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In addition, cases decided under law preceding section
7520’s effective date offer a degree of guidance on the concept
of a private annuity for transfer tax purposes. Even prior to
the enactment of section 7520, estate and gift tax regulations
had long contained actuarial tables for use in valuing private
annuities, life estates, and terms of years. See Simpson v.
United States, 252 U.S. 547, 549 (1920); Dix v. Commissioner, 46
T.C. 796, 800 (1966), affd. 392 F.2d 313 (4th Cir. 1968); Estate
of Cullison v. Commissioner, supra; Estate of Shapiro v.
Commissioner, T.C. Memo. 1993-483. While no statute mandated
their application, courts generally approved of and often
required their use. See Dix v. Commissioner, supra at 801;
Estate of Shapiro v. Commissioner, supra.
For instance, in Dix v. Commissioner, supra at 798-801, we
concluded that the regulatory tables were to be used in valuing a
lifetime “private annuity” paid pursuant to an agreement stating
as follows:
WHEREAS, THE transferor is willing to bargain,
sell, and transfer to the transferees all the
securities so listed in Schedule ‘A’, provided however
that transferees, and each of them, will agree to pay
the transferor a sum certain annually, as hereinafter
set forth, regardless of the value of the securities so
transferred and regardless of the income therefrom
received by transferees * * *
Similarly, in Estate of Shapiro v. Commissioner, supra, the
will of the decedent’s predeceased wife had established a trust
and instructed the trustee “pay to my husband or apply for his
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