Estate of Gladys J. Cook - Page 9

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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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