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Regs. (relating to exceptions to the use of prescribed tables
under certain circumstances), annuities are valued under the
tables set forth in the regulations.4 Sec. 7520. The factors
for a wide range of interest rates and mortality assumptions are
published in tables found in section 20.2031-7, Estate Tax Regs.
The estate argues that even if the stream of payments is an
annuity, use of the annuity tables to value the payments creates
an unreasonable and unrealistic result because the valuation
formula in section 7520 does not take into account the lack of
marketability of the lottery payments. Respondent argues for use
of the annuity tables regardless of whether the right to the
payments was marketable in the hands of the partnership.
Respondent contends that decedent’s interests in the partnership,
not the partnership’s right to receive the lottery payments, is
the property in which the lack of marketability should be
discounted. We agree with respondent.
It is well established that the tables should be used where
annuities are being valued “‘unless it is shown that the result
is so unrealistic and unreasonable that either some modification
in the prescribed method should be made * * * or complete
departure from the method should be taken, and a more reasonable
4 Sec. 20.7520-3(a), Estate Tax Regs., provides a list of
exceptions effective May 1, 1989 (none of which are present
here), and sec. 20.7520-3(b), Estate Tax Regs., enumerates
additional exceptions effective after Dec. 13, 1995.
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Last modified: May 25, 2011