Eligibility
Taxpayers making a transfer of an annuity, life interest, remainder, or reversionary interest where a charitable deduction is allowable.
Frequently Asked Questions
Who is eligible for the Prior-Month Interest Rate Election for Charitable Transfers?
Taxpayers making a transfer of an annuity, life interest, remainder, or reversionary interest where a charitable deduction is allowable.
How does the Prior-Month Interest Rate Election for Charitable Transfers work?
For valuations involving charitable contributions (like CRATs or CLATs), taxpayers can elect to use the 7520 interest rate from either of the two months preceding the valuation date.
What law authorizes the Prior-Month Interest Rate Election for Charitable Transfers?
The Prior-Month Interest Rate Election for Charitable Transfers is authorized under IRC §7520(a) of the Internal Revenue Code (Title 26, United States Code).
Statutory Text — IRC §7520
Source: Internal Revenue Code, Title 26, United States Code
§ 7520. Valuation tables(a) General ruleFor purposes of this title, the value of any annuity, any interest for life or a term of years, or any remainder or reversionary interest shall be determined—(1) under tables prescribed by the Secretary, and
(2) by using an interest rate (rounded to the nearest 2/10ths of 1 percent) equal to 120 percent of the Federal midterm rate in effect under section 1274(d)(1) for the month in which the valuation date falls.
If an income, estate, or gift tax charitable contribution is allowable for any part of the property transferred, the taxpayer may elect to use such Federal midterm rate for either of the 2 months preceding the month in which the valuation date falls for purposes of paragraph (2). In the case of transfers of more than 1 interest in the same property with respect to which the taxpayer may use the same rate under paragraph (2), the taxpayer shall use the same rate with respect to each such interest.
(b) Section not to apply for certain purposesThis section shall not apply for purposes of part I of subchapter D of chapter 1 or any other provision specified in regulations.
(c) Tables(1) In generalThe tables prescribed by the Secretary for purposes of subsection (a) shall contain valuation factors for a series of interest rate categories.
(2) Revision for recent mortality chargesThe Secretary shall revise the initial tables prescribed for purposes of subsection (a) to take into account the most recent mortality experience available as of the time of such revision. Such tables shall be revised 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.
(d) Valuation dateFor purposes of this section, the term “valuation date” means the date as of which the valuation is made.
(e) Tables to include formulasFor purposes of this section, the term “tables” includes formulas.
(Added Pub. L. 100–647, title V, § 5031(a), Nov. 10, 1988, 102 Stat. 3668; amended Pub. L. 113–295, div. A, title II, § 221(a)(118), Dec. 19, 2014, 128 Stat. 4054.)
Editorial Notes
Codification
Another section 7520 was renumbered section 7521 of this title.
Amendments2014—Subsec. (c)(2), (3). Pub. L. 113–295 redesignated par. (3) as (2), substituted “The Secretary” for “Not later than December 31, 1989, the Secretary” and struck out “thereafter” after “once each 10 years”, and struck out former par. (2). Prior to amendment, text of par. (2) read as follows: “Not later than the day 3 months after the date of the enactment of this section, the Secretary shall prescribe initial tables for purposes of subsection (a). Such tables may be based on the same mortality experience as used for purposes of section 2031 on the date of the enactment of this section.”
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