PLR 201928003: Code Sec. 7520 – Terminal Taxpayer May Use Special Actuarial Factor for Gift Valuation

In PLR 201928003 the IRS ruled that a terminal taxpayer may use a special actuarial factor to value certain gifts made by her during her lifetime.

The facts were as follows:

Taxpayer was born on Date 1. Taxpayer is the income beneficiary of three trusts. On Date 2, Taxpayer utilized the disclaimer provisions expressly provided in the three trusts and disclaimed her life estates. At the time Taxpayer disclaimed, Taxpayer had been medically diagnosed as suffering from cancer and was in hospice care. Taxpayer’s medical prognosis was that she was terminally ill and that there was at least a fifty percent probability that Taxpayer would die within one year of Date 2. Taxpayer died five days later, Date 3.

The IRS ruled that because the taxpayer was terminally ill, the mortality component prescribed under Code Sec. 7520 for ordinary life estate interests could not to be used to determine the present value of the life estate interests disclaimed by her. Therefore, an actuarial factor of .00043 was directed to be used in valuing the gifts.

See full PLR 201928003 by clicking PLR 201928003: Code Sec. 7520 – Individual May Use Special Actuarial Factor for Gift Valuation.

Posted by Lewis J. Saret, Co-General Editor, Wealth Strategies Journal..

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