Rev. Rul. 62-137

Rev. Rul. 62-137

1962-2 C.B. 28
Story posted in Revenue Rulings on 29 March 2006
audience: PGDC Network | last updated: 15 June 2011
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Sec. 72

Supplemented by Rev. Rul. 62-216
Amplified by Rev. Rul. 72-438
Amplified by Rev. Rul. 84-162

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Rev. Rul. 62-137

An organization, such as a corporation, trust, fund or foundation (other than a commercial insurance company), from time to time, enters into agreements to pay life annuities of a specified amount to individuals or to their designees in exchange for money or other property. Held , the annuity contracts issued by such an organization are sufficiently comparable to individual annuity contracts issued by commercial insurance companies to justify the application of a similar standard of valuation to both. See Anna L. Raymond v. Commissioner , 40 B.T.A. 244, affirmed 114 Fed.(2d) 140, certiorari denied, 311 U.S. 710. Accordingly, the annuity rates listed in the table below, which have been selected as representative of the annuity rates currently charged by leading commercial insurance companies for individual contracts, will be used as the standard for valuing currently issued annuities (single life) for Federal tax purposes. It must be realized, however, that the table is subject to change depending upon market conditions. Notice of change will be given by publication in the Internal Revenue Bulletin.

If the agreement provides for an annuity which is not a single life annuity, then appropriate rates, comparable to the single-life rates shown in the table below, shall be used in the valuation. In the case of a completed transaction involving such an annuity, the Commissioner of Internal Revenue, Washington 25, D.C., will furnish the rate to the taxpayer concerned upon request. The request must be accompanied by a statement of the date of birth of each annuitant and by copies of the relevant instruments.

The values prescribed herein will apply even though the annuity contract to be valued (or any other contract) is reinsured or coinsured with a commercial insurance company, unless the agreement provides that all or a specified portion of the annuity obligation has been reinsured by a designated commercial insurance company. In such case, the designated commercial insurance company's individual annuity rate for a comparable contract will be used for the amount of the obligation so reinsured, and the values prescribed herein will apply to any balance of the obligation.

The values prescribed herein will apply for the purpose of determining the aggregate amount of consideration paid for the contract (investment in the contract) for purposes of section 72 of the Internal Revenue Code of 1954.

The provisions of this Revenue Ruling apply to annuity contracts issued by such organizations on or after September 6, 1962, which is 10 days after the date of publication in the Internal Revenue Bulletin. The value of an annuity contract based on any acceptable table prior to the above date will not be changed.

        FAIR MARKET VALUE OF ANNUITIES ISSUED BY ORGANIZATION
           (OTHER THAN COMMERCIAL INSURANCE COMPANIES) ON
                      OR AFTER SEPTEMBER 6, 1962
                           Single Life Rates
           Rates for immediate annuity of $1.00 per annum
--------------------------------------------------------------------
                                                  Rate
    Age                          -----------------------------------
                                     Male                      Female
--------------------------------------------------------------------
32                                  22.812                     25.063
33                                  22.566                     24.809
34                                  22.312                     24.550
35                                  22.052                     24.284
36                                  21.785                     24.012
37                                  21.510                     23.734
38                                  21.228                     23.449
39                                  20.940                     23.158
40                                  20.643                     22.858
41                                  20.339                     22.552
42                                  20.027                     22.239
43                                  19.707                     21.919
44                                  19.382                     21.590
45                                  19.049                     21.255
46                                  18.710                     20.911
47                                  18.368                     20.560
48                                  18.019                     20.203
49                                  17.667                     19.838
50                                  17.311                     19.468
51                                  16.950                     19.094
52                                  16.586                     18.714
53                                  16.217                     18.331
54                                  15.845                     17.942
55                                  15.469                     17.550
56                                  15.089                     17.154
57                                  14.705                     16.754
58                                  14.317                     16.351
59                                  13.924                     15.942
60                                  13.526                     15.531
61                                  13.125                     15.116
62                                  12.717                     14.696
63                                  12.306                     14.271
64                                  11.889                     13.842
65                                  11.469                     13.409
66                                  11.046                     12.970
67                                  10.641                     12.527
68                                  10.266                     12.078
69                                   9.889                     11.627
70                                   9.512                     11.172
71                                   9.143                     10.715
72                                   8.775                     10.256
73                                   8.408                      9.879
74                                   8.043                      9.502
75                                   7.682                      9.125
76                                   7.323                      8.749
77                                   6.970                      8.374
78                                   6.622                      8.001
79                                   6.281                      7.632
80                                   5.946                      7.266
81                                   5.619                      6.905
82                                   5.299                      6.549
83                                   4.989                      6.200
84                                   4.688                      5.857
85                                   4.397                      5.522

The above table gives the rate for a life annuity of $1.00 per annum in annual installments, first payment one year hence. To obtain the rate for an annuity of $1.00 per annum payable in installments at the end of each:

          (a) monthly period,      add $0.482 to the tabular rate.
          (b) quarterly period,    add $0.395 to the tabular rate.
          (c) semiannual period,   add $0.263 to the tabular rate.

For example, the rate for an annuity of $1.00 per annum payable at the end of each quarter during the life of a male aged 56 is $15.089 plus $0.395 or $15.484.

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