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1. Analysis of Annuity Characteristics
We begin with a few comments on the relevance of the
estate’s submissions regarding the characteristics of a typical
annuity. While we do not dispute that the features cited may be
widely present in commercially purchased annuity contracts, we
point out that to the extent these elements are not also
representative of so-called private annuities, they offer little
insight into the nature of interests intended to be treated under
the section 7520 tables.
Section 7520(b) states that the section shall not apply for
purposes “specified in regulations.” Section 20.7520-1, Estate
Tax Regs., directs generally that annuities be valued in
accordance with section 20.2031-7, Estate Tax Regs., and the
tables therein. However, section 20.2031-7(b), Estate Tax Regs.,
expressly excepts commercial annuities from its operation, as
follows: “The value of annuities issued by companies regularly
engaged in their sale * * * is determined under � 20.2031-8.”
Section 20.2031-8(a)(1), Estate Tax Regs., in turn provides that
the value of such contracts “is established through the sale by
that company of comparable contracts.” Since the State of
Connecticut is not in the business of selling annuity contracts,
we clarify that the attributes of a commercial annuity are
relevant here only in so far as they parallel what would be found
with respect to a private annuity.
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