066.08826
53.12142.11791.11454.11132.10823.10526.10242.09969.09707.09456
54.12921.12556.12206.11870.11548.11239.10942.10657.10383.10120
55.13738.13359.12995.12646.12311.11989.11679.11382.11096.10820
56.14595.14202.13824.13462.13113.12778.12456.12146.11847.11560
57.15491.15084.14693.14317.13955.13607.13272.12949.12638.12338
58.16424.16004.15599.15209.14834.14473.14125.13789.13465.13153
59.17390.16955.16537.16134.15746.15371.15010.14662.14325.14001
60.18387.17939.17507.17091.16689.16302.15927.15566.15217.14880
61.19420.18958.18513.18084.17669.17268.16881.16506.16145.15795
62.20494.20020.19561.19119.18691.18277.17877.17490.17115.16753
63.21613.21126.20654.20199.19758.19331.18918.18518.18131.17757
64.22774.22274.21791.21322.20869.20429.20004.19592.19192.18805
65.23979.23467.22971.22490.22025.21573.21135.20710.20299.19899
66.25233.24709.24202.23709.23231.22767.22318.21881.21457.21045
67.26543.26009.25489.24985.24496.24021.23560.23111.22676.22252
68.27908.27363.26833.26319.25819.25332.24860.24400.23954.23519
69.29324.28769.28230.27705.27195.26699.26216.25746.25288.24843
70.30783.30219.29671.29137.28618.28112.27619.27139.26672.26216
71.32277.31706.31150.30608.30079.29564.29063.28573.28096.27631
72.33803.33225.32661.32112.31575.31052.30542.30044.29559.29084
73.35356.34772.34201.33645.33101.32571.32053.31547.31053.30571
74.36943.36354.35778.35215.34666.34129.33604.33091.32590.32100
75.38574.37980.37400.36833.36278.35735.35205.34686.34178.33681
76.40256.39660.39076.38505.37947.37400.36864.36340.35827.35324
77.41991.41394.40808.40235.39674.39124.38585.38056.37539.37032
78.43777.43180.42594.42020.41457.40906.40365.39834.39314.38803
79.45602.45007.44422.43849.43287.42735.42193.41661.41139.40627
May 17, 1999381999–20 I.R.B.

TABLE U(1)
BASED ON LIFE TABLE 90CM
UNITRUST SINGLE LIFE REMAINDER FACTORS
APPLICABLE FOR TRANSFERS AFTER APRIL 30, 1999
ADJUSTED PAYOUT RATE
AGE 10.2%10.4%10.6%10.8%11.0%11.2%11.4%11.6%11.8%12.0%
80.47449.46856.46275.45704.45143.44592.44051.43519.42997.42484
81.49300.48712.48134.47566.47008.46460.45921.45391.44870.44357
82.51145.50563.49990.49427.48873.48328.47792.47265.46746.46235
83.52983.52407.51841.51284.50735.50195.49663.49139.48624.48116
84.54828.54261.53702.53151.52609.52075.51549.51030.50519.50015
85.56693.56135.55586.55044.54510.53983.53464.52952.52447.51949
86.58560.58013.57474.56943.56418.55901.55390.54886.54389.53898
87.60398.59864.59337.58817.58303.57795.57294.56799.56310.55828
88.62206.61685.61170.60662.60159.59663.59173.58688.58209.57736
89.63980.63474.62972.62477.61987.61503.61024.60551.60083.59620
90.65719.65227.64741.64259.63783.63312.62846.62385.61928.61477
91.67388.66912.66440.65973.65511.65053.64600.64152.63708.63269
92.68949.68487.68030.67577.67129.66685.66245.65809.65378.64950
93.70401.69954.69511.69072.68637.68205.67778.67355.66935.66519
94.71765.71332.70902.70477.70055.69636.69222.68810.68403.67998
95.73072.72653.72237.71825.71416.71010.70608.70209.69813.69421
96.74311.73906.73504.73105.72709.72316.71926.71539.71155.70774
97.75465.75073.74684.74297.73914.73533.73155.72780.72407.72037
98.76555.76175.75798.75424.75052.74683.74317.73953.73591.73232
99.77626.77260.76895.76534.76174.75817.75462.75109.74759.74411
100.78676.78323.77971.77622.77274.76929.76586.76245.75906.75569
101.79719.79379.79040.78703.78368.78035.77704.77375.77048.76722
102.80749.80422.80096.79772.79450.79130.78811.78494.78178.77864
103.81775.81461.81149.80838.80529.80221.79914.79609.79306.79003
104.82881.82582.82284.81988.81693.81399.81106.80815.80525.80236
105.83959.83674.83391.83108.82826.82546.82267.81988.81711.81435
106.85373.85108.84844.84581.84319.84058.83797.83537.83278.83020
107.87113.86875.86636.86399.86161.85925.85689.85453.85218.84984
108.89913.89721.89529.89337.89145.88953.88762.88571.88380.88189
109.94900.94800.94700.94600.94500.94400.94300.94200.94100.94000
1999–20 I.R.B.39May 17, 1999

TABLE U(1)
BASED ON LIFE TABLE 90CM
UNITRUST SINGLE LIFE REMAINDER FACTORS
APPLICABLE FOR TRANSFERS AFTER APRIL 30, 1999
ADJUSTED PAYOUT RATE
AGE12.2%12.4%12.6%12.8%13.0%13.2%13.4%13.6%13.8%14.0%
0.01208.01197.01187.01177.01168.01159.01151.01143.01135.01128
1.00378.00367.00358.00348.00340.00331.00323.00316.00309.00302
2.00353.00342.00331.00322.00312.00304.00295.00288.00280.00273
3.00350.00339.00327.00317.00307.00298.00289.00281.00273.00265
4.00359.00347.00335.00324.00313.00303.00294.00285.00276.00268
5.00377.00363.00351.00339.00327.00317.00306.00297.00288.00279
6.00400.00386.00372.00359.00347.00335.00325.00314.00305.00295
7.00430.00414.00400.00386.00373.00360.00349.00338.00327.00317
8.00465.00448.00432.00417.00403.00390.00378.00366.00354.00344
9.00508.00490.00473.00457.00442.00428.00414.00402.00389.00378
10.00560.00541.00523.00506.00490.00475.00460.00446.00433.00421
11.00620.00600.00581.00563.00546.00529.00514.00499.00485.00472
12.00689.00668.00647.00628.00610.00593.00576.00560.00545.00531
13.00763.00740.00718.00698.00678.00660.00642.00626.00610.00595
14.00834.00810.00787.00766.00745.00726.00707.00689.00673.00657
15.00901.00875.00851.00828.00807.00786.00767.00748.00730.00714
16.00959.00932.00907.00883.00860.00839.00818.00799.00780.00762
17.01011.00983.00956.00930.00907.00884.00862.00842.00822.00804
18.01057.01027.00999.00972.00947.00923.00900.00879.00858.00839
19.01101.01070.01040.01012.00985.00960.00936.00914.00892.00871
20.01148.01115.01083.01054.01026.00999.00974.00950.00927.00905
21.01197.01162.01129.01098.01068.01040.01014.00988.00964.00941
22.01249.01211.01176.01143.01112.01082.01054.01027.01002.00978
23.01304.01264.01227.01192.01159.01127.01098.01069.01042.01017
24.01364.01322.01283.01246.01210.01177.01145.01115.01087.01060
25.01431.01387.01345.01306.01268.01233.01199.01168.01137.01109
26.01506.01459.01415.01373.01333.01295.01260.01226.01194.01163
27.01591.01541.01494.01449.01407.01367.01329.01293.01259.01226
28.01684.01631.01580.01533.01488.01445.01405.01367.01330.01296
29.01785.01728.01675.01624.01577.01531.01488.01447.01408.01372
30.01893.01833.01776.01723.01672.01623.01578.01534.01493.01453
31.02010.01946.01885.01828.01773.01722.01673.01627.01582.01540
32.02134.02066.02002.01940.01883.01828.01776.01726.01679.01634
33.02270.02197.02128.02063.02002.01943.01887.01835.01784.01736
34.02415.02338.02265.02195.02130.02067.02008.01951.01897.01846
35.02574.02492.02414.02340.02270.02203.02140.02080.02022.01967
36.02746.02658.02575.02496.02422.02350.02283.02218.02157.02098
37.02932.02838.02750.02666.02586.02510.02438.02369.02303.02241
38.03135.03035.02941.02851.02766.02685.02608.02534.02464.02397
39.03355.03249.03149.03053.02962.02876.02793.02715.02640.02568
May 17, 1999401999–20 I.R.B.

TABLE U(1)
BASED ON LIFE TABLE 90CM
UNITRUST SINGLE LIFE REMAINDER FACTORS
APPLICABLE FOR TRANSFERS AFTER APRIL 30, 1999
ADJUSTED PAYOUT RATE
AGE12.2%12.4%12.6%12.8%13.0%13.2%13.4%13.6%13.8%14.0%
40.03596.03484.03377.03275.03178.03086.02998.02914.02833.02757
41.03861.03742.03628.03520.03416.03318.03224.03134.03048.02966
42.04152.04025.03903.03788.03678.03573.03473.03377.03285.03198
43.04468.04333.04205.04082.03965.03853.03746.03644.03546.03453
44.04813.04670.04533.04403.04278.04159.04045.03936.03832.03732
45.05183.05032.04887.04748.04616.04489.04368.04252.04141.04034
46.05582.05421.05267.05121.04980.04846.04717.04593.04475.04362
47.06006.05836.05673.05518.05369.05226.05089.04958.04832.04711
48.06459.06279.06107.05943.05785.05634.05488.05349.05216.05087
49.06942.06752.06571.06397.06230.06070.05916.05768.05626.05490
50.07459.07259.07068.06884.06708.06538.06376.06219.06069.05924
51.08012.07801.07599.07406.07220.07041.06869.06703.06544.06391
52.08596.08375.08163.07959.07763.07574.07392.07218.07049.06887
53.09214.08982.08759.08544.08338.08139.07948.07763.07586.07415
54.09867.09623.09389.09164.08946.08737.08536.08342.08154.07974
55.10556.10301.10055.09819.09591.09371.09159.08955.08757.08567
56.11283.11016.10759.10511.10272.10042.09819.09605.09397.09197
57.12050.11771.11502.11243.10993.10751.10518.10293.10075.09864
58.12852.12562.12281.12011.11749.11496.11252.11016.10787.10567
59.13687.13385.13092.12810.12537.12273.12017.11770.11531.11299
60.14554.14240.13935.13641.13356.13080.12813.12555.12305.12063
61.15457.15130.14813.14507.14210.13923.13644.13375.13113.12860
62.16402.16063.15734.15415.15107.14808.14518.14237.13964.13699
63.17393.17042.16700.16370.16049.15738.15437.15144.14860.14584
64.18429.18065.17712.17369.17036.16714.16400.16096.15800.15513
65.19511.19135.18769.18415.18070.17735.17410.17094.16787.16488
66.20645.20257.19880.19513.19157.18810.18473.18146.17827.17517
67.21841.21441.21052.20673.20305.19947.19599.19259.18929.18608
68.23096.22685.22284.21895.21515.21146.20786.20436.20094.19762
69.24409.23987.23575.23175.22784.22404.22033.21672.21320.20976
70.25772.25339.24918.24507.24106.23715.23333.22961.22598.22244
71.27178.26735.26304.25882.25471.25070.24679.24296.23923.23559
72.28622.28170.27729.27298.26877.26467.26065.25673.25290.24915
73.30100.29639.29189.28749.28320.27899.27489.27087.26694.26310
74.31621.31152.30694.30246.29807.29378.28959.28548.28146.27753
75.33195.32719.32253.31797.31351.30914.30486.30067.29657.29255
76.34832.34350.33877.33415.32961.32517.32082.31656.31238.30828
77.36535.36047.35570.35101.34642.34192.33750.33317.32892.32475
78.38302.37811.37329.36856.36392.35937.35490.35051.34621.34198
79.40124.39630.39145.38669.38201.37742.37291.36848.36413.35985
1999–20 I.R.B.41May 17, 1999

TABLE U(1)
BASED ON LIFE TABLE 90CM
UNITRUST SINGLE LIFE REMAINDER FACTORS
APPLICABLE FOR TRANSFERS AFTER APRIL 30, 1999
ADJUSTED PAYOUT RATE
AGE12.2%12.4%12.6%12.8%13.0%13.2%13.4%13.6%13.8%14.0%
80.41980.41485.40998.40520.40050.39588.39134.38688.38249.37818
81.43854.43358.42871.42392.41921.41457.41001.40553.40112.39678
82.45733.45238.44752.44273.43802.43338.42881.42431.41989.41553
83.47616.47123.46638.46161.45690.45227.44770.44320.43877.43441
84.49519.49030.48548.48073.47604.47143.46688.46239.45797.45361
85.51458.50974.50496.50025.49560.49102.48650.48204.47763.47329
86.53413.52935.52463.51998.51538.51084.50636.50194.49758.49327
87.55351.54881.54416.53957.53503.53055.52613.52176.51744.51317
88.57268.56806.56349.55898.55451.55010.54574.54144.53718.53296
89.59162.58710.58262.57819.57382.56949.56520.56097.55678.55263
90.61030.60588.60151.59718.59290.58866.58447.58032.57621.57214
91.62834.62403.61977.61554.61136.60722.60312.59907.59505.59107
92.64527.64107.63692.63280.62872.62468.62068.61672.61279.60890
93.66107.65699.65294.64893.64495.64101.63711.63323.62940.62559
94.67597.67200.66806.66415.66027.65643.65262.64884.64509.64138
95.69031.68645.68262.67881.67504.67130.66759.66390.66025.65662
96.70396.70021.69648.69279.68912.68548.68186.67828.67471.67118
97.71670.71305.70943.70584.70227.69872.69520.69171.68824.68480
98.72875.72521.72169.71819.71472.71127.70784.70444.70106.69770
99.74065.73721.73379.73040.72703.72368.72035.71704.71375.71048
100.75234.74901.74570.74241.73914.73589.73265.72944.72625.72307
101.76399.76077.75757.75438.75122.74807.74494.74183.73873.73565
102.77552.77241.76932.76625.76319.76015.75712.75411.75111.74813
103.78703.78404.78106.77809.77514.77221.76929.76638.76348.76060
104.79948.79662.79377.79093.78810.78528.78248.77969.77691.77414
105.81159.80885.80612.80340.80069.79799.79530.79262.78995.78729
106.82763.82506.82250.81995.81741.81488.81235.80983.80732.80482
107.84749.84516.84283.84051.83819.83587.83356.83126.82896.82666
108.87999.87808.87618.87428.87238.87049.86859.86670.86481.86293
109.93900.93800.93700.93600.93500.93400.93300.93200.93100.93000
May 17, 1999421999–20 I.R.B.
(f) Effective dates.This section applies
after April 30, 1999.
Par. 10. The undesignated center head-
ing immediately preceding §1.664-4A is
revised to read as follows:
Unitrust Actuarial Tables Applicable
Before May 1, 1999
Par. 11. Section 1.664-4A is amended
as follows:
1. The section heading is revised.
2. In paragraph (d)(4), the first sen-
tence is revised.
3. In paragraph (d)(6), the introductory
text is revised and Table D is removed.
4. The heading of newly designated
paragraph (e) is revised.
5. In newly designated paragraph
(e)(1), the first sentence is revised.
6. Newly designated paragraphs (e)(3)
through (e)(5) are revised.
7. In newly designated paragraph
(e)(6), the heading and the first sentence
of the introductory text are revised and
the last sentence of introductory text is re-
moved and two new sentences are added
in its place.
8. The heading of Table U(1) is re-
vised.
The addition and revisions read as fol-
lows:
§1.664–4A Valuation of charitable
remainder interests for which the
valuation date is before May 1, 1999.
* * * * *
(d) * * *
(4) Period is a term of years. If the pe-
riod described in §1.664-3(a)(5) is a term
of years, the factor which is used in deter-
mining the present value of the remainder
interest is the factor under the appropriate

adjusted payout rate in Table D in
§1.664–4(e)(6) that corresponds to the
number of years in the term. * * *
* * * * *
(6) Actuarial tables for transfers for
which the valuation date is after Novem-
ber 30, 1983, and before May 1, 1989.
Table D in §1.664–4(e)(6) and the follow-
ing tables shall be used in the application
of the provisions of this section:
* * * * *
(e) Valuation of charitable remainder
unitrusts having certain payout sequences
for transfers for which the valuation date
is after April 30, 1989, and before May 1,
1999—(1) In general. Except as other-
wise provided in paragraph (e)(2) of this
section, in the case of transfers for which
the valuation date is after April 30, 1989,
and before May 1, 1999, the present value
of a remainder interest is determined
under paragraphs (e)(3) through (e)(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 dis-
tribute on such date under §1.664-
3(a)(1)(v) if the taxable year of the trust
were to end on such date. * * *
* * * * *
(3) Adjusted payout rate.For transfers
for which the valuation date is after April
30, 1989, and before May 1, 1999, the ad-
justed payout rate is determined by using
the appropriate Table F, contained in
§ 1.664–4(e)(6), for the section 7520 in-
terest rate applicable to the transfer. If the
interest rate is between 4.2 and 14 per-
cent, see §1.664–4(e)(6). If the interest
rate is below 4.2 percent or greater than
14 percent, 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 pe-
riod described in §1.664–3(a)(5) is a term
of years, the factor that is used in deter-
mining the present value of the remainder
interest for transfers for which the valua-
tion date is after April 30, 1989, and be-
fore May 1, 1999, is the factor under the
appropriate adjusted payout rate in Table
D in §1.664–4(e)(6) corresponding to the
number of years in the term. If the ad-
justed payout rate is an amount that is be-
tween adjusted payout rates for which fac-
tors are provided in Table D, a linear
interpolation must be made. The present
value of the remainder interest is deter-
mined 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. Gener-
ally, for purposes of this section, the valu-
ation 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 valua-
tion date is the date of death. See §1.664–
4T(e)(4) for additional rules regarding the
valuation date. See §1.664–4T(e)(4) for
an example that illustrates the application
of this paragraph (e)(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 after April 30,
1989, and before May 1, 1999, is the fac-
tor in Table U(1) in paragraph (e)(6) of
this section under the appropriate adjusted
payout. For purposes of the computations
described in this paragraph (e)(5), the age
of an individual is the age of that individ-
ual 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 appro-
priate table, a linear interpolation must be
made. The rules provided in §1.664–
4T(e)(5) apply for determining the pre-
sent value of the remainder interest. See
§1.664–4T(e)(5) for an example illustrat-
ing the application of this paragraph
(e)(5)(using current actuarial tables).
(6) Actuarial tables for transfers for
which the valuation date is after April 30,
1989, and before May 1, 1999. For trans-
fers for which the valuation date is after
April 30, 1989, and before May 1, 1999,
the present value of a charitable remain-
der unitrust interest that is dependent on a
term of years or the termination of a life
interest is determined by using the section
7520 rate and Table D, Tables F(4.2)
through F(14.0) in §1.664–4(e)(6) and
Table U(1) of this paragraph (e)(6), as ap-
plicable. * * * Publication 1458 is no
longer available for purchase from the Su-
perintendent of Documents, United States
Government Printing Office, Washington,
DC 20402. However, pertinent factors in
this publication may be obtained by a
written request to: CC:DOM:CORP:R
(IRS Publication 1458), room 5226, Inter-
nal Revenue Service, POB 7604, Ben
Franklin Station, Washington, DC 20044.
Table U(1).—Unitrust Single Life
Remainder Factors - Based on Life Table
80CNSMT
[Applicable for Transfers After April 30,
1989, and Before May 1, 1999]
* * * * *
Par. 12. Section 1.7520–1 is amended
by:
1. Revising the last two sentences of
paragraph (b)(2).
2. Revising the headings for para-
graphs (c)(1) and (c)(2).
3. Revising the introductory text of
paragraph (c)(2).
4. Removing the first two sentences of
paragraph (c)(2)(iii) and adding one sen-
tence in their place.
5. Revising paragraph (d).
The revisions and addition read as fol-
lows:
§1.7520–1 Valuation of annuities,
unitrust interests, interests for life or
terms of years, and remainder or
reversionary interests.
* * * * *
(b) * * *
(2) * * * For transactions with valua-
tion dates after April 30, 1989, and before
May 1, 1999, the mortality component
table (80CNSMT) is contained in
§20.2031–7A(e)(4) of this chapter. See
§20.2031–7A(a) through (d) of this chap-
ter for mortality component tables applic-
able to transactions for which the valua-
tion date falls before May 1, 1989.
(c) * * *
(1) Regulations sections containing ta-
bles with interest rates between 4.2 and
14 percent for valuation dates after April
30, 1989, and before May 1, 1999.* * *
(2) Internal Revenue Service publica-
tions containing tables with interest rates
between 2.2 and 26 percent for valuation
dates after April 30, 1989, and before
May 1, 1999. The following publications
are no longer available for purchase from
the Superintendent of Documents, how-
ever, they may be obtained from
CC:DOM:CORP:R, room 5226, Internal
Revenue Service, POB 7604, Ben
Franklin Station, Washington, DC 20044:
* * * * *
1999–20 I.R.B.43May 17, 1999

(iii) Internal Revenue Service Publica-
tion 1459, “Actuarial Values, Gamma
Volume,” (8-89). * * *
(d) Effective date. This section applies
after April 30, 1989, and before May 1,
1999.
Par. 13. Section 1.7520–1T is added to
read as follows:
§1.7520–1T Valuation of annuities,
unitrust interests, interests for life or
terms of years, and remainder or
reversionary interests (temporary).
(a) through (b)(1) [Reserved] For fur-
ther guidance, see §1.7520–1(a) through
(b)(1).
(2) Mortality component.The mortality
component reflects the mortality data
most recently available from the United
States census. As new mortality data be-
comes available after each decennial cen-
sus, the mortality component described in
this section will be revised periodically
and the revised mortality component ta-
bles will be published in the regulations at
that time. For transactions with valuation
dates after April 30, 1999, the mortality
component table (Table 90CM) is con-
tained in §20.2031–7T(d)(7) of this chap-
ter. See §20.2031–7A of this chapter for
mortality component tables applicable to
transactions for which the valuation date
falls before May 1, 1999.
(c) [Reserved]. For further guidance,
see §1.7520–1(c).
(1) Regulation sections containing ta-
bles with interest rates between 4.2 and
14 percent for valuation dates after April
30, 1999. Section 1.642(c)–6T(e)(6) con-
tains Table S used for determining the
present value of a single life remainder in-
terest in a pooled income fund as defined
in §1.642(c)–5. See §1.642(c)–6A for ac-
tuarial factors for one life applicable to
valuation dates before May 1, 1999. Sec-
tion 1.664–4(e)(6) contains Table F (pay-
out factors) and Table D (actuarial factors
used in determining the present value of a
remainder interest postponed for a term of
years). Section1.664–4T(e)(7) contains
Table U(1) (actuarial factors for one life).
These tables are used in determining the
present value of a remainder interest in a
charitable remainder unitrust as defined in
§1.664–3. See §1.664–4A for actuarial
factors for one life applicable to valuation
dates before May 1, 1999. Section
20.2031–7(d)(6) of this chapter contains
Table B (actuarial factors used in deter-
mining the present value of an interest for
a term of years), Table K (annuity end-of-
interval adjustment factors), and Table J
(term certain annuity beginning-of-inter-
val adjustment factors). Section 20.2031–
7T(d)(7) of this chapter contains Table S
(actuarial factors for one life), and Table
90CM (mortality components). These ta-
bles are used in determining the present
value of annuities, life estates, remain-
ders, and reversions. See §20.2031–7A of
this chapter for actuarial factors for one
life and mortality components applicable
to valuation dates before May 1, 1999.
(2) Internal Revenue Service publica-
tions containing tables with interest rates
between 2.2 and 26 percent for valuation
dates after April 30, 1999.The following
documents are available for purchase
from the Superintendent of Documents,
United States Government Printing Of-
fice, Washington, DC 20402:
(i) Internal Revenue Service Publica-
tion 1457, “Actuarial Values, Book
Aleph,” (1999). This publication includes
tables of valuation factors, as well as ex-
amples that show how to compute other
valuation factors, for determining the pre-
sent value of annuities, life estates, terms
of years, remainders, and reversions,
measured by one or two lives. These fac-
tors 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.
(ii) Internal Revenue Service Publica-
tion 1458, “Actuarial Values, Book Beth,”
(1999). This publication includes 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.
(iii) Internal Revenue Service Publica-
tion 1459, “Actuarial Values, Book
Gimel,” (1999). This publication in-
cludes tables for computing deprecation
adjustment factors. See §1.170A–12T.
(d) Effective date. This section applies
after April 30, 1999.
PART 20—ESTATE TAX; ESTATES OF
DECEDENTS DYING AFTER
AUGUST 16, 1954
Par. 14. The authority citation for part
20 is amended by adding entries in nu-
merical order to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Section 20.2031–7T also issued under 26
U.S.C. 7520(c)(2). * * *
Section 20.7520–1T also issued under 26
U.S.C. 7520(c)(2). * * *
Par. 15. 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 ap-
pear 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, inter-
ests for life or term of years, and remain-
der or reversionary interests.
§20.2031–7T Valuation of annuities, in-
terests for life or term of years, and re-
mainder or reversionary interests (tempo-
rary).
§20.2031–8 Valuation of certain life in-
surance and annuity contracts; valuation
of shares in an open-end investment com-
pany.
§20.2031–9 Valuation of other property.
Actuarial Tables Applicable Before
May 1, 1999
§20.2031–7A Valuation of annuities, in-
terests for life or term of years, and re-
mainder or reversionary interests for es-
tates of decedents for which the valuation
date of the gross estate is before May 1,
1999.
Par. 16. The undesignated centerhead-
ing immediately following §20.2046-1is
revised to read as follows:
Actuarial Tables Applicable Before
May 1, 1999
Par. 17. Section 20.2031–7A is
amended by:
1. Revising the section heading.
2. Adding paragraph (e).
The revision and addition read as fol-
lows:
May 17, 1999441999–20 I.R.B.

§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
before May 1, 1999.
* * * * *
(e) Valuation of annuities, interests for
life or term of years, and remainder or re-
versionary interests for estates of dece-
dents for which the valuation date of the
gross estate is after April 30,1989, and
before May 1, 1999—(1) In general.Ex-
cept as otherwise provided in §20.2031–
7(b) and §20.7520–3(b) (pertaining to
certain limitations on the use of pre-
scribed tables), if the valuation date for
the gross estate of the decedent is after
April 30, 1989, and before May 1, 1999,
the fair market value of annuities, life es-
tates, terms of years, remainders, and re-
versionary interests is the present value of
the interests determined by use of stan-
dard or special section 7520 actuarial fac-
tors and the valuation methodology de-
scribed in §20.2031–7T(d). These factors
are derived by using the appropriate sec-
tion 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 (e)(4) of this section for
determination of the appropriate table for
use in valuing these interests.
(2) Transitional rule.(i) If the valua-
tion date is after April 30, 1989, and be-
fore June 10, 1994, a taxpayer can rely on
Notice 89–24 (1989–1 C.B. 660), or No-
tice 89–60 (1989–1 C.B. 700 ). See
§601.601(d)(2)(ii)(b) of this chapter.
(ii) If a decedent dies after April 30,
1989, and if on May 1, 1989, the decedent
was mentally incompetent so that the dis-
position of the decedent’s property could
not be changed, and the decedent dies
without having regained competency to
dispose of the decedent’s property or dies
within 90 days of the date on which the
decedent first regains competency, the
fair market value of annuities, life estates,
terms for years, remainders, and rever-
sions included in the gross estate of the
decedent is their present value determined
either under this section or under the cor-
responding section applicable at the time
the decedent became mentally incompe-
tent, at the option of the decedent’s execu-
tor. For example, see paragraph (d) of
this section.
(3) Publications and actuarial compu-
tations by the Internal Revenue Service.
Many standard actuarial factors not in-
cluded in paragraph (e)(4) of this section
or in §20.2031–7(d)(6) are included in In-
ternal Revenue Service Publication 1457,
“Actuarial Values, Alpha Volume,” (8-
89). Publication 1457 also includes ex-
amples that illustrate how to compute
many special factors for more unusual sit-
uations. Publication 1457 is no longer
available for purchase from the Superin-
tendent of Documents, United States
Government Printing Office, Washington,
DC 20402. However, pertinent factors in
this publication may be obtained from:
CC:DOM:CORP:R (IRS Publication
1457), room 5226, Internal Revenue Ser-
vice, POB 7604, Ben Franklin Station,
Washington, DC 20044. If a special fac-
tor is required in the case of an actual
decedent, the Internal Revenue Service
may furnish the factor to the executor
upon a request for a ruling. The request
for a ruling must be accompanied by a
recitation of the facts including a state-
ment of the date of birth for each measur-
ing life, the date of the decedent’s death,
any other applicable dates, and a copy of
the will, trust, or other relevant docu-
ments. A request for a ruling must com-
ply with the instructions for requesting a
ruling published periodically in the Inter-
nal Revenue Bulletin (see §§601.201 and
601.601(d)(2)(ii)(b) of this chapter) and
include payment of the required user fee.
(4) Actuarial tables.Except as pro-
vided in §20.7520–3(b) (pertaining to cer-
tain limitations on the use of prescribed
tables), Life Table 80CNSMT and Table S
(Single life remainder factors applicable
where the valuation date is after April 30,
1989, and before May 1, 1999), contained
in this paragraph (b)(4), and Table B,
Table J, and Table K set forth in
§20.2031–7(d)(6) must be used in the ap-
plication of the provisions of this section
when the section 7520 interest rate com-
ponent is between 4.2 and 14 percent.
Table S and Table 80CNSMT are as fol-
lows:
Par. 17a. Section 20.2031–7A is fur-
ther amended by redesignating Table S
and Table 80CNSMT in §20.2031–
7(d)(6) as Table S and Table 80CNSMT
in §20.2031–7A(e)(4) and revising the
table headings to read as follows:
* * * * *
(e) * * *
(4) * * *
Table S.–Based on Life on Life Table
80CNSMT Single Life Remainder
Factors
[Applicable After April 30, 1989, and
Before May 1, 1999]
* * * * *
Table 80CNSMT.–Applicable After April
30, 1989, and Before May 1, 1999
* * * * *
Par. 18. Section 20.2031-7 is amended
by:
1. Revising the section heading.
2. Revising paragraphs (c) through
(d)(5).
3. Revising paragraph (d)(6) heading
and introductory text.
4. Revising paragraph (e).
The revisions read as follows:
§20.2031–7 Valuation of annuities,
interests for life or term of years, and
remainder or reversionary interests.
* * * * *
(c) through (d)(5) [Reserved]. For fur-
ther guidance, see §20.2031–7T(c)
through (d)(5).
(d)(6) Actuarial Table B, Table J, and
Table K where the valuation date is after
April 30, 1989. Except as provided in
§20.7520–3(b) (pertaining to certain limi-
tations on prescribed tables), the tables in
this paragraph (d)(6) and either Table S
and Table 80CNSMT in §20.2031–
7A(e)(4) (for valuation dates after April
30, 1989, and before May 1, 1999), or
Table S and Table 90CM in §20.2031–
7T(d)(7) (for valuation dates after May 1,
1999) must be used in the application of
the provisions of this section when the
section 7520 interest rate component is
between 4.2 and 14 percent.
* * * * *
(e) Effective date.This section applies
after April 30, 1989, and before May 1,
1999.
Par. 19. Section 20.2031–7T is added
to read as follows:
1999–20 I.R.B.45May 17, 1999

§20.2031–7T Valuation of annuities,
interests for life or term of years, and
remainder or reversionary interests
(temporary).
(a) through (b) [Reserved]. For further
information see §20.2031–7(a) through
(b).
(c) Actuarial valuations.The present
value of annuities, life estates, terms of
years, remainders, and reversions for es-
tates of decedents for which the valuation
date of the gross estate is after April 30,
1999, is determined under paragraph (d)
of this section. The present value of an-
nuities, life estates, terms of years, re-
mainders, and reversions for estates of
decedents for which the valuation date of
the gross estate is before May 1, 1999, is
determined under the following sections:
Valuation DateApplicable
AfterBeforeSection
—01-01-5220.2031–7A(a)
12-31-5101-01-7120.2031–7A(b)
12-31-7012-01-8320.2031–7A(c)
11-30-8305-01-8920.2031–7A(d)
04-30-8905-01-9920.2031–7A(e)
(d) Actuarial valuations after April 30,
1999—(1) In general.Except as other-
wise provided in paragraph (b) of this sec-
tion and §20.7520-3(b) (pertaining to cer-
tain limitations on the use of prescribed
tables), if the valuation date for the gross
estate of the decedent is after April 30,
1999, the fair market value of annuities,
life estates, terms of years, remainders,
and reversionary interests is the present
value determined by use of standard or
special section 7520 actuarial factors.
These factors are derived by using the ap-
propriate 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.
(2) Specific interests—(i) 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)–6T(e) of this chapter. The fair
market value of a remainder interest in a
charitable remainder annuity trust, as de-
fined in §1.664–2(a) of this chapter, is the
present value determined under §1.664–
2(c) of this chapter. The fair market value
of a remainder interest in a charitable re-
mainder unitrust, as defined in §1.664–3
of this chapter, is its present value deter-
mined under §1.664–4T(e) of this chapter.
The fair market value of a life interest or
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 in-
terest on that date determined under
§1.664–4T(e)(4) and (5) of this chapter.
(ii) Ordinary remainder and reversion-
ary interests.If the interest to be valued
is to take effect after a definite number of
years or after the death of one individual,
the present value of the interest is com-
puted by multiplying the value of the
property by the appropriate remainder in-
terest actuarial factor (that corresponds to
the applicable section 7520 interest rate
and remainder interest period) in Table B
(for a term certain) or the appropriate
Table S (for one measuring life), as the
case may be. Table B is contained in
§20.2031–7(d)(6) and Table S (for one
measuring life when the valuation date is
after April 30, 1999) is contained in para-
graph (d)(7) of this section and in Internal
Revenue Service Publication 1457. For
information about obtaining actuarial fac-
tors for other types of remainder interests,
see paragraph (d)(4) of this section.
(iii) Ordinary term-of-years and life in-
terests.If the interest to be valued is the
right of a person to receive the income of
certain property, or to use certain nonin-
come-producing 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 term-of-years or life
interest actuarial factor (that corresponds
to the applicable section 7520 interest rate
and term-of-years or life interest period).
Internal Revenue Service Publication
1457 includes actuarial factors for an in-
terest for a term of years in Table B and
for the life of one individual in Table S
(for one measuring life when the valua-
tion date is after April 30, 1999). How-
ever, term-of-years and life interest actu-
arial factors are not included in Table B in
§20.2031–7(d)(6) or Table S in paragraph
(d)(7) of this section. If Internal Revenue
Service Publication 1457 (or any other re-
liable source of term-of-years and life in-
terest actuarial factors) is not conve-
niently available, an actuarial factor for
the interest may be derived mathemati-
cally. This actuarial factor may be de-
rived by subtracting the correlative re-
mainder factor (that corresponds to the
applicable section 7520 interest rate and
the term of years or the life) in Table B
(for a term of years) in §20.2031–7(d)(6)
or in Table S (for the life of one individ-
ual) in paragraph (d)(7) of this section, as
the case may be, from 1.000000. For in-
formation about obtaining actuarial fac-
tors for other types of term-of-years and
life interests, 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 actuarial factor (that
corresponds to the applicable section
7520 interest rate and annuity period). In-
ternal Revenue Publication 1457 includes
actuarial factors in Table B (for an annuity
payable for a term of years) and in Table S
(for an annuity payable for the life of one
individual when the valuation date is after
April 30, 1999). However, annuity actuar-
ial factors are not included in Table B in
§20.2031–7(d)(6) or Table S in paragraph
(d)(7) of this section. If Internal Revenue
Service Publication 1457 (or any other re-
liable source of annuity actuarial factors)
is not conveniently available, a required
annuity factor for a term of years or for
one life may be mathematically derived.
This annuity factor may be derived by
subtracting the applicable remainder fac-
tor (that corresponds to the applicable sec-
tion 7520 interest rate and annuity period)
in Table B (in the case of a term-of-years
annuity) in §20.2031–7(d)(6) or in Table S
(in the case of a one-life annuity when the
valuation date is after April 30, 1999) in
paragraph (d)(7) of this section, as the
case may be, from 1.000000 and then di-
viding the result by the applicable section
7520 interest rate expressed as a decimal
number.
(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 ag-
gregate amount payable annually is then
multiplied by the applicable adjustment
factor as contained in Table K in
§20.2031–7(d)(6) for payments made at
May 17, 1999461999–20 I.R.B.

the end of the specified periods. The pro-
visions of this paragraph (d)(2)(iv)(B) are
illustrated by the following example:
Example.At the time of the decedent’s death, the
survivor/annuitant, age 72, is entitled to receive an
annuity of $15,000 a year for life payable in equal
monthly installments at the end of each period. The
section 7520 rate for the month in which the dece-
dent died is 9.6 percent. Under Table S in paragraph
(d)(7) of this section, the remainder factor at 9.6 per-
cent for an individual aged 72 is .38438. By con-
verting the remainder factor to an annuity factor, as
described above, the annuity factor at 9.6 percent for
an individual aged 72 is 6.4127 (1.00000 minus
.38438, divided by .096). Under Table K in
§20.2031–7(d)(6), the adjustment factor under the
column for payments made at the end of each
monthly period at the rate of 9.6 percent is 1.0433.
The aggregate annual amount, $15,000, is multiplied
by the factor 6.4127 and the product multiplied by
1.0433. The present value of the annuity at the date
of the decedent’s death is, therefore, $100,355.55
($15,000 36.4127 31.0433).
(C) If an annuity is payable at the be-
ginning of annual, semiannual, quarterly,
monthly, or weekly periods for a term of
years, the value of the annuity is com-
puted 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 ob-
tained is then multiplied by the adjust-
ment factor in Table J in §20.2031–
7(d)(6) at the appropriate interest rate
component for payments made at the be-
ginning of specified periods. If an annu-
ity 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 this paragraph
(d)(2)(iv).
(v) Annuity and unitrust interests for a
term of years or until the prior death of
an individual.See §25.2512–5T(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 indi-
vidual.
(3) Transitional rule.(i) If a decedent
dies after April 30, 1999, and if on May 1,
1999, the decedent was mentally incom-
petent so that the disposition of the dece-
dent’s property could not be changed, and
the decedent dies without having regained
competency to dispose of the decedent’s
property or dies within 90 days of the date
on which the decedent first regains com-
petency, the fair market value of annu-
ities, life estates, terms for years, remain-
ders, and reversions included in the gross
estate of the decedent is their present
value determined either under this section
or under the corresponding section applic-
able at the time the decedent became
mentally incompetent, at the option of the
decedent’s executor. For example, see
§20.2031–7A(e)(2).
(ii) If a decedent dies after April 30,
1999, and before July 1, 1999, the fair
market value of annuities, life estates, re-
mainders, and reversions based on one or
more measuring lives included in the
gross estate of the decedent is their pre-
sent value determined under this section
by use of the section 7520 interest rate for
the month in which the valuation date oc-
curs (See §§20.7520–1(b) and 20.7520–
2(a)(2)) and the appropriate actuarial ta-
bles under either paragraph (d)(7) of this
section or §20.2031–7A(e)(4), at the op-
tion of the decedent’s executor.
(iii) For purposes of paragraphs
(d)(3)(i) and (ii) of this section, where the
decedent’s executor is given the option to
use the appropriate actuarial tables under
either paragraph (d)(7) of this section or
§20.2031–7A(e)(4), the decedent’s execu-
tor must use the same actuarial table with
respect to each individual transaction and
with respect to all transfers occurring on
the valuation date (e.g., gift and income
tax charitable deductions with respect to
the same transfer must be determined
based on the same tables, and all assets
includible in the gross estate and/or estate
tax deductions claimed must be valued
based on the same tables).
(4) Publications and actuarial compu-
tations by the Internal Revenue Service.
Many standard actuarial factors not in-
cluded in §20.2031–7(d)(6) or in para-
graph (d)(7) of this section are included in
Internal Revenue Service Publication
1457, “Actuarial Values, Book Aleph,”
(1999). Publication 1457 also includes
examples that illustrate how to compute
many special factors for more unusual sit-
uations. A copy of this publication is
available for purchase from the Superin-
tendent of Documents, United States
Government Printing Office, Washington,
DC 20402. If a special factor is required
in the case of an actual decedent, the In-
ternal Revenue Service may furnish the
factor to the executor upon a request for a
ruling. 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 periodi-
cally in the Internal Revenue Bulletin (see
§§601.201 and 601.601(d)(2)(ii)(b) of
this chapter) and include payment of the
required user fee.
(5) Examples.The provisions of this
section are illustrated by the following ex-
amples:
Example 1. Remainder payable at an individ-
ual’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 dece-
dent’s death, A was 47 years 5 months old. In the
month in which the decedent died, the section 7520
rate was 9.8 percent. Under Table S in paragraph
(d)(7) of this section, the remainder factor at 9.8 per-
cent for determining the present value of the remain-
der interest due at the death of a person aged 47, the
number of years nearest A’s actual age at the dece-
dent’s death, is .10317. The present value of the re-
mainder interest at the date of the decedent’s death
is, therefore, $5,158.50 ($50,000 3.10317).
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 10 months old. The section 7520 rate
at the time of the parent’s death was 10.2 percent.
Under Table S in paragraph (d)(7) of this section, the
remainder factor at 10.2 percent for determining the
present value of the remainder interest due at the
death of a person aged 31, the number of years clos-
est to A’s age at the decedent’s death, is .03583.
Converting this remainder factor to an income fac-
tor, as described in paragraph (d)(2)(iii) of this sec-
tion, the factor for determining the present value of
an income interest for the life of a person aged 31 is
.96417. The present value of A’s interest at the time
of the parent’s death is, therefore, $48,208.50
($50,000 3.96417).
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 a 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 7 months old. Also, at A’s
death, the section 7520 rate was 9.6 percent. Under
Table S in paragraph (d)(7) of this section, the factor
at 9.6 percent for determining the present value of
the remainder interest at the death of a person age 46
(the number of years nearest B’s actual age) is
1999–20 I.R.B.47May 17, 1999

.10013. By converting the factor to an annuity fac-
tor, as described in paragraph (d)(2)(iv)(A) of this
section, the factor for the present value of an annuity
payable until the death of a person age 46 is 9.3736
(1.00000 minus .10013, divided by .096). The ad-
justment factor from Table K in §20.2031–7(d)(6) at
an interest rate of 9.6 percent for semiannual annuity
payments made at the end of the period is 1.0235.
The present value of the annuity at the date of A’s
death is, therefore, $95,938.80 ($10,000 39.3736
31.0235).
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 a year payable in
equal quarterly installments at the end of each quar-
ter throughout a term certain. At the time of the
decedent’s death, the section 7520 rate was 9.8 per-
cent. A quarterly payment had just been made prior
to the decedent’s death and payments were to con-
tinue for 5 more years. Under Table B in §20.2031–
7(d)(6) for the interest rate of 9.8 percent, the factor
for the present value of a remainder interest due after
a term of 5 years is .626597. Converting the factor to
an annuity factor, as described in paragraph
(d)(2)(iv)(A) of this section, the factor for the present
value of an annuity for a term of 5 years is 3.8102.
The adjustment factor from Table K in §20.2031–
7(d)(6) at an interest rate of 9.8 percent for quarterly
annuity payments made at the end of the period is
1.0360. The present value of the annuity is, there-
fore, $39,473.67 ($10,000 33.8102 31.0360).
(6) [Reserved]. For further guidance,
see §20.2031–7(d)(6).
(7) Actuarial Table S and Table 90CM
where the valuation date is after April 30,
1999. Except as provided in §20.7520–
2(b) (pertaining to certain limitations on
the use of prescribed tables), the follow-
ing Table 90CM and Table S (single life
remainder factors applicable where the
valuation date is after April 30, 1999) and
Table B, Table J, and Table K contained in
§20.2031–7(d)(6), must be used in the ap-
plication of the provisions of this section
when the section 7520 interest rate com-
ponent is between 4.2 and 14 percent.
May 17, 1999481999–20 I.R.B.
TABLE S
BASED ON LIFE TABLE 90CM
SINGLE LIFE REMAINDER FACTORS
APPLICABLE AFTER APRIL 30, 1999
INTEREST RATE
AGE4.2% 4.4%4.6%4.8%5.0%5.2%5.4%5.6%5.8%6.0%
0.06752.06130.05586.05109.04691.04322.03998 .03711.03458.03233
1.06137.05495.04932.04438.04003.03620.03283.02985.02721.02487
2.06325 .05667 .05088 .04580 .04132 .03737 .03388.03079.02806.02563
3.06545 .05869 .05275 .04752 .04291 .03883 .03523 .03203 .02920 .02668
4.06784 .06092 .05482 .04944 .04469 .04048 .03676 .03346 .03052 .02791
5.07040 .06331 .05705 .05152 .04662 .04229 .03845 .03503 .03199 .02928
6.07310 .06583 .05941 .05372 .04869 .04422 .04025 .03672 .03357 .03076
7.07594 .06849 .06191 .05607 .05089 .04628 .04219 .03854 .03528 .03236
8.07891 .07129 .06453 .05853 .05321 .04846 .04424 .04046 .03709 .03407
9.08203 .07423 .06731 .06115 .05567 .05079 .04643 .04253 .03904 .03592
10.08532 .07734 .07024 .06392 .05829 .05326 .04877 .04474 .04114 .03790
11.08875 .08059 .07331 .06683 .06104 .05587 .05124 .04709 .04336 .04002
12.09233 .08398 .07653 .06989 .06394.05862.05385 .04957 .04572 .04226
13.09601 .08748 .07985 .07304 .06693 .06146 .05655 .05214 .04816 .04458
14.09974 .09102 .08322 .07624 .06997 .06435 .05929 .05474 .05064 .04694
15.10350 .09460 .08661 .07946 .07303 .06725 .06204 .05735 .05312 .04930
16.10728 .09818.09001 .08268 .07608 .07014 .06479 .05996 .05559 .05164
17.11108 .10179 .09344 .08592 .07916 .07306 .06755 .06257 .05807 .05399
18.11494 .10545 .09691 .08921 .08227.07601 .07034 .06521 .06057 .05636
19.11889.10921 .10047 .09259 .08548 .07904 .07322.06794 .06315 .05880
20.12298.11310 .10417 .09610 .08881 .08220 .07622 .07078 .06584 .06135
21.12722 .11713 .10801.09976 .09228 .08550 .07935 .07375.06866 .06403
22.13159 .12130 .11199 .10354 .09588 .08893 .08260 .07685 .07160 .06682
23.13613 .12563.11612 .10748 .09964 .09250 .08601 .08009 .07468 .06975
24.14084 .13014 .12043 .11160 .10357 .09625 .08958 .08349 .07793 .07284
25.14574 .13484 .12493 .11591 .10768 .10018 .09334 .08708 .08135 .07611
26.15084 .13974 .12963 .12041 .11199 .10431 .09728 .09085 .08496 .07956
27.15615 .14485 .13454 .12513 .11652 .10865 .10144 .09484 .08878 .08322
28.16166 .15016 .13965.13004 .12124 .11319 .10580 .09901 .09279 .08706
29.16737 .15567 .14497 .13516 .12617 .11792 .11035 .10339 .09699 .09109

TABLE S
BASED ON LIFE TABLE 90CM
SINGLE LIFE REMAINDER FACTORS
APPLICABLE AFTER APRIL 30, 1999
INTEREST RATE
AGE4.2% 4.4%4.6%4.8%5.0%5.2%5.4%5.6%5.8%6.0%
30.17328 .16138 .15048 .14047 .13129 .12286 .11510 .10796 .10138 .09532
31.17938 .16728 .15618 .14599 .13661 .12799 .12004 .11272 .10597 .09974
32.18568 .17339 .16210 .15171 .14214 .13333 .12520 .11769 .11076 .10435
33.19220 .17972 .16824 .15766 .14790 .13889 .13058 .12289 .11578 .10920
34.19894 .18627 .17460 .16383 .15388.14468 .13618 .12831 .12102.11426
35.20592.19307.18121.17025.16011.15073.14204.13399.12652.11958
36.21312.20010.18805.17691.16658.15701.14814.13990.13225.12514
37.22057.20737.19514.18382.17331.16356.15450.14608.13825.13096
38.22827.21490.20251.19100.18031.17038.16113.15253.14452.13705
39.23623.22270.21013.19845.18759.17747.16805.15927.15108.14344
40.24446 .23078 .21805 .20620 .19516 .18487 .17527.16631 .15795 .15013
41.25298 .23915 .22626 .21425 .20305 .19259.18282 .17368 .16514 .15715
42.26178 .24782 .23478 .22262 .21125 .20062 .19069 .18138 .17267 .16450
43.27087 .25678 .24360 .23129 .21977 .20898 .19888 .18941 .18053 .17220
44.28025 .26603 .25273 .24027 .22860 .21766 .20740 .19777 .18873 .18023
45.28987.27555 .26212 .24953 .23772 .22664 .21622 .20644 .19724 .18858
46.29976.28533 .27179 .25908.24714 .23591 .22536.21542 .20606 .19725
47.30987.29535 .28171.26889 .25682 .24546 .23476 .22468 .21518 .20621
48.32023.30563.29190 .27897 .26678 .25530 .24447 .23425.22460 .21549
49.33082.31615 .30234 .28931 .27702 .26543 .25447 .24412 .23434 .22509
50.34166.32694.31306.29995.28756.27586.26479.25432.24441.23502
51.35274.33798.32404.31085.29838.28658.27541.26482.25479.24528
52.36402.34924.33525.32200.30946.29757.28630.27561.26547.25584
53.37550.36070.34668.33339.32078.30882.29746.28667.27643.26669
54.38717.37237.35833.34500.33234.32031.30888.29801.28766.27782
55.39903.38424.37019.35683.34413.33205.32056.30961.29918.28925
56.41108.39631.38227.36890.35617.34405.33250.32149.31099.30097
57.42330.40857.39455.38118.36844.35629.34469.33363.32306.31297
58.43566.42098.40699.39364.38089.36873.35710.34600.33538.32522
59.44811.43351.41956.40623.39350.38133.36968.35855.34789.33768
60.46066.44613.43224.41896.40624.39408.38243.37127.36058.35033
61.47330.45887.44505.43182.41914.40699.39535.38418.37347.36318
62.48608.47175.45802.44485.43223.42011.40848.39732.38660.37629
63.49898.48478.47115.45807.44550.43343.42184.41069.39997.38966
64.51200.49793.48442.47143.45895.44694.43539.42427.41357.40326
65.52512.51121.49782.48495.47255.46062.44912.43805.42738.41709
66.53835.52461.51137.49862.48634.47449.46307.45206.44143.43118
67.55174.53818.52511.51250.50034.48860.47727.46633.45576.44556
68.56524.55188.53899.52654.51452.50291.49168.48083.47034.46020
69.57882.56568.55299.54071.52885.51737.50627.49552.48513.47506
70.59242.57951.56703.55495.54325.53193.52096.51034.50004.49007
1999–20 I.R.B.49May 17, 1999

TABLE S
BASED ON LIFE TABLE 90CM
SINGLE LIFE REMAINDER FACTORS
APPLICABLE AFTER APRIL 30, 1999
INTEREST RATE
AGE4.2% 4.4%4.6%4.8%5.0%5.2%5.4%5.6%5.8%6.0%
71.60598 .59332 .58106 .56918 .55767 .54651 .53569.52520 .51503 .50516
72.61948 .60707 .59504 .58338 .57206 .56108 .55043 .54009 .53004 .52029
73.63287 .62073 .60895 .59751 .58640 .57561.56513 .55495 .54505 .53543
74.64621 .63435 .62282 .61162 .60073 .59015 .57985 .56984 .56009 .55061
75.65953 .64796 .63671 .62575 .61510 .60473 .59463.58480 .57523 .56591
76.67287 .66160 .65063 .63995 .62954 .61940 .60952.59989 .59050 .58135
77.68622 .67526 .66459 .65419 .64404 .63415 .62450.61509 .60590 .59694
78.69954 .68892 .67856 .66845 .65858 .64895 .63955 .63036 .62140 .61264
79.71278 .70250 .69246 .68265 .67308.66372 .65457 .64563 .63690 .62836
80.72581 .71588 .70618 .69668 .68740 .67833 .66945 .66077 .65227 .64396
81.73857 .72899 .71962 .71045 .70147 .69268 .68408 .67566 .66741 .65933
82.75101 .74178 .73274 .72389 .71522 .70672 .69840.69024 .68225 .67441
83.76311 .75423 .74553 .73700 .72864 .72044 .71240.70451 .69678.68919
84.77497 .76645 .75809 .74988 .74183.73393.72618 .71857 .71110 .70377
85.78665 .77848 .77047 .76260 .75487 .74728 .73982 .73250 .72530 .71823
86.79805 .79025 .78258 .77504 .76764 .76036 .75320 .74617 .73925 .73245
87.80904 .80159 .79427 .78706 .77998 .77301 .76615 .75940 .75277 .74624
88.81962 .81251 .80552 .79865 .79188 .78521 .77865 .77220 .76584 .75958
89.82978 .82302 .81636 .80980 .80335 .79699 .79072 .78455 .77847 .77248
90.83952 .83309 .82676 .82052 .81437 .80831 .80234 .79645 .79064 .78492
91.84870 .84260 .83658 .83064 .82479 .81902 .81332 .80771 .80217 .79671
92.85716 .85136 .84563 .83998 .83441 .82891 .82348 .81812 .81283 .80761
93.86494 .85942.85396 .84858 .84326 .83801 .83283 .82771 .82266 .81767
94.87216 .86690 .86170 .85657 .85149 .84648 .84153 .83664 .83181 .82704
95.87898 .87397 .86902 .86412 .85928 .85450 .84977 .84510 .84049 .83592
96.88537 .88060 .87587 .87121 .86659 .86203 .85751 .85305 .84864 .84427
97.89127 .88672 .88221 .87775 .87335 .86898 .86467 .86040 .85618 .85200
98.89680 .89245 .88815 .88389 .87968 .87551 .87138 .86730 .86326 .85926
99.90217 .89803 .89393 .88987 .88585 .88187 .87793 .87402 .87016.86633
100.90738 .90344 .89953 .89567 .89183 .88804 .88428 .88056 .87687 .87322
101.91250 .90876.90504 .90137 .89772 .89412 .89054 .88699 .88348 .88000
102.91751 .91396 .91045 .90696 .90350 .90007 .89668 .89331 .88997 .88666
103.92247 .91912 .91579 .91249 .90922 .90598 .90276 .89957 .89640 .89326
104.92775 .92460 .92148 .91839 .91532 .91227 .90924 .90624 .90326 .90031
105.93290 .92996 .92704 .92415 .92127 .91841 .91558 .91276 .90997 .90719
106.93948 .93680 .93415 .93151 .92889 .92628 .92370 .92113 .91857 .91604
107.94739 .94504 .94271 .94039 .93808 .93579 .93351 .93124 .92899 .92675
108.95950 .95767 .95585 .95404 .95224 .95045.94867 .94689 .94512 .94336
109.97985 .97893 .97801 .97710 .97619 .97529 .97438.97348 .97259 .97170
May 17, 1999501999–20 I.R.B.

TABLE S
BASED ON LIFE TABLE 90CM
SINGLE LIFE REMAINDER FACTORS
APPLICABLE AFTER APRIL 30, 1999
INTEREST RATE
AGE6.2%6.4%6.6%6.8%7.0%7.2%7.4%7.6%7.8%8.0%
0.03034 .02857.02700.02559.02433.02321.02220.02129.02047.01973
1.02279 .02094.01929.01782.01650.01533.01427.01331.01246.01168
2.02347 .02155.01983.01829.01692.01569.01458.01358.01268.01187
3.02444 .02243.02065.01905.01761.01632.01516.01412.01317.01232
4.02558 .02349.02163.01996.01846.01712.01590.01481.01382.01292
5.02686 .02469 .02275 .02101 .01945 .01804 .01677 .01562 .01458 .01364
6.02825 .02600 .02398 .02217 .02053 .01906 .01773 .01653 .01544 .01445
7.02976 .02742 .02532 .02343 .02172 .02019 .01880 .01754 .01640 .01536
8.03137 .02894 .02675 .02479 .02301 .02140 .01995 .01864 .01744 .01635
9.03311 .03059 .02832 .02627 .02442 .02274 .02122 .01985 .01859 .01745
10.03499 .03237 .03001 .02788 .02595 .02420 .02262 .02118 .01987 .01867
11.03700 .03428 .03183 .02961 .02760 .02578 .02413 .02262 .02125 .02000
12.03913 .03632 .03377 .03146 .02937 .02748 .02575 .02418 .02275 .02144
13.04135 .03843 .03579 .03339 .03122 .02924 .02744 .02580 .02431 .02294
14.04359 .04057 .03783 .03534 .03308 .03102 .02915 .02744 .02587 .02444
15.04584 .04270 .03986 .03728 .03493 .03279 .03083 .02905 .02742 .02593
16.04806 .04482 .04187 .03919 .03674 .03452 .03248 .03063 .02892 .02736
17.05029 .04692 .04387.04108 .03855 .03623 .03411 .03218 .03040 .02877
18.05253 .04905 .04588 .04299 .04036 .03795 .03574 .03373 .03187 .03017
19.05484 .05124 .04796 .04496 .04222 .03972 .03742 .03532 .03339.03161
20.05726 .05354 .05013 .04702 .04418 .04158 .03919 .03700 .03498 .03313
21.05980 .05595 .05242 .04920 .04625 .04354 .04105 .03877 .03667 .03473
22.06246 .05847 .05482 .05147 .04841 .04559 .04301 .04063 .03844 .03642
23.06524 .06112 .05734 .05387.05069 .04777 .04508 .04260 .04032 .03821
24.06819 .06392 .06001 .05642 .05312 .05008 .04728 .04470 .04232 .04012
25.07131 .06690 .06285 .05913 .05570 .05255 .04964 .04695 .04447.04218
26.07460 .07005 .06586 .06200 .05845 .05518 .05215 .04936 .04677.04438
27.07810 .07340 .06907 .06508 .06140 .05800 .05485 .05195 .04925 .04676
28.08179 .07693 .07246 .06833 .06451 .06098 .05772 .05469 .05189 .04929
29.08566 .08065 .07603 .07176 .06780 .06414 .06075 .05761 .05469 .05198
30.08973 .08456 .07978 .07536 .07127 .06748 .06396 .06069 .05766 .05483
31.09398 .08865 .08372 .07915 .07491 .07098 .06733 .06394 .06078 .05785
32.09843 .09294 .08785 .08313 .07875 .07468 .07089 .06737 .06409 .06103
33.10310 .09745 .09220 .08732 .08279 .07858 .07466 .07100 .06759 .06441
34.10799 .10217 .09676 .09173 .08705 .08269 .07862 .07483 .07129 .06798
35.11314 .10715 .10157 .09638 .09155 .08704 .08283 .07890 .07522 .07179
36.11852 .11236 .10662 .10127 .09628 .09162 .08726 .08319 .07938 .07581
37.12416 .11783 .11193 .10641 .10126 .09645 .09194 .08772 .08377 .08006
38.13009 .12359 .11751 .11183 .10652 .10155 .09689 .09253 .08843 .08459
39.13629 .12962 .12338 .11753 .11206 .10693 .10212 .09761 .09337 .08938
1999–20 I.R.B.51May 17, 1999

TABLE S
BASED ON LIFE TABLE 90CM
SINGLE LIFE REMAINDER FACTORS
APPLICABLE AFTER APRIL 30, 1999
INTEREST RATE
AGE6.2%6.4%6.6%6.8%7.0%7.2%7.4%7.6%7.8%8.0%
40.14281.13597.12955.12355.11791.11262.10766.10299.09860.09447
41.14966.14264.13606.12989.12409.11864.11352.10870.10417.09989
42.15685.14966.14291.13657.13061.12500.11972.11475.11006.10564
43.16437.15702.15010.14360.13747.13171.12627.12115.11631.11174
44.17224.16472.15764.15098.14469.13876.13317.12789.12290.11819
45.18042.17274.16550.15867.15223.14615.14040.13496.12982.12496
46.18893.18110.17370.16671.16011.15387.14796.14238.13708.13207
47.19775.18975.18220.17505.16830.16190.15584.15010.14466.13950
48.20688.19873.19102.18373.17682.17027.16406.15817.15258.14727
49.21633.20804.20018.19274.18568.17898.17262.16658.16084.15539
50.22612.21769.20969.20210.19490.18805.18155.17536.16948.16388
51.23625.22769.21955.21182.20448.19749.19084.18452.17849.17275
52.24669.23799.22973.22186.21438.20726.20047.19400.18784.18196
53.25742.24861.24022.23222.22461.21735.21043.20383.19753.19151
54.26845.25952.25101.24290.23516.22777.22072.21399.20756.20140
55.27978.27074.26212.25389.24604.23853.23136.22450.21793.21166
56.29140.28227.27355.26522.25725.24963.24233.23535.22867.22227
57.30333.29411.28529.27686.26879.26106.25365.24656.23976.23324
58.31551.30621.29731.28878.28061.27278.26528.25807.25116.24453
59.32790.31854.30956.30095.29269.28477.27716.26986.26284.25610
60.34050.33107.32202.31334.30500.29699.28929.28190.27478.26794
61.35331.34384.33473.32598.31757.30948.30170.29422.28701.28007
62.36639.35688.34772.33892.33044.32229.31443.30687.29958.29255
63.37974.37020.36101.35216.34363.33542.32750.31986.31250.30539
64.39334.38378.37456.36568.35711.34884.34087.33317.32574.31857
65.40718.39761.38838.37947.37087.36257.35455.34681.33932.33208
66.42128.41172.40249.39357.38496.37663.36858.36079.35326.34597
67.43569.42616.41694.40803.39941.39107.38299.37518.36761.36028
68.45038.44089.43170.42281.41419.40585.39777.38994.38235.37499
69.46531.45587.44672.43786.42927.42094.41286.40503.39743.39006
70.48040.47103.46194.45312.44456.43626.42820.42038.41278.40540
71.49558.48629.47727.46851.46000.45174.44371.43591.42832.42095
72.51082.50162.49268.48399.47554.46733.45934.45157.44401.43666
73.52607.51697.50813.49952.49114.48299.47506.46733.45981.45249
74.54139.53241.52367.51515.50686.49879.49092.48325.47578.46849
75.55683.54798.53936.53095.52276.51477.50698.49938.49197.48474
76.57243.56373.55524.54696.53888.53100.52330.51579.50846.50130
77.58819.57965.57132.56318.55523.54747.53988.53247.52523.51815
78.60408.59572.58755.57957.57177.56414.55668.54939.54225.53527
79.62001.61184.60385.59604.58840.58092.57360.56644.55943.55256
May 17, 1999521999–20 I.R.B.

TABLE S
BASED ON LIFE TABLE 90CM
SINGLE LIFE REMAINDER FACTORS
APPLICABLE AFTER APRIL 30, 1999
INTEREST RATE
AGE6.2%6.4%6.6%6.8%7.0%7.2%7.4%7.6%7.8%8.0%
80.63582 .62786 .62007 .61244 .60497 .59765 .59048 .58347 .57659 .56985
81.65142 .64367 .63608.62864.62135.61421.60721.60034.59361.58701
82.66673.65920.65182.64458.63748.63052.62368.61698.61041.60395
83.68175.67444.66728.66024.65334.64656.63991.63338.62696.62066
84.69657.68950.68256.67574.66904.66246.65599.64964.64340.63727
85.71128.70446.69775.69116.68467.67830.67204.66587.65982.65386
86.72576.71919.71272.70636.70010.69394.68789.68193.67606.67029
87.73981.73349.72726.72114.71511.70917.70333.69757.69190.68632
88.75342.74735.74137.73548.72968.72396.71833.71279.70732.70194
89.76658.76076.75503.74938.74381.73832.73290.72757.72231.71712
90.77928.77371.76823.76281.75748.75221.74702.74190.73684.73186
91.79131.78600.78075.77557.77046.76542.76044.75553.75068.74589
92.80246.79737.79235.78740.78250.77767.77290.76818.76353.75893
93.81274.80788.80307.79832.79363.78899.78441.77989.77542.77100
94.82232.81766.81306.80850.80401.79956.79517.79082.78653.78228
95.83141.82695.82254.81818.81387.80961.80539.80122.79710.79302
96.83996.83569.83147.82729.82316.81907.81503.81103.80707.80315
97.84787.84378.83973.83573.83176.82784.82396.82012.81632.81255
98.85530.85138.84750.84366.83985.83609.83236.82867.82502.82140
99.86255.85880.85508.85140.84776.84415.84057.83703.83353.83005
100.86960.86601.86246.85894.85546.85200.84858.84519.84183.83849
101.87655.87313.86974.86638.86305.85975.85648.85324.85003.84684
102.88338.88012.87689.87369.87052.86738.86426.86116.85809.85505
103.89015.88706.88399.88095.87793.87494.87197.86903.86611.86321
104.89737.89446.89157.88871.88586.88304.88024.87745.87469.87195
105.90443.90170.89898.89628.89360.89094.88830.88568.88307.88049
106.91351.91101.90852.90605.90359.90115.89873.89632.89392.89154
107.92452.92230.92010.91791.91573.91356.91141.90927.90714.90502
108.94161.93987.93814.93641.93469.93298.93128.92958.92790.92622
109.97081.96992.96904.96816.96729.96642.96555.96468.96382.96296
1999–20 I.R.B.53May 17, 1999

TABLE S
BASED ON LIFE TABLE 90CM
SINGLE LIFE REMAINDER FACTORS
APPLICABLE AFTER APRIL 30, 1999
INTEREST RATE
AGE8.2%8.4%8.6%8.8%9.0%9.2%9.4%9.6%9.8%10.0%
0.01906.01845.01790.01740.01694.01652.01613.01578.01546.01516
1.01098.01034.00977.00924.00876.00833.00793.00756.00722.00691
2.01113.01046.00986.00930.00880.00834.00791.00753.00717.00684
3.01155.01084.01020.00962.00909.00860.00816.00775.00737.00702
4.01211.01137.01069.01008.00952.00900.00853.00810.00770.00733
5.01279.01201.01130.01065.01006.00952.00902.00856.00814.00775
6.01356.01274.01199.01131.01068.01011.00959.00910.00865.00824
7.01442.01356.01277.01205.01140.01079.01023.00972.00925.00881
8.01536.01446.01363.01287.01218.01154.01096.01041.00991.00945
9.01641.01546.01460.01380.01307.01240.01178.01120.01068.01019
10.01758.01659.01567.01484.01407.01336.01270.01210.01154.01103
11.01886.01781.01686.01598.01517.01442.01373.01310.01251.01196
12.02024.01915.01814.01721.01636.01558.01485.01419.01357.01299
13.02168.02054.01948.01851.01762.01679.01603.01533.01467.01407
14.02313.02193.02083.01981.01887.01801.01721.01646.01578.01514
15.02456.02330.02214.02107.02009.01918.01834.01756.01684.01617
16.02593.02462.02340.02229.02126.02030.01942.01860.01785.01714
17.02728.02590.02463.02346.02238.02138.02046.01960.01880.01806
18.02861.02717.02584.02462.02348.02243.02146.02056.01972.01894
19.02998.02847.02708.02580.02461.02351.02249.02154.02066.01984
20.03142.02984.02839.02704.02580.02465.02357.02258.02165.02079
21.03295.03130.02978.02837.02706.02585.02473.02368.02271.02180
22.03455.03283.03124.02976.02839.02712.02594.02484.02382.02286
23.03626.03446.03279.03124.02981.02847.02723.02608.02500.02400
24.03809.03620.03446.03283.03133.02993.02863.02741.02628.02522
25.04005.03808.03625.03456.03298.03151.03014.02887.02768.02656
26.04216.04010.03819.03641.03476.03322.03178.03044.02919.02802
27.04444.04229.04029.03843.03670.03508.03357.03217.03085.02962
28.04687.04463.04254.04059.03877.03708.03550.03402.03263.03133
29.04946.04712.04493.04289.04099.03922.03756.03600.03455.03318
30.05221.04976.04748.04534.04335.04149.03975.03812.03659.03515
31.05511.05255.05017.04794.04585.04390.04208.04037.03876.03725
32.05818.05551.05302.05069.04851.04647.04455.04276.04107.03948
33.06144.05866.05606.05363.05135.04921.04720.04532.04355.04188
34.06489.06200.05928.05674.05436.05212.05002.04805.04619.04444
35.06857.06555.06273.06007.05758.05524.05304.05097.04902.04718
36.07246.06932.06638.06361.06101.05856.05626.05409.05205.05012
37.07659.07332.07025.06737.06466.06210.05969.05742.05528.05325
38.08098.07758.07439.07138.06855.06588.06336.06099.05874.05662
39.08563.08210.07878.07565.07270.06992.06729.06480.06245.06023
May 17, 1999541999–20 I.R.B.

TABLE S
BASED ON LIFE TABLE 90CM
SINGLE LIFE REMAINDER FACTORS
APPLICABLE AFTER APRIL 30, 1999
INTEREST RATE
AGE8.2%8.4%8.6%8.8%9.0%9.2%9.4%9.6%9.8%10.0%
40.09059.08692.08347.08021.07714.07423.07149.06889.06643.06411
41.09586.09206.08848.08509.08189.07886.07600.07329.07072.06828
42.10147.09753.09381.09029.08696.08381.08083.07800.07531.07277
43.10742.10334.09948.09583.09237.08909.08598.08304.08024.07758
44.11373.10950.10551.10172.09813.09472.09148.08841.08549.08272
45.12035.11599.11185.10792.10420.10066.09730.09410.09106.08817
46.12732.12281.11853.11447.11061.10694.10345.10013.09696.09395
47.13460.12995.12553.12133.11733.11353.10991.10646.10317.10004
48.14223.13743.13287.12853.12439.12046.11671.11313.10972.10646
49.15020.14526.14056.13608.13181.12774.12385.12015.11661.11322
50.15855.15347.14862.14401.13960.13540.13138.12754.12388.12037
51.16727.16205.15707.15232.14777.14344.13929.13532.13153.12789
52.17634.17098.16587.16097.15630.15183.14755.14345.13953.13577
53.18576.18027.17501.16999.16518.16057.15616.15194.14789.14400
54.19552.18990.18451.17935.17441.16968.16514.16078.15661.15260
55.20564.19989.19437.18908.18402.17915.17449.17001.16571.16157
56.21613.21025.20461.19919.19400.18901.18422.17962.17519.17093
57.22698.22098.21522.20968.20436.19925.19434.18961.18507.18069
58.23816.23204.22616.22051.21507.20984.20481.19996.19530.19080
59.24962.24339.23740.23163.22608.22073.21558.21062.20584.20123
60.26136.25502.24892.24304.23738.23192.22666.22158.21669.21196
61.27339.26695.26075.25477.24900.24343.23806.23288.22787.22304
62.28578.27925.27295.26687.26100.25533.24985.24456.23945.23451
63.29854.29192.28553.27935.27339.26762.26205.25666.25145.24641
64.31164.30494.29846.29221.28615.28030.27463.26915.26384.25870
65.32508.31831.31177.30543.29930.29336.28761.28203.27663.27140
66.33891.33208.32547.31906.31285.30684.30101.29536.28987.28456
67.35318.34630.33963.33316.32689.32081.31491.30918.30363.29823
68.36785.36093.35422.34770.34138.33524.32928.32349.31787.31240
69.38290.37595.36920.36265.35628.35009.34408.33824.33256.32703
70.39823.39127.38450.37791.37151.36529.35924.35335.34762.34204
71.41378.40681.40003.39343.38701.38076.37467.36875.36298.35736
72.42950.42253.41575.40914.40271.39644.39034.38438.37858.37293
73.44535.43840.43162.42502.41858.41231.40619.40022.39440.38872
74.46139.45446.44771.44112.43469.42842.42230.41632.41049.40479
75.47769.47080.46408.45752.45111.44485.43874.43277.42693.42123
76.49430.48747.48079.47427.46790.46167.45558.44963.44380.43811
77.51123.50447.49786.49139.48506.47888.47282.46690.46111.45543
78.52845.52177.51523.50884.50257.49645.49044.48457.47881.47317
79.54584.53926.53282.52650.52032.51426.50833.50251.49681.49122
1999–20 I.R.B.55May 17, 1999

TABLE S
BASED ON LIFE TABLE 90CM
SINGLE LIFE REMAINDER FACTORS
APPLICABLE AFTER APRIL 30, 1999
INTEREST RATE
AGE8.2%8.4%8.6%8.8%9.0%9.2%9.4%9.6%9.8%10.0%
80.56325.55678.55044.54423.53813.53216.52630.52056.51492.50939
81.58054.57419.56797.56186.55587.54999.54422.53856.53300.52754
82.59762.59140.58530.57931.57343.56766.56198.55641.55094.54557
83.61448.60840.60243.59657.59081.58515.57958.57411.56874.56346
84.63124.62531.61949.61376.60813.60259.59715.59179.58652.58134
85.64800.64224.63657.63099.62550.62010.61478.60955.60441.59934
86.66461.65902.65351.64810.64276.63751.63233.62724.62222.61728
87.68083.67541.67008.66483.65965.65455.64953.64458.63970.63489
88.69663.69140.68624.68116.67615.67121.66634.66154.65680.65213
89.71201.70696.70199.69708.69224.68747.68276.67811.67353.66900
90.72694.72209.71730.71257.70791.70330.69876.69427.68984.68547
91.74117.73650.73190.72735.72286.71842.71404.70972.70545.70123
92.75439.74991.74548.74110.73678.73251.72829.72412.72000.71593
93.76664.76233.75806.75385.74969.74557.74150.73748.73350.72957
94.77809.77394.76983.76578.76177.75780.75388.75000.74616.74237
95.78899.78500.78106.77715.77329.76947.76569.76195.75826.75460
96.79928.79544.79165.78790.78418.78050.77686.77326.76970.76617
97.80883.80514.80149.79787.79430.79075.78725.78377.78033.77693
98.81781.81427.81075.80727.80382.80041.79703.79368.79036.78708
99.82661.82320.81982.81648.81316.80988.80662.80340.80020.79704
100.83519.83192.82868.82547.82228.81913.81600.81290.80982.80678
101.84368.84055.83744.83437.83131.82829.82529.82231.81936.81643
102.85203.84904.84607.84313.84021.83731.83444.83159.82876.82596
103.86034.85748.85465.85184.84906.84629.84355.84082.83812.83544
104.86923.86653.86385.86119.85855.85593.85333.85074.84818.84563
105.87792.87537.87283.87032.86782.86534.86287.86042.85799.85557
106.88918.88683.88450.88218.87987.87758.87530.87304.87079.86855
107.90291.90082.89873.89666.89460.89255.89051.88849.88647.88447
108.92455.92288.92123.91958.91794.91630.91468.91306.91145.90984
109.96211.96125.96041.95956.95872.95788.95704.95620.95537.95455
May 17, 1999561999–20 I.R.B.

TABLE S
BASED ON LIFE TABLE 90CM
SINGLE LIFE REMAINDER FACTORS
APPLICABLE AFTER APRIL 30, 1999
INTEREST RATE
AGE10.2%10.4%10.6%10.8%11.0%11.2%11.4%11.6%11.8%12.0%
0.01488.01463.01439.01417.01396.01377.01359.01343.01327.01312
1.00662.00636.00612.00589.00568.00548.00530.00513.00497.00482
2.00654.00626.00600.00576.00554.00533.00514.00496.00479.00463
3.00670.00641.00613.00588.00564.00542.00522.00502.00484.00468
4.00699.00668.00639.00612.00587.00563.00542.00521.00502.00484
5.00739.00706.00675.00646.00620.00595.00571.00550.00529.00510
6.00786.00751.00718.00687.00659.00633.00608.00585.00563.00543
7.00841.00803.00769.00736.00706.00678.00652.00627.00604.00582
8.00902.00863.00826.00791.00759.00730.00702.00675.00651.00628
9.00973.00931.00892.00856.00822.00790.00760.00733.00706.00682
10.01055.01010.00969.00930.00894.00861.00829.00799.00772.00746
11.01146.01099.01055.01014.00976.00940.00907.00875.00846.00818
12.01246.01196.01150.01106.01066.01028.00993.00960.00928.00899
13.01351.01298.01249.01204.01161.01121.01084.01049.01016.00985
14.01455.01400.01348.01300.01255.01213.01173.01136.01102.01069
15.01555.01497.01443.01392.01345.01300.01259.01220.01183.01148
16.01648.01587.01530.01477.01427.01380.01336.01295.01257.01220
17.01737.01673.01612.01556.01504.01455.01408.01365.01324.01286
18.01822.01754.01691.01632.01576.01525.01476.01430.01387.01347
19.01908.01837.01770.01708.01650.01595.01544.01495.01450.01407
20.01999.01924.01854.01788.01726.01669.01615.01564.01516.01471
21.02096.02017.01943.01874.01809.01748.01691.01637.01586.01539
22.02197.02114.02036.01963.01895.01830.01770.01713.01660.01610
23.02306.02218.02136.02059.01987.01919.01855.01795.01739.01686
24.02424.02331.02245.02163.02087.02016.01948.01885.01825.01769
25.02552.02455.02364.02278.02197.02122.02051.01984.01920.01861
26.02692.02589.02493.02403.02318.02238.02162.02091.02025.01961
27.02846.02738.02636.02541.02451.02367.02287.02212.02141.02074
28.03012.02898.02791.02690.02595.02506.02422.02342.02267.02196
29.03190.03070.02957.02851.02751.02656.02567.02483.02404.02329
30.03381.03254.03135.03023.02917.02817.02723.02634.02551.02471
31.03583.03450.03324.03206.03094.02989.02890.02796.02707.02623
32.03799.03659.03527.03402.03284.03173.03068.02968.02874.02785
33.04031.03883.03744.03612.03488.03371.03260.03155.03055.02961
34.04279.04123.03976.03838.03707.03583.03465.03354.03249.03149
35.04545.04382.04227.04081.03943.03812.03688.03571.03459.03354
36.04830.04658.04495.04341.04196.04058.03927.03803.03685.03573
37.05134.04953.04782.04620.04467.04321.04183.04052.03928.03809
38.05462.05272.05092.04921.04760.04606.04461.04322.04191.04066
39.05812.05613.05424.05245.05075.04913.04760.04614.04475.04343
1999–20 I.R.B.57May 17, 1999

TABLE S
BASED ON LIFE TABLE 90CM
SINGLE LIFE REMAINDER FACTORS
APPLICABLE AFTER APRIL 30, 1999
INTEREST RATE
AGE10.2%10.4%10.6%10.8%11.0%11.2%11.4%11.6%11.8%12.0%
40.06190.05981.05782.05594.05415.05245.05083.04929.04783.04643
41.06597.06378.06170.05972.05784.05605.05435.05272.05118.04970
42.07035.06806.06587.06380.06182.05994.05815.05644.05481.05326
43.07505.07265.07036.06818.06611.06414.06225.06045.05874.05710
44.08008.07757.07518.07290.07072.06865.06667.06478.06298.06125
45.08542.08279.08029.07791.07563.07346.07138.06940.06750.06569
46.09108.08834.08573.08324.08085.07858.07640.07432.07233.07043
47.09705.09419.09147.08886.08637.08399.08172.07954.07745.07545
48.10335.10038.09754.09482.09222.08973.08735.08507.08288.08078
49.10999.10690.10394.10111.09840.09581.09332.09093.08864.08644
50.11701.11380.11073.10778.10496.10225.09965.09716.09477.09247
51.12441.12108.11789.11482.11189.10907.10636.10376.10126.09886
52.13217.12871.12540.12222.11916.11623.11341.11071.10810.10560
53.14028.13670.13327.12997.12680.12375.12082.11801.11529.11268
54.14875.14505.14150.13808.13480.13163.12859.12566.12284.12012
55.15760.15378.15011.14657.14317.13989.13674.13370.13077.12794
56.16684.16290.15911.15546.15194.14855.14528.14213.13909.13615
57.17648.17242.16851.16474.16111.15760.15422.15096.14781.14477
58.18647.18229.17827.17438.17064.16702.16353.16015.15689.15374
59.19678.19249.18835.18435.18049.17676.17316.16968.16631.16305
60.20740.20300.19875.19464.19066.18682.18311.17952.17604.17268
61.21837.21385.20949.20527.20119.19724.19341.18971.18613.18266
62.22973.22511.22064.21631.21212.20807.20414.20033.19664.19306
63.24152.23680.23222.22779.22350.21934.21530.21139.20760.20392
64.25372.24890.24422.23969.23529.23103.22690.22289.21899.21521
65.26633.26141.25664.25201.24752.24316.23893.23482.23083.22695
66.27940.27439.26953.26481.26023.25577.25145.24724.24316.23918
67.29299.28790.28296.27815.27348.26894.26453.26024.25606.25200
68.30709.30193.29691.29202.28728.28265.27816.27378.26952.26537
69.32166.31643.31134.30639.30157.29687.29230.28785.28351.27928
70.33661.33133.32618.32116.31628.31152.30688.30235.29794.29364
71.35188.34654.34134.33627.33133.32651.32181.31722.31275.30838
72.36742.36204.35679.35168.34668.34181.33706.33241.32788.32345
73.38317.37776.37248.36733.36229.35738.35257.34788.34330.33882
74.39923.39380.38849.38330.37823.37328.36844.36370.35908.35455
75.41566.41021.40489.39968.39459.38961.38474.37997.37531.37074
76.43254.42709.42176.41655.41144.40645.40156.39677.39208.38749
77.44988.44444.43912.43391.42880.42380.41891.41411.40940.40479
78.46765.46224.45694.45174.44665.44166.43677.43197.42726.42265
79.48574.48037.47510.46993.46487.45990.45502.45024.44554.44094
May 17, 1999581999–20 I.R.B.

TABLE S
BASED ON LIFE TABLE 90CM
SINGLE LIFE REMAINDER FACTORS
APPLICABLE AFTER APRIL 30, 1999
INTEREST RATE
AGE10.2%10.4%10.6%10.8%11.0%11.2%11.4%11.6%11.8%12.0%
80.50397.49865.49343.48830.48327.47834.47349.46873.46406.45947
81.52219.51693.51176.50669.50171.49682.49201.48729.48265.47809
82.54029.53510.53000.52499.52007.51523.51047.50580.50120.49667
83.55826.55315.54813.54319.53834.53356.52886.52424.51969.51522
84.57624.57123.56629.56144.55666.55195.54732.54277.53828.53386
85.59435.58944.58460.57984.57516.57054.56599.56151.55710.55275
86.61241.60762.60289.59824.59365.58913.58468.58029.57596.57170
87.63015.62548.62087.61633.61185.60744.60309.59880.59456.59039
88.64753.64299.63851.63409.62973.62543.62118.61700.61287.60879
89.66454.66013.65579.65150.64726.64308.63895.63488.63086.62689
90.68115.67689.67268.66853.66442.66037.65637.65241.64851.64465
91.69706.69294.68887.68486.68089.67696.67309.66925.66547.66173
92.71190.70792.70399.70011.69627.69247.68872.68501.68134.67771
93.72569.72184.71804.71429.71057.70689.70326.69967.69611.69259
94.73861.73490.73123.72759.72400.72044.71692.71344.71000.70659
95.75097.74739.74384.74033.73686.73342.73002.72665.72331.72001
96.76267.75922.75579.75240.74905.74572.74243.73917.73595.73275
97.77356.77022.76691.76363.76039.75718.75399.75084.74772.74463
98.78382.78059.77740.77423.77110.76799.76491.76186.75884.75584
99.79390.79079.78771.78465.78162.77862.77565.77270.76978.76688
100.80376.80076.79779.79485.79193.78904.78617.78333.78051.77771
101.81353.81066.80780.80497.80217.79938.79662.79388.79117.78847
102.82318.82042.81768.81496.81227.80960.80694.80431.80170.79911
103.83278.83014.82752.82491.82233.81977.81723.81470.81220.80971
104.84310.84059.83810.83563.83317.83073.82831.82591.82352.82115
105.85318.85079.84843.84607.84374.84142.83911.83682.83455.83229
106.86633.86413.86193.85975.85758.85543.85329.85116.84904.84694
107.88247.88049.87852.87656.87460.87266.87073.86881.86690.86500
108.90825.90666.90507.90350.90193.90037.89881.89727.89572.89419
109.95372.95290.95208.95126.95045.94964.94883.94803.94723.94643
1999–20 I.R.B.59May 17, 1999

TABLE S
BASED ON LIFE TABLE 90CM
SINGLE LIFE REMAINDER FACTORS
APPLICABLE AFTER APRIL 30, 1999
INTEREST RATE
AGE12.2%12.4%12.6%12.8%13.0%13.2%13.4%13.6%13.8%14.0%
0.01298.01285.01273.01261.01250.01240.01230.01221.01212.01203
1.00468.00455.00443.00431.00420.00410.00400.00391.00382.00374
2.00448.00435.00421.00409.00398.00387.00376.00366.00357.00348
3.00452.00437.00423.00410.00398.00386.00375.00365.00355.00345
4.00468.00452.00437.00423.00410.00397.00386.00375.00364.00354
5.00493.00476.00460.00445.00431.00418.00405.00393.00382.00371
6.00524.00506.00489.00473.00458.00444.00430.00418.00406.00394
7.00562.00543.00525.00508.00492.00477.00462.00449.00436.00423
8.00606.00586.00566.00548.00531.00515.00499.00485.00471.00458
9.00659.00637.00616.00597.00579.00561.00545.00529.00514.00500
10.00721.00698.00676.00655.00636.00617.00600.00583.00567.00552
11.00792.00767.00744.00722.00701.00682.00663.00645.00628.00612
12.00871.00845.00821.00797.00775.00754.00735.00716.00698.00681
13.00955.00928.00902.00877.00854.00831.00810.00790.00771.00753
14.01038.01009.00981.00955.00930.00907.00885.00864.00843.00824
15.01116.01085.01056.01028.01002.00977.00954.00932.00910.00890
16.01186.01153.01123.01094.01066.01040.01015.00992.00969.00948
17.01250.01215.01183.01152.01124.01096.01070.01045.01022.00999
18.01308.01272.01238.01206.01175.01147.01119.01093.01068.01044
19.01367.01329.01293.01259.01227.01196.01167.01140.01113.01088
20.01428.01388.01350.01314.01280.01248.01217.01188.01161.01134
21.01494.01451.01411.01373.01337.01303.01271.01240.01211.01183
22.01562.01517.01475.01435.01397.01361.01326.01294.01263.01233
23.01635.01588.01543.01501.01460.01422.01386.01351.01319.01287
24.01716.01665.01618.01573.01530.01489.01451.01415.01380.01347
25.01804.01751.01701.01653.01608.01565.01524.01485.01448.01413
26.01902.01845.01792.01741.01693.01648.01604.01563.01524.01487
27.02011.01951.01895.01841.01790.01742.01696.01652.01610.01571
28.02129.02066.02006.01949.01895.01844.01795.01748.01704.01662
29.02258.02191.02127.02067.02009.01955.01903.01853.01806.01762
30.02396.02325.02257.02193.02132.02074.02019.01966.01916.01869
31.02543.02467.02396.02328.02263.02201.02143.02087.02034.01983
32.02701.02621.02545.02472.02404.02338.02276.02217.02160.02106
33.02871.02786.02706.02629.02556.02487.02420.02357.02297.02240
34.03054.02964.02879.02797.02720.02646.02576.02509.02445.02383
35.03253.03158.03067.02981.02898.02820.02745.02674.02606.02541
36.03467.03366.03269.03178.03090.03007.02928.02852.02779.02710
37.03697.03590.03488.03391.03298.03209.03125.03044.02967.02893
38.03947.03833.03725.03622.03524.03430.03340.03254.03172.03094
39.04217.04096.03982.03873.03768.03669.03573.03482.03395.03312
May 17, 1999601999–20 I.R.B.

TABLE S
BASED ON LIFE TABLE 90CM
SINGLE LIFE REMAINDER FACTORS
APPLICABLE AFTER APRIL 30, 1999
INTEREST RATE
AGE12.2%12.4%12.6%12.8%13.0%13.2%13.4%13.6%13.8%14.0%
40.04510.04383.04262.04146.04035.03930.03828.03732.03639.03550
41.04830.04695.04567.04445.04327.04215.04108.04005.03907.03812
42.05177.05035.04900.04770.04646.04527.04413.04304.04200.04100
43.05553.05404.05261.05123.04992.04866.04746.04630.04520.04413
44.05960.05802.05651.05506.05368.05235.05107.04985.04867.04754
45.06395.06229.06069.05917.05770.05630.05495.05365.05241.05121
46.06860.06685.06517.06356.06202.06053.05911.05774.05643.05516
47.07353.07169.06992.06823.06660.06504.06353.06209.06070.05936
48.07877.07684.07498.07320.07149.06984.06826.06673.06527.06385
49.08433.08231.08036.07849.07669.07495.07329.07168.07013.06864
50.09026.08814.08609.08413.08224.08042.07867.07698.07535.07378
51.09655.09433.09219.09013.08815.08624.08440.08262.08091.07926
52.10318.10086.09863.09647.09439.09239.09046.08860.08680.08506
53.11017.10774.10541.10315.10098.09888.09686.09491.09302.09120
54.11750.11498.11254.11019.10792.10572.10361.10156.09958.09767
55.12522.12258.12005.11759.11522.11294.11072.10859.10652.10451
56.13332.13059.12794.12539.12292.12054.11823.11599.11383.11174
57.14183.13899.13624.13359.13102.12853.12613.12380.12154.11936
58.15070.14775.14490.14215.13948.13689.13439.13197.12962.12734
59.15990.15685.15389.15103.14826.14558.14298.14046.13801.13564
60.16942.16626.16321.16024.15737.15459.15189.14927.14673.14426
61.17929.17603.17287.16981.16684.16395.16115.15844.15580.15324
62.18960.18623.18297.17980.17673.17375.17085.16803.16530.16264
63.20035.19688.19352.19025.18708.18400.18100.17809.17525.17250
64.21154.20797.20451.20114.19787.19469.19159.18859.18566.18281
65.22318.21951.21595.21249.20912.20584.20265.19955.19652.19358
66.23532.23156.22790.22434.22088.21751.21422.21102.20791.20487
67.24804.24419.24044.23679.23324.22977.22640.22311.21990.21678
68.26133.25740.25356.24983.24618.24263.23917.23579.23250.22929
69.27516.27114.26723.26341.25969.25605.25251.24905.24567.24237
70.28945.28536.28137.27747.27367.26996.26633.26279.25934.25596
71.30412.29996.29590.29193.28806.28427.28057.27696.27343.26998
72.31913.31491.31078.30675.30281.29895.29519.29150.28790.28438
73.33444.33016.32597.32188.31788.31396.31013.30638.30271.29913
74.35012.34579.34155.33741.33335.32938.32549.32168.31795.31430
75.36628.36190.35762.35343.34932.34530.34136.33750.33372.33001
76.38299.37858.37427.37004.36589.36183.35784.35394.35011.34636
77.40028.39585.39151.38725.38307.37898.37496.37103.36716.36337
78.41812.41368.40933.40506.40086.39675.39271.38874.38485.38103
79.43641.43198.42762.42334.41914.41502.41096.40698.40308.39924
1999–20 I.R.B.61May 17, 1999

TABLE S
BASED ON LIFE TABLE 90CM
SINGLE LIFE REMAINDER FACTORS
APPLICABLE AFTER APRIL 30, 1999
INTEREST RATE
AGE12.2%12.4%12.6%12.8%13.0%13.2%13.4%13.6%13.8%14.0%
80.45496.45054.44619.44192.43772.43360.42954.42556.42164.41779
81.47360.46920.46487.46061.45643.45231.44827.44429.44038.43653
82.49223.48785.48355.47932.47516.47106.46703.46307.45916.45532
83.51081.50648.50221.49802.49388.48982.48581.48187.47799.47416
84.52951.52523.52101.51686.51277.50874.50477.50086.49701.49321
85.54847.54425.54009.53600.53196.52798.52406.52019.51638.51262
86.56749.56335.55926.55523.55126.54734.54348.53966.53591.53220
87.58627.58221.57820.57425.57035.56650.56270.55895.55526.55161
88.60477.60079.59688.59301.58919.58542.58170.57802.57439.57081
89.62297.61909.61527.61149.60776.60408.60044.59685.59330.58979
90.64084.63707.63335.62968.62604.62246.61891.61540.61194.60851
91.65803.65437.65076.64719.64366.64017.63672.63330.62993.62659
92.67412.67058.66707.66360.66017.65678.65342.65010.64682.64357
93.68911.68567.68227.67890.67557.67227.66901.66578.66258.65942
94.70321.69988.69657.69330.69006.68686.68369.68055.67744.67437
95.71674.71351.71031.70713.70399.70088.69781.69476.69174.68875
96.72959.72646.72335.72028.71724.71422.71123.70828.70534.70244
97.74156.73853.73552.73254.72959.72666.72376.72089.71804.71522
98.75287.74993.74702.74413.74126.73842.73561.73282.73006.72732
99.76401.76117.75834.75555.75277.75002.74730.74459.74191.73926
100.77494.77219.76946.76676.76408.76142.75878.75616.75357.75099
101.78580.78315.78052.77791.77532.77275.77021.76768.76517.76268
102.79654.79399.79146.78894.78645.78397.78152.77908.77666.77426
103.80724.80479.80236.79994.79755.79517.79280.79046.78813.78582
104.81879.81646.81413.81183.80954.80726.80501.80276.80054.79832
105.83005.82782.82560.82340.82121.81904.81688.81474.81260.81049
106.84485.84277.84071.83866.83662.83459.83257.83057.82857.82659
107.86311.86124.85937.85751.85566.85382.85199.85017.84835.84655
108.89266.89114.88963.88812.88662.88513.88364.88216.88068.87922
109.94563.94484.94405.94326.94248.94170.94092.94014.93937.93860
May 17, 1999621999–20 I.R.B.

LIFE TABLE
TABLE 90CM
APPLICABLE AFTER APRIL 30, 1999
Age xl(x)Age xl(x)Age xl(x)
(1)(2)(1)(2)(1)(2)
010000037959697462852
19906438957807560449
29899239955817657955
39894440953737755373
49890741951567852704
59887742949287949943
69885043946878047084
79882644944318144129
89880345941548241091
99878346938558337994
109876647935288434876
119875048931738531770
129873449927878628687
139871350923708725638
149868151919188822658
159863552914248919783
169857353908859017046
179849754902979114466
189840955896589212066
19983145688965939884
20982155788214947951
21981135887397956282
22980065986506964868
23978966085537973694
24977846184490982745
25976716283368991999
269755663821691001424
27974416480887101991
28973226579519102672
29971996678066103443
30970706776531104284
31969346874907105175
32967916973186106105
3396642707135710760
3496485716941110833
3596322726734410917
369615073651541100
1999–20 I.R.B.63May 17, 1999
(e) Effective dates.This section applies
after April 30, 1999.
Par. 20 Section 20.2055–2 is amended
by revising paragraph (f)(4) to read as fol-
lows:
§20.2055–2 Transfers not exclusively for
charitable purposes.
* * * * *
(f) * * *
(4) Other decedents. The present value
of an interest not described in paragraph
(f)(2) of this section is to be determined
under §20.2031–7T(d) in the case of
decedents where the valuation date of the

gross estate is after April 30, 1999, or
under §20.2031–7A in the case of dece-
dents where the valuation date of the
gross estate is before May 1, 1999.
* * * * *
Par. 21. Section 20.7520–1 is amended
as follows:
1. Paragraph (b)(2), last two sentences
are revised.
2. Headings for paragraphs (c)(1) and
(c)(2) are revised.
3. Paragraph (c)(2) introductory text is
revised.
4. Paragraph (c)(2)(iii) is amended by
removing the first two sentences and
adding one sentence in their place.
5. Paragraph (d) is revised.
The revised and added provisions read
as follows:
§20.7520–1 Valuation of annuities,
unitrust interests, interests for life or term
of years, and remainder or reversionary
interests.
* * * * *
(b) * * *
(2) * * * For decedents’ estates with
valuation dates after April 30, 1989, and
before May 1, 1999, the mortality compo-
nent table (Table 80CNSMT) is included
in §20.2031–7A(e)(4). See §20.2031–
7A(a) through (d) for mortality compo-
nent tables applicable to decedents’ es-
tates with valuation dates before May 1,
1989.
(c) * * *
(1) Regulations sections containing ta-
bles with interest rates between 4.2 and
14 percent for valuation dates after April
30, 1989, and before May 1, 1999.* * *
(2) Internal Revenue Service publica-
tions containing tables with interest rates
between 2.2. and 26 percent for valuation
dates after April 30, 1989, and before
May 1, 1999.The following publications
are no longer available from the Superin-
tendent of Documents, however, they
may be obtained from: CC:DOM:CORP:
R, room 5226, Internal Revenue Service,
POB 7604, Ben Franklin Station, Wash-
ington, DC 20044:
* * * * *
(iii) Internal Revenue Service Publica-
tion 1459, “Actuarial Values, Gamma
Volume,” (8-89). * * *
(d) Effective date.This section applies
after April 30, 1989, and before May 1,
1999.
Par. 22. Section 20.7520–1T is added
to read as follows:
§20.7520–1T Valuation of annuities,
unitrust interests, interests for life or term
of years, and remainder or reversionary
interests (temporary).
(a) (1) [Reserved]. For further guid-
ance, see §20.7520–1(a)1).
(2) In the case of a transfer to a pooled
income fund with a valuation date after
April 30, 1999, see §1.642(c)–6T(e) (or,
for certain prior periods, §1.642(c)–6A)
of this chapter (Income Tax Regulations)
with respect to the valuation of the re-
mainder interest.
(a)(3) through (b)(1) [Reserved]. For
further guidance, see §20.7520–1(a)(3)
through (b)(1).
(b)(2) Mortality component.The mor-
tality component reflects the mortality
data most recently available from the
United States Census. As new mortality
data becomes available after each decen-
nial census, the mortality component de-
scribed in this section will be revised peri-
odically and the mortality component
tables will be published in the regulations
at that time. For decedents’ estates with
valuation dates after April 30, 1999, the
mortality component table (Table 90CM)
is included in §20.2031–7T(d)(7). See
§20.2031–A for mortality component ta-
bles applicable to decedent’s estates with
valuation dates before May 1, 1999.
(c) [Reserved]. For further guidance,
see §20.7520–1(c).
(1) Regulation sections containing ta-
bles with interest rates between 4.2 and
14 percent for valuation dates after April
30, 1999. Section 1.642(c)–6T(e)(6) of
this chapter contains Table S used for de-
termining the present value of a single life
remainder interest in a pooled income
fund as defined in §1.642(c)–5 of this
chapter. See §1.642(c)–6A of this chapter
for actuarial factors for one life applicable
to valuation dates before May 1, 1999.
Section 1.664–4(e)(6) of this chapter con-
tains Table F (payout factors) and Table D
(actuarial factors used in determining the
present value of a remainder interest post-
poned for a term of years). Section
1.664–4T(e)(7) of this chapter contains
Table U(1) (actuarial factors for one life).
These tables are used in determining the
present value of a remainder interest in a
charitable remainder unitrust as defined in
§1.664–3 of this chapter. See §1.664–4A
of this chapter for actuarial factors for one
life applicable to valuation dates before
May 1, 1999. Section 20.2031–7(d)(6)
contains Table B (actuarial factors used
in determining the present value of an in-
terest for a term of years), Table K (annu-
ity end-of-interval adjustment factors),
and Table J (term certain annuity begin-
ning-of-interval adjustment factors). Sec-
tion 20.2031–7T(d)(7) contains Table S
(actuarial factors for one life) and Table
90CM (mortality components). These ta-
bles are used in determining the present
value of annuities, life estates, remain-
ders, and reversions. See §20.2031–7A
for actuarial factors for one life and mor-
tality components applicable to valuation
dates before May 1, 1999.
(2) Internal Revenue Service publica-
tions containing tables with interest rates
between 2.2 and 26 percent for valuation
dates after April 30, 1999.The following
documents are available for purchase
from the Superintendent of Documents,
United States Government Printing Of-
fice, Washington, DC 20402:
(i) Internal Revenue Service Publica-
tion 1457, “Actuarial Values, Book
Aleph,” (1999). This publication includes
tables of valuation factors, as well as ex-
amples that show how to compute other
valuation factors, for determining the pre-
sent value of annuities, life estates, terms
of years, remainders, and reversions,
measured by one or two lives. These fac-
tors may also be used in the valuation of
interests in a charitable remainder annuity
trust as defined in §1.664–2 of this chap-
ter (Income Tax Regulations) and a
pooled income fund as defined in
§1.642(c)–5 of this chapter.
(ii) Internal Revenue Service Publica-
tion 1458, “Actuarial Values, Book Beth,”
(1999). This publication includes 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.
(iii) Internal Revenue Service Publica-
tion 1459, “Actuarial Values, Book
Gimel,” (1999). This publication in-
May 17, 1999641999–20 I.R.B.

cludes tables for computing depreciation
adjustment factors. See §1.170A–12T of
this chapter.
(d) Effective date. This section applies
after April 30, 1999.
PART 25—GIFT TAX; GIFTS MADE
AFTER DECEMBER 31, 1954
Par. 23. The authority citation for part
25 is amended by adding entries in nu-
merical order to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Section 25.2512–5T also issued under 26
U.S.C. 7520(c)(2). * * *
Section 25.7520–1T also issued under 26
U.S.C. 7520(c)(2). * * *
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 sec-
tion 2512.
§25.2512–1 Valuation of property; in
general.
§25.2512–2 Stocks and bonds.
§25.2512–3 Valuation of interest in busi-
nesses.
§25.2512–4 Valuation of notes.
§25.2512–5 Valuation of annuities, uni-
trust interests, interests for life or term of
years, and remainder or reversionary in-
terests.
§25.2512–5T Valuation of annuities, uni-
trust interests, interests for life or term of
years, and remainder or reversionary in-
terests (temporary).
§25.2512–6 Valuation of certain life in-
surance and annuity contracts; valuation
of shares in an open-end investment com-
pany.
§25.2512–7 Effect of excise tax.
§25.2512–8 Transfers for insufficient
consideration.
Actuarial Tables Applicable Before
May 1, 1999
§25.2512–5A Valuation of annuities, uni-
trust interests, interests for life or term of
years, and remainder or reversionary in-
terests transferred before May 1, 1999.
Par. 25. Section 25.2512–5 is amended
as follows:
1. The section heading is revised.
2. Paragraphs (c) and (d) are revised.
3. Paragraph (e) is revised.
The revised provisions read as follows:
§25.2512–5 Valuation of annuities,
unitrust interests, interests for life or term
of years, and remainder or reversionary
interests.
* * * * *
(c) and (d) [Reserved]. For further
guidance, see §25.2512–5T(c) and (d).
(e) Effective date.This section applies
after April 30, 1989, and before May 1,
1999.
Par. 26. Section 25.2512–5T is added
to read as follows:
§25.2512–5T Valuation of annuities,
unitrust interests, interests for life or term
of years, and remainder or reversionary
interests (temporary).
(a) and (b) [Reserved]. For further
guidance, see §25.2512–5(a) and (b).
(c) Actuarial valuations.The present
value of annuities, unitrust interests, life
estates, terms of years, remainders, and
reversions transferred by gift after April
30, 1999, is determined under paragraph
(d) of this section. The present value of
annuities, unitrust interests, life estates,
terms of years, remainders, and reversions
transferred by gift before May 1, 1999, is
determined under the following sections:
TransfersApplicable
AfterBeforeRegulations
—01-01-5225.2512–5A(a)
12-31-5101-01-7125.2512–5A(b)
12-31-7012-01-8325.2512–5A(c)
11-30-8305-01-8925.2512–5A(d)
04-30-8905-01-9925.2512–5A(e)
(d) Actuarial valuations after April 30,
1999—(1) In general.Except as other-
wise provided in paragraph (b) of this sec-
tion and §25.7520–3(b) (relating to ex-
ceptions to the use of prescribed tables
under certain circumstances), if the valua-
tion date for the gift is after April 30,
1999, the fair market value of annuities,
life estates, terms of years, remainders,
and reversions transferred after April 30,
1999, is the present value of such interests
determined under paragraph (d)(2) of this
section and by use of standard or special
section 7520 actuarial factors. These fac-
tors are derived by using the appropriate
section 7520 interest rate and, if applica-
ble, the mortality component for the valu-
ation date of the interest that is being val-
ued. See §§25.7520–1 through 25.7520–
4. The fair market value of a qualified an-
nuity interest described in section
2702(b)(1) and a qualified unitrust inter-
est 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,
life estate, remainder, or reversion that the
donor holds by virtue of a transfer previ-
ously 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 assign-
ment of an income interest by a person
who received the interest from a spouse.
(i) 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)–6T(e) of this
chapter (see §1.642(c)–6A for certain
prior periods). The fair market value of a
remainder interest in a charitable remain-
der annuity trust, as described in §1.664–
2(a) of this chapter, is its present value de-
termined under §1.664–2(c) of this chap-
ter. 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
§1.664–4T(e) 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 transfer less the fair market
value of the remainder interest, deter-
mined under §1.664–4T(e)(4) and (5) of
this chapter.
(ii) Ordinary remainder and reversion-
ary interests.If the interest to be valued
is to take effect after a definite number of
years or after the death of one individual,
the present value of the interest is com-
puted by multiplying the value of the
property by the appropriate remainder in-
terest actuarial factor (that corresponds to
1999–20 I.R.B.65May 17, 1999

the applicable section 7520 interest rate
and remainder interest period) in Table B
(for a term certain) or the appropriate
Table S (for one measuring life), as the
case may be. Table B is contained in
§20.2031–7(d) of this chapter and Table S
(for one measuring life when the valua-
tion date is after April 30, 1999) is in-
cluded in §20.2031–7T(d)(7) of this chap-
ter and Internal Revenue Service
Publication 1457. See §20.2031–
7A(e)(4) of this chapter containing Table
S and Life Table 80CNSMT for valuation
of interests after April 30, 1989, and be-
fore May 1, 1999. For information about
obtaining actuarial factors for other types
of remainder interests, see paragraph
(d)(4) of this section.
(iii) Ordinary term-of-years and life in-
terests. If the interest to be valued is the
right of a person to receive the income of
certain property, or to use certain nonin-
come-producing 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 term-of-years or life in-
terest actuarial factor (that corresponds to
the applicable section 7520 interest rate
and term-of-years or life interest period).
Internal Revenue Service Publication
1457 includes actuarial factors for an in-
terest for a term of years in Table B and
for the life of one individual in Table S
(for one measuring life when the valuation
date is after April 30, 1999). However,
term-of-years and life interest actuarial
factors are not included in Table B in
§20.2031–7(d)(6) or Table S in §20.2031-
7T(d)(7) (or in §20.2031–7A(e)(4)) of this
chapter. If Internal Revenue Service Pub-
lication 1457 (or any other reliable source
of term-of-years and life interest actuarial
factors) is not conveniently available, an
actuarial factor for the interest may be de-
rived mathematically. This actuarial fac-
tor may be derived by subtracting the cor-
relative remainder factor (that corresponds
to the applicable section 7520 interest rate
and the term of years or the life) in Table
B (for a term of years) in §20.2031–
7(d)(6) of this chapter or in Table S (for
the life of one individual) in §20.2031–
7T(d)(7) of this chapter, as the case may
be, from 1.000000. For information about
obtaining actuarial factors for other types
of term-of-years and life interests, 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 actuarial factor (that
corresponds to the applicable section
7520 interest rate and annuity period). In-
ternal Revenue Service Publication 1457
includes actuarial factors in Table B (for
an annuity payable for a term of years)
and in Table S (for an annuity payable for
the life of one individual when the valua-
tion date is after April 30, 1999). How-
ever, annuity actuarial factors are not in-
cluded in Table B in §20.2031–7(d)(6) of
this chapter or Table S in §20.2031–
7T(d)(7) (or in §20.2031–7A(e)(4)) of
this chapter. If Internal Revenue Service
Publication 1457 (or any other reliable
source of annuity actuarial factors) is not
conveniently available, an annuity factor
for a term of years or for one life may be
derived mathematically. This annuity
factor may be derived by subtracting the
applicable remainder factor (that corre-
sponds to the applicable section 7520 in-
terest rate and annuity period) in Table B
(in the case of a term-of-years annuity) in
§20.2031–7(d)(6) of this chapter or in
Table S (in the case of a one-life annuity)
in §20.2031–7T(d)(7) of this chapter, as
the case may be, from 1.000000 and then
dividing the result by the applicable sec-
tion 7520 interest rate expressed as a dec-
imal number. See §20.2031–7T(d)(2)(iv)
of this chapter for an example that illus-
trates the computation of the present
value of an annuity.
(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 ag-
gregate amount payable annually is then
multiplied by the applicable adjustment
factor set forth in Table K in §20.2031–
7(d)(6) of this chapter at the appropriate
interest rate component for payments
made at the end of the specified periods.
The provisions of this paragraph
(d)(2)(iv)(B) are illustrated by the follow-
ing example:
Example. In July, the donor agreed to pay the an-
nuitant the sum of $10,000 per year, payable in
equal semiannual installments at the end of each pe-
riod. 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 10.6 percent. Under Table S in
§20.2031–7T(d)(7) of this chapter, the factor at 10.6
percent for determining the present value of a re-
mainder interest payable at the death of an individ-
ual aged 68 is .29691. Converting the remainder
factor to an annuity factor, as described above, the
annuity factor for determining the present value of
an annuity transferred to an individual age 68 is
6.6329 (1.00000 minus .29691 divided by .106).
The adjustment factor from Table K in §20.2031–
7(d)(6) of this chapter in the column for payments
made at the end of each semiannual period at the
rate of 10.6 percent is 1.0258. The aggregate annual
amount of the annuity, $10,000, is multiplied by the
factor 6.6329 and the product multiplied by 1.0258.
The present value of the donee’s annuity is, there-
fore, $68,040.29 ($10,000 36.6329 31.0258).
(C) If an annuity is payable at the be-
ginning of annual, semiannual, quarterly,
monthly, or weekly periods for a term of
years, the value of the annuity is com-
puted 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 ob-
tained is then multiplied by the adjust-
ment factor in Table J in §20.2031–
7(d)(6) of this chapter at the appropriate
interest rate component for payments
made at the beginning of specified peri-
ods. If an annuity is payable at the begin-
ning 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 pay-
ment 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.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 values from the tables in §§20.2031–
7(d)(6) and 20.2031–7T(d)(7) of this
chapter as described in the following
example:
Example.The donor transfers $100,000 into a
trust and retains the right to receive an annuity from
the trust in the amount of $6,000 per year, payable in
equal semiannual installments at the end of each pe-
May 17, 1999661999–20 I.R.B.

riod. 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 taken as 60 for
purposes of computing the present value of the re-
tained annuity. The section 7520 rate for the month
in which the transfer occurred is 9.8 percent. The
present value of the donor’s retained interest is
$35,709.13, determined as follows:
TABLE S value at 9.8 percent, age 60 . . . . .21669
TABLE S value at 9.8 percent, age 70 . . . . .34762
TABLE 90CM value at age 70 . . . . . . . . . . . 71357
TABLE 90CM value at age 60 . . . . . . . . . . .85537
TABLE B value at 9.8 percent, 10 years . . .392624
TABLE K value at 9.8 percent . . . . . . . . . . 1.0239
Factor for donor’s retained interest at 9.8 percent:
1999–20 I.R.B.67May 17, 1999
(1.00000 – .21669) – (.392624 3 (71357/85537) 3 (1.00000 – .34762))= 5.8126
.098
Present value of donor’s retained interest:
($6,000 35.8126 31.0239) . . . . . . . . $35,709.13
(B) Unitrust interests.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 val-
ues from the tables in §§1.664–4(e)(6)
and 1.664–4T(e)(7) of this chapter as de-
scribed in the following example:
Example. The donor who, as of the nearest birth-
day, is 60 years old, transfers $100,000 to a unitrust
on January 1st. The trust instrument requires that
each year the trust pay to the donor, in equal semian-
nual installments on June 30th and December 31st, 6
percent of the fair market value of the trust assets,
valued as of January 1st each 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
9.8 percent. Under Table F(9.8) in §1.664-4(e)(6) of
this chapter, the appropriate adjustment factor is
.932539 for semiannual payments payable at the end
of the semiannual period. The adjusted payout rate
is 5.595 percent (6% 3.932539). The present value
of the donor’s retained interest is $40,848.00 deter-
mined as follows:
TABLE U(1) value at 5.6 percent, age 60 . . .35375
TABLE U(1) value at 5.6 percent, age 70 . . .49342
TABLE 90CM value at age 70 . . . . . . . . . . . 71357
TABLE 90CM value at age 60 . . . . . . . . . . . 85537
TABLE D value at 5.6 percent,
10 years . . . . . . . . . . . . . . . . . . . . . . . . . . .561979
Factor for donor’s retained interest at 5.6 percent:
(1.000000 – .35375) – (.561979 3(71357/85537) 3(1.000000 – .49342)) = .40876
TABLE U(1) value at 5.4 percent, age 60 . . .36542
TABLE U(1) value at 5.4 percent, age 70 . . .50473
TABLE 90CM value at age 70 . . . . . . . . . . . 71357
TABLE 90CM value at age 60 . . . . . . . . . . . 85537
TABLE D value at 5.4 percent, 10 years . .573999
Factor for donor’s retained interest at 5.4 percent:
(1.000000 – .36542) – (.573999 3(71357/85537) 3(1.000000 – .50473)) = .39742
Difference .01134
Interpolation adjustment:
5.595% – 5.4%
= x
0.2%.01134
x=.01106
Factor at 5.4 percent, age 60 . . . . . . . . . . .39742
Plus: Interpolation adjustment . . . . . . . . .01106
Interpolated Factor . . . . . . . . . . . . . . . . . .40848
Present value of donor’s retained interest:
($100,000 3.40848) . . . . . . . . . . . $40,848.00
(3) Transitional rule. If the valuation
date of a transfer of property by gift is
after April 30, 1999, and before July 1,
1999, the fair market value of the interest
transferred is determined by use of 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 paragraph (d)(2) of this section or
§25.2512–5A(e), at the option of the
donor. However, with respect to each in-
dividual transaction and with respect to
all transfers occurring on the valuation
date, the donor must use the same actuar-
ial tables (e.g., gift and income tax chari-
table deductions with respect to the same
transfer must be determined based on the
same tables, and all transfers made on the
same date must be valued based on the
same tables).
(4) Publications and actuarial compu-
tations by the Internal Revenue Service.
Many standard actuarial factors not in-
cluded in §20.2031–7(d)(6) or §20.2031–
7T(d)(7) of this chapter are included in
Internal Revenue Service Publication
1457, “Actuarial Values, Book Aleph,”
(1999). Internal Revenue Service Publi-
cation 1457 also includes examples that
illustrate how to compute many special
factors for more unusual situations. A
copy of this publication is available for
purchase from the Superintendent of Doc-
uments, United States Government Print-
ing Office, Washington, DC 20402. If a
special factor is required in the case of a
completed gift, the Service may furnish
the factor to the donor upon a request for
a ruling. 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 request-
ing a ruling published periodically in the
Internal Revenue Bulletin (see §§601.201
and 601.601(d)(2)(ii)(b) of this chapter)
and include payment of the required user
fee.
(e) Effective dates.This section applies
after April 30, 1999.
Par. 27. The undesignated centerhead-
ing immediately following §25.2518–3 is
revised to read as follows:
Actuarial Tables Applicable Before
May 1, 1999
Par. 28. Section 25.2512–5A is
amended by:
1. Revising the section heading.
2. Adding paragraph (e).
The revision and addition read as fol-
lows:
§25.2512–5A Valuation of annuities,
unitrust interests, interests for life or term
of years, and remainder or reversionary
interests transferred before May 1, 1999.
* * * * *
(e) Valuation of annuities, unitrust in-
terests, interests for life or term of years,
and remainder or reversionary interests
transferred after April 30, 1989, and be-
fore May 1, 1999—(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 ta-
bles), if the valuation date of the trans-
ferred interest is after April 30, 1989, and

before May 1, 1999, the fair market value
of annuities, unitrust interests, life estates,
terms of years, remainders, and reversions
transferred by gift is the present value of
the interests determined by use of stan-
dard or special section 7520 actuarial fac-
tors and the valuation methodology de-
scribed in §25.2512–5T(d). Sections
20.2031–7(d)(6) and 20.2031–7A(e)(4) of
this chapter and related sections provide
tables with standard actuarial factors and
examples that illustrate how to use the ta-
bles to compute the present value of ordi-
nary annuity, life, and remainder interests
in property. These sections 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 exam-
ples are also generally applicable for gift
tax purposes in computing the values of
taxable gifts.
(2) Transitional rule.(i) If the valua-
tion date of a transfer of an interest in
property by gift is after April 30, 1989,
and before June 10, 1994, a donor can
rely on Notice 89–24 (1989–1 C.B. 660),
or Notice 89–60 (1989–1 C.B. 700), in
valuing the transferred interest. (See
§601.601(d)(2)(ii)(b) of this chapter.)
(ii) If a donor transferred an interest in
property by gift after December 31, 1988,
and before May 1, 1989, retaining an in-
terest in the same property, and after April
30, 1989, and before January 1, 1990,
transferred the retained interest in prop-
erty, the donor may, at the option of the
donor, value the transfer of the retained
interest under this paragraph (e) or para-
graph (d) of this section.
(3) Publications and actuarial compu-
tations by the Internal Revenue Service.
Many standard actuarial factors not in-
cluded in §§20.2031–7(d)(6) and
20.2031–7A(e)(4) of this chapter are in-
cluded in Internal Revenue Service Publi-
cation 1457, “Actuarial Values, Alpha
Volume,” (8-89). Internal Revenue Ser-
vice Publication 1457 also includes exam-
ples that illustrate how to compute many
special factors for more unusual situa-
tions. Publication 1457 is no longer
available for purchase from the Superin-
tendent of Documents, United States
Government Printing Office, Washington,
DC 20402. However, pertinent factors in
this publication may be obtained from:
CC:DOM:CORP:R (IRS Publication
1457), room 5226, Internal Revenue Ser-
vice, POB 7604, Ben Franklin Station,
Washington, DC 20044. If a special fac-
tor is required in the case of a completed
gift, the Internal Revenue Service may
furnish the factor to the donor upon a re-
quest for a ruling. The request for a rul-
ing 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 periodi-
cally in the Internal Revenue Bulletin (see
§§601.201 and 601.601(d)(2)(ii)(b) of
this chapter) and include payment of the
required user fee.
Par. 29. Section 25.7520–1 is amended
as follows:
1. Paragraph (b)(2), the last two sen-
tences are revised.
2. The headings for paragraphs (c)(1)
and (c)(2) are revised.
3. Paragraph (c)(2) introductory text is
revised.
4. Paragraph (c)(2)(iii) is amended by
removing the first two sentences and
adding one sentence in their place.
5. Paragraph (d) is revised.
The revised and added provisions read
as follows:
§25.7520–1 Valuation of annuities,
unitrust interests, interests for life or term
of years, and remainder or reversionary
interests.
* * * * *
(b) * * *
(2) * * * For gifts with valuation dates
after April 30, 1989, and before May 1,
1999, the mortality component table
(Table 80CNSMT) is included in
§20.2031–7A(e)(4) of this chapter. See
§20.2031–7A(a) through (d) of this chap-
ter for mortality component tables applic-
able to decedents’ estates with valuation
dates before May 1, 1989.
(c) * * *
(1) Regulations sections containing ta-
bles with interest rates between 4.2 and
14 percent for valuation dates after April
30, 1989, and before May 1, 1999.* * *
(2) Internal Revenue Service publica-
tions containing tables with interest rates
between 2.2. and 26 percent for valuation
dates after April 30, 1989, and before
May 1, 1999. The following publications
are no longer available from the Superin-
tendent of Documents, however, they
may be obtained from: CC:DOM:CORP:
R, room 5226, Internal Revenue Service,
POB 7604, Ben Franklin Station, Wash-
ington, DC 20044:
* * * * *
(iii) Internal Revenue Service Publica-
tion 1459, “Actuarial Values, Gamma
Volume,” (8-89). * * *
(d) Effective date.This section applies
after April 30, 1989, and before May 1,
1999.
Par. 30. Section 25.7520-1T is added
to read as follows:
§25.7520–1T Valuation of annuities,
unitrust interests, interests for life or term
of years, and remainder or reversionary
interests (temporary).
(a) through (b) (1) [Reserved]. For fur-
ther guidance, see §25.7520–1(a) through
(b)(1).
(b)(2) Mortality component. The mor-
tality component reflects the mortality
data most recently available from the
United States Census. As new mortality
data becomes available after each decen-
nial census, the mortality component de-
scribed in this section will be revised peri-
odically and the mortality component
tables will be published in the regulations
at that time. For gifts with valuation
dates after April 30, 1999, the mortality
component table (Table 90CM) is in-
cluded in §20.2031–7T(d)(7) of this chap-
ter. See §20.2031–7A of this chapter for
mortality component tables applicable to
decedent’s estates with valuation dates
before May 1, 1999.
(c) [Reserved]. For further guidance,
see §25.7520–1(c).
(1) Regulation sections containing ta-
bles with interest rates between 4.2 and
14 percent for valuation dates after April
30, 1999. Section 1.642(c)–6T(e)(6) of
this chapter contains Table S used for de-
termining the present value of a single life
remainder interest in a pooled income
fund as defined in §1.642(c)–5 of this
chapter. See §1.642(c)–6A for actuarial
factors for one life applicable to valuation
dates before May 1, 1999. Section 1.664–
4(e)(6) of this chapter contains Table F
(payout factors) and Table D (actuarial
May 17, 1999681999–20 I.R.B.

factors used in determining the present
value of a remainder interest postponed
for a term of years). Section 1.664–
4T(e)(7) of this chapter contains, Table
U(1) (actuarial factors for one life).
These tables are used in determining the
present value of a remainder interest in a
charitable remainder unitrust as defined in
§1.664-3 of this chapter. See §1.664–4A
for actuarial factors for one life applicable
to valuation dates before May 1, 1999.
Section 20.2031–7(d)(6) of this chapter
contains Table B (actuarial factors used in
determining the present value of an inter-
est for a term of years), Table K (annuity
end-of-interval adjustment factors), Table
J (term certain annuity beginning-of-in-
terval adjustment factors). Section
20.2031– 7T(d)(7) of this chapter con-
tains Table S (actuarial factors for one
life) and Table 90CM (mortality compo-
nents). These tables are used in determin-
ing the present value of annuities, life es-
tates, remainders, and reversions. See
§20.2031– 7A of this chapter for actuarial
factors for one life and mortality compo-
nents applicable to valuation dates before
May 1, 1999.
(2) Internal Revenue Service publica-
tions containing tables with interest rates
between 2.2 and 26 percent for valuation
dates after April 30, 1999.The following
documents are available for purchase
from the Superintendent of Documents,
United States Government Printing Of-
fice, Washington, DC 20402:
(i) Internal Revenue Service Publica-
tion 1457, “Actuarial Values, Book
Aleph,” (1999). This publication includes
tables of valuation factors, as well as ex-
amples that show how to compute other
valuation factors, for determining the pre-
sent value of annuities, life estates, terms
of years, remainders, and reversions,
measured by one or two lives. These fac-
tors may also be used in the valuation of
interests in a charitable remainder annuity
trust as defined in §1.664–2 of this chap-
ter (Income Tax Regulations) and a
pooled income fund as defined in
§1.642(c)–5 of this chapter.
(ii) Internal Revenue Service Publica-
tion 1458, “Actuarial Values, Book Beth,”
(1999). This publication includes 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.
(iii) Internal Revenue Service Publica-
tion 1459, “Actuarial Values, Book
Gimel,” (1999). This publication in-
cludes tables for computing depreciation
adjustment factors. See §1.170A–12T of
this chapter.
(d) Effective date.This section applies
after April 30, 1999.
Par. 31. Section 25.7520–3 is
amended as follows:
1. In paragraph (b)(2)(v), Example 5 is
revised.
2. In paragraph (b)(4), the Example is
revised.
The revised examples read as follows:
§25.7520–3 Limitation on the
application of section 7520.
* * * * *
(b) * * *
(2) * * *
(v) * **
Example 5. Eroding corpus in an annuity trust.
(i) The donor, who is age 60 and in normal health,
transfers property worth $1,000,000 to a trust. The
trust will pay a 10 percent ($100,000 per year) annu-
ity to a charitable organization for the life of the
donor, payable annually at the end of each period,
and the remainder will be distributed to the donor’s
child. The section 7520 rate for the month of the
transfer is 6.8 percent. First, it is necessary to deter-
mine whether the annuity may exhaust the corpus
before all annuity payments are made. Because it is
assumed that any measuring life may survive until
age 110, any life annuity could require payments
until the measuring life reaches age 110. Based on a
section 7520 interest rate of 6.8 percent, the determi-
nation of whether the annuity may exhaust the cor-
pus before the annuity payments are made is com-
puted as follows:
Age to which life annuity may continue . . . .110
less: Age of measuring life at date of
transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Number of years annuity may continue . . . . . .50
Annual annuity payment . . . . . . . . $100,000.00
times: Annuity factor for 50 years
derived from Table B . . . . . . . . . . 14.1577
Present value of term certain
annuity . . . . . . . . . . . . . . . . . . . .$1,415,770.00
(ii) Since 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 an-
nuity payable for a term of years or until the prior
death of the annuitant, with the term of years deter-
mined by when the fund will be exhausted by the an-
nuity payments.
(iii) Using factors based on Table 90CM at 6.8
percent (see §20.2031–7T(d)(7) of this chapter), it is
determined that the fund will be sufficient to make
17 annual payments, but not to make the entire 18th
payment. Specifically, the initial corpus will be able
to make payments of $67,287.26 per year for 17
years plus payments of $32,712.74 per year for 18
years. The annuity is valued by adding the value of
the two separate temporary annuities.
(iv) Based on Table H of Publication 1457 (a
copy of this publication may be purchased from the
Superintendent of Documents, United States Gov-
ernment Printing Office, Washington, DC 20402),
the present value of an annuity of $67,287.26 per
year payable for 17 years or until the prior death of a
person aged 60 is $588,016.64 ($67,287.26 3
8.7389). The present value of an annuity of
$32,712.74 per year payable for 18 years or until the
prior death of a person aged 60 is $292,196.74
($32,712.74 38.9322). Thus, the present value of
the charitable annuity interest is $880,213.38
($588,016.64 + $292,196.74).
* * * * *
(4) * * *
Example. Terminal illness.The donor transfers
property worth $1,000,000 to a child in exchange for
the child’s promise to pay the donor $103,000 per
year for the donor’s life, payable annually at the end
of each period. The donor is age 60 but has been di-
agnosed with an incurable illness and has at least a
50 percent probability of dying within 1 year. The
section 7520 interest rate for the month of the trans-
fer is 10.6 percent, and the standard annuity factor at
that interest rate for a person age 60 in normal health
is 7.5590. Thus, if the donor were not terminally ill,
the present value of the annuity would be $778,577
($103,000 37.5590). Assuming the presumption
provided in paragraph (b)(3) of this section does not
apply, because there is at least a 50 percent probabil-
ity that the donor will die within 1 year, the standard
section 7520 annuity factor may not be used to de-
termine the present value of the donor’s annuity in-
terest. Instead, a special section 7520 annuity factor
must be computed that takes into account the projec-
tion of the donor’s actual life expectancy.
* * * * *
Par. 32. In the list below, for each sec-
tion indicated in the left column, remove
the language in the middle column and
add the language in the right column:
1999–20 I.R.B.69May 17, 1999

SectionRemoveAdd
1.170A–6(c)(5)19701971
Example (1)
first and last sentence
1.170A–6(c)(5)1970
Example (2)(a)
first sentence
1.170A–6(c)(5)19701971
Example (3)(a)
first, sixth, seventh and eighth sentences
1.170A–6(c)(5)19711972
Example (3)(a)
seventh and eighth sentences
1.170A–6(c)(5)19721973
Example (3)(a)
seventh and eighth sentences
1.170A–6(c)(5)19701971
Example (3)(b)
introductory text
1.170A–6(c)(5)Jan. 1,1970Jan. 1,1971
Example (3)(b)
Table headings
1.170A–6(c)(5)Dec. 31, 1970Dec. 31, 1971
Example (3)(b)
column 1 of table
1.170A–6(c)(5)Dec. 31, 1971Dec. 31, 1972
Example (3)(b)
column 1 of table
1.170A–6(c)(5)Dec. 31, 1972Dec. 31, 1973
Example (3)(b)
column 1 of table
1.170A–6(c)(5)19721973
Example (3)(c)
1.170A–6(c)(5)19721973
Example (3)(d)
1.170A–12(b)(2)factorfactor before May 1, 1999
paragraph heading
1.170A–12(b)(2)April 30, 1989,April 30, 1989, and before May 1,
fourth sentence1999,
1.170A–12(b)(2)CC:DOM:CORP:T:RCC:DOM:CORP:R
sixth sentence
1.170A–12(b)(2)room 5228room 5226
sixth sentence
May 17, 1999701999–20 I.R.B.

SectionRemoveAdd
1.170A–12(c)paragraph (f) of such sections§20.2031-7(d)(6) of this chapter
first sentence
1.170A–12(e)(2)Table 80CNSMT in §20.2031–7Table 90CM in §20.2031–7T
following the formula
1.170A–12(e)(3)E:A:GOP:E:EP:A:1
last sentence
1.170A–14(h)(4),December 1, 1983May 1, 1999
Example 2,fourth sentence
1.642(c)–6A(e)(2)(i)§20.2031–7(d)(6)§20.2031–7A(e)(4)
1.664–1(a)(5)(ii)(b)(1)column 2 of Table DTable D in §1.664–4(e)(6)
In §1.664–4A(d)(6)
1.664–1(a)(5)(iv)(iii) of this section:(ii) of this section:
introductory text
1.664–1(a)(6)§1.664–4(e), §1.664–4(A)§§1.664–4T(e), 1.664–4T(e) and
introductory text(d), and former §1.664–41.664–4A(d) and (e)
(d) (as contained in the 26 CFR part 1
edition revised as of April 1, 1994)
1.664–2(c)April 30, 1989April 30, 1999
1.664–2(c)§20.2031–7A(a) through (d)§20.2031–7A (a) through (e)
sixth sentence
1.664–2(c)May 1, 1989May 1, 1999
sixth sentence
1.664–2(c)last sentence
1.7520–1(a)(2)1989, see §1.642(c)–6(e)1999, see §1.642(c)–6T(e)
1.7520–1(a)(3)(or, for certain prior periods,
last sentence§1.664–4A)
1.7520–1(c)(1)Section 1.642(c)–6(e)(4)Section 1.642(c)–6A(e)(5)
first sentence
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Regulations) containscontain
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fourth sentence§20.2031–7(A)(d)
20.2055–2(f)(2)(iv)§20.2031–10(f)§20.2031–7A(d)
Example (1)second sentence
20.2055–2(f)(2)(iv)§20.2031–10(f)§20.2031–7A(d)
Example (2) second sentence
1999–20 I.R.B.71May 17, 1999

SectionRemoveAdd
20.2055–2(f)(2)(iv)§20.2031–10(e)§20.2031–7A(c)
Example (3)second sentence
20.2055–2(f)(2)(iv)§20.2031–10(f)§20.2031–7A(d)
Example (3) third sentence
20.2056A–4(c)(4)(ii)(B)Alpha VolumeBook Aleph
penultimate sentence
20.2056A–4(d),Alpha VolumeBook Aleph
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20.7520–(a)(2)1989, see §1.642(c)–6(e)1999, see §1.642(c)–6T(e)
20.7520–1(a)(3)(or, for certain prior periods,
second sentence§1.664–4A)
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first sentence
20.7520–1(c)(1)Section 1.664–4(e)(6)Sections 1.664–4(e)(6) and
second sentenceof this chapter contains1.664-4A(e)(6) of this chapter contain
20.7520–1(c)(1)Section 20.2031–7(d)(6) containsSections 20.2031–7(d)(6) and
third sentence20.2031–7A(e)(4) contain
25.7520–1(a)(2)1989, see §1.642(c)–6(e)1999, see §1.642(c)–6T(e)
25.7520–1(a)(3)(or, for certain prior periods,
last sentence§1.664–4A)
25.7520-1(c)(1)Section 1.642(c)–6(e)(4)Section 1.642(c)–6A(e)(5)
first sentence
25.7520–1(c)(1)Section 1.664–4(e)(6) of this chapterSections 1.664–4(e)(6) and
second sentencecontains1.664–4A(e)(6) of this chapter contain
25.7520–1(c)(1)Section 20.2031–7(d)(6)Sections 20.2031–7(d)(6) and
third sentence(Estate Tax Regulations) contains20.2031–7A(e)(4) contain
May 17, 1999721999–20 I.R.B.
Robert E. Wenzel,
Deputy Commissioner of
Internal Revenue.
Approved April 21, 1999.
Donald C. Lubick,
Assistant Secretary of
the Treasury.
(Filed by the Office of the Federal Register on April
29, 1999, 8:45 a.m., and published in the issue of the
Federal Register for April 30, 1999, 64 F.R. 23187)

Revisions to Schedule P
(Form 1120-FSC)
Notice 99–23
This notice effects interim revisions to
Schedule P of Form 1120-FSC (1998)
filed by foreign sales corporations, and
the instructions thereto. The Department
of the Treasury (“Treasury”) and the In-
ternal Revenue Service (the “Service”)
also seek public comments on certain pro-
posed revisions to Schedule P for subse-
quent taxable years.
SECTION I. BACKGROUND
Schedule P, “Transfer Price or Commis-
sion,” of Form 1120-FSC, “U.S. Income
Tax Return of a Foreign Sales Corpora-
tion,” is used by foreign sales corporations
(FSCs) to compute the transfer price to
charge a FSC or the commission to pay to
a FSC under the FSC administrative pric-
ing rules of section 925 of the Internal
Revenue Code. The transfer price or com-
mission is used to allocate between a FSC
and its related supplier foreign trading
gross receipts from the sale of export
property and certain services.
Each transaction generating foreign
trading gross receipts under the adminis-
trative pricing rules is reportable on
Schedule P. A FSC and its related sup-
plier may elect under Temp. Treas. Reg.
§ 1.925(a)–1T(c)(8) to group these trans-
actions on a product or product line basis
and must make the election for each
group on Schedule P. Line B of Schedule
P provides checkboxes for a FSC to indi-
cate whether the Schedule P is filed
“Transaction-by-transaction” or with re-
spect to a “Group of transactions.”
For taxable years beginning before Jan-
uary 1, 1998, Line B of Schedule P also
contained a third checkbox labeled “Ag-
gregate of transactions,” which repre-
sented an additional option. Under this
option, the instructions to Schedule P al-
lowed the FSC to combine on a single
Schedule P transactions or groups of
transactions based on product or product
line using the administrative pricing rules.
In cases where such aggregation was cho-
sen, the instructions required the FSC and
its related supplier to maintain a support-
ing schedule for each transaction or group
of transactions reported in the aggregate
form. For taxable years beginning before
January 1, 1998, many FSCs and their re-
lated suppliers chose to file Schedules P
in the aggregate form.
For the 1998 version of Schedule P
(“Schedule P (1998)”), the aggregation
option was eliminated. The purpose of
the revision was to enable the Service to
better determine and identify on the face
of the Schedule P (1998) the particular
product or product line for which the FSC
was making a grouping election under the
administrative pricing rules.
The ability of the Service to identify
elected groupings readily is increasingly
important in light of the amendments made
to Temp. Treas. Reg. § 1.925(a)–1T(c)(8)
by T.D. 8764, 63 F.R. 10305, 1998–15
I.R.B. 9. Effective March 3, 1998, for tax-
able years beginning after December 31,
1997, T.D. 8764 provides that an election
to group transactions based on product or
product line must be made on a timely
filed Schedule P and cannot be changed
thereafter. No untimely or amended re-
turns will be allowed to elect to group, to
change a grouping basis, or to change from
a grouping basis to a transaction-by-trans-
action basis (collectively “grouping rede-
terminations”). For FSCs reporting on a
calendar-year basis, the temporary regula-
tions as amended first apply to returns due
March 15, 1999, or, as extended, Septem-
ber 15, 1999.
Under a transition rule, the temporary
regulations as amended also permit
grouping redeterminations with respect to
taxable years beginning before January 1,
1998, provided such grouping redetermi-
nations are made no later than the due
date (including extensions) for the FSC’s
timely filed return for its first taxable year
beginning after December 31, 1997. No-
tice 99–24, page 74 of this Bulletin, an-
nounces the intent of the Service in final
regulations to extend the time for filing
under this transition rule to the due date of
the FSC’s timely filed return (including
extensions) for the FSC’s first taxable
year beginning on or after January 1,
1999. For FSCs reporting on a calendar-
year basis, grouping redeterminations
under the transition rule in the final regu-
lations will first be due March 15, 2000,
or, as extended, September 15, 2000.
Accordingly, the Service, FSCs, and
their related suppliers now have a height-
ened interest in clearly identifying group-
ings of transactions elected on Schedule P
of a timely filed FSC return.
During the filing season for 1998 FSC
returns, several taxpayers, practitioners,
and Internal Revenue Service Centers
have brought to the Service’s attention that
an increasing number of FSCs and their
related suppliers are reporting their for-
eign trading gross receipts on a transac-
tion-by-transaction basis and that the re-
moval of the aggregation option, in
requiring a Schedule P (1998) to be filed
for each transaction, has the effect of sig-
nificantly increasing the paper and pro-
cessing burden on both taxpayers and the
Service. Treasury and the Service have
concluded that this unintended increase in
paper burden can and should be alleviated.
Beginning with the Schedule P (1998),
the Service has decided to restore the ag-
gregation option contained in the 1997
version of the schedule. The aggregation
option shall remain available to taxpayers
until the Service develops an appropriate
method for taxpayers to identify their
grouping elections without creating an
unreasonable paper burden. This notice
seeks public comments on a proposed
method to achieve this objective.
SECTION II. REVISIONS TO
SCHEDULE P AND INSTRUCTIONS
For taxable years beginning on or after
January 1, 1998, Schedule P may be com-
pleted as if Line B included the same
three checkboxes as appeared on the 1997
version of Schedule P except as otherwise
provided in instructions to successor
forms Schedule P. Pursuant to the preced-
ing sentence, FSCs may insert in Line B a
checkbox numbered “3” and labeled “Ag-
gregate of transactions.” Instructions to
such checkbox are as follows:
3. Aggregate of transactions.—
Check box 3 if the FSC combinesits
transactions or group of transactions
using the administrative pricing rules.
File one Schedule P if the FSC aggregates
its transactions. Under this method, the
FSC and its related supplier must main-
tain a supporting schedule for each trans-
action or group of transactions.
1999–20 I.R.B.73May 17, 1999
Part III. Administrative, Procedural, and Miscellaneous

FSCs filing aggregate Schedules P in
accordance with this paragraph should
enter “FILED UNDER NOTICE 99–23”
across the top of the schedule.
SECTION III. REQUEST FOR
COMMENTS
The Service is exploring alternatives
for amending Schedule P and its instruc-
tions to require FSCs to present all Sched-
ule P information in the form of a sum-
mary schedule in spreadsheet or similar
format in lieu of filing a separate Sched-
ule P for each transaction or group of
transactions. Exceptions to this require-
ment may be provided in the case of small
FSCs or those FSCs with de minimis
amounts of foreign trading gross receipts.
Moreover, with respect to transactions
that are not subject to an election to group
but rather are reported on a transaction-
by-transaction basis, the Service expects
to permit a FSC, in lieu of filing a sum-
mary schedule for such transactions, to
aggregate on a single Schedule P those
transactions within a product or product
line to which the same administrative
pricing method is applied, provided that a
supporting schedule is maintained for
each transaction.
Treasury and the Service invite public
comments on these proposed changes to
Schedule P. Comments should be submit-
ted in writing by June 30, 1999. Com-
ments may be mailed to:
Internal Revenue Service
P.O. Box 7604
Ben Franklin Station
Attn: CC:CORP:T:R (Notice 99-23)
Room 5228
Washington, DC 20044
or may be hand-delivered between the
hours of 6 a.m. and 5 p.m. to CC:DOM:
CORP:R (Notice 99–23), Courier’s Desk,
Internal Revenue Building, 1111 Consti-
tution Avenue, NW, Washington, DC. Al-
ternatively, comments may be submitted
via the Internet at: http://www.irs.us-
treas.gov/prod/tax_regs/comments.htm1
The comments submitted will be avail-
able for public inspection and copying.
SECTION IV. DRAFTING
INFORMATION
The principal author of this notice is
Douglas Giblen of the Office of Associate
Chief Counsel (International). For further
information regarding this notice, contact
Mr. Giblen at (202) 874-1490 (not a toll-
free call).
Extension of Time to File FSC
Grouping Redeterminations
Under Transition Rule to be
Included in Final Regulations
Notice 99–24
SECTION I. PURPOSE
This notice informs taxpayers of the in-
tent of the Department of the Treasury
(“Treasury”) and the Internal Revenue
Service (the “Service”) to include in final
regulations under section 925 of the Inter-
nal Revenue Code addressing foreign
sales corporations (“FSCs”) and their re-
lated suppliers a one-year extension of the
time for filing grouping redeterminations
under the transition rule of Temp. Treas.
Reg. § 1.925(a)–1T(c)(8)(i), as amended
by T.D. 8764, 1998–15 I.R.B. 9 (63 F.R.
10305).
SECTION II. BACKGROUND
Section 927(d)(2)(B) of the Code pro-
vides generally that FSCs and their re-
lated suppliers may, to the extent pro-
vided in regulations, elect to apply the
FSC transfer pricing provisions under
section 925 on the basis of groups of
transactions based on product lines, rather
than on a transaction-by-transaction basis.
Prior to the amendments made by T.D.
8764, Temp. Treas. Reg. § 1.925(a)–
1T(c)(8)(i) permitted such a grouping of
transactions to be elected on the FSC in-
come tax return for the applicable taxable
year. Further, Temp. Treas. Reg.
§ 1.925(a)–1T(e)(4) permitted FSCs and
their related suppliers, upon determining
that a different transfer pricing method or
grouping of transactions may be more
beneficial, to file amended returns to ef-
fect a redetermination of the transfer price
payable by the FSC or the commission
payable to the FSC. Such a redetermina-
tion could be made if the taxable years of
the FSC and its related supplier were open
under the statute of limitations for making
claims for refund under section 6511 and
if the redetermination affected both the
FSC and the related supplier.
The temporary regulations were
amended by T.D. 8764 to address an in-
creasing number of situations in which
taxpayers, assisted by sophisticated com-
puter programs and typically employing
complex estimating techniques, substan-
tially revised their transaction grouping
elections just prior to the expiration of the
statute of limitations and many years after
the original returns were filed. This prac-
tice placed a significant burden on the
audit process and created a potential for
abuse.
Effective March 3, 1998, for taxable
years beginning after December 31, 1997,
Temp. Treas. Reg. § 1.925(a)–1T(c)(8)(i),
as amended by T.D. 8764, provides that
an election to group transactions must be
made on a timely filed (including exten-
sions) FSC return and cannot be changed
thereafter, and that no untimely or
amended returns will be allowed to elect
to group, to change a grouping basis, or to
change from a grouping basis to a transac-
tion-by-transaction basis (collectively
“grouping redeterminations”). Thus, for
example, for FSCs reporting on a calen-
dar-year basis, the temporary regulations,
as amended, apply to 1998 returns due
March 15, 1999, or, as extended, Septem-
ber 15, 1999.
Temp. Treas. Reg. § 1.925(a)–1T(c)-
(8)(i) also contains a transition rule which
requires grouping redeterminations for
any taxable year beginning before Janu-
ary 1, 1998, to be made no later than the
due date of the FSC’s timely filed (includ-
ing extensions) return for the FSC’s first
taxable year beginning after December
31, 1997. Thus, for example, for a calen-
dar-year taxpayer, the time for filing
grouping redeterminations for all taxable
years prior to the 1998 calendar year is
March 15, 1999, or, as extended, Septem-
ber 15, 1999.
A notice of proposed rulemaking cross-
referencing T.D. 8764 and inviting public
comments was published on March 3,
1998, as REG–102144–98, 63 F.R.
10351, 1998–15 I.R.B. 25. On June 24,
1998, a public hearing was held regarding
the proposed changes to the grouping re-
determination rules. Written comments
were also received by Treasury and the
Service. Commentators generally ex-
pressed the view that the time for filing
grouping redeterminations for taxable
May 17, 1999741999–20 I.R.B.

years beginning before January 1, 1998
under the transition rule should be ex-
tended to allow taxpayers an appropriate
amount of time to make the necessary cal-
culations. They pointed out that many
FSCs and their related suppliers are hav-
ing difficulty assembling the data neces-
sary to determine for each open taxable
year whether a grouping redetermination
would be advantageous and to calculate
accurate amounts to be reported for such a
redetermination. This data assembly may
be especially difficult for taxpayers using
computer software where data was not
originally maintained in electronic form.
SECTION III. INTENT TO EXTEND
TIME TO FILE UNDER THE
TRANSITION RULE IN FINAL
REGULATIONS
After considering these comments,
Treasury and the Service have determined
that the time for filing grouping redeter-
minations for taxable years beginning be-
fore January 1, 1998, under the transition
rule will be extended by one year. Ac-
cordingly, the final regulations under sec-
tion 925 will provide that for taxable
years beginning before January 1, 1998,
the time for filing a grouping redetermi-
nation is the due date (including exten-
sions) of the FSC’s timely filed return for
the FSC’s first taxable year beginning on
or after January 1, 1999.
SECTION IV. DRAFTING
INFORMATION
The principal author of this notice is
Douglas Giblen of the Office of Associate
Chief Counsel (International). For further
information regarding this notice, contact
Mr. Giblen at (202) 874-1490 (not a toll-
free call).
Effective Date of Regulations
Under Section 1441 and
Qualified Intermediary
Procedures
Notice 99–25
The Department of the Treasury (Trea-
sury) and the Internal Revenue Service
(IRS) intend to extend the date of applica-
bility of the regulations under section
1441 and related provisions to payments
made after December 31, 2000. The rea-
sons for this delay and its consequences
are explained in this notice.
Section 1. Background
In Treasury Decision 8734 (62 F.R.
53387 [1997–2 C.B. 109]), as modified
by T.D. 8804 (63 F.R. 72183 [1999–12
I.R.B. 5]) (the “new withholding regula-
tions”), the Department of the Treasury
and the Internal Revenue Service issued
comprehensive regulations under chapter
3 (sections 1441–1464) and subpart G of
subchapter A of chapter 61 (sections
6041–6050S) of the Internal Revenue
Code (the “Code”). Qualified intermedi-
aries are a key component of those regula-
tions. A qualified intermediary is a for-
eign entity, or foreign branch of a U.S.
entity, that obtains the benefit of establish-
ing the foreign status of its account hold-
ers, and their entitlement to reduced rates
of withholding, by using a single with-
holding certificate rather than having to
provide documentation for each customer
to a U.S. withholding agent. In addition,
the qualified intermediary can report most
of its payments to the IRS on a pooled
basis, rather than having to provide a
Form 1042-S for each of its foreign ac-
count holders or investors. In exchange
for these benefits, the qualified intermedi-
ary assumes certain compliance and infor-
mation reporting responsibilities.
To be a qualified intermediary, an en-
tity must enter an agreement with the IRS.
The IRS has provided information on
qualified intermediary agreements first in
Rev. Proc. 98–27, 1998–15 I.R.B. 30, and
Notice 98–16, 1998–15 I.R.B. 12, and
subsequently in Notice 99–8, 1999–5
I.R.B. 26. The final provisions of quali-
fied intermediary agreements have not yet
been determined. Notice 99–8 also an-
nounced certain changes that Treasury
and IRS are proposing to make to T.D.
8734.
Section 2. Delayed Effective Date
Commentators to Notice 99–8 stated
that financial institutions are involved in
substantial information systems changes
that are required for their systems to be-
come year 2000 compliant. To meet their
objectives, financial institutions are im-
posing restrictions on systems changes to
ensure a smooth year 2000 transition.
Commentators also indicated that certain
aspects of the qualified intermediary
regime were not apparent to some finan-
cial institutions when the new withhold-
ing regulations were first issued and that
implementation of the regulations would
require more time and effort from many
institutions than had initially been ex-
pected. Further, because the terms of the
qualified intermediary agreements have
not been finalized, potential qualified in-
termediaries are not yet certain of all of
their documentation, withholding, and re-
porting obligations. Therefore, commen-
tators have stated that full compliance
with the regulations cannot be achieved if
the 1441 regulations become effective on
January 1, 2000.
Treasury and the IRS have concluded
that it is in the best interest of tax admin-
istration to extend the date of applicability
of the final withholding regulations to
permit taxpayers to make the computer
system modifications necessary to com-
ply with the new withholding regulations
without the impediments caused by year
2000 concerns. Therefore, T.D. 8734, as
modified by T.D. 8804, will be amended
to apply to payments made after Decem-
ber 31, 2000.
In Notice 98–16, the IRS stated that it
would regard the 1999 calendar year as a
transition period in enforcing compliance
for the administration of the withholding
tax system. The year 2000 will similarly
be regarded as a transition period. Ac-
cordingly, in enforcing compliance with
current withholding rules for calendar
years 1999 and 2000, the IRS will take
into account the extent to which a with-
holding agent makes a good faith effort to
transform its business practices and infor-
mation systems to comply with the final
withholding regulations. For example,
the IRS will take into account whether a
U.S. withholding agent makes reasonable
efforts during 1999 and 2000 to modify
its account opening practices to conform
to the new documentation requirements,
obtain new withholding certificates on ex-
isting accounts, and make appropriate
systems changes to comply with the final
withholding regulations. For foreign
withholding agents, the IRS will take into
account whether or not the withholding
agent makes a good faith effort to seek
qualified intermediary status. The IRS
will also take into account whether or not
a withholding agent (whether U.S. or for-
1999–20 I.R.B.75May 17, 1999

eign) effectively implements the final
withholding regulations beginning on
January 1, 2001.
Section 3. Documentation Transition
Rules
The new withholding regulations con-
tain transition rules affecting the docu-
mentation that must be obtained under the
new withholding regulations. See, for ex-
ample, §§1.1441–1(f)(2)(i), 1.1441–4(g),
1.1441–5(g), and 1.1441–6(g). Those
documentation transition rules generally
permit the use of Forms W-8, 1001, 1078,
4224, and 8709, or a statement under cur-
rent regulation §1.1441–5 (“old docu-
mentation”) until December 31, 2000.
The new withholding regulations will not
extend the use of old documentation be-
yond December 31, 2000. An extension
is not necessary because Forms W-8BEN,
W-8ECI, and W-8EXP (“new withholding
certificates”) which replace the old docu-
mentation, and which comply with the
new withholding regulations, have been
available since the end of 1998. There-
fore, withholding agents will have had
over two years to replace old documenta-
tion with new withholding certificates.
The regulations incorporating the effec-
tive date change will continue to treat new
withholding certificates as satisfying the
documentation requirements of the regu-
lations in effect prior to January 1, 2001.
The final regulations concerning cer-
tain payments made pursuant to a securi-
ties lending or sale-repurchase transaction
provide that substitute interest payments
made with respect to securities that give
rise to U.S. source interest income may be
characterized as portfolio interest if the
transferor of the security complies with
the documentation requirements of
§1.871–14(c) of the final withholding
regulations. Because §1.871–14(c) of
the final withholding regulations was not
to be effective before January 1, 1999,
Notice 97–66 contained a transition rule
providing that the statement requirement
of section 871(h)(5) would be satisfied
with respect to substitute interest pay-
ments made after November 13, 1997,
and before January 1, 1999, if any writ-
ten, electronic, or oral statement that rea-
sonably establishes that the payee is a for-
eign person is given or made to the payor
before, or within a reasonable period
after, the payment. In Notice 98–16, the
IRS extended the transition rule of Notice
97–66 to apply to substitute interest pay-
ments made after November 13, 1997 (or
after December 31, 1998 if elected) and
before January 1, 2000. Because the IRS
intends to make §1.871–14(c) of the new
withholding regulations effective for pay-
ments made after December 31, 2000, as
announced herein, the transition rule in
Notice 97–66 is extended to apply to sub-
stitute interest payments made after No-
vember 13, 1997 (or after December 31,
1998, if elected) and before January 1,
2001. Without this extension, withhold-
ing agents would be limited to using Form
W-8 or Form W-8BEN to apply the port-
folio interest exemption. The remainder
of Notice 97–66 remains unchanged.
Finally, in Announcement 99–24,
1999–14 I.R.B. 12, the IRS asked for
comments on proposed changes to Form
1042-S that would be effective for forms
to be filed in 2001. Because of the delay
in the effective date of T.D. 8734, the sug-
gested changes set forth in Announcement
99–24 are now proposed to apply to
Forms 1042-S filed in 2002. The 2000
Form 1042-S will remain the same size
and format as the 1999 forms. The 1999
form may, however, be revised to reflect
changes in the law.
Section 4. Contact Information
The principal author of this Notice is
Laurie Hatten-Boyd of the Office of the
Associate Chief Counsel (International)
within the Office of the Chief Counsel,
Internal Revenue Service, 1111 Constitu-
tion Avenue, NW, Washington, DC
20224. For further information regarding
this Notice contact Ms. Hatten-Boyd at
202-622-3840 (not a toll-free call).
May 17, 1999761999–20 I.R.B.

Notice of Proposed Rulemaking
and Notice of Public Hearing
Guidance Under Section 355(d);
Recognition of Gain on Certain
Distributions of Stock or
Securities
REG–106004–98
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemak-
ing and notice of public hearing.
SUMMARY: This document contains
proposed regulations relating to recogni-
tion of gain on certain distributions of
stock or securities of a controlled corpora-
tion. These proposed regulations affect
corporations and their shareholders. Pro-
posed regulations are necessary because
of statutory changes made by the Om-
nibus Budget Reconciliation Act of 1990.
This document also provides notice of a
public hearing on these proposed regula-
tions.
DATES: Written and electronic com-
ments must be received by August 2,
1999. Outlines of topics to be discussed
at the public hearing scheduled for Sep-
tember 21, 1999, at 10 a.m. must be re-
ceived by August 31, 1999.
ADDRESSES: Send submissions to
CC:DOM:CORP:R (REG–106004–98),
room 5226, Internal Revenue Service,
POB 7604, Ben Franklin Station, Wash-
ington, DC 20044. Submissions may be
hand delivered Monday through Friday
between the hours of 8 a.m. and 5 p.m. to:
CC:DOM:CORP:R (REG–106004–98),
Courier’s Desk, Internal Revenue Ser-
vice, 1111 Constitution Avenue, NW,
Washington, DC. Alternatively, taxpayers
may submit comments electronically via
the Internet by selecting the “Tax Regs”
option on the IRS Home Page, or by sub-
mitting comments directly to the IRS In-
ternet site at http://www.irs.ustreas.gov/
tax_regs/regslist.html. The public hear-
ing will be held in room 2615, Internal
Revenue Building, 1111 Constitution Av-
enue, NW, Washington, DC.
FOR FURTHER INFORMATION CON-
TACT: Concerning the proposed regula-
tions, Robert Hawkes (202) 622-7530 or
Phoebe Bennett (202) 622-7750; concern-
ing submissions of comments, the hear-
ing, and/or to be placed on the building
access list to attend the hearing, Guy R.
Traynor (202) 622-7190 (not toll-free
numbers).
SUPPLEMENTARY INFORMATION:
Background
If the requirements of section 355(a)
are met, a distributing corporation (Dis-
tributing) may distribute the stock or se-
curities of a controlled corporation (Con-
trolled) to its shareholders or security
holders (Distributees) with no gain or loss
recognized to the Distributees. A Distrib-
utee allocates its basis in Distributing
stock or securities between the Controlled
stock or securities received in the distrib-
ution and any Distributing stock or securi-
ties retained in proportion to the fair mar-
ket value of each. See section 358;
§§1.358–1 and 1.358–2. If neither sec-
tion 355(d) nor (e) applies, then Distribut-
ing generally recognizes no gain on the
distribution of stock or securities. See
section 355(c)(2) or 361(c)(2).
With limited exceptions, the Tax Re-
form Act of 1986 (Public Law 99–514,
100 Stat. 208) (TRA), repealed the doc-
trine of General Utilities & Operating
Co. v. Helvering,296 U.S. 200 (1935), by
requiring a corporation to recognize gain
on both liquidating and nonliquidating
distributions of appreciated property. In
retaining section 355 as an exception to
General Utilities repeal, Congress in-
tended to permit historic shareholders to
carry on their historic corporate busi-
nesses in separate corporations. See H. R.
Rep. 101–881, at 341 (1990). However,
Congress became concerned that, after
the TRA, a person could purchase a his-
toric shareholder’s interest, receive a dis-
tribution of Controlled stock tax-free to
both Distributing and the purchaser, and
obtain a fair market value basis in the
Controlled stock. Accordingly, Congress
amended section 355(b)(2)(D) in the Om-
nibus Budget Reconciliation Act of 1987
(Public Law 100–203, section 10223, 101
Stat. 1330–411) (1987 OBRA) to make
section 355 inapplicable where a Distrib-
utee acquired control (as defined in sec-
tion 368(c)) of a corporation conducting a
business in a taxable transaction during
the five-year period ending on the date of
the distribution. See H. R. Rep. No. 100–
391, at 1082–83 (1987). However, sec-
tion 355(b)(2)(D) did not apply to noncor-
porate purchasers or purchasers of less
than 80 percent of Distributing stock.
Section 355(d), enacted as part of the
Omnibus Budget Reconciliation Act of
1990 (Public Law 101–508, section
11321(a), 104 Stat. 1388–460) (1990
OBRA), followed the purposes of the
1987 OBRA provisions but substantially
expanded their scope. See H. R. Rep.
101–881, at 341 (1990). In section
355(d), Congress intended to prevent the
use of section 355 either to “dispose of
subsidiaries in transactions that resemble
sales, or to obtain a fair market value
stepped-up basis for any future disposi-
tions, without incurring corporate-level
tax.” Id.
Section 355(d) requires recognition of
gain on a distribution of Controlled stock
(as though the Controlled stock were sold
to the Distributee at its fair market value)
if, immediately after the distribution, any
person holds disqualified stock of Distrib-
uting or any distributed Controlled that
constitutes a 50 percent or greater inter-
est. See section 355(d)(1) and (2). Dis-
qualified stock is stock in Distributing ac-
quired by purchase after October 9, 1990
and during the five-year period (taking
into account section 355(d)(6)) ending on
the date of distribution (the five-year pe-
riod), or Controlled stock either (1) ac-
quired by purchase during the five-year
period or (2) distributed with respect to
either disqualified Distributing stock or
on Distributing securities acquired by
purchase during the five-year period. See
section 355(d)(3). A 50 percent or greater
interest means stock possessing at least 50
percent of the total combined voting
power of all classes of stock entitled to
vote or at least 50 percent of the total
value of shares of all classes of stock. See
section 355(d)(4). Section 355(d) also
contains a definition of purchase (section
355(d)(5)), a provision suspending the
1999–20 I.R.B.77May 17, 1999
Part IV. Items of General Interest

five-year period for certain stock or secu-
rities (section 355(d)(6)), and aggregation
and attribution provisions (section
355(d)(7) and (8)). Section 355(d)(9) au-
thorizes regulations to carry out the pur-
poses of section 355(d), including regula-
tions to prevent the avoidance of its
purposes through the use of related per-
sons, intermediaries, pass-through enti-
ties, options, or other arrangements, and
regulations modifying the definition of
purchase.
Explanation of Provisions
(a) General Rules and Purposes of
Section 355(d)
As stated above, section 355(d) is in-
tended to prevent taxpayers from using
section 355 to dispose of subsidiaries in
sale-like transactions, or to obtain a fair
market value stepped-up basis for future
dispositions, without incurring a corpo-
rate-level tax. See H. R. Rep. 101–881, at
341 (1990). The legislative history to
section 355(d) describes transactions gen-
erally not violating the purposes of sec-
tion 355(d):
The purposes of [section 355(d)] are
not generally violated if there is a dis-
tribution of a controlled corporation
within 5 years of an acquisition by pur-
chase and the effect of the distribution
is neither (1) to increase ownership in
the distributing corporation or any con-
trolled corporation by persons who
have directly or indirectly acquired
stock within the prior five years, nor
(2) to provide a basis step-up with re-
spect to the stock of any controlled cor-
poration.
H. R. Rep. No. 101–964 (Conference Re-
port), at 1093 (1990).
The Conference Report, at page 1091,
clarifies that the grant of regulatory au-
thority in section 355(d)(9) includes the
authority to exclude from section 355(d)
transactions not violating its purposes.
The proposed regulations provide that a
distribution is not a disqualified distribu-
tion under section 355(d)(2) and proposed
§1.355–6(b)(1) if the distribution and any
related transactions do not violate the pur-
poses of section 355(d). The proposed
regulations describe transactions not vio-
lating the purposes of section 355(d) in a
manner similar to the legislative history
and provide some examples of those
transactions. If a distribution does not vi-
olate the purposes of section 355(d) under
proposed §1.355–6(b)(3), such distribu-
tion is a distribution to which section
355(d) does not apply. Accordingly, such
a distribution still could be a distribution
to which section 355(e) applies. See sec-
tion 355(e)(2)(D).
The exception in the proposed regula-
tions for transactions that do not violate
the purposes of section 355(d) applies to
transactions in which a disqualified per-
son neither increases an interest nor ob-
tains a purchased basis in Controlled
stock. A disqualified person is any person
that, immediately after a distribution,
holds disqualified stock in Distributing or
Controlled that constitutes a 50-percent or
greater interest (under section 355(d)(4)
and proposed §1.355–6(c)). Based on ex-
amples in the Conference Report, the pro-
posed regulations define purchased basis
as basis in Controlled stock that is dis-
qualified stock, unless the Controlled
stock and the Distributing stock on which
the Controlled stock is distributed are
treated as acquired by purchase solely
under the attribution rules of section
355(d)(8) and proposed §1.355–6(e)(1).
Examples in the proposed regulations
demonstrate the application of the two-
pronged purpose test.
The proposed regulations also provide
that a person that acquires an interest in
any entity by purchase is not treated as
having acquired by purchase stock owned
by the entity under section 355(d)(8)(B)
and paragraph (e)(1) of this section when
the person no longer holds the directly
purchased interest. Examples demon-
strate the operation of this rule when pur-
chased stock is eliminated in a liquidation
or upstream merger.
The proposed regulations provide an
anti-avoidance rule that permits the Com-
missioner to treat any distribution as a
disqualified distribution under section
355(d)(2) and proposed §1.355–6(b)(1) if
the distribution or another transaction or
transactions are engaged in or structured
with a principal purpose to avoid the pur-
poses of section 355(d) or the regulations
thereunder with respect to the distribu-
tion. For example, the Commissioner
may determine that the existence of a re-
lated person, intermediary, pass-through
entity, or similar person (an intermediary)
should be disregarded, in whole or in part,
if the intermediary is formed or availed of
with a principal purpose to avoid the pur-
poses of section 355(d) or the regulations
thereunder.
(b) Whether a Person Holds a 50
Percent or Greater Interest
Under section 355(d)(4), 50 percent or
greater interestmeans stock possessing at
least 50 percent of the total combined vot-
ing power of all classes of stock entitled
to vote or at least 50 percent of the total
value of shares of all classes of stock.
The proposed regulations provide rules
relating to that definition.
Valuation
The proposed regulations provide that,
for purposes of section 355(d)(4) and pro-
posed §1.355–6, all shares of stock within
a single class are considered to have the
same value. But see proposed §1.355–
6(c)(3)(vii), which applies a special valu-
ation rule to determine whether options
are reasonably certain to be exercised.
Effect of Options, Warrants, Convertible
Obligations, and Other Similar Interests
Section 355(d)(9) provides regulatory
authority to prevent the avoidance of the
purposes of section 355(d) through the
use of options. The Conference Report
states, at page 1092, that Congress intends
that regulations be issued to treat an op-
tion to acquire stock as exercised if two
criteria are satisfied. The first is that a
deemed exercise would cause a person to
have a 50 percent or greater interest ac-
quired by purchase. The second is that,
under all the facts and circumstances (in-
cluding projected earnings or appreciation
and including the risk shifting or other ef-
fects of any other arrangements with the
option holder or related parties), the effect
of the option would be to avoid the appli-
cation of section 355(d).
In general, the proposed regulations
disregard options in determining whether
any person holds disqualified stock con-
stituting a 50 percent or greater interest.
However, under the proposed regulations,
an option to acquire stock that has not
been exercised when a distribution occurs
is treated as exercised on the date it was
issued or most recently transferred if two
criteria are satisfied. The first, based on
the Conference Report, is that a deemed
May 17, 1999781999–20 I.R.B.

exercise would cause a person to become
a disqualified person. An option is not
treated as exercised under this criterion,
however, if the effect of the treatment is
to prevent a person who would otherwise
be a disqualified person from being
treated as a disqualified person. The sec-
ond criterion is that, immediately after the
distribution of Controlled, and based on
all the facts and circumstances, it is rea-
sonably certain that the option will be ex-
ercised. The IRS and Treasury believe
that the proposed regulations, which em-
ploy a “reasonably certain” standard to
treat options as exercised in potentially
abusive situations, is consistent with the
guidance given in the Conference Report
with respect to options. The proposed
regulations generally except certain in-
struments not ordinarily having an abuse
potential from treatment as options, such
as escrow, pledge, or other security agree-
ments, compensatory options, and options
exercisable only upon death, disability,
mental incompetency, or retirement.
When an option is treated as exercised,
it is treated as exercised both for purposes
of determining the percentage of the vot-
ing power of stock owned and for pur-
poses of determining the percentage of
the value of stock owned. The effect of
control premiums and minority and
blockage discounts on stock value is
taken into account only for purposes of
applying the “reasonably certain” test. If
the “reasonably certain” test is met, so
that an option is treated as exercised, all
shares of a single class are considered to
have the same value for purposes of deter-
mining the amount of stock deemed ac-
quired under the option.
The option rules of proposed §1.355–
6(c)(3) determine when an option is
treated as exercised only for purposes of
section 355(d) (but not for purposes of
section 355(d)(6)) and do not apply for
purposes of any other sections of the In-
ternal Revenue Code. The option rules
are proposed to apply generally to options
outstanding in distributions occurring
after the regulations are published as final
regulations in the Federal Register.See
proposed §1.355–6(g). However, the Ser-
vice may apply substance over form prin-
ciples in determining whether options
outstanding in distributions before the ef-
fective date are treated as stock or as exer-
cised in appropriate circumstances.
Plan or Arrangement
Under section 355(d)(7)(B), if two or
more persons act pursuant to a plan or
arrangement with respect to acquisitions of
stock or securities in Distributing or Con-
trolled, those persons are treated as one
person for purposes of section 355(d). The
proposed regulations provide a rule to de-
termine when shareholders act pursuant to
a plan or arrangement. Under the rule
(which does not apply for purposes of any
other section of the Internal Revenue
Code), two or more shareholders act pur-
suant to a plan or arrangement only if they
have a formal or informal understanding
among themselves to make a coordinated
acquisition of stock. A principal element
in determining if such an understanding
exists is whether the investment decision
of each person is based on the investment
decision of one or more other existing or
prospective shareholders. Thus, in gen-
eral, a public offering is not treated as a
plan or arrangement if each investor makes
an independent investment decision. This
rule applies regardless of the amount of
stock the shareholders own or acquire.
The rule is based on the entity rule con-
tained in §1.382–3(a)(1), and the IRS and
Treasury intend that the two provisions be
administered in a similar manner.
The proposed regulations provide that
creditors’ participation in an insolvency
workout or reorganization in a title 11 or
similar case, and the receipt of stock in
satisfaction of indebtedness in a workout
or reorganization, are not treated as a plan
or arrangement among the creditors. The
IRS and Treasury request comments as to
whether additional provisions are appro-
priate for workout or bankruptcy situa-
tions, such as rules regarding the timing
of purchases of stock received by credi-
tors, or rules regarding whether rights cre-
ated in favor of creditors in a bankruptcy
case should be treated as options.
(c) Purchase
Under section 355(d)(5)(A), except as
otherwise provided in section 355(d)(5)-
(B) and (C), a purchase means any acqui-
sition, but only if (1) the basis of the prop-
erty acquired in the hands of the acquirer
is not determined in whole or in part by
reference to the adjusted basis of such
property in the hands of the person from
whom acquired, or under section 1014(a),
and (2) the property is not acquired in an
exchange to which section 351, 354, 355,
or 356 applies. The proposed regulations
clarify that the term exchangein the
statute includes a reference to all section
355 distributions (for example, spin-offs,
even though no property is conveyed in
exchange for the distributed stock).
Exceptions to Definition of Purchase
Under Section 355(d)(5)(A)
The proposed regulations provide that
an acquisition of stock permitted to be re-
ceived by a transferor of property without
the recognition of gain under section
351(a), or permitted to be received with-
out the recognition of gain under section
354 or 355, is not a purchase to the extent
section 358(a)(1) applies to determine the
recipient’s basis, whether or not the recip-
ient also recognizes gain under section
351(b) or 356. The Conference Report
suggests, at page 1092, that regulations
generally should treat stock received by a
target corporation shareholder in a reorga-
nization as acquired by purchase if the
shareholder also receives boot. The Con-
ference Report states that purchase treat-
ment is warranted because the basis in the
shareholder’s acquiring corporation stock
is increased by the gain the shareholder
recognizes. However, under section
358(a)(1)(A), the basis in the stock also is
reduced by the amount of the boot re-
ceived. Thus, the shareholder will not re-
ceive a net basis increase in the acquiring
corporation stock. The proposed regula-
tions also provide that, to the extent stock
that is “other property” under section
351(b) or 356(a)(1) is received in addition
to stock excepted from purchase treat-
ment under the basic rule, the boot stock
is treated as purchased on the date of the
exchange or distribution for purposes of
section 355(d).
The proposed regulations provide that
an acquisition of stock by a corporation is
generally not a purchase to the extent sec-
tion 334(b) or 362(a) or (b) applies to de-
termine the corporation’s basis in the
stock received. However, because of the
basis results, stock is treated as purchased
on the date of the stock acquisition for
purposes of section 355(d) if the liquidat-
ing corporation recognizes gain or loss
with respect to the transferred stock as de-
scribed in section 334(b)(1), or to the ex-
1999–20 I.R.B.79May 17, 1999

tent the basis of the transferred stock is in-
creased through the recognition of gain by
the transferor under section 362(a) or (b).
The proposed regulations provide that,
subject to certain restrictions, section
305(a) and section 1036(a) transactions
are not purchases.
Certain Section 351 Exchanges
Treated as Purchases
Under section 355(d)(5)(B), a purchase
includes any acquisition of property in an
exchange to which section 351 applies to
the extent the property is acquired in ex-
change for any cash or cash item, any
marketable stock or security, or any debt
of the transferor. The property treated as
acquired by purchase is the property re-
ceived by the transferor in the exchange.
If the transferor receives more than one
class of stock or securities, or receives
both stock and securities, the proposed
regulations provide that the amount of
stock or securities purchased is deter-
mined in a manner that corresponds to the
basis allocation under section 358. The
proposed regulations define the terms
cash itemand marketable stockto include
personal property within the meaning of
section 1092(d)(1) and §1.1092(d)–1,
without giving effect to section
1092(d)(3).
The proposed regulations provide cer-
tain exceptions to purchase treatment
under section 355(d)(5)(B). Under the
first exception, an acquisition of stock in
a corporation in a section 351(a) transac-
tion by one or more persons in exchange
for an amount of stock in another corpora-
tion (the transferred corporation) that
meets the requirements of section
1504(a)(2) is not a purchase by the trans-
feror or transferors, regardless of whether
the stock of the transferred corporation is
marketable stock. Under the second ex-
ception, an acquisition of stock in ex-
change for any cash or cash item, any
marketable stock, or any debt of the trans-
feror in a section 351 transaction gener-
ally is not a purchase if the transferor
transfers the items as part of an active
trade or business and the transferred items
do not exceed the reasonable needs of the
trade or business. This exception is based
on the Conference Report, at page 1093.
The proposed regulations provide guid-
ance based on §1.355–3(b)(2) and (3) for
determining active conduct of a trade or
business and guidance on the reasonable
needs of the trade or business. All facts
and circumstances are considered in ap-
plying the exception.
The third exception, also based on the
Conference Report, at pages 1092-93,
provides that an acquisition of stock in
exchange for any cash or cash item, mar-
ketable stock or security, or debt of the
transferor in a section 351 transaction is
generally not a purchase if the transferor
corporation or corporations, the transferee
corporation, and any distributed con-
trolled corporation of the transferee cor-
poration are members of the same affili-
ated group as defined in section 1504(a)
before the section 351 transaction (if the
transferee corporation is in existence be-
fore the transaction) and do not cease to
be members of such affiliated group in
any transaction related to the section 351
transaction (including any distribution of
a controlled corporation by the transferee
corporation). An example illustrates that,
under the anti-avoidance rule of proposed
§1.355–6(b)(4), this exception does not
apply if the section 351 transaction is en-
gaged in or structured with a principal
purpose to avoid the purposes of section
355(d).
The proposed regulations provide pur-
chase rules for certain triangular asset re-
organizations. For purposes of section
355(d), the proposed regulations gener-
ally treat the controlling corporation as
having acquired the assets and liabilities
of the target corporation in a transaction
in which basis in the acquired assets is de-
termined under section 362(b) and then
transferred the assets and liabilities to its
subsidiary corporation in a section 351
transaction. This treatment is consistent
with the determination of basis in the
stock of the acquiring subsidiary or target
corporation under §1.358–6. The applica-
tion of section 351 to the deemed asset
contribution causes section 355(d)(5)(B)
(and proposed §1.355–6(d)(3)(i) through
(iv)) to apply.
The proposed regulations provide spe-
cial rules for transactions qualifying as a
reorganization under section 368(a)(1)(A)
by reason of section 368(a)(2)(E) and also
as either a reorganization under section
368(a)(1)(B) or a section 351 transfer.
Special rules are necessary for these
transactions because, under §1.358–
6(c)(2)(ii) or 1.1502-30(b), a controlling
corporation may determine its basis in
surviving corporation stock by choosing
from two alternative methods, but the tax-
payer need not choose a method until a
basis determination is relevant. The pro-
posed regulations describe corresponding
methods for determining the amount of
surviving corporation stock treated as
purchased for purposes of section 355(d).
The proposed regulations provide that, re-
gardless of which method the controlling
corporation may actually employ to deter-
mine its basis in the surviving corporation
stock under §1.358–6(c)(2)(ii) or 1.1502–
30(b), the total amount of surviving cor-
poration stock treated as purchased imme-
diately after the distribution equals the
higher of the amount of surviving corpo-
ration stock that would be treated as pur-
chased under the two alternative methods
described in proposed §1.355–6(d)(5)(i).
The proposed regulations allow a control-
ling corporation to select one of the two
alternative methods if the controlling cor-
poration obtains a letter ruling and enters
into a closing agreement under section
7121 in which it agrees to determine its
basis in surviving corporation stock using
the corresponding method under §1.358–
6(c)(2)(ii)(A) or (B). This option allows
the taxpayer to conform the section
355(d) results with the section 358 basis
results it chooses.
Finally, the proposed regulations ex-
plain the treatment of group structure
changes to which §1.1502–31 applies,
and provide rules adjusting purchase
treatment to conform to basis treatment in
triangular reorganizations and group
structure changes.
(d) Deemed Purchase and Timing Rules
Attribution and Aggregation
Under section 355(d)(8)(B), if any per-
son purchases an interest in an entity, and
any stock held by the entity is attributed
to the person under section 355(d)(8)(A),
the person is treated as purchasing the
stock on the later of the date the person
purchased the interest in the entity or the
date the entity purchased the stock.
The proposed regulations adopt three
additional timing rules based on the Con-
ference Report, at page 1090. First, if a
May 17, 1999801999–20 I.R.B.

person and an entity are treated as a single
person under section 355(d)(7), and the
person later purchases an additional inter-
est in the entity, the person is treated as
purchasing, at the time the additional in-
terest is purchased, the amount of stock
attributed from the entity to the person as
a result of the additional interest. This
timing rule applies even though the per-
son was (prior to purchasing the addi-
tional interest in the entity) already
treated as owning all of the stock owned
by the entity under the aggregation rules
of section 355(d)(7). Second, if two per-
sons are treated as one person under sec-
tion 355(d)(7) and one later purchases
stock from the other, the date of the later
purchase is used. Third, if a person who
is already treated as holding stock under
section 355(d)(8)(A) later directly pur-
chases such stock, the date of the later di-
rect purchase is used. The proposed regu-
lations contain a series of examples,
similar to those on pages 1090 and 1091
of the Conference Report, demonstrating
the operation of these rules.
Transferred Basis Rule
Under section 355(d)(5)(C), if any per-
son acquires property from another per-
son who acquired the property by pur-
chase, and the adjusted basis of the
property in the hands of the acquirer is de-
termined in whole or in part by reference
to the adjusted basis of the property in the
hands of the other person, the acquirer is
treated as having acquired the property by
purchase on the date it was acquired by
the other person. This rule applies, for
example, where stock of a corporation
with a purchased basis is acquired in a
section 351 transfer or a reorganization
qualifying under section 368(a)(1)(B), but
does not apply if the stock of a former
common parent is acquired in a group
structure change.
Under proposed §1.355–6(d)(2)(i)-
(B)(2), transferred stock is treated as pur-
chased on the date of a transfer if the
stock is transferred in a liquidation, and
the liquidating corporation recognizes
gain or loss with respect to the transferred
stock as described in section 334(b)(1), or
to the extent the basis of the transferred
stock is increased through the recognition
of gain by the transferor under section
362(a) or (b).
Exchanged Basis Rule
Based on the Conference Report, at
page 1092, the proposed regulations
adopt a rule that, if any person acquires an
interest in an entity (the first interest) by
purchase, and the first interest is ex-
changed for an interest in another entity
(the second interest) where the adjusted
basis of the second interest is determined
by reference to the adjusted basis of the
first interest, then the second interest is
treated as having been purchased on the
date the first interest was purchased. This
rule applies, for example, where stock of
a corporation acquired by purchase is sub-
sequently exchanged for other stock in a
section 351, 354, or 1036(a) exchange.
Under proposed §1.355–6(d)(2)(i)(A)(2),
stock that is other property under section
351(b) or 356(a)(1) is treated as pur-
chased on the date of the exchange or dis-
tribution.
Substantial Diminution of Risk
As in section 355(d)(6), the proposed
regulations provide that the running of the
five-year period under section 355(d)(3)
is suspended for any period during which
the holder’s risk of loss is substantially di-
minished by an option, a short sale, any
special class of stock (including tracking
stock), or any other device or transaction.
(e) Duty to Determine Stockholders and
Presumptions
The proposed regulations provide that,
in determining whether section 355(d) ap-
plies to a distribution, Distributing must
determine whether a disqualified person
holds its stock or the stock of any distrib-
uted Controlled. For this purpose, a cor-
poration is deemed to have knowledge of
the existence and contents of all sched-
ules, forms, and other documents filed
with or under the rules of the Securities
and Exchange Commission, including,
without limitation, any Schedule 13D or
13G (or any similar schedules) and
amendments, with respect to any relevant
corporation.
The proposed regulations provide that,
absent actual knowledge to the contrary,
with respect to reporting stock, Distribut-
ing may presume that all schedules,
forms, or other documents are timely
filed, accurate, and complete. Reporting
stock is defined as stock that is described
in Rule 13d–1(i) of Regulation 13D pro-
mulgated under the Securities and Ex-
change Act of 1934. In addition, the pro-
posed regulations provide a presumption
with respect to less-than-five-percent
shareholders, which are defined as per-
sons that, at no time during the five-year
period, hold directly (or under the option
rules contained in the proposed regula-
tions) stock possessing five percent or
more of the total combined voting power
of all classes of stock entitled to vote and
the total value of shares of all classes of
stock of a corporation. Absent actual
knowledge (or deemed knowledge re-
garding reporting stock) immediately
after a distribution to the contrary regard-
ing a particular shareholder, Distributing
may generally presume that no less-than-
five-percent shareholder of a corporation
acquired stock by purchase during the
five-year period. This presumption does
not apply to any less-than-five-percent
shareholder that, at any time during the
five-year period, is related to, acted pur-
suant to a plan or arrangement with, or
holds stock that is attributed to a share-
holder that is not a less-than-five-percent
shareholder at any time during the five-
year period. If an acquiring corporation
acquires Distributing in a transferred
basis transaction, Distributing may apply
both the reporting stock presumption and
the less-than-five-percent shareholder
presumption to determine whether section
355(d) applies to a distribution of Con-
trolled stock to the acquiring corporation
due to preacquisition stock purchases by
Distributing’s former shareholders.
Proposed Effective Date
The proposed regulations would apply
to distributions occurring after the regula-
tions are published as final regulations in
the Federal Register,except that they
would not apply to any distributions oc-
curring pursuant to a written agreement
which is (subject to customary conditions)
binding on the date the regulations are
published as final regulations in the Fed-
eral Register,and at all times thereafter.
Special Analyses
It has been determined that this notice
of proposed rulemaking is not a signifi-
1999–20 I.R.B.81May 17, 1999

cant regulatory action as defined in Exec-
utive Order 12866. Therefore, a regula-
tory assessment is not required. It also
has been determined that section 553(b)
of the Administrative Procedure Act (5
U.S.C. chapter 5) does not apply to these
regulations, and, because the regulations
do not impose a collection of information
on small entities, the Regulatory Flexibil-
ity Act (5 U.S.C. chapter 6) does not
apply. Pursuant to section 7805(f) of the
Internal Revenue Code, this notice of pro-
posed rulemaking will be submitted to the
Chief Counsel for Advocacy of the Small
Business Administration for comment on
its impact on small business.
Comments and Public Hearing
Before these proposed regulations are
adopted as final regulations, considera-
tion will be given to any written or elec-
tronic comments (preferably a signed
original and eight (8) copies, if written)
that are submitted timely to the IRS. The
IRS and Treasury specifically request
comments on the clarity of the proposed
rule and how it may be made easier to un-
derstand. All comments will be available
for public inspection and copying.
A public hearing has been scheduled for
September 21, 1999, beginning at 10 a.m.
in room 2615 of the Internal Revenue
Building, 1111 Constitution Avenue, NW,
Washington, DC. Due to building security
procedures, visitors must enter at the 10th
Street entrance, located between Constitu-
tion and Pennsylvania Avenues, NW. In
addition, all visitors must present photo
identification to enter the building. Be-
cause of access restrictions, visitors will
not be admitted beyond the immediate en-
trance area more than 15 minutes before
the hearing starts. For information about
having your name placed on the building
access list to attend the hearing, see the
“FOR FURTHER INFORMATION CON-
TACT” section of this preamble.
The rules of 26 CFR 601.601(a)(3)
apply to the hearing. Persons who wish to
present oral comments at the hearing must
submit written or electronic comments
and an outline of the topics to be dis-
cussed and the time to be devoted to each
topic (preferably a signed original and
eight (8) copies, if written) by August 31,
1999. A period of 10 minutes will be al-
lotted to each person for making com-
ments. An agenda showing the schedul-
ing of the speakers will be prepared after
the deadline for receiving outlines has
passed. Copies of the agenda will be
available free of charge at the hearing.
Drafting Information
The principal author of these proposed
regulations is Phoebe Bennett, Office of
the Assistant Chief Counsel (Corporate).
However, other personnel from the IRS
and Treasury Department participated in
their development.
*****
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 is amended by adding an entry in
numerical order to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Section 1.355–6 also issued under 26
U.S.C. 355(d)(9). * * *
Par. 2. Section 1.355–0 is amended by;
1. Revising the section heading.
2. Revising the entries for §1.355–6.
The revisions read as follows:
§1.355–0 To facilitate the use of
§§1.355–1 through 1.355–6, this section
lists the major paragraphs in those
sections.
* * * * *
§1.355–6 Recognition of gain on certain
distributions of stock or securities in
controlled corporation.
a.Conventions.
1.Distributing securities.
2.Marketable securities.
3.Examples.
4.Five-year period.
a.General rules and purposes of section
355(d).
1.Disqualified distributions in general.
2.Disqualified stock.
i.In general.
ii. Purchase.
1.Certain distributions not disqualified
distributions because purposes of
section 355(d) not violated.
i.In general.
ii. Disqualified person.
iii. Purchased basis.
iv. Purchased interest no longer held.
v.Examples.
1.Anti-avoidance rule.
i.In general.
ii. Example.
i.Whether a person holds a 50 percent
or greater interest.
1.In general.
2.Valuation.
3.Effect of options, warrants, convert-
ible obligations, and other similar in-
terests.
i.Application.
ii. General rule.
iii. Options deemed newly issued.
(A) Exchange, adjustment, or alteration
of existing option.
(B) Certain compensatory options.
i.Effect of treating an option as exer-
cised.
(A) In general.
(B) Cash settlement options, phantom
stock, stock appreciation rights, cer-
tain notional principal contracts, or
similar interests.
(C) Stock purchase agreement or similar
arrangement.
i.Instruments treated as options.
ii. Instruments generally not treated as
options.
(A) Escrow, pledge, or other security
agreements.
(B) Compensatory options.
(1) General rule.
(2) Exception.
(C) Certain stock conversion features.
(D) Options exercisable only upon death,
disability, mental incompetency, or
retirement.
(E) Rights of first refusal.
(F) Other enumerated instruments.
i.Reasonably certain that the option
will be exercised.
(A) In general.
(B) Stock purchase agreement or similar
arrangement.
i.Examples.
1.Plan or arrangement.
i.In general.
ii. Understanding.
iii. Examples.
a.Purchase.
1.In general.
i.Definition of purchase under section
355(d)(5)(A).
ii. Section 355 distributions.
iii. Examples.
1.Exceptions to definition of purchase
under section 355(d)(5)(A).
i.Acquisition of stock in a transaction
which includes other property or
money.
May 17, 1999821999–20 I.R.B.

(A) Transferors and shareholders of
transferor or distributing corpora-
tions.
(1) In general.
(2) Exception.
(B) Transferee corporations.
(1) In general.
(2) Exception.
(C) Examples.
i.Acquisition of stock in a distribution
to which section 305(a) applies.
ii. Section 1036(a) exchange.
1. Certain section 351 exchanges
treated as purchases.
i.In general.
(A) Treatment of stock received by trans-
feror.
(B) Multiple classes of stock.
i.Cash item, marketable stock.
ii. Exception for certain acquisitions.
(A) In general.
(B) Example.
i.Exception for assets transferred as
part of an active trade or business.
(A) In general.
(B) Active conduct of a trade or business.
(C) Reasonable needs of the trade or
business.
(D) Consideration of all facts and cir-
cumstances.
i.Exception for transfer between mem-
bers of the same affiliated group.
(A) In general.
(B) Examples.
1.Triangular asset reorganizations.
i.Definition.
ii. Treatment.
iii. Example.
1.Reverse triangular reorganizations
other than triangular asset reorgani-
zations.
i.In general.
ii. Letter ruling and closing agreement.
iii. Examples.
1. Treatment of group structure
changes.
i.In general.
ii. Adjustments to basis of higher-tier
members.
iii. Example.
1.Special rules for triangular asset reor-
ganizations, other reverse triangular
reorganizations, and group structure
changes.
a.Deemed purchase and timing rules.
1.Attribution and aggregation.
i.In general.
ii. Purchase of additional interest.
iii. Purchase between persons treated as
one person.
iv. Purchase by a person already treated
as holding stock under section
355(d)(8)(A).
v.Examples.
1.Transferred basis rule.
2.Exchanged basis rule.
i.In general.
ii. Example.
1.Substantial diminution of risk.
i.In general.
ii. Property to which suspension ap-
plies.
iii. Risk of loss substantially diminished.
iv. Special class of stock.
a. Duty to determine stockholders.
1. In general.
2.Deemed knowledge of contents of
securities filings.
3.Presumptions as to securities filings.
4.Presumption as to less-than-five-per-
cent shareholders.
5.Examples.
a.Effective date.
Par. 3. Section 1.355–6 is revised to
read as follows:
§1.355–6 Recognition of gain on certain
distributions of stock or securities in con-
trolled corporation—(a) Conventions—
(1) Distributing securities.Unless other-
wise stated, any reference in this section
to stock of a corporation that is (or be-
comes) a distributing corporation includes
a reference to securities of the corpora-
tion. See section 355(d)(3)(B)(ii)(II) (dis-
qualified controlled corporation stock in-
cludes controlled corporation stock
distributed with respect to purchased dis-
tributing corporation securities).
(2) Marketable securities.Unless oth-
erwise stated, any reference in this section
to marketable stock includes a reference
to marketable securities.
(3) Examples. For purposes of the ex-
amples in this section, unless otherwise
stated, assume that P, S, T, X, Y, N, HC,
D, D1, D2, D3, and C are corporations, A
and B are individuals, shareholders are
not treated as one person under section
355(d)(7), stock has been owned for more
than five years and section 355(d)(6) and
paragraph (e)(4) of this section do not
apply, no election under section 338 (if
available) is made, and all transactions
described are respected under general tax
principles, including the step transaction
doctrine. No inference should be drawn
from any example as to whether any re-
quirements of section 355 other than
those of section 355(d), as specified, are
satisfied.
(4) Five-year period.For purposes of
this section, the term five-year period
means the five-year period (determined
after applying section 355(d)(6) and para-
graph (e)(4) of this section) ending on the
date of the distribution, but in no event
beginning earlier than October 10, 1990.
(b) General rules and purposes of sec-
tion 355(d)—(1) Disqualified distribu-
tions in general.In the case of a disquali-
fied distribution, any stock or securities in
the controlled corporation shall not be
treated as qualified property for purposes
of section 355(c)(2) or 361(c)(2). In gen-
eral, a disqualified distribution is any dis-
tribution to which section 355 (or so much
of section 356 as relates thereto) applies if,
immediately after the distribution—
(i) Any person holds disqualified stock
in the distributing corporation that consti-
tutes a 50 percent or greater interest in
such corporation; or
(ii) Any person holds disqualified stock
in the controlled corporation (or, if stock
of more than one controlled corporation is
distributed, in any controlled corporation)
that constitutes a 50 percent or greater in-
terest in such corporation.
(2) Disqualified stock—(i) In general.
Disqualified stock is—
(A) Any stock in the distributing corpo-
ration acquired by purchase during the
five-year period; and
(B) Any stock in any controlled corpo-
ration—
(1) Acquired by purchase during the
five-year period; or
(2) Received in the distribution to the
extent attributable to distributions on any
stock in the distributing corporation ac-
quired by purchase during the five-year
period.
(ii) Purchase.For the definition of a
purchasefor purposes of section 355(d)
and this section, see section 355(d)(5) and
paragraph (d) of this section.
(3) Certain distributions not disquali-
fied distributions because purposes of
section 355(d) not violated—(i) In gen-
eral.Notwithstanding the provisions of
section 355(d)(2) and this paragraph (b), a
distribution is not a disqualified distribu-
tion if the distribution and any related
transactions do not violate the purposes of
1999–20 I.R.B.83May 17, 1999

section 355(d) as provided in this para-
graph (b)(3). A distribution does not vio-
late the purposes of section 355(d) if the
effect of the distribution and any related
transactions is neither—
(A) To increase direct or indirect own-
ership in the distributing corporation or
any controlled corporation by a disquali-
fied person; nor
(B) To provide a disqualified person
with a purchased basis in the stock of any
controlled corporation.
(ii) Disqualified person.Adisqualified
personis any person (taking into account
section 355(d)(7) and paragraph (c)(4) of
this section) that, immediately after a dis-
tribution, holds (directly or indirectly
under section 355(d)(8) and paragraph
(e)(1) of this section) disqualified stock in
the distributing corporation or controlled
corporation that constitutes a 50 percent
or greater interest in such corporation
(under section 355(d)(4) and paragraph
(c) of this section).
(iii) Purchased basis. Apurchased
basisis basis in controlled corporation
stock that is disqualified stock, unless the
controlled corporation stock and any dis-
tributing corporation stock with respect to
which the controlled corporation stock is
distributed are treated as acquired by pur-
chase solely under the attribution rules of
section 355(d)(8) and paragraph (e)(1) of
this section.
(iv) Purchased interest no longer held.
A person that acquires an interest in any
entity by purchase ceases to be treated as
having acquired by purchase stock owned
by the entity under section 355(d)(8)(B)
and paragraph (e)(1) of this section at the
time when the person no longer holds the
directly purchased interest.
(v) Examples.The following examples
illustrate this paragraph (b)(3):
Example 1. Stock distributed in spin-off; no pur-
chased basis. D owns all of the stock of D1, and D1
owns all the stock of C. A purchases 60 percent of
the D stock for cash. Within five years of A’s pur-
chase, D1 distributes the C stock to D. A is treated as
having purchased 60 percent of the stock of both D1
and C on the date A purchases 60 percent of the D
stock under the attribution rules of section 355(d)(8)
and paragraph (e)(1) of this section. The C stock re-
ceived by D is attributable to a distribution on pur-
chased D1 stock under section 355(d)(3)(B)(ii). Ac-
cordingly, the D1 and C stock each is disqualified
stock under section 355(d)(3) and paragraph (b)(2) of
this section, and A is a disqualified person under
paragraph (b)(3)(ii) of this section. However, the
purposes of section 355(d) under paragraph (b)(3)(i)
of this section are not violated. A did not increase di-
rect or indirect ownership in D1 or C. In addition,
D’s basis in the C stock is not a purchased basis
under paragraph (b)(3)(iii) of this section because
both the D1 and the C stock are treated as acquired
by purchase solely under the attribution rules of sec-
tion 355(d)(8) and paragraph (e)(1) of this section.
Accordingly, D1’s distribution of the C stock to D is
not a disqualified distribution under section
355(d)(2) and paragraph (b)(1) of this section.
Example 2. Stock distributed in spin-off; pur-
chased basis.The facts are the same as Example 1,
except that D immediately further distributes the C
stock to its shareholders (including A) pro rata. The
D and C stock each is disqualified stock under sec-
tion 355(d)(3) and paragraph (b)(2) of this section,
and A is a disqualified person under paragraph
(b)(3)(ii) of this section. The purposes of section
355(d) under paragraph (b)(3)(i) of this section are
violated. A did not increase direct or indirect owner-
ship in D or C. However, A’s basis in the C stock is
a purchased basis under paragraph (b)(3)(iii) of this
section because the D stock is not treated as ac-
quired by purchase solely under the attribution rules
of section 355(d)(8) and paragraph (e)(1) of this sec-
tion. Accordingly, the further distribution is a dis-
qualified distribution under section 355(d)(2) and
paragraph (b)(1) of this section.
Example 3. Stock distributed in split-off with
ownership increase; purchased basis.The facts are
the same as Example 1,except that D immediately
further distributes the C stock to A in exchange for
A’s purchased stock in D. The C stock received by
A is attributable to a distribution on purchased D
stock under section 355(d)(3)(B)(ii), and A’s basis in
the C stock is determined by reference to the ad-
justed basis of A’s purchased D stock under para-
graph (e)(3) of this section. Accordingly, the D
stock and the C stock each is disqualified stock
under section 355(d)(3) and paragraph (b)(2) of this
section, and A is a disqualified person under para-
graph (b)(3)(ii) of this section. The purposes of sec-
tion 355(d) under paragraph (b)(3)(i) of this section
are violated because A increased its ownership in C
from a 60 percent indirect interest to a 100 percent
direct interest, and because A’s basis in the C stock is
a purchased basis under paragraph (b)(3)(iii) of this
section. Accordingly, the further distribution is a
disqualified distribution under section 355(d)(2) and
paragraph (b)(1) of this section.
Example 4. Stock distributed in spin-off; pur-
chased basis.D1 owns all the stock of C. D pur-
chases all of the stock of D1 for cash. Within five
years of D’s purchase of D1, P acquires all of the
stock of D1 from D in a section 368(a)(1)(B) reorga-
nization that is not a reorganization under section
368(a)(1)(A) by reason of section 368(a)(2)(E), and
D1 distributes all of its C stock to P. P is treated as
having acquired the D1 stock by purchase on the
date D acquired it under the transferred basis rule of
section 355(d)(5)(C) and paragraph (e)(2) of this
section. P is treated as having purchased all of the C
stock on the date D purchased the D1 stock under
the attribution rules of section 355(d)(8) and para-
graph (e)(1) of this section, and the C stock received
by P is attributable to a distribution on purchased D1
stock under section 355(d)(3)(B)(ii). Accordingly,
the D1 and C stock each is disqualified stock under
section 355(d)(3) and paragraph (b)(2) of this sec-
tion, and P is a disqualified person under paragraph
(b)(3)(ii) of this section. The purposes of section
355(d) under paragraph (b)(3)(i) of this section are
violated. P did not increase direct or indirect owner-
ship in D1 or C. However, P’s basis in the C stock is
a purchased basis under paragraph (b)(3)(iii) of this
section because the D1 stock is not treated as ac-
quired by purchase solely under the attribution rules
of section 355(d)(8) and paragraph (e)(1) of this sec-
tion. Accordingly, D1’s distribution of the C stock
to P is a disqualified distribution under section
355(d)(2) and paragraph (b)(1) of this section.
Example 5. Stock distributed in split-off with
ownership increase; no purchased basis.P owns 50
percent of the stock of D, the remaining D stock is
owned by unrelated persons, D owns all the stock of
C, and A purchases all of the P stock from the P
shareholders. Within five years of A’s purchase, D
distributes all of the C stock to P in exchange for P’s
D stock. A is treated as having purchased 50 percent
of the stock of both D and C on the date A purchases
the P stock under the attribution rules of section
355(d)(8) and paragraph (e)(1) of this section. The
C stock received by P is attributable to a distribution
on purchased D stock under section 355(d)(3)(B)(ii).
Accordingly, the D stock and the C stock each is dis-
qualified stock under section 355(d)(3) and para-
graph (b)(2) of this section, and A is a disqualified
person under paragraph (b)(3)(ii) of this section. The
purposes of section 355(d) under paragraph (b)(3)(i)
of this section are violated because, even though P’s
basis in the C stock is not a purchased basis under
paragraph (b)(3)(iii) of this section, A increased its
direct or indirect ownership in C from a 50 percent
indirect interest to a 100 percent indirect interest.
Accordingly, D’s distribution of the C stock to P is a
disqualified distribution under section 355(d)(2) and
paragraph (b)(1) of this section.
Example 6. Stock distributed in split-off with no
ownership increase; no purchased basis.A pur-
chases all of the stock of T. T later merges into D in
a section 368(a)(1)(A) reorganization and A ex-
changes its purchased T stock for 60 percent of the
stock of D. D owns all of the stock of D1 and D2,
D1 and D2 each owns 50 percent of the stock of D3,
and D3 owns all of the stock of C. Within five years
of A’s purchase of the T stock, D3 distributes the C
stock to D1 in exchange for all of D1’s D3 stock. A
is treated as having acquired 60 percent of the D
stock by purchase on the date A purchases the T
stock under paragraph (e)(3) of this section. A is
treated as having purchased 60 percent of the stock
of D1, D2, D3, and C on the date A purchases the T
stock under the attribution rules of section 355(d)(8)
and paragraph (e)(1) of this section. The C stock re-
ceived by D1 is attributable to a distribution on pur-
chased D3 stock under section 355(d)(3)(B)(ii).
Accordingly, the D3 stock and the C stock each is
disqualified stock under section 355(d)(3) and para-
graph (b)(2) of this section, and A is a disqualified
person under paragraph (b)(3)(ii) of this section.
However, the purposes of section 355(d) under para-
graph (b)(3)(i) of this section are not violated. A did
not increase direct or indirect ownership in D3 or C,
and D1’s basis in the C stock is not a purchased
basis under paragraph (b)(3)(iii) of this section be-
cause the D3 stock is treated as acquired by pur-
chase solely under the attribution rules of section
355(d)(8) and paragraph (e)(1) of this section. Ac-
May 17, 1999841999–20 I.R.B.

cordingly, D3’s distribution of the C stock to D1 is
not a disqualified distribution under section
355(d)(2) and paragraph (b)(1) of this section.
Example 7. Purchased basis eliminated by liqui-
dation; stock distributed in spin- off.P owns 30 per-
cent of the stock of D, D owns all of the stock of D1,
and D1 owns all of the stock of C. P purchases the
remaining 70 percent of the D stock for cash.
Within five years of P’s purchase, P liquidates D in a
transaction qualifying under sections 332 and
337(a), and D1 then distributes the stock of C to P.
Prior to the liquidation, P is treated as having pur-
chased 70 percent of the stock of D1 and C on the
date P purchases the D stock under the attribution
rules of section 355(d)(8)(B) and paragraph (e)(1) of
this section. After the liquidation, however, under
paragraph (b)(3)(iv) of this section, P is not treated
as having acquired by purchase the D1 or the C
stock under section 355(d)(8)(B) and paragraph
(e)(1) of this section because P no longer holds the
directly purchased interest in D. Under section
334(b)(1), P’s basis in the D1 stock is determined by
reference to D’s basis in the D1 stock and not by ref-
erence to P’s basis in D. Paragraph (d)(2)(i)(B) of
this section does not treat the D1 stock as newly pur-
chased in P’s hands because no gain or loss was rec-
ognized by D in the liquidation. Accordingly, nei-
ther the D1 stock nor the C stock is disqualified
stock under section 355(d)(3) and paragraph (b)(2)
of this section in P’s hands, and the distribution is
not a disqualified distribution under section
355(d)(2) and paragraph (b)(1) of this section.
Example 8. Purchased basis eliminated by up-
stream merger; stock distributed in spin-off.D owns
all of the stock of D1, and D1 owns all of the stock
of C. P purchases 60 percent of the D stock for cash.
Within five years of P’s purchase, D merges into P in
a section 368(a)(1)(A) reorganization, with the D
shareholders other than P receiving solely P stock in
exchange for their D stock, and D1 then distributes
the stock of C to P. Prior to the merger, P is treated
as having purchased 60 percent of the stock of D1
and C on the date P purchases the D stock under the
attribution rules of section 355(d)(8) and paragraph
(e)(1) of this section. After the merger, however,
under paragraph (b)(3)(iv) of this section, P is not
treated as having acquired by purchase the D1 or the
C stock under section 355(d)(8)(B) and paragraph
(e)(1) of this section because P no longer holds the
directly purchased interest in D. Under section
362(b), P’s basis in the D1 stock is determined by
reference to D’s basis in the D1 stock and not by ref-
erence to P’s basis in D. Paragraph (d)(2)(i)(B) of
this section does not treat the D1 stock as newly pur-
chased in P’s hands because no gain or loss was rec-
ognized by D in the merger. Accordingly, neither
the D1 stock nor the C stock is disqualified stock
under section 355(d)(3) and paragraph (b)(2) of this
section in P’s hands, and the distribution is not a dis-
qualified distribution under section 355(d)(2) and
paragraph (b)(1) of this section.
(4) Anti-avoidance rule—(i) In gen-
eral.Notwithstanding any provision of
section 355(d) or this section, the Com-
missioner may treat any distribution as a
disqualified distribution under section
355(d)(2) and paragraph (b)(1) of this
section if the distribution or another trans-
action or transactions are engaged in or
structured with a principal purpose to
avoid the purposes of section 355(d) or
this section with respect to the distribu-
tion. Without limiting the preceding sen-
tence, the Commissioner may determine
that the existence of a related person, in-
termediary, pass-through entity, or similar
person (an intermediary) should be disre-
garded, in whole or in part, if the interme-
diary is formed or availed of with a prin-
cipal purpose to avoid the purposes of
section 355(d) or this section.
(ii) Example. The following example
illustrates this paragraph (b)(4):
Example. Post-distribution redemption.B
wholly owns D, which wholly owns C. With a prin-
cipal purpose to avoid the purposes of section
355(d), A, B, D, and C engage in the following
transactions. A purchases 45 of 100 shares of the
only class of D stock. Within five years after A’s
purchase, D distributes all of its 100 shares in C to A
and B pro rata. D then redeems 20 shares of B’s D
stock, and C redeems 20 shares of B’s C stock.
After the redemption, A owns 45 shares and B owns
35 shares in each of D and C. Under paragraph
(b)(4)(i) of this section, the Commissioner may treat
A as owning disqualified stock in D and C that con-
stitutes a 50 percent or greater interest in D and C
immediately after the distribution. Under that treat-
ment, the distribution is a disqualified distribution
under section 355(d)(2).
(c) Whether a person holds a 50 per-
cent or greater interest—(1) In general.
Under section 355(d)(4), 50 percent or
greater interestmeans stock possessing at
least 50 percent of the total combined vot-
ing power of all classes of stock entitled
to vote or at least 50 percent of the total
value of shares of all classes of stock.
(2) Valuation. For purposes of section
355(d)(4) and this section, all shares of
stock within a single class are considered
to have the same value. But see para-
graph (c)(3)(vii)(A) of this section (deter-
mination of whether it is reasonably cer-
tain that an option will be exercised).
(3) Effect of options, warrants, convert-
ible obligations, and other similar inter-
ests—(i) Application.This paragraph
(c)(3) provides rules to determine when
an option is treated as exercised for pur-
poses of section 355(d) (other than sec-
tion 355(d)(6)). Except as provided in
this paragraph (c)(3), an option is not
treated as exercised for purposes of sec-
tion 355(d). This paragraph (c)(3) does
not affect the determination of whether an
instrument is an option or stock under
general principles of tax law (such as sub-
stance over form).
(ii) General rule.In determining
whether a person has acquired by pur-
chase a 50 percent or greater interest under
section 355(d)(4), an option to acquire
stock (as described in paragraphs (c)(3)(v)
and (vi) of this section) that has not been
exercised when a distribution occurs is
treated as exercised on the date it was is-
sued or most recently transferred if—
(A) Its exercise (whether by itself or in
conjunction with the deemed exercise of
one or more other options) would cause a
person to become a disqualified person;
and
(B) Immediately after the distribution,
it is reasonably certain (as described in
paragraph (c)(3)(vii) of this section) that
the option will be exercised.
(iii) Options deemed newly issued—
(A) Exchange, adjustment, or alteration
of existing option.For purposes of this
paragraph (c)(3), each of the following is
treated as a new issuance or transfer of an
existing option only if it materially in-
creases the likelihood that an option will
be exercised—
(1) An exchange of an option for an-
other option or options;
(2) An adjustment to the terms of an
option (including an adjustment pursuant
to the terms of the option);
(3) An adjustment to the terms of the
underlying stock (including an adjustment
pursuant to the terms of the stock);
(4) A change to the capital structure of
the issuing corporation; and
(5) An alteration to the fair market
value of issuing corporation stock through
an asset transfer (other than regular, ordi-
nary dividends) or through any other
means.
(B) Certain compensatory options. An
option described in paragraph (c)(3)(vi)-
(B)(2) of this section is treated as issued
on the date it becomes transferable.
(iv) Effect of treating an option as exer-
cised—(A) In general.For purposes of
section 355(d), an option that is treated as
exercised under this paragraph (c)(3) is
treated as exercised both for purposes of
determining the percentage of the voting
power of stock owned by the holder and
for purposes of determining the percent-
age of the value of stock owned by the
holder.
1999–20 I.R.B.85May 17, 1999

(B) Cash settlement options, phantom
stock, stock appreciation rights, certain
notional principal contracts, or similar
interests.If a cash settlement option,
phantom stock, stock appreciation right,
notional principal contract described in
paragraph (c)(3)(v)(B) of this section, or
similar interest is treated as exercised, the
option is treated as having been converted
into stock of the issuing corporation. If
the amount to be received upon the exer-
cise of such an option is determined by
reference to a multiple of the increase in
the value of a share of the issuing corpo-
ration’s stock on the exercise date over
the value of a share of the stock on the
date the option is issued, the option is
treated as converted into a corresponding
number of shares of such stock. Appro-
priate adjustments must be made in any
situation in which the amount to be re-
ceived upon exercise of the option is de-
termined in another manner.
(C) Stock purchase agreement or simi-
lar arrangement.If a stock purchase
agreement or similar arrangement is
deemed exercised, the purchaser is treated
as having purchased of the stock under
the terms of the agreement or arrange-
ment as though all covenants had been
satisfied and all contingencies met. The
agreement or arrangement is deemed to
have been exercised as of the date it is en-
tered into or most recently assigned.
(v) Instruments treated as options.For
purposes of this paragraph (c)(3), except
to the extent provided in paragraph
(c)(3)(vi) of this section, the following are
treated as options:
(A) A call option, warrant, convertible
obligation, the conversion feature of con-
vertible stock, put option, redemption
agreement (including a right to cause the
redemption of stock), notional principal
contract (as defined in §1.446–3(c)) that
provides for the payment of amounts in
stock, stock purchase agreement or simi-
lar arrangement, or any other instrument
that provides for the right to purchase,
issue, redeem, or transfer stock (including
an option on an option).
(B) A cash settlement option, phantom
stock, stock appreciation right, notional
principal contract (as defined in §1.446-
3(c)) that provides for payment based on
the price of stock, or any other similar in-
terest (except for stock).
(vi) Instruments generally not treated as
options.For purposes of this paragraph
(c)(3), the following are not treated as op-
tions, unless issued, transferred, or listed
with a principal purpose to avoid the appli-
cation of section 355(d) or this section:
(A) Escrow, pledge, or other security
agreements.An option that is part of a se-
curity arrangement in a typical lending
transaction (including a purchase money
loan), if the arrangement is subject to cus-
tomary commercial conditions. For this
purpose, a security arrangement includes,
for example, an agreement for holding
stock in escrow or under a pledge or other
security agreement, or an option to ac-
quire stock contingent upon a default
under a loan.
(B) Compensatory options—(1) Gen-
eral rule.An option to acquire stock in a
corporation with customary terms and
conditions provided to an employee, di-
rector, or independent contractor in con-
nection with the performance of services
for the corporation or a person related to it
under section 355(d)(7)(A) (and that is not
excessive by reference to the services per-
formed) and that—
(i) Is nontransferable within the mean-
ing of §1.83–3(d); and
(ii) Does not have a readily ascertain-
able fair market value as defined in
§1.83–7(b).
(2) Exception. Paragraph (c)(3)(vi)(B)-
(1) of this section ceases to apply to an op-
tion that becomes transferable.
(C) Certain stock conversion features.
The conversion feature of convertible
stock, provided that—
(1) The stock is not convertible for at
least five years after issuance or transfer;
and
(2) The terms of the conversion feature
do not require the tender of any considera-
tion other than the stock being converted.
(D) Options exercisable only upon
death, disability, mental incompetency, or
retirement.Any option entered into be-
tween stockholders of a corporation (or a
stockholder and the corporation) with re-
spect to the stock of either stockholder that
is exercisable only upon the death, disabil-
ity, mental incompetency of the stock-
holder, or, in the case of stock acquired in
connection with the performance of ser-
vices for the corporation or a person re-
lated to it under section 355(d)(7)(A) (and
that is not excessive by reference to the
services performed), the stockholder’s re-
tirement.
(E) Rights of first refusal. A bona fide
right of first refusal regarding the corpora-
tion’s stock with customary terms, entered
into between stockholders of a corporation
(or between the corporation and a stock-
holder).
(F) Other enumerated instruments.
Any other instruments specified in regula-
tions, a revenue ruling, or a revenue proce-
dure. See §601.601(d)(2) of this chapter.
(vii) Reasonably certain that the option
will be exercised—(A) In general. The
determination of whether, immediately
after the distribution, an option is reason-
ably certain to be exercised is based on all
the facts and circumstances. In applying
the previous sentence, the fair market
value of stock underlying an option is de-
termined by taking into account control
premiums and minority and blockage dis-
counts.
(B) Stock purchase agreement or simi-
lar arrangement.A stock purchase agree-
ment or similar arrangement is treated as
reasonably certain to be exercised if the
parties’ obligations to complete the trans-
action are subject only to reasonable clos-
ing conditions.
(viii) Examples.The following exam-
ples illustrate this paragraph (c)(3):
Example 1.D owns all of the stock of C. A pur-
chases 40 percent of D’s only class of stock and an
option to purchase an additional 20 percent of the D
stock. Assume that no control premium or minority
or blockage discount applies to the D stock underly-
ing the option. The option permits A to acquire the
stock at $30 per share, and D’s stock has a fair mar-
ket value of $27 per share on the date the option is is-
sued. The option is subject to no contingencies or re-
strictive covenants, may be exercised within five
years after its issuance, and is not described in para-
graph (c)(3)(vi) of this section (regarding instru-
ments generally not treated as options). Within five
years of A’s purchase of the D stock and option, D
distributes the stock of its subsidiary C pro rata and A
receives 40 percent of the C stock in the distribution.
Immediately after the distribution, D’s stock has a
fair market value of $30 per share and C’s stock has a
fair market value of $15 per share. At the time of the
distribution, A exchanges A’s option for an option to
purchase 20 percent of the D stock at $20 per share
and an option to purchase 20 percent of the C stock at
$10 per share. Based on all the facts and circum-
stances, it is reasonably certain, immediately after
the distribution, that A will exercise its options.
Under paragraph (c)(3)(iii)(A)(1) of this section, the
substituted options are treated as issued on the date
the original option was issued. Accordingly, the op-
tions are treated as exercised by A on the date that A
purchased the original option. A is treated as owning
60 percent of the D stock and 60 percent of the C
stock that is disqualified stock, and the distribution is
a disqualified distribution under section 355(d)(2)
and paragraph (b)(1) of this section.
May 17, 1999861999–20 I.R.B.

Example 2. D owns all of the stock of C. A pur-
chases 37 percent of D’s only class of stock. B owns
38 percent of the D stock, and the remaining 25 per-
cent is owned by 20 individuals, each of whom owns
less than five percent of D’s stock. A purchases an
option to purchase an additional 14 percent of the D
stock from shareholders other than B for $50 per
share. The option is subject to no contingencies or
restrictive covenants, may be exercised within five
years after its issuance, and is not described in para-
graph (c)(3)(vi) of this section. Within five years of
A’s purchase of the option and 37 percent interest in
D, D distributes the stock of its subsidiary C pro rata
and A receives 37 percent of the C stock in the distri-
bution. At the time of the distribution, A exchanges
its option for an option to purchase 14 percent of the
D stock at $25 per share and an option to purchase
14 percent of the C stock at $25 per share. Assume
that, although a shareholder that owned no D or C
stock would pay only $20 per share for D or C stock
immediately after the distribution, a shareholder in
A’s position would pay $30 per share for 14 percent
of the stock of D or C because of the control pre-
mium which attaches to the shares. The control pre-
mium is taken into account under paragraph
(c)(3)(vii)(A) of this section to determine whether A
is reasonably certain to exercise the options. Based
on all the facts and circumstances, it is reasonably
certain, immediately after the distribution, that A
will exercise its options. Under paragraph
(c)(3)(iii)(A) of this section, the substituted options
are treated as issued on the date the original option
was issued. Accordingly, the options are treated as
exercised by A on the date that A purchased the orig-
inal option. Under paragraph (c)(2) of this section,
all shares of D and C are considered to have the
same value to determine the amount of stock A is
treated as purchasing under the options. A is treated
as owning 51 percent of the D stock and 51 percent
of the C stock that is disqualified stock, and the dis-
tribution is a disqualified distribution under section
355(d)(2).
(4) Plan or arrangement—(i) In gen-
eral.Under section 355(d)(7)(B), if two
or more persons act pursuant to a plan or
arrangement with respect to acquisitions
of stock in the distributing corporation or
controlled corporation, those persons are
treated as one person for purposes of sec-
tion 355(d).
(ii) Understanding.For purposes of
section 355(d)(7)(B), two or more per-
sons who are (or will after an acquisition
become) shareholders (or are treated as
shareholders under paragraph (c)(3)(ii) of
this section) act pursuant to a plan or
arrangement with respect to an acquisi-
tion of stock only if they have a formal or
informal understanding among them-
selves to make a coordinated acquisition
of stock. A principal element in determin-
ing if such an understanding exists is
whether the investment decision of each
person is based on the investment deci-
sion of one or more other existing or
prospective shareholders. However, the
participation by creditors in formulating a
plan for an insolvency workout or a reor-
ganization in a title 11 or similar case
(whether as members of a creditors’ com-
mittee or otherwise) and the receipt of
stock by creditors in satisfaction of in-
debtedness pursuant to the workout or re-
organization do not cause the creditors to
be considered as acting pursuant to a plan
or arrangement.
(iii) Examples.The following exam-
ples illustrate paragraph (c)(4)(ii) of this
section:
Example 1.D has 1,000 shares of common stock
outstanding. A group of 20 unrelated individuals
who previously owned no D stock (the Group) agree
among themselves to acquire 50 percent or more of
D’s stock. The Group is not a person under section
7701(a)(1). Subsequently, pursuant to their under-
standing, the members of the Group purchase 600
shares of D common stock from the existing D
shareholders (a total of 60 percent of the D stock),
with each member purchasing 30 shares. Under
paragraph (c)(4)(ii) of this section, the members of
the Group have a formal or informal understanding
among themselves to make a coordinated acquisi-
tion of stock. Their interests are therefore aggre-
gated under section 355(d)(7)(B), and they are
treated as one person who purchased 600 shares of
D’s stock for purposes of section 355(d).
Example 2. D has 1,000 shares of outstanding
stock owned by unrelated individuals. D’s manage-
ment is concerned that D may become subject to a
takeover bid. In separate meetings, D’s manage-
ment meets with potential investors who own no
stock and are friendly to management to convince
them to acquire D’s stock based on an understanding
that D will assemble a group that in the aggregate
will acquire more than 50 percent of D’s stock. Sub-
sequently, 15 of these investors each purchases four
percent of D’s stock. Under paragraph (c)(4)(ii) of
this section, the 15 investors have a formal or infor-
mal understanding among themselves to make a co-
ordinated acquisition of stock. Their interests are
therefore aggregated under section 355(d)(7)(B),
and they are treated as one person who purchased
600 shares of D stock for purposes of section 355(d).
Example 3. (i) D has 1,000 shares of outstanding
stock owned by unrelated individuals. An invest-
ment advisor advises its clients that it believes D’s
stock is undervalued and recommends that they ac-
quire D stock. Acting on the investment advisor’s
recommendation, 20 unrelated individuals each pur-
chases 30 shares of D stock. Each client’s decision
was not based on the investment decisions made by
one or more other clients. Because there is no for-
mal or informal understanding among the clients to
make a coordinated acquisition of D stock, their in-
terests are not aggregated under section
355(d)(7)(B) and they are treated as making separate
purchases.
(ii) The facts are the same as in paragraph (i) of
thisExample 3, except that the investment advisor is
also the underwriter (without regard to whether it is
a firm commitment or best efforts underwriting) for
a primary or secondary offering of D stock. The re-
sult is the same.
(iii) The facts are the same as in paragraph (i) of
this Example 3,except that, instead of an investment
advisor recommending that clients purchase D
stock, the trustee of several trusts qualified under
section 401(a) sponsored by unrelated corporations
causes each trust to purchase the D stock. The result
is the same, provided that the trustee’s investment
decision made on behalf of each trust was not based
on the investment decision made on behalf of one or
more of the other trusts.
(d) Purchase—(1) In general—(i) Def-
inition of purchase under section 355(d)-
(5)(A). Under section 355(d)(5)(A), ex-
cept as otherwise provided in section
355(d)(5)(B) and (C), a purchase means
any acquisition, but only if—
(A) The basis of the property acquired
in the hands of the acquirer is not deter-
mined—
(1) In whole or in part by reference to
the adjusted basis of such property in the
hands of the person from whom acquired;
or
(2) Under section 1014(a); and
(B) The property is not acquired in an
exchange to which section 351, 354, 355,
or 356 applies.
(ii) Section 355 distributions.Para-
graph (d)(1)(i)(B) of this section includes
all section 355 distributions, whether in
exchange (in whole or in part) for stock or
pro rata.
(iii) Examples. The following exam-
ples illustrate this paragraph (d)(1):
Example 1. Section 304(a)(1) acquisition.A,
who owns all of the stock of P and T, sells the T
stock to P for cash. The T stock is not marketable
stock under section 355(d)(5)(B)(ii) and paragraph
(d)(3)(ii) of this section. A is treated under section
304(a)(1) as receiving a distribution in redemption
of the P stock. Under section 302(d), the deemed re-
demption is treated as a section 301 distribution.
Assume that under sections 304(b)(2) and 301(c)(1),
all of the distribution is a dividend. A and P are
treated in the same manner as if A had transferred
the T stock to P in exchange for stock of P in a trans-
action to which section 351(a) applies, and P had
then redeemed the stock P was treated as issuing in
the transaction. Under section 362(a), P’s basis in
the T stock is determined by reference to A’s ad-
justed basis in the T stock, and there is no basis in-
crease in the T stock because A recognizes no gain
on the deemed transfer. Accordingly, P’s acquisition
of the T stock from A is not a purchase by P under
section 355(d)(5)(A)(i)(I) and paragraphs
(d)(1)(i)(A)(1) and (d)(2)(i)(B) of this section.
Example 2. Section 338 election.P owns all of
the stock of S and no other assets. X acquires all of
the P stock from the P shareholders and makes an
1999–20 I.R.B.87May 17, 1999

election under section 338. Under section
355(d)(5)(A), X has acquired the P stock by pur-
chase. Under section 338(a) and (b), P is treated as
having sold all of its assets at fair market value and
purchased the assets as a new corporation as of the
beginning of the day after the acquisition date for an
amount equal to the purchase price of the P stock.
Accordingly, P is treated as having purchased all of
the S stock under section 355(d)(5)(A).
(2) Exceptions to definition of purchase
under section 355(d)(5)(A).The follow-
ing acquisitions are not treated as pur-
chases under section 355(d)(5)(A):
(i) Acquisition of stock in a transaction
which includes other property or money—
(A) Transferors and shareholders of trans-
feror or distributing corporations—(1) In
general.An acquisition of stock permitted
to be received by a transferor of property
without the recognition of gain under sec-
tion 351(a), or permitted to be received
without the recognition of gain under sec-
tion 354 or 355, is not a purchase to the
extent section 358(a)(1) applies to deter-
mine the recipient’s basis in the stock re-
ceived, whether or not the recipient also
recognizes gain under section 351(b) or
356. But see paragraph (e)(3) of this sec-
tion (interest received in exchange for pur-
chased interest in exchanged basis transac-
tion treated as purchased).
(2) Exception. To the extent there is re-
ceived in the exchange or distribution, in
addition to stock described in paragraph
(d)(2)(i)(A)(1) of this section, stock that
is other property under section 351(b) or
356(a)(1), the stock is treated as pur-
chased on the date of the exchange or dis-
tribution for purposes of section 355(d).
(B) Transferee corporations—(1) In
general.An acquisition of stock by a cor-
poration is not a purchase to the extent
section 334(b) or 362(a) or (b) applies to
determine the corporation’s basis in the
stock received. But see section 355(d)-
(5)(C) and paragraph (e)(2) of this section
(purchased property transferred in trans-
ferred basis transaction is treated as pur-
chased by transferee).
(2) Exception.If a corporation ac-
quires stock, the stock is treated as pur-
chased on the date of the stock acquisition
for purposes of section 355(d)—
(i) If the liquidating corporation recog-
nizes gain or loss with respect to the
transferred stock as described in section
334(b)(1); or
(ii) To the extent the basis of the trans-
ferred stock is increased through the
recognition of gain by the transferor
under section 362(a) or (b).
(C)Examples.The following examples
illustrate this paragraph (d)(2)(i):
Example 1. (i) A owns all the stock of T. T
merges into D in a transaction qualifying under sec-
tion 368(a)(1)(A), with A exchanging all of the T
stock for D stock and $100 cash. Under section
356(a)(1), A recognizes $100 of the realized gain on
the transaction. Under section 358(a)(1), A’s basis
in the D stock equals A’s basis in the T stock, de-
creased by the $100 received and increased by the
gain recognized, also $100. Under paragraph
(d)(2)(i)(A) of this section, A is not treated as having
purchased the D stock for purposes of section
355(d)(5).
(ii) The facts are the same as in paragraph (i) of
this Example,except that rather than D stock and
$100 cash, A receives D stock and stock in C, a cor-
poration not a party to the reorganization, with a fair
market value of $100. Under section 358(a)(2), A’s
basis in the C stock is its fair market value, or $100.
Under paragraph (d)(2)(i)(A)(2) of this section, A is
treated as having purchased the C stock, but not the
D stock, for purposes of section 355(d)(5).
Example 2.A purchases all of the stock of D,
which is not marketable stock, on Date 1 for $90.
Within five years of A’s purchase, on Date 2, A con-
tributes the D stock to P in exchange for P stock
worth $90 and $10 cash in a transaction qualifying
under section 351. Under section 362(a), P’s basis
in D is $100. P is treated as having purchased 90
percent ($90 worth) of the D stock on Date 1 under
section 355(d)(5)(C) and paragraph (e)(2)(i) of this
section and as having purchased 10 percent ($10
worth) of the D stock on Date 2 under paragraph
(d)(2)(i)(B)(2) of this section.
(ii) Acquisition of stock in a distribu-
tion to which section 305(a) applies.An
acquisition of stock in a distribution qual-
ifying under section 305(a) is not a pur-
chase to the extent section 307(a) applies
to determine the recipient’s basis. How-
ever, to the extent the distribution is of
rights to acquire stock, see paragraph
(c)(3) of this section for rules regarding
options, warrants, convertible obligations,
and other similar interests.
(iii) Section 1036(a) exchange. An ex-
change of stock qualifying under section
1036(a) is not a purchase by either party
to the exchange to the extent the basis of
the property acquired equals that of the
property exchanged under section
1031(d).
(3) Certain section 351 exchanges
treated as purchases—(i) In general–(A)
Treatment of stock received by transferor.
Under section 355(d)(5)(B), a purchase
includes any acquisition of property in an
exchange to which section 351 applies to
the extent the property is acquired in ex-
change for any cash or cash item, any
marketable stock, or any debt of the trans-
feror. The property treated as acquired by
purchase is the property received by the
transferor in the exchange.
(B) Multiple classes of stock.If the
transferor in a transaction described in
section 355(d)(5)(B) receives stock or se-
curities of more than one class, or re-
ceives both stock and securities, then the
amount of stock or securities purchased is
determined in a manner that corresponds
to the allocation of basis to the stock or
securities under section 358. See §1.358–
2(b).
(ii) Cash item, marketable stock.For
purposes of section 355(d)(5)(B) and this
paragraph (d)(3), either or both of the
terms cash itemand marketable stock in-
clude personal property within the mean-
ing of section 1092(d)(1) and §1.1092(d)–
1, without giving effect to section
1092(d)(3).
(iii) Exception for certain acquisi-
tions—(A) In general.Except to the ex-
tent provided in paragraph (e)(3) of this
section (interest received in exchange for
purchased interest in exchanged basis
transaction treated as purchased), an ac-
quisition of stock in a corporation in a
section 351 transaction by one or more
persons in exchange for an amount of
stock in another corporation (the trans-
ferred corporation) that meets the require-
ments of section 1504(a)(2) is not a pur-
chase by the transferor or transferors,
regardless of whether the stock of the
transferred corporation is marketable
stock under section 355(d)(5)(B)(ii) and
paragraph (d)(3)(ii) of this section.
(B) Example.The following example
illustrates this paragraph (d)(3)(iii):
Example.D’s two classes of stock, voting com-
mon and nonvoting preferred, are both widely held
and publicly traded. The nonvoting preferred stock
is stock described in section 1504(a)(4). Assume
that all of the D stock is marketable stock under sec-
tion 355(d)(5)(B)(ii) and paragraph (d)(3)(ii) of this
section. D’s board of directors proposes that, for
valid business purposes, D’s common stock should
be held by a holding company, HC, but its preferred
stock should not be transferred to HC. As proposed,
the D common shareholders exchange their D stock
solely for HC common stock in a section 351(a)
transaction. The D preferred shareholders retain
their stock. HC acquires an amount of D stock that
meets the requirements of section 1504(a)(2). Al-
though the D common stock was marketable stock
in the hands of the D shareholders immediately be-
fore the transfer, and the D nonvoting preferred
stock is marketable stock after the transfer, the D
shareholders are not treated as having acquired the
May 17, 1999881999–20 I.R.B.

HC stock by purchase (except to the extent the ex-
changed basis rule of paragraph (e)(3) of this section
may apply to treat HC stock as purchased on the
date the exchanged D stock was purchased).
(iv) Exception for assets transferred as
part of an active trade or business—(A)
In general. Except to the extent provided
in paragraph (e)(3) of this section, an ac-
quisition not described in paragraph
(d)(3)(iii) of this section of stock in ex-
change for any cash or cash item, any
marketable stock, or any debt of the trans-
feror in a section 351 transaction is not a
purchase if—
(1) The transferor is engaged in the ac-
tive conduct of a trade or business under
paragraph (d)(3)(iv)(B) of this section and
the transferred items (including debt in-
curred in the ordinary course of the trade or
business) are used in the trade or business;
(2) The transferred items do not exceed
the reasonable needs of the trade or busi-
ness under paragraph (d)(3)(iv)(C) of this
section;
(3) The transferor transfers the items as
part of the trade or business; and
(4) The transferee continues the active
conduct of the trade or business.
(B) Active conduct of a trade or busi-
ness. For purposes of this paragraph
(d)(3)(iv), whether, with respect to the
trade or business at issue, the transferor
and transferee are engaged in the active
conduct of a trade or business is deter-
mined under §1.355–3(b)(2) and (3), ex-
cept that—
(1) Conduct is tested before the transfer
(with respect to the transferor) and after
the transfer (with respect to the trans-
feree) rather than immediately after a dis-
tribution; and
(2) The trade or business need not have
been conducted for five years before its
transfer, but it must have been conducted
for a sufficient period of time to establish
that it is a viable and ongoing trade or
business.
(C) Reasonable needs of the trade or
business. For purposes of this paragraph
(d)(3)(iv), the reasonable needs of the
trade or business include only the amount
of cash or cash items, marketable stock,
or debt of the transferor that a prudent
business person apprised of all relevant
facts would consider necessary for the
present and reasonably anticipated future
needs of the business. Transferred items
may be considered necessary for reason-
ably anticipated future needs only if the
transferor and transferee have specific,
definite, and feasible plans for their use.
Those plans must require that items in-
tended for anticipated future needs rather
than present needs be used as expedi-
tiously as possible consistent with the
business purpose for retention of the
items. Future needs are not reasonably
anticipated if they are uncertain or vague
or where the execution of the plan for
their use is substantially postponed. The
reasonable needs of a trade or business
are generally its needs at the time of the
transfer of the business including the
items. However, for purposes of applying
section 355(d) to a distribution, events
and conditions after the transfer and
through the date immediately after the
distribution (including whether plans for
the use of transferred items have been
consummated or substantially postponed)
may be considered to determine whether
at the time of the transfer the items were
necessary for the present and reasonably
anticipated future needs of the business.
(D) Consideration of all facts and cir-
cumstances.All facts and circumstances
are considered in determining whether
this paragraph (d)(3)(iv) applies.
(v) Exception for transfer between
members of the same affiliated group—
(A) In general.Except to the extent pro-
vided in paragraph (e)(3) of this section,
an acquisition of stock (whether actual or
constructive) not described in paragraphs
(d)(3)(iii) and (iv) of this section in ex-
change for any cash or cash item, mar-
ketable stock, or debt of the transferor in a
section 351 transaction is not a purchase
if the transferor corporation or corpora-
tions, the transferee corporation, and any
distributed controlled corporation of the
transferee corporation are members of the
same affiliated group as defined in section
1504(a) before the section 351 transaction
(if the transferee corporation is in exis-
tence before the transaction) and do not
cease to be members of such affiliated
group in any transaction that is related to
the section 351 transaction (including any
distribution of a controlled corporation by
the transferee corporation). But see para-
graph (b)(4) of this section where the
transfer is made for a principal purpose to
avoid the purposes of section 355(d).
(B) Examples.The following examples
illustrate this paragraph (d)(3)(v):
Example 1.Publicly traded P has wholly owned
S since 1990. S is engaged in the business of com-
puter software development and is developing a new
software platform for use in the managed health care
industry. Over a period of four years beginning on
January 31, 2000, P contributes a substantial amount
of cash to S solely for the purpose of funding the
software platform development. On completion of
the software platform in January of 2004, 60 percent
of the value of the S stock is attributable to the cash
contributions made within the last four years. The P
group’s primary lender requires that S separately in-
corporate the software platform and related assets
and distribute the new subsidiary to P as a condition
of providing required funding to market the plat-
form. Accordingly, on February 1, 2004, S forms N,
contributes the platform and related assets to N, and
distributes all of the N stock to P in a transaction in-
tended to qualify under section 355(a). P, S, and N
will not leave the affiliated group in any transaction
related to the cash contributions. Under paragraph
(d)(3)(v)(A) of this section, P’s cash contributions to
S are not treated as purchases of additional S stock,
and the distribution of N from S to P is not a disqual-
ified distribution under section 355(d)(2) and para-
graph (b)(1) of this section.
Example 2.On Date 1, P contributes cash to its
subsidiary S with a principal purpose to increase its
stock basis in S. Sixty percent of the value of P’s S
stock is attributable to the cash contribution. Under
paragraph (b)(4) of this section (anti-avoidance
rule), 60 percent of the S stock is treated as pur-
chased under section 355(d)(5)(B), notwithstanding
paragraph (d)(3)(v)(A) of this section. Accordingly,
any distribution of a subsidiary of S to P within the
five-year period after Date 1 will be a disqualified
distribution, regardless of whether P, S, and any dis-
tributed S subsidiary remain affiliated after the dis-
tribution and any transactions related to the cash
contribution.
(4) Triangular asset reorganizations—
(i) Definition.A triangular asset reorgani-
zation is a reorganization that qualifies
under—
(A) Section 368(a)(1)(A) or (G) by rea-
son of section 368(a)(2)(D);
(B) Section 368(a)(1)(A) by reason of
section 368(a)(2)(E) (regardless of
whether section 368(a)(3)(E) applies), un-
less the transaction also qualifies as either
a section 351 transfer or a reorganization
under section 368(a)(1)(B); or
(C) Section 368(a)(1)(C), and stock of
the controlling corporation rather than the
acquiring corporation is exchanged for
the acquired corporation’s properties.
(ii) Treatment. Notwithstanding sec-
tion 355(d)(5)(A), for purposes of section
355(d), the controlling corporation in a
triangular asset reorganization is treated
as having—
(A) Acquired the assets of the acquired
corporation (and as having assumed any
liabilities assumed by the controlling cor-
1999–20 I.R.B.89May 17, 1999

poration’s subsidiary corporation or to
which the acquired corporation’s assets
were subject (the acquired liabilities)) in a
transaction in which the controlling cor-
poration’s basis in the acquired corpora-
tion’s assets was determined under sec-
tion 362(b); and
(B) Transferred the acquired assets and
acquired liabilities to its subsidiary corpo-
ration in a section 351 transfer.
(iii) Example.The following example
illustrates this paragraph (d)(4):
Example. Forward triangular reorganization.P
forms S with $10 cash and T merges into S in a reor-
ganization qualifying under section 368(a)(1)(A) by
reason of section 368(a)(2)(D) in which the T share-
holders receive solely P stock in exchange for their
T stock. T is not a common parent of a consolidated
group of corporations. The $10 cash with which P
formed S will not be used in the acquired business.
T’s assets consist only of assets part of and used in
its business with a value of $80, and $10 cash that is
not part of or used in T’s business. T has no liabili-
ties. S will use T’s business assets in T’s business
(which will become S’s business), but will invest the
$20 cash in an unrelated passive investment. Under
paragraph (d)(4)(ii) of this section, P is treated as ac-
quiring the T assets in a transaction in which P’s
basis in the T assets was determined under section
362(b) and contributing them to S in a section 351
transfer. The exception in paragraph (d)(3)(v) of
this section does not apply because P and S became
affiliated in the same transaction in which the sec-
tion 351 transfer is deemed to occur. Accordingly, P
is treated under section 355(d)(5)(B) and paragraph
(d)(3)(iv) of this section as having purchased $20 of
the S stock, but is not deemed to have purchased the
remaining $80 of the S stock.
(5) Reverse triangular reorganizations
other than triangular asset reorganiza-
tions—(i) In general.Except as provided
in paragraph (d)(5)(ii) of this section, if a
transaction qualifies as a reorganization
under section 368(a)(1)(A) by reason of
section 368(a)(2)(E) and also as either a
reorganization under section 368(a)(1)(B)
or a section 351 transfer, then either sec-
tion 355(d)(5)(B) (and paragraph (d)(3)(i)
through (iv) of this section) or 355(d)-
(5)(C) (and paragraph (e)(2) of this sec-
tion) applies. Regardless of which
method the controlling corporation em-
ploys to determine its basis in the surviv-
ing corporation stock under §1.358–6(c)-
(2)(ii) or 1.1502–30(b), the total amount
of surviving corporation stock treated as
purchased by the controlling corporation
will equal the higher of—
(A) The amount of surviving corpora-
tion stock that would be treated as pur-
chased (on the date of the deemed section
351 transfer) by the controlling corpora-
tion if the controlling corporation ac-
quired the surviving corporation’s assets
and assumed its liabilities in a transaction
in which the controlling corporation’s
basis in the surviving corporation assets
was determined under section 362(b), and
then transferred the acquired assets and li-
abilities to the surviving corporation in a
section 351 transfer (see §§1.358–6(c)(1)
and (2)(ii)(A) and 1.1502–30(b)); or
(B) The amount of surviving corpora-
tion stock that would be treated as pur-
chased (on the date the surviving corpora-
tion shareholders purchased their
surviving corporation stock) if the con-
trolling corporation acquired the stock of
the surviving corporation in a transaction
in which the basis in the surviving corpo-
ration’s stock was determined under sec-
tion 362(b) (see §§1.358–6(c)(2)(ii)(B)
and 1.1502–30(b)).
(ii) Letter ruling and closing agree-
ment. If a controlling corporation obtains
a letter ruling and enters into a closing
agreement under section 7121 in which it
agrees to determine its basis in surviving
corporation stock under §1.358–6(c)(2)-
(ii)(A), or under §1.1502–30(b) by apply-
ing §1.358–6(c)(2)(ii)(A) (deemed asset
acquisition and transfer by controlling
corporation), then section 355(d)(5)(B)
and paragraph (d)(3)(i) through (iv) of
this section apply, and section 355(d)-
(5)(C) and paragraph (e)(2) of this section
do not apply. If a controlling corporation
obtains a letter ruling and enters into a
closing agreement under section 7121
under which it agrees to determine its
basis in surviving corporation stock under
§1.358–6(c)(2)(ii)(B), or under §1.1502–
30(b) by applying §1.358–6(c)(2)(ii)(B)
(deemed stock acquisition), then section
355(d)(5)(C) and paragraph (e)(2) of this
section apply, and section 355(d)(5)(B)
and paragraphs (d)(3)(i) through (iv) of
this section do not apply.
(iii) Example. The following example
illustrates this paragraph (d)(5):
Example. Reverse triangular reorganization;
purchase. (i) A purchases 60 percent of the stock of
D on Date 1. D owns no cash items, marketable
stock, or transferor debt, but holds cash that is not
part of or used in D’s trade or business under para-
graph (d)(3)(iv) of this section and that represents 20
percent of D’s value. On Date 2, P forms S, and S
merges into D in a reorganization qualifying under
section 368(a)(1)(B) and under section 368(a)(1)(A)
by reason of section 368(a)(2)(E). In the reorganiza-
tion, P acquires all of the D stock in exchange solely
for P stock. After Date 2, and within five years after
Date 1, D distributes its wholly owned subsidiary C
to P. P does not obtain a letter ruling and enter into a
closing agreement under paragraph (d)(5)(ii) of this
section. P would acquire 20 percent of the D stock
by purchase on Date 2 under paragraph (d)(5)(i)(A)
of this section by operation of section 355(d)(5)(B)
and paragraph (d)(3)(iv) of this section. The excep-
tion in paragraph (d)(3)(v) of this section does not
apply because P and S became affiliated in the same
transaction in which the section 351 transfer is
deemed to occur. P would acquire 60 percent of the
D stock by purchase on Date 1 under paragraph
(d)(5)(i)(B) of this section because, under the trans-
ferred basis rule of section 355(d)(5)(C) and para-
graph (e)(2) of this section, P is treated as though P
purchased the D stock on the date A purchased it.
Accordingly, under paragraph (d)(5)(i) of this sec-
tion, P is treated as acquiring the higher amount (60
percent) by purchase on Date 1. D’s distribution of
C to P is a disqualified distribution under section
355(d)(2) and paragraph (b)(1) of this section. In
addition, A is treated as acquiring the P stock by pur-
chase on Date 1 under paragraph (e)(3) of this sec-
tion because A’s basis in the P stock is determined by
reference to A’s basis in the D stock.
(ii) The facts are the same as in paragraph (i) of
this Example,except that P obtains a letter ruling
and enters into a closing agreement under which it
agrees to determine its basis in the D stock under
§1.358–6(c)(2)(ii)(A). Under paragraph (d)(5)(ii) of
this section, section 355(d)(5)(B) (and paragraphs
(d)(3)(i) through (iv) of this section) applies, and
section 355(d)(5)(C) (and paragraph (e)(2) of this
section) does not apply. Accordingly, P is treated as
acquiring only 20 percent of the D stock by purchase
on Date 2. D’s distribution of C to P is not a disqual-
ified distribution under section 355(d)(2) and para-
graph (b)(1) of this section.
(6) Treatment of group structure
changes—(i) In general.Notwithstand-
ing section 355(d)(5)(A), for purposes of
section 355(d), if a corporation succeeds
another corporation as the common parent
of a consolidated group in a group struc-
ture change to which §1.1502–31 applies,
the new common parent is treated as hav-
ing acquired the assets and assumed the
liabilities of the former common parent in
a transaction in which the new common
parent’s basis in the former common par-
ent’s assets was determined under section
362(b), and then transferred the acquired
assets and liabilities to the former com-
mon parent (or, if the former common
parent does not survive, to the new com-
mon parent’s subsidiary) in a section 351
transfer, with the new common parent and
former common parent being treated as
not in the same affiliated group at the time
of the transfer (notwithstanding §1.1502–
31(c)(2)).
May 17, 1999901999–20 I.R.B.

(ii) Adjustments to basis of higher-tier
members.A higher-tier member that indi-
rectly owns all or part of the former com-
mon parent’s stock after a group structure
change is treated as having purchased the
stock of an immediate subsidiary to the
extent that the higher-tier member’s basis
in the subsidiary is increased under
§1.1502–31(d)(4).
(iii) Example.The following example
illustrates this paragraph (d)(6):
Example. P is the common parent of a consoli-
dated group, and T is the common parent of another
group. P has owned S for more than five years, and
the fair market value of the S stock is $50. T’s assets
consist only of non-marketable stock of direct and
indirect wholly owned subsidiaries with a value of
$50, assets used in its business with a value of $50,
and $50 of marketable stock that is not part of or
used in T’s business. T has no liabilities. T merges
into S with the T shareholders receiving solely P
stock with a value of $150 in exchange for their T
stock in a section 368(a)(2)(D) reorganization. S
will use T’s business assets in T’s business (which
will become S’s business), but will hold the $50 of
marketable stock for investment purposes. Assume
that the transaction is a reverse acquisition under
§1.1502–75(d)(3) because the T shareholders, as a
result of owning T stock, own more than 50 percent
of the value of P’s stock immediately after the trans-
action. Thus, the transaction is a group structure
change under §1.1502–33(f)(1). Under paragraph
(d)(6) of this section, P is treated as having acquired
the assets of T in a transaction in which P’s basis in
the T assets was determined under section 362(b),
and then transferred the acquired assets to S in a sec-
tion 351 transfer, with P and T being treated as not in
the same affiliated group at the time of the transfer.
The exception in paragraph (d)(3)(v) of this section
(transfers within an affiliated group) does not apply.
Accordingly, P is treated under section 355(d)(5)(B)
and paragraph (d)(3)(iv) of this section as having
purchased $50 of the S stock (attributable to the
marketable stock), but is not deemed to have pur-
chased the remaining $150 of the S stock.
(7) Special rules for triangular asset
reorganizations, other reverse triangular
reorganizations, and group structure
changes. The amount of acquiring sub-
sidiary, surviving corporation, or former
common parent stock that is treated as
purchased under paragraph (c)(4),
(5)(i)(A), or (6) of this section (by opera-
tion of section 355(d)(5)(B) and para-
graphs (d)(3)(i) through (iv) of this sec-
tion) is adjusted to reflect any basis
adjustment under—
(i) Section 1.358-6(c)(2)(i)(B) and (C)
(reduction of basis adjustment in reverse
triangular reorganization where control-
ling corporation acquires less than all of
the surviving corporation stock),
§1.1502–30(b) (applying §1.358–6(c)-
(2)(i)(B) and (C) to a consolidated group),
and §1.1502–31(d)(2)(ii) (reduction of
basis adjustment in group structure
change where new common parent ac-
quires less than all of the former common
parent stock); or
(ii) Section 1.358–6(d) (reduction of
basis adjustment in any triangular reorga-
nization to the extent controlling corpora-
tion does not provide consideration),
§1.1502–30(b) (applying §1.358–6(d)
(except §1.358–6(d)(2)) to a consolidated
group), and §1.1502–31(d)(1) (reduction
of basis adjustment in group structure
change to the extent new common parent
does not provide consideration).
(e) Deemed purchase and timing
rules—(1) Attribution and aggregation—
(i) In general.Under section 355(d)-
(8)(B), if any person acquires by purchase
an interest in any entity, and the person is
treated under section 355(d)(8)(A) as
holding any stock by reason of holding
the interest, the stock shall be treated as
acquired by purchase on the later of the
date of the purchase of the interest in the
entity or the date the stock is acquired by
purchase by such entity.
(ii) Purchase of additional interest.If a
person and an entity are treated as a single
person under section 355(d)(7), and the
person later purchases an additional inter-
est in the entity, the person is treated as
purchasing on the date of the later pur-
chase the amount of stock attributed from
the entity to the person under section
355(d)(8)(A) as a result of the additional
interest.
(iii) Purchase between persons treated
as one person.If two persons are treated
as one person under section 355(d)(7),
and one later purchases stock or securities
from the other, the date of the later pur-
chase is used for purposes of determining
when the five-year period commences.
(iv) Purchase by a person already
treated as holding stock under section
355(d)(8)(A).If a person who is already
treated as holding stock under section
355(d)(8)(A) later directly purchases such
stock, the date of the later direct purchase
is used for purposes of determining when
the five-year period commences.
(v) Examples.The following examples
illustrate this paragraph (e)(1):
Example 1. On Date 1, A purchases 10 percent of
the stock of P, which has held 100 percent of the
stock of T for more than five years at the time of A’s
purchase. A is deemed to have purchased 10 percent
of P’s T stock on Date 1. If A later purchases an ad-
ditional 41 percent of the stock of P on Date 2, A is
deemed to have purchased an additional 41 percent
of P’s T stock on Date 2. Because A and P are now
related persons under section 267(b), they are treated
as one person under section 355(d)(7)(A), and A is
treated as owning all of P’s T stock. A is treated as
acquiring 51 percent of the T stock by purchase at the
times of A’s respective purchases of P stock on Date
1 and Date 2. The remaining 49 percent of T stock is
treated as acquired when P acquired the T stock,
more than five years before Date 1. If P distributes T
within five years after Date 1, the distribution will be
a disqualified distribution under section 355(d)(2)
and paragraph (b)(1) of this section.
Example 2.A has owned 60 percent of the stock
of P for more than five years, and P has owned 40
percent of the stock of T for more than five years. A
and P are treated as one person, and A is treated as
owning 40 percent of the stock of T for more than
five years. If P later purchases an additional 20 per-
cent of the stock of T on Date 1, A is treated as ac-
quiring by purchase the additional 20 percent of T
stock on Date 1. If A then purchases an additional
10 percent of the stock of P on Date 2, under the at-
tribution rule and the deemed purchase rule, A is
deemed to have purchased on Date 2 an additional
four percent of the T stock (10 percent of the 40 per-
cent that P originally owned). In addition, even
though A and P were already treated as one person
under section 355(d)(7)(A), A is also deemed to
have purchased two percent of the T stock on Date 2
(10 percent of the 20 percent of the T stock that it
was treated as purchasing on Date 1). A is still
treated as owning all 60 percent of the T stock
owned by P. However, of the 60 percent, A is treated
as having purchased 18 percent of the T stock on
Date 1 and 6 percent of the T stock on Date 2, for a
total of 24 percent purchased stock.
Example 3.A purchases a 20 percent interest in
partnership M on Date 1. M has owned 30 percent
of the stock and 25 percent of the securities of P for
more than five years. P has owned 40 percent of the
stock and 100 percent of the securities of T for more
than five years. Under section 318(a)(2)(C) as mod-
ified by section 355(d)(8)(A), M is deemed to own
12 percent of the stock (30 percent of the 40 percent
P owns) and 30 percent of the securities (30 percent
of the 100 percent P owns) of T. Under sections
318(a)(2)(A) and 355(d)(8)(B), A is deemed to have
purchased 2.4 percent of the stock (20 percent of the
12 percent M is deemed to own) and 6 percent of the
securities (20 percent of the 30 percent M is deemed
to own) of T on Date 1. Similarly, A is deemed to
have purchased 6 percent of the stock (20 percent of
the 30 percent M owns) and five percent of the secu-
rities (20 percent of the 25 percent M owns) of P on
Date 1. If M later purchases an additional 10 per-
cent of P stock on Date 2, M is deemed to have pur-
chased four percent of the stock (10 percent of the
40 percent P owns) and 10 percent of the securities
(10 percent of the 100 percent P owns) of T on Date
2. A is deemed to have purchased two percent of the
stock of P on Date 2 (20 percent of the 10 percent M
purchased). A is also deemed to have purchased 0.8
percent of the stock (20 percent of the four percent
M is deemed to have purchased) and two percent of
1999–20 I.R.B.91May 17, 1999

the securities (20 percent of the 10 percent M is
deemed to have purchased) of T on Date 2.
Example 4.A and B are brother and sister. For
more than five years, A has owned 75 percent of the
stock of P, and B has owned 25 percent of the stock
of P. A and B are treated as one person under section
267(b), and the stock of each is treated as purchased
on the date it was purchased by A and B, respec-
tively. If B later purchases 50 percent of the P stock
from A on Date 1, A and B are still treated as one
person. However, the 50 percent of P stock that B
purchased from A is treated as purchased on Date 1.
(2) Transferred basis rule.If any per-
son acquires property from another per-
son who acquired the property by pur-
chase (determined with regard to section
355(d)(5) and paragraphs (d) and (e)(2)
and (3) of this section, but without regard
to section 355(d)(8) and paragraph (e)(1)
of this section), and the adjusted basis of
the property in the hands of the acquirer is
determined in whole or in part by refer-
ence to the adjusted basis of the property
in the hands of the other person, the ac-
quirer is treated as having acquired the
property by purchase on the date it was so
acquired by the other person. The rule in
this paragraph (e)(2) applies, for example,
where stock of a corporation acquired by
purchase is subsequently acquired in a
section 351 transfer or a reorganization
qualifying under section 368(a)(1)(B), but
does not apply if the stock of a former
common parent is acquired in a group
structure change to which §1.1502–31 ap-
plies. But see paragraph (d)(2)(i)(B)(2)
of this section for situations where the
stock is treated as purchased on the date
of a transfer.
(3) Exchanged basis rule—(i) In gen-
eral.If any person acquires an interest in
an entity (the first interest) by purchase
(determined with regard to section
355(d)(5) and paragraphs (d) and (e)(2)
and (3) of this section, but without regard
to section 355(d)(8) and paragraph (e)(1)
of this section), and the first interest is ex-
changed for an interest in another entity
(the second interest) where the adjusted
basis of the second interest is determined
in whole or in part by reference to the ad-
justed basis of the first interest, then the
second interest is treated as having been
purchased on the date the first interest
was purchased. The rule in this paragraph
(e)(3) applies, for example, where stock
of a corporation acquired by purchase is
subsequently exchanged for other stock in
a section 351, 354, or 1036(a) exchange.
But see paragraph (d)(2)(i)(A)(2) of this
section for situations where the stock is
treated as purchased on the date of an ex-
change or distribution.
(ii) Example.The following example
illustrates this paragraph (e)(3):
Example.A purchases 50 percent of the stock of
T on Date 1. On Date 2, T merges into D in a sec-
tion 368(a)(1)(A) reorganization, with A exchanging
all of the T stock solely for stock of D. Under sec-
tion 358(a), A’s basis in the D stock is determined by
reference to the basis of the T stock it purchased.
Accordingly, A is treated as having purchased the D
stock on Date 1, and has a purchased basis in the D
stock under paragraph (b)(3)(iii) of this section.
(4) Substantial diminution of risk—(i) In
general.If section 355(d)(6) applies to
any stock for any period, the running of
any five-year period set forth in section
355(d)(3) is suspended during such period.
(ii) Property to which suspension ap-
plies. Section 355(d)(6) applies to any
stock for any period during which the
holder’s risk of loss with respect to such
stock, or with respect to any portion of the
activities of the corporation, is (directly or
indirectly) substantially diminished by an
option, a short sale, any special class of
stock, or any other device or transaction.
(iii) Risk of loss substantially dimin-
ished.Whether a holder’s risk of loss is
substantially diminished under section
355(d)(6) and paragraph (e)(4)(ii) of this
section will be determined based on all
facts and circumstances relating to the
stock, the corporate activities, and ar-
rangements for holding the stock.
(iv) Special class of stock. For pur-
poses of section 355(d)(6) and paragraph
(e)(4)(ii) of this section, the term special
class of stockincludes a class of stock that
grants particular rights to, or bears partic-
ular risks for, the holder or the issuer with
respect to the earnings, assets, or attrib-
utes of less than all the assets or activities
of a corporation or any of its subsidiaries.
The term includes, for example, tracking
stock and stock (or any related instru-
ments or arrangements) the terms of
which provide for the distribution
(whether or not at the option of any party
or in the event of any contingency) of any
controlled corporation or other specified
assets to the holder or to one or more per-
sons other than the holder.
(f) Duty to determine stockholders—
(1) In general.In determining whether
section 355(d) applies to a distribution of
controlled corporation stock, a distribut-
ing corporation must determine whether a
disqualified person holds its stock or the
stock of any distributed controlled corpo-
ration. This paragraph (f) provides rules
regarding this determination and the ex-
tent to which a distributing corporation
must investigate whether a disqualified
person holds stock.
(2) Deemed knowledge of contents of
securities filings.A distributing corpora-
tion is deemed to have knowledge of the
existence and contents of all schedules,
forms, and other documents filed with or
under the rules of the Securities and Ex-
change Commission, including without
limitation any Schedule 13D or 13G (or
any similar schedules) and amendments,
with respect to any relevant corporation.
(3) Presumption as to securities filings.
Absent actual knowledge to the contrary,
in determining whether section 355(d) ap-
plies to a distribution, a distributing cor-
poration may presume, with respect to
stock that is reporting stock (while such
stock is reporting stock), that every share-
holder or other person required to file a
schedule, form, or other document with or
under the rules of the Securities and Ex-
change Commission as of a given date has
filed the schedule, form, or other docu-
ment as of that date and that the contents
of filed schedules, forms, or other docu-
ments are accurate and complete. Report-
ing stockis stock that is described in Rule
13d–1(i) of Regulation 13D (17 CFR
240.13d–1(i)) (or any rule or regulation to
generally the same effect) promulgated by
the Securities and Exchange Commission
under the Securities Exchange Act of
1934 (15 U.S.C. 78a et seq.).
(4) Presumption as to less-than-five-per-
cent shareholders.Absent actual knowl-
edge (or deemed knowledge under para-
graph (f)(2) of this section) immediately
after the distribution to the contrary with
regard to a particular shareholder, a distrib-
uting corporation may presume that no
less-than-five-percent shareholder of a cor-
poration acquired stock by purchase under
section 355(d)(5) or (8) and paragraphs (d)
and (e) of this section during the five-year
period. For purposes of this paragraph (f),
a less-than- five-percent shareholder is a
person that, at no time during the five-year
period, holds directly (or by application of
paragraph (c)(3)(ii) of this section, but not
by application of section 355(d)(7) or (8))
May 17, 1999921999–20 I.R.B.

stock possessing five percent or more of
the total combined voting power of all
classes of stock entitled to vote and the
total value of shares of all classes of stock
of a corporation. However, this presump-
tion does not apply to any less-than-five-
percent shareholder that, at any time dur-
ing the five-year period —
(I) Is related under section
355(d)(7)(A) to a shareholder in the cor-
poration that is, at any time during the
five-year period, not a less-than-five-per-
cent shareholder;
(ii) Acted pursuant to a plan or arrange-
ment, with respect to acquisitions of the
corporation’s stock under section
355(d)(7)(B) and paragraph (c)(4) of this
section, with a shareholder in the corpora-
tion that is, at any time during the five-
year period, not a less-than-five-percent
shareholder; or
(iii) Holds stock that is attributed under
section 355(d)(8)(A) to a shareholder in
the corporation that is, at any time during
the five-year period, not a less-than-five-
percent shareholder.
(5) Examples.The following examples
illustrate this paragraph (f):
Example 1. Publicly traded corporation; no
schedules filed.D is a widely held and publicly
traded corporation with a single class of reporting
stock and no other class of stock. Assume that ap-
plicable federal law requires any person that directly
holds five percent or more of the D stock to file a
schedule with the Securities and Exchange Commis-
sion within 10 days after an acquisition. D distrib-
utes its wholly owned subsidiary C pro rata. D de-
termines that no schedule, form, or other document
has been filed with respect to its stock or the stock of
any other relevant corporation during the five-year
period or within 10 days after the distribution. Im-
mediately after the distribution, D has no knowledge
that any of its shareholders are (or were at any time
during the five-year period) not less-than-five-per-
cent shareholders, or that any particular shareholder
acquired D stock by purchase under section
355(d)(5) or (8) and paragraphs (d) and (e) of this
section during the five-year period. Under para-
graph (f)(3) of this section, D may presume it has no
shareholder that is or was not a less-than-five-per-
cent shareholder during the five-year period due to
the absence of any filed schedules, forms, or other
documents. Under paragraph (f)(4) of this section,
D may presume that none of its less-than-five-per-
cent shareholders acquired D’s stock by purchase
during the five-year period. Accordingly, D may
presume that section 355(d) does not apply to the
distribution of C.
Example 2. Publicly traded corporation; sched-
ule filed.The facts are the same as those in Example
1,except that D determines that, as of 10 days after
the distribution, only one schedule has been filed
with respect to its stock. That schedule discloses
that X acquired 15 percent of the D stock one year
before the distribution. Absent contrary knowledge,
D may rely on the presumptions in paragraph (f)(3)
of this section and so may presume that X is its only
shareholder that is or was not a less-than-five-per-
cent shareholder during the five-year period. D may
not rely on the presumption in paragraph (f)(4) of
this section with respect to X. In addition, D may
not rely on the presumption in paragraph (f)(4) of
this section with respect to any less-than-five-per-
cent shareholder that, at any time during the five-
year period, is related to X under section
355(d)(7)(A), acted pursuant to a plan or arrange-
ment with X under section 355(d)(7)(B) and para-
graph (c)(4) of this section with respect to acquisi-
tions of D stock, or holds stock that is attributed to X
under section 355(d)(8)(A). Accordingly, under
paragraph (f)(1) of this section, to determine
whether section 355(d) applies, D must determine:
whether X acquired its directly held D stock by pur-
chase under section 355(d)(5) and paragraphs (d)
and (e)(2) and (3) of this section during the five-year
period; whether X is treated as having purchased
any additional D stock under section 355(d)(8) and
paragraph (e)(1) of this section during the five-year
period; and whether X is related to, or acquired its D
stock pursuant to a plan or arrangement with, one or
more of D’s other shareholders during the five-year
period under section 355(d)(7)(A) or (B) and para-
graph (c)(4) of this section, and if so, whether those
shareholders acquired their D stock by purchase
under section 355(d)(5) or (8) and paragraphs (d)
and (e) of this section during the five-year period.
Example 3. Acquisition of publicly traded corpo-
ration. The facts are the same as those in Example
1,except that P acquires all of the D stock in a sec-
tion 368(a)(1)(B) reorganization that is not also a re-
organization under section 368(a)(1)(A) by reason
of section 368(a)(2)(E), and D distributes C to P one
year later. Under the deemed purchase rule of sec-
tion 355(d)(5)(C) and paragraph (e)(2) of this sec-
tion, P is treated as having acquired the D stock by
purchase on the date the D shareholders acquired the
D stock by purchase. Even though D has no less-
than-five-percent shareholder immediately after the
distribution, D may rely on the presumptions in
paragraphs (f)(3) and (4) of this section to determine
whether and to what extent the D stock is treated as
purchased during the five-year period in P’s hands
under the deemed purchase rule of section
355(d)(5)(C) and paragraph (e)(2) of this section.
Accordingly, D may presume that section 355(d)
does not apply to the distribution of C to P.
Example 4. Non-publicly traded corporation.D
is owned by 20 shareholders and has a single class
of stock that is not reporting stock. D knows that A
owns 40 percent of the D stock, and D does not
know that any other shareholder has owned as much
as five percent of the D stock at any time during the
five-year period. D may not rely on the presumption
in paragraph (f)(3) of this section because its stock is
not reporting stock. D may not rely on the presump-
tion in paragraph (f)(4) of this section with respect
to A. In addition, D may not rely on the presump-
tion in paragraph (f)(4) of this section for any less-
than-five-percent shareholder that, at any time dur-
ing the five-year period, is related to A under section
355(d)(7)(A), acted pursuant to a plan or arrange-
ment with A under section 355(d)(7)(B) and para-
graph (c)(4) of this section with respect to acquisi-
tions of D stock, or holds stock that is attributed to A
under section 355(d)(8)(A). D may rely on the pre-
sumption in paragraph (f)(4) of this section for less-
than-five-percent shareholders that during the five-
year period are not related to A, did not act pursuant
to a plan or arrangement with A, and do not hold
stock attributed to A. Accordingly, under paragraph
(f)(1) of this section, to determine whether section
355(d) applies, D must determine: that A is its only
shareholder that is (or was at any time during the
five-year period) not a less-than-five-percent share-
holder; whether A acquired its directly held D stock
by purchase under section 355(d)(5) and paragraphs
(d) and (e)(2) and (3) of this section during the five-
year period; whether A is treated as having pur-
chased any additional D stock under section
355(d)(8) and paragraph (e)(1) of this section during
the five-year period; and whether A is related to, or
acquired its D stock pursuant to a plan or arrange-
ment with, one or more of D’s other shareholders
during the five-year period under section
355(d)(7)(A) or (B) and paragraph (c)(4) of this sec-
tion, and if so, whether those shareholders acquired
their D stock by purchase under section 355(d)(5) or
(8) and paragraphs (d) and (e) of this section during
the five-year period.
(g) Effective date.This section applies
to distributions occurring after these regu-
lations are published as final regulations
in the Federal Register,except that they
do not apply to any distributions occur-
ring pursuant to a written agreement
which is (subject to customary condi-
tions) binding on the date the regulations
in this section are published as final regu-
lations in the Federal Register,and at all
times thereafter.
Robert E. Wenzel,
Deputy Commissioner of
Internal Revenue.
(Filed by the Office of the Federal Register on April
29, 1999, 8:45 a.m., and published in the issue of the
Federal Register for May 3, 1999, 64 F.R. 23554)
Notice of Proposed Rulemaking
by Cross-Reference to
Temporary Regulations
Use of Actuarial Tables in
Valuing Annuities, Interests for
Life or Terms of Years, and
Remainder or Reversionary
Interests
REG–103851–99
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemaking
by cross-reference to temporary regula-
tions.
1999–20 I.R.B.93May 17, 1999

SUMMARY: These proposed regulations
relate to the use of actuarial tables in valu-
ing annuities, interests for life or terms of
years, and remainder or reversionary in-
terests. These regulations are necessary
because section 7520(c)(3) directs the
Secretary to update the actuarial tables to
reflect the most recent mortality experi-
ence available. These regulations will ef-
fect the valuation of inter vivos and testa-
mentary transfers of interest dependent on
one or more measuring lives. The text of
the temporary regulations in T.D. 8819,
page 5 of this Bulletin, also serves as the
text of these proposed regulations.
DATES: Written and electronic com-
ments and requests for a public hearing
must be received by July 29, 1999.
ADDRESSES: Send submissions to
CC:DOM:CORP:R (REG–103851–99),
room 5226, Internal Revenue Service,
POB 7604, Ben Franklin Station, Wash-
ington DC 20044. Submissions may also
be hand delivered Monday through Friday
between the hours of 8 a.m. and 5 p.m. to:
CC:DOM:CORP:R (REG–103851–99),
Courier’s Desk, Internal Revenue Ser-
vice, 1111 Constitution Avenue, NW,
Washington, DC. Alternatively, taxpayers
may submit comments electronically via
the internet by selecting the “Tax Regs”
option on the IRS Home Page, or by sub-
mitting comments directly to the IRS in-
ternet site at http://www.irs.ustreas.gov/
prod/taxregs/comments.html.
FOR FURTHER INFORMATION CON-
TACT: Concerning the regulations,
William L. Blodgett, (202) 622-3090;
concerning submissions, Guy Traynor,
(202) 622-7180 (not toll-free numbers).
SUPPLEMENTARY INFORMATION:
Background
Temporary regulations in T.D. 8819
amend Income Tax Regulations (26 CFR
part 1) under sections 642(c)(5) and 664,
Estate Tax Regulations (26 CFR part 20)
under section 2031, and Gift Tax Regula-
tions (26 CFR part 25) under section
2512. These regulations revise actuarial
tables used for the valuation of partial in-
terests in property under section 7520 to
reflect the mortality experience based on
the 1990 United States census, the most
recent mortality experience available.
The text of those temporary regulations
also serves as the text of these proposed
regulations. The preamble to the tempo-
rary regulations explains the temporary
regulations.
Special Analysis
It has been determined that this notice of
proposed rulemaking is not a significant
regulatory action as defined in EO 12866.
Therefore, a regulatory assessment is not
required. It also has been determined that
section 553(b) of the Administrative Pro-
cedure Act (5 U.S.C. chapter 5) does not
apply to these regulations, and because
these regulations do not impose a collec-
tion of information requirement on small
entities, the Regulatory Flexibility Act (5
U.S.C. chapter 6) does not apply. Pursuant
to section 7805(f) of the Internal Revenue
Code, this notice of proposed rulemaking
will be submitted to the Chief Counsel for
Advocacy of the Small Business Adminis-
tration for comment on its impact on small
business.
Proposed Effective Date
The regulations are proposed to apply
to the valuation of annuities, interests for
life or terms of years, and remainder or
reversionary interests for valuation dates
after April 30, 1999.
Comments and requests for a Public
Hearing
Before these proposed regulations are
adopted as final regulations, considera-
tion will be given to any electronic and
written comments (a signed original and 8
copies) that are submitted timely to the
IRS. All comments will be available for
public inspection and copying. A public
hearing may be scheduled if requested in
writing by any person who timely submits
written comments. If a public hearing is
scheduled, notice of the date, time, and
place for the hearing will be published in
the Federal Register.
Drafting Information
The principal author of these regulations
is William L. Blodgett, Office of Assistant
Chief Counsel (Passthroughs and Special
Industries), IRS. However, other person-
nel from the IRS and Treasury Department
participated in their development.
*****
Proposed Amendments to the Regulations
Accordingly, 26 CFR part 1 is pro-
posed 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 revising paragraphs (b)(2) and (b)(3)
to read as follows:
§1.170A–12 Valuation of a remainder
interest in real property for contributions
made after July 31, 1969.
* * * * *
(b) * * *
(2) [The text of this proposed para-
graph (b)(2) is the same as the text of
§1.170A–12T(b)(2) published in T.D.
8819.]
(3) [The text of this proposed para-
graph (b)(3) is the same as the text of
§1.170A–12T(b)(3) published in T.D.
8819.]
* * * * *
Par. 3. Section 1.642(c)–6 is amended
by revising paragraphs (d), (e) and (f) to
read as follows:
§1.642(c)–6 Valuation of a remainder
interest in property transferred to a
pooled income fund.
* * * * *
(d) [The text of this proposed para-
graph (d) is the same as the text of
§1.642(c)–6T(d) published in T.D. 8819.]
(e) [The text of this proposed para-
graph (e) is the same as the text of
§1.642(c)–6T(e) published in T.D. 8819.]
(f) [The text of this proposed para-
graph (f) is the same as the text of
§1.642(c)–6T(f) published in T.D. 8819.]
Par. 4. Section 1.664–4 is amended by
revising paragraphs (a)(1), (d), (e) and (f)
to read as follows:
§1.664–4 Calculation of the fair market
value of the remainder interest in a
charitable remainder unitrust.
(a) * * *
(1) [The text of this proposed para-
graph (a)(1) is the same as the text of
§1.664–4T(a)(1) published in T.D. 8819.]
*****
May 17, 1999941999–20 I.R.B.

(d) [The text of this proposed para-
graph (d) is the same as the text of
§1.664–4T(d) published in T.D. 8819.]
(e) [The text of this proposed paragraph
(e) is the same as the text of §1.664–4T(e)
published in T.D. 8819.]
(f) [The text of this proposed paragraph
(f) is the same as the text of §1.664–4T(f)
published in T.D. 8819.]
Par. 4. Section 1.7520–1 is amended
by revising paragraphs (b)(2), (c)(1),
(c)(2) and (d) to read as follows:
§1.7520–1 Valuation of annuities,
unitrust interest, interests for life or terms
of years, and remainder or reversionary
interests.
* * * * *
(b) * * *
(2) [The text of this proposed para-
graph (b)(2) is the same as the text of
§1.7520–1T(b)(2) published in T.D.
8819.]
(c) * * *
(1) [The text of this proposed para-
graph (c)(1) is the same as the text of
§1.7520–1T(c)(1) published in T.D.
8819.]
(2) [The text of this proposed para-
graph (c)(2) is the same as the text of
§1.7520–1T(c)(2) published in T.D.
8819.]
(d) [The text of this proposed para-
graph (d) is the same as the text of
§1.7520–1T(d) published in T.D. 8819.]
PART 20–ESTATE TAX; ESTATES OF
DECEDENTS DYING AFTER
AUGUST 16, 1954
Par. 5. The authority citation for part
20 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 6. Section 20.2031–7 is amended
by revising paragraphs (c), (d) and (e) to
read as follows:
§20.2031–7 Valuation of annuities,
interests for life or term of years , and
remainder or reversionary interests.
* * * * *
(c) [The text of this proposed paragraph
(c) is the same as the text of §20.2031–
7T(c) published in T.D. 8819.]
(d) [The text of this proposed para-
graph (d) is the same as the text of
§20.2031–7T(d) published in T.D. 8819.]
(e) [The text of this proposed paragraph
(e) is the same as the text of §20.2031–
7T(e) published in T.D. 8819.]
Par. 7. Section 20.7520–1 is amended
by revising paragraphs (a)(2), (b)(2),
(c)(1), (c)(2) and (d) to read as follows:
§20.7520–1 Valuation of annuities,
unitrust interests, interests for life or term
of years, and remainder or reversionary
interests.
(a) * * *
(2) [The text of this proposed para-
graph (a)(2) is the same as the text of
§20.7520–1T(a)(2) published in T.D.
8819.]
* * * * *
(b) * * *
(2) [The text of this proposed para-
graph (b)(2) is the same as the text of
§20.7520–1T(b)(2) published in T.D.
8819.]
(c) * * *
(1) [The text of this proposed para-
graph (c)(1) is the same as the text of
§20.7520–1T(c)(1) published in T.D.
8819.]
(2) [The text of this proposed para-
graph (c)(2) is the same as the text of
§20.7520–1T(c)(2) published in T.D.
8819.]
(d) [The text of this proposed para-
graph (d) is the same as the text of
§20.7520–1T(d) published in T.D. 8819.]
PART 25–GIFT TAX; GIFTS MADE
AFTER DECEMBER 31, 1954
Par. 8. The authority citation for part
25 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 9. Section 25.2512–5 is amended
by revising paragraphs (c), (d) and (e) to
read as follows:
§25.2512–5 Valuation of annuities,
unitrust interest, interests for life or term
of years, and remainder or reversionary
interests.
* * * * *
(c) [The text of this proposed paragraph
(c) is the same as the text of §25.2512–
5T(c) published in T.D. 8819.]
(d) [The text of this proposed para-
graph (d) is the same as the text of
§25.2512–5T(d) published in T.D. 8819.]
(e) [The text of this proposed paragraph
(e) is the same as the text of §25.2512–
5T(e) published in T.D. 8819.]
Par. 10. Section 25.7520–1 is amended
by revising paragraphs (b)(2), (c)(1),
(c)(2) and (d) to read as follows:
§25.7520–1 Valuation of annuities,
unitrust interests, interests for life or term
of years, and remainder or reversionary
interests.
* * * * *
(b) * * *
(2) [The text of this proposed para-
graph (b)(2) is the same as the text of
§25.7520–1T(b)(2) published in T.D.
8819.]
(c) * * *
(1) [The text of this proposed paragraph
(c)(1) is the same as the text of §25.7520–
1T(c)(1) published in T.D. 8819.]
(2) [The text of this proposed para-
graph (c)(2) is the same as the text of
§25.7520–1T(c)(2) published in T.D.
8819.]
(d) [The text of this proposed para-
graph (d) is the same as the text of
§25.7520–1T(d) published in T.D. 8819.]
Robert E. Wenzel,
Deputy Commissioner of
Internal Revenue.
(Filed by the Office of the Federal Register on April
29, 1999, 8:45 a.m., and published in the issue of the
Federal Register for April 30, 1999, 64 F.R. 23245)
Nonconventional Source
Fuel Credit, Section 29 Inflation
Adjustment Factor, and Section
29 Reference Price
Announcement 99–53
This document contains a correction to
Notice 99–18, 1999–16 I.R.B. 4, in which
the underlying calculation given to deter-
mine the nonconventional source fuel
credit amount contained an erroneous
number (the amount of the credit itself
was not erroneous).
The corrected provision reads as fol-
lows:
CREDIT AMOUNT
The nonconventional source fuel credit
under § 29(a) is $6.12 per barrel-of-oil
equivalent of qualified fuels ($3.00 3
2.0384).
1999–20 I.R.B.95May 17, 1999

May 17, 1999961999–20 I.R.B.
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”)
that have an effect on previous rulings
use the following defined terms to de-
scribe the effect:
Amplified describes a situation where
no change is being made in a prior pub-
lished position, but the prior position is
being extended to apply to a variation of
the fact situation set forth therein. Thus,
if an earlier ruling held that a principle
applied to A, and the new ruling holds
that the same principle also applies to B,
the earlier ruling is amplified. (Compare
with modified, below).
Clarified is used in those instances
where the language in a prior ruling is
being made clear because the language
has caused, or may cause, some confu-
sion. It is not used where a position in a
prior ruling is being changed.
Distinguisheddescribes a situation
where a ruling mentions a previously
published ruling and points out an essen-
tial difference between them.
Modified is used where the substance
of a previously published position is
being changed. Thus, if a prior ruling
held that a principle applied to A but not
to B, and the new ruling holds that it ap-
plies to both A and B, the prior ruling is
modified because it corrects a published
position. (Compare with amplified and
clarified, above).
Obsoleted describes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transac-
tions. This term is most commonly used
in a ruling that lists previously published
rulings that are obsoleted because of
changes in law or regulations. A ruling
may also be obsoleted because the sub-
stance has been included in regulations
subsequently adopted.
Revoked describes situations where the
position in the previously published rul-
ing is not correct and the correct position
is being stated in the new ruling.
Superseded describes a situation where
the new ruling does nothing more than
restate the substance and situation of a
previously published ruling (or rulings).
Thus, the term is used to republish under
the 1986 Code and regulations the same
position published under the 1939 Code
and regulations. The term is also used
when it is desired to republish in a single
ruling a series of situations, names, etc.,
that were previously published over a pe-
riod of time in separate rulings. If the
new ruling does more than restate the
substance of a prior ruling, a combination
of terms is used. For example, modified
and superseded describes a situation
where the substance of a previously pub-
lished ruling is being changed in part and
is continued without change in part and it
is desired to restate the valid portion of
the previously published ruling in a new
ruling that is self contained. In this case
the previously published ruling is first
modified and then, as modified, is super-
seded.
Supplemented is used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and
that list is expanded by adding further
names in subsequent rulings. After the
original ruling has been supplemented
several times, a new ruling may be pub-
lished that includes the list in the original
ruling and the additions, and supersedes
all prior rulings in the series.
Suspended is used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of
cases in litigation, or the outcome of a
Service study.
Abbreviations
The following abbreviations in current use and for-
merly used will appear in material published in the
Bulletin.
A—Individual.
Acq.—Acquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank.
B.T.A.—Board of Tax Appeals.
C.—Individual.
C.B.—Cumulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Cooperative.
Ct.D.—Court Decision.
CY—County.
D—Decedent.
DC—Dummy Corporation.
DE—Donee.
Del. Order—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Employer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduciary.
FC—Foreign Country.
FICA—Federal Insurance Contribution Act.
FISC—Foreign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Federal Unemployment Tax Act.
FX—Foreign Corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grantee.
GP—General Partner.
GR—Grantor.
IC—Insurance Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited Partner.
LR—Lessor.
M—Minor.
Nonacq.—Nonacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Personal Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Partnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Real Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsidiary.
S.P.R.—Statements of Procedral Rules.
Stat.—Statutes at Large.
T—Target Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Transferee.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpayer.
TR—Trust.
TT—Trustee.
U.S.C.—United States Code.
X—Corporation.
Y—Corporation.
Z—Corporation.
Definition of Terms

1999–20 I.R.B.97May 17, 1999
1
A cumulative list of all revenue rulings, revenue
procedures, Treasury decisions, etc., published in
Internal Revenue Bulletins 1998–1 through 1998–52
will be found in Internal Revenue Bulletin 1999–1,
dated January 4, 1999.
Numerical Finding List
1
Bulletins 1999–1 through 1999–19
Announcements:
99–1, 1999–2 I.R.B. 41
99–2, 1999–2 I.R.B. 44
99–3, 1999–3 I.R.B. 15
99–4, 1999–3 I.R.B. 15
99–5, 1999–3 I.R.B. 16
99–6, 1999–4 I.R.B.24
99–7, 1999–2 I.R.B. 45
99–8, 1999–4 I.R.B.24
99–9, 1999–4 I.R.B. 24
99–10, 1999–5 I.R.B. 63
99–11, 1999–5 I.R.B. 64
99–12, 1999–5 I.R.B. 65
99–13, 1999–6 I.R.B. 18
99–14, 1999–7 I.R.B.60
99–15, 1999–8 I.R.B.78
99–16, 1999–8 I.R.B. 80
99–17, 1999–9 I.R.B. 59
99–18, 1999–13 I.R.B. 21
99–19, 1999–10 I.R.B. 63
99–20, 1999–11 I.R.B.53
99–21, 1999–11 I.R.B.55
99–22, 1999–12 I.R.B. 32
99–23, 1999–15 I.R.B. 7
99–24, 1999–14 I.R.B. 12
99–25, 1999–12 I.R.B. 35
99–26, 1999–14 I.R.B. 20
99–27, 1999–13 I.R.B. 22
99–28, 1999–13 I.R.B. 25
99–29, 1999–13 I.R.B. 25
99–30, 1999–13 I.R.B. 26
99–31, 1999–13 I.R.B. 26
99–32, 1999–14 I.R.B.20
99–33, 1999–14 I.R.B. 21
99–34, 1999–15 I.R.B. 8
99–35, 1999–14 I.R.B. 22
99–36, 1999–16 I.R.B. 10
99–37, 1999–15 I.R.B. 9
99–38, 1999–15 I.R.B. 9
99–39, 1999–15 I.R.B. 10
99–40, 1999–16 I.R.B. 10
99–41, 1999–16 I.R.B. 10
99–42, 1999–16 I.R.B. 11
99–43, 1999–16 I.R.B. 11
99–44, 1999–16 I.R.B. 12
99–45, 1999–16 I.R.B. 12
99–46, 1999–16 I.R.B. 13
99–48, 1999–17 I.R.B.20
99–49, 1999–18 I.R.B.7
99–50, 1999–19 I.R.B. 6
99–51, 1999–19 I.R.B. 6
99–52, 1999–19 I.R.B. 9
Notices:
99–1, 1999–2 I.R.B. 8
99–2, 1999–2 I.R.B. 8
99–3, 1999–2 I.R.B. 10
99–4, 1999–3 I.R.B. 9
99–5, 1999–3 I.R.B. 10
99–6, 1999–3 I.R.B. 12
99–7, 1999–4 I.R.B.23
99–8, 1999–5 I.R.B. 26
99–9, 1999–4 I.R.B. 23
99–10, 1999–6 I.R.B. 14
99–11, 1999–8 I.R.B.56
99–12, 1999–9 I.R.B. 44
Notices—Continued
99–13, 1999–10 I.R.B. 26
99–14, 1999–11 I.R.B.7
99–15, 1999–12 I.R.B.20
99–16, 1999–13 I.R.B.10
99–17, 1999–14 I.R.B.6
99–18, 1999–16 I.R.B. 4
99–19, 1999–16 I.R.B. 4
99–20, 1999–17 I.R.B.16
99–21, 1999–17 I.R.B. 19
99–22, 1999–19 I.R.B.5
Proposed Regulations:
REG–209103–89, 1999–11 I.R.B. 10
REG–209619–93, 1999–10 I.R.B. 28
REG–245562–96, 1999–9 I.R.B. 45
REG–104072–97, 1999–11 I.R.B. 12
REG–114663–97, 1999–6 I.R.B. 15
REG–114664–97, 1999–11 I.R.B. 21
REG–116826–97, 1999–10 I.R.B. 40
REG–118620–97, 1999–9 I.R.B. 46
REG–120168–97, 1999–12 I.R.B. 21
REG–121806–97, 1999–10 I.R.B. 46
REG–100729–98, 1999–14 I.R.B. 9
REG–104924–98, 1999–10 I.R.B.47
REG–105964–98, 1999–12 I.R.B. 22
REG–106177–98, 1999–12 I.R.B. 25
REG–106219–98, 1999–9 I.R.B. 51
REG–106386–98, 1999–12 I.R.B. 31
REG–106388–98, 1999–11 I.R.B. 27
REG–106564–98, 1999–10 I.R.B.53
REG–106902–98, 1999–8 I.R.B. 57
REG–106905–98, 1999–11 I.R.B. 39
REG–110524–98, 1999–10 I.R.B. 55
REG–111435–98, 1999–7 I.R.B. 55
REG–113694–98, 1999–7 I.R.B. 56
REG–111435–98, 1999–7 I.R.B. 55
REG–113744–98, 1999–10 I.R.B. 59
REG–114841–98, 1999–11 I.R.B. 41
REG–115433–98, 1999–9 I.R.B. 54
REG–116099–98, 1999–12 I.R.B. 34
REG–116824–98, 1999–7 I.R.B.57
REG–117620–98, 1999–7 I.R.B. 59
REG–118662–98, 1999–13 I.R.B. 13
REG–119192–98, 1999–11 I.R.B. 45
REG–121865–98, 1999–8 I.R.B.63
Revenue Procedures:
99–1, 1999–1 I.R.B. 6
99–2, 1999–1 I.R.B. 73
99–3, 1999–1 I.R.B. 103
99–4, 1999–1 I.R.B. 115
99–5, 1999–1 I.R.B. 158
99–6, 1999–1 I.R.B. 187
99–7, 1999–1 I.R.B. 226
99–8, 1999–1 I.R.B. 229
99–9, 1999–2 I.R.B. 17
99–10, 1999–2 I.R.B. 11
99–11, 1999–2 I.R.B. 14
99–12, 1999–3 I.R.B. 13
99–13, 1999–5 I.R.B. 52
99–14, 1999–5 I.R.B. 56
99–15, 1999–7 I.R.B. 42
99–16, 1999–7 I.R.B. 50
99–17, 1999–7 I.R.B. 52
99–18, 1999–11 I.R.B.7
99–19, 1999–13 I.R.B.10
99–20, 1999–14 I.R.B.7
99–21, 1999–17 I.R.B. 18
99–22, 1999–15 I.R.B.5
Revenue Procedures—Continued
99–23, 1999–16 I.R.B.5
Revenue Rulings:
99–1, 1999–2 I.R.B. 4
99–2, 1999–2 I.R.B. 5
99–3, 1999–3 I.R.B. 4
99–4, 1999–4 I.R.B.19
99–5, 1999–6 I.R.B.8
99–6, 1999–6 I.R.B. 6
99–7, 1999–5 I.R.B. 4
99–8, 1999–6 I.R.B.8
99–9, 1999–7 I.R.B.14
99–10, 1999–10 I.R.B. 10
99–11, 1999–10 I.R.B. 18
99–12, 1999–11 I.R.B. 6
99–13, 1999–10 I.R.B. 4
99–14, 1999–13 I.R.B. 3
99–15, 1999–12 I.R.B.4
99–16, 1999–13 I.R.B.5
99–17, 1999–14 I.R.B. 4
99–18, 1999–14 I.R.B. 3
99–19, 1999–15 I.R.B. 3
99–20, 1999–18 I.R.B.5
99–21, 1999–18 I.R.B. 3
99–22, 1999–19 I.R.B.3
Treasury Decisions:
8789, 1999–3 I.R.B. 5
8791, 1999–5 I.R.B. 7
8792, 1999–7 I.R.B.36
8793, 1999–7 I.R.B.15
8794, 1999–7 I.R.B.4
8795, 1999–7 I.R.B.8
8796, 1999–4 I.R.B. 16
8797, 1999–5 I.R.B. 5
8798, 1999–12 I.R.B. 16
8799, 1999–6 I.R.B. 10
8800, 1999–4 I.R.B. 20
8801, 1999–4 I.R.B. 5
8802, 1999–4 I.R.B. 10
8803, 1999–12 I.R.B. 15
8804, 1999–12 I.R.B. 5
8805, 1999–5 I.R.B. 14
8806, 1999–6 I.R.B.4
8807, 1999–9 I.R.B. 33
8808, 1999–10 I.R.B. 21
8809, 1999–7 I.R.B.27
8810, 1999–7 I.R.B.19
8811, 1999–10 I.R.B. 19
8812, 1999–8 I.R.B. 19
8813, 1999–9 I.R.B. 34
8814, 1999–9 I.R.B. 4
8815, 1999–9 I.R.B. 31
8816, 1999–8 I.R.B. 4
8817, 1999–8 I.R.B. 51
8818, 1999–17 I.R.B.3

May 17, 1999981999–20 I.R.B.
Finding List of Current Action on
Previously Published Items
1
Bulletins 1999–1 through 1999–19
Notices:
92–36
Modified by
Rev. Proc. 99–23, 1999–16 I.R.B. 5
94–16
Obsoleted by
Notice 99–22, 1999–19 I.R.B. 5
96–64
Modified by
Rev. Proc. 99–23, 1999–16 I.R.B. 5
98–39
Modified by
Rev. Proc. 99–23, 1999–16 I.R.B. 5
98–52
Modified by
Rev. Proc. 99–23, 1999–16 I.R.B. 5
99–5
Modified by
Rev. Proc. 99–23, 1999–16 I.R.B. 5
Revenue Procedures:
78–10
Obsoleted by
99–12, 1999–3 I.R.B. 13
89–9
Modified by
99–23, 1999–16 I.R.B. 5
89–13
Modified by
99–23, 1999–16 I.R.B. 5
93–39, section 13
Modified by
99–23, 1999–16 I.R.B. 5
94–56
Superseded by
99–9, 1999–2 I.R.B. 17
95–12
Modified by
99–23, 1999–16 I.R.B. 5
97–23
Superseded by
99–3, 1999–1 I.R.B. 103
97–41
Modified by
99–23, 1999–16 I.R.B. 5
98–1
Superseded by
99–1, 1999–1 I.R.B. 6
98–2
Superseded by
99–2, 1999–1 I.R.B. 73
98–3
Superseded by
99–3, 1999–1 I.R.B. 103
98–4
Superseded by
99–4, 1999–1 I.R.B. 115
Revenue Procedures—Continued
98–5
Superseded by
99–5, 1999–1 I.R.B. 158
98–6
Superseded by
99–6, 1999–1 I.R.B. 187
98–7
Superseded by
99–7, 1999–1 I.R.B. 226
98–8
Superseded by
99–8, 1999–1 I.R.B. 229
98–14
Modified by
99–23, 1999–16 I.R.B. 5
98–22
Modified and amplified by
99–13, 1999–5 I.R.B. 52
98–28
Obsoleted by (except as provided in section 5.02 of)
99–22, 1999–15 I.R.B. 5
98–56
Superseded by
99–3, 1999–1 I.R.B. 103
98–63
Modified by announcement
99–7, 1999–2 I.R.B. 45
Revenue Rulings:
92–19
Supplemented in part by
99–10, 1999–10 I.R.B. 10
1
A cumulative finding list for previously published
items mentioned in Internal Revenue Bulletins
1998–1 through 1998–52 will be found in Internal
Revenue Bulletin 1999–1, dated January 4, 1999.

INTERNAL REVENUE BULLETIN
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