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issues are largely subsidiary to determining the basic
characterization, in the first instance, of a payment right.
Whether these features affect the value in a particular case of
an asset so classified is a question which we shall take up
below. At this juncture, we first hold that decedent’s lottery
winnings constitute an annuity for tax purposes and within the
meaning of section 7520.
C. Valuation of Lottery Installments Under Section 7520
Interests within the purview of section 7520 must be valued
in accordance with the prescribed actuarial tables unless they
can satisfy the requisites for an exception to the statute’s use.
As previously indicated, section 20.7520-3(a), Estate Tax Regs.,
provides a list of exceptions effective May 1, 1989, none of
which has been cited as on point here, and section 20.7520-3(b),
Estate Tax Regs., enumerates additional exceptions effective
after December 13, 1995. See sec. 20.7520-3(c), Estate Tax Regs.
While these latter limitations are not directly applicable to
1994, the preamble to T.D. 8630, 1996-1 C.B. 339, which adopted
paragraph (b) as an amendment to the final regulations under
section 7520, addressed the relationship of the new provisions to
prior law as follows:
One commentator suggested that the tables
prescribed by the regulations must be used for valuing
all interests transferred between April 30, 1989 (the
effective date of section 7520) and December 13, 1995
(the effective date of the regulations). However,
these regulations generally adopt principles
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