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6.1.3 Computing Actuarial Values - IRS Publications 1457, 1458 and 1459

Computing Actuarial Values - IRS Publications 1457, 1458 and 1459

1457 - Book 3A:  IRS Publication 1457 contains six tables used to compute actuarial values for annuities.

1458- Book 3B:  IRS Publication 1458 contains six tables used to compute actuarial values for unitrusts.

1459- Book 3C:  IRS Publication 1459 is a much shorter book than Publications 1457 and 1458.
IRS Publications 1457, 1458, and 1459 were published in 1999 and are used to compute actuarial values. Publication 1457 is titled Book 3A. Publication 1458 is titled Book 3B and Publication 1459 is Book 3C.

1457 - Book 3A
IRS Publication 1457 contains six tables used to compute actuarial values for annuities.

Table S contains factors used to compute the present value of a life annuity, a life estate or a remainder interest based on a single life. The factors are calculated using different interest rates (i.e., rate of the month) ranging from 0.2% to 20.0%, as required by Sec. 7520. This table can also be used to value the remainder interest in a pooled income fund.

Table R(2) is used to determine the present value of a remainder interest of $1 payable at the death of the last to die of two persons. This table can also be used to value the remainder interest in a pooled income fund.

Table B is used in determining the present value of an annuity, an income interest and a remainder interest for a term of years.

Table H is used for determining commutation factors for life interests.

Table 2000CM is the mortality table discussed in GiftLaw Pro 6.1.2 and is used to calculate factors involving life contingencies.

Table K contains adjustment factors for annuities payable at the end of annual, semi-annual, quarterly, monthly and weekly periods.

1458- Book 3B
IRS Publication 1458 contains six tables used to compute actuarial values for unitrusts. All of the factors in the tables listed below reflect annual compounding of interest.

Table U(1) is a table of factors used to determine the present value of a remainder interest in a single life unitrust.

Table U(2) is used to determine the present value of a remainder interest in a $1 payable at the death of the last to die of two persons.

Table D is used to determine the present value of a term of years unitrust.

Table F contains factors for computing adjusted payout rates for annual, semi-annual, quarterly and weekly payment periods at interest rates (i.e., rate of the month) from 0.2% to 20%.

Table Z is a list of commutation tables used for computing the retained interest in a unitrust payable for the lesser of a life or a term of years.

Table 2000CM is the mortality table used to determine values of life contingencies.

1459- Book 3C
IRS Publication 1459 is a much shorter book than Publications 1457 and 1458. Book 3C is used to calculate depreciation adjustments factors. Interest rates used in Book 3C range from 0.2% to 20.0%.

The factors used in Table C of Book 3C are used to adjust the standard remainder factors for valuing gifts of depreciated property. Under Reg. 1.170A-12, a depreciation adjustment must be made for all gifts of a remainder interest in a personal residence (i.e., a life estate). If a depreciation adjustment is not made, no charitable deduction is allowed.

Related Topics on Computing Actuarial Values - IRS Publications 1457, 1458 and 1459

3.8.2  Pooled Income Fund Valuation and Taxation:    The pooled income fund (PIF) must be valued at least annually to determine the appropriate income to be distributed. The valuation is essential because when new donors are added to the fund, they must be assigned a number of units that fairly reflects their share of the fund. Reg. 1.642(c)-5(c)(2)(i)(c). In addition, the valuation is essential for distributions to the parent charity when an interest terminates.

Davenport:    In Estate of Sarah M. Davenport et al. v. Commissioner; T.C. Memo. 2006-215; No. 16060-04 (5 Oct 2006), the court determined that two commercial annuities would be includable in the estate and valued using the Sec. 7520 treasury tables.

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