Rev. Rul. 84-162
1984-2 C.B. 200, 1984-46 I.R.B. 8.
Internal Revenue Service
Revenue Ruling
VALUATION; ANNUITY CONTRACTS
Published: November 13, 1984
Section 2512. - Valuation of Gifts, 26 CFR 25.2512-5: Valuation of
annuities, life estates, terms for years, reminders, and reversions,
transferred after November 30, 1983.
(Also Section 2031; 20.2031-7.)
Valuation; annuity contracts. The valuation tables that appear in section
25.2512-5 of the Gift Tax Regulations and section 20.2031-7 of the Estate
Tax Regulations are to be used in valuing annuity contracts issued by an
organization such as a corporation, trust, fund, or foundation (other than
as insurance company) for gift tax purposes. Rev. Ruls. 62-137, 62-216,
67-39, and 72-438 amplified.
ISSUE
The purpose of this revenue ruling is to update the rate tables
contained in Rev. Rul. 62-216, 1962-2 C.B. 30, and Rev. Rul. 72-438, 1972-2
C.B. 38.
FACTS, LAW AND ANALYSIS
Rev. Rul. 62-137, 1962-2 C.B. 28, holds that for purposes of section 72
of the Internal Revenue Code, the aggregate amount of consideration paid
(investment in the contract), in the case of life annuity contracts issued
by an organization such as a corporation, trust, fund, or foundation (other
than an insurance company) which from time to time enters into agreements
to pay annuities of a specified amount to individuals or their designees in
exchange for money or other property, is to be determined by reference to
the cost of a comparable contact purchased from an insurance company,
citing Raymond v. Commissioner, 40 B.T.A. 244 (1939), aff'd, 114 F.2d 140
(7th Cir. 1940), cert. denied, 311 U.S. 710.
Rev. Rul. 62-137 was supplemented by Rev. Rul. 62-216, which contains
expanded tables of annuity rates. Rev. Rul. 62-216 states that the annuity
rates set forth therein are subject to change depending on market
conditions and that any notice of change will be given by publication in
the Internal Revenue Bulletin.
Rev. Rul. 67-39, 1967-1 C.B. 18, holds that the rates set forth in Rev.
Rul. 62-216 are to be used for estate and gift tax purposes and for income
tax purposes, as well as for purposes of section 72 of the Code, in valuing
annuity contracts issued from time to time by an organization such as a
corporation, trust, fund, or foundation (other than an insurance company)
in exchange for money or other property.
Rev. Rul. 72-438, 1972-2 C.B. 38, updated the rate tables and added
tables to be used in the valuation of certain types of deferred payment
annuity contracts.
HOLDING
After November 23, 1984, the valuation tables that appear in section
25.2512-5 of the Gift Tax Regulations and section 20.2031-7 of the Estate
Tax Regulations shall be used instead of the tables in Rev. Rul. 72-438,
above, in valuing any of the annuity contracts described in that ruling.
The rates in Rev. Rul. 72-438 continue to apply to annuity contracts
described above that were issued on or before November 23, 1984.
The rates prescribed by this revenue ruling are subject to change
depending upon market conditions. Notice of change will be given by
publication in the Internal Revenue Bulletin.
In the case of an actual gift, the Commissioner will ordinarily supply
the computation upon request. The request must be accompanied by a
statement of the date of birth of each annuitant and by copies of the
relevant instruments.
EFFECTS ON OTHER DOCUMENTS
Rev. Rul. 62-137, Rev. Rul. 62-216, Rev. Rul. 67-39, and Rev. Rul.
72-438 are amplified.
Rev. Rul. 84-162, 1984-2 C.B. 200, 1984-46 I.R.B. 8.
