Bulletin No. 2022–21

HIGHLIGHTS

OF THIS ISSUE





Bulletin No. 2022–21

May 23, 2022

These synopses are intended only as aids to the reader in

identifying the subject matter covered. They may not be

relied upon as authoritative interpretations.

ADMINISTRATIVE, INCOME TAX

Rev. Proc. 2022-22, page 1098.

This revenue procedure provides two simplified procedures for bona fide residents of Puerto Rico who are

not otherwise required to file taxable year 2021 Federal

tax returns, and who meet certain other requirements

(Puerto Rico CTC filers) to claim the child tax credit.

Under section 4 of this revenue procedure, Puerto Rico

CTC filers who file simplified U.S. self-employment tax

returns may omit their modified adjusted gross income

for the purpose of claiming the child tax credit. Under

section 5 of this revenue procedure, Puerto Rico CTC

filers who file simplified Federal income tax returns may

omit their modified adjusted gross income for the purpose of claiming the child tax credit.

ESTATE TAX, GIFT TAX, INCOME TAX

REG-122770-18, page 1104.

These proposed regulations provide guidance relating

to the use of actuarial tables in valuing annuities, interests for life or a term of years, and remainder or

reversionary interests. These regulations will affect

Finding Lists begin on page ii.

the valuation of inter vivos and testamentary transfers

of interests dependent on one or more measuring

lives. These regulations are necessary because section 7520(c)(3) directs the Secretary to update the

actuarial tables to reflect the most recent mortality

experience available.

INCOME TAX

Notice 2022-20, page 1095.

This notice publishes the inflation adjustment factor and

reference price for calendar year 2022 for the renewable electricity production credit under section 45 of

the Internal Revenue Code. The notice also provides

the credit amounts for calendar year 2022 under

section 45.

Notice 2022-24, page 1097.

The notice announces that under § 613A(c)(6)(C) of the

Internal Revenue Code, the applicable percentage for

purposes of determining percentage depletion on marginal properties for calendar year 2022 is 15 percent.

The format of the notice is identical to the format of

notices previously published on this issue.

The IRS Mission

Provide America’s taxpayers top-quality service by helping

them understand and meet their tax responsibilities and enforce the law with integrity and fairness to all.

Introduction

The Internal Revenue Bulletin is the authoritative instrument

of the Commissioner of Internal Revenue for announcing official rulings and procedures of the Internal Revenue Service

and for publishing Treasury Decisions, Executive Orders, Tax

Conventions, legislation, court decisions, and other items of

general interest. It is published weekly.

It is the policy of the Service to publish in the Bulletin all substantive rulings necessary to promote a uniform application

of the tax laws, including all rulings that supersede, revoke,

modify, or amend any of those previously published in the

Bulletin. All published rulings apply retroactively unless otherwise indicated. Procedures relating solely to matters of internal management are not published; however, statements of

internal practices and procedures that affect the rights and

duties of taxpayers are published.

Revenue rulings represent the conclusions of the Service

on the application of the law to the pivotal facts stated in

the revenue ruling. In those based on positions taken in rulings to taxpayers or technical advice to Service field offices,

identifying details and information of a confidential nature are

deleted to prevent unwarranted invasions of privacy and to

comply with statutory requirements.

Rulings and procedures reported in the Bulletin do not have the

force and effect of Treasury Department Regulations, but they

may be used as precedents. Unpublished rulings will not be

relied on, used, or cited as precedents by Service personnel in

the disposition of other cases. In applying published rulings and

procedures, the effect of subsequent legislation, regulations,

court decisions, rulings, and procedures must be considered,

and Service personnel and others concerned are cautioned

against reaching the same conclusions in other cases unless

the facts and circumstances are substantially the same.

The Bulletin is divided into four parts as follows:

Part I.—1986 Code.

This part includes rulings and decisions based on provisions

of the Internal Revenue Code of 1986.

Part II.—Treaties and Tax Legislation.

This part is divided into two subparts as follows: Subpart A,

Tax Conventions and Other Related Items, and Subpart B,

Legislation and Related Committee Reports.

Part III.—Administrative, Procedural, and Miscellaneous.

To the extent practicable, pertinent cross references to these

subjects are contained in the other Parts and Subparts. Also

included in this part are Bank Secrecy Act Administrative

Rulings. Bank Secrecy Act Administrative Rulings are issued

by the Department of the Treasury’s Office of the Assistant

Secretary (Enforcement).

Part IV.—Items of General Interest.

This part includes notices of proposed rulemakings, disbarment and suspension lists, and announcements.

The last Bulletin for each month includes a cumulative index

for the matters published during the preceding months. These

monthly indexes are cumulated on a semiannual basis, and are

published in the last Bulletin of each semiannual period.

The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.

May 23, 2022 

Bulletin No. 2022–21

Part III

Credit for Renewable

Electricity Production and

Publication of Inflation

Adjustment Factor and

Reference Price for

Calendar Year 2022

Notice 2022-20

This notice publishes the inflation adjustment factor and reference price for

calendar year 2022 for the renewable electricity production credit under section 45

of the Internal Revenue Code. The 2022

inflation adjustment factor and reference

price are used in determining the availability of the credit and apply to calendar

year 2022 sales of kilowatt hours of electricity produced in the United States or a

possession thereof from qualified energy

resources. For calendar year 2022, the

credit period for refined coal production

and Indian coal production expired.

BACKGROUND

Section 45(a) provides that the renewable electricity production credit for any

tax year is an amount equal to the product of 1.5 cents multiplied by the kilowatt

hours of specified electricity produced

by the taxpayer and sold to an unrelated

person during the tax year. This electricity must be produced from qualified energy resources and at a qualified facility

during the 10-year period beginning on

the date the facility was originally placed

in service.

Section 45(b)(1) provides that the

amount of the credit determined under

section 45(a) is reduced by an amount

which bears the same ratio to the amount

of the credit as (A) the amount by which

the reference price for the calendar year

in which the sale occurs exceeds 8 cents,

bears to (B) 3 cents. Under section 45(b)

(2), the 1.5 cent amount in section 45(a)

and the 8 cent amount in section 45(b)

(1) are each adjusted by multiplying such

amount by the inflation adjustment factor

for the calendar year in which the sale

Bulletin No. 2022–21

occurs. If any amount as increased under

the preceding sentence is not a multiple

of 0.1 cent, the amount is rounded to the

nearest multiple of 0.1 cent. In the case of

electricity produced in open-loop biomass

facilities, landfill gas facilities, trash facilities, qualified hydropower facilities, and

marine and hydrokinetic renewable energy facilities, section 45(b)(4)(A) requires

the amount in effect under section 45(a)

(1) (before rounding to the nearest 0.1

cent) to be reduced by one-half.

Section 45(b)(5) provides that in the

case of any facility using wind to produce

electricity, the amount of the credit determined under section 45(a) (determined after the application of section 45(b)(1), (2),

and (3) and without regard to section 45(b)

(5)) shall be reduced by (A) in the case

of any facility the construction of which

begins after December 31, 2016, and before January 1, 2018, 20 percent, (B) in

the case of any facility the construction of

which begins after December 31, 2017,

and before January 1, 2019, 40 percent,

(C) in the case of any facility the construction of which begins after December

31, 2018, and before January 1, 2020, 60

percent, and (D) in the case of any facility the construction of which begins after

December 31, 2019, and before January 1,

2022, 40 percent.

Section 45(c)(1) defines qualified energy resources as wind, closed-loop biomass, open-loop biomass, geothermal

energy, municipal solid waste, qualified

hydropower production, and marine and

hydrokinetic renewable energy.

Section 45(d)(1) defines a qualified

facility using wind to produce electricity

as any facility owned by the taxpayer that

is originally placed in service after December 31, 1993, and the construction of

which begins before January 1, 2022. See

section 45(e)(7) for rules relating to the

inapplicability of the credit to electricity

sold to utilities under certain contracts.

Section 45(d)(2)(A) defines a qualified

facility using closed-loop biomass to produce electricity as any facility (i) owned

by the taxpayer that is originally placed in

service after December 31, 1992, and the

construction of which begins before January 1, 2022, or (ii) owned by the taxpayer

1095

which before January 1, 2022 is originally placed in service and modified to use

closed-loop biomass to co-fire with coal,

with other biomass, or with both, but only

if the modification is approved under the

Biomass Power for Rural Development

Programs or is part of a pilot project of

the Commodity Credit Corporation as

described in 65 FR 63052. For purposes

of section 45(d)(2)(A)(ii), a facility shall

be treated as modified before January 1,

2022, if the construction of such modification begins before such date. Section 45(d)

(2)(C) provides that in the case of a qualified facility described in section 45(d)(2)

(A)(ii), (i) the 10-year period referred to

in section 45(a) is treated as beginning no

earlier than the date of the enactment of

section 45(d)(2)(C)(i) (October 22, 2004),

and (ii) if the owner of such facility is not

the producer of the electricity, the person

eligible for the credit allowable under

section 45(a) is the lessee or the operator

of such facility. A qualified facility using

closed-loop biomass includes a new unit

placed in service after the date of the enactment of section 45(d)(2)(B) (October 3,

2008) in connection with a qualified facility using closed-loop biomass, but only to

the extent of the increased amount of electricity produced at the facility by reason of

such new unit.

Section 45(d)(3)(A) defines a qualified facility using open-loop biomass to

produce electricity as any facility owned

by the taxpayer which (i) in the case of a

facility using agricultural livestock waste

nutrients, (I) is originally placed in service

after the date of the enactment of section

45(d)(3)(A)(i)(I) (October 22, 2004) and

the construction of which begins before

January 1, 2022, and (II) the nameplate

capacity rating of which is not less than

150 kilowatts, and (ii) in the case of any

other facility, the construction of which

begins before January 1, 2022. In the case

of any facility described in section 45(d)

(3)(A), if the owner of such facility is not

the producer of the electricity, section

45(d)(3)(C) provides that the person eligible for the credit allowable under section

45(a) is the lessee or the operator of such

facility. A qualified facility using openloop biomass includes a new unit placed

May 23, 2022

in service after the date of the enactment

of section 45(d)(3)(B) (October 3, 2008)

in connection with a qualified facility using open-loop biomass, but only to the extent of the increased amount of electricity

produced at the facility by reason of such

new unit.

Section 45(d)(4) defines a qualified

facility using geothermal energy to produce electricity as any facility owned by

the taxpayer that is originally placed in

service after the date of the enactment of

section 45(d)(4) (October 22, 2004) and

the construction of which begins before

January 1, 2022. A qualified facility using

geothermal energy does not include any

property described in section 48(a)(3) the

basis of which is taken into account by the

taxpayer for purposes of determining the

energy credit under section 48.

Section 45(d)(6) defines a qualified

facility using gas derived from the biodegradation of municipal solid waste to

produce electricity as any facility owned

by the taxpayer that is originally placed in

service after the date of the enactment of

section 45(d)(6) (October 22, 2004) and

the construction of which begins before

January 1, 2022.

Section 45(d)(7) defines a qualified

facility (other than a facility described in

section 45(d)(6)) that uses municipal solid

waste to produce electricity as any facility

owned by the taxpayer that is originally

placed in service after the date of the enactment of section 45(d)(7) (October 22,

2004) and the construction of which begins before January 1, 2022. A qualified

facility using municipal solid waste includes a new unit placed in service in connection with a facility placed in service on

or before the date of the enactment of section 45(d)(7), but only to the extent of the

increased amount of electricity produced

at the facility by reason of such new unit.

Section 45(d)(9) defines a qualified

facility producing qualified hydroelectric

production described in section 45(c)(8)

as (i) any facility producing incremental

hydropower production, but only to the

extent of its incremental hydropower production attributable to efficiency improvements or additions to capacity described in

section 45(c)(8)(B) placed in service after

the date of the enactment of section 45(d)

(9) (August 8, 2005) and before January

1, 2022, and (ii) any other facility placed

May 23, 2022

in service after the date of the enactment

of section 45(d)(9) (August 8, 2005) and

the construction of which begins before

January 1, 2022. Section 45(d)(9)(B) provides that, in the case of a qualified facility described in section 45(d)(9)(A), the

10-year period referred to in section 45(a)

shall be treated as beginning on the date

the efficiency improvements or additions

to capacity are placed in service. Section

45(d)(9)(C) provides that for purposes of

section 45(d)(9)(A)(i), an efficiency improvement or addition to capacity shall be

treated as placed in service before January

1, 2022 if the construction of such improvement or addition begins before such

date.

Section 45(d)(11) provides in the case

of a facility producing electricity from

marine and hydrokinetic renewable energy, the term “qualified facility” means any

facility owned by the taxpayer which (A)

has a nameplate capacity rating of at least

150 kilowatts, and (B) is originally placed

in service on or after the date of the enactment of section 45(d)(11) (October 3,

2008) and the construction of which begins before January 1, 2022.

Section 45(e)(2)(A) requires the Secretary to determine and publish in the Federal Register each calendar year the inflation

adjustment factor and the reference price

for such calendar year. The inflation adjustment factor and the reference price for

the 2022 calendar year were published in

the Federal Register at 87 FR 22286 on

April 14, 2022. A Correction notice was

published in the Federal Register at 87 FR

27204 on May 6, 2022.

Section 45(e)(2)(B) defines the inflation adjustment factor for a calendar year

as a fraction the numerator of which is the

GDP implicit price deflator for the preceding calendar year and the denominator

of which is the GDP implicit price deflator for the calendar year 1992. The term

“GDP implicit price deflator” means the

most recent revision of the implicit price

deflator for the gross domestic product as

computed and published by the Department of Commerce before March 15 of

the calendar year.

Section 45(e)(2)(C) provides that the

reference price is the Secretary’s determination of the annual average contract price

per kilowatt hour of electricity generated

from the same qualified energy resource

1096

and sold in the previous year in the United

States. Only contracts entered into after

December 31, 1989 are taken into account.

INFLATION ADJUSTMENT

FACTOR AND REFERENCE PRICE

The inflation adjustment factor for calendar year 2022 for qualified energy resources is 1.7593.

The reference price for calendar year

2022 for facilities producing electricity

from wind (based upon information provided by the Department of Energy) is

4.09 cents per kilowatt hour. The reference

prices for facilities producing electricity

from closed-loop biomass, open-loop biomass, geothermal energy, municipal solid

waste, qualified hydropower production,

and marine and hydrokinetic energy have

not been determined for calendar year

2022.

PHASEOUT CALCULATION

Because the 2022 reference price for

electricity produced from wind (4.09 cents

per kilowatt hour) does not exceed 8 cents

multiplied by the inflation adjustment factor (1.7593), the phaseout of the credit

provided in section 45(b)(1) does not apply to such electricity sold during calendar year 2022. However, refer to section

45(b)(5) for an additional phaseout of the

credit for wind facilities the construction

of which begins after December 31, 2016.

For electricity produced from closed-loop

biomass, open-loop biomass, geothermal

energy, municipal solid waste, qualified

hydropower production, and marine and

hydrokinetic energy, the phaseout of the

credit provided in section 45(b)(1) does

not apply to such electricity sold during

calendar year 2022.

CREDIT AMOUNT BY QUALIFIED

ENERGY RESOURCE AND

FACILITY

As required by section 45(b)(2), the 1.5

cent amount in section 45(a)(1) is adjusted

by multiplying such amount by the inflation adjustment factor for the calendar year

in which the sale occurs. If any amount as

increased under the preceding sentence is

not a multiple of 0.1 cent, such amount

is rounded to the nearest multiple of 0.1

Bulletin No. 2022–21

cent. In the case of electricity produced in

open-loop biomass facilities, landfill gas

facilities, trash facilities, qualified hydropower facilities, and marine and hydrokinetic renewable energy facilities, section

45(b)(4)(A) requires the amount in effect

under section 45(a)(1) (before rounding to

the nearest 0.1 cent) to be reduced by onehalf. Under the calculation required by

section 45(b)(2), the credit for renewable

electricity production for calendar year

2022 under section 45(a) is 2.6 cents per

kilowatt hour on the sale of electricity produced from the qualified energy resources

of wind, closed-loop biomass, and geothermal energy, and 1.3 cents per kilowatt

hour on the sale of electricity produced in

open-loop biomass facilities, landfill gas

facilities, trash facilities, qualified hydropower facilities, and marine and hydrokinetic energy facilities.

DRAFTING AND CONTACT

INFORMATION

The principal author of this notice is

Charles Hyde of the Office of Associate

Chief Counsel (Passthroughs & Special

Industries). For further information regarding this notice contact Mr. Hyde at

(202) 317-6853 (not a toll-free number).

2022 Marginal Production

Rates

Notice 2022-24

This notice announces the applicable

percentage under § 613A of the Internal

Revenue Code to be used in determining

percentage depletion for marginal properties for the 2022 calendar year.

Section 613A(c)(6)(C) defines the term

“applicable percentage” for purposes of

determining percentage depletion for oil

and gas produced from marginal properties. The applicable percentage is the

percentage (not greater than 25 percent)

equal to the sum of 15 percent, plus one

percentage point for each whole dollar

by which $20 exceeds the reference price

(determined under § 45K(d)(2)(C)) for

crude oil for the calendar year preceding

the calendar year in which the taxable year

begins. The reference price determined

under § 45K(d)(2)(C) for the 2021 calendar year is $65.90.

The following table contains the applicable percentages for marginal production

for taxable years beginning in calendar

years 1991 through 2022.

Notice 2022-24

APPLICABLE PERCENTAGE FOR MARGINAL

PRODUCTION

Calendar Year

Applicable Percentage

1991

15 percent

1992

18 percent

1993

19 percent

1994

20 percent

1995

21 percent

1996

20 percent

1997

16 percent

1998

17 percent

1999

24 percent

2000

19 percent

2001

15 percent

2002

15 percent

2003

15 percent

2004

15 percent

2005

15 percent

2006

15 percent

2007

15 percent

2008

15 percent

2009

15 percent

2010

15 percent

2011

15 percent

2012

15 percent

2013

15 percent

Bulletin No. 2022–21

1097

May 23, 2022

Notice 2022-24

APPLICABLE PERCENTAGE FOR MARGINAL

PRODUCTION

Calendar Year

Applicable Percentage

2014

15 percent

2015

15 percent

2016

15 percent

2017

15 percent

2018

15 percent

2019

15 percent

2020

15 percent

2021

15 percent

2022

15 percent

The principal author of this notice

is Elimelech Brander of the Office of

Associate Chief Counsel (Passthroughs

and Special Industries). For further information regarding this notice contact Mr.

Brander at (202) 317-6853 (not a toll-free

number).

26 CFR 1.6012-1: Individuals required to make

returns of income.

(Also Part I, §§ 24, 933, 7527A; 1.933-1.)

Rev. Proc. 2022-22

SECTION 1. PURPOSE

.01 This revenue procedure provides

simplified procedures for certain bona fide

residents of the Commonwealth of Puerto

Rico (Puerto Rico) to claim the child tax

credit under § 24.1 The Department of the

Treasury and the Internal Revenue Service

(IRS) have provided these procedures to

make it easier for certain bona fide residents of Puerto Rico to file taxable year

2021 Federal tax returns to claim the child

tax credit.

.02 Section 2 of this revenue procedure

describes the child tax credit in further detail. Section 3 of this revenue procedure

describes the scope of the procedures

provided in this revenue procedure. Section 4 of this revenue procedure provides

a simplified procedure for filing Form

1

1040-PR, Planilla para la Declaración

de la Contribución Federal sobre el Trabajo por Cuenta Propia, or Form 1040SS, U.S. Self-Employment Tax Return, to

claim the child tax credit. Section 5 of this

revenue procedure provides a simplified

procedure for filing Form 1040, U.S. Individual Income Tax Return (also available

as Formulario 1040(SP), Declaración de

Impuestos de los Estados Unidos Sobre los

Ingresos Personales), or Form 1040-SR,

U.S. Tax Return for Seniors (also available

as Formulario 1040-SR(SP), Declaración

de Impuestos de los Estados Unidos para

Personas de 65 Años de Edad o Más), to

claim the child tax credit.

SECTION 2. BACKGROUND

.01 Overview of 2021 Child Tax Credit. Section 9611 of the American Rescue

Plan Act of 2021 (American Rescue Plan),

Public Law 117-2, 135 Stat. 4, 144-149

(March 11, 2021), added §§ 24(i), 24(j),

and 7527A to the Code. Section 24(i)

modifies the child tax credit rules set forth

in § 24 for any taxable year beginning after December 31, 2020, and before January 1, 2022 (taxable year 2021). Section

7527A provides for advance payments of

the child tax credit and section 24(j) provides that the amount of the child tax credit is generally reduced by these advance

payments. Section 9612(a) of the American Rescue Plan added § 24(k) to the

Code to provide special rules for American Samoa, Guam, the Commonwealth

of the Northern Mariana Islands, Puerto

Rico, and the U.S. Virgin Islands (each, a

U.S. territory), effective for taxable years

beginning after December 31, 2020. 135

Stat. at 150-152.

.02 Credit Allowed. Under § 24(a),

a taxpayer may claim a child tax credit

against the taxpayer’s Federal income tax

(as imposed by chapter 1 of the Code) for

the taxable year with respect to each CTC

qualifying child (as defined in section 2.06

of this revenue procedure) of the taxpayer.

.03 Expanded Credit Eligibility for

Bona Fide Residents of Puerto Rico. Starting in 2021, a bona fide resident of Puerto

Rico with one or more CTC qualifying

children may claim the child tax credit.

See §§ 24(i)(1) and 24(k)(2). Prior to enactment of the American Rescue Plan, §

24(d)(1)(B) required bona fide residents

of Puerto Rico who had no earned income

for Federal income tax purposes to have

at least three CTC qualifying children as

a condition for child tax credit eligibility.

.04 Credit Fully Refundable. The child

tax credit for taxable year 2021 is fully

refundable for a taxpayer if the taxpayer (or spouse, if filing a joint return) is a

bona fide resident of Puerto Rico (within

the meaning of § 937(a)) for such taxable

year. See § 24(i)(1). Full refundability

means that taxpayers can benefit from

the maximum amount of the credit even

Unless otherwise specified, all Code, section, and “§” references are to sections of the U.S. Internal Revenue Code (Code).

May 23, 2022

1098

Bulletin No. 2022–21

if they do not have taxable earned income

or do not owe any Federal tax for taxable

year 2021. Bona fide residents of Puerto

Rico may claim the fully refundable child

tax credit for taxable year 2021 even if

they had no income and paid no U.S. Social Security taxes.

.05 Credit Amounts. Taxpayers claiming the child tax credit for taxable year

2021 may receive up to $3,000 for each

CTC qualifying child who is between the

ages of 6 and 17 as of the end of taxable

year 2021, and $3,600 for each CTC qualifying child who is under the age of 6 as of

the end of taxable year 2021. See § 24(i)

(2) and (3). The child tax credit for taxable

year 2021 begins to be reduced if modified

adjusted gross income (AGI) for purposes

of the child tax credit exceeds $150,000

if filing a joint return or if filing as a surviving spouse (as defined in § 2(a) of the

Code); $112,500 if filing as head of household (as defined in § 2(b)); or $75,000 if

filing as single or married and filing a separate return. See § 24(i)(4).

.06 CTC Qualifying Child. A “CTC

qualifying child” is a qualifying child

of the taxpayer (as defined in § 152(c))

who has not attained the age of 18 at the

close of taxable year 2021. See § 24(i)(2)

(A). No child tax credit is allowed for a

qualifying child unless the social security

number (SSN) of the child, which must

be valid for employment and be issued by

the Social Security Administration before

the due date of the taxpayer’s taxable year

Federal income tax return (including extensions), is provided on the return. See §

24(h)(7). If the taxpayer’s child was a U.S.

citizen when the child received the SSN,

the SSN is valid for employment.

.07 Advance Child Tax Credit Payments for Calendar Year 2021. Section

7527A(a) required the Secretary of the

Treasury or her delegate to establish a program for making periodic advance child

tax credit payments to taxpayers the total

of which, during any calendar year, equals

the “annual advance amount” (as defined

in § 7527A(b)(1)) determined with respect

to that taxpayer for that calendar year. Although residents of Puerto Rico may be

eligible to claim the child tax credit, residents of Puerto Rico were not eligible to

receive advance child tax credit payments.

See § 7527A(e)(4)(A). However, there

may have been circumstances in which

Bulletin No. 2022–21

a resident of Puerto Rico nonetheless received advance child tax credit payments

(for example, if the IRS estimated the

Puerto Rico resident’s child tax credit for

taxable year 2021 based on a Form 1040

or Form 1040-SR that the resident filed for

taxable year 2019 or 2020).

.08 Reconciliation Requirement Regarding Child Tax Credit and Advance

Child Tax Credit Payments. Bona fide

residents of Puerto Rico who received

advance child tax credit payments (described in section 2.07 of this revenue

procedure) during calendar year 2021

must reduce (but not below zero) the

amount of the child tax credit claimed

for taxable year 2021 by the total amount

of those advance child tax credit payments. See § 24(j)(1). If the amount of

the taxpayer’s advance child tax credit

payments received in calendar year 2021

exceeds the taxpayer’s allowable child

tax credit for taxable year 2021, the taxpayer’s Federal income tax imposed for

taxable year 2021 will be increased by

the excess subject to reduction by a “safe

harbor amount.” See § 24(j)(2).

SECTION 3. SCOPE

.01 Overview. This revenue procedure

allows Puerto Rico CTC filers (as defined

in section 4.02 of this revenue procedure)

to provide information to the IRS to claim

the child tax credit through the filing of a

simplified Federal tax return using either

of the following procedures: (1) the procedures set forth in section 4 of this revenue

procedure, which allow Puerto Rico CTC

filers to provide this information through

a simplified Form 1040-PR or Form 1040SS or (2) the procedures set forth in section 5 of this revenue procedure, which allow Puerto Rico CTC filers to provide this

information through a simplified Form

1040 or Form 1040-SR.

.02 Purpose of Simplified Filing Procedure under Section 4. Section 4 of this

revenue procedure provides a simplified

filing procedure that permits Puerto Rico

CTC filers to file a Form 1040-PR or Form

1040-SS to claim the child tax credit. Specifically, Puerto Rico CTC filers who file

a simplified Form 1040-PR or Form 1040SS for taxable year 2021 in accordance

with section 4 of this revenue procedure

do not need to specify their income to

1099

compute the amount of child tax credit

that they are eligible to claim.

.03 Purpose of Simplified Filing Procedure under Section 5. Section 5 of this

revenue procedure provides a simplified

filing procedure that permits Puerto Rico

CTC filers to file a Form 1040 or Form

1040-SR to claim the child tax credit. Specifically, Puerto Rico CTC filers who file

a simplified Form 1040 or Form 1040-SR

for taxable year 2021 in accordance with

section 5 of this revenue procedure do not

need to specify their income to compute

the amount of child tax credit that they are

eligible to claim.

.04 Individuals Who Are Not Puerto

Rico Residents Are Not Eligible. The procedures provided by this revenue procedure apply only to a U.S. citizen or U.S.

resident alien who is a bona fide resident

of Puerto Rico and who is not described in

section 3.05, 3.06, 3.07, or 3.08 of this revenue procedure. The procedures provided

by this revenue procedure do not apply to

a resident of any U.S. territory (as defined

in section 2.01 of this revenue procedure)

other than Puerto Rico, or to a U.S. citizen

or U.S. resident who is not a resident of a

U.S. territory. Residents of a U.S. territory should contact their local territory tax

agency for additional information about

the child tax credit. A U.S. citizen or U.S.

resident who is not a resident of a U.S. territory should refer to Form 1040 or Form

1040-SR, Schedule 8812 (Form 1040),

Credits for Qualifying Children and Other Dependents, and their instructions, to

claim the child tax credit for taxable year

2021. A U.S. citizen or U.S. resident alien

who is not a bona fide resident of Puerto

Rico or a resident of a U.S. territory may

qualify to use the simplified filing procedures set forth in Rev. Proc. 2022-12,

2022-7 I.R.B. 494. See section 4.02(1) and

(6) of this revenue procedure.

.05 Individuals Required to File a

Form 1040-PR, Form 1040-SS, Form

1040, or Form 1040-SR Not Eligible. The

procedures provided by this revenue procedure do not apply to individuals who

are required to file a Form 1040-PR, Form

1040-SS, Form 1040, or Form 1040-SR

for taxable year 2021 (including bona fide

residents of Puerto Rico who are required

to report tax on their self-employment income). See section 4.02(2) and (3) of this

revenue procedure.

May 23, 2022

.06 Individuals With Modified AGI

Above Applicable Income Thresholds

Not Eligible. The procedures provided

by this revenue procedure do not apply to

individuals whose modified AGI for purposes of the child tax credit exceeds the

applicable income threshold for claiming

the maximum child tax credit amount as

described in section 2.05 of this revenue

procedure. That is, the procedures do

not apply to individuals whose modified

AGI exceeds (i) $150,000, if filing a joint

return or filing as a surviving spouse;

(ii) $112,500, if filing as head of household; and (iii) $75,000, if filing as single

or married and filing a separate return. The

amount of income of an individual with

modified AGI at or below their applicable threshold will not impact the amount

of the child tax credit that the individual

is eligible to claim. See section 4.02(4) of

this revenue procedure.

.07 Individuals Who Received Excess

Advance Child Tax Credit Payments Not

Eligible. The procedures provided by this

revenue procedure apply to individuals

who need to file a Federal income tax

return to claim the child tax credit in an

amount greater than zero for taxable year

2021. Individuals who received advance

child tax credit payments during calendar year 2021, the total amount of which

equals or exceeds the individual’s allowable child tax credit for taxable year 2021,

cannot claim the child tax credit in an

amount greater than zero for taxable year

2021. Accordingly, the procedures provided by this revenue procedure do not apply

to such individuals, and they cannot file a

Federal tax return under this revenue procedure. See section 4.02(5) of this revenue

procedure.

.08 Individuals Who Previously Filed

a Form 1040-PR, Form 1040-SS, Form

1040, or Form 1040-SR Not Eligible. The

procedures provided by this revenue procedure do not apply to individuals who

have already filed a paper or electronic

Form 1040-PR, Form 1040-SS, Form

1040, or Form 1040-SR for taxable year

2021. Such individuals do not need to file

any additional forms or otherwise contact

the IRS to claim the child tax credit for

each CTC qualifying child if the child tax

credit was claimed on the previously filed

return for taxable year 2021. See section

4.02(7) of this revenue procedure.

May 23, 2022

SECTION 4. SPECIAL PROCEDURE

FOR PUERTO RICO CTC FILERS

TO FILE FORM 1040-PR OR FORM

1040-SS TO CLAIM THE CHILD

TAX CREDIT

.01 Federal Tax Return Claiming the

Child Tax Credit. Under the simplified

procedure set forth in this section 4, a

simplified return may be filed, on paper or

electronically, for taxable year 2021 on a

Form 1040-PR or Form 1040-SS. A Federal tax return for taxable year 2021 filed

by a Puerto Rico CTC filer under the simplified procedure in this section 4 will result in the Puerto Rico CTC filer claiming

the child tax credit for taxable year 2021.

.02 Definition of Puerto Rico CTC

Filer. For purposes of this revenue procedure, a “Puerto Rico CTC filer” is an

individual-(1) Who is a bona fide resident of Puerto Rico (within the meaning of § 937(a)

for taxable year 2021);

(2) Whose income for taxable year

2021 is completely exempt from taxation

under § 933;

(3) Who is not required to file a Form

1040-PR, Form 1040-SS, Form 1040,

or Form 1040-SR for taxable year 2021,

such as to report tax on self-employment

income;

(4) Whose modified AGI for taxable

year 2021 under § 24(b)(1) is less than or

equal to their applicable income threshold

under § 24(i)(4)(B);

(5) Who is eligible to claim the child

tax credit in an amount greater than zero

for taxable year 2021;

(6) Who is a U.S. citizen or resident

alien (or is treated as a United States resident alien in accordance with an election

under § 6013(g) or (h)); and

(7) Who has not already filed a paper or

electronic Form 1040-PR, Form 1040-SS,

Form 1040, or Form 1040-SR for taxable

year 2021.

.03 Simplified Filing Method.

(1) Overview. In the case of a Puerto

Rico CTC filer, the IRS will process the

filer’s Form 1040-PR or Form 1040-SS

for taxable year 2021 to calculate the

child tax credit if the form is prepared in

the manner required by this section 4.03.

The Form 1040-PR or Form 1040-SS

must include the information described

in this section 4.03 to claim the child tax

1100

credit. The information described in this

section 4.03 generally follows the standard IRS instructions except that a Puerto

Rico CTC filer is not required to report the

filer’s modified AGI on line 1 of Part II. A

Puerto Rico CTC filer may file a Schedule LEP (Form 1040), Request for Change

in Language Preference (also available

as Anexo LEP (Formulario 1040(SP)),

Solicitud para Cambiar la Preferencia

de Idioma), with Form 1040-PR or Form

1040-SS to request a change in language

preference for further communications

from the IRS.

(2) Personal information. A Puerto

Rico CTC filer must enter their name,

mailing address, and SSN or IRS Individual Taxpayer Identification Number

(ITIN), and the name and SSN or ITIN of

their spouse if filing a joint return, at the

top of Form 1040-PR or Form 1040-SS.

(3) Virtual currency. A Puerto Rico

CTC filer must check the appropriate box

indicating whether the filer (either filer if

filing a joint return) received, sold, exchanged, or otherwise disposed of a financial interest in any virtual currency.

(4) Part I, line 1 (filing status). A Puerto Rico CTC filer must select their filing

status for taxable year 2021 on line 1 of

Part I.

(5) Part I, line 2 (CTC qualifying children). A Puerto Rico CTC filer must complete the appropriate lines on line 2 of Part

I regarding each CTC qualifying child for

taxable year 2021 who has an SSN that is

valid for employment. For each individual claimed as a CTC qualifying child,

the Puerto Rico CTC filer must provide

the name, SSN, and relationship to the

individual.

(6) Part I, lines 3 through 8. A Puerto

Rico CTC filer must leave lines 3 through

8 of Part I blank.

(7) Part I, line 9 (child tax credit entry). A Puerto Rico CTC filer must complete line 9 of Part I. To determine this

amount, the Puerto Rico CTC filer must:

(a) Compute the sum of the following:

(i) $3,600 multiplied by the number of

CTC qualifying children of the filer listed

on line 2 of Part I who were under age 6 at

the end of taxable year 2021; and

(ii) $3,000 multiplied by the number of

CTC qualifying children of the filer listed

on line 2 of Part I who were under age 18

at the end of taxable year 2021 but who

Bulletin No. 2022–21

were not under age 6 at the end of taxable

year 2021;

(b) Subtract from that sum the aggregate amount of advance child tax credit

payments the filer (and the filer’s spouse

if filing jointly) received for 2021, if any,

which may be obtained from the filer’s

Letter 6419 or the filer’s IRS online account at https://www.irs.gov/account and,

as applicable, Letter 6419 of the filer’s

spouse or the IRS online account of the

filer’s spouse; and

(c) Enter that result on line 9 of Part I.

(8) Part I, lines 10 through 11b. A

Puerto Rico CTC filer must leave lines 10

through 11b of Part I blank.

(9) Part I, lines 12 through 14a. A

Puerto Rico CTC filer must enter on lines

12 through 14a of Part I the amount entered on line 9 of Part I.

(10) Part I, line 14a checkbox (split

direct deposit indicator). A Puerto Rico

CTC filer may not check the box on line

14a of Part I.

(11) Part I, lines 14b through 14d (direct deposit information). A Puerto Rico

CTC filer may request the direct deposit

of their taxable year 2021 tax refund into

an account at a bank or other financial institution by entering the information on

lines 14b through 14d of Part I. The Puerto

Rico CTC filer must not request that their

taxable year 2021 tax refund be deposited into an account that is not in the name

of that filer (for example, a Puerto Rico

CTC filer must not request a direct deposit

of their taxable year 2021 tax refund into

their tax return preparer’s account).

(12) Part I, lines 15 and 16. A Puerto

Rico CTC filer must leave lines 15 and 16

of Part I blank.

(13) Part II, line 1 (modified adjusted

gross income). A Puerto Rico CTC filer

must leave line 1 of Part II blank.

(14) Part II, line 3 (refundable child

tax credit). A Puerto Rico CTC filer must

enter on line 3 of Part II the amount entered on line 9 of Part I.

(15) Parts III through VI. A Puerto Rico

CTC filer must leave Parts III through VI

blank.

(16) Signature. A Puerto Rico CTC

filer must sign the return under penalties

of perjury, including the filer’s identity

protection personal identification number

(that is, the filer’s IP PIN), if applicable,

as part of the filer’s signature. In addition,

Bulletin No. 2022–21

the Puerto Rico CTC filer may enter the

identifying information of any third-party

designee, if applicable, at the bottom of

page 1 of Form 1040-PR or Form 1040SS. A Puerto Rico CTC filer who has been

assigned an IP PIN, but has misplaced

it, may retrieve the IP PIN at https://

www.irs.gov/identity-theft-fraud-scams/

retrieve-your-ip-pin.

.04 Simplified Return Is a Federal Tax

Return. A simplified return completed by a

Puerto Rico CTC filer in accordance with

the procedure described in section 4.03 of

this revenue procedure is a taxable year

2021 Federal tax return for all purposes,

whether filed on paper or electronically.

SECTION 5. SPECIAL PROCEDURE

FOR PUERTO RICO CTC FILERS

TO FILE FORM 1040 OR FORM

1040-SR TO CLAIM THE CHILD

TAX CREDIT

.01 Federal Tax Return Claiming the

Child Tax Credit. Under the simplified

procedure set forth in this section 5, a

simplified return may be filed, on paper or

electronically, for taxable year 2021 on a

Form 1040 or Form 1040-SR. A Federal

tax return for taxable year 2021 filed by

a Puerto Rico CTC filer under the simplified procedure in this section 5 will result

in the Puerto Rico CTC filer claiming the

child tax credit for taxable year 2021.

.02 Definition of Puerto Rico CTC Filer. For purposes of this section 5, a “Puerto

Rico CTC filer” has the same definition as

in section 4.02 of this revenue procedure.

.03 Simplified Filing Method.

(1) Overview. In the case of a Puerto

Rico CTC filer, the IRS will process the

filer’s Form 1040 or Form 1040-SR for

taxable year 2021 to calculate the child

tax credit for taxable year 2021 if the form

is prepared in the manner required by this

section 5.03. The Form 1040 or Form

1040-SR must include the information

described in this section 5.03 to claim the

child tax credit. The information described

in this section 5.03 generally follows the

standard IRS instructions for filers whose

income is completely exempt from taxation under § 933 except that a Puerto Rico

CTC filer is not required to report the filer’s modified AGI on lines 1 through 3

of Schedule 8812 (Form 1040). A Puerto

Rico CTC filer may file a Schedule LEP

1101

(Form 1040) with Form 1040 or Form

1040-SR to request a change in language

preference for further communications

from the IRS.

(2) Required general information on

Form 1040 or Form 1040-SR.

(a) Filing status. A Puerto Rico CTC

filer must select their filing status for taxable year 2021 at the top of Form 1040 or

Form 1040-SR.

(b) Personal information. A Puerto

Rico CTC filer must enter their name,

mailing address, and SSN or ITIN, and

the name and SSN or ITIN of their spouse

if filing a joint return, on the appropriate

lines of Form 1040 or Form 1040-SR.

(3) Virtual currency. A Puerto Rico

CTC filer must check the appropriate box

on Form 1040 or Form 1040-SR indicating whether the filer (either filer if filing a

joint return) received, sold, exchanged, or

otherwise disposed of a financial interest

in any virtual currency.

(4) Individuals who could be claimed

as dependents by other individuals. A

Puerto Rico CTC filer must check the applicable boxes in the top line of the “Standard Deduction” section of the Form 1040

or Form 1040-SR for each individual who

can be claimed as a dependent by any other individual for taxable year 2021.

(5) General information regarding

dependents.

(a) In general. A Puerto Rico CTC filer must complete the appropriate lines in

the “Dependents” section of Form 1040 or

Form 1040-SR regarding each CTC qualifying child for taxable year 2021 who has

an SSN that is valid for employment. For

each individual claimed as a CTC qualifying child, the Puerto Rico CTC filer must

provide the name, SSN, and relationship

to the individual.

(b) CTC qualifying children. A Puerto

Rico CTC filer must check the child tax

credit box in Column (4) of the “Dependents” section for each CTC qualifying

child for taxable year 2021 who has an

SSN that is valid for employment.

(6) Limited information to provide

in Form 1040 or Form 1040-SR, lines 1

through 38. A Puerto Rico CTC filer must

leave blank lines 1 through 38 of Form

1040 or Form 1040-SR, except as provided in this section 5.03(6):

(a) Line 28 (child tax credit entry).

A Puerto Rico CTC filer must enter

May 23, 2022

the amount of the filer’s child tax credit for taxable year 2021 on line 28. The

credit amount may be computed using

Schedule 8812 (Form 1040), available at

https://www.irs.gov/Schedule8812 (also

available as Anexo 8812 (Formulario

1040(SP)), Créditos por Hijos Calificados

y Otros Dependientes, at https://www.irs.

gov/Schedule8812SP), and information

from the filer’s Letter 6419 or the filer’s

IRS online account at https://www.irs.gov/

account and, as applicable, Letter 6419 of

the filer’s spouse or the IRS online account of the filer’s spouse. The filer claiming the child tax credit must (i) complete

Schedule 8812 pursuant to the instructions

described in section 5.03(8) through (22)

of this revenue procedure, and (ii) attach

the Schedule 8812 to the filer’s Form 1040

or Form 1040-SR.

(b) Lines 32 through 35a. A Puerto Rico

CTC filer must enter on lines 32 through

35a the amount entered on line 28.

(c) Line 35a checkbox (split direct deposit indicator). A Puerto Rico CTC filer

may not check the box on line 35a.

(d) Lines 35b through 35d (direct deposit information). A Puerto Rico CTC

filer may request the direct deposit of their

taxable year 2021 tax refund into an account at a bank or other financial institution by entering the information on lines

35b through 35d. The Puerto Rico CTC

filer must not request that their taxable

year 2021 tax refund be deposited into an

account that is not in the name of that filer (for example, a Puerto Rico CTC filer

must not request a direct deposit of their

taxable year 2021 tax refund into their tax

return preparer’s account).

(7) Signature. A Puerto Rico CTC filer

must sign the Form 1040 or Form 1040-SR

under penalties of perjury, including the

filer’s identity protection personal identification number (that is, the filer’s IP PIN),

if applicable, as part of the filer’s signature.

In addition, the Puerto Rico CTC filer may

enter the identifying information of any

third-party designee, if applicable, at the

bottom of page 2 of Form 1040 or Form

1040-SR. A Puerto Rico CTC filer who

has been assigned an IP PIN, but has misplaced it, may retrieve the IP PIN at https://

www.irs.gov/identity-theft-fraud-scams/

retrieve-your-ip-pin.

May 23, 2022

(8) Schedule 8812. A Puerto Rico CTC

filer must enter the filer’s name and SSN

and the name of their spouse if filing a

joint return at the top of Schedule 8812.

(9) Schedule 8812, Part I-A, lines 1

through 3 (modified AGI). A Puerto Rico

CTC filer must leave lines 1 through 3 of

Schedule 8812 (Form 1040) blank.

(10) Schedule 8812, Part I-A, lines

4a-c (CTC qualifying children). A Puerto

Rico CTC filer must complete lines 4a, 4b

and 4c.

(11) Schedule 8812, Part I-A, line 5

(child tax credit). A Puerto Rico CTC filer

must complete line 5. In completing line

5, the Puerto Rico CTC filer must provide

the sum of the following:

(a) $3,600 multiplied by the number

entered on line 4b; and

(b) $3,000 multiplied by the number

entered on line 4c.

(12) Schedule 8812, Part I-A, line 6

(credit for other dependents) and line 7.

A Puerto Rico CTC filer must leave lines

6 and 7 blank.

(13) Schedule 8812, Part I-A, line 8. A

Puerto Rico CTC filer must enter on line 8

the amount entered on line 5.

(14) Schedule 8812, Part I-A, line 9: A

Puerto Rico CTC filer must enter on line 9

$200,000 (or $400,000 if married and filing a joint return).

(15) Schedule 8812, Part I-A, lines

10 and 11. A Puerto Rico CTC filer must

leave lines 10 and 11 blank.

(16) Schedule 8812, Part I-A, line 12.

A Puerto Rico CTC filer must enter on line

12 the amount entered on line 5.

(17) Schedule 8812, Part I-A, line 13.

A Puerto Rico CTC filer must check only

the box on line 13B.

(18) Schedule 8812, Part I-B, line 14a.

A Puerto Rico CTC filer must leave line

14a blank.

(19) Schedule 8812, Part I-B, line 14b.

A Puerto Rico CTC filer must enter on line

14b the amount entered on line 5.

(20) Schedule 8812, Part I-B, lines 14c

and 14d. A Puerto Rico CTC filer must

leave lines 14c and 14d blank.

(21) Schedule 8812, Part I-B, line 14e.

A Puerto Rico CTC filer must enter on line

14e the amount entered on line 5.

(22) Schedule 8812, Part I-B, line

14f (advance child tax credit payments

1102

received). A Puerto Rico CTC filer must

enter on line 14f the aggregate amount

of advance child tax credit payments the

filer (and the filer’s spouse if filing jointly) received for 2021, which may be obtained from the filer’s Letter 6419 or the

filer’s IRS online account at https://www.

irs.gov/account and, as applicable, Letter

6419 of the filer’s spouse or the IRS online account of the filer’s spouse.

(23) Schedule 8812, Part I-B, line 14g

(allowable child tax credit). A Puerto Rico

CTC filer must complete line 14g. To determine this amount, the Puerto Rico CTC

filer must:

(a) Subtract the amount entered on line

14f from the amount entered on line 14e

(that is, the filer must subtract the aggregate amount of advance child tax credit

payments that the filer received in 2021,

if any, from the amount of child tax credit

for which the filer is eligible); and

(b) Enter that result (that is, the allowable child tax credit) on line 14g.

(24) Schedule 8812, Part I-B, line 14h.

A Puerto Rico CTC filer must leave line

14h blank.

(25) Schedule 8812, Part I-B, line 14i

(refundable child tax credit). A Puerto

Rico CTC filer must enter on line 14i the

amount entered on line 14g.

(26) Schedule 8812, Parts I-C through

III, lines 15a through 50. A Puerto Rico

CTC filer must leave lines 15a through 50

blank.

.04 Simplified Return Is a Federal Tax

Return. A simplified return completed by a

Puerto Rico CTC filer in accordance with

the procedure described in section 5.03 of

this revenue procedure is a taxable year

2021 Federal tax return for all purposes,

whether filed on paper or electronically.

SECTION 6. APPLICABILITY

DATE

This revenue procedure applies to Federal tax returns filed after May 6, 2022.

SECTION 7. ADDITIONAL

INFORMATION

.01 Child Tax Credit and Advance

Child Tax Credit Payments. Individuals can obtain additional information

Bulletin No. 2022–21

regarding advance child tax credit payments and the child tax credit for taxable year 2021 through the IRS child tax

credit and advance child tax credit payment webpage at https://www.irs.gov/

childtaxcredit2021.

.02 Completing a Federal Tax Return. Bona fide residents of Puerto Rico

can obtain additional information regarding how to complete their Federal

Bulletin No. 2022–21

tax returns at https://www.irs.gov/Form1040PR (in Spanish); https://www.irs.

gov/Form1040SS; https://www.irs.gov/

Form1040SP (in Spanish); https://www.

irs.gov/Form1040; and https://www.irs.

gov/Form1040SR.

.03 Obtaining Tax Information in Other Languages. Taxpayers may obtain basic tax information in other languages at

https://www.irs.gov/MyLanguage.

1103

SECTION 8. DRAFTING

INFORMATION

The principal author of this revenue procedure is the Office of the Associate Chief Counsel (Income Tax &

Accounting).

May 23, 2022

Part IV

Notice of Proposed

Rulemaking

Use of Actuarial Tables in

Valuing Annuities, Interests

for Life or a Term of

Years, and Remainder or

Reversionary Interests

REG-122770-18

AGENCY: Internal Revenue Service

(IRS), Treasury.

ACTION: Notice of proposed rulemaking.

SUMMARY: This document contains

proposed regulations relating to the use of

actuarial tables in valuing annuities, interests for life or a term of years, and remainder or reversionary interests. These regulations will affect the valuation of inter

vivos and testamentary transfers of interests dependent on one or more measuring

lives. These regulations are necessary because applicable law requires the actuarial tables to be updated to reflect the most

recent mortality experience available.

DATES: Written or electronic comments

and requests for a public hearing must be

received by July 5, 2022. Requests for a

public hearing must be submitted as prescribed in the “Comments and Requests

for a Public Hearing” section.

ADDRESSES: Commenters are strongly

encouraged to submit public comments

electronically. Submit electronic submissions via the Federal eRulemaking Portal

at www.regulations.gov (indicate IRS and

REG-122770-18) by following the online

instructions for submitting comments.

Once submitted to the Federal eRulemaking Portal, comments cannot be edited

or withdrawn. The IRS expects to have

limited personnel available to process

public comments that are submitted on

paper through mail. Until further notice,

any comments submitted on paper will

be considered to the extent practicable.

May 23, 2022

The Department of the Treasury (Treasury Department) and the IRS will publish for public availability any comment

submitted electronically, and to the extent

practicable on paper, to its public docket.

Send paper submissions to: CC:PA:LPD:PR (REG-122770-18), room 5203,

Internal Revenue Service, PO Box 7604,

Ben Franklin Station, Washington, D.C.

20044.

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, Mayer R. Samuels of the Office of

Associate Chief Counsel (Passthroughs

and Special Industries), (202) 317-6859;

concerning the submission of comments

or requests for a public hearing, Regina

L. Johnson, (202) 317-5177 (not toll-free

numbers).

SUPPLEMENTARY INFORMATION:

Background

This document contains amendments

to the Income Tax Regulations (26 CFR

part 1), the Estate Tax Regulations (26

CFR part 20), and the Gift Tax Regulations (26 CFR part 25) to reflect revisions

to certain tables used for the valuation of

interests in property under section 7520 of

the Internal Revenue Code of 1986 (Code)

to reflect the most recent mortality experience available.

In General

Section 7520, effective for transfers

for which the valuation date is on or after May 1, 1989, generally provides that

the value of an annuity, an interest for

life or a term of years, and a remainder or

reversionary interest is to be determined

under tables published by the Secretary of

the Treasury or her delegate (Secretary)

by using an interest rate (rounded to the

nearest two-tenths of one percent) equal

to 120 percent of the Federal midterm rate

in effect under section 1274(d)(1) for the

month in which the valuation date falls. If

a charitable contribution is allowable for

any part of the property transferred, the

taxpayer may elect under section 7520(a)

1104

to use such Federal midterm rate for either

of the two months preceding the month

in which the valuation date falls. Section

7520(c)(2), as it existed on May 1, 1989,

directed the Secretary to issue tables not

later than December 31, 1989, utilizing

the then most recent mortality experience.

Thereafter, the Secretary is directed to revise these tables not less frequently than

once each 10 years to take into account the

most recent mortality experience available

as of the time of the revision.

These proposed regulations contain

Table 2010CM that is based on data compiled from the 2010 census. For transfers

for which the valuation date is on or after

the applicability date of the Treasury decision adopting these regulations as final

regulations (published as the final rule

in the Federal Register), the appropriate

actuarial factors based on Table 2010CM

may be computed by taxpayers. However,

for the convenience of taxpayers, actuarial

factors may be found on IRS websites and

publications referenced in these proposed

regulations. These proposed regulations

also make conforming amendments to

various sections of the existing regulations to provide the references to these

revised actuarial factors. The updated actuarial tables will be available beginning

May 5, 2022, at no charge, electronically via the IRS website at https://www.irs.

gov/retirement-plans/actuarial-tables.

IRS Publications 1457 “Actuarial Valuations Version 4A” (forthcoming 2022),

1458 “Actuarial Valuations Version 4B”

(forthcoming 2022), and 1459 “Actuarial Valuations Version 4C” (forthcoming

2022) will provide additional references

and explanations to the actuarial tables

that are published on the IRS website.

These publications will be available after the applicability date of the Treasury

decision adopting these regulations as final regulations. Table S (Single Life Remainder Factors) and Table U(1) (Unitrust

Single Life Remainder Factors), which

are referenced and explained in Publications 1457 and 1458, respectively, will no

longer be published in these regulations.

Furthermore, the current Table S and Table U(1), effective for transfers for which

the valuation date is after April 30, 2009,

Bulletin No. 2022–21

and before the applicability date of the

Treasury decision adopting these regulations as final regulations is published in

the Federal Register, will be moved to

sections containing actuarial material for

historical reference. Table B, Table D, Tables F(0.2) through F(20.0), Table J, and

Table K, which are not based on mortality

experience, are not changed.

The following chart summarizes the

applicable interest rates and the citations

to textual materials and tables for the various periods covered under the current

regulations. For purposes of this chart,

“DPAD” is the day prior to the applicability date of the Treasury decision adopting

these regulations as final regulations and

“AD” is the applicability date of the Treasury decision adopting these regulations

as final regulations.

Cross Reference to Regulation Sections

Valuation

Period

Interest

Rate

Regulation

Section

Table

Section 642:

Valuation, in general

before 01/01/52

01/01/52 - 12/31/70

01/01/71 - 11/30/83

12/01/83 - 04/30/89

05/01/89 - 04/30/99

05/01/99 - 04/30/09

05/01/09 – DPAD

on or after AD

4%

3.5%

6%

10%

7520

7520

7520

7520

1.642(c)-6

1.642(c)-6A(a)

1.642(c)-6A(b)

1.642(c)-6A(c)

1.642(c)-6A(d)

1.642(c)-6A(e)

1.642(c)-6A(f)

1.642(c)-6A(g)

1.642(c)-6(e)

Table G

Table S (5/1/89 - 4/30/99)

Table S (5/1/99 - 4/30/09)

Table S (5/1/09- DPAD)

Table S (on or after AD)

Section 664:

Valuation, in general

1.664-4

before 01/01/52

4%

1.664-4A(a)

01/01/52 - 12/31/70

3.5%

1.664-4A(b)

01/01/71 - 11/30/83

6%

1.664-4A(c)

12/01/83 - 04/30/89

10%

1.664-4A(d)

05/01/89 - 04/30/99

7520

1.664-4A(e)

05/01/99 - 04/30/09

7520

1.664-4A(f)

05/01/09 - DPAD

7520

1.664-4A(g)

on or after AD

7520

1.664-4(e)

Table E, Table F(1)

Table U(1) (5/1/89 - 4/30/99)

Table U(1) (5/1/99 - 4/30/09)

Table U(1) (5/1/09-DPAD)

Table U(1) (on or after AD), Table D, and Table F

See Pub. 1458, ver. 4A

Section 2031:

Valuation, in general

20.2031-7

before 01/01/52

4%

20.2031-7A(a)

01/01/52 - 12/31/70

3.5%

20.2031-7A(b)

01/01/71 - 11/30/83

6%

20.2031-7A(c)

12/01/83 - 04/30/89

10%

20.2031-7A(d)

05/01/89 - 04/30/99

7520

20.2031-7A(e)

05/01/99 - 04/30/09

7520

20.2031-7A(f)

05/01/09 - DPAD

7520

20.2031-7A(g)

on or after AD

7520

20.2031-7(d)

Table A, Table B, Table LN

Table S (5/1/89 - 4/30/99)

Table 80CNSMT

Table S (5/1/99 - 4/30/09)

Table 90CM

Table S (5/1/09 - DPAD)

Table 2000CM

Table S (on or after AD)

Table 2010CM

Table B, Table J, Table K

see Pub. 1457, ver. 4A

Bulletin No. 2022–21

1105

May 23, 2022

Section 2512:

Valuation, in general

before 01/01/52

01/01/52 - 12/31/70

01/01/71 - 11/30/83

12/01/83 - 04/30/89

05/01/89 - 04/30/99

05/01/99 - 04/30/09

05/01/09 - DPAD

on or after AD

4%

3.5%

6%

10%

7520

7520

7520

7520

Applicability Dates

These regulations are proposed to be

applicable in the case of annuities, interests for life or a term of years, and remainder or reversionary interests that are

valued as of a date on or after the first day

of the month following the date on which

the Treasury decision adopting these regulations as final regulations is published in

the Federal Register.

Transitional Rules

The regulations provide certain rules

to facilitate the transition to the new actuarial tables. For gift tax purposes, if the

date of a transfer is on or after January 1,

2021, and before the applicability date of

the Treasury decision adopting these regulations as final regulations, the donor may

choose to determine the value of the gift

(and/or any applicable charitable deduction) under tables based on either Table

2000CM or Table 2010CM. Similarly,

for estate tax purposes, if the decedent

dies on or after January 1, 2021, and before the applicability date of the Treasury

decision adopting these regulations as final regulations, the value of any interest

(and/or any applicable charitable deduction) may be determined in the discretion

of the decedent’s executor under tables

based on either Table 2000CM or Table

2010CM, provided that the decedent’s executor must use the same mortality table

to value all interests in the same property.

However, the section 7520 interest rate to

be utilized is the appropriate rate for the

month in which the valuation date occurs,

subject to the following special rule for

certain charitable transfers. Specifically,

in accordance with this transitional rule

and the rules contained in §§1.7520‑2(a)

(2), 20.7520‑2(a)(2), and 25.7520-2(a)

May 23, 2022

25.2512-5

25.2512-5A(a)

25.2512-5A(b)

25.2512-5A(c)

25.2512-5A(d)

25.2512-5A(e)

25.2512-5A(f)

25.2512-5A(g)

25.2512-5(d)

(2), in cases involving a charitable deduction, if the valuation date occurs on or

after January 1, 2021, but before the applicability date of the Treasury decision

adopting these regulations as final regulations, and the executor or donor elects

under section 7520(a) to use the section

7520 interest rate for a month that is prior

to January 1, 2021, then the mortality experience contained in Table 2000CM must

be used. If the executor or donor uses the

section 7520 interest rate for a month that

is on or after January 1, 2021, but before

the applicability date of the Treasury decision adopting these regulations as final

regulations, then the tables based on either

Table 2000CM or Table 2010CM may be

used. However, if the valuation date occurs on or after the applicability date of

the Treasury decision adopting these regulations as final regulations, the executor or

donor must use the new mortality experience contained in Table 2010CM even if

the use of a prior month’s interest rate is

elected under section 7520(a).

In addition, the regulations no longer

will provide that the estate of a decedent

who was under a mental disability that

prevented a change in the disposition of

the decedent’s property may elect to value

the property interest included in the gross

estate either under the mortality table and

interest rate in effect at the time the decedent first became subject to the mental disability or under the mortality table and interest rate in effect on the decedent’s date

of death. The taxpayer decedent, during

life and before the advent of the mental

disability, would not know, beforehand,

what the market interest rate would be at

his or her future date of death, but can reasonably be expected to have understood

that the property interest would be valued

at the then-applicable market rate, whatever it might be. Becoming incapacitated

1106

should not alter the effect of that understanding. Therefore, a special rule permitting an election to use the interest rate

in effect at the time the decedent first became subject to the mental disability is not

necessary. The same is true with respect

to mortality rates. Accordingly, estates of

decedents with a mental disability who die

after the applicability date of the Treasury

decision adopting these regulations as final regulations will be required to use the

mortality table and interest rate in effect

on the decedent’s date of death or the alternate valuation date under section 2032,

if elected.

Special Analyses

These proposed regulations are not

subject to review under section 6(b) of

Executive Order 12866 pursuant to the

Memorandum of Agreement (April 11,

2018) between the Treasury Department

and the Office of Management and Budget (OMB) regarding review of tax regulations. Therefore, a regulatory impact

assessment is not required.

Pursuant to the Regulatory Flexibility Act (5 U.S.C. chapter 6), it is hereby

certified that this proposed rule will not

have a significant economic impact on a

substantial number of small entities. This

document proposes to implement statutorily required periodic updates to actuarial

tables used in valuing various interests in

property that are affected by a person’s

life expectancy. The updates would not

impose any direct compliance requirements on any entities other than the time

to read and understand the proposed updates. Notwithstanding this certification,

the Treasury Department and the IRS invite comment on the impact this proposed

rule would have on small entities.

Bulletin No. 2022–21

The Treasury Department and the IRS

have assessed that the proposed regulations do not establish a new collection

of information nor modify an existing

collection that requires the approval of

the Office of Management and Budget

under the Paperwork Reduction Act (44

U.S.C. chapter 35). The Treasury Department and the IRS seek comments on this

assessment.

Pursuant to section 7805(f), this notice

of proposed rulemaking has been submitted to the Chief Counsel for the Office of

Advocacy of the Small Business Administration for comment on its impact on small

business.

Statement of Availability of IRS

Documents

IRS Revenue Procedures, Revenue

Rulings, Notices, and other guidance cited in this preamble are published in the

Internal Revenue Bulletin (or Cumulative

Bulletin) and are available from the Superintendent of Documents, U.S. Government Publishing Office, Washington, DC

20402, or by visiting the IRS website at

https://www.irs.gov.

Comments and Requests for Public

Hearing

The Treasury Department and the IRS

request comments on all aspects of the

proposed rules.

Before these proposed amendments to

the regulations are adopted as final regulations, consideration will be given to

comments that are submitted timely to the

IRS as prescribed in the preamble under

the ADDRESSES section. Any electronic comments submitted, and to the extent

practicable any paper comments submitted, will be made available at www.regulations.gov or upon request.

A public hearing will be scheduled if

requested in writing by any person who

timely submits electronic or written comments. Requests for a public hearing also

are encouraged to be made electronically.

If a public hearing is scheduled, notice of

the date and time for the public hearing

will be published in the Federal Register.

Announcement 2020-4, 2020-17 I.R.B 1,

provides that, until further notice, public

hearings conducted by the IRS will be

Bulletin No. 2022–21

held telephonically. Any telephonic hearing will be made accessible to people with

disabilities.

Drafting Information

The principal author of these regulations is Mayer R. Samuels, Office of the

Associate Chief Counsel (Passthroughs

and Special Industries), IRS. However,

other personnel from the IRS and Treasury Department participated in their

development.

List of Subjects

26 CFR Part 1

Income taxes, Reporting and recordkeeping requirements.

26 CFR Part 20

Estate taxes, Reporting and recordkeeping requirements.

26 CFR Part 25

Gift taxes, Reporting and recordkeeping requirements.

Proposed Amendments to the

Regulations

Accordingly, 26 CFR parts 1, 20, and

25 are proposed to be amended as follows:

PART 1--INCOME TAXES

Paragraph 1. The authority citation for

part 1 continues to read in part as follows:

Authority: 26 U.S.C. 7805 * * *

Par. 2. Section 1.170A-12 is amended

by:

1. Revising paragraphs (b)(2) and (3).

2. Adding paragraph (b)(4).

3. Revising paragraphs (e)(2) and (f)

The revisions and addition read as

follows:

§1.170A-12 Valuation of a remainder

interest in real property for contributions

made after July 31, 1969.

*****

(b) * * *

1107

(2) Computation of depreciation factor.

If the valuation of the remainder interest

in depreciable property is dependent upon

the continuation of one life, a special factor must be used. The factor determined

under this paragraph (b)(2) is carried to

the fifth decimal place. The special factor

is to be computed on the basis of the interest rate and life contingency rates from the

mortality table prescribed in §20.2031-7

of this chapter (or for periods before [applicability date of the Treasury decision

adopting these regulations as final regulations], §20.2031‑7A of this chapter)

and on the assumption that the property

depreciates on a straight-line basis over

its estimated useful life. For transfers for

which the valuation date is on or after [applicability date of the Treasury decision

adopting these regulations as final regulations], special factors for determining

the present value of a remainder interest

following one life may be computed by

taxpayers based on Table 2010CM, found

in §20.2031-7(d)(7)(ii) of this chapter,

and using the formula provided in this

paragraph (b)(2). Alternatively, taxpayers

may use the actuarial factors provided in

Table C to determine the special factor

for the remainder interest following one

life. Table C will be available beginning

May 5, 2022, at no charge, electronically via the IRS website at https://www.irs.

gov/retirement-plans/actuarial-tables (or

a corresponding URL as may be updated

from time to time). IRS Publication 1459,

“Actuarial Valuations Version 4C” (2022),

references and explains Table C and provides examples describing the computation. This publication will be available

after [date of publication of the final rule

in the Federal Register]. For transfers

for which the valuation date is on or after May 1, 2009, and before [applicability date of the Treasury decision adopting

these regulations as final regulations],

special factors for determining the present

value of a remainder interest following

one life and an example describing the

computation are contained in the previous version of Table C, which is currently

available, at no charge, electronically via

the IRS website at https://www.irs.gov/

retirement-plans/actuarial-tables.

IRS

Publication 1459, “Actuarial Valuations

Version 3C” (2009), references and explains this version of Table C and provides

May 23, 2022

examples describing the computation.

See, however, §1.7520-3(b) (relating to

exceptions to the use of prescribed tables

under certain circumstances). Otherwise,

in the case of the valuation of a remainder interest following one life, the special

factor may be obtained through use of the

formula in Figure 1 to this paragraph (b)

(2). The prescribed mortality table is Table

2010CM as set forth in §20.2031‑7(d)(7)

(ii) of this chapter, or for periods before

[applicability date of the Treasury decision adopting these regulations as final

regulations], the appropriate table found

in §20.2031-7A of this chapter. Table

2010CM is referenced by IRS Publication

1459, “Actuarial Values Version 4C.” The

mortality tables prescribed for periods

before [applicability date of the Treasury

decision adopting these regulations as final regulations] are referenced by prior

versions of IRS Publication 1459.

Figure 1 to paragraph (b)(2) – Formula for determining single life remainder interest in depreciable property

(3) Sample factors from actuarial Table S. The present value of a remainder interest

(3) Sample factors from actuarial Ta- chapter to derive factors from the appro- IRS website at https://www.irs.gov/retireble S. The present value of a remainder priate mortality table. For the convenience ment‑plans/actuarial-tables. For purposes

dependent on the termination of one life is determined by using the formula in §20.2031interest dependent on the termination of of taxpayers, actuarial factors have been of the example in paragraph (b)(4) of this

one life is determined by using the for- computed by IRS and appear in Table S. section, the following factors from Table

of this chapter

to derive

factorsTable

fromS the

table.

The complete

can appropriate

be found on themortality

mula 7(d)(2)(ii)(B)

in §20.2031-7(d)(2)(ii)(B)

of this

S will be

used: For the

taxpayers, actuarial factors have been computed by IRS and appear in Table S.

Tableconvenience

1 to paragraphof

(b)(3)

The complete Table S can be found

theTable

IRS Swebsite

at Table 2010CM

Factorson

from

- Based on

Interest at 3.2 Percent

purposes of the example

in paragraph

Age https://www.irs.gov/retirement-plans/actuarial-tables.

Annuity

LifeFor

Estate

Remainder

62

14.6131

0.46762

(b)(4) of this section, the following factors from Table S will be used:

0.53238

of 28 years ($10,000)). The portion of the propercomputed under the formula described in paragraph

(4) Example. After [applicability date of the

Table

1 adopting

to paragraph

(b)(3)

ty considered to be nondepreciable is $40,000 (the (b)(2) of this section and is 0.19392. (This factor,

Treasury

decision

these regulations

as final

value of the land at the time of the gift ($30,000)

0.19392, may instead be determined by using Table

regulations], A, who is 62, donates to Y University a

remainder interest in a personal residence, consisting plus the expected value of the house at the end of 28 C, which can be found on the IRS website at https://

Factors

Table SAt- the

Based

years ($10,000)).

time ofon

theTable

gift, the 2010CM

interwww.irs.gov/retirement-plans/actuarial-tables, and

of a house and land, subject to a reserved life

estate from

est rateInterest

prescribed under

section

7520 is 3.2 percent.

following the method provided in IRS Publication

in A. At the time of the gift, the land has a value

at 3.2

Percent

Based on an interest rate of 3.2 percent, the remain1459, “Actuarial Values Version 4C”.) The value

of $30,000 and the house has a value of $100,000

Age

Annuity

Life Estate

Remainder

with an estimated useful life of 28 years, at the end der factor for $1.00 prescribed in §20.2031-7(d) and of the depreciable remainder interest is $17,452.80

62period the value of the house is expected

14.6131found in Table S for a person

0.46762

0.53238

age 62 is 0.53238.

(0.19392

times $90,000). Therefore, the value of the

of which

The value of the nondepreciable remainder interest

remainder interest is $38,748.00 ($21,295.20 plus

to be $10,000. The portion of the property consid$17,452.80).

ered to be depreciable is $90,000 (the value of the is $21,295.20 (0.53238 times $40,000). The factor

Example.

After

dateinterest

of the

Treasuryproperty

decision

for the remainder

in depreciable

is *adopting

house ($100,000) (4)

less its

expected value

at the [applicability

end

* * * * these

regulations as final regulations], A, who is 62, donates to Y University a remainder interest in a

May 23, 2022

1108

Bulletin No. 2022–21

personal residence, consisting of a house and land, subject to a reserved life estate in A. At the

(e) * * *

(2) In the case of the valuation of a remainder interest following two lives, the

special factor may be obtained through use

of the formula in Figure 2 to this paragraph

(e)(2). The prescribed mortality table is Table

2010CM as set forth in §20.2031-7(d)(7)(ii)

of this chapter, or for periods before [applicability date of the Treasury decision adopting these regulations as final regulations],

the appropriate table found in §20.2031-7A

of this chapter. Table 2010CM is referenced

by IRS Publication 1459, “Actuarial Values

Version 4C.” The mortality tables prescribed

for periods before [applicability date of the

Treasury decision adopting these regulations as final regulations] are referenced by

prior versions of IRS Publication 1459.

Figure 2 to paragraph (e)(2)(i) – Formula for determining two-life remainder interest in depreciable property

adding “paragraph (h)(4)(vii) of this sec- §20.2031-7A(d)(6) of this chapter. Accordingly, the

* * * ** ** * * *

value of the remainder interest, and thus the amount

(f) Applicability date. This section ap- tion (Example 7)” in its place.

eligible for an income tax deduction under section

7. In newly designated paragraph (h) 170(f), is $55,996 ($200,000 × 0.27998).

plies to contributions made after July 31,

(f)

Applicability

date.

This

section

applies

to

contributions

made

after July 31, 1969,

1969, except that paragraphs (b)(2), (3), (4)(xi) by removing “example (10)” and * * * * *

and (4) and (e)(2) of this section apply to adding “paragraph (h)(4)(x) of this section

dates. Except as otherexcept that

paragraphs

and (4)10)”

andin(e)(2)

of this section apply (j)

toApplicability

all contributions

its place.

all contributions

made

on or after (b)(2),

[applica-(3),(Example

wise provided in paragraph (g)(4)(ii) and

8. By revising paragraph (j).

bility date of the Treasury decision adoptparagraph (i) of this section, this section

revisions

read as

follows: adopting these

ing these

regulations

as final

regulations]. date The

made

on or after

[applicability

of the

Treasury

decision

as final made on or

appliesregulations

only to contributions

Par. 3. Section 1.170A-14 is amended:

after December 18, 1980. Paragraph (h)

1. regulations].

In paragraph (h)(4) by designating §1.170A-14 Qualified conservation

(4)(ii) of this section applies on and after

Example 1 through 12 as paragraphs (h) contributions.

[applicability date of the Treasury deci(4)(i) through (xii), respectively.

sion adopting these regulations as final

Par.newly

3. Section

1.170A-14

2. By revising

designated

para- * *is*amended:

**

regulations].

(h) * * *

graph (h)(4)(ii).

Par. 4. Section 1.642(c)-6 is amended

3. In newly1.designated

paragraphs

(h)by designating

(4) * * * Example 1 through 12 asby:

In paragraph

(h)(4)

paragraphs (h)(4)(i)

(ii) Example 2. In 1984 B, who is 62, donates a

(4)(iii) and (iv) by removing “Example 2”

1. Revising paragraph (d).

remainder

interest in Greenacre to a qualifying orand adding

“paragraph

(h)(4)(ii) of this

through

(xii), respectively.

2. Redesignating paragraph (e) as paraganization for conservation purposes. Greenacre is

section (Example 2)” in its place.

a tract of 200 acres of undeveloped woodland that is graph (g) of §1.642(c)-6A.

4. In newly designated paragraph (h) valued at $200,000 at its highest and best use. Under

3. Adding new paragraph (e) and revis2. By

revising

paragraph (h)(4)(ii).

(4)(v) by removing

“Example

4”newly

and add-designated

§1.170A-12(b), the value of a remainder interest in

ing paragraph (f).

ing “paragraph (h)(4)(iv) of this section real property following one life is determined under

The revisions and addition read as

§25.2512-5 of (h)(4)(iii)

this chapter (Gift

Regulations).

3.itsInplace.

newly designated paragraphs

andTax(iv)

by removing “Example 2” and

(Example 4)” in

(See §25.2512‑5A of this chapter with respect to the follows:

5. In newly designated paragraph (h)(4) valuation of annuities, interests for life or a term of

(vi) by

removing

“Example 2”

and adding

years,

and remainder

or reversionary

transadding

“paragraph

(h)(4)(ii)

of this

section

(Example

2)” ininterests

its place.

§1.642(c)-6 Valuation of a remainder

“paragraph (h)(2)(ii) of this section (Ex- ferred before [applicability date of the Treasury deci- interest in property transferred to a

sion adopting these regulations as final regulations].)

ample 2)” in its place.

pooled4”income

fund.

4.

In

newly

designated

paragraph

(h)(4)(v) by removing “Example

and adding

6. In newly designated paragraph (h) For transfers occurring after November 30, 1983, and

before May 1, 1989, the single life remainder fac(4)(viii) by removing “Example 7” and tors, valued at 10 percent, can be found in Table A of * * * * *

“paragraph (h)(4)(iv) of this section (Example 4)” in its place.

Bulletin No.

1109

5. 2022–21

In newly designated paragraph (h)(4)(vi)

by removing “Example 2” and addingMay 23, 2022

(d) Valuation. The present value of

the remainder interest in property transferred to a pooled income fund on or after

[applicability date of the Treasury decision adopting these regulations as final

regulations], is determined under paragraph (e) of this section. The present value

of the remainder interest in property transferred to a pooled income fund for which

the valuation date is before [applicability

date of the Treasury decision adopting

these regulations as final regulations] is

determined under the following sections:

Table 6 to paragraph (d)

Valuation Dates

After

12-31-51

12-31-70

11-30-83

04-30-89

04-30-99

04-30-09

Applicable Regulations

Before

01-01-52

01-01-71

12-01-83

05-01-89

05-01-99

05-01-09

AD

1.642(c)-6A(a)

1.642(c)-6A(b)

1.642(c)-6A(c)

1.642(c)-6A(d)

1.642(c)-6A(e)

1.642(c)-6A(f)

1.642(c)-6A(g)

AD = [applicability date of the Treasury decision adopting these regulations as final regulations].

(e) Present value of the remainder interest in the case of transfers to pooled

income funds for which the valuation

date is on or after [applicability date

of the Treasury decision adopting these

regulations as final regulations]--(1) In

general. In the case of transfers to pooled

income funds for which the valuation

date is on or after [applicability date of

the Treasury decision adopting these regulations as final regulations], the present

value of a remainder interest is determined under this section. See, however,

§1.7520-3(b) (relating to exceptions to

the use of prescribed tables under certain

circumstances). The present value of a

remainder interest that is dependent on

the termination of the life of one individual is computed by using the formula in

§20.2031-7(d)(2)(ii)(B) of this chapter

to derive factors from the appropriate

mortality table. For the convenience of

taxpayers, actuarial factors have been

computed by IRS and appear in Table S.

Table S will be available beginning May

5, 2022, at no charge, electronically via

the IRS website at https://www.irs.gov/

retirement-plans/actuarial-tables (or a

corresponding URL as may be updated from time to time). Table S is referenced and explained by IRS Publication 1457 “Actuarial Valuations Version

4A,” which will be available after [date

of publication of the final rule in the

Federal Register]. For purposes of the

May 23, 2022

computations under this section, the age

of an individual is the age at the individual’s nearest birthday.

(2) Transitional rule for valuation of

transfers to pooled income funds. For purposes of section 170, 2055, 2106, 2522, or

2624, in the case of transfers to a pooled

income fund for which the valuation date

is on or after January 1, 2021, and before

[applicability date of the Treasury decision

adopting these regulations as final regulations], the present value of the remainder

interest under this section is determined

by using the section 7520 interest rate for

the month in which the valuation date occurs (see §§1.7520-1(b) and 1.7520-2(a)

(2)) and the appropriate actuarial factors

derived from the selected mortality table,

either Table 2010CM in § 20.2031-7(d)

(7)(ii) of this chapter or Table 2000CM

in §20.2031-7A(g)(4) of this chapter, at

the option of the donor or the decedent’s

executor, as the case may be. For the convenience of taxpayers, actuarial factors

based on Table 2010CM appear in the

proposed version of Table S, and actuarial

factors based on Table 2000CM appear in

the current version of Table S, which will

be available beginning May 5, 2022, at no

charge, electronically via the IRS website

at https://www.irs.gov/retirement-plans/

actuarial-tables (or a corresponding URL

as may be updated from time to time). The

donor or decedent’s executor must consistently use the same mortality basis with

1110

respect to each interest (income, remainder, partial, etc.) in the same property, and

with respect to all transfers occurring on

the valuation date. For example, gift and

income tax charitable deductions with

respect to the same transfer must be determined based on factors with the same

mortality basis, and all assets includible

in the gross estate and/or estate tax deductions claimed must be valued based on

factors with the same mortality basis.

(3) Present value of a remainder interest. The present value of a remainder interest in property transferred to a pooled

income fund is computed on the basis of-(i) Life contingencies determined from

the values of lx that are set forth in Table

2010CM in §20.2031-7(d)(7)(ii) of this

chapter (see §20.2031-7A of this chapter

for certain prior periods); and

(ii) Discount at a rate of interest, compounded annually, equal to the highest

yearly rate of return of the pooled income

fund for the three taxable years immediately preceding its taxable year in which

the transfer of property to the fund is

made. For purposes of this paragraph

(e), the yearly rate of return of a pooled

income fund is determined as provided

in paragraph (c) of this section unless the

highest rate of return is deemed to be the

rate described in paragraph (e)(4) of this

section for funds in existence less than 3

taxable years. For purposes of this paragraph (e)(3)(ii), the first taxable year of a

Bulletin No. 2022–21

pooled income fund is considered a taxable year even though the taxable year

consists of less than 12 months. However, appropriate adjustments must be made

to annualize the rate of return earned by

the fund for that period. Where it appears

from the facts and circumstances that the

highest yearly rate of return of the fund for

the three taxable years immediately preceding the taxable year in which the transfer of property is made has been purposely

manipulated to be substantially less than

the rate of return that otherwise would be

reasonably anticipated with the purpose of

obtaining an excessive charitable deduction, that rate of return may not be used.

In that case, the highest yearly rate of return of the fund is determined by treating

the fund as a pooled income fund that has

been in existence for less than three preceding taxable years.

(4) Pooled income funds in existence

less than three taxable years. If a pooled

income fund has been in existence less than

three taxable years immediately preceding

the taxable year in which the transfer is

made to the fund and the transfer to the

fund is made on or after May 1, 1989, the

highest rate of return is deemed to be the

interest rate (rounded to the nearest twotenths of one percent) that is one percent

less than the highest annual average of the

monthly section 7520 rates for the three

calendar years immediately preceding the

calendar year in which the transfer to the

pooled income fund is made. The deemed

rate of return for transfers to new pooled

income funds is recomputed each calendar year using the monthly section 7520

rates for the three year period immediately

preceding the calendar year in which each

transfer to the fund is made until the fund

has been in existence for three taxable

years and can compute its highest rate of

return for the three taxable years immediately preceding the taxable year in which

the transfer of property to the fund is made

in accordance with the rules set forth in

the first sentence of paragraph (e)(3)(ii) of

this section.

(5) Computation of value of remainder

interest--(i) Factor. The factor that is used

in determining the present value of a remainder interest that is dependent on the

termination of the life of one individual

is the factor obtained through use of the

formula in §20.2031-7(d)(2)(ii)(B) of this

chapter to derive factors from the appropriate mortality table. For the convenience

of taxpayers, actuarial factors have been

computed by IRS and appear in Table S.

Table S will be available beginning May

5, 2022, at no charge, electronically via

the IRS website at https://www.irs.gov/

retirement-plans/actuarial-tables. Table S

is referenced and explained in IRS Publication 1457 “Actuarial Valuations Version

4A,” which will be available after [date of

publication of the final rule in the Federal

Register]. In using the section of Table S

for the interest rate equal to the appropriate yearly rate of return, the appropriate

remainder factor is opposite the number

that corresponds to the age of the individual upon whose life the value of the remainder interest is based (See §1.642(c)6A for certain prior periods). The tables

referenced by IRS Publication 1457 “Actuarial Valuations Version 4A” include

factors for yearly rates of return from 0.2

to 20 percent, inclusive, in increments of

two-tenths of one percent. For other situations, see paragraph (b) of this section.

If the yearly rate of return is a percentage

that is between the yearly rates of return

for which factors are provided by Table S,

an exact method of obtaining the applicable factors (such as through software using the actual rate of return and the actuarial formulas provided in §20.2031-7(d)(2)

(ii)(B) of this chapter) or a linear interpolation must be used, provided whichever

method used is applied consistently. The

present value of the remainder interest is

determined by multiplying the fair market

value of the property on the valuation date

by the appropriate remainder factor.

(ii) Sample factors from actuarial Table S. For purposes of the example in paragraph (e)(5)(iii) of this section, the following factors from Table S will be used:

Table 7 to paragraph (e)(5)(ii)

Age

55

Age

55

Factors from Table S - Based on Table 2010CM

Interest at 5.4 Percent

Annuity

Life Estate

13.2515

0.71558

Interest at 5.6 Percent

Annuity

Life Estate

12.9710

0.72637

(iii) Example of interpolation. After [applicability date of the Treasury decision adopting these regulations as final regulations], A, whose age is 54 years

and 8 months, transfers $100,000 to a pooled income

Bulletin No. 2022–21

fund, and retains a life income interest in the property. The highest yearly rate of return earned by the

fund for its 3 preceding taxable years is 5.43 percent.

In Table S, the remainder factor opposite 55 years

1111

Remainder

0.28442

Remainder

0.27363

under 5.4 percent is 0.28442 and under 5.6 percent is

0.27363. The present value of the remainder interest

is $28,280, computed as illustrated in Figure 1 to this

paragraph (e)(5)(iii).

May 23, 2022

Figure 1 to paragraph (e)(5)(iii) – Illustration of interpolation method

(6) Actuarial tables. In the case of transfers for which the valuation date is on or after

Par. 5. The undesignated center head(g) Present value of the remainder in(6) Actuarial tables. In the case of

[applicability

date

of the Treasury

decision

adopting

these§1.642(c)-6A

regulations as

final

the to pooled

immediately

preceding

terest

in regulations],

the case of transfers

transfers

for which the

valuation

date is ing

income funds for which the valuation date

on or after [applicability date of the Trea- is revised to read as follows:

IncomeonFund

Tables

is onlife

or after

May

1, 2009,

sury present

decision value

adopting

regulations

of these

a remainder

interestPooled

dependent

the Actuarial

termination

of one

in the

case

of a and before [apas final regulations], the present value of a Applicable Before [Applicability Date of plicability date of the Treasury decision

remainder interest dependent on the termi- the Treasury Decision Adopting These adopting these regulations as final regulatransfer to a pooled income fund is determined by using the formula in §20.2031-7(d)(2)(ii)(B)

tions]--(1) In general. In the case of transnation of one life in the case of a transfer to Regulations as Final Regulations]

Par. 6. Section 1.642(c)-6A is amended fers to pooled income funds for which the

a pooled income fund is determined by usofformula

this chapter

to derive factors from

the convenience

of May 1, 2009,

by: the appropriate mortality table. For

valuation

date is on or after

ing the

in §20.2031-7(d)(2)(ii)(B)

1. Revising the section heading.

and before [applicability date of the Treaof this chapter to derive factors from the

2. In

newly redesignated

paragraph

(g):in Table

sury decision

adopting

appropriate

mortality

table. For

the convetaxpayers,

actuarial

factors

have been

computed

by IRS and

appear

S. Table

S willthese

be regulations

i. The heading and paragraphs (g)(1) as final regulations], the present value of

nience of taxpayers, actuarial factors have

(5) and electronically

(g)(6) introductory

a remainder

is determined under

been available

computed by

IRS and appear

in 2022,

Ta- through

beginning

May 5,

at no charge,

via text

the IRS

website interest

at

ble S. Table S will be available beginning are revised.

this section. See, however, §1.7520‑3(b)

ii. Paragraph (g)(7) is added.

May 5, 2022, at no charge, electronically

(relating to exceptions to the use of prehttps://www.irs.gov/retirement-plans/actuarial-tables.

Table Sread

is referenced

explained

in circumstancThe revisions and addition

as scribedand

via the

IRS website at https://www.irs.gov/

tables

under certain

retirement-plans/actuarial-tables. Table S follows:

es). The present value of a remainder inIRS Publication

1457

"Actuarial

available

after [date

is referenced

and explained

in IRS

Publi- Valuations Version 4A,” which will be

terest

that is dependent

on of

the termination

cation 1457 “Actuarial Valuations Version §1.642(c)-6A Valuation of charitable

of the life of one individual is computed

for which the

4A,” publication

which will be of

available

afterrule

[dateinoftheremainder

by the use of Table S in paragraph (g)(6)

the final

Federal interests

Register].

publication of the final rule in the Federal valuation date is before [applicability

of this section. For purposes of the comdate of the Treasury decision adopting

Register].

putations under this section, the age of an

(f) Applicability date. This section applies on and after [applicability

date of the

(f) Applicability date. This section ap- these regulations as final regulations].

individual is the age at the individual’s

plies on and after [applicability date of the

nearest birthday.

Treasury

decision

these *regulations

as final regulations].

****

Treasury

decision

adoptingadopting

these regula(2) Transitional rules for valuation of

tions as final regulations].

transfers to pooled income funds. (i) For

Par. 5. The undesignated center heading immediately preceding §1.642(c)-6A is revised

May 23, 2022

to read as follows:

1112

Bulletin No. 2022–21

purposes of section 2055, 2106, or 2624, if

on May 1, 2009, the decedent was under a

mental disability so that the disposition of

the property could not be changed, and the

decedent died on or after May 1, 2009, but

before [applicability date of the Treasury

decision adopting these regulations as final regulations] without having regained

the ability to dispose of the decedent’s

property, or if the decedent died within 90

days of the date that the decedent first regained that ability on or after May 1, 2009,

but before [applicability date of the Treasury decision adopting these regulations

as final regulations], the present value of

a remainder interest is determined as if the

valuation date with respect to the decedent’s gross estate is either before May 1,

2009, or after April 30, 2009, at the option

of the decedent’s executor.

(ii) For purposes of section 170, 2055,

2106, 2522, or 2624, in the case of transfers to a pooled income fund for which

the valuation date is on or after May 1,

2009, and before July 1, 2009, the present

value of the remainder interest under this

section is determined by using the section

7520 interest rate for the month in which

the valuation date occurs (see §§1.75201(b) and 1.7520-2(a)(2)) and the appropriate actuarial tables under either paragraph

(f)(6) or (g)(6) of this section, at the option

of the donor or the decedent’s executor, as

the case may be.

(iii) For purposes of paragraphs (g)(2)

(i) and (ii) of this section, where the donor

or decedent’s executor is given the option

to use the appropriate actuarial tables under either paragraph (f)(6) or (g)(6) of this

section, the donor or decedent’s executor

must consistently use the same mortality

basis with respect to each interest (income, remainder, partial, etc.) in the same

property, and with respect to all transfers

occurring on the valuation date. For example, gift and income tax charitable deductions with respect to the same transfer

must be determined based on factors with

the same mortality basis, and all assets includible in the gross estate and/or estate

tax deductions claimed must be valued

based on factors with the same mortality

basis.

(3) Present value of a remainder interest. The present value of a remainder interest in property transferred to a pooled

income fund is computed on the basis of --

Bulletin No. 2022–21

(i) Life contingencies determined from

the values of lx that are set forth in Table

2000CM in §20.2031-7A(g)(4) of this

chapter; and

(ii) Discount at a rate of interest, compounded annually, equal to the highest

yearly rate of return of the pooled income

fund for the three taxable years immediately preceding its taxable year in which

the transfer of property to the fund is

made. The provisions of §1.642(c)-6(c)

apply for determining the yearly rate of

return. However, where the taxable year

is less than 12 months, the provisions of

§1.642(c)-6(e)(3)(ii) apply for the determining the yearly rate of return.

(4) Pooled income funds in existence

less than three taxable years. The provisions of §1.642(c)-6(e)(4) apply for determining the highest yearly rate of return

when the pooled income fund has been in

existence less than three taxable years.

(5) Computation of value of remainder

interest. The factor that is used in determining the present value of a remainder

interest that is dependent on the termination of the life of one individual is the factor from Table S in paragraph (g)(6) of this

section under the appropriate yearly rate

of return opposite the number that corresponds to the age of the individual upon

whose life the value of the remainder interest is based. Table S in paragraph (g)(6)

of this section includes factors for yearly rates of return from 0.2 to 14 percent,

inclusive, in increments of two-tenths of

one percent. Actuarial factors that do not

appear in paragraph (g)(6) of this section may be computed directly by using

the formula in §20.2031-7(d)(2)(ii)(B)

of this chapter to derive factors from the

appropriate mortality table. For the convenience of taxpayers, actuarial factors

have been computed by IRS and appear in

Table S that is referenced and explained

by IRS Publication 1457, “Actuarial Valuations Version 3A” (2009). The table is

available at no charge, electronically via

the IRS website at https://www.irs.gov/

retirement-plans/actuarial-tables (or a

corresponding URL as may be updated

from time to time). For other situations,

see §1.642(c)-6(b). If the yearly rate of

return is a percentage that is between the

yearly rates of return for which factors are

provided by Table S, an exact method of

obtaining the applicable factors (such as

1113

through software using the actual rate of

return and actuarial formulas provided in

§20.2031-7(d)(2)(ii)(B) of this chapter) or

a linear interpolation must be used, provided whichever method used is applied

consistently. The present value of the remainder interest is determined by multiplying the fair market value of the property on the valuation date by the appropriate

remainder factor. For an example of a

computation of the present value of a remainder interest requiring a linear interpolation adjustment, see §1.642(c)-6(e)(5).

(6) Actuarial tables. In the case of

transfers for which the valuation date is on

or after May 1, 2009, and before [applicability date of the Treasury decision adopting these regulations as final regulations],

and without regard to the headings in the

tables in this paragraph (g)(6) that do not

contain this termination date for the applicability of the tables, the present value of a

remainder interest dependent on the termination of one life in the case of a transfer

to a pooled income fund is determined by

using the following tables:

*****

(7) Applicability dates. Paragraphs (g)

(1) through (6) of this section apply on and

after May 1, 2009, and before [applicability date of the Treasury decision adopting

these regulations as final regulations].

Par. 7. Section 1.664-2 is amended by

revising paragraphs (c) and (e) as follows:

§1.664-2 Charitable remainder annuity

trust.

*****

(c) Calculation of the fair market value

of the remainder interest of a charitable

remainder annuity trust. For purposes of

sections 170, 2055, 2106, and 2522, the

fair market value of the remainder interest of a charitable remainder annuity trust

(as described in this section) is the net fair

market value (as of the appropriate valuation date) of the property placed in trust

less the present value of the annuity. For

purposes of this section, valuation date

means, in general, the date on which the

property is transferred to the trust by the

donor regardless of when the trust is created. In the case of transfers to a charitable remainder annuity trust for which the

valuation date is after April 30, 1999, if an

election is made under section 7520 and

May 23, 2022

§1.7520-2(b) to compute the present value of the charitable interest by using the

interest rate component for either of the 2

months preceding the month in which the

transfer is made, the month so elected is

the valuation date for purposes of determining the interest rate and mortality tables. For purposes of section 2055 or 2106,

the valuation date is the date of death unless the alternate valuation date is elected

in accordance with section 2032 in which

event, and within the limitations set forth

in section 2032 and the regulations in this

part under section 2032, the valuation date

is the alternate valuation date. If the decedent’s estate elects the alternate valuation

date under section 2032 and also elects,

under section 7520 and §1.7520-2(b), to

use the interest rate component for one of

the 2 months preceding the alternate valuation date, the month so elected is the valuation date for purposes of determining

the interest rate and mortality tables. The

present value of an annuity is computed

under §20.2031-7(d) of this chapter for

transfers for which the valuation date is on

or after [applicability date of the Treasury

decision adopting these regulations as final regulations], or under §20.2031-7A(a)

through (g) of this chapter, whichever is

applicable, for transfers for which the valuation date is before [applicability date of

the Treasury decision adopting these regulations as final regulations]. See, however, §1.7520‑3(b) (relating to exceptions to

the use of prescribed tables under certain

circumstances).

*****

(e) Applicability date. Paragraph (c) of

this section applies on and after [applicability date of the Treasury decision adopting these regulations as final regulations].

Par. 8. Section 1.664-4 is amended by:

1. Revising paragraphs (a)(1) and (d).

2. In paragraph (e):

i. Redesignating the paragraph heading as the heading for §1.664‑4A(g)

and paragraphs (e)(1), (2), (5), and (7)

as §1.664‑4A(g)(1), (2), (5), and (6),

respectively.

ii. Adding a new paragraph heading

and new paragraphs (e)(1), (2), and (5).

iii. Revising the heading for paragraph

(e)(6).

iv. Redesignating the text of paragraph

(e)(6) as paragraph (e)(6)(iii).

v. Adding paragraphs (e)(6)(i) and (ii).

vi. Revising the introductory text of

newly redesignated paragraph (e)(6)(iii),

preceding Table D.

vii. Adding a new paragraph (e)(7).

3. Revising paragraph (f).

The additions and revisions read as

follows:

§1.664-4 Calculation of the fair market

value of the remainder interest in a

charitable remainder unitrust.

(a) * * *

(1) Life contingencies determined as to

each life involved, from the values of lx set

forth in Table 2010CM in §20.2031-7(d)

(7)(ii) of this chapter in the case of transfers for which the valuation date is on or

after [applicability date of the Treasury decision adopting these regulations as final

regulations]; or from Table 2000CM contained in §20.2031‑7A(g)(4) of this chapter in the case of transfers for which the

valuation date is on or after May 1, 2009,

and before [applicability date of the Treasury decision adopting these regulations

as final regulations]. See §20.2031‑7A(a)

through (f) of this chapter, whichever is

applicable, for transfers for which the valuation date is before May 1, 2009;

*****

(d) Valuation. The fair market value of a remainder interest in a charitable remainder unitrust (as described in

§1.664-3) for transfers for which the valuation date is on or after [applicability

date of the Treasury decision adopting

these regulations as final regulations], is

its present value determined under paragraph (e) of this section. The fair market

value of a remainder interest in a charitable remainder unitrust (as described in

§1.664-3) for transfers for which the valuation date is before [applicability date

of the Treasury decision adopting these

regulations as final regulations], is its

present value determined under the following sections:

Table 1 to paragraph (d)

Valuation Dates

After

12-31-51

12-31-70

11-30-83

04-30-89

04-30-99

04-30-09

Applicable Regulations

Before

01-01-52

01-01-71

12-01-83

05-01-89

05-01-99

05-01-09

AD

1.664-4A(a)

1.664-4A(b)

1.664-4A(c)

1.664-4A(d)

1.664-4A(e)

1.664-4A(f)

1.664-4A(g)

AD = [applicability date of the Treasury decision adopting these regulations as final regulations].

(e) Valuation of charitable remainder

unitrusts having certain payout sequences for transfers for which the valuation

date is on or after [applicability date of

May 23, 2022

the Treasury decision adopting these

regulations as final regulations]--(1) In

general. Except as otherwise provided in

paragraph (e)(2) of this section, in the case

1114

of transfers for which the valuation date is

on or after [applicability date of the Treasury decision adopting these regulations

as final regulations], the present value

Bulletin No. 2022–21

of a remainder interest is determined under paragraphs (e)(3) through (7) of this

section, provided that, in a short taxable

year, the trustee shall prorate the unitrust

amount as provided in §1.664‑3(a)(1)(v).

See, however, §1.7520-3(b) (relating to

exceptions to the use of the prescribed tables under certain circumstances).

(2) Transitional rule for valuation of

charitable remainder unitrusts. For purposes of section 170, 2055, 2106, 2522,

or 2624, in the case of transfers to a

charitable remainder unitrust for which

the valuation date is on or after January

1, 2021, and before [applicability date of

the Treasury decision adopting these regulations as final regulations], the present

value of a remainder interest based on one

or more measuring lives is determined under this section by using the section 7520

interest rate for the month in which the

valuation date occurs (see §§1.7520-1(b)

and 1.7520-2(a)(2)) and the appropriate

actuarial factors derived from the selected mortality table, either Table 2010CM

in §20.2031-7(d)(7)(ii) of this chapter or

Table 2000CM in §20.2031-7A(g)(4) of

this chapter, at the option of the donor or

the decedent’s executor, as the case may

be. For the convenience of taxpayers, actuarial factors based on Table 2010CM

appear in the proposed version of Table

U(1), and actuarial factors based on Table

2000CM appear in the current version of

Table U(1), which will be available beginning May 5, 2022, at no charge, electronically via the IRS website at https://www.

irs.gov/retirement-plans/actuarial-tables

(or a corresponding URL as may be updated from time to time). The donor or

Bulletin No. 2022–21

decedent’s executor must consistently use

the same mortality basis with respect to

each interest (income, remainder, partial,

etc.) in the same property, and with respect

to all transfers occurring on the valuation

date. For example, gift and income tax

charitable deductions with respect to the

same transfer must be determined based

on factors with the same mortality basis,

and all assets includible in the gross estate

and/or estate tax deductions claimed must

be valued based on factors with the same

mortality basis.

*****

(5) Period is the life of one individual--(i) Factor. If the period described in

§1.664-3(a)(5) is the life of one individual, the factor that is used in determining

the present value of the remainder interest

for transfers for which the valuation date

is on or after [insert the applicability date

of the Treasury decision adopting these

regulations as final regulations] is the

factor obtained through the use of the formula in Figure 1 to this paragraph (e)(5)

(i). The prescribed mortality table is Table 2010CM as set forth in §20.2031‑7(d)

(7)(ii) of this chapter, or for periods before [applicability date of the Treasury

decision adopting these regulations as

final regulations], the appropriate table

found in §20.2031-7A of this chapter. Table 2010CM is referenced by IRS Publication 1458, “Actuarial Values Version

4B.” The mortality tables prescribed for

periods before [applicability date of the

Treasury decision adopting these regulations as final regulations] are referenced

by prior versions of IRS Publication 1458.

Alternatively, the remainder factors have

1115

been determined for the convenience of

taxpayers and appear in Table U(1) under

the appropriate adjusted payout rate. Table

U(1) will be available beginning May 5,

2022, at no charge, electronically via the

IRS website at https://www.irs.gov/retirement-plans/actuarial-tables (or a corresponding URL as may be updated from

time to time). Table U(1) is referenced and

explained by IRS Publication 1458 “Actuarial Valuations Version 4B,” which will

be available after [date of publication of

the final rule in the Federal Register]. For

purposes of the computations described in

this paragraph (e)(5), the age of an individual is the age of that individual at the

individual’s nearest birthday. If the adjusted payout rate is an amount that is between

adjusted payout rates for which factors are

provided in the appropriate table, an exact

method of obtaining the applicable factors

(such as through software using the actual adjusted payout rate and the actuarial

formula in this paragraph (e)(5)) or a linear interpolation must be used, provided

whichever method used is applied consistently. The present value of the remainder

interest is determined by multiplying the

net fair market value (as of the valuation

date as determined in §1.664‑4(e)(4)) of

the property placed in trust by the factor

determined under this paragraph (e)(5). If

the adjusted payout rate is from 0.2 to 20.0

percent, inclusive, taxpayers may see the

actuarial tables referenced and explained

by IRS Publication 1458 “Actuarial Valuations Version 4B”. Alternatively, the

Commissioner may supply a factor upon

a request for a ruling. See paragraph (b)

of this section.

May 23, 2022

explained by IRS Publication 1458 "Actuarial Valuations Version 4B". Alternatively, the

Commissioner may supply a factor upon a request for a ruling. See paragraph (b) of this section.

Figure 1 to paragraph (e)(5)(i) – Formula for determining unitrust remainder factors

Figure 1 to paragraph (e)(5)(i) – Formula for determining unitrust remainder factors

(ii) Sample factors from actuarial Table U(1). For purposes of the example in paragraph

(ii) Sample factors from actuarial Table U(1). For purposes of the example in

paragraph (e)(5)(iii) of this section, the

following factors from Table U(1) and

Table F(3.2) (see paragraph (e)(6)(ii) of

this section) will be used:

(e)(5)(iii) of this section, the following factors from Table U(1) and Table F(3.2) (see paragraph

Table

2 to paragraph

(e)(6)(ii)

of this (e)(5)(ii)

section) will be used:

Table 2 to paragraph (e)(5)(ii) Factors from Table U(1) - Based on Table 2010CM

Adjusted Payout Rate

Factors

on Table 2010CM

Age

4.8% from Table U(1) - Based

5.0%

5.2%

77

0.61491

0.60343

0.59223

Factors from Table F(3.2)

Factors for Computing Adjusted Payout Rates for Unitrusts

Interest at 3.2 Percent

# of Months from Annual Valuation to First Payout

Adjustment Factors for Payments at End of Period

At Least

But Less Than

Annual

Semiannual

6

7

0.984374

0.976683

(iii) Example of interpolation. After [applicability date of the Treasury decision adopting these regulations as final regulations], A, whose age is 76 years

and 11 months, transfers $100,000 to a charitable remainder unitrust on January 1st. The trust instrument

requires that the trust pay to A semiannually (on June

May 23, 2022

30 and December 31) 5 percent of the fair market

value of the trust assets as of January 1st during A’s

life. The section 7520 rate for January is 3.2 percent.

Under Table F(3.2), the appropriate adjustment factor is 0.976683 for semiannual payments payable

at the end of the semiannual period. The adjusted

1116

payout rate is 4.8834% (5% × 0.976683). Based on

interpolating between the remainder factors in Table

U(1), the present value of the remainder interest is

$61,012, computed as illustrated in Figure 2 to this

paragraph (e)(5)(iii).

Bulletin No. 2022–21

Figure 2 to paragraph (e)(5)(iii) – Illustration of unitrust interpolation method

(6) Actuarial

Table

D and

F (0.2)

through

F(20.0)

for transfers

for which

thefor adjusted payout

this section,

but only

have been

computed

by IRS

and appear

(6) Actuarial

Table D and

Tables

F Tables

(0.2) through F(20.0) for transfers for in Table D. Table D can be found on the rates from 4.2 to 14 percent, inclusive. For

transfers

for which the valuation date is on

websiteRemainder

at https://www.irs.gov/retirewhich

the valuation

is on

or May

after 1,IRS

valuation

date isdate

on or

after

1989--(i)

factors for charitable

remainder

May 1, 1989--(i) Remainder factors for ment-plans/actuarial-tables (or a corre- or after [applicability date of the Treasury

charitable remainder unitrusts. For trans- sponding URL as may be updated from decision adopting these regulations as fiForvaluation

transfers

foriswhich

valuation

or after May

1989,

the present

regulations],

wherevalue

the present value

time

to time). date

Table is

D on

is referenced

and 1,nal

fersunitrusts.

for which the

date

on or the

after May 1, 1989, the present value of a explained in IRS Publication 1458 “Actu- of a charitable remainder unitrust interest

of a charitable

unitrust

that is dependent

is determined

by of a life

arial Valuations

Version 4B,”upon

whicha term

will of

is years

dependent

on the termination

charitable

remainderremainder

unitrust interest

that interest

is dependent upon a term of years is de- be available after [date of publication of interest, see paragraph (e)(5) of this secfinal rule (e)(6)(i).

in the Federal

Register].

tion. See,

however, §1.7520-3(b) (relating

termined

the formula

in Figure

using by

theusing

formula

in Figure

3 to thistheparagraph

For the

convenience

of taxpayers,

(e)(5)

of thisForsection.

(relating

exceptions

useofofprescribed taThehowever,

remainder§1.7520-3(b)

factors from Table

D also to to

exceptions to

to the

the use

3 toparagraph

this paragraph

(e)(6)(i).

the con- See,

venience of taxpayers, actuarial factors can be found in paragraph (e)(6)(iii) of bles under certain circumstances).

actuarial factors have been computed by IRS and appear in Table D. Table D can be found on

prescribed tables under certain circumstances).

the IRS website at https://www.irs.gov/retirement-plans/actuarial-tables (or a corresponding

Figure

3 to 3paragraph

(e)(6)(i)

– Formula

for determining

term certain unitrust

remainder

factorsremainder factors

Figure

to paragraph

(e)(6)(i)

– Formula

for determining

term certain

unitrust

URL as may be updated from time to time). Table D is referenced and explained in IRS

Publication 1458 “Actuarial Valuations Version 4B,” which will be available after [date of

publication of the final rule in the Federal Register]. The remainder factors from Table D also

can be found in paragraph (e)(6)(iii) of this section, but only for adjusted payout rates from 4.2 to

14 percent, inclusive. For transfers for which the valuation date is on or after [applicability date

(ii) Unitrust

payout

rate adjustment

factors. as

Forfinal

transfers

for which

the valuation

is

of the Treasury

decision

adopting

these regulations

regulations],

where

the presentdate

value

Bulletin

No.May

2022–21

1117

May

on

after

1, 1989, the

unitrust

payout

rate adjustment

are determined

by usingsee

the 23, 2022

of aorcharitable

remainder

unitrust

interest

is dependent

on thefactors

termination

of a life interest,

(ii) Unitrust payout rate adjustment

factors. For transfers for which the valuation date is on or after May 1, 1989, the

unitrust payout rate adjustment factors

are determined by using the formula in

Figure 4 to this paragraph (e)(6)(ii). For

the convenience of taxpayers, actuarial factors have been computed by IRS,

for interest rates from 0.2 to 20 percent,

inclusive, and appear in Tables F(0.2)

through F(20.0). Tables F(0.2) through

F(20.0) can be found on the IRS website

at https://www.irs.gov/retirement-plans/

actuarial-tables (or a corresponding URL

as may be updated from time to time). Tables F(0.2) through F(20.0) are referenced

and explained in IRS Publication 1458

“Actuarial Valuations Version 4B,” which

will be available after [date of publication

of the final rule in the Federal Register].

The factors from Table F also can be found

in paragraph (e)(6)(iii) of this section, but

only for interest rates from 4.2 to 14 percent, inclusive.

Figure 4 to paragraph (e)(6)(ii) – Formula for determining unitrust payout rate adjustment factors

available

beginning

MayF(14.0).

5, 2022, atThe

no unitrust

i. Revising

the heading

and paragraphs

(iii) Table D and Tables

through

(iii)F(4.2)

Table

D and be

Tables

F(4.2)

through

remainder

factors

F(14.0). The unitrust remainder factors charge, electronically via the IRS website (g)(1) and (2).

Adding paragraphs (g)(3) and (4).

from Table D, for interest rates from 4.2 at https://www.irs.gov/retirement-plans/

from Table D, for interest rates from 4.2 to 14 percent, inclusive, and the ii.unitrust

payout factors

iii. Revising paragraph (g)(5).

to 14 percent, inclusive, and the unitrust actuarial-tables. These actuarial tables

iv. In paragraph (g)(6), revising the inpayout factors from Tables F(4.2) through are referenced and explained by IRS Pubfrom

Tables

F(4.2) through F(14.0)

are as

follows:

lication

1458,

“Actuarial Valuations Ver- troductory text.

F(14.0)

are as

follows:

sion 4B” (2022). This publication will be

v. Adding paragraph (g)(7).

*****

The additions and revisions read as

(7)*Actuarial

* * * * Table U(1) for transfers available after [date of publication of the

for which the valuation date is on or af- final rule in the Federal Register]. See, follows:

however,

§1.7520‑3(b)

(relating

to excep- date is on or after

ter [applicability

date of theTable

Treasury

(7) Actuarial

U(1) for

transfers

for which

the valuation

decision adopting these regulations as tions to the use of prescribed tables under §1.664-4A Valuation of charitable

remainder interests for which the

final regulations]. The present value of a certain circumstances).

[applicability

of theremainTreasury decision

adopting

regulations

as final regulations].

The

(f) Applicability

date.these

This section

ap- valuation

date is before [applicability

remainder

interest in adate

charitable

der unitrust that is dependent on the ter- plies on and after [applicability date of the date of the Treasury decision adopting

present

of a remainder

interest

in a decision

charitable

remainder

unitrust these

that regulations

is dependent

on the

Treasury

adopting

these regulaas final

regulations].

mination

of a value

life interest

is determined

by using the section 7520 rate, Tables tions as final regulations].

Par. 9. The

center head* * *Tables

**

F(0.2)termination

through (20.0)

of (see

a lifeparagraph

interest (e)

is determined

by undesignated

using the section

7520 rate,

F(0.2) through

(g) Valuation of charitable remainder

(6)(ii) of this section), and the formula in ing immediately preceding §1.664-4A is

unitrusts having certain payout sequences

paragraph (e)(5)(i) of this section to de- revised to read as follows:

(20.0) (see paragraph (e)(6)(ii) of this

section), and the formula in paragraph (e)(5)(i) of this

Unitrust Actuarial Tables Applicable for transfers for which the valuation date

rive factors from the appropriate mortality

table. For the convenience of taxpayers, Before [Applicability Date of the Treasury is on or after May 1, 2009, and before [apsection

to have

derive

factors

frombytheDecision

appropriate

mortality

table. Forasthe plicability

convenience

Adopting

These Regulations

date of

of taxpayers,

the Treasury decision

actuarial

factors

been

computed

adopting these regulations as final reguIRS and appear in Table U(1). For trans- Final Regulations]

Par.by

10.IRS

Section

amended

In general.

Except as otherfers for

which the

valuation

date

is oncomputed

or

actuarial

factors

have

been

and 1.664-4A

appear inisTable

U(1).lations]--(1)

For transfers

for which

wise provided in paragraph (g)(2) of this

after [applicability date of the Treasury by:

1. Revising the section heading.

section, in the case of transfers for which

decision adopting these regulations as fithe valuation date is on or after [applicability

date of the Treasury decision

adopting these

2. In newly redesignated paragraph (g): the valuation date is on or after May 1,

nal regulations], the actuarial tables will

regulations as final regulations], the actuarial tables will be available beginning May 5, 2022, at

Mayno

23,

2022electronically via the IRS website at1118

Bulletin No. 2022–21

charge,

https://www.irs.gov/retirement-plans/actuarial-

2009, and before [applicability date of the

Treasury decision adopting these regulations as final regulations], the present value of a remainder interest is determined

under paragraphs (g)(3) through (6) of

this section, provided that the amount of

the payout as of any payout date during

any taxable year of the trust is not larger

than the amount that the trust could distribute on such date under §1.664‑3(a)(1)

(v) if the taxable year of the trust were to

end on such date. See, however, §1.75203(b) (relating to exceptions to the use

of the prescribed tables under certain

circumstances).

(2) Transitional rules for valuation of

charitable remainder unitrusts. (i) For

purposes of sections 2055, 2106, or 2624,

if on May 1, 2009, the decedent was under a mental disability so that the disposition of the property could not be changed,

and the decedent died on or after May 1,

2009, but before [applicability date of the

Treasury decision adopting these regulations as final regulations], without having regained the ability to dispose of the

decedent’s property, or if the decedent

died within 90 days of the date that the

decedent first regained that ability on or

after May 1, 2009, but before [applicability date of the Treasury decision adopting

these regulations as final regulations], the

present value of a remainder interest under this section is determined as if the valuation date with respect to the decedent’s

gross estate is either before May 1, 2009,

or after April 30, 2009, at the option of the

decedent’s executor.

(ii) For purposes of sections 170, 2055,

2106, 2522, or 2624, in the case of transfers to a charitable remainder unitrust for

which the valuation date is on or after May

1, 2009, and before July 1, 2009, the present value of a remainder interest based on

one or more measuring lives is determined

under this section by using the section

7520 interest rate for the month in which

the valuation date occurs (see §§1.75201(b) and 1.7520-2(a)(2)) and the appropriate actuarial tables under either paragraph

(f)(6) or (g)(6) of this section, at the option

of the donor or the decedent’s executor, as

the case may be.

(iii) For purposes of paragraphs (g)(2)

(i) and (ii) of this section, where the donor or decedent’s executor is given the

option to use the appropriate actuarial

Bulletin No. 2022–21

tables under either paragraph (f)(6) or

(g)(6) of this section, the donor or decedent’s executor must consistently use the

same mortality basis with respect to each

interest (income, remainder, partial, etc.)

in the same property, and with respect to

all transfers occurring on the valuation

date. For example, gift and income tax

charitable deductions with respect to the

same transfer must be determined based

on factors with the same mortality basis,

and all assets includible in the gross estate

and/or estate tax deductions claimed must

be valued based on factors with the same

mortality basis.

(3) Adjusted payout rate. The adjusted

payout rate is determined by applying the

formula in §1.664-4(e)(6)(ii) for the section 7520 interest rate applicable to the

transfer to derive a factor. For the convenience of taxpayers, actuarial factors have

been computed by IRS, for interest rates

from 0.2 to 20 percent, inclusive, and appear in Tables F(0.2) through F(20.0). Tables F(0.2) through F(20.0) can be found

on the IRS website at https://www.irs.

gov/retirement-plans/actuarial-tables (or

a corresponding URL as may be updated

from time to time). Tables F(0.2) through

F(20.0) are referenced and explained in

IRS Publication 1458 “Actuarial Valuations Version 3B.” The payout adjustment

factors from Table F can also be found in

§1.664‑4(e)(6)(iii), but only for interest

rates from 4.2 to 14 percent, inclusive. Alternatively, the Commissioner may supply

a factor upon a request for a ruling. See

§1.664-4(b). See §1.664-4(e) for rules applicable in determining the adjusted payout rate.

(4) Period is a term of years. If the period described in §1.664-3(a)(5) is a term

of years, the factor that is used in determining the present value of the remainder

interest is determined by applying the formula in §1.664-4(e)(6)(i) under the appropriate adjusted payout rate corresponding

to the number of years in the term. For

the convenience of taxpayers, actuarial

factors have been computed by IRS and

appear in Table D. Table D can be found

on the IRS website at https://www.irs.

gov/retirement-plans/actuarial-tables (or

a corresponding URL as may be updated

from time to time). Table D is referenced

and explained in IRS Publication 1458

“Actuarial Valuations Version 3B.” The

1119

remainder factors from Table D also can

be found in §1.664‑4(e)(6)(iii), but only

for adjusted payout rates from 4.2 to 14

percent, inclusive. If the adjusted payout

rate is a percentage that is between the

adjusted payout rate for which factors are

provided by Table D, an exact method of

obtaining the applicable factors (such as

through software using the actual rate of

return and the actuarial formula provided

in §1.664-4(e)(6)(i)) or a linear interpolation must be used, provided whichever

method used is applied consistently. The

present value of the remainder interest

is determined by multiplying the net fair

market value (as of the appropriate valuation date) of the property placed in trust by

the factor determined under this paragraph

(g)(4). Generally, for purposes of this section, the valuation date is, in the case of

an inter vivos transfer, the date on which

the property is transferred to the trust by

the donor, and, in the case of a testamentary transfer under sections 2055, 2106,

or 2624, the valuation date is the date of

death. See §1.664-4(e)(4) for additional

rules regarding the valuation date, and for

an example that illustrates the application

of this paragraph (g)(4).

(5) Period is the life of one individual.

If the period described in §1.664-3(a)(5)

is the life of one individual, the factor that

is used in determining the present value

of the remainder interest for transfers for

which the valuation date is on or after

May 1, 2009, and before [applicability

date of the Treasury decision adopting

these regulations as final regulations],

may be computed directly by using the

formula in §1.664‑4(e)(5)(i) to derive

factors from the appropriate mortality

table. For the convenience of taxpayers,

actuarial factors have been computed

by IRS and appear in Table U(1). Table

U(1) can be found on the IRS website at

https://www.irs.gov/retirement-plans/actuarial-tables (or a corresponding URL

as may be updated from time to time).

Table U(1) is referenced and explained

in IRS Publication 1458 “Actuarial Valuations Version 3B.” The remainder factors from Table U(1) also can be found in

paragraph (g)(6) of this section, but only

for adjusted payout rates from 4.2 to 14

percent, inclusive. For purposes of the

computations described in this paragraph

(g)(5), the age of an individual is the age

May 23, 2022

of that individual at the individual’s nearest birthday. If the adjusted payout rate is

a percentage that is between the adjusted payout rate for which factors are provided by Table U(1), an exact method of

obtaining the applicable factors (such as

through software using the actual rate of

return and the actuarial formula provided

in §1.664‑4(e)(5)(i)) or a linear interpolation must be used, provided whichever

method used is applied consistently. The

rules provided in §1.664‑4(e)(5) apply

for determining the present value of the

remainder interest. See §1.664-4(e)(5)

for an example illustrating the application of this paragraph (g)(5) (using current actuarial tables).

(6) Actuarial Table U(1) for transfers

for which the valuation date is on or after May 1, 2009, and before [applicability date of the Treasury decision adopting

these regulations as final regulations]. For

transfers for which the valuation date is on

or after May 1, 2009, and before [applicability date of the Treasury decision adopting these regulations as final regulations],

and without regard to the headings in the

tables in this paragraph (g)(6) that do not

contain this termination date for the applicability of the tables, the present value

of a charitable remainder unitrust interest

that is dependent on the termination of

a life interest is determined by using the

section 7520 rate, Table U(1) in this paragraph (g)(6), and Tables F(4.2) through

F(14.0) in §1.664-4(e)(6)(iii). See, however, §1.7520‑3(b) (relating to exceptions

to the use of prescribed tables under certain circumstances). Actuarial factors that

do not appear in the following tables may

be computed directly by using the formula in §1.664-4(e)(5)(i) to derive factors

from the appropriate mortality table. For

the convenience of taxpayers, actuarial

factors have been computed by IRS and

appear in Table U(1) that is referenced

and explained by IRS Publication 1458,

“Actuarial Valuations Version 3B” (2009).

The table is available at no charge, electronically via the IRS website at https://

www.irs.gov/retirement-plans/actuarial-tables (or a corresponding URL as may

be updated from time to time).

*****

(7) Applicability dates. Paragraphs

(g)(1) through (6) of this section apply

on and after May 1, 2009, and before

May 23, 2022

[applicability date of the Treasury decision adopting these regulations as final

regulations].

Par. 11. Section 1.7520-1 is amended

by revising paragraphs (a)(1) and (2), (b)

(2), (c), and (d) and adding paragraphs (e)

and (f) to read as follows:

§1.7520-1 Valuation of annuities,

interests for life or a term of years, and

remainder or reversionary interests.

(a) * * * (1) Except as otherwise provided in this section and in §1.7520-3

(relating to exceptions to the use of prescribed tables under certain circumstances), in the case of certain transactions after

April 30, 1989, subject to income tax, the

fair market value of annuities, interests for

life or a term of years (including unitrust

interests), and remainder or reversionary

interests is their present value determined

under this section. See §20.2031-7(d) of

this chapter (and, for periods prior to [applicability date of the Treasury decision

adopting these regulations as final regulations], §20.2031-7A of this chapter) for

the computation of the value of annuities,

interests for life or a term of years, and

remainder or reversionary interests other

than interests described in paragraphs (a)

(2) and (3) of this section.

(2) For a transfer to a pooled income

fund, see §1.642(c)‑6(e) (or, for periods

prior to [applicability date of the Treasury decision adopting these regulations

as final regulations], §1.642(c)-6A) with

respect to the valuation of the remainder

interest.

*****

(b) * * *

(2) Mortality component. The mortality component reflects the mortality data

most recently available from the United

States census. As new mortality data becomes available after each decennial census, the mortality component described in

this section will be revised and the revised

mortality component tables will be published in the IRS publications at that time.

For transactions with valuation dates on

or after [applicability date of the Treasury

decision adopting these regulations as final regulations], the mortality component

table (Table 2010CM) is in §20.2031-7(d)

(7)(ii) of this chapter, is referenced by IRS

Publication 1457, “Actuarial Valuations

1120

Version 4A,” and can be found on the

IRS website at https://www.irs.gov/retirement-plans/actuarial-tables (or a corresponding URL as may be updated from

time to time). See §20.2031-7A of this

chapter for mortality component tables

applicable to transactions for which the

valuation date falls before [applicability

date of the Treasury decision adopting

these regulations as final regulations].

(c) Actuarial factors. The present

value on the valuation date of an annuity, an interest for life or a term of years,

and a remainder or reversionary interest

is computed by using the section 7520

interest rate component that is described

in paragraph (b)(1) of this section and the

mortality component that is described in

paragraph (b)(2) of this section. Actuarial

factors for determining these present values may be calculated by taxpayers using

the actuarial formulas in §20.2031-7(d)(2)

of this chapter but, for the convenience of

taxpayers, are included in tables that are

referenced and explained by publications

of the Internal Revenue Service. If a special factor is required in order to value an

interest, the special factor may be calculated by taxpayers using the actuarial formulas in §20.2031-7(d)(2) of this chapter

or the taxpayer may request a ruling to obtain the factor from the Internal Revenue

Service. The request for a ruling must be

accompanied by a recitation of the facts,

including the date of birth for each measuring life and copies of relevant instruments. A request for a ruling must comply

with the instructions for requesting a ruling published periodically in the Internal

Revenue Bulletin (see Rev. Proc. 2021-1,

2021-1 I.R.B. 1, and subsequent updates,

and §§ 601.201 and 601.601(d)(2)(ii)(b)

of this chapter) and must include payment

of the required user fee.

(d) IRS publications referencing and

explaining actuarial tables with rates

from 0.2 to 20 percent, inclusive, at intervals of two-tenths of one percent, for

valuation dates on or after [applicability

date of the Treasury decision adopting

these regulations as final regulations].

The publications listed in paragraphs (d)

(1) through (3) of this section will be

available after [date of publication of the

final rule in the Federal Register]. The

underlying actuarial tables referenced and

explained by these publications will be

Bulletin No. 2022–21

available beginning May 5, 2022, at no

charge, electronically via the IRS website

at https://www.irs.gov/retirement-plans/

actuarial-tables:

(1) IRS Publication 1457, “Actuarial Valuations Version 4A” (2022). This

publication references tables of valuation

factors and provides examples that show

how to compute other valuation factors,

for determining the present value of annuities, interests for life or a term of years,

and remainder or reversionary interests,

measured by one or two lives. These factors may also be used in the valuation of

interests in a charitable remainder annuity

trust as defined in §1.664-2 and a pooled

income fund as defined in §1.642(c)‑5.

This publication references and explains

Table S (single life remainder factors),

Table R(2) (two-life last-to-die remainder

factors), Table B (actuarial factors used

in determining the present value of an interest for a term of years), Table H (commutation factors), Table J (term certain

annuity beginning-of-interval adjustment

factors), and Table K (annuity end-of-interval adjustment factors). See earlier versions of the publication, §1.642(c)-6A, or

§20.2031-7A of this chapter for Table S

applicable to valuation dates before [applicability date of the Treasury decision

adopting these regulations as final regulations]. Earlier versions of the publication

also contain earlier versions of Table R(2).

Table B, Table J, and Table K also can be

found in §20.2031-7(d)(6) of this chapter,

but only for interest rates from 4.2 to 14

percent, inclusive.

(2) IRS Publication 1458, “Actuarial Valuations Version 4B” (2022). This

publication references and explains term

certain tables and tables of one and two

life valuation factors for determining the

present value of remainder interests in a

charitable remainder unitrust as defined

in §1.664-3. This publication references

Table U(1) (unitrust single life remainder

factors), Table U(2) (unitrust two-life lastto-die remainder factors), Table D (actuarial factors used in determining the present

value of a remainder interest postponed

for a term of years), Table F (adjustment

payout rate factors), and Table Z (unitrust

commutation factors). See earlier versions of the publication or §1.664-4A for

Table U(1) applicable to valuation dates

before [applicability date of the Treasury

Bulletin No. 2022–21

decision adopting these regulations as final regulations]. Earlier versions of the

publication also contain earlier versions of

Table U(2). Table D also can be found in

§1.664-4(e)(6)(iii), but only for adjusted

payout rates from 4.2 to 14 percent, inclusive. Table F also can be found in §1.6644(e)(6)(iii), but only for interest rates from

4.2 to 14 percent, inclusive.

(3) IRS Publication 1459, “Actuarial

Valuations Version 4C” (2022). This publication references and explains Table C,

which provides factors for making adjustments to the standard remainder factor for

valuing gifts of depreciable property. See

§1.170A-12.

(4) The publications identified in paragraphs (d)(1) through (3) of this section

also reference Table 2010CM, the mortality component table.

(e) Use of approximation methods for

obtaining factors when the required valuation rate falls between two listed rates.

For certain cases, this part and IRS publications provide approximation methods

(for example, interpolation) for obtaining

factors when the required valuation rate

falls between two listed rates (such as in

the case of a pooled income fund’s rate of

return or a unitrust’s adjusted payout rate).

In general, exact methods of obtaining the

applicable factors are allowed, such as

through software using the applicable interest rate and the proper actuarial formula, provided such direct methods are applied consistently. The actuarial formula

in §20.2031‑7(d)(2)(ii)(B) of this chapter

is used to determine the remainder factor

for pooled income funds and the actuarial

formula in §1.664‑4(e)(5)(i) is used to determine the remainder factor for unitrusts.

The approximation method provided in

this part must be used if more exact methods are not available.

(f) Applicability date. This section applies on and after [applicability date of the

Treasury decision adopting these regulations as final regulations].

PART 20--ESTATE TAX; ESTATES

OF DECEDENTS DYING AFTER

AUGUST 16, 1954

Par. 12. The authority citation for part

20 continues to read in part as follows:

Authority:26 U.S.C. 7805.

*****

1121

Par. 13. Section 20.2031-0 is revised to

read as follows:

§20.2031-0 Table of contents.

This section lists the section headings

and undesignated center headings that appear in the regulations under section 2031.

§20.2031-1 Definition of gross estate; valuation of property.

§20.2031-2 Valuation of stocks and bonds.

§20.2031-3 Valuation of interests in

businesses.

§20.2031-4 Valuation of notes.

§20.2031-5 Valuation of cash on hand or

on deposit.

§20.2031-6 Valuation of household and

personal effects.

§20.2031-7 Valuation of annuities, interests for life or a term of years, and remainder or reversionary interests.

§20.2031-8 Valuation of certain life insurance and annuity contracts; valuation of shares in an open-end investment

company.

§20.2031-9 Valuation of other property.

Actuarial Tables Applicable Before

[Applicability Date of the Treasury Decision Adopting These Regulations as Final

Regulations]

§20.2031-7A Valuation of annuities,

interests for life or a term of years, and

remainder or reversionary interests for estates of decedents for which the valuation

date of the gross estate is before [applicability date of the Treasury decision adopting these regulations as final regulations].

Par. 14. Section 20.2031-7 is amended

by:

1. Revising paragraph (c), the heading

of paragraph (d), and paragraphs (d)(1)

through (5).

2. Redesignating paragraph (d)(7) as

paragraph (g)(4) of §20.2031-7A.

3. Adding new paragraph (d)(7).

4. Revising paragraph (e).

The revisions and addition read as

follows:

§20.2031-7 Valuation of annuities,

interests for life or a term of years, and

remainder or reversionary interests.

*****

May 23, 2022

(c) Actuarial valuations. The present

value of annuities, interests for life or

a term of years, and remainder or reversionary interests for estates of decedents

for which the valuation date of the gross

estate is on or after [applicability date of

the Treasury decision adopting these regulations as final regulations], is determined

under paragraph (d) of this section. The

present value of annuities, interests for life

or a term of years, and remainder or reversionary interests for estates of decedents

for which the valuation date of the gross

estate is before [applicability date of the

Treasury decision adopting these regulations as final regulations], is determined

under the following sections:

Table 1 to paragraph (c)

Valuation Dates

After

12-31-51

12-31-70

11-30-83

04-30-89

04-30-99

04-30-09

Applicable Regulations

Before

01-01-52

01-01-71

12-01-83

05-01-89

05-01-99

05-01-09

AD

20.2031-7A(a)

20.2031-7A(b)

20.2031-7A(c)

20.2031-7A(d)

20.2031-7A(e)

20.2031-7A(f)

20.2031-7A(g)

AD = [applicability date of the Treasury decision adopting these regulations as final regulations].

(d) Actuarial valuations on or after

[applicability date of the Treasury decision adopting these regulations as final

regulations]--(1) In general. Except as

otherwise provided in paragraph (b) of

this section and §20.7520-3(b) (pertaining

to certain limitations on the use of prescribed tables), if the valuation date for

the gross estate of the decedent is on or after [applicability date of the Treasury decision adopting these regulations as final

regulations], the fair market value of annuities, interests for life or a term of years,

and remainder or reversionary interests

is the present value determined by using

standard or special section 7520 actuarial

factors. These factors are derived by using

the actuarial formulas provided in paragraph (d)(2) of this section, the appropriate section 7520 interest rate, and, if applicable, the mortality component for the

valuation date of the interest that is being

valued. For purposes of the computations

described in this section, the age of an

individual is the age of that individual at

the individual’s nearest birthday. For the

convenience of taxpayers, paragraph (d)

(2) of this section provides for published

tables of factors for specific types of interests. These published tables provide

factors for rates from 0.2 to 20 percent,

inclusive, at intervals of two-tenths of one

May 23, 2022

percent. In general, appropriate factors instead may be computed directly from the

actuarial formulas provided in paragraph

(d)(2) of this section. In some cases, specific examples in this part and IRS publications illustrate approximation methods

(for example, interpolation) for obtaining

factors when the required valuation rate

falls between two listed rates (such as in

the case of a pooled income fund’s rate of

return or a unitrust’s adjusted payout rate).

Exact methods of obtaining the applicable actuarial factors are allowed, such as

through software using the actual rate of

return and the actuarial formulas provided

in paragraph (d)(2) of this section; the approximation method provided in this part

must be used if more exact methods are

not available. See §§20.7520-1 through

20.7520-4.

(2) Specific interests--(i) Pooled income funds and charitable remainder

trusts. The fair market value of a remainder interest in a pooled income fund, as

defined in §1.642(c)-5 of this chapter, is

its value determined under §1.642(c)-6(e).

The fair market value of a remainder interest in a charitable remainder annuity trust,

as defined in §1.664-2(a), is the present

value determined under §1.664-2(c). The

fair market value of a remainder interest in

a charitable remainder unitrust, as defined

1122

in §1.664-3, is its present value determined

under §1.664-4(e). The fair market value

of a life interest or an interest for a term of

years in a charitable remainder unitrust is

the fair market value of the property as of

the date of valuation less the fair market

value of the remainder interest on that date

determined under §1.664-4(e)(4) and (5).

(ii) Ordinary remainder and reversionary interests--(A) Remainder and reversionary interests for a term of years. If

the interest to be valued is a remainder or

reversionary interest to take effect after a

definite number of years, the present value

of the interest is computed by multiplying

the value of the property by the appropriate remainder factor (that corresponds to

the applicable section 7520 interest rate

and the stated term). The factor for an ordinary remainder interest following a term

certain may be found using the formula in

Figure 1 to this paragraph (d)(2)(ii)(A).

For the convenience of taxpayers, actuarial factors have been computed by IRS and

appear in Table B. Table B can be found

on the IRS website at https://www.irs.

gov/retirement-plans/actuarial-tables (or

a corresponding URL as may be updated

from time to time). Table B is referenced

and explained in IRS Publication 1457

“Actuarial Valuations Version 4A,” which

will be available after [date of publication

Bulletin No. 2022–21

of the final rule in the Federal Register].

The remainder factors from Table B also

can be found in paragraph (d)(6) of this

section, but only for interest rates from

4.2 to 14 percent, inclusive. For information about obtaining special factors for

other situations, see paragraph (d)(4) of

this section.

Figure 1 to paragraph (d)(2)(ii)(A) – Formula for determining term certain remainder factors

Figure 1 to paragraph (d)(2)(ii)(A) – Formula for determining term certain remainder factors

(B) Remainder

and reversionary

interests

dependent

on the may

life ofMay

one5,individual.

If the electronically

the death

of one individual

2022, at no charge,

(B) Remainder

and reversionary

inter- following

ests dependent on the life of one individual. be found using the formula in Figure 2 to via the IRS website at https://www.irs.gov/

paragraph (d)(2)(ii)(B).

(or a corIf the

interestto

to be

be valued

a remainder

or this

interest

valuedis is

a remainder

or reversionary

interestThe

to prescribed

take effect retirement-plans/actuarial-tables

after the death of one

reversionary interest to take effect after the mortality table is Table 2010CM as set responding URL as may be updated from

death of one individual, the present value forth in paragraph (d)(7)(ii) of this section, time to time). Table S is referenced and

individual, the present value of the interest is computed by multiplying the value of the property

of the interest is computed by multiplying or for periods before [applicability date of explained by IRS Publication 1457 “Acthe value of the property by the appropriate the Treasury decision adopting these regu- tuarial Valuations Version 4A,” which will

by the factor

appropriate

remainder

(that as

corresponds

to the

7520after

interest

final regulations],

theapplicable

appropriate section

be available

[daterate

of publication of

remainder

(that corresponds

to factor

the lations

applicable section 7520 interest rate and the table found in §20.2031-7A. For the conve- the final rule in the Federal Register]. For

of taxpayers,

actuarial

factorsthe

haveremainder

information

about obtaining

ageand

of the

life of

the life interest

themeasuring

age of the

measuring

life ofnience

the life

interest that

precedes

interest).

The special factors

that precedes the remainder interest). The been computed by IRS and appear in Ta- for other situations, see paragraph (d)(4) of

factor for an ordinary remainder interest ble S. Table S will be available beginning this section.

factor for an ordinary remainder interest following the death of one individual may be found

Figure

2 tothe

paragraph

for determining

single life remainder

factors mortality table is

using

formula(d)(2)(ii)(B)

in Figure –2Formula

to this paragraph

(d)(2)(ii)(B).

The prescribed

Table 2010CM as set forth in paragraph (d)(7)(ii) of this section, or for periods before

[applicability date of the Treasury decision adopting these regulations as final regulations], the

appropriate table found in §20.2031-7A. For the convenience of taxpayers, actuarial factors have

been computed by IRS and appear in Table S. Table S will be available beginning May 5, 2022,

at no charge, electronically via the IRS website at https://www.irs.gov/retirement-plans/actuarialtables (or a corresponding URL as may be updated from time to time). Table S is referenced and

explained by IRS Publication 1457 "Actuarial Valuations Version 4A,” which will be available

after [date of publication of the final rule in the Federal Register]. For information about

obtaining special factors for other situations, see paragraph (d)(4) of this section.

income

of certain

property,

or to the

of thetointerest

is computed

by mul(iii) Ordinary

interests for

a term for

of athe

(iii) Ordinary

interests

term

of years

and life

interests.

If thevalue

interest

be valued

is

use

of

certain

property,

for

a

term

of

years

tiplying

the

value

of

the

property

by the

years

and

life

interests.

If

the

interest

to

be

Figure 2 to paragraph (d)(2)(ii)(B) – Formula for determining single life remainder factors

valued is the right of a person to receive or for the life of one individual, the present appropriate actuarial factor for an interest

the right of a person to receive the income of certain property, or to the use of certain property,

for a term of years or for the life of one individual, the present value of the interest is computed

Bulletin No. 2022–21

1123

May 23, 2022

for a term of years or for a life interest information about obtaining special fac- the convenience of taxpayers, actuarial

(that corresponds to the applicable section tors for other situations, see paragraph (d) factors have been computed by IRS and

7520 interest rate and the durational pe- (4) of this section.

appear in the “Annuity” column of Table

riod). The actuarial factor for an ordinary

(iv) Annuities. (A) If the interest to be S. Table S (applicable when the valuation

income interest for a term certain may be valued is the right of a person to receive an date is on or after [applicability date of the

found by subtracting from 1.000000 the annuity that is payable at the end of each Treasury decision adopting these regulafactor for an ordinary remainder interest year for a term of years or for the life of tions as final regulations]) can be found

following the same term certain that is de- one individual, the present value of the on the IRS website at https://www.irs.gov/

Version

4A”.

§20.2031-7A

earlier isversions

of by

Publication

valuation of interests

termined

under

the See

formula

in paragraph or interest

computed

multiplying1457

the for

retirement-plans/actuarial-tables.

Table B

(d)(2)(ii)(A) of this section. For the con- aggregate amount payable annually by and Table S are referenced and explained

venience

taxpayers, actuarial

the appropriate

factor

(thatregulations

cor- in IRSasPublication

1457 “Actuarial Valubeforeof[applicability

date offactors

the Treasury

decisionannuity

adopting

these

final

have been computed by IRS and appear responds to the applicable section 7520 ations Version 4A”. See §20.2031-7A or

in the “Income Interest” column of Table interest rate and annuity period). The earlier versions of Publication 1457 for

regulations]. For information about obtaining special factors for other situations, see paragraph

B which can be found on the IRS website appropriate annuity factor for an annuity valuation of interests before [applicabiliat https://www.irs.gov/retirement-plans/ payable for a term of years is computed by ty date of the Treasury decision adopting

(d)(4) of this

actuarial-tables

(orsection.

a corresponding URL subtracting from 1.000000 the factor for these regulations as final regulations]. For

as may be updated from time to time). The an ordinary remainder interest following information about obtaining special facactuarial factor

forthe

an annuity

ordinary isincome

termofcertain

that is determined

tors for other

(B) If

payablethe

at same

the end

semiannual,

quarterly, monthly,

or situations,

weekly see paragraph (d)

interest for the life of one individual may under the formula in paragraph (d)(2)(ii) (4) of this section.

be found by subtracting from 1.00000 the (A) of this section and then dividing the

(B) If the annuity is payable at the

periods, the product obtained by multiplying the annuity factor by the aggregate

amount payable

factor for an ordinary remainder interest result by the applicable section 7520 in- end of semiannual, quarterly, monthly, or

following the life of the same individual terest rate expressed as a number with at weekly periods, the product obtained by

is then

multiplied

by the applicable

adjustment

the appropriate

interest

rate factor by the agthatannually

is determined

in paragraph

(d)(2)(ii)

least four decimal

places.factor

For theatconvemultiplying

the annuity

(B) of this section. For the convenience nience of taxpayers, actuarial factors have gregate amount payable annually is then

of component

taxpayers, actuarial

factors have

been

been

computed

by IRS andperiods.

appear in The

the applicable

multiplied by

the applicable adjustment

for payments

made

at the

end

of the specified

adjustment

computed by IRS and appear in the “Life “Annuity” column of Table B which can factor at the appropriate interest rate comEstate”

column

of Table

Table the

S (apbe found

on the3 IRS

website

at https://

ponent for payments

factor

may be

foundS.using

formula

in Figure

to this

paragraph

(d)(2)(iv)(B).

For the made at the end of

plicable when the valuation date is on or www.irs.gov/retirement-plans/actuar- the specified periods. The applicable adafter [applicability date of the Treasury ial-tables (or a corresponding URL as justment factor may be found using the

convenience

taxpayers,

actuarial

factors

have been

byThe

IRS and

appear

in Table

K. paragraph (d)

decision

adoptingofthese

regulations

as may

be updated

from computed

time to time).

formula

in Figure

3 to this

final regulations]) can be found on the appropriate annuity factor for an annuity (2)(iv)(B). For the convenience of taxpayK,atwhich

is referenced and explained

Publication

canisbe found

on thefactors

IRS have been computIRSTable

website

https://www.irs.gov/retirepayable forbythe

life of one 1457,

individual

ers, actuarial

ment-plans/actuarial-tables. Table B and computed by subtracting from 1.00000 ed by IRS and appear in Table K. Table

Table

S are at

referenced

and explained by the factor for an ordinary remainder The

inter-provisions

K, which of

is referenced

and explained by

website

https://www.irs.gov/retirement-plans/actuarial-tables.

this

IRS Publication 1457 “Actuarial Valua- est following the life of the same individ- Publication 1457, can be found on the

tions Version 4A”. See §20.2031-7A or ual that is determined under the formula IRS website at https://www.irs.gov/retireparagraph (d)(2)(iv)(B) are illustrated by the example in paragraph (d)(2)(iv)(B)(2) of this

earlier versions of Publication 1457 for in paragraph (d)(2)(ii)(B) of this section ment-plans/actuarial-tables. The provivaluation of interests before [applicabili- and then dividing the result by the appli- sions of this paragraph (d)(2)(iv)(B) are

section.

ty date

of the Treasury decision adopting cable section 7520 interest rate expressed illustrated by the example in paragraph (d)

these regulations as final regulations]. For as a number with four decimal places. For (2)(iv)(B)(2) of this section.

Figure 3 to paragraph (d)(2)(iv)(B) – Formula for determining annuity adjustment factor at the

Figure 3 to paragraph (d)(2)(iv)(B) – Formula for determining annuity adjustment factor at the end of the specified period

end of the specified period

(1) Sample factors from actuarial Ta- example in paragraph (d)(2)(iv)(B)(2) of this section, the following factors from

(1) Sample

factors from

theTable

example

Table of

S and

K willin

be used:

ble S and Table

K. For purposes

of theactuarial Table S and Table K. For purposes

paragraph (d)(2)(iv)(B)(2) of this section, the following factors from Table S and Table K will be

May 23, 2022

1124

Bulletin No. 2022–21

used:

Table 2 to paragraph (d)(2)(iv)(B)(1)

Age

75

Interest Rate

3.2%

Factors from Table S - Based on Table 2010CM

Interest at 3.2 Percent

Annuity

Life Estate

Remainder

9.4053

0.30097

0.69903

Factors from Table K

Adjustment Factors for Annuities Payable at the End of Each Interval

Semi-Annually

Quarterly

Monthly

1.0079

1.0119

1.0146

(2) Example. At the time of the decedent’s death,

the survivor/annuitant, age 75, is entitled to receive

an annuity of $15,000 per year for life payable in

equal monthly installments at the end of each month.

The section 7520 rate for the month in which the

decedent died is 3.2 percent. Under Table S, the

annuity factor at 3.2 percent for an individual aged

75 is 9.4053. Under Table K, the adjustment factor

under the column for payments made at the end of

each monthly period at the rate of 3.2 percent is

1.0146. The aggregate annual amount, $15,000, is

multiplied by the factor 9.4053 and the product then

is multiplied by 1.0146. The present value of the annuity at the date of the decedent’s death is, therefore,

$143,139.26 ($15,000 × 9.4053 × 1.0146).

(C) If an annuity is payable at the beginning of annual, semiannual, quarterly,

monthly, or weekly periods for a term of

years, the value of the annuity is computed by multiplying the aggregate amount

payable annually by the annuity factor

described in paragraph (d)(2)(iv)(A) of

this section; and the product so obtained

then is multiplied by the applicable adjustment factor at the appropriate interest

rate component for payments made at the

beginning of specified periods. The a

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