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As previously indicated, section 20.7520-4(a), Estate Tax
Regs., states that, if the relevant valuation date is after April
30, 1989, and before June 10, 1994, executors may rely on Notice
89-24, 1989-1 C.B. 660, and Notice 89-60, 1989-1 C.B. 700, in
valuing transferred interests. However, in attempting to
analogize their use of these Notices to the reliance on Rev. Rul.
80-80, 1980-1 C.B. 194, addressed in Estate of McLendon v.
Commissioner, supra, the estates have failed to recognize a
critical distinction. Neither the regulation nor the referenced
Notices purport to deal with the substantive question of whether
actuarial tables are properly applied in the first instance. In
fact, Notice 89-24, 1989-1 C.B. 660, recites only that
“Generally, under section 7520, the value of an annuity, interest
for life or for a term of years, or remainder or reversionary
interest is determined under new tables that are to be prescribed
by the Secretary.” The regulation and Notices merely authorize
executors to utilize a particular set of figures and formulas,
different from those promulgated in the final regulations, in
performing the actuarial computation. They do not provide any
standards regarding whether use of actuarial tables is the
appropriate valuation methodology. Other administrative and
judicial rulings in place at the time the Notices were issued
dealt with this question, and the estates are not entitled to
ignore the principles established therein.
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Last modified: May 25, 2011