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Although there are few cases applying section 7520 to such
private annuities, this Court in Estate of Cullison v.
Commissioner, T.C. Memo. 1998-216, affd. without published
opinion 221 F.3d 1347 (9th Cir. 2000), characterized an
arrangement as a private annuity and required its valuation under
section 7520. The agreement at issue there provided that the
decedent would convey all of her interest in certain farmland to
her grandchildren by warranty deed and that the grandchildren
would pay to her $311,165 annually for the remainder of her life.
See id. The agreement further specified that the decedent would
have no further interest in the land after the date the agreement
was signed and that the land would not be security for the
annuity payments. See id.
In addressing whether any portion of the land transfer
constituted a gift, the estate argued that the annuity was
properly valued apart from the section 7520 tables, on the basis
of an interest rate supposedly reflecting that available on land
sale contracts in the area. See id. We, however, pointed out
that “Unlike a seller under a land sale contract, decedent under
the private annuity would have only an unsecured right to receive
a specified annual payment during her life.” Id. (fn. ref.
omitted). We then held that such an interest was within the
scope of section 7520. See id.
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