Private ANnuity Calculation

[Gary]

A piece of real estate is sold. The proceeds are placed in an irrevocable trust and the trustees (beneficiaries and buyers) of the trust pay the sellers of the real estate a private annuity.

I need help in valuing the annuity.

I have seen information pertaining to private annuities and valuation assumptions in 20.2031-7; Valuation of annuities,... (of the regulations) and I also see information about annuities in IRC section 72 and regulations thereunder.

What should apply? Specifically what interest and mortality table, from which set of information? What is the scope of applicability of each of the above code and regulations?

Thank you.

Gary

[david rigby]

Sorry, no direct experience, but would not your choice(s) depend on the terms of the annuity contract? Does it have any guarantees? true life contingency? joint life status? minimums? finite time period? etc.

[mbozek]

the rules are in the regs under IRC 2702.