[Title 26 CFR ]
[Code of Federal Regulations (annual edition) - April 1, 2003 Edition]
[From the U.S. Government Printing Office]
[[Page i]]
26
Part 1 (Secs. 1.61 to 1.169)
Revised as of April 1, 2003
Internal Revenue
Containing a codification of documents of general
applicability and future effect
As of April 1, 2003
With Ancillaries
Published by
Office of the Federal Register
National Archives and Records
Administration
A Special Edition of the Federal Register
[[Page ii]]
U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON : 2003
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[[Page iii]]
Table of Contents
Page
Explanation................................................. v
Title 26:
Chapter I--Internal Revenue Service, Department of
the Treasury (Continued) 3
Findings Aids:
Table of CFR Titles and Chapters........................ 1065
Alphabetical List of Agencies Appearing in the CFR...... 1083
Table of OMB Control Numbers............................ 1093
List of CFR Sections Affected........................... 1111
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Cite this Code: CFR
To cite the regulations in
this volume use title,
part and section number.
Thus, 26 CFR 1.61-1
refers to title 26, part
1, section 61-1.
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[[Page v]]
EXPLANATION
The Code of Federal Regulations is a codification of the general and
permanent rules published in the Federal Register by the Executive
departments and agencies of the Federal Government. The Code is divided
into 50 titles which represent broad areas subject to Federal
regulation. Each title is divided into chapters which usually bear the
name of the issuing agency. Each chapter is further subdivided into
parts covering specific regulatory areas.
Each volume of the Code is revised at least once each calendar year
and issued on a quarterly basis approximately as follows:
Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1
The appropriate revision date is printed on the cover of each
volume.
LEGAL STATUS
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noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie
evidence of the text of the original documents (44 U.S.C. 1510).
HOW TO USE THE CODE OF FEDERAL REGULATIONS
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To determine whether a Code volume has been amended since its
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EFFECTIVE AND EXPIRATION DATES
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OMB CONTROL NUMBERS
The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires
Federal agencies to display an OMB control number with their information
collection request.
[[Page vi]]
Many agencies have begun publishing numerous OMB control numbers as
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placed as close as possible to the applicable recordkeeping or reporting
requirements.
OBSOLETE PROVISIONS
Provisions that become obsolete before the revision date stated on
the cover of each volume are not carried. Code users may find the text
of provisions in effect on a given date in the past by using the
appropriate numerical list of sections affected. For the period before
January 1, 2001, consult either the List of CFR Sections Affected, 1949-
1963, 1964-1972, 1973-1985, or 1986-2000, published in 11 separate
volumes. For the period beginning January 1, 2001, a ``List of CFR
Sections Affected'' is published at the end of each CFR volume.
CFR INDEXES AND TABULAR GUIDES
A subject index to the Code of Federal Regulations is contained in a
separate volume, revised annually as of January 1, entitled CFR Index
and Finding Aids. This volume contains the Parallel Table of Statutory
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The Federal Register Index is issued monthly in cumulative form.
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the daily Federal Register.
A List of CFR Sections Affected (LSA) is published monthly, keyed to
the revision dates of the 50 CFR titles.
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There are no restrictions on the republication of material appearing
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[[Page vii]]
The Office of the Federal Register also offers a free service on the
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Raymond A. Mosley,
Director,
Office of the Federal Register.
April 1, 2003.
[[Page ix]]
THIS TITLE
Title 26--Internal Revenue is composed of twenty volumes. The
contents of these volumes represent all current regulations issued by
the Internal Revenue Service, Department of the Treasury, as of April 1,
2003. The first thirteen volumes comprise part 1 (Subchapter A--Income
Tax) and are arranged by sections as follows: Secs. 1.0-1-1.60;
Secs. 1.61-1.169; Secs. 1.170-1.300; Secs. 1.301-1.400; Secs. 1.401-
1.440; Secs. 1.441-1.500; Secs. 1.501-1.640; Secs. 1.641-1.850;
Secs. 1.851-1.907; Secs. 1.908-1.1000; Secs. 1.1001-1.1400;
Secs. 1.1401--1.1503-2A; and Sec. 1.1551-1 to end. The fourteenth volume
containing parts 2-29, includes the remainder of subchapter A and all of
Subchapter B--Estate and Gift Taxes. The last six volumes contain parts
30-39 (Subchapter C--Employment Taxes and Collection of Income Tax at
Source); parts 40-49; parts 50-299 (Subchapter D--Miscellaneous Excise
Taxes); parts 300-499 (Subchapter F--Procedure and Administration);
parts 500-599 (Subchapter G--Regulations under Tax Conventions); and
part 600 to end (Subchapter H--Internal Revenue Practice).
The OMB control numbers for Title 26 appear in Sec. 602.101 of this
chapter. For the convenience of the user, Sec. 602.101 appears in the
Finding Aids section of the volumes containing parts 1 to 599.
[[Page x]]
[[Page 1]]
TITLE 26--INTERNAL REVENUE
(This book contains part 1, Secs. 1.61 to 1.169)
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Part
chapter i--Internal Revenue Service, Department of the
Treasury (Continued)...................................... 1
[[Page 3]]
CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY
(CONTINUED)
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Editorial Note: IRS published a document at 45 FR 6088, Jan. 25, 1980,
deleting statutory sections from their regulations. In Chapter I cross-
references to the deleted material have been changed to the
corresponding sections of the IRS Code of 1954 or to the appropriate
regulations sections. When either such change produced a redundancy, the
cross-reference has been deleted. For further explanation, see 45 FR
20795, March 31, 1980.
SUBCHAPTER A--INCOME TAX (CONTINUED)
Part Page
1 Income taxes................................ 5
Supplementary Publications: Internal Revenue Service Looseleaf
Regulations System, Alcohol and Tobacco Tax Regulations, and
Regulations Under Tax Conventions.
Editorial Note: Treasury Decision 6091, 19 FR 5167, Aug. 17, 1954,
provides in part as follows:
Paragraph 1. All regulations (including all Treasury decisions)
prescribed by, or under authority duly delegated by, the Secretary of
the Treasury, or jointly by the Secretary and the Commissioner of
Internal Revenue, or by the Commissioner of Internal Revenue with the
approval of the Secretary of the Treasury, or jointly by the
Commissioner of Internal Revenue and the Commissioner of Customs or the
Commissioner of Narcotics with the approval of the Secretary of the
Treasury, applicable under any provision of law in effect on the date of
enactment of the Code, to the extent such provision of law is repealed
by the Code, are hereby prescribed under and made applicable to the
provisions of the Code corresponding to the provision of law so repealed
insofar as any such regulation is not inconsistent with the Code. Such
regulations shall become effective as regulations under the various
provisions of the Code as of the dates the corresponding provisions of
law are repealed by the Code, until superseded by regulations issued
under the Code.
Par. 2. With respect to any provision of the Code which depends for
its application upon the promulgation of regulations or which is to be
applied in such manner as may be prescribed by regulations, all
instructions or rules in effect immediately prior to the enactment of
the Code, to the extent such instructions or rules could be prescribed
as regulations under authority of such provision of the Code, shall be
applied as regulations under such provision insofar as such instructions
or rules are not inconsistent with the Code. Such instructions or rules
shall be applied as regulations under the applicable provision of the
Code as of the date such provision takes effect.
Par. 3. If any election made or other act done pursuant to any
provision of the Internal Revenue Code of 1939 or prior internal revenue
laws would (except for the enactment of the Code) be effective for any
period subsequent to such enactment, and if corresponding provisions are
contained in the Code, such election or other act shall be given the
same effect under the corresponding provisions of the Code to the extent
not inconsistent therewith. The term ``act'' includes, but is not
limited to, an allocation, identification, declaration, agreement,
option, waiver, relinquishment, or renunciation.
Par. 4. The limits of the various internal revenue districts have not
been changed by the enactment of the Code. Furthermore, delegations of
authority made pursuant to the provisions of Reorganization Plan No. 26
of 1950 and Reorganization Plan No. 1 of 1952 (as well as redelegations
thereunder), including those governing the authority of the Commissioner
of Internal Revenue, the Regional Commissioners of Internal Revenue, or
the District Directors of Internal Revenue, are applicable to the
provisions of the Code to the extent consistent therewith.
[[Page 5]]
SUBCHAPTER A--INCOME TAX (CONTINUED)
PART 1--INCOME TAXES--Table of Contents
COMPUTATION OF TAXABLE INCOME
Definition of Gross Income, Adjusted Gross Income, and Taxable Income
Sec.
1.61-1 Gross income.
1.61-2 Compensation for services, including fees, commissions, and
similar items.
1.61-2T Taxation of fringe benefits--1985 through 1988 (temporary).
1.61-3 Gross income derived from business.
1.61-4 Gross income of farmers.
1.61-5 Allocations by cooperative associations; per-unit retain
certificates--tax treatment as to cooperatives and patrons.
1.61-6 Gains derived from dealings in property.
1.61-7 Interest.
1.61-8 Rents and royalties.
1.61-9 Dividends.
1.61-10 Alimony and separate maintenance payments; annuities; income
from life insurance and endowment contracts.
1.61-11 Pensions.
1.61-12 Income from discharge of indebtedness.
1.61-13 Distributive share of partnership gross income; income in
respect of a decedent; income from an interest in an estate or
trust.
1.61-14 Miscellaneous items of gross income.
1.61-15 Options received as payment of income.
1.61-21 Taxation of fringe benefits.
1.62-1 Adjusted gross income.
1.62-1T Adjusted gross income (temporary).
1.62-2 Reimbursements and other expense allowance arrangements.
1.63-1 Change of treatment with respect to the zero bracket amount and
itemized deductions.
1.63-2 Cross reference.
1.67-1T 2-percent floor on miscellaneous itemized deductions
(temporary).
1.67-2T Treatment of pass-through entities (temporary).
1.67-3 Allocation of expenses by real estate mortgage investment
conduits.
1.67-3T Allocation of expenses by real estate mortgage investment
conduits (temporary).
1.67-4T Allocation of expenses by nongrantor trusts and estates
(temporary). [Reserved]
Items Specifically Included in Gross Income
1.71-1 Alimony and separate maintenance payments; income to wife or
former wife.
1.71-1T Alimony and separate maintenance payments (temporary).
1.71-2 Effective date; taxable years ending after March 31, 1954,
subject to the Internal Revenue Code of 1939.
1.72-1 Introduction.
1.72-2 Applicability of section.
1.72-3 Excludable amounts not income.
1.72-4 Exclusion ratio.
1.72-5 Expected return.
1.72-6 Investment in the contract.
1.72-7 Adjustment in investment where a contract contains a refund
feature.
1.72-8 Effect of certain employer contributions with respect to
premiums or other consideration paid or contributed by an
employee.
1.72-9 Tables.
1.72-10 Effect of transfer of contracts on investment in the contract.
1.72-11 Amounts not received as annuity payments.
1.72-12 Effect of taking an annuity in lieu of a lump sum upon the
maturity of a contract.
1.72-13 Special rule for employee contributions recoverable in three
years.
1.72-14 Exceptions from application of principles of section 72.
1.72-15 Applicability of section 72 to accident or health plans.
1.72-16 Life insurance contracts purchased under qualified employee
plans.
1.72-17 Special rules applicable to owner-employees.
1.72-17A Special rules applicable to employee annuities and
distributions under deferred compensation plans to self-
employed individuals and owner-employees.
1.72-18 Treatment of certain total distributions with respect to self-
employed individuals.
1.72(e)-1T Treatment of distributions where substantially all
contributions are employee contributions (temporary).
1.72(p)-1 Loans treated as distributions.
1.73-1 Services of child.
1.74-1 Prizes and awards.
1.75-1 Treatment of bond premiums in case of dealers in tax-exempt
securities.
1.77-1 Election to consider Commodity Credit Corporation loans as
income.
1.77-2 Effect of election to consider commodity credit loans as income.
1.78-1 Dividends received from certain foreign corporations by certain
domestic corporations choosing the foreign tax credit.
1.79-0 Group-term life insurance--definitions of certain terms.
1.79-1 Group-term life insurance--general rules.
1.79-2 Exceptions to the rule of inclusion.
[[Page 6]]
1.79-3 Determination of amount equal to cost of group-term life
insurance.
1.79-4T Questions and answers relating to the nondiscrimination
requirements for group-term life insurance (temporary).
1.82-1 Payments for or reimbursements of expenses of moving from one
residence to another residence attributable to employment or
self-employment.
1.83-1 Property transferred in connection with the performance of
services.
1.83-2 Election to include in gross income in year of transfer.
1.83-3 Meaning and use of certain terms.
1.83-4 Special rules.
1.83-5 Restrictions that will never lapse.
1.83-6 Deduction by employer.
1.83-7 Taxation of nonqualified stock options.
1.83-8 Applicability of section and transitional rules.
1.84-1 Transfer of appreciated property to political organizations.
1.85-1 Unemployment compensation.
1.88-1 Nuclear decommissioning costs.
Items Specifically Excluded From Gross Income
1.101-1 Exclusion from gross income of proceeds of life insurance
contracts payable by reason of death.
1.101-2 Employees' death benefits.
1.101-3 Interest payments.
1.101-4 Payment of life insurance proceeds at a date later than death.
1.101-5 Alimony, etc., payments.
1.101-6 Effective date.
1.101-7 Mortality table used to determine exclusion for deferred
payments of life insurance proceeds.
1.102-1 Gifts and inheritances.
1.103-1 Interest upon obligations of a State, territory, etc.
1.103-2 Dividends from shares and stock of Federal agencies or
instrumentalities.
1.103-3 Interest upon notes secured by mortgages executed to Federal
agencies or instrumentalities.
1.103-4 Interest upon United States obligations.
1.103-5 Treasury bond exemption in the case of trusts or partnerships.
1.103-6 Interest upon United States obligations in the case of
nonresident aliens and foreign corporations, not engaged in
business in the United States.
1.103-7 Industrial development bonds.
1.103-8 Interest on bonds to finance certain exempt facilities.
1.103-9 Interest on bonds to finance industrial parks.
1.103-10 Exemption for certain small issues of industrial development
bonds.
1.103-11 Bonds held by substantial users.
1.103-16 Obligations of certain volunteer fire departments.
1.103(n)-1T Limitation on aggregate amount of private activity bonds
(temporary).
1.103(n)-2T Private activity bond defined (temporary).
1.103(n)-3T Private activity bond limit (temporary).
1.103(n)-4T Elective carryforward of unused private activity bond limit
(temporary).
1.103(n)-5T Certification of no consideration for allocation
(temporary).
1.103(n)-6T Determinations of population (temporary).
1.103(n)-7T Election to allocate State ceiling to certain facilities
for local furnishing of electricity (temporary).
1.103A-2 Qualified mortgage bond.
1.104-1 Compensation for injuries or sickness.
1.105-1 Amounts attributable to employer contributions.
1.105-2 Amounts expended for medical care.
1.105-3 Payments unrelated to absence from work.
1.105-4 Wage continuation plans.
1.105-5 Accident and health plans.
1.105-6 Special rules for employees retired before January 27, 1975.
1.105-11 Self-insured medical reimbursement plan.
1.106-1 Contributions by employer to accident and health plans.
1.107-1 Rental value of parsonages.
1.108-1 Stock-for-debt exception not to apply in de minimis cases.
1.108-2 Acquisition of indebtedness by a person related to the debtor.
1.108-3 Intercompany losses and deductions.
1.108-4 Election to reduce basis of depreciable property under section
108(b)(5) of the Internal Revenue Code .
1.108-5 Time and manner for making election under the Omnibus Budget
Reconciliation Act of 1993.
1.108-6 Limitations on the exclusion of income from the discharge of
qualified real property business indebtedness.
1.108(c)-1T [Reserved]
1.109-1 Exclusion from gross income of lessor of real property of value
of improvements erected by lessee.
1.110-1 Qualified lessee construction allowances.
1.111-1 Recovery of certain items previously deducted or credited.
1.112-1 Combat zone compensation of members of the Armed Forces.
1.113-1 Mustering-out payments for members of the Armed Forces.
1.117-1 Exclusion of amounts received as a scholarship or fellowship
grant.
1.117-2 Limitations.
1.117-3 Definitions.
1.117-4 Items not considered as scholarships or fellowship grants.
1.117-5 Federal grants requiring future service as a Federal employee.
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1.118-1 Contributions to the capital of a corporation.
1.119-1 Meals and lodging furnished for the convenience of the
employer.
1.120-1 Statutory subsistence allowance received by police.
1.120-3 Notice of application for recognition of status of qualified
group legal services plan.
1.121-1 Exclusion of gain from sale or exchange of a principal
residence.
1.121-2 Limitations.
1.121-3 Reduced maximum exclusion for taxpayers failing to meet certain
requirements.
1.121-3T Reduced maximum exclusion for taxpayers failing to meet
certain requirements (temporary).
1.121-4 Special rules.
1.122-1 Applicable rules relating to certain reduced uniformed services
retirement pay.
1.123-1 Exclusion of insurance proceeds for reimbursement of certain
living expenses.
1.125-2T Question and answer relating to the benefits that may be
offered under a cafeteria plan (temporary).
1.125-3 Effect of the Family and Medical Leave Act (FMLA) on the
operation of cafeteria plans.
1.125-4 Permitted election changes.
1.127-1 Amounts received under a qualified educational assistance
program.
1.127-2 Qualified educational assistance program.
1.132-0 Outline of regulations under section 132.
1.132-1 Exclusion from gross income for certain fringe benefits.
1.132-1T Exclusion from gross income of certain fringe benefits--1985
through 1988 (temporary).
1.132-2 No-additional-cost services.
1.132-2T No-additional-cost service--1985 through 1988 (temporary).
1.132-3 Qualified employee discounts.
1.132-3T Qualified employee discount--1985 through 1988 (temporary).
1.132-4 Line of business limitation.
1.132-4T Line of business limitation--1985 through 1988 (temporary).
1.132-5 Working condition fringes.
1.132-5T Working condition fringe--1985 through 1988 (temporary).
1.132-6 De minimis fringes.
1.132-6T De minimis fringe--1985 through 1988 (temporary).
1.132-7 Employer-operated eating facilities.
1.132-7T Treatment of employer-operated eating facilities--1985 through
1988 (temporary).
1.132-8 Fringe benefit nondiscrimination rules.
1.132-8T Nondiscrimination rules--1985 through 1988 (temporary).
1.133-1T Questions and answers relating to interest on certain loans
used to acquire employer securities (temporary).
1.141-0 Table of contents.
Tax Exemption Requirements for State and Local Bonds
1.141-1 Definitions and rules of general application.
1.141-2 Private activity bond tests.
1.141-3 Definition of private business use.
1.141-4 Private security or payment test.
1.141-5 Private loan financing test.
1.141-6 Allocation and accounting rules.
1.141-7 Special rules for output facilities.
1.141-8 $15 million limitation for output facilities.
1.141-9 Unrelated or disproportionate use test.
1.141-10 Coordination with volume cap. [Reserved]
1.141-11 Acquisition of nongovernmental output property. [Reserved]
1.141-12 Remedial actions.
1.141-13 Refunding issues. [Reserved]
1.141-14 Anti-abuse rules.
1.141-15 Effective dates.
1.141-16 Effective dates for qualified private activity bond
provisions.
1.142-0 Table of contents.
1.142-1 Exempt facility bonds.
1.142-2 Remedial actions.
1.142-3 Refunding issues. [Reserved]
1.142-4 Use of proceeds to provide a facility.
1.142(a)(5)-1 Exempt facility bonds: Sewage facilities.
1.142(f)(4)-1 Manner of making election to terminate tax-exempt bond
financing.
1.144-0 Table of contents.
1.144-1 Qualified small issue bonds, qualified student loan bonds, and
qualified redevelopment bonds.
1.144-2 Remedial actions.
1.144-3 Standard deduction for individuals choosing income averaging.
[Reserved]
1.145-0 Table of contents.
1.145-1 Qualified 501(c)(3) bonds.
1.145-2 Application of private activity bond regulations.
1.147-0 Table of contents.
1.147-1 Other requirements applicable to certain private activity
bonds.
1.147-2 Remedial actions.
1.147(b)-1 Bond maturity limitation--treatment of working capital.
1.148-0 Scope and table of contents.
1.148-1 Definitions and elections.
1.148-2 General arbitrage yield restriction rules.
1.148-3 General arbitrage rebate rules.
1.148-4 Yield on an issue of bonds.
1.148-5 Yield and valuation of investments.
1.148-6 General allocation and accounting rules.
1.148-7 Spending exceptions to the rebate requirement.
[[Page 8]]
1.148-8 Small issuer exception to rebate requirement.
1.148-9 Arbitrage rules for refunding issues.
1.148-10 Anti-abuse rules and authority of Commissioner.
1.148-11 Effective dates.
1.149(b)-1 Federally guaranteed bonds.
1.149(d)-1 Limitations on advance refundings.
1.149(e)-1 Information reporting requirements for tax-exempt bonds.
1.149(g)-1 Hedge bonds.
1.150-1 Definitions.
1.150-2 Proceeds of bonds used for reimbursement.
1.150-4 Change in use of facilities financed with tax-exempt private
activity bonds.
1.150-5 Filing notices and elections.
Regulations Applicable to Certain Bonds Sold Prior to July 8, 1997
1.148-1A Definitions and elections.
1.148-2A General arbitrage yield restriction rules.
1.148-3A General arbitrage rebate rules.
1.148-4A Yield on an issue of bonds.
1.148-5A Yield and valuation of investments.
1.148-6A General allocation and accounting rules.
1.148-9A Arbitrage rules for refunding issues.
1.148-10A Anti-abuse rules and authority of Commissioner.
1.148-11A Effective dates.
1.149(d)-1A Limitations on advance refundings.
1.150-1A Definitions.
Deductions for Personal Exemptions
1.151-1 Deductions for personal exemptions.
1.151-2 Additional exemptions for dependents.
1.151-3 Definitions.
1.151-4 Amount of deduction for each exemption under section 151.
1.152-1 General definition of a dependent.
1.152-2 Rules relating to general definition of dependent.
1.152-3 Multiple support agreements.
1.152-4 Support test in case of child of divorced or separated parents.
1.152.4T Dependency exemption in the case of a child of divorced
parents, etc. (temporary).
1.153-1 Determination of marital status.
1.154 Statutory provisions; cross references.
Itemized Deductions for Individuals and Corporations
1.161-1 Allowance of deductions.
1.162-1 Business expenses.
1.162-2 Traveling expenses.
1.162-3 Cost of materials.
1.162-4 Repairs.
1.162-5 Expenses for education.
1.162-6 Professional expenses.
1.162-7 Compensation for personal services.
1.162-8 Treatment of excessive compensation.
1.162-9 Bonuses to employees.
1.162-10 Certain employee benefits.
1.162-10T Questions and answers relating to the deduction of employee
benefits under the Tax Reform Act of 1984; certain limits on
amounts deductible (temporary).
1.162-11 Rentals.
1.162-12 Expenses of farmers.
1.162-13 Depositors' guaranty fund.
1.162-14 Expenditures for advertising or promotion of good will.
1.162-15 Contributions, dues, etc.
1.162-16 Cross reference.
1.162-17 Reporting and substantiation of certain business expenses of
employees.
1.162-18 Illegal bribes and kickbacks.
1.162-19 Capital contributions to Federal National Mortgage
Association.
1.162-20 Expenditures attributable to lobbying, political campaigns,
attempts to influence legislation, etc., and certain
advertising.
1.162-21 Fines and penalties.
1.162-22 Treble damage payments under the antitrust laws.
1.162-25 Deductions with respect to noncash fringe benefits.
1.162-25T Deductions with respect to noncash fringe benefits
(temporary).
1.162-27 Certain employee remuneration in excess of $1,000,000.
1.162-28 Allocation of costs to lobbying activities.
1.162-29 Influencing legislation.
1.163-1 Interest deduction in general.
1.163-2 Installment purchases where interest charge is not separately
stated.
1.163-3 Deduction for discount on bond issued on or before May 27,
1969.
1.163-4 Deduction for original issue discount on certain obligations
issued after May 27, 1969.
1.163-5 Denial of interest deduction on certain obligations issued
after December 31, 1982, unless issued in registered form.
1.163-5T Denial of interest deduction on certain obligations issued
after December 31, 1982, unless issued in registered form
(temporary).
1.163-6T Reduction of deduction where section 25 credit taken
(temporary).
1.163-7 Deduction for OID on certain debt instruments.
1.163-8T Allocation of interest expense among expenditures (temporary).
1.163-9T Personal interest (temporary).
1.163-10T Qualified residence interest (temporary).
1.163-12 Deduction of original issue discount on instrument held by
related foreign person.
1.163-13 Treatment of bond issuance premium.
[[Page 9]]
1.163(d)-1 Time and manner for making election under the Omnibus Budget
Reconciliation Act of 1993.
1.164-1 Deduction for taxes.
1.164-2 Deduction denied in case of certain taxes.
1.164-3 Definitions and special rules.
1.164-4 Taxes for local benefits.
1.164-5 Certain retail sales taxes and gasoline taxes.
1.164-6 Apportionment of taxes on real property between seller and
purchaser.
1.164-7 Taxes of shareholder paid by corporation.
1.164-8 Payments for municipal services in atomic energy communities.
1.165-1 Losses.
1.165-2 Obsolescence of nondepreciable property.
1.165-3 Demolition of buildings.
1.165-4 Decline in value of stock.
1.165-5 Worthless securities.
1.165-6 Farming losses.
1.165-7 Casualty losses.
1.165-8 Theft losses.
1.165-9 Sale of residential property.
1.165-10 Wagering losses.
1.165-11 Election in respect of losses attributable to a disaster.
1.165-12 Denial of deduction for losses on registration-required
obligations not in registered form.
1.165-13T Questions and answers relating to the treatment of losses on
certain straddle transactions entered into before the
effective date of the Economic Recovery Tax Act of 1981, under
section 108 of the Tax Reform Act of 1984 (temporary).
1.166-1 Bad debts.
1.166-2 Evidence of worthlessness.
1.166-3 Partial or total worthlessness.
1.166-4 Reserve for bad debts.
1.166-5 Nonbusiness debts.
1.166-6 Sale of mortgaged or pledged property.
1.166-7 Worthless bonds issued by an individual.
1.166-8 Losses of guarantors, endorsers, and indemnitors incurred on
agreements made before January 1, 1976.
1.166-9 Losses of guarantors, endorsers, and indemnitors incurred, on
agreements made after December 31, 1975, in taxable years
beginning after such date.
1.166-10 Reserve for guaranteed debt obligations.
1.167(a)-1 Depreciation in general.
1.167(a)-2 Tangible property.
1.167(a)-3 Intangibles.
1.167(a)-4 Leased property.
1.167(a)-5 Apportionment of basis.
1.167(a)-5T Application of section 1060 to section 167 (temporary).
1.167(a)-6 Depreciation in special cases.
1.167(a)-7 Accounting for depreciable property.
1.167(a)-8 Retirements.
1.167(a)-9 Obsolescence.
1.167(a)-10 When depreciation deduction is allowable.
1.167(a)-11 Depreciation based on class lives and asset depreciation
ranges for property placed in service after December 31, 1970.
1.167(a)-12 Depreciation based on class lives for property first placed
in service before January 1, 1971.
1.167(a)-13T Certain elections for intangible property (temporary).
1.167(a)-14 Treatment of certain intangible property excluded from
section 197.
1.167(b)-0 Methods of computing depreciation.
1.167(b)-1 Straight line method.
1.167(b)-2 Declining balance method.
1.167(b)-3 Sum of the years-digits method.
1.167(b)-4 Other methods.
1.167(c)-1 Limitations on methods of computing depreciation under
section 167(b) (2), (3), and (4).
1.167(d)-1 Agreement as to useful life and rates of depreciation.
1.167(e)-1 Change in method.
1.167(f)-1 Reduction of salvage value taken into account for certain
personal property.
1.167(g)-1 Basis for depreciation.
1.167(h)-1 Life tenants and beneficiaries of trusts and estates.
1.167(i)-1 Depreciation of improvements in the case of mines, etc.
1.167(l)-1 Limitations on reasonable allowance in case of property of
certain public utilities.
1.167(l)-2 Public utility property; election as to post-1969 property
representing growth in capacity.
1.167(l)-3 Multiple regulation, asset acquisitions, reorganizations,
etc.
1.167(l)-4 Public utility property; election to use asset depreciation
range system.
1.167(m)-1 Class lives.
1.168-5 Special rules.
1.168(d)-0 Table of contents for the applicable convention rules.
1.168(d)-1 Applicable convention--Half-year and mid-quarter
conventions.
1.168(f)(8)-1T Safe-harbor lease information returns concerning
qualified mass commuting vehicles (temporary).
1.168(h)-1 Like-kind exchanges involving tax-exempt use property.
1.168(i)-0 Table of contents for the general asset account rules.
1.168(i)-1 General asset accounts.
1.168(i)-2 Lease term.
1.168(j)-1T Questions and answers concerning tax-exempt entity leasing
rules (temporary).
1.168A-1 Amortization of emergency facilities; general rule.
1.168A-2 Election of amortization.
1.168A-3 Election to discontinue amortization.
[[Page 10]]
1.168A-4 Definitions.
1.168A-5 Adjusted basis of emergency facility.
1.168A-6 Depreciation of portion of emergency facility not subject to
amortization.
1.168A-7 Payment by United States of unamortized cost of facility.
1.169-1 Amortization of pollution control facilities.
1.169-2 Definitions.
1.169-3 Amortizable basis.
1.169-4 Time and manner of making elections
Authority: 26 U.S.C. 7805, unless otherwise noted.
Section 1.61-2T also issued under 26 U.S.C. 61.
Section 1.61-21 also issued under 26 U.S.C. 61.
Sections 1.62-1T and 1.62-2 also issued under 26 U.S.C. 62;
Sections 1.67-2T and 1.67-3T also issued under 26 U.S.C. 67(c);
Section 1.67-3 also issued under 26 U.S.C. 67(c).
Sections 1.72-4, 1.72-5, 1.72-6, 1.72-7, 1.72-8, and 1.72-11 also
issued under 26 U.S.C. 72(c).
Section 1.101-7 also issued under 26 U.S.C. 101(d)(2)(B)(ii);
Section 1.103-10 also issued under 26 U.S.C. 103(b)(6);
Section 1.103A-2 also issued under 26 U.S.C. 103A(j);
Section 1.108-1 also issued under 26 U.S.C. 108(e)(8) and
108(e)(10(B);
Section 1.108-2 also issued under 26 U.S.C. 108;
Section 1.108-3 also issued under 26 U.S.C. 108, 267, and 1502.
Section 1.108-4 also issued under 26 U.S.C. 108.
Section 1.108-5 also issued under 26 U.S.C. 108.
Section 1.108(c)-1 also issued under the authority of 26 U.S.C.
108(d)(9);
Section 1.110-1 also issued under 26 U.S.C. 110(d);
Sections 1.132-0 through 1.132-8T also issued under 26 U.S.C. 132;
Sections 1.148-0 through 1.148-11 also issued under 26 U.S.C. 148
(f), (g), and (i);
Sections 1.148-6 also issued under 26 U.S.C. 148 (f), (g), and (i);
Section 1.149(b)-1 also issued under 26 U.S.C. 149(b)(3)(B) (v);
Section 1.149(d)-1 also issued under 26 U.S.C. 149(d)(7);
Section 1.149(e)-1 also issued under 26 U.S.C. 149(e);
Section 1.149(g)-1 also issued under 26 U.S.C. 149(g)(5);
Sections 1.150-4 also issued under 26 U.S.C. 150 (c)(5);
Section 1.163-8T also issued under 26 U.S.C. 469(k)(4);
Section 1.163-9T also issued under 26 U.S.C. 163(h)(3)(D);
Section 1.163-11T is also issued under 26 U.S.C. 163(h);
Section 1.165-12 also issued under 26 U.S.C. 165(j)(3);
Section 1.166-10 also issued under 26 U.S.C. 166(f);
Section 1.168(d)-1 also issued under 26 U.S.C. 168(d)(3);
Section 1.168(f)(8)-1T also added under sec. 112(c), Black Lung
Benefits Revenue Act of 1981 (Pub. L. 97-119);
Section 1.168(h)-1 also issued under 26 U.S.C. 168.
Section 1.168(i)-1 also issued under 26 U.S.C. 168(i)(4).
Section 1.168(i)-2 also issued under 26 U.S.C. 168.
Section 1.168(j)-1T also added under 26 U.S.C. 168(j)(10).
Source: T.D. 6500, 25 FR 11402, Nov. 26, 1960; 25 FR 14021, Dec. 21,
1960, unless otherwise noted.
COMPUTATION OF TAXABLE INCOME
Definition of Gross Income, Adjusted Gross Income, and Taxable Income
Sec. 1.61-1 Gross income.
(a) General definition. Gross income means all income from whatever
source derived, unless excluded by law. Gross income includes income
realized in any form, whether in money, property, or services. Income
may be realized, therefore, in the form of services, meals,
accommodations, stock, or other property, as well as in cash. Section 61
lists the more common items of gross income for purposes of
illustration. For purposes of further illustration, Sec. 1.61-14
mentions several miscellaneous items of gross income not listed
specifically in section 61. Gross income, however, is not limited to the
items so enumerated.
(b) Cross references. Cross references to other provisions of the
Code are to be found throughout the regulations under section 61. The
purpose of these cross references is to direct attention to the more
common items which are included in or excluded from gross income
entirely, or treated in some special manner. To the extent that another
section of the Code or of the regulations thereunder, provides specific
treatment for any item of income, such
[[Page 11]]
other provision shall apply notwithstanding section 61 and the
regulations thereunder. The cross references do not cover all possible
items.
(1) For examples of items specifically included in gross income, see
Part II (section 71 and following), Subchapter B, Chapter 1 of the Code.
(2) For examples of items specifically excluded from gross income,
see part III (section 101 and following), Subchapter B, Chapter 1 of the
Code.
(3) For general rules as to the taxable year for which an item is to
be included in gross income, see section 451 and the regulations
thereunder.
Sec. 1.61-2 Compensation for services, including fees, commissions, and similar items.
(a) In general. (1) Wages, salaries, commissions paid salesmen,
compensation for services on the basis of a percentage of profits,
commissions on insurance premiums, tips, bonuses (including Christmas
bonuses), termination or severance pay, rewards, jury fees, marriage
fees and other contributions received by a clergyman for services, pay
of persons in the military or naval forces of the United States, retired
pay of employees, pensions, and retirement allowances are income to the
recipients unless excluded by law. Several special rules apply to
members of the Armed Forces, National Oceanic and Atmospheric
Administration, and Public Health Service of the United States; see
paragraph (b) of this section.
(2) The Code provides special rules including the following items in
gross income:
(i) Distributions from employees' trusts, see sections 72, 402, and
403, and the regulations thereunder;
(ii) Compensation for child's services (in child's gross income),
see section 73 and the regulations thereunder;
(iii) Prizes and awards, see section 74 and the regulations
thereunder.
(3) Similarly, the Code provides special rules excluding the
following items from gross income in whole or in part:
(i) Gifts, see section 102 and the regulations thereunder;
(ii) Compensation for injuries or sickness, see section 104 and the
regulations thereunder;
(iii) Amounts received under accident and health plans, see section
105 and the regulations thereunder;
(iv) Scholarship and fellowship grants, see section 117 and the
regulations thereunder;
(v) Miscellaneous items, see section 122.
(b) Members of the Armed Forces, National Oceanic and Atmospheric
Administration, and Public Health Service. (1) Subsistence and uniform
allowances granted commissioned officers, chief warrant officers,
warrant officers, and enlisted personnel of the Armed Forces, National
Oceanic and Atmospheric Administration, and Public Health Service of the
United States, and amounts received by them as commutation of quarters,
are excluded from gross income. Similarly, the value of quarters or
subsistence furnished to such persons is excluded from gross income.
(2) For purposes of this section, quarters or subsistence includes
the following allowances for expenses incurred after December 31, 1993,
by members of the Armed Forces, members of the commissioned corps of the
National Oceanic and Atmospheric Administration, and members of the
commissioned corps of the Public Health Service, to the extent that the
allowances are not otherwise excluded from gross income under another
provision of the Internal Revenue Code: a dislocation allowance,
authorized by 37 U.S.C. 407; a temporary lodging allowance, authorized
by 37 U.S.C. 405; a temporary lodging expense, authorized by 37 U.S.C.
404a; and a move-in housing allowance, authorized by 37 U.S.C. 405. No
deduction is allowed under this chapter for any expenses reimbursed by
such excluded allowances. For the exclusion from gross income of--
(i) Disability pensions, see section 104(a)(4) and the regulations
thereunder;
(ii) Miscellaneous items, see section 122.
(3) The per diem or actual expense allowance, the monetary allowance
in lieu of transportation, and the mileage allowance received by members
of the Armed Forces, National Oceanic and Atmospheric Administration,
and the Public Health Service, while in a travel
[[Page 12]]
status or on temporary duty away from their permanent stations, are
included in their gross income except to the extent excluded under the
accountable plan provisions of Sec. 1.62-2.
(c) Payment to charitable, etc., organization on behalf of person
rendering services. The value of services is not includible in gross
income when such services are rendered directly and gratuitously to an
organization described in section 170(c). Where, however, pursuant to an
agreement or understanding, services are rendered to a person for the
benefit of an organization described in section 170(c) and an amount for
such services is paid to such organization by the person to whom the
services are rendered, the amount so paid constitutes income to the
person performing the services.
(d) Compensation paid other than in cash--(1) In general. Except as
otherwise provided in paragraph (d)(6)(i) of this section (relating to
certain property transferred after June 30, 1969), if services are paid
for in property, the fair market value of the property taken in payment
must be included in income as compensation. If services are paid for in
exchange for other services, the fair market value of such other
services taken in payment must be included in income as compensation. If
the services are rendered at a stipulated price, such price will be
presumed to be the fair market value of the compensation received in the
absence of evidence to the contrary. For special rules relating to
certain options received as compensation, see Secs. 1.61-15, 1.83-7, and
section 421 and the regulations thereunder. For special rules relating
to premiums paid by an employer for an annuity contract which is not
subject to section 403(a), see section 403(c) and the regulations
thereunder and Sec. 1.83-8(a). For special rules relating to
contributions made to an employees' trust which is not exempt under
section 501, see section 402(b) and the regulations thereunder and
Sec. 1.83-8(a).
(2) Property transferred to employee or independent contractor. (i)
Except as otherwise provided in section 421 and the regulations
thereunder and Sec. 1.61-15 (relating to stock options), and paragraph
(d)(6)(i) of this section, if property is transferred by an employer to
an employee or if property is transferred to an independent contractor,
as compensation for services, for an amount less than its fair market
value, then regardless of whether the transfer is in the form of a sale
or exchange, the difference between the amount paid for the property and
the amount of its fair market value at the time of the transfer is
compensation and shall be included in the gross income of the employee
or independent contractor. In computing the gain or loss from the
subsequent sale of such property, its basis shall be the amount paid for
the property increased by the amount of such difference included in
gross income
(ii)(a) Cost of life insurance on the life of the employee.
Generally, life insurance premiums paid by an employer on the life of
his employee where the proceeds of such insurance are payable to the
beneficiary of such employee are part of the gross income of the
employee. However, the amount includible in the employee's gross income
is determined with regard to the provisions of section 403 and the
regulations thereunder in the case of an individual contract issued
after December 31, 1962, or a group contract, which provides incidental
life insurance protection and which satisfies the requirements of
section 401(g) and Sec. 1.401-9, relating to the nontransferability of
annuity contracts. For the special rules relating to the includibility
in an employee's gross income of an amount equal to the cost of certain
group term life insurance on the employee's life which is carried
directly or indirectly by his employer, see section 79 and the
regulations thereunder. For special rules relating to the exclusion of
contributions by an employer to accident and health plans for the
employee, see section 106 and the regulations thereunder.
(b) Cost of group-term life insurance on the life of an individual
other than an employee. The cost (determined under paragraph (d)(2) of
Sec. 1.79-3) of group-term life insurance on the life of an individual
other than an employee (such as the spouse or dependent of the employee)
provided in connection with the performance of services by the employee
is includible in the gross income of the employee.
[[Page 13]]
(3) Meals and living quarters. The value of living quarters or meals
which an employee receives in addition to his salary constitutes gross
income unless they are furnished for the convenience of the employer and
meet the conditions specified in section 119 and the regulations
thereunder. For the treatment of rental value of parsonages or rental
allowance paid to ministers, see section 107 and the regulations
thereunder; for the treatment of statutory subsistence allowances
received by police, see section 120 and the regulations thereunder.
(4) Stock and notes transferred to employee or independent
contractor. Except as otherwise provided by section 421 and the
regulations thereunder and Sec. 1.61-15 (relating to stock options), and
paragraph (d)(6)(i) of this section, if a corporation transfers its own
stock to an employee or independent contractor as compensation for
services, the fair market value of the stock at the time of transfer
shall be included in the gross income of the employee or independent
contractor. Notes or other evidences of indebtedness received in payment
for services constitute income in the amount of their fair market value
at the time of the transfer. A taxpayer receiving as compensation a note
regarded as good for its face value at maturity, but not bearing
interest, shall treat as income as of the time of receipt its fair
discounted value computed at the prevailing rate. As payments are
received on such a note, there shall be included in income that portion
of each payment which represents the proportionate part of the discount
originally taken on the entire note.
(5) Property transferred on or before June 30, 1969, subject to
restrictions. Notwithstanding paragraph (d) (1), (2), or (4) of this
section, if any property is transferred after September 24, 1959, by an
employer to an employee or independent contractor as compensation for
services, and such property is subject to a restriction which has a
significant effect on its value at the time of transfer, the rules of
Sec. 1.421-6(d)(2) shall apply in determining the time and the amount of
compensation to be included in the gross income of the employee or
independent contractor. This (5) is also applicable to transfers subject
to a restriction which has a significant effect on its value at the time
of transfer and to which Sec. 1.83-8(b) (relating to transitional rules
with respect to transfers of restricted property) applies. For special
rules relating to options to purchase stock or other property which are
issued as compensation for services, see Sec. 1.61-15 and section 421
and the regulations thereunder.
(6) Certain property transferred, premiums paid, and contributions
made in connection with the performance of services after June 30, 1969-
-(i) Exception. Paragraph (d) (1), (2), (4), and (5) of this section and
Sec. 1.61-15 do not apply to the transfer of property (as defined in
Sec. 1.83-3(e)) after June 30, 1969, unless Sec. 1.83-8 (relating to the
applicability of section 83 and transitional rules) applies. If section
83 applies to a transfer of property, and the property is not subject to
a restriction that has a significant effect on the fair market value of
such property, then the rules contained in paragraph (d) (1), (2), and
(4) of this section and Sec. 1.61-15 shall also apply to such transfer
to the extent such rules are not inconsistent with section 83.
(ii) Cross references. For rules relating to premiums paid by an
employer for an annuity contract which is not subject to section 403(a),
see section 403(c) and the regulations thereunder. For rules relating to
contributions made to an employees' trust which is not exempt under
section 501(a), see section 402(b) and the regulations thereunder.
[T.D. 6500, 25 FR 11402, Nov. 26, 1960, as amended by T.D. 6696, 28 FR
13450, Dec. 12, 1963; T.D. 6856, 30 FR 13316, Oct. 20, 1965; T.D. 7544,
43 FR 31913, July 24, 1978; T.D. 7623, 44 FR 28800, May 17, 1979; T.D.
8256, 54 FR 28582, July 6, 1989; T.D. 8607, 60 FR 40076, Aug. 7, 1995]
Sec. 1.61-2T Taxation of fringe benefits--1985 through 1988 (temporary).
(a) Fringe benefits--(1) In general. Section 61(a)(1) provides that,
except as otherwise provided in subtitle A, gross income includes
compensation for services, including fees, commissions, fringe benefits,
and similar items. Examples of fringe benefits include: an employer-
provided automobile, a flight
[[Page 14]]
on an employer-provided aircraft, an employer-provided free or
discounted commercial airline flight, an employer-provided vacation, and
employer-provided discount on property or services, and emkployer-
provided membership in a country club or other social club, and an
employer-provided ticket to an entertainment or sporting event.
(2) Fringe benefits excluded from income. To the extent that a
particular fringe benefit is specifically excluded from gross income
pursuant to another section of subtitle A, that section shall govern the
treatment of the fringe benefit. Thus, if the requirements of the
governing section are satisfied, the fringe benefits may be excludable
from gross income. Examples of excludable fringe benefits are qualified
tuition reductions provided to an employee (section 177(d)); meals and
lodging furnished to an employee for the convenience of the employer
(section 119); and benefits provided under a dependent care assistance
program (section 129). Similarly, the value of the use by an employee of
an employer-provided vehicle or a flight provided to an employee on an
employer-provided aircraft may be excludable from income under section
105 (because, for example, the trnsportation is provided for medical
reasons) if and to the extent that the requirements of that section are
satisfied. Section 61 and the regulations thereunder shall apply,
however, to the extent that they are not inconsistent with such other
section. For example, many fringe benefits specifically addressed in
other sections of subtitle A are excluded from gross income only to the
extent that they do not exceed specific dollar or percentage limits, or
only if certain other requirements are met. If the limits are exceeded
or the requirements are not met, some or all of the fringe benefit may
be includible in gross income. See paragraph (b)(3) of this section.
(3) Compensation for services. A fringe benefit provided in
connection with the performance of services shall be considered to have
been provided as compensation for servcies. Refraining from the
performance of services (such as pursuant to a covenant not to compete)
is deemed to be the performance of services for purposes of this
section.
(4) Recipient of a fringe benefit--(i) Definition. A fringe benefit
is included in the income of the ``recipient'' of the fringe benefit.
The recipient of a fringe benefit is the person performing the services
in connection with which the fringe benefit is provided. Thus, a person
may be considered to be a recipient, even though that person did not
actually receive the fringe benefit. For example, a fringe benefit
provided to any person is connection with the performance of services by
another person is considered to have been provided to the person who
performs the services and not the person who receives the fringe
benefit. In addition, if a fringe benefit is provided to a person, but
taxable to a second person as the recipient, such benefit is referred to
as provided to the second person and use by the first person is
considered use by the second person. For example, provision of an
automobile to an employee's spouse by the employer is taxable to the
employee as the recipient. The automobile is referred to as available to
the employee and use by the employee's spouse is considered use by the
employee.
(ii) Recipient may be other than an employee. The recipient of a
fringe benefit need not be an employee of the provider of the fringe
benefit, but may be a partner, director, or an independent contractor.
For convenience, the term ``employee'' includes a reference to any
recipient of a fringe benefit, unless otherwise specifically provided in
this section.
(5) Provider of a fringe benefit. The ``provider'' of a fringe
benefit is that person for whom the services are performed, regardless
of whether that person actually provides the fringe benefit to the
recipient. The provider of a fringe benefit need not be the employer of
the recipient of the fringe benefit, but may be, for example, a client
or customer of an independent contractor. For convenience, the term
``employer'' includes a reference to any provider of a fringe benefit,
unless otherwise specifically provided in this section.
(6) Effective date. This section is effective from January 1, 1985,
to December 31, 1988, with respect to fringe benefits
[[Page 15]]
furnished before January 1, 1989. No inference may be drawn from the
promulgation or terms of this section concerning the application of law
in effect prior to January 1, 1985.
(b) Valuation of fringe benefits--(1) In general. An employee must
include in gross income the amount by which the fair market value of the
fringe benefit exceeds the sum of (i) the amount, if any, paid for the
benefit, and (ii) the amount, if any, specifically excluded from gross
income by some other section of subtitle A. Therefore, for example, if
the employee pays fair market value for what is received, no amount is
includible in the gross income of the employee.
(2) Fair market value. In general, fair market value is determined
on the basis of all the facts and circumstances. Specifically, the fair
market value of a fringe benefit is that amount a (hypothetical person
would have to pay a hypothetical third party to obtain (i.e., purchase
or lease) the particular fringe benefit. Thus, for example, the effect
of any special relationship that may exist between the employer and the
employee must be disregarded. This also means that an employee's
subjective perception of the value of a fringe benefit is not relevant
to the determination of a fringe benefit's fair market value. In
addition, the cost incurred by the employer is not determinative of the
fair market value of the fringe benefit. For special rules relating to
the valuation of certain fringe benefits, see paragraph (c) of this
section.
(3) Exclusion from income based on cost. If a statutory exclusion
phrased in terms of cost applies to the provision of a fringe benefit,
section 61 does not require the inclusion in the recipient's gross
income of the difference between the fair market value and the
excludable cost of that fringe benefit. For example, section 129
provides an exclusion from an employee's gross income for amounts paid
or incurred by an employer to provide dependent care assistance to
employees. Even if the fair market value of the dependent care
assistance exceeds the employer's cost, the excess is not subject to
inclusion under section 61 and this section. If the statutory cost
exclusion is a limited amount, however, then the fair market value of
the fringe benefit attributable to any excess cost is subject to
inclusion.
(4) Fair market value of the availability of an employer-provided
vehicle. If the vehicle special valuation rules of paragraph (d), (e),
or (f) of this section are not used by a taxpayer entitled to use such
rules, the value of the availability of an employer-provided vehicle is
determined under the general valuation principles set forth in this
section. In general, such valuation must be determined by reference to
the cost to a hypothetical person of leasing from a hypothetical third
party the same or comparable vehicle on the same or comparable terms in
the geographic area in which the vehicle is available for use. Unless
the employee can substantiate that the same or comparable vehicle could
have been leased on a cents-per-mile basis, the value of the
availability of the vehicle cannot be determined by reference to a
cents-per-mile rate applied to the number of miles the vehicle is
driven. An example of a comparable lease term is the amount of time that
the vehicle is available to the employee for use, e.g., a one-year
period.
(5) Fair market value of a flight on an employer-provided aircraft.
If the non-commercial flight special valuation rule of paragraph (g) of
this section is not used (or is not properly used) by a taxpayer
entitled to use such rule, the value of a flight on an employer-provided
aircraft is determined under the general valuation principles set forth
in this section. An example of how the general valuation principles
would apply is that if an employee whose flight is primarily personal
controls the use of an aircraft with respect to such flight, such flight
is valued by reference to how much it would cost a hypothetical person
to charter the same or comparable aircraft for the same or comparable
flight. The cost to charter the aircraft must be allocated among all
employees on board the aircraft based on all the facts and
circumstances, including which employees controlled the use of the
aircraft. Notwithstanding the allocation required by the preceding
sentence, no additional amount shall be included in
[[Page 16]]
the income of any employee whose flight is properly valued under the
special valuation rule of paragraph (g) of this section.
(c) Special valuation rules--(1) In general. Paragraphs (d) through
(j) of this section provide special valuation rules that may be used
under certain circumstances for certain commonly provided fringe
benefits. Paragraph (d) provides a lease valuation rule relating to
employer-provided automobiles. Paragraph (e) provides a cents-per-mile
valuation rule relating to employer-provided vehicles. Paragraph (f)
provides a commuting valuation rule relating to employer-provided
vehicles. Paragraph (g) provides a flight valuation rule relating to
flights on employer-provided aircraft. Paragraph (h) provides a flight
valuation rule relating to flights on commercial airlines. Paragraph(i)
is reserved. Paragraph (j) provides a meal valuation rule relating to
employer-operated eating facilities for employees. For general rules
relating to the valuation of fringe benefits not eligible for valuation
under the special valuation rules, see paragraph (d) of this section.
(2) Use of the special valuation rules--(i) In general. The Special
valuation rules may be used for income, employment tax, and reporting
purposes. Use of any of the special valuation rules is optional. An
employer need not use the same vehicle special valuation rule for all
vehicles provided to all employees. For example, an employer may use the
automobile lease valuation rule for automobiles provided to some
employees, and the commuting and vehicle cents-per-mile valuation rules
for automobiles provided to other employees. Except as otherwise
provided, however, if either the commercial flight valuation rule or the
noncommercial flight valuation rule is used, such rule must be used by
an employer to value all flights taken by employees in a calendar year.
Effective January 1, 1986, if an employer uses one of the special rules
to value the benefit provided to an employee, the employee may not use
another special rule to value that benefit. The employee may, however,
use general valuation rules based on facts and circumstances (see
paragraph (b) of this section). Effective January 1, 1986, an employee
may only use a special valuation rule if the employer uses the rule. If
a special rule is used, it must be used for all purposes. If an employer
properly uses a special rule and the employee uses the special rule, the
employee must include in gross income the amount determined by the
employer under the special rule less any amount reimbursed by the
employee to the employer. The employer and the employee may use the
special rules to determine the amount of the reimbursement due the
employer by the employee. If an employer properly uses a special rule
and properly determines the amount of an employee's working condition
fringe under section 132 and Sec. 1.132-1T (under the general rule or
under a special rule), and the employee uses the special valuation rule,
the employee must include in gross income the amount determined by the
employer less any amount reimbursed by the employee to the employer.
(ii) Transitional rules--(A) Use of vehicle special valuation rules
for 1985 and 1986. For purposes of valuing the use or availability of a
vehicle, the consistency rules provided in paragraphs (d)(6) and (e)(5)
of this section (relating to the automobile lease valuation rule and the
vehicle cents-per-mile valuation rule, respectively) apply for 1987 and
thereafter. Therefore, for 1985 and 1986 an employer (and employee,
subject to paragraph (c)(2)(i) of this section) may use any applicable
special valuation rule (or no special valuation rule) to value the use
or availability of a vehicle, subject to paragraph (c)(2)(ii)(B) of this
section.
(B) Consistency Rules for 1985 and 1986. If an employer uses the
automobile lease valuation rule of paragraph (d) of this section in 1985
or 1986 with respect to an automobile, such rule must be used for the
entire calendar year with respect to the automobile except for any
period during which the commuting valuation rule of paragraph (f) of
this section is properly used. If an employer uses the vehicle cents-
per-mile valuation rule of pararaph (e) of this section in 1985 or 1986
with respect to a vehicle, such rule must be used for the entire
calendar year with respect to the vehicle except for any period during
which the commuting valuation
[[Page 17]]
rule of paragraph (f) of this section is properly used. The rules of
this paragraph (c)(2)(ii)(B) also apply to employees using the special
valuation rules of paragraphs (d) or (e) of this section.
(C) Employee's use of special valuation rules for 1985. An employee
may use a special valuation rule (other than the rule in paragraph (e)
of this section relating to the vehicle cents-per-mile valuation rule)
during 1985 even if the employer does not use the same special valuation
rule during 1985. An employee's use of a special valuation rule in 1986
and thereafter must be consistent with his employer's use of the rule as
required under paragraph (c)(2)(i) of this section.
(D) Examples. The following examples illustrate the rules of
paragraph (c)(2)(ii) of this section:
Example (1). Assume that an employer properly uses the automobile
lease valuation rule in 1985. The employer may use the vehicle cents-
per-mile valuation rule in 1986 if the requirements of the vehicle
cents-per-mile valuation rule are satisfied.
Example (2). Assume that an employer does not use a special
valuation rule to value the availability of an automobile in 1985. The
employer may use any of the special valuation rules in 1986 if the
requirements of the rule chosen are satisfied. The same applies for
1987.
Example (3). Assume that an employer properly uses the vehicle
cents-per-mile valuation rule in 1985. The employer may continue to use
to the rule or use any of the other special valuation rules to value the
benefit provided in 1986 if the requirements of the rule chosen are
satisfied. Alternatively, the employer may use none of the special
valuation rules in 1986 but use any of the rules in 1987 if the
requirements of the rule chosen are satisfied.
Example (4). Assume that an employee properly uses the automobile
lease valuation rule in 1985. In 1986 and thereafter the employee may
use a special valuation rule only if the employee's employer uses the
same special valuation rule. The employee may use general valuation
principles to value the benefit provided in 1986 and thereafter.
(3) Election to use the special valuation rules--A particular
special valuation rule is deemed to have been elected by the employer
(and, if applicable, by the employee), if the employer (and, if
applicable, the employee) determines the value of the fringe benefit
provided by applying the special valuation rule and treats such value as
the fair market value of the fringe benefit for income, employment tax,
and reporting purposes. Neither the employer nor the employee is
required to notify the Internal Revenue Service of the election.
(4) Application of section 414 to employers. For purposes of
paragraphs (c) through (j) of this section, except as otherwise provided
therein, the term ``employer'' includes all entities required to be
treated as a single employer under section 414 (b), (c), or (m).
(5) Valuation formulas contained in the special valuation rules. The
valuation formulas contained in the special valuation rules are provided
only for use in connection with such rules. Thus, when a special
valuation rule is properly applied to a fringe benefit, the Commissioner
will accept the value calculated pursuant to the rule as the fair market
value of that fringe benefit. However, when a special valuation rule is
not properly applied to a fringe benefit (see, for example, paragraph
(g)(11) of this section), or when a special valuation rule is not used
to value a fringe benefit by a taxpayer entitled to use the rule, the
fair market value of that fringe benefit may not be determined by
reference to any value calculated under any special valuation rule.
Under the circumstances described in the preceding sentence, the fair
market value of the fringe benefit must be determined pursuant to
paragraph (b) of this section.
(6) Modification of the special valuation rules. The Commissioner
may, if he deems it necessary, add, delete, or modify the special
valuation rules, including the valuation formulas contained herein, on a
prospective basis.
(7) Special Accounting Period. If the employer is using the special
accounting rule provided in Announcement 85-113 (1985-31 I.R.B., August
5, 1985) (relating to the reporting of and withholding on the value of
noncash fringe benefits), benefits which are deemed provided in a
subsequent calendar year pursuant to such rule are considered as
provided in such subsequent calendar year for purposes of the special
valuation rules. Thus, if a particular special valuation rule is in
effect for a calendar year, it applies to benefits deemed provided
during such calendar year under the special accounting rule.
[[Page 18]]
(d) Automobile lease valuation rule--(1) In general--(i) Annual
Lease Value. Under the special valuation rule of this paragraph (d), if
an employer provides an employee with an automobile that is available to
the employee for an entire calendar year, the value of the benefit
provided in the Annual Lease Value (determined under paragraph (d)(2) of
this section) of that automobile. Except as otherwise provided, for an
automobile that is available to an employee for less than an entire
calendar year, the value of the benefit provided is either a pro-rated
Annual Lease Value or the Daily Lease Value (as defined in paragraph
(d)(4) of this section), whichever is applicable. Absent any statutory
exclusion relating to the employer-provided automobile (see, for
example, section 132(a)(3) and Sec. 1.132-5T(b)), the amount of the
Annual Lease Value (or a pro-rated Annual Lease Value or the Daily Lease
Value, as applicable) is included in the gross income of the employee.
(ii) Definition of automobile. For purposes of this paragraph (d),
the term ``automobile'' means any four-wheeled vehicle manufactured
primarily for use on public streets, roads, and highways.
(2) Calculation of Annual Lease Valu e--(i) In general. The Annual
Lease Value of a particular automobile is calculated as follows:
(A) Determine the fair market value of the automobile as of the
first date on which the automobile is made available to any employee of
the employer for personal use. For an automobile first made available to
any employee for personal use prior to January 1, 1985, determine the
fair market value as of January 1, 1985. For rules relating to
determination of the fair market value of an automobile for purposes of
this paragraph (d), see paragraph (d)(5) of this section.
(B) Select the dollar range in column 1 of the Annual Lease Value
Table, set forth in paragraph (d)(2)(iii) of this section, corresponding
to the fair market value of the automobile. Except as otherwise provided
in paragraphs (d)(2) (iv) and (v) of this section, the Annual Lease
Value for each year of availability of the automobile is the
corresponding amount in column 2 of the Table.
(ii) Use by employee only in 1985. If the employee, but not the
employer, is using the special rule of this paragraph (d), the employee
may calculate the Annual Lease Value in the same manner as described in
paragraph (d)(2)(i)(A) of this section, except that the fair market
value of the automobile is determined as of the first date on which the
automobile is made available to the employee for personal use or, for an
automobile made available to the employee for personal use prior to
January 1, 1985, by determining the fair market value as of January 1,
1985. If the employer is also using the special rule of this paragraph
(d), however, then the employee to whom the automobile is made available
must use the special rule, if at all, by using the Annual Lease Value
calculated by the employer. The rules of this paragraph (d)(2)(ii) apply
only for 1985.
(iii) Annual Lease Value Table.
------------------------------------------------------------------------
Annual
Automobile fair market value lease
value
(1) (2)
------------------------------------------------------------------------
$0 to $999................................................... $600
$1,000 to $1,999............................................. 850
$2,000 to $2,999............................................. 1,100
$3,000 to $3,999............................................. 1,350
$4,000 to $4,999............................................. 1,600
$5,000 to $5,999............................................. 1,850
$6,000 to $6,999............................................. 2,100
$7,000 to $7,999............................................. 2,350
$8,000 to $8,999............................................. 2,600
$9,000 to $9,999............................................. 2,850
$10,000 to $10,999........................................... 3,100
$11,000 to $11,999........................................... 3,350
$12,000 to $12,999........................................... 3,600
$13,000 to $13,999........................................... 3,850
$14,000 to $14,999........................................... 4,100
$15,000 to $15,999........................................... 4,350
$16,000 to $16,999........................................... 4,600
$17,000 to $17,999........................................... 4,850
$18,000 to $18,999........................................... 5,100
$19,000 to $19,999........................................... 5,350
$20,000 to $20,999........................................... 5,600
$21,000 to $21,999........................................... 5,580
$22,000 to $22,999........................................... 6,100
$23,000 to $23,999........................................... 6,350
$24,000 to $24,999........................................... 6,600
$25,000 to $25,999........................................... 6,850
$26,000 to $27,999........................................... 7,250
$28,000 to $29,999........................................... 7,750
$30,000 to $31,999........................................... 8,250
$32,000 to $33,999........................................... 8,750
$34,000 to $35,999........................................... 9,250
$36,000 to $37,999........................................... 9,750
$38,000 to $39,999........................................... 10,250
$40,000 to $41,999........................................... 10,750
$42,000 to $43,999........................................... 11,250
$44,000 to $45,999........................................... 11,750
$46,000 to $47,999........................................... 12,250
[[Page 19]]
$48,000 to $49,999........................................... 12,750
$50,000 to $51,999........................................... 13,250
$52,000 to $53,999........................................... 13,750
$54,000 to $55,999........................................... 14,250
$56,000 to $57,999........................................... 14,750
$58,000 to $59,999........................................... 15,250
------------------------------------------------------------------------
For vehicles having a fair market value in excess of $59,999, the Annual
Lease Value is equal to: (.25 x the fair market value of the automobile)
+ $500.
(iv) Recalculation of annual lease value. The Annual Lease Values
determined under the rules of this paragraph (d) are based on a four-
year lease term. Therefore, except as otherwise provided in paragraph
(d)(2)(v) of this section, the Annual Lease Value calculated by applying
paragraph (d)(2) (i) or (ii) of this section shall remain in effect for
the period that begins with the first date the special valuation rule of
paragraph (d) of this section is applied by the employer to the
automobile and ends on December 31 of the fourth full calendar year
following that date. The Annual Lease Value for each subsequent four-
year period is calculated by determining the fair market value of the
automobile as of the January 1 following the period described in the
previous sentence and selecting the amount in column 2 of the Annual
Lease Value Table corresponding to the appropriate dollar range in
column 1 of the Table. If, however, the employer is using the special
accounting rule provided in Announcement 85-113 (1985-31 I.R.B., August
5, 1985) (relating to the reporting of and withholding on the value of
noncash fringe benefits), the employer may calculate the Annual Lease
Value for each subsequent four-year period as of the beginning of the
special accounting period that begins immediately prior to the January 1
described in the previous sentence. For example, assume that pursuant to
Announcement 85-113, an employer uses the special accounting rule.
Assume further that beginning on November 1, 1985, the special
accounting period is November 1 to October 31 and that the employer
elects to use the special valuation rule of this paragraph (d) as of
January 1, 1985. The employer may recalculate the Annual Lease Value as
of November 1, 1988, rather than as of January 1, 1989.
(v) Transfer of the automobile to another employee. Unless the
primary purpose of the transfer is to reduce Federal taxes, if an
employer transfers an automobile from one employee to another employee,
the employer may recalculate the Annual Lease Value based on the fair
market value of the automobile as of January 1 of the year of transfer.
If, however, the employer is using the special accounting rule provided
in Announcement 85-113 (1985-31 I.R.B., August 5, 1985) (relating to the
reporting of and withholding on the value of noncash fringe benefits),
the employer may recalculate the Annual Lease Value based on the fair
market value of the automobile as of the beginning of the special
accounting period in which the transfer occurs. If the employer does not
recalculate the Annual Lease Value, and the employee to whom the
automobile is transferred uses the special valuation rule, the employee
may not recalculate the Annual Lease Value.
(3) Services included in, or excluded from, the Annual Lease Value
Table--(i) Maintenance and insurance included. The Annual Lease Values
contained in the Annual Lease Value Table include the fair market value
of maintenance of, and insurance for, the automobile. Neither an
employer nor an employee may reduce the Annual Lease Value by the fair
market value of any service included in the Annual Lease Value that is
not provided by the employer, such as reducing the Annual Lease Value by
the fair market value of a maintenance service contract or insurance. An
employer or employee may take into account the services actually
provided with respect to the automobile by valuing the availability of
the automobile under the general valuation rules of paragraph (b) of
this section.
(ii) Fuel excluded--(A) In general. The Annual Lease Values do not
include the fair market value of fuel provided by the employer,
regardless of whether fuel is provided in kind or its cost is reimbursed
by or charged to the employer.
[[Page 20]]
(B) Valuation of fuel provided in kind. The provision of fuel in
kind may be valued at fair market value based on all the facts and
circumstances or, in the alternative, it may be valued at 5.5 cents per
mile for all miles driven by the employee. However, the provision of
fuel in kind may not be valued at 5.5 cents per mile for miles driven
outside the United States, Canada, and Mexico. For purposes of this
section, the United States includes the United States and its
territories.
(C) Valuation of fuel where cost reimbursed by or charged to
employer. The fair market value of fuel, the cost of which is reimbursed
by or charged to an employer, is generally the amount of the actual
reimbursement or the amount charged, provided the purchase of the fuel
is at arm's length. If an employer with a fleet of at least 20
automobiles that meet the requirements of paragraph (d)(5)(v)(C) of this
section reimburses employees for the cost of fuel or allows employees to
charge the employer for the cost of the fuel, however, the fair market
value of fuel provided to those automobiles may be determined by
reference to the employer's fleet-average cents-per-mile fuel cost. The
fleet-average cents-per-mile fuel cost in equal to the fleet-average
per-gallon fuel cost divided by the fleet-average miles-per-gallon rate.
The averages described in the preceding sentence must be determined by
averaging the per-gallon fuel costs and miles-per-gallon rates of a
representative sample of the automobiles in the fleet equal to the
greater of ten percent of the automobiles in the fleet or 20 automobiles
for a representative period, such as a two month period.
(iii) All other services excluded. The fair market value of any
service not specifically identified in paragraph (d)(3)(i) of this
section that is provided by the employer with respect to an automobile
(such as the services of a chauffeur) must be added to the Annual Lease
Value of the automobile in determining the fair market value of the
benefit provided.
(4) Availability of an automobile for less than an entire calendar
year--(i) Pro-rated Annual Lease Value used for continuous availability
of 30 or more days. Except as otherwise provided in paragraph (d)(4)(iv)
of this section, for periods of continuous availability of 30 or more
days, but less than an entire calendar year, the value of the
availability of the employer-provided automobile is the pro-rated Annual
Lease Value. The pro-rated Annual Lease Value is calculated by
multiplying the applicable Annual Lease Value by a fraction, the
numerator of which is the number of days of availability and the
denominator of which is 365.
(ii) Daily Lease Value used for continuous availability of less than
30 days. Except as otherwise provided in paragraph (d)(4)(iii) of this
section, for periods of continuous availability of one or more but less
than 30 days, the value of the availability of the employer-provided
automobile is the Daily Lease Value. The Daily Lease Value is calculated
by multiplying the applicable Annual Lease Value by a fraction, the
numerator of which is four times the number of days of availability and
the denominator of which is 365.
(iii) Election to treat all periods as periods of at least 30 days.
A pro-rated Annual Lease Value may be applied with respect to a period
of continuous availability of less than 30 days, by treating the
automobile as if it had been available for 30 days, if to do so would
result in a lower valuation than applying the Daily Lease Value to the
shorter period of actual availability.
(iv) Periods of unavailability--(A) General rule. In general, a pro-
rated Annual Lease Value (as provided in paragraph (d)(4)(i) of this
section) is used to value the availability of an employer-provided
automobile when the automobile is available to an employee for a period
of continuous availability of at least 30 days but less than the entire
calendar year. Neither an employer nor an employee may use a pro-rated
Annual Lease Value when the reduction of Federal taxes is the primary
reason the automobile is unavailable to an employee during the calendar
year.
(B) Unavailability for personal reasons of the employee. If an
automobile is unavailable to an employee because of personal reasons of
the employee, such as while the employee is on vacation, a pro-rated
Annual Lease Value may not
[[Page 21]]
be used. For example, assume an automobile is available to an employee
during the first five months of the year and during the last five months
of the year. Assume further that the period of unavailability occurs
because the employee is on vacation. The Annual Lease Value, if it is
applied, must be applied with respect to the entire 12 month period. The
Annual Lease Value may not be pro-rated to take into account the two-
month period of unavailability.
(5) Fair market value--(i) In general. For purposes of determining
the Annual Lease Value of an automobile under the Annual Lease Value
Table, the fair market value of an automobile is that amount a
hypothetical person would have to pay a hypothetical third party to
purchase the particular automobile provided. Thus, for example, any
special relationship that may exist between the employee and the
employer must be disregarded. Also, the employee's subjective perception
of the value of the automobile is not relevant to the determination of
the automobile's fair market value. In addition, except as provided in
paragraph (d)(5) (ii) of this section, the cost incurred by the employer
of either purchasing of leasing the automobile is not determinative of
the fair market value of the automobile.
(ii) Safe-harbor valuation rule. For purposes of calculating the
Annual Lease Value of an automobile under this paragraph (d), the safe-
harbor value of the automobile may be used as the fair market value of
the automobile For an automobile owned by the employer, the safe-harbor
value of the automobile is the employer's cost of purchasing the
automobile, provided the purchase is made at arm's length. For an
automobile leased by the employer, the safe-harbor value of the
automobile is the value determined under paragraph (d)(5)(iii) of this
section.
(iii) Use of nationally recognized pricing guides. The fair market
value of an automobile that is (A) provided to an employee prior to
January 1, 1985, (B) being revalued pursuant to paragraphs (d)(2) (iv)
or (v) of this section, or (C) is a leased automobile being valued
pursuant to paragraph (d)(5)(ii) of this section, may be determined by
using the retail value of such automobile as reported in a nationally
recognized publication that regularly reports new or used automobile
retail values, whichever is applicable. The values contained in (and
obtained from) the publication must be reasonable with respect to the
automobile being valued.
(iv) Fair market value of special equipment--(A) Certain equipment
excluded. The fair market value of an automobile does not include the
fair market value of any telephone or any specialized equipment that is
added to or carried in the automobile if the presence of such equipment
is necessitated by, and attributable to, the business needs of the
employer.
(B) Use of specialized equipment outside of employer's business. The
value of specialized equipment must be included, however, if the
employee to whom the automobile is available uses the specialized
equipment in a trade of business of the employee other than the
employee's trade or business of being an employee of the employer.
(C) Equipment susceptible to personal use. The exclusion rule
provided in this paragraph (d)(5)(iv) does not apply to specialized
equipment susceptible to personal use.
(v) Fleet-average valuation rule--(A) In general. An employer with a
fleet of 20 or more automobiles may use a fleet-average value for
purposes of calculating the Annual Lease Values of the automobiles in
the fleet. The fleet-average value is the average of the fair market
values of each automobile in the fleet. The fair market value of each
automobile in the fleet shall be determined, pursuant to the rules of
paragraphs (d)(5) (i) through (iv) of this section, as of the later of
January 1, 1985, or the first date on which the automobile is made
available to any employee of the employer for personal use.
(B) Period for use of rule. The fleet-average valuation rule of this
paragraph (d)(5)(v) may be used by an employer as of January 1 of any
calendar year following the calendar year in which the employer acquires
a fleet of 20 or more automobiles. The Annual Lease Value calculated for
the automobiles in the fleet, based on the fleet-average value,
[[Page 22]]
shall remain in effect for the period that begins with the first January
1 the fleet-average valuation rule of this paragraph (d)(5)(v) is
applied by the employer to the automobiles in the fleet and ends on
December 31 of the subsequent calendar year. The Annual Lease Value for
each subsequent two year period is calculated by determining the fleet-
average value of the automobiles in the fleet as of the first January 1
of such period. An employer may cease using the fleet-average valuation
rule as of any January 1. The fleet-average valuation rule does not
apply as of January 1 of the year in which the number of automobiles in
the employer's fleet declines to fewer than 20. If, however, the
employer is using the special accounting rule provided in Announcement
85-113 (I.R.B. No. 31, August 5, 1985), the employer may apply the rules
of this paragraph (d)(5)(v)(B) on the basis of the special accounting
period rather than the calendar year. (This is accomplished by
substituting (1) the beginning of the special accounting period that
begins immediately prior to the January 1 described in this paragraph
(d)(5)(v)(B) for January 1 wherever it appears in this paragraph
(d)(5)(v)(B) and (2) the end of such accounting period for December 31.)
The revaluation rules of paragraph (d)(2) (iv) and (v) of this section
do not apply to automobiles valued under this paragraph (d)(5)(v).
(C) Limitations on use of fleet-average rule. The rule provided in
this paragraph (d)(5)(v) may not be used for any automobile whose fair
market value (determined pursuant to paragraphs (d)(5) (i) through (iv)
of this section as of either the first date on which the automobile is
made available to any employee of the employer for personal use or, if
later, January 1, 1985) exceeds $16,500. In addition, the rule provided
in this paragraph (d)(5)(v) may only be used for automobiles that the
employer reasonably expects will regularly be used in the employer's
trade or business. Infrequent use of the vehicle, such as for trips to
the airport or between the employer's multiple business premises, does
not constitute regular use of the vehicle in the employer's trade or
business.
(D) Additional automobiles added to the fleet. If the rule provided
in this paragraph (d)(5)(v) is used by an employer, it must be used for
every automobile included in or added to the fleet that meets the
requirements of paragraph (d)(5)(v)(C) of this section. The fleet-
average value in effect at the time an automobile is added to the fleet
is treated as the fair market value of the automobile for purposes of
determining the Annual Lease Value of the automobile until the fleet-
average value changes pursuant to paragraph (d)(5)(v)(B) of this
section.
(E) Use of the fleet-average rule by employees. An employee can only
use the fleet-average value if it is used by the employer. If an
employer uses the fleet-average value, and the employee uses the special
valuation rule of paragraph (d) of this section, the employee must use
the fleet-average value.
(6) Consistency rules--(i) Use of the automobile lease valuation
rule by an employer. Except as provided in paragraph (d)(5) (v)(B) of
this section, an employer may adopt the automobile lease valuation rule
of this paragraph (d) for an automobile only if the rule is adopted with
respect to the later of the period that begins on January 1, 1987, or
the first period in which the automobile is made available to an
employee of the employer for personal use or, if the commuting valuation
rule of paragraph (f) of this section is used when the automobile is
first made available to an employee of the employer for personal use,
the first period in which the commuting valuation rule is not used.
(ii) An employer must use the automobile lease valuation rule for
all subsequent periods. Once the automobile lease valuation rule has
been adopted for an automobile by an employer, the rule must be used by
the employer for all subsequent periods in which the employer makes the
automobile available to any employee, except that the employer may, for
any period during which use of the automobile qualifies for the
commuting valuation rule of paragraph (f) of this section, use the
commuting valuation rule with respect to the automobile.
[[Page 23]]
(iii) Use of the automobile lease valuation rule by an employee.
Except as provided in paragraph (c)(2)(ii)(C) of this section, an
employee may adopt the automobile lease valuation rule for an automobile
only if the rule is adopted (A) by the employer and (B) with respect to
the first period in which the automobile for which the employer
(consistent with paragraph (d)(6)(i) of this section) adopted the rule
is made available to that employee for personal use, or, if the
commuting valuation rule of paragraph (f) of this section is used when
the automobile is first made available to that employee for personal
use, the first period in which the commuting valuation rule is not used.
(iv) An employee must use the automobile lease valuation rule for
all subsequent periods. Once the automobile lease valuation rule has
been adopted for an automobile by an employee, the rule must be used by
the employee for all subsequent periods in which the automobile for
which the rule is used is available to the employee, except that the
employee may, for any period during which use of the automobile
qualifies for use of the commuting valuation rule of paragraph (f) of
this section and for which the employer uses the rule, use the commuting
valuation rule with respect to the automobile.
(v) Replacement automobiles. Notwithstanding anything in this
paragraph (D)(6) to the contrary, if the automobile lease valuation rule
is used by an employer, or by an employer and an employee, with respect
to a particular automobile, and a replacement automobile is provided to
the employee for the primary purpose of reducing Federal taxes, then the
employer, or the employer and the employee, using the rule must continue
to use the rule with respect to the replacement automobile.
(e) Vehicle cents-per-mile valuation rule--(1) In general--(i)
General rule. Under the vehicle cents-per-mile valuation rule of this
paragraph (e), if an employer provides an employee with the use of a
vehicle that (A) the employer reasonably expects will be regularly used
in the employer's trade or business throughout the calendar year (or
such shorter period as the vehicle may be owned or leased by the
employer) or (B) satisfies the requirements of paragraph (e)(1)(ii) of
this section, the value of the benefit provided in the calendar year is
the standard mileage rate provided in the applicable Revenue Ruling or
Revenue Procedure (``cents-per-mile rate'') multiplied by the total
number of miles the vehicle is driven by the employee for personal
purposes. For 1985, the standard mileage rate is 21 cents per mile for
the first 15,000 miles and 11 cents per mile for all miles over 15,000.
See Rev. Proc. 85-49. The standard mileage rate must be applied to
personal miles independent of business miles. Thus, for example, if an
employee drives 20,000 personal miles and 35,000 business miles in 1985,
the value of the personal use of the vehicle is $3,700
(15,000x$.21+5,000x$.11). For purposes of this section, the use of a
vehicle for personal purposes is any use of the vehicle other than use
in the employee's trade or business of being an employee of the
employer. Infrequent use of the vehicle, such as for trips to the
airport or between the employer's multiple business premises, does not
constitute regular use of the vehicle in the employer's trade or
business.
(ii) Mileage rule. A vehicle satisfies the requirements of this
paragraph (e)(1)(ii) in a calendar year if (A) it is actually driven at
least 10,000 miles in the year, and (B) use of the vehicle during the
year is primarily by employees. For example, if a vehicle is used by
only one employee during the year and that employee drives a vehicle at
least 10,000 miles in a calendar year, such vehicle satisfies the
requirements of this paragraph (e)(1)(ii) even if all miles driven by
the employee are personal. The requirements of this paragraph
(e)(1)(ii), however, will not be satisfied if during the year the
vehicle is transferred among employees in such a way which enables an
employee whose use was at a rate significantly less that 10,000 miles
per year to meet the 10,000 mile threshold. Assume that an employee uses
a vehicle for the first six months of the year and drives 2,000 miles,
and that vehicle is then used by other employees who drive the vehicle
8,000 miles in the last six months of the year. Because the rate at
which miles were driven in the first six months of the year would result
in only 4,000
[[Page 24]]
miles being driven in the year, and because the first employee did not
use the vehicle during the last six months of the year, the requirements
of this paragraph (e)(1)(ii) are not satisfied. The requirement of
paragraph (e)(1)(ii)(B) of this section is deemed satisfied if employees
use the vehicle on a consistent basis for commuting. If the employer
does not own or lease the vehicle during a portion of the year, the
10,000 mile threshold is to be reduced proportionately to reflect the
periods when the employer owned or leased the vehicle. For purposes of
this paragraph (e)(1)(ii), use of the vehicle by an individual (other
than the employee) whose use would be taxed to the employee is not
considered use by the employee.
(iii) Limitation on use of the vehicle cents-per-mile valuation
rule. The value of the use of an automobile (as defined in paragraph
(d)(1)(ii) of this section) may not be determined under the vehicle
cents-per-mile valuation rule of this paragraph (e) if the fair market
value of the automobile (determined pursuant to paragraphs (d)(5) (i)
through (iv) of this section as of the later of January 1, 1985, or the
first date on which the automobile is made available to any employee of
the employer for personal use) exceeds $12,800. No inference may be
drawn from the promulgation or terms of this section concerning the
application of law in effect prior to January 1, 1985.
(2) Definition of vehicle. For purposes of this paragraph (e), the
term ``vehicle'' means any motorized wheeled vehicle manufactured
primarily for use on public streets, roads, and highways. The term
``vehicle'' includes an automobile as defined in paragraph (d)(1)(ii) of
this section.
(3) Services included in, or excluded from, the cents-per-mile rate-
-(i) Maintenance and insurance included. The cents-per-mile rate
includes the fair market value of maintenance of, and insurance for, the
vehicle. An employer may not reduce the cents-per-mile rate by the fair
market value of any service included in the cents-per-mile rate but not
provided by the employer. An employer or employee may take into account
the services provided with respect to the automobile by valuing the
availability of the automobile under the general valuation rules of
paragraph (b) of this section.
(ii) Fuel provided by the employer--(A) Miles driven in the United
States, Canada, and Mexico. With respect to miles driven in the United
States, Canada, and Mexico, the cents-per-mile rate includes the fair
market value of fuel provided by the employer. If fuel is not provided
by the employer, the cents-per-mile rate may be reduced by no more than
5.5 cents or the amount specified in any applicable Revenue Ruling or
Revenue Procedure. For purposes of this section, the United States
includes the United States and its territories.
(B) Miles driven outside the United States, Canada, and Mexico. With
respect to miles driven outside the United States, Canada, and Mexico,
the fair market value of fuel provided by the employer is not reflected
in the cents-per-mile rate. Accordingly, the cents-per-mile rate may be
reduced but by no more than 5.5 cents or the amount specified in any
applicable Revenue Ruling or Revenue Procedure. If the employer provides
the fuel in kind, it must be valued based on all the facts and
circumstances. If the employer reimburses the employee for the cost of
fuel or allows the employee to charge the employer for the cost of fuel,
the fair market value of the fuel is generally the amount of the actual
reimbursement or the amount charged, provided the purchase of fuel is at
arm's length.
(4) Valuation of personal use only. The vehicle cents-per-mile
valuation rule of this paragraph (e) may only be used to value the miles
driven for personal purposes. Thus, the employer must include an amount
in an employee's income with respect to the use of a vehicle that is
equal to the product of the number of personal miles driven by the
employee and the appropriate cents-per-mile rate. The employer may not
include in income a greater or lesser amount; for example, the employer
may not include in income 100 percent (all business and personal miles)
of the value of the use of the vehicle. The term ``personal miles''
means all miles driven by the employee except miles
[[Page 25]]
driven by the employee is the employee's trade or business of being an
employee of the employer.
(5) Consistency rules--(i) Use of the vehicle cents-per-mile
valuation rule by an employer. An employer must adopt the vehicle cents-
per-mile valuation rule of this paragraph (e) for a vehicle by the later
of the period that begins on January 1, 1987, or the first period in
which the vehicle is used by an employee of the employer for personal
use or, if the commuting valuation rule of paragraph (f) of this section
is used when the vehicle is first used by an employee of the employer
for personal use, the first period in which the commuting valuation rule
is not used.
(ii) An employer must use the vehicle cents-per-mile valuation rule
for all subsequent periods. Once the vehicle cents-per-mile valuation
rule has been adopted for a vehicle by an employer, the rule must be
used by the employer for all subsequent periods in which the vehicle
qualifies for use of the rule, except that (A) the employer may, for any
period during which use of the vehicle qualifies for the commuting
valuation rule of paragraph (f) of this section, use the commuting
valuation rule with respect to the vehicle, and (B) if the employer
elects to use the automobile lease valuation rule of paragraph (d) of
this section for a period in which the vehicle does not qualify for use
of the vehicle cents-per-mile valuation rule, then the employer must
comply with the requirements of paragraph (d)(6) of this section. If the
vehicle fails to qualify for use of the vehicle cents-per-mile valuation
rule during a subsequent period, the employer may adopt for such
subsequent period and thereafter any other special valuation rule for
which the vehicle then qualifies. For purposes of paragraph (d)(6) of
this section, the first day on which an automobile with respect to which
the vehicle cents-per-mile rule had been used fails to qualify for use
of the vehicle cents-per-mile valuation rule may be deemed to be the
first day on which the automobile is available to an employee of the
employer for personal use.
(iii) Use of the vehicle cents-per-mile valuation rule by an
employee. An employee may adopt the vehicle cents-per-mile valuation
rule for a vehicle only if the rule is adopted (A) by the employer and
(B) with respect to the first period in which the vehicle for which the
employer (consistent with paragraph (e)(5)(i) of this section) adopted
the rule is available to that employee for personal use or, if the
commuting valuation rule of paragraph (f) of this section is used by
both the employer and the employee when the vehicle is first used by an
employee for personal use, the first period in which the commuting
valuation rule is not used.
(iv) An employee must use the vehicle cents-per-mile valuation rule
for all subsequent periods. Once the vehicle cents-per-mile valuation
rule has been adopted for a vehicle by an employee, the rule must be
used by the employee for all subsequent periods of personal use of the
vehicle by the employee for which the rule is used by the employer,
except that the employee may, for any period during which use of the
vehicle qualifies for use of the commuting valuation rule of paragraph
(f) of this section and for which such rule is used by the employer, use
the commuting valuation rule with respect to the vehicle.
(v) Replacement vehicles. Notwithstanding anything in this paragraph
(e)(5) to the contrary, if the vehicle cents-per-mile valuation rule is
used by an employer, or by an employer and an employee, with respect to
a particular vehicle, and a replacement vehicle is provided to the
employee for the primary purpose of reducing Federal taxes, then the
employer, or the employer and the employee, using the rule must continue
to use the rule with respect to the replacement vehicle if the
replacement vehicle qualifies for use of the rule.
(f) Commuting valuation rule--(1) In general. Under the commuting
valuation rule of this paragraph (f), the value of the commuting use of
an employer-provided vehicle may be determined pursuant to paragraph
(f)(3) of this section if the following criteria are met by the employer
and employees with respect to the vehicle:
(i) The vehicle is owned or leased by the employer and is provided
to one or more employees for use in connection
[[Page 26]]
with the employer's trade or business and is used in the employer's
trade or business;
(ii) For bona fide noncompensatory business reasons, the employer
requires the employee to commute to and/or from work in the vehicle;
(iii) The employer has established a written policy under which the
employee may not use the vehicle for personal purposes, other than for
commuting or de minimis personal use (such as a stop for a personal
errand on the way between a business delivery and the employee's home);
(iv) Except for de minimis personal use, the employee does not use
the vehicle for any personal purpose other than commuting; and
(v) The employee required to use the vehicle for commuting is not a
control employee of the employer (as defined in paragraphs (f) (5) and
(6) of this section).
If the vehicle is a chauffeur-driven vehicle, the commuting valuation
rule of this paragraph (f) may not be used to value the commuting use of
any passenger who commutes in the vehicle. The rule may be used,
however, to value the commuting use of the chauffeur. Personal use of a
vehicle is all use of the vehicle by the employee that is not used in
the employee's trade or business of being an employee of the employer.
(2) Special rules. Notwithstanding anything in paragraph (f)(1) of
this section to the contrary, the following special rules apply--
(i) Written policy not required in 1985. The policy described in
paragraph (f)(1)(iii) of this section prohibiting personal use need not
be written with respect to the commuting use which occurs prior to
January 1, 1986;
(ii) Commuting use during 1985. For commuting use that occurs after
December 31, 1984, but before January 1, 1986, the restrictions of
paragraph (f)(1)(v) of this section shall be applied by substituting
``an employee who is an officer or a five-percent owner of the
employer'' in lieu of ``a control employee''. For purposes of
determining who is a five-percent owner, any individual who owns (or is
considered as owning) five or more percent of the fair market value of
an entity (the ``owned entity'') is considered a five-percent owner of
all entities that would be aggregated with the owned entity under the
rules of section 414 (b), (c), or (m). An employee who is an officer of
an employer shall be treated as an officer of all entities treated as a
single employer pursuant to section 414 (b), (c), or (m). The
definitions provided in paragraphs (f)(5)(i) and (f)(6) of this section
may be used to define an officer; and
(iii) Control employee exception. If the vehicle in which the
employee is required to commute is not an automobile as defined in
paragraph (d)(1)(ii) of this section, the restrictions of paragraph
(f)(1)(v) of this section do not apply.
(3) Commuting value--(i) $1.50 per one-way commute. If the
requirements of this paragraph (f) are satisfied, the value of the
commuting use of an employer-provided vehicle is $1.50 per one-way
commute (e.g., from home to work or from work to home).
(ii) Value per employee. If there is more than one employee who
commutes in the vehicle, such as in the case of an employer-sponsored
car pool, the amount includible in the income of each employee is $1.50
per one-way commute. Thus, the amount includible for each round-trip
commute is $3.00 per employee.
(4) Definition of vehicle. For purposes of this paragraph (f), the
term ``vehicle'' means any motorized wheeled vehicle manufactured
primarily for use on public streets, roads, and highways. The term
``vehicle'' includes an automobile as defined in paragraph (d)(1)(ii) of
this section.
(5) Control employee defined--Non-government employer. For purposes
of this paragraph (f), a control employee of a non-government employer
is any employee--
(i) Who is a Board- or shareholder-appointed, confirmed, or elected
officer of the employer,
(ii) Who is a director of the employer, or
(iii) Who owns a one-percent or greater equity, capital, or profits
interest in the employer.
For purposes of determining who is a one-percent owner under paragraph
(f)(5)(iii) of this section, any individual
[[Page 27]]
who owns (or is considered as owning under section 318(a) or principles
similar to section 318(a) for entities other than corporations) one
percent or more of the fair market value of an entity (the ``owned
entity'') is considered a one-percent owner of all entities which would
be aggregated with the owned entity under the rules of section 414 (b),
(c), or (m). An employee who is an officer of an employer shall be
treated as an officer of all entities treated as a single employer
pursuant to section 414 (b), (c) or (m).
(6) Control employee defined--Government employer. For purposes of
this paragraph (f), a control employee of a government employer if any--
(i) Elected official,
(ii) Federal employee who is appointed by the President and
confirmed by the Senate. In the case of commissioned officers of the
United States Armed Forces, an officer is any individual with the rank
of brigadier general or above or the rank of rear admiral (lower half)
or above; or
(iii) State or local executive officer comparable to the individuals
described in paragraph (f)(6) (i) and (ii) of this section.
For purposes of this paragraph (f), the term ``government'' includes any
Federal, state, or local governmental unit, and any agency or
instrumentality thereof.
(g) Non-commercial flight valuation rule--(1) In general. Under the
non-commercial flight valuation rule of this paragraph (g), if an
employee is provided with a flight on an employer-provided aircraft, the
value of the flight is calculated using the aircraft valuation formula
provided in paragraph (g)(5) of this section. Except as otherwise
provided, for purposes of this paragraph (g), a flight provided to a
person whose flight would be taxable to an employee as the recipient is
referred to as provided to the employee, and a flight taken by such
person is considered a flight taken by the employee.
(2) Eligible flights and eligible aircraft. The valuation rule of
this paragraph (g) may be used to value flights on all employer-provided
aircraft, including helicopters. The valuation rule of this paragraph
(g) may be used to value international as well as domestic flights. The
valuation rule of this paragraph (g) may not be used to value a flight
on any commercial aircraft on which air transportation is sold to the
public on a per-seat basis. For a special valuation rule relating to
certain flights on commercial aircraft, see paragraph (h) of this
section.
(3) Definition of a flight--(i) General rule. Except as otherwise
provided in paragraph (g)(3)(iii) of this section (relating to
intermediate stops), for purposes of this paragraph (g), an individual's
flight is the distance (in statute miles) between the place at which the
individual boards the aircraft and the place at which the individual
deplanes.
(ii) Valuation of each flight. Under the valuation rule of this
paragraph (g), value is determined separately for each flight. Thus, a
round-trip is comprised of at least two flights. For example, an
employee who takes a personal trip on an employer-provided aircraft from
New York, New York to Denver, Colorado, Denver to Los Angeles,
California, and Los Angeles to New York has taken three flights and must
apply the aircraft valuation formula separately to each flight. The
value of a flight must be determined on a passenger-by-passenger basis.
For example, if an individual accompanies an employee and the flight
taken by the individual would be taxed to the employee, the employee
would be taxed on the special rule value of the flight by the employee
and by the individual.
(iii) Intermediate stop. If the primary purpose of a landing is
necessitated by weather conditions, by an emergency, for purposes of
refueling or obtaining other services relating to the aircraft, or for
purposes of the employer's business unrelated to the employee whose
flight is being valued (``an intermediate stop''), the distance between
the place at which the trip originates and the place at which the
intermediate stop occurs is not considered a flight. For example, assume
that an employee's trip originates in St. Louis, Missouri, on route to
Seattle, Washington, but, because of weather conditions, the aircraft
lands in Denver, Colorado, and the employee stays in Denver overnight.
Assume further that the next day the aircraft flies to Seattle
[[Page 28]]
where the employee deplanes. The employee's flight is the distance
between the airport in St. Louis and the airport in Seattle. Assume that
a trip originates in New York, New York, with five passengers and makes
an intermediate stop in Chicago, Illinois, before going on to Los
Angeles, California. If one of the five passengers deplanes in Chicago,
the distance of that passenger's flight would be the distance between
the airport in New York and the airport in Chicago. The intermediate
stop is disregarded when measuring the flights taken by each of the
other passengers. Their flights would be the distance between the
airport in New York and the airport in Los Angeles.
(4) Personal and non-personal flights--(i) In general. The valuation
rule of this paragraph (g) applies to personal flights on employer-
provided aircraft. A personal flight is one the value of which is not
excludable under another section of subtitle A, such as under section
132(d) (relating to a working condition fringe). However, solely for
purposes of paragraphs (g)(4)(ii) and (g)(4)(iii) of this section,
references to personal flights do not include flights a portion of which
would not be excludable by reason of section 274.(c).
(ii) Trip primarily for employer's business. If an employee
combines, in one trip, personal and business flights on an employer-
provided aircraft and the employee's trip is primarily for the
employer's business (see Sec. 1.162-2(b)(2)), the employee must include
in income the excess of the value of all the flights that comprise the
trip over the value of the flights that would have been taken had there
been no personal flights but only business flights. For example, assume
that an employee flies on an employer-provided aircraft from Chicago,
Illinois to Miami, Florida, for the employer's business and that from
Miami the employee flies on the employer-provided aircraft to Orlando,
Florida, for personal purposes and then flies back to Chicago. Assume
further that the primary purpose of the trip is for the employer's
business. The amount includible in income is the excess of the value of
the three flights (Chicago to Miami, Miami to Orlando, and Orlando to
Chicago), over the value of the flights that would have been taken had
there been no personal flights but only business flights (Chicago to
Miami and Miami to Chicago).
(iii) Primarily personal trip. In an employee combines, in one trip,
personal and business flights on an employer-provided aircraft and the
aircraft's trip is primarily personal (see Sec. 1.162-2(b)(2)), the
amount includible in the employee's income is the value of the personal
flights that would have been taken had there been no business flights
but only personal flights. For example, assume that an employee flies on
an employer-provided aircraft from San Francisco, California, to Los
Angeles, California, for the employer's business and that from Los
Angeles the employee flies on an employer-provided aircraft to Palm
Springs, California, primarily for personal reasons and then flies back
to San Francisco. Assume further that the primary purpose of the trip is
personal. The amount includible in the employee's income is the value of
personal flights that would have been taken had there been no business
flights but only personal flights (San Francisco to Palm Springs and
Palm Springs to San Francisco).
(iv) Application of section 274(c). The value of employer-provided
travel outside the United States away from home may not be excluded from
the employee's gross income as a working condition fringe, by either the
employer or the employee, to the extent not deductible by reason of
section 274(c). The valuation rule of this paragraph (g) applies to that
portion of the value of any flight not excludable by reason of section
274(c). Such value must be included in income in addition to the amounts
determined under paragraphs (g)(4)(ii) and (g)(4)(iii) of this section.
(v) Flight by individuals who are not personal guests. If an
individual who is not an employee of the employer providing the aircraft
is on a flight, and the individual is not the personal guest of any
employee, the flight by the individual is not taxable to any employee of
the employer providing the aircraft. The rule in the preceding sentence
applies where the individual is provided the flight by the employer for
noncompensatory business reasons of the employer. For example, assume
that G,
[[Page 29]]
and employee of company Y, accompanies A, an employee of company X, on
company X's aircraft for the purpose of inspecting land under
consideration for purchase by company X from company Y. The flight by G
is not taxable to A.
(5) Aircraft valuation formula. Under the valuation rule of this
paragraph (g), the value of a flight is determined by multiplying the
base aircraft valuation formula for the period during which the flight
was taken by the appropriate aircraft multiple (as provided in paragraph
(g)(7) of this section) and then adding the applicable terminal charge.
The base aircraft valuation formula (also known as the Standard Industry
Fare Level formula or SIFL) in effect on June 30, 1985, is as follows:
($.1402 per mile for the first 500 miles, $.1069 per mile for miles
between 501 and 1500, and $.1028 per mile for miles over 1500). The
terminal charge in effect on June 30, 1985, is $25.62. The SIFL cents-
per-mile rates in the formula and the terminal charge are calculated by
the Department of Transportation and are revised semi-annually.
(6) SIFL formula in effect for a particular flight. For purposes of
this paragraph (g), in determining the value of a particular flight
during the first six months of a calendar year, the SIFL formula (and
terminal charge) in effect on December 31 of the preceding year applies,
and in determining the value of a particular flight during the last six
months of a calendar year, the SIFL formula (and terminal charge) in
effect on June 30 of that year applies. The following is the SIFL
formula in effect on December 31, 1984: ($.1480 per mile for the first
500 miles, $.1128 per mile for miles between 501 and 1500, and $.1085
per mile for miles over 1500). The terminal charge in effect on December
31, 1984, is $27.05.
(7) Aircraft multiples--(i) In general. The aircraft multiples are
based on the maximum certified takeoff weight of the aircraft. For
purposes of applying the aircraft valuation formula described in
paragraph (g)(5) of this section, the aircraft multiples are as follows:
[In percent]
------------------------------------------------------------------------
Aircraft multiple
for a--
---------------------
Maximum certified takeoff weight of the aircraft Non-
Control control
employee employee
------------------------------------------------------------------------
6,000 lbs. or less................................ 62.5 15.6
6,001 to 10,000 lbs............................... 125.0 23.4
10,001 to 25,000 lbs.............................. 300.0 31.3
25,001 lbs. or more............................... 400.0 31.3
------------------------------------------------------------------------
(ii) Flights treated as provided a to control employee. Except as
provided in paragraph (g)(10) of this section, any flight provided to an
individual whose flight would be taxable to a control employee (as
defined in paragraph (g)(8) and (9) of this section) as the recipient
shall be valued as if such flight has been provided to that control
employee. For example, assume that the chief executive officer of an
employer, his spouse, and his two children fly on an employer-provided
aircraft for personal purposes. Assume further that the maximum
certified takeoff weight of the aircraft is 12,000 lbs. The amount
includible in the employee's income is 4 x ((300 percent x base aircraft
valuation formula) plus the applicable terminal charge).
(8) Control employee defined--Nongovernment employer. For purposes
of this paragraph (g), a control employee of a non-government employer
is any employee--
(i) Who is a Board- or shareholder- appointed, confirmed, or elected
officer of the employer, limited to the lesser of (A) one-percent of all
employees (increased to the next highest integer, if not an integer) or
(B) ten employees;
(ii) Whose compensation equals or exceeds the compensation of the
top one percent most highly-paid employees of the employer (increased to
the next highest integer, if not an integer) limited to a maximum of 25
employees;
(iii) Who owns a ten-percent or greater equity, capital or profits
interest in the employer; or
(iv) Who is a director of the employer.
For purposes of this paragraph (g), any employee who is a family member
(within the meaning of section 267(c)(4)) of a control employee is also
a control employee. Pursuant to this paragraph (g)(8), an employee may
be a control employee under more than one
[[Page 30]]
of the requirements listed in paragraphs (g)(8) (i) through (iv) of this
section. For example, an employee may be both an officer under paragraph
(g)(8)(i) of this section and a highly-paid employee under paragraph
(g)(8)(ii) of this section. In this case, for purposes of the officer
limitation rule of paragraph (g)(8)(i) of this section and the highly-
paid employee limitation rule of paragraph (g)(8)(ii) of this section,
the employee would be counted as reducing both such limitation rules. In
no event shall an employee whose compensation is less than $50,000 be a
control employee under paragraph (g)(8)(ii) of this section. For
purposes of determining who is a ten-percent owner under paragraph
(g)(8)(iii) of this section, any individual who owns (or is considered
as owning under section 318(a) or principles similar to section 318(a)
for entities other than corporations) ten percent or more of the fair
market value of an entity (the ``owned entity'') is considered a ten-
percent owner of all entities which would be aggregated with the owned
entity under the rules of section 414 (b), (c), or (m). For purposes of
determining who is an officer under paragraph (g)(8)(i) of this section,
notwithstanding anything in this section to the contrary, if the
employer would be aggregated with other employers under the rules of
section 414 (b), (c), or (m), the officer definition and the limitations
are applied to each separate employer rather than to the aggregated
employer. If applicable, the officer limitation rule of paragraph
(g)(8)(i) of this section is applied to employees in descending order of
their compensation. Thus, if an employer has 11 board-appointed
officers, the employee with the least compensation of those officers
would not be an officer under paragraph (g)(8)(i) of this section. For
purposes of this paragraph (g), the term ``compensation'' means the
amount reported on a Form W-2 as income for the prior calendar year.
Compensation includes all amounts received from all entities treated as
a single employer under section 414 (b), (c), or (m).
(9) Control employee defined--Government. For purposes of this
paragraph (g), a control employee of a government employer is any--
(i) Elected officials;
(ii) Federal employee who is appointed by the President and
confirmed by the Senate. In the case of commissioned officers of the
United States Armed Forces, an officer is any individual with the rank
or brigadier general or above or the rank of rear admiral (lower half)
or above; or
(iii) State or local executive officer comparable to the individuals
in paragraph (g)(9)(i) and (ii) of this section.
For purposes of this paragraph (g), the term ``government'' includes any
Federal, state, or local government unit, and any agency or
instrumentality thereof.
(10) Seating capacity rule--(i) In general. Where 50 percent of more
of the regular passenger seating capacity of an aircraft (as used by the
employer) is occupied by individuals whose flights are primarily for the
employer's business (and whose flights are excludable from income under
section 132(d)), the value of a flight on that aircraft by any employee
who is not flying primarily for the employer's business (or who is
flying primarily for the employer's business but the value of whose
flight is not excludable under section 132(d) by reason of section
274(c)) is deemed to be zero. See Sec. 1.132-5T which limits the
exclusion under section 132(d) to situations where the employee receives
the flight in connection with the performance of services for the
employer providing the aircraft. For purposes of this paragraph (g)(10),
the term ``employee'' includes only employees and partners of the
employer providing the aircraft and does not include independent
contractors and directors of the employer.
For purposes of this paragraph (g)(10), the second sentence of paragraph
(g)(1) of this section will not apply. Instead, a flight taken by an
individual who is either treated as an employee pursuant to section
132(f)(1) or whose flight is treated as a flight taken by an employee
pursuant to section 132(f)(2) is considered a flight taken by an
employee. If (A) a flight is considered taken by an individual other
than an employee (as defined in this paragraph (g)(10)), (B) the value
of that individual's flight is not excludable under section 132(d), and
(C) the seating capacity
[[Page 31]]
rule of this paragraph (g)(10) otherwise applies, then the value of the
flight provided to such an individual is the value of a flight provided
to a non-control employee (even if the individual who would be taxed on
the value of such individual's flight is a control employee).
(ii) Application of 50-percent test to multiple flights. The seating
capacity rule of this paragraph (g)(10) must be met both at the time the
individual whose flight is being valued boards the aircraft and at the
time the individual deplanes. For example, assume that employee A boards
an employer-provided aircraft for personal purposes in New York, New
York, and that at that time 80 percent of the regular passenger seating
capacity of the aircraft is occupied by individuals whose flights are
primarily for the employer's business (and whose flights are excludable
from income under section 132(d)) (``the business passengers''). If the
aircraft flies directly to Hartford, Connecticut where all of the
passengers, including A, deplane, the requirements of the seating
capacity rule of this paragraph (g)(10) have been satisfied. If instead,
some of the passengers, including A, remain on the aircraft in Hartford
and the aircraft continues on to Boston, Massachusetts, where they all
deplane, the requirements of the seating capacity rule of this paragraph
(g)(10) will not be satisfied unless at least 50 percent of the seats
comprising the aircraft's regular passenger seating capacity were
occupied by the business passengers at the time A deplanes in Boston.
(iii) Regular passenger seating capacity. The regular passenger
seating capacity of an aircraft is the maximum number of seats that have
at any time been on the aircraft (while owned or leased by the
employer). Except to the extent excluded pursuant to paragraph
(g)(10)(v) of this section, regular seating capacity includes all seats
which may be occupied by members of the flight crew. It is irrelevant
that on a particular flight, less than the maximum number of seats are
available for use, because, for example, some of the seats are removed.
When determining the maximum number of seats, those seats that cannot at
any time be legally used during takeoff and are not any time used during
takeoff are not counted.
(iv) Examples. The rules of paragraph (g)(10)(iii) of this section
are illustrated by the following examples:
Example (1). Employer A and employer B order the same aircraft,
except that A orders it with 10 seats and B orders it with eight seats.
A always uses its aircraft as a 10-seat aircraft; B always uses its
aircraft as an eight-seat aircraft. The regular passenger seating
capacity of A's aircraft is 10 and of B's aircraft is eight.
Example (2). Assume the same facts as in example (1), except that
whenever A's chief executive officer and spouse use the aircraft eight
seats are removed. Even if substantially all of the use of the aircraft
is by the chief executive officer and spouse the regular passenger
seating capacity of the aircraft is 10.
Example (3). Assume the same facts as in example (1), except that
whenever more than eight people want to fly in B's aircraft, two extra
seats are added. Even if substantially all of the use of the aircraft
occurs with eight seats, the regular passenger seating capacity of the
aircraft is 10.
(v) Seats occupied by flight crew. When determining the regular
passenger seating capacity of an aircraft, any seat occupied by a member
of the flight crew (whether or not such individual is an employee of the
employer providing the aircraft) shall not be counted, unless the
purpose of the flight by such individual is not primarily to serve as a
member of the flight crew. If the seat occupied by a member of the
flight crew is not counted as a passenger seat pursuant to the previous
sentence, such member of the flight crew is disregarded in applying the
50 percent test described in the first sentence of paragraph (g)(10)(i)
of this section. For example, assume that, prior to the application of
this paragraph (g)(10)(v), the regular passenger seating capacity of an
aircraft is two seats.
Assume further that an employee pilots the aircraft and that the
employee's flight is not primarily for the employer's business. If the
employee's spouse occupies the other seat for personal purposes, the
seating capacity rule is not met and the value of both
[[Page 32]]
flights must be included in the employee's income. If, however, the
employee's flight were primarily for the employer's business (unrelated
to serving as a member of the flight crew), then the seating capacity
rule is met and the value of the flight for the employee's spouse is
deemed to be zero. If the employee's flight were primarily to serve as a
member of the flight crew, then the seating capacity rule is not met and
the value of a flight by any passenger for primarily personal reasons is
not deemed to be zero.
(11) Erroneous use of the non-commercial flight valuation rule--(i)
In general. If the non-commercial flight valuation rule of this
paragraph (g) is used by an employer or a control employee, as the case
may be, on a return as originally filed, on the grounds that either the
control employee is not in fact a control employee, or that the aircraft
is within a specific weight classification, and either position is
subsequently determined to be erroneous, the valuation rule of this
paragraph (g) (including paragraph (g)(13) of this section) is not
available to value the flight taken by that control employee by the
person or persons taking the erroneous position. With respect to the
weight classifications, the previous sentence does not apply if the
position taken is that the weight of the aircraft is greater than it is
subsequently determined to be. If, with respect to a flight by a control
employee, the seating capacity rule of paragraph (g)(10) of this section
is used by an employer or the control employee, as the case may be, on a
return as originally filed, and it is subsequently determined that the
requirements of paragraph (g)(10) of this section were not met, the
valuation rule of this paragraph (g) (including paragraph (g)(13) of
this section) is not available to value the flight taken by that control
employee by the person or persons taking the erroneous position.
(ii) Value of flight excluded as a working condition fringe. If
either an employer or an employee, on a return as originally filed,
excludes from the employee's income or wages the value of a flight on
the grounds that the flight was excludable as a working condition fringe
under section 132, and that position is subsequently determined to be
erroneous, the valuation rule of this paragraph (g) (including paragraph
(g)(13) of this section) is not available to value the flight taken by
that employee by the person or persons taking the erroneous position.
(12) Consistency rules--(i) Use by the employer. Except as otherwise
provided in paragraphs (g)(11) and (g)(13)(iv) of this section, if the
non-commercial flight valuation rule of this paragraph (g) is used by an
employer to value flights provided in a calendar year, the rule must be
used to value all flights provided in the calendar year.
(ii) Use by the employee. Except as otherwise provided in paragraphs
(g)(11) and (g)(13)(iv) of this section, if the non-commercial flight
valuation rule of this paragraph (g) is used by an employee to value a
flight taken in a calendar year, the rule must be used to value all
flights taken in the calendar year.
(13) Transitional valuation rule--(i) In general. If the value of a
flight determined under this paragraph (g)(13) is lower than the value
of the flight otherwise determined under paragraph (g) of this section,
the value of the flight is the lower amount. The transitional valuation
rule of this paragraph (g)(13) is available only for flights provided
after December 31, 1984, and before January 1, 1986.
(ii) Transitional valuation rule aircraft multiples. The appropriate
aircraft multiples under the transitional valuation rule are as follows:
(A) 125 percent of the base aircraft valuation formula, plus the
applicable terminal charge, for any flight by any employee who is not a
key employee (as defined in paragraph (g)(13)(iii) of this section.)
(B) 125 percent of the base aircraft valuation formula, plus the
applicable terminal charge, for a flight by a key employee if there is a
primary business purpose of the trip by the aircraft. For purposes of
this paragraph (g)(13)(ii) (B), entertaining an employee or other
individual is not a business purpose.
(C) 600 percent of the base aircraft valuation formula, plus the
applicable terminal charge, for a flight by a key employee if there is
not primary business for the trip by the aircraft.
[[Page 33]]
Where there is no business purpose for the trip by the aircraft, the
alternative valuation rule may not be used to value a flight by a key
employee. For purposes of this section, compensating an employee is not
a business purpose.
(iii) Key employee defined. A ``key employee'' is any employee who
is a five-percent owner or an officer of the employer, or who, with
respect to a particular trip by the aircraft, controls the use of the
aircraft. For purposes of determining who is a five-percent owner, any
individual who owns (or is considered as owning) five or more percent of
the fair market value of an entity (the ``owned entity'') is considered
a five-percent owner of all entities that would be aggregated with the
owned entity under the rules of section 414(b), (c), or (m).
(iv) Erroneous use of transitional valuation rule. If the
transitional valuation rule is used by an employer or a key employee, as
the case may be, on a return as originally filed, on the grounds that--
(A) The key employee is not in fact a key employee,
(B) An aircraft trip had a primary business purpose, or
(C) An aircraft trip had some business purpose,
and such position is subsequently determined to be erroneous, neither
the transitional valuation rule nor the non-commercial flight valuation
rule of this paragraph (g) is available to value such flight taken by
that key employee by the person or persons taking the erroneous
position.
(h) Commercial flight valuation rule--(1) In general. Under the
commercial flight valuation rule of this paragraph (h), the value of a
space-available flight (as defined in paragraph (h)(2) of this section)
on a commercial aircraft is 25 percent of the actual carrier's highest
unrestricted coach fare in effect for the particular flight taken.
(2) Space-available flight. The commercial flight valuation rule of
this paragraph (h) is available to value a space-available flight. The
term ``space-available flight'' means a flight on a commercial aircraft
(i) for which the airline (the acutal carrier) incurs no substantial
additional cost (including forgone revenue) determined without regard to
any amount paid for the flight and (ii) which is subject to the same
types of restrictions customarily associated with flying on an employee
``standby'' or ``space-available'' basis. A flight may be a space-
available flight even if the airline that is the actual carrier is not
the employer of the employee.
(3) Commercial aircraft. If the actual carrier does not offer, in
the ordinary course of its business, air transportation to customers on
a per-seat basis, the commercial flight valuation rule of this paragraph
(h) is not available. Thus, if, in the ordinary course of its line of
business, the employer only offers air transportation to customers on a
charter basis, the commerical flight valuation rule of this paragraph
(h) may not be used to value a space-available flight on the employer's
aircraft. Similarly, if, in the ordinary course of its line of business,
an employer only offers air transportation to customers for the
transport of cargo, the commercial flight valuation rule of this
paragraph (h) may not be used to value a space-available flight on the
employer's aircraft.
(4) Timing of inclusion. The date that the flight is taken is the
relevant date for purposes of applying section 61(a)(1) and this section
to a space-available flight on a commercial aircraft. The date of
purchase or issuance of a pass or ticket is not relevant. Thus, this
section applies to a flight taken on or after January 1, 1985,
regardless of the date on which the pass or ticket for the flight was
purchased or issued.
(5) Consistency rules--(i) Use by employer. If the commercial flight
valuation rule of this paragraph (h) is used by an employer to value
flights provided in a calendar year, the rule must be used to value all
flights provided in the calendar year.
(ii) Use by employee. If the commercial flight valuation rule of
this paragraph (h) is used by an employee to value a flight taken in a
calendar year, the rule must be used to value all flights taken by such
employee in the calendar year.
(i) [Reserved]
(j) Valuation of meals provided at an employer-operated eating
facility for employees--(1) In general. The valuation
[[Page 34]]
rule of this paragraph (j) may be used to value a meal provided at an
employer-operated eating facility for employees (as defined in
Sec. 1.132-7T). For rules relating to an exclusion for the value of
meals provided at an employer-operated eating facility for employees,
see Sec. 1.132-7T.
(2) Valuation formula--(i) In general. The value of all meals
provided at an employer-operated eating facility for employees during a
calendar year is 150 percent of the direct operaitng costs of the eating
facility (``total meal value''). For purposes of this paragraph (j), the
definition of direct operating costs provided in Sec. 1.132-7T applies.
The taxable value of meals provided at an eating facility may be
determined in two ways. The ``individual meal subsidy'' may be treated
as the taxable value of a meal provided at the eating facility (see
paragraph (j)(2)(ii) of this section). Alternatively, the employer may
allocate the ``total meal subsidy'' among employees (see paragraph
(j)(2)(iii) of this section).
(ii) ``Individual meal subsidy'' defined. The ``individual meal
subsidy'' is determined by multiplying the price charged for a
particular meal by a fraction, the numerator of which is the total meal
value and the denominator of which is the gross receipts of the eating
facility, and then subtracting the amount paid for the meal. The taxable
value of meals provided to a particular employee during a calendar year,
therefore, is the sum of the individual meal subsidies provided to the
employee during the calendar year.
(iii) Allocation of ``total meal subsidy.'' Instead of using the
individual meal value method, the employer may allocate the ``total meal
subsidy'' (total meal value less the gross receipts of the facility)
among employees in any manner reasonable under the circumstances.
[T.D. 8063, 50 FR 52285, Dec. 23, 1985, as amended by T.D. 8256, 54 FR
28582, July 6, 1989; T.D. 8457, 57 FR 62195, Dec. 30, 1992]
Sec. 1.61-3 Gross income derived from business.
(a) In general. In a manufacturing, merchandising, or mining
business, ``gross income'' means the total sales, less the cost of goods
sold, plus any income from investments and from incidental or outside
operations or sources. Gross income is determined without subtraction of
depletion allowances based on a percentage of income to the extent that
it exceeds cost depletion which may be required to be included in the
amount of inventoriable costs as provided in Sec. 1.471-11 and without
subtraction of selling expenses, losses or other items not ordinarily
used in computing costs of goods sold or amounts which are of a type for
which a deduction would be disallowed under section 162 (c), (f), or (g)
in the case of a business expense. The cost of goods sold should be
determined in accordance with the method of accounting consistently used
by the taxpayer. Thus, for example, an amount cannot be taken into
account in the computation of cost of goods sold any earlier than the
taxable year in which economic performance occurs with respect to the
amount (see Sec. 1.446-1(c)(1)(ii)).
(b) State contracts. The profit from a contract with a State or
political subdivision thereof must be included in gross income. If
warrants are issued by a city, town, or other political subdivision of a
State, and are accepted by the contractor in payment for public work
done, the fair market value of such warrants should be returned as
income. If, upon conversion of the warrants into cash, the contractor
does not receive and cannot recover the full value of the warrants so
returned, he may deduct any loss sustained from his gross income for the
year in which the warrants are so converted. If, however, he realizes
more than the value of the warrants so returned, he must include the
excess in his gross income for the year in which realized.
[T.D. 6500, 25 FR 11402, Nov. 26, 1960; 25 FR 14021, Dec. 31, 1960, as
amended by T.D. 7207, 37 FR 20767, Oct. 5, 1972; T.D. 7285, 38 FR 26184,
Sept. 19, 1973; T.D. 8408, 57 FR 12419, Apr. 10, 1992]
Sec. 1.61-4 Gross income of farmers.
(a) Farmers using the cash method of accounting. A farmer using the
cash receipts and disbursements method of accounting shall include in
his gross income for the taxable year--
[[Page 35]]
(1) The amount of cash and the value of merchandise or other
property received during the taxable year from the sale of livestock and
produce which he raised,
(2) The profits from the sale of any livestock or other items which
were purchased,
(3) All amounts received from breeding fees, fees from rent of
teams, machinery, or land, and other incidental farm income,
(4) All subsidy and conservation payments received which must be
considered as income, and
(5) Gross income from all other sources.
The profit from the sale of livestock or other items which were
purchased is to be ascertained by deducting the cost from the sales
price in the year in which the sale occurs, except that in the case of
the sale of purchased animals held for draft, breeding, or dairy
purposes, the profits shall be the amount of any excess of the sales
price over the amount representing the difference between the cost and
the depreciation allowed or allowable (determined in accordance with the
rules applicable under section 1016(a) and the regulations thereunder).
However, see section 162 and the regulations thereunder with respect to
the computation of taxable income on other than the crop method where
the cost of seeds or young plants purchased for further development and
cultivation prior to sale is involved. Crop shares (whether or not
considered rent under State law) shall be included in gross income as of
the year in which the crop shares are reduced to money or the equivalent
of money. See section 263A for rules regarding costs that are required
to be capitalized.
(b) Farmers using an accrual method of accounting. A farmer using an
accrual method of accounting must use inventories to determine his gross
income. His gross income on an accrual method is determined by adding
the total of the items described in subparagraphs (1) through (5) of
this paragraph and subtracting therefrom the total of the items
described in subparagraphs (6) and (7) of this paragraph. These items
are as follows:
(1) The sales price of all livestock and other products held for
sale and sold during the year;
(2) The inventory value of livestock and products on hand and not
sold at the end of the year;
(3) All miscellaneous items of income, such as breeding fees, fees
from the rent of teams, machinery, or land, or other incidental farm
income;
(4) Any subsidy or conservation payments which must be considered as
income;
(5) Gross income from all other sources;
(6) The inventory value of the livestock and products on hand and
not sold at the beginning of the year; and
(7) The cost of any livestock or products purchased during the year
(except livestock held for draft, dairy, or breeding purposes, unless
included in inventory).
All livestock raised or purchased for sale shall be added in the
inventory at their proper valuation determined in accordance with the
method authorized and adopted for the purpose. Livestock acquired for
draft, breeding, or dairy purposes and not for sale may be included in
the inventory (see subparagraphs (2), (6), and (7) of this paragraph)
instead of being treated as capital assets subject to depreciation,
provided such practice is followed consistently from year to year by the
taxpayer. When any livestock included in an inventory are sold, their
cost must not be taken as an additional deduction in computing taxable
income, because such deduction is reflected in the inventory. See the
regulations under section 471. See section 263A for rules regarding
costs that are required to be capitalized. Crop shares (whether or not
considered rent under State law) shall be included in gross income as of
the year in which the crop shares are reduced to money or the equivalent
of money.
(c) Special rules for certain receipts. In the case of the sale of
machinery, farm equipment, or any other property (except stock in trade
of the taxpayer, or property of a kind which would properly be included
in the inventory of the taxpayer if on hand at the close of the taxable
year, or property held by the
[[Page 36]]
taxpayer primarily for sale to customers in the ordinary course of his
trade or business), any excess of the proceeds of the sale over the
adjusted basis of such property shall be included in the taxpayer's
gross income for the taxable year in which such sale is made. See,
however, section 453 and the regulations thereunder for special rules
relating to certain installment sales. If farm produce is exchanged for
merchandise, groceries, or the like, the market value of the article
received in exchange is to be included in gross income. Proceeds of
insurance, such as hail or fire insurance on growing crops, should be
included in gross income to the extent of the amount received in cash or
its equivalent for the crop injured or destroyed. See section 451(d) for
special rule relating to election to include crop insurance proceeds in
income for taxable year following taxable year of destruction. For
taxable years beginning after July 12, 1972, where a farmer is engaged
in producing crops and the process of gathering and disposing of such
crops is not completed within the taxable year in which such crops are
planted, the income therefrom may, with the consent of the Commissioner
(see section 446 and the regulations thereunder), be computed upon the
crop method. For taxable years beginning on or before July 12, 1972,
where a farmer is engaged in producing crops which take more than a year
from the time of planting to the time of gathering and disposing, the
income therefrom may, with the consent of the Commissioner (see section
446 and the regulations thereunder), be computed upon the crop method.
In any case in which the crop method is used, the entire cost of
producing the crop must be taken as a deduction for the year in which
the gross income from the crop is realized, and not earlier.
(d) Definition of ``farm''. As used in this section, the term
``farm'' embraces the farm in the ordinarily accepted sense, and
includes stock, dairy, poultry, fruit, and truck farms; also
plantations, ranches, and all land used for farming operations. All
individuals, partnerships, or corporations that cultivate, operate, or
manage farms for gain or profit, either as owners or tenants, are
designated as farmers. For more detailed rules with respect to the
determination of whether or not an individual is engaged in farming, see
Sec. 1.175-3. For rules applicable to persons cultivating or operating a
farm for recreation or pleasure, see sections 162 and 165, and the
regulations thereunder.
(e) Cross references. (1) For election to include Commodity Credit
Corporation loans as income, see section 77 and regulations thereunder.
(2) For definition of gross income derived from farming for purposes
of limiting deductibility of soil and water conservation expenditures,
see section 175 and regulations thereunder.
(3) For definition of gross income from farming in connection with
declarations of estimated income tax, see section 6073 and regulations
thereunder.
[T.D. 6500, 25 FR 11402, Nov. 26, 1960; 25 FR 14021, Dec. 31, 1960, as
amended by T.D. 7198, 37 FR 13679, July 13, 1972; T.D. 8729, 62 FR
44546, Aug. 22, 1997]
Sec. 1.61-5 Allocations by cooperative associations; per-unit retain certificates--tax treatment as to cooperatives and patrons.
(a) In general. Amounts allocated on the basis of the business done
with or for a patron by a cooperative association, whether or not
entitled to tax treatment under section 522, in cash, merchandise,
capital stock, revolving fund certificates, retain certificates,
certificates of indebtedness, letters of advice or in some other manner
disclosing to the patron the dollar amount allocated, shall be included
in the computation of the gross income of such patron for the taxable
year in which received to the extent prescribed in paragraph (b) of this
section, regardless of whether the allocation is deemed, for the purpose
of section 522, to be made at the close of a preceding taxable year of
the cooperative association. The determination of the extent of
taxability of such amounts is in no way dependent upon the method of
accounting employed by the patron or upon the method, cash, accrual, or
otherwise, upon which the taxable income of such patron is computed.
[[Page 37]]
(b) Extent of taxability. (1) Amounts allocated to a patron on a
patronage basis by a cooperative association with respect to products
marketed for such patron, or with respect to supplies, equipment, or
services, the cost of which was deductible by the patron under section
162 or section 212, shall be included in the computation of the gross
income of such patron, as ordinary income, to the following extent:
(i) If the allocation is in cash, the amount of cash received.
(ii) If the allocation is in merchandise, the amount of the fair
market value of such merchandise at the time of receipt by the patron.
(iii) If the allocation is in the form of revolving fund
certificates, retain certificates, certificates of indebtedness, letters
of advice, or similar documents, the amount of the fair market value of
such document at the time of its receipt by the patron. For purposes of
this subdivision, any document containing an unconditional promise to
pay a fixed sum of money on demand or at a fixed or determinable time
shall be considered to have a fair market value at the time of its
receipt by the patron, unless it is clearly established to the contrary.
However, for purposes of this subdivision, any document which is payable
only in the discretion of the cooperative association, or which is
otherwise subject to conditions beyond the control of the patron, shall
be considered not to have any fair market value at the time of its
receipt by the patron, unless it is clearly established to the contrary.
(iv) If the allocation is in the form of capital stock, the amount
of the fair market value, if any, of such capital stock at the time of
its receipt by the patron.
(2) If any allocation to which subparagraph (1) of this paragraph
applies is received in the form of a document of the type described in
subparagraph (1) (iii) or (iv) of this paragraph and is redeemed in full
or in part or is otherwise disposed of, there shall be included in the
computation of the gross income of the patron, as ordinary income, in
the year of redemption or other disposition, the excess of the amount
realized on the redemption or other disposition over the amount
previously included in the computation of gross income under such
subparagraph.
(3)(i) Amounts which are allocated on a patronage basis by a
cooperative association with respect to supplies, equipment, or
services, the cost of which was not deductible by the patron under
section 162 or section 212, are not includible in the computation of the
gross income of such patron. However, in the case of such amounts which
are allocated with respect to capital assets (as defined in section
1221) or property used in the trade or business within the meaning of
section 1231, such amounts shall, to the extent set forth in
subparagraph (1) of this paragraph, be taken into account by such patron
in determining the cost of the property to which the allocation relates.
Notwithstanding the preceding sentence, to the extent that such amounts
are in excess of the unrecovered cost of such property, and to the
extent that such amounts relate to such property which the patron no
longer owns, they shall be included in the computation of the gross
income of such patron.
(ii) If any patronage dividend is allocated to the patron in the
form of a document of the type described in subparagraph (1) (iii) or
(iv) of this paragraph, and if such allocation is with respect to
capital assets (as defined in section 1221) or property used in the
trade or business within the meaning of section 1231, any amount
realized on the redemption or other disposition of such document which
is in excess of the amount which was taken into account upon the receipt
of the document by the patron shall be taken into account by such patron
in the year of redemption or other disposition as an adjustment to basis
or as an inclusion in the computation of gross income, as the case may
be.
(iii) Any adjustment to basis in respect of an amount to which
subdivision (i) or (ii) of this subparagraph applies shall be made as of
the first day of the taxable year in which such amount is received.
(iv) The application of the provisions of this subparagraph may be
illustrated by the following examples:
Example (1). On July 1, 1959, P, a patron of a cooperative
association, purchases a tractor for use in his farming business from
such
[[Page 38]]
association for $2,200. The tractor has an estimated useful life of five
years and an estimated salvage value of $200. P files his income tax
returns on a calendar year basis and claims depreciation on the tractor
for the year 1959 of $200 pursuant to his use of the straight-line
method at the rate of $400 per year. On July 1, 1960, the cooperative
association allocates to P with respect to his purchase of the tractor a
dividend of $300 in cash. P will reduce his depreciation allowance with
respect to the tractor for 1960 (and subsequent taxable years) to
$333.33, determined as follows:
Cost of tractor, July 1, 1959.................................. $2,200
Less:
Depreciation for 1959 (6 mos.).................... $200
Adjustment as of Jan. 1, 1960, for cash patronage 300
dividend.........................................
Salvage value..................................... 200
----------
700
--------
Basis for depreciation for the remaining 4\1/2\ years of 1,500
estimated life..........................................
Basis for depreciation divided by the 4\1/2\ years of remaining 333.33
life..........................................................
Example (2). Assume the same facts as in example (1), except that on
July 1, 1960, the cooperative association allocates a dividend to P with
respect to his purchase of the tractor in the form of a revolving fund
certificate having a face amount of $300. The certificate is redeemable
in cash at the discretion of the directors of the association and is
subject to diminution by any future losses of the association, and has
no fair market value when received by P. Since the certificate had no
fair market value when received by P, no amount with respect to such
certificate was taken into account by him in the year 1960. In 1965, P
receives $300 cash from the association in full redemption of the
certificate. Prior to 1965, he had recovered through depreciation $2,000
of the cost of the tractor, leaving an unrecovered cost of $200 (the
salvage value). For the year 1965, the redemption proceeds of $300 are
applied against the unrecovered cost of $200, reducing the basis to
zero, and the balance of the redemption proceeds, $100, is includible in
the computation of P's gross income.
Example (3). Assume the same facts as in example (2), except that
the certificate is redeemed in full on July 1, 1962. The full $300
received on redemption of the certificate will be applied against the
unrecovered cost of the tractor as of January 1, 1962, computed as
follows:
Cost of tractor, July 1, 1959.................................. $2,200
Less:
Depreciation for 1959 (6 mos.).................... $200
Depreciation for 1960............................. 400
Depreciation for 1961............................. 400
----------
1,000
--------
Unrecovered cost on Jan. 1, 1962......................... 1,200
Adjustment as of Jan. 1, 1962, for proceeds of the redemption 300
of the revolving fund certificate.............................
----------
Unrecovered cost on Jan. 1, 1962, after adjustment............. 900
Less: Salvage value........................................ 200
----------
Basis for depreciation on Jan. 1, 1962................... 700
If P uses the tractor in his business until June 30,
1964, he would be entitled to the following
depreciation allowances with respect to the tractor:
For 1962............................................ 280
For 1963............................................ 280
For 1964 (6 mos.)................................... 140
----------
700
--------
Balance to be depreciated...................................... 0
Example (4). Assume the same facts as in example (3), except that P
sells the tractor in 1961. The entire $300 received in 1962 in
redemption of the revolving fund certificate is includible in the
computation of P's gross income for the year 1962.
(c) Special rule. If, for any taxable year ending before December 3,
1959, a taxpayer treated any patronage dividend received in the form of
a document described in paragraph (b) (1) (iii) or (iv) of this section
in accordance with the regulations then applicable (whether such
dividend is subject to paragraph (b) (1) or (3) of this section), such
taxpayer is not required to change the treatment of such patronage
dividends for any such prior taxable year. On the other hand, the
taxpayer may, if he so desires, amend his income tax returns to treat
the receipt of such patronage dividend in accordance with the provisions
of this section, but no provision in this paragraph shall be construed
as extending the period of limitations within which a claim for credit
or refund may be filed under section 6511.
(d) Per-unit retain certificates; tax treatment of cooperative
associations; distribution and reinvestment alternative. (1)(i) In the
case of a taxable year to which this paragraph applies to a cooperative
association, such association shall, in computing the amount paid or
returned to a patron with respect to products marketed for such patron,
take into account the stated dollar amount of any per-unit retain
certificate (as defined in paragraph (g) of this section)--
(a) Which is issued during the payment period for such year (as
defined in subparagraph (3) of this paragraph) with respect to such
products,
[[Page 39]]
(b) With respect to which the patron is a qualifying patron (as
defined in subparagraph (2) of this paragraph), and
(c) Which clearly states the fact that the patron has agreed to
treat the stated dollar amount thereof as representing a cash
distribution to him which he has reinvested in the cooperative
association.
(ii) No amount shall be taken into account by a cooperative
association by reason of the issuance of a per-unit retain certificate
to a patron who was not a qualifying patron with respect to such
certificate. However, any amount paid in redemption of a per-unit retain
certificate which was issued to a patron who was not a qualifying patron
with respect to such certificate shall be taken into account by the
cooperative in the year of redemption, as an amount paid or returned to
such patron with respect to products marketed for him. This subdivision
shall apply only to per-unit retain certificates issued with respect to
taxable years of the cooperative association to which this paragraph
applied to the association (that is, taxable years with respect to which
per-unit retain certificates were issued to one or more patrons who are
qualifying patrons).
(2)(i) A patron shall be considered to be a ``qualifying patron''
with respect to a per-unit retain certificate if there is in effect an
agreement between the cooperative association and such patron which
clearly provides that such patron agrees to treat the stated dollar
amounts of all per-unit retain certificates issued to him by the
association as representing cash distributions which he has
constructively received and which he has, of his own choice, reinvested
in the cooperative association. Such an agreement may be included in a
by-law of the cooperative which is adopted prior to the time the
products to which the per-unit retain certificates relate are marketed.
However, except where there is in effect a ``written agreement''
described in subdivision (ii) of this subparagraph, a patron shall not
be considered to be a ``qualifying patron'' with respect to a per-unit
retain certificate if it has been established by a determination of the
Tax Court of the United States, or any other court of competent
jurisdiction, which has become final, that the stated dollar amount of
such certificate, or of a similar certificate issued under similar
circumstances to such patron or any other patron by the cooperative
association, is not required to be included (as ordinary income) in the
gross income of such patron, or such other patron, for the taxable year
of the patron in which received.
(ii) The ``written agreement'' referred to in subdivision (i) of
this subparagraph is an agreement in writing, signed by the patron, on
file with the cooperative association, and revocable as provided in this
subdivision. Unless such an agreement specifically provides to the
contrary, it shall be effective for per-unit retain certificates issued
with respect to the taxable year of the cooperative association in which
the agreement is received by the association, and unless revoked, for
per-unit retain certificates issued with respect to all subsequent
taxable years. A ``written agreement'' must be revocable by the patron
at any time after the close of the taxable year in which it is made. To
be effective, a revocation must be in writing, signed by the patron, and
furnished to the cooperative association. A revocation shall be
effective only for per-unit retain certificates issued with respect to
taxable years of the cooperative association following the taxable year
in which it is furnished to the association. Notwithstanding the
preceding sentence, a revocation shall not be effective for per-unit
retain certificates issued with respect to products marketed for the
patron under a pooling arrangement in which such patron participated
before such revocation. The following is an example of an agreement
which would meet the requirements of this subparagraph:
I agree that, for purposes of determining the amount I have received
from this cooperative in payment for my goods, I shall treat the face
amount of any per-unit retain certificates issued to me on and after ---
------- as representing a cash distribution which I have constructively
received and which I have reinvested in the cooperative.
________________________________________________________________________
(Signed)
[[Page 40]]
(3) For purposes of this paragraph and paragraph (e) of this
section, the payment period for any taxable year of the cooperative is
the period beginning with the first day of such taxable year and ending
with the 15th day of the 9th month following the close of such year.
(4) This paragraph shall apply to any taxable year of a cooperative
association if, with respect to such taxable year, the association has
issued per-unit retain certificates to one or more of its patrons who
are qualifying patrons with respect to such certificates within the
meaning of subparagraph (2) of this paragraph.
(e) Tax treatment of cooperative association; taxable years for
which paragraph (d) does not apply. (1) In the case of a taxable year to
which paragraph (d) of this section does not apply to a cooperative
association, such association shall, in computing the amount paid or
returned to a patron with respect to products marketed for such patron,
take into account the fair market value (at the time of issue) of any
per-unit retain certificates which are issued by the association with
respect to such products during the payment period for such taxable
year.
(2) An amount paid in redemption of a per-unit retain certificate
issued with respect to a taxable year of the cooperative association for
which paragraph (d) of this section did not apply to the association,
shall, to the extent such amount exceeds the fair market value of the
certificate at the time of its issue, be taken into account by the
association in the year of redemption, as an amount paid or returned to
a patron with respect to products marketed for such patron.
(3) For purposes of this paragraph and paragraph (f)(2) of this
section, any per-unit retain certificate containing an unconditional
promise to pay a fixed sum of money on demand or at a fixed or
determinable time shall be considered to have a fair market value at the
time of its issue, unless it is clearly established to the contrary. On
the other hand, any per-unit retain certificate (other than capital
stock) which is redeemable only in the discretion of the cooperative
association, or which is otherwise subject to conditions beyond the
control of the patron, shall be considered not to have any fair market
value at the time of its issue, unless it is clearly established to the
contrary.
(f) Tax treatment of patron. (1) The following rules apply for
purposes of computing the amount includible in gross income with respect
to a per-unit retain certificate which was issued to a patron by a
cooperative association with respect to a taxable year of such
association for which paragraph (d) of this section applies.
(i) If the patron is a qualifying patron with respect to such
certificate (within the meaning of paragraph (d) (2) of this section),
he shall, in accordance with his agreement, include (as ordinary income)
the stated dollar amount of the certificate in gross income for his
taxable year in which the certificate is received by him.
(ii) If the patron is not a qualifying patron with respect to such
certificate, no amount is includible in gross income on the receipt of
the certificate; however, any gain on the redemption, sale, or other
disposition of such certificate shall, to the extent of the stated
dollar amount thereof, be considered as gain from the sale or exchange
of property which is not a capital asset.
(2) The amount of the fair market value of a per-unit retain
certificate which is issued to a patron by a cooperative association
with respect to a taxable year of the association for which paragraph
(d) of this section does not apply shall be included, as ordinary
income, in the gross income of the patron for the taxable year in which
the certificate is received. Any gain on the redemption, sale, or other
disposition of such a per-unit retain certificate shall, to the extent
its stated dollar amount exceeds its fair market value at the time of
issue, be treated as gain on the redemption, sale, or other disposition
of property which is not a capital asset.
(g) ``Per-unit retain certificate'' defined. For purposes of
paragraphs (d), (e), and (f), of this section, the term ``per-unit
retain certificate'' means any capital stock, revolving fund
certificate, retain certificate, certificate of indebtedness, letter of
advice, or other written notice--
[[Page 41]]
(1) Which is issued to a patron with respect to products marketed
for such patron;
(2) Which discloses to the patron the stated dollar amount allocated
to him on the books of the cooperative association; and
(3) The stated dollar amount of which is fixed without reference to
net earnings.
(h) Effective date. This section shall not apply to any amount the
tax treatment of which is prescribed in section 1385 and Sec. 1.1385-1.
Paragraphs (d), (e), and (f) of this section shall apply to per-unit
retain certificates as defined in paragraph (g) of this section issued
by a cooperative association during taxable years of the association
beginning after April 30, 1966, with respect to products marketed for
patrons during such years.
[T.D. 6500, 25 FR 11402, Nov. 26, 1960, as amended by T.D. 6855, 30 FR
13134, Oct. 15, 1965]
Sec. 1.61-6 Gains derived from dealings in property.
(a) In general. Gain realized on the sale or exchange of property is
included in gross income, unless excluded by law. For this purpose
property includes tangible items, such as a building, and intangible
items, such as goodwill. Generally, the gain is the excess of the amount
realized over the unrecovered cost or other basis for the property sold
or exchanged. The specific rules for computing the amount of gain or
loss are contained in section 1001 and the regulations thereunder. When
a part of a larger property is sold, the cost or other basis of the
entire property shall be equitably apportioned among the several parts,
and the gain realized or loss sustained on the part of the entire
property sold is the difference between the selling price and the cost
or other basis allocated to such part. The sale of each part is treated
as a separate transaction and gain or loss shall be computed separately
on each part. Thus, gain or loss shall be determined at the time of sale
of each part and not deferred until the entire property has been
disposed of. This rule may be illustrated by the following examples:
Example (1). A, a dealer in real estate, acquires a 10-acre tract
for $10,000, which he divides into 20 lots. The $10,000 cost must be
equitably apportioned among the lots so that on the sale of each A can
determine his taxable gain or deductible loss.
Example (2). B purchases for $25,000 property consisting of a used
car lot and adjoining filling station. At the time, the fair market
value of the filling station is $15,000 and the fair market value of the
used car lot is $10,000. Five years later B sells the filling station
for $20,000 at a time when $2,000 has been properly allowed as
depreciation thereon. B's gain on this sale is $7,000, since $7,000 is
the amount by which the selling price of the filling station exceeds the
portion of the cost equitably allocable to the filling station at the
time of purchase reduced by the depreciation properly allowed.
(b) Nontaxable exchanges. Certain realized gains or losses on the
sale or exchange of property are not ``recognized'', that is, are not
included in or deducted from gross income at the time the transaction
occurs. Gain or loss from such sales or exchanges is generally
recognized at some later time. Examples of such sales or exchanges are
the following:
(1) Certain formations, reorganizations, and liquidations of
corporations, see sections 331, 333, 337, 351, 354, 355, and 361;
(2) Certain formations and distributions of partnerships, see
sections 721 and 731;
(3) Exchange of certain property held for productive use or
investment for property of like kind, see section 1031;
(4) A corporation's exchange of its stock for property, see section
1032;
(5) Certain involuntary conversions of property if replaced, see
section 1033;
(6) Sale or exchange of residence if replaced, see section 1034;
(7) Certain exchanges of insurance policies and annuity contracts,
see section 1035; and
(8) Certain exchanges of stock for stock in the same corporation,
see section 1036.
(c) Character of recognized gain. Under Subchapter P, Chapter 1 of
the Code, relating to capital gains and losses, certain gains derived
from dealings in property are treated specially, and under certain
circumstances the maximum rate of tax on such gains is 25 percent, as
provided in section 1201. Generally, the property subject to this
[[Page 42]]
treatment is a ``capital asset'', or treated as a ``capital asset''. For
definition of such assets, see sections 1221 and 1231, and the
regulations thereunder. For some of the rules either granting or denying
this special treatment, see the following sections and the regulations
thereunder:
(1) Transactions between partner and partnership, section 707;
(2) Sale or exchange of property used in the trade or business and
involuntary conversions, section 1231;
(3) Payment of bonds and other evidences of indebtedness, section
1232;
(4) Gains and losses from short sales, section 1233;
(5) Options to buy or sell, section 1234;
(6) Sale or exchange of patents, section 1235;
(7) Securities sold by dealers in securities, section 1236;
(8) Real property subdivided for sale, section 1237;
(9) Amortization in excess of depreciation, section 1238;
(10) Gain from sale of certain property between spouses or between
an individual and a controlled corporation, section 1239;
(11) Taxability to employee of termination payments, section 1240.
Sec. 1.61-7 Interest.
(a) In general. As a general rule, interest received by or credited
to the taxpayer constitutes gross income and is fully taxable. Interest
income includes interest on savings or other bank deposits; interest on
coupon bonds; interest on an open account, a promissory note, a
mortgage, or a corporate bond or debenture; the interest portion of a
condemnation award; usurious interest (unless by State law it is
automatically converted to a payment on the principal); interest on
legacies; interest on life insurance proceeds held under an agreement to
pay interest thereon; and interest on refunds of Federal taxes. For
rules determining the taxable year in which interest, including interest
accrued or constructively received, is included in gross income, see
section 451 and the regulations thereunder. For the inclusion of
interest in income for the purpose of the retirement income credit, see
section 37 and the regulations thereunder. For credit of tax withheld at
source on interest on tax-free covenant bonds, see section 32 and the
regulations thereunder. For rules relating to interest on certain
deferred payments, see section 483 and the regulations thereunder.
(b) Interest on Government obligations--(1) Wholly tax-exempt
interest. Interest upon the obligations of a State, Territory, or a
possession of the United States, or any political subdivision of any of
the foregoing, or of the District of Columbia, is wholly exempt from
tax. Interest on certain United States obligations issued before March
1, 1941, is exempt from tax to the extent provided in the acts of
Congress authorizing the various issues. See section 103 and the
regulations thereunder.
(2) Partially tax-exempt interest. Interest earned on certain United
States obligations is partly tax exempt and partly taxable. For example,
the interest on United States Treasury bonds issued before March 1,
1941, to the extent that the principal of such bonds exceeds $5,000, is
exempt from normal tax but is subject to surtax. See sections 35 and
103, and the regulations thereunder.
(3) Fully taxable interest. In general, interest on United States
obligations issued on or after March 1, 1941, and obligations issued by
any agency or instrumentality of the United States after that date, is
fully taxable; but see section 103 and the regulations thereunder. A
taxpayer using the cash receipts and disbursements method of accounting
who owns United States savings bonds issued at a discount has an
election as to when he will report the interest; see section 454 and the
regulations thereunder.
(c) Obligations bought at a discount; bonds bought when interest
defaulted or accrued. When notes, bonds, or other certificates of
indebtedness are issued by a corporation or the Government at a discount
and are later redeemed by the debtor at the face amount, the original
discount is interest, except as otherwise provided by law. See also
paragraph (b) of this section for the rules relating to Government
bonds. If
[[Page 43]]
a taxpayer purchases bonds when interest has been defaulted or when the
interest has accrued but has not been paid, any interest which is in
arrears but has accrued at the time of purchase is not income and is not
taxable as interest if subsequently paid. Such payments are returns of
capital which reduce the remaining cost basis. Interest which accrues
after the date of purchase, however, is taxable interest income for the
year in which received or accrued (depending on the method of accounting
used by the taxpayer).
(d) Bonds sold between interest dates; amounts received in excess of
original issue discount; interest on life insurance. When bonds are sold
between interest dates, part of the sales price represents interest
accrued to the date of the sale and must be reported as interest income.
Amounts received in excess of the original issue discount upon the
retirement or sale of a bond or other evidence of indebtedness may under
some circumstances constitute capital gain instead of ordinary income.
See section 1232 and the regulations thereunder. Interest payments on
amounts payable as employees' death benefits (whether or not section
101(b) applies thereto) and on the proceeds of life insurance policies
payable by reason of the insured's death constitute gross income under
some circumstances. See section 101 and the regulations thereunder for
details. Where accrued interest on unwithdrawn insurance policy
dividends is credited annually and is subject to withdrawal annually by
the taxpayer, such interest credits constitute gross income to such
taxpayer as of the year of credit. However, if under the terms of the
insurance policy the interest on unwithdrawn policy dividends is subject
to withdrawal only on the anniversary date of the policy (or some other
date specified therein), then such interest shall constitute gross
income to the taxpayer for the taxable year in which such anniversary
date (or other specified date) falls.
[T.D. 6500, 25 FR 11402, Nov. 26, 1960, as amended by T.D. 6723, 29 FR
5342, Apr. 21, 1964; T.D. 6873, 31 FR 941, Jan. 25, 1966]
Sec. 1.61-8 Rents and royalties.
(a) In general. Gross income includes rentals received or accrued
for the occupancy of real estate or the use of personal property. For
the inclusion of rents in income for the purpose of the retirement
income credit, see section 37 and the regulations thereunder. Gross
income includes royalties. Royalties may be received from books,
stories, plays, copyrights, trademarks, formulas, patents, and from the
exploitation of natural resources, such as coal, gas, oil, copper, or
timber. Payments received as a result of the transfer of patent rights
may under some circumstances constitute capital gain instead of ordinary
income. See section 1235 and the regulations thereunder. For special
rules for certain income from natural resources, see Subchapter I
(section 611 and following), Chapter 1 of the Code, and the regulations
thereunder.
(b) Advance rentals; cancellation payments. Except as provided in
section 467 and the regulations thereunder, gross income includes
advance rentals, which must be included in income for the year of
receipt regardless of the period covered or the method of accounting
employed by the taxpayer. An amount received by a lessor from a lessee
for cancelling a lease constitutes gross income for the year in which it
is received, since it is essentially a substitute for rental payments.
As to amounts received by a lessee for the cancellation of a lease, see
section 1241 and the regulations thereunder.
(c) Expenditures by lessee. As a general rule, if a lessee pays any
of the expenses of his lessor such payments are additional rental income
of the lessor. If a lessee places improvements on real estate which
constitute, in whole or in part, a substitute for rent, such
improvements constitute rental income to the lessor. Whether or not
improvements made by a lessee result in rental income to the lessor in a
particular case depends upon the intention of the parties, which may be
indicated either by the terms of the lease or by the surrounding
circumstances. For the exclusion from gross income of income (other than
rent) derived by a lessor of real property on the termination of a
lease, representing the value of such property attributable to buildings
erected or other improvements made
[[Page 44]]
by a lessee, see section 109 and the regulations thereunder. For the
exclusion from gross income of a lessor corporation of certain of its
income taxes on rental income paid by a lessee corporation under a lease
entered into before January 1, 1954, see section 110 and the regulations
thereunder.
[T.D. 6500, 25 FR 11402, Nov. 26, 1960; 25 FR 14021, Dec. 31, 1960, as
amended by T.D. 8820, 64 FR 26851, May 18, 1999]
Sec. 1.61-9 Dividends.
(a) In general. Except as otherwise specifically provided, dividends
are included in gross income under sections 61 and 301. For the
principal rules with respect to dividends includible in gross income,
see section 316 and the regulations thereunder. As to distributions made
or deemed to be made by regulated investment companies, see sections 851
through 855, and the regulations thereunder. As to distributions made by
real estate investment trusts, see sections 856 through 858, and the
regulations thereunder. See section 116 for the exclusion from gross
income of $100 ($50 for dividends received in taxable years beginning
before January 1, 1964) of dividends received by an individual, except
those from certain corporations. Furthermore, dividends may give rise to
a credit against tax under section 34, relating to dividends received by
individuals (for dividends received on or before December 31, 1964), and
under section 37, relating to retirement income.
(b) Dividends in kind; stock dividends; stock redemptions. Gross
income includes dividends in property other than cash, as well as cash
dividends. For amounts to be included in gross income when distributions
of property are made, see section 301 and the regulations thereunder. A
distribution of stock, or rights to acquire stock, in the corporation
making the distribution is not a dividend except under the circumstances
described in section 305(b). However, the term ``dividend'' includes a
distribution of stock, or rights to acquire stock, in a corporation
other than the corporation making the distribution. For determining when
distributions in complete liquidation shall be treated as dividends, see
section 333 and the regulations thereunder. For rules determining when
amounts received in exchanges under section 354 or exchanges and
distributions under section 355 shall be treated as dividends, see
section 356 and the regulations thereunder.
(c) Dividends on stock sold. When stock is sold, and a dividend is
both declared and paid after the sale, such dividend is not gross income
to the seller. When stock is sold after the declaration of a dividend
and after the date as of which the seller becomes entitled to the
dividend, the dividend ordinarily is income to the seller. When stock is
sold between the time of declaration and the time of payment of the
dividend, and the sale takes place at such time that the purchaser
becomes entitled to the dividend, the dividend ordinarily is income to
him. The fact that the purchaser may have included the amount of the
dividend in his purchase price in contemplation of receiving the
dividend does not exempt him from tax. Nor can the purchaser deduct the
added amount he advanced to the seller in anticipation of the dividend.
That added amount is merely part of the purchase price of the stock. In
some cases, however, the purchaser may be considered to be the recipient
of the dividend even though he has not received the legal title to the
stock itself and does not himself receive the dividend. For example, if
the seller retains the legal title to the stock as trustee solely for
the purpose of securing the payment of the purchase price, with the
understanding that he is to apply the dividends received from time to
time in reduction of the purchase price, the dividends are considered to
be income to the purchaser.
[T.D. 6500, 25 FR 11402, Nov. 26, 1960, as amended by T.D. 6777, 29 FR
17807, Dec. 16, 1964]
Sec. 1.61-10 Alimony and separate maintenance payments; annuities; income from life insurance and endowment contracts.
(a) In general. Alimony and separate maintenance payments,
annuities, and income from life insurance and endowment contracts in
general constitute gross income, unless excluded by law. Annuities paid
by religious, charitable,
[[Page 45]]
and educational corporations are generally taxable to the same extent as
other annuities. An annuity charged upon devised land is taxable to the
donee-annuitant to the extent that it becomes payable out of the rents
or other income of the land, whether or not it is a charge upon the
income of the land.
(b) Cross references. For the detailed rules relating to--
(1) Alimony and separate maintenance payments, see section 71 and
the regulations thereunder;
(2) Annuities, certain proceeds of endowment and life insurance
contracts, see section 72 and the regulations thereunder;
(3) Life insurance proceeds paid by reason of death of insured,
employees' death benefits, see section 101 and the regulations
thereunder;
(4) Annuities paid by employees' trusts, see section 402 and the
regulations thereunder;
(5) Annuities purchased for employee by employer, see section 403
and the regulations thereunder.
Sec. 1.61-11 Pensions.
(a) In general. Pensions and retirement allowances paid either by
the Government or by private persons constitute gross income unless
excluded by law. Usually, where the taxpayer did not contribute to the
cost of a pension and was not taxable on his employer's contributions,
the full amount of the pension is to be included in his gross income.
But see sections 72, 402, and 403, and the regulations thereunder. When
amounts are received from other types of pensions, a portion of the
payment may be excluded from gross income. Under some circumstances,
amounts distributed from a pension plan in excess of the employee's
contributions may constitute long-term capital gain, rather than
ordinary income.
(b) Cross references. For the inclusion of pensions in income for
the purpose of the retirement income credit, see section 37 and the
regulations thereunder. Detailed rules concerning the extent to which
pensions and retirement allowances are to be included in or excluded
from gross income are contained in other sections of the Code and the
regulations thereunder. Amounts received as pensions or annuities under
the Social Security Act (42 U.S.C. ch. 7) or the Railroad Retirement Act
(45 U.S.C. ch. 9) are excluded from gross income. For other partial and
total exclusions from gross income, see the following:
(1) Annuities in general, section 72 and the regulations thereunder;
(2) Employees' annuities, sections 402 and 403 and the regulations
thereunder;
(3) References to other acts of Congress exempting veterans'
pensions and railroad retirement annuities and pensions, section 122.
[T.D. 6500, 25 FR 11402, Nov. 26, 1960, as amended by T.D. 6856, 30 FR
13316, Oct. 20, 1965]
Sec. 1.61-12 Income from discharge of indebtedness.
(a) In general. The discharge of indebtedness, in whole or in part,
may result in the realization of income. If, for example, an individual
performs services for a creditor, who in consideration thereof cancels
the debt, the debtor realizes income in the amount of the debt as
compensation for his services. A taxpayer may realize income by the
payment or purchase of his obligations at less than their face value. In
general, if a shareholder in a corporation which is indebted to him
gratuitously forgives the debt, the transaction amounts to a
contribution to the capital of the corporation to the extent of the
principal of the debt.
(b) Proceedings under Bankruptcy Act. (1) Income is not realized by
a taxpayer by virtue of the discharge, under section 14 of the
Bankruptcy Act (11 U.S.C. 32), of his indebtedness as the result of an
adjudication in bankruptcy, or by virtue of an agreement among his
creditors not consummated under any provision of the Bankruptcy Act, if
immediately thereafter the taxpayer's liabilities exceed the value of
his assets. Furthermore, unless one of the principal purposes of seeking
a confirmation under the Bankruptcy Act is the avoidance of income tax,
income is not realized by a taxpayer in the case of a cancellation or
reduction of his indebtedness under--
[[Page 46]]
(i) A plan of corporate reorganization confirmed under Chapter X of
the Bankruptcy Act (11 U.S.C., ch. 10);
(ii) An ``arrangement'' or a ``real property arrangement'' confirmed
under Chapter XI or XII, respectively, of the Bankruptcy Act (11 U.S.C.,
ch. 11, 12); or
(iii) A ``wage earner's plan'' confirmed under Chapter XIII of the
Bankruptcy Act (11 U.S.C., ch. 13).
(2) For adjustment of basis of certain property in the case of
cancellation or reduction of indebtedness resulting from a proceeding
under the Bankruptcy Act, see the regulations under section 1016.
(c) Issuance and repurchase of debt instruments--(1) Issuance. An
issuer does not realize gain or loss upon the issuance of a debt
instrument. For rules relating to an issuer's interest deduction for a
debt instrument issued with bond issuance premium, see Sec. 1.163-13.
(2) Repurchase--(i) In general. An issuer does not realize gain or
loss upon the repurchase of a debt instrument. However, if a debt
instrument provides for payments denominated in, or determined by
reference to, a nonfunctional currency, an issuer may realize a currency
gain or loss upon the repurchase of the instrument. See section 988 and
the regulations thereunder. For purposes of this paragraph (c)(2), the
term repurchase includes the retirement of a debt instrument, the
conversion of a debt instrument into stock of the issuer, and the
exchange (including an exchange under section 1001) of a newly issued
debt instrument for an existing debt instrument.
(ii) Repurchase at a discount. An issuer realizes income from the
discharge of indebtedness upon the repurchase of a debt instrument for
an amount less than its adjusted issue price (within the meaning of
Sec. 1.1275-1(b)). The amount of discharge of indebtedness income is
equal to the excess of the adjusted issue price over the repurchase
price. See section 108 and the regulations thereunder for additional
rules relating to income from discharge of indebtedness. For example, to
determine the repurchase price of a debt instrument that is repurchased
through the issuance of a new debt instrument, see section 108(e)(10).
(iii) Repurchase at a premium. An issuer may be entitled to a
repurchase premium deduction upon the repurchase of a debt instrument
for an amount greater than its adjusted issue price (within the meaning
of Sec. 1.1275-1(b)). See Sec. 1.163-7(c) for the treatment of
repurchase premium.
(iv) Effective date. This paragraph (c)(2) applies to debt
instruments repurchased on or after March 2, 1998.
(d) Cross references. For exclusion from gross income of--
(1) Income from discharge of indebtedness in certain cases, see
sections 108 and 1017, and regulations thereunder;
(2) Forgiveness of Government payments to encourage exploration,
development, and mining for defense purposes, see section 621 and
regulations thereunder.
(e) Cross reference. For rules relating to the treatment of
liabilities on the sale or other disposition of encumbered property, see
Sec. 1.1001-2.
[T.D. 6500, 25 FR 11402, Nov. 26, 1960, as amended by T.D. 6984, 33 FR
19174, Dec. 24, 1968; T.D. 7741, 45 FR 81745, Dec. 12, 1980; T.D. 8746,
62 FR 68175, Dec. 31, 1997]
Sec. 1.61-13 Distributive share of partnership gross income; income in respect of a decedent; income from an interest in an estate or trust.
(a) In general. A partner's distributive share of partnership gross
income (under section 702(c)) constitutes gross income to him. Income in
respect of a decedent (under section 691) constitutes gross income to
the recipient. Income from an interest in an estate or trust constitutes
gross income under the detailed rules of Part I (section 641 and
following), Subchapter J, Chapter 1 of the Code. In many cases, these
sections also determine who is to include in his gross income the income
from an estate or trust.
(b) Creation of sinking fund by corporation. If a corporation, for
the sole purpose of securing the payment of its bonds or other
indebtedness, places property in trust or sets aside certain amounts in
a sinking fund under the control of a trustee who may be authorized to
invest and reinvest such sums from time to time, the property
[[Page 47]]
or fund thus set aside by the corporation and held by the trustee is an
asset of the corporation, and any gain arising therefrom is income of
the corporation and shall be included as such in its gross income.
Sec. 1.61-14 Miscellaneous items of gross income.
(a) In general. In addition to the items enumerated in section
61(a), there are many other kinds of gross income. For example, punitive
damages such as treble damages under the antitrust laws and exemplary
damages for fraud are gross income. Another person's payment of the
taxpayer's income taxes constitutes gross income to the taxpayer unless
excluded by law. Illegal gains constitute gross income. Treasure trove,
to the extent of its value in United States currency, constitutes gross
income for the taxable year in which it is reduced to undisputed
possession.
(b) Cross references. (1) Prizes and awards, see section 74 and
regulations thereunder;
(2) Damages for personal injury or sickness, see section 104 and the
regulations thereunder;
(3) Income taxes paid by lessee corporation, see section 110 and
regulations thereunder;
(4) Scholarships and fellowship grants, see section 117 and
regulations thereunder;
(5) Miscellaneous exemptions under other acts of Congress, see
section 122;
(6) Tax-free covenant bonds, see section 1451 and regulations
thereunder.
(7) Notional principal contracts, see Sec. 1.446-3.
[T.D. 6500, 25 FR 11402, Nov. 26, 1960, as amended by T.D. 6856, 30 FR
13316, Oct. 20, 1965; T.D. 8491, 58 FR 53127, Oct. 14, 1993]
Sec. 1.61-15 Options received as payment of income.
(a) In general. Except as otherwise provided in Sec. 1.61-2(d)(6)(i)
(relating to certain restricted property transferred after June 30,
1969), if any person receives an option in payment of an amount
constituting compensation of such person (or any other person), such
option is subject to the rules contained in Sec. 1.421-6 for purposes of
determining when income is realized in connection with such option and
the amount of such income. In this regard, the rules of Sec. 1.421-6
apply to an option received in payment of an amount constituting
compensation regardless of the form of the transaction. Thus, the rules
of Sec. 1.421-6 apply to an option transferred for less than its fair
market value in a transaction taking the form of a sale or exchange if
the difference between the amount paid for the option and its fair
market value at the time of transfer is the payment of an amount
constituting compensation of the transferee or any other person. This
section, for example, makes the rules of Sec. 1.421-6 applicable to
options granted in whole or partial payment for services of an
independent contractor. If an amount of money or property is paid for an
option to which this paragraph applies, then the amount paid shall be
part of the basis of such option.
(b) Options to which paragraph (a) does not apply. (1) Paragraph (a)
of this section does not apply to:
(i) An option which is subject to the rules contained in section
421; and
(ii) An option which is not granted as the payment of an amount
constituting compensation, such as an option which is acquired solely as
an investment (including an option which is part of an investment unit
described in paragraph (b) of Sec. 1.1232-3). For rules relating to the
taxation of options described in this subdivision, see section 1234 and
the regulations thereunder.
(2) If a person acquires an option which is not subject to the rules
contained in section 421, and if such option has a readily ascertainable
fair market value, such person may establish that such option was not
acquired as payment of an amount constituting compensation by showing
that the amount of money or its equivalent paid for the option equaled
the readily ascertainable fair market value of the option. If a person
acquires an option which is not subject to the rules contained in
section 421, and if such option does not have a readily ascertainable
fair market value, then to establish that such option was not acquired
as payment of an amount constituting compensation, such person must show
that, from an examination of all the surrounding circumstances, there
was no reason for
[[Page 48]]
the option to have been granted as the payment of an amount constituting
compensation. For example, such person must show that he had neither
rendered nor was obligated to render substantial services in
consideration for the granting of the option. In determining whether an
option, such as an option acquired in connection with an obligation as
part of an investment unit, has been granted as compensation for
services, the ordinary services performed by an investor in his own
self-interest in connection with his investing activities will not be
treated as the consideration for the grant of the option. For example,
if a small business investment company takes an active part in the
management of its debtor small business company, the rendering of such
management services will not be treated as the consideration for the
granting of the option, provided such services are rendered for an
independent consideration, or are merely protective of the small
business investment company's investment in the borrower. See paragraph
(c) of Sec. 1.421-6 for the meaning of the term ``readily ascertainable
fair market value.''
(c) Statement required in connection with certain options. (1) Any
person acquiring any option to purchase securities (other than an option
described in subparagraph (2) of this paragraph) shall attach a
statement to his income tax return for the taxable year in which the
option was acquired. For the definition of the term ``securities'', see
section 165(g)(2).
(2) The statement otherwise required by subparagraph (1) of this
paragraph shall not be required with respect to the following options:
(i) Options subject to the rules contained in section 305(a) or
section 421;
(ii) Options acquired as part of an investment unit consisting of an
option and a debenture, note, or other similar obligation--
(a) If such unit is acquired as part of a public offering and the
amount of money or its equivalent paid for such unit is not less than
the public offering price, or
(b) If such unit is actively traded on an established market and the
amount of money or its equivalent paid for such unit is not less than
the price paid for such unit in contemporaneous purchases of such unit
by persons independent of both the seller and the taxpayer;
(iii) Options acquired as part of a public offering, if the amount
of money or its equivalent paid for such option is not less than the
public offering price; and
(iv) Options which are actively traded on an established market and
which are acquired for money or its equivalent at a price not less than
the price paid for such options in contemporaneous purchases of such
options by persons independent of both the seller and the taxpayer.
(3) The statement required by subparagraph (1) of this paragraph
shall contain the following information:
(i) Name and address of the taxpayer;
(ii) Description of the securities subject to the option (including
number of shares of stock);
(iii) Period during which the option is exercisable;
(iv) Whether the option had a readily ascertainable fair market
value at date of grant; and
(v) Whether the option is subject to paragraph (a) of this section.
(4) If the statement required by subparagraph (1) of this paragraph
indicates either that the option is not subject to paragraph (a) of this
section, or that the option is subject to paragraph (a) of this section
but that such option had a readily ascertainable fair market value at
date of grant, then such statement shall contain the following
additional information:
(i) Option price;
(ii) Value at date of grant of securities subject to the option;
(iii) Restrictions (if any) on exercise or transfer of option;
(iv) Restrictions (if any) on transfer of securities subject to the
option;
(v) Value of the option (if readily ascertainable);
(vi) How value of option was determined;
(vii) Amount of money (or its equivalent) paid for the option;
(viii) Person from whom the option was acquired;
[[Page 49]]
(ix) A concise description of the circumstances surrounding the
acquisition of the option and any other factors relied upon by the
taxpayer to establish that the option is not subject to paragraph (a) of
this section, or, if the option is treated by the taxpayer as subject to
paragraph (a) of this section, that the option had a readily
ascertainable fair market value at date of grant.
(d) Effective date. This section shall apply to options granted
after July 11, 1963, other than options required to be granted pursuant
to the terms of a written contract entered into on or before such date.
[T.D. 6696, 28 FR 13450, Dec. 12, 1963, as amended by T.D. 6706, 29 FR
2911, Mar. 3, 1964; T.D. 6984, 33 FR 19175, Dec. 24, 1968; T.D. 7554, 43
FR 31913, July 24, 1978]
Sec. 1.61-21 Taxation of fringe benefits.
(a) Fringe benefits--(1) In general. Section 61(a)(1) provides that,
except as otherwise provided in subtitle A of the Internal Revenue Code
of 1986, gross income includes compensation for services, including
fees, commissions, fringe benefits, and similar items. For an outline of
the regulations under this section relating to fringe benefits, see
paragraph (a)(7) of this section. Examples of fringe benefits include:
an employer-provided automobile, a flight on an employer-provided
aircraft, an employer-provided free or discounted commercial airline
flight, an employer-provided vacation, an employer-provided discount on
property or services, an employer-provided membership in a country club
or other social club, and an employer-provided ticket to an
entertainment or sporting event.
(2) Fringe benefits excluded from income. To the extent that a
particular fringe benefit is specifically excluded from gross income
pursuant to another section of subtitle A of the Internal Revenue Code
of 1986, that section shall govern the treatment of that fringe benefit.
Thus, if the requirements of the governing section are satisfied, the
fringe benefits may be excludable from gross income. Examples of
excludable fringe benefits include qualified tuition reductions provided
to an employee (section 117(d)); meals or lodging furnished to an
employee for the convenience of the employer (section 119); benefits
provided under a dependent care assistance program (section 129); and
no-additional-cost services, qualified employee discounts, working
condition fringes, and de minimis fringes (section 132). Similarly, the
value of the use by an employee of an employer-provided vehicle or a
flight provided to an employee on an employer-provided aircraft may be
excludable from income under section 105 (because, for example, the
transportation is provided for medical reasons) if and to the extent
that the requirements of that section are satisfied. Section 134
excludes from gross income ``qualified military benefits.'' An example
of a benefit that is not a qualified military benefit is the personal
use of an employer-provided vehicle. The fact that another section of
subtitle A of the Internal Revenue Code addresses the taxation of a
particular fringe benefit will not preclude section 61 and the
regulations thereunder from applying, to the extent that they are not
inconsistent with such other section. For example, many fringe benefits
specifically addressed in other sections of subtitle A of the Internal
Revenue Code are excluded from gross income only to the extent that they
do not exceed specific dollar or percentage limits, or only if certain
other requirements are met. If the limits are exceeded or the
requirements are not met, some or all of the fringe benefit may be
includible in gross income pursuant to section 61. See paragraph (b)(3)
of this section.
(3) Compensation for services. A fringe benefit provided in
connection with the performance of services shall be considered to have
been provided as compensation for such services. Refraining from the
performance of services (such as pursuant to a covenant not to compete)
is deemed to be the performance of services for purposes of this
section.
(4) Person to whom fringe benefit is taxable--(i) In general. A
taxable fringe benefit is included in the income of the person
performing the services in connection with which the fringe benefit is
furnished. Thus, a fringe benefit may be taxable to a person even though
that person did not actually receive the fringe benefit. If a fringe
benefit is furnished to someone other than the
[[Page 50]]
service provider such benefit is considered in this section as furnished
to the service provider, and use by the other person is considered use
by the service provider. For example, the provision of an automobile by
an employer to an employee's spouse in connection with the performance
of services by the employee is taxable to the employee. The automobile
is considered available to the employee and use by the employee's spouse
is considered use by the employee.
(ii) All persons to whom benefits are taxable referred to as
employees. The person to whom a fringe benefit is taxable need not be an
employee of the provider of the fringe benefit, but may be, for example,
a partner, director, or an independent contractor. For convenience, the
term ``employee'' includes any person performing services in connection
with which a fringe benefit is furnished, unless otherwise specifically
provided in this section.
(5) Provider of a fringe benefit referred to as an employer. The
``provider'' of a fringe benefit is that person for whom the services
are performed, regardless of whether that person actually provides the
fringe benefit to the recipient. The provider of a fringe benefit need
not be the employer of the recipient of the fringe benefit, but may be,
for example, a client or customer of the employer or of an independent
contractor. For convenience, the term ``employer'' includes any provider
of a fringe benefit in connection with payment for the performance of
services, unless otherwise specifically provided in this section.
(6) Effective date. Except as otherwise provided, this section is
effective as of January 1, 1989 with respect to fringe benefits provided
after December 31, 1988. See Sec. 1.61-2T for rules in effect from
January 1, 1985, to December 31, 1988.
(7) Outline of this section. The following is an outline of the
regulations in this section relating to fringe benefits:
Sec. 1.61-21 (a) Fringe benefits.
(1) In general.
(2) Fringe benefits excluded from income.
(3) Compensation for services.
(4) Person to whom fringe benefit is taxable.
(5) Provider of a fringe benefit referred to as an employer.
(6) Effective date.
(7) Outline of this section.
Sec. 1.61-21 (b) Valuation of fringe benefits
(1) In general.
(2) Fair market value.
(3) Exclusion from income based on cost.
(4) Fair market value of the availability of an employer-provided
vehicle.
(5) Fair market value of chauffeur services.
(6) Fair market value of a flight on an employer-provided piloted
aircraft.
(7) Fair market value of the use of an employer-provided aircraft
for which the employer does not furnish a pilot.
Sec. 1.61-21 (c) Special valuation rules.
(1) In general.
(2) Use of the special valuation rules.
(3) Additional rules for using special valuation.
(4) Application of section 414 to employers.
(5) Valuation formulae contained in the special valuation rules.
(6) Modification of the special valuation rules.
(7) Special accounting rule.
Sec. 1.61-21 (d) Automobile lease valuation rule.
(1) In general.
(2) Calculation of Annual Lease Value.
(3) Services included in, or excluded from, the Annual Lease Value
Table.
(4) Availability of an automobile for less than an entire calendar
year.
(5) Fair market value.
(6) Special rules for continuous availability of certain
automobiles.
(7) Consistency rules.
Sec. 1.61-21 (e) Vehicle cents-per-mile valuation rule.
(1) In general.
(2) Definition of vehicle.
(3) Services included in, or excluded from, the cents-per-mile rate.
(4) Valuation of personal use only.
(5) Consistency rules.
Sec. 1.61-21 (f) Commuting valuation rule.
(1) In general.
(2) Special rules.
(3) Commuting value.
(4) Definition of vehicle.
(5) Control employee defined--Non-government employer.
(6) Control employee defined--Government employer.
(7) ``Compensation'' defined.
Sec. 1.61-21 (g) Non-commercial flight valuation rule.
(1) In general.
(2) Eligible flights and eligible aircraft.
(3) Definition of a flight.
(4) Personal and non-personal flights.
(5) Aircraft valuation formula.
(6) Discretion to provide new formula.
(7) Aircraft multiples.
(8) Control employee defined--Non-government employer.
[[Page 51]]
(9) Control employee defined--Government employer.
(10) ``Compensation'' defined.
(11) Treatment of former employees.
(12) Seating capacity rule.
(13) Erroneous use of the non-commercial flight valuation rule.
(14) Consistency rules.
Sec. 1.61-21 (h) Commercial flight valuation rule.
(1) In general.
(2) Space-available flight.
(3) Commercial aircraft.
(4) Timing of inclusion.
(5) Consistency rules.
Sec. 1.61-21 (i) [Reserved]
Sec. 1.61-21 (j) Valuation of meals provided at an employer-operated
eating facility for employees.
(1) In general.
(2) Valuation formula.
Sec. 1.61-21 (k) Commuting valuation rule for certain employees.
(1) In general.
(2) Trip-by-trip basis.
(3) Commuting value.
(4) Definition of employer-provided transportation.
(5) Unsafe conditions.
(6) Qualified employee defined.
(7) Examples.
(8) Effective date.
(b) Valuation of fringe benefits--(1) In general. An employee must
include in gross income the amount by which the fair market value of the
fringe benefit exceeds the sum of--
(i) The amount, if any, paid for the benefit by or on behalf of the
recipient, and
(ii) The amount, if any, specifically excluded from gross income by
some other section of subtitle A of the Internal Revenue Code of 1986.
Therefore, for example, if the employee pays fair market value for what
is received, no amount is includible in the gross income of the
employee. In general, the determination of the fair market value of a
fringe benefit must be made before subtracting out the amount, if any,
paid for the benefit and the amount, if any, specifically excluded from
gross income by another section of subtitle A. See paragraphs (d)(2)(ii)
and (e)(1)(iii) of this section.
(2) Fair market value. In general, fair market value is determined
on the basis of all the facts and circumstances. Specifically, the fair
market value of a fringe benefit is the amount that an individual would
have to pay for the particular fringe benefit in an arm's-length
transaction. Thus, for example, the effect of any special relationship
that may exist between the employer and the employee must be
disregarded. Similarly, an employee's subjective perception of the value
of a fringe benefit is not relevant to the determination of the fringe
benefit's fair market value nor is the cost incurred by the employer
determinative of its fair market value. For special rules relating to
the valuation of certain fringe benefits, see paragraph (c) of this
section.
(3) Exclusion from income based on cost. If a statutory exclusion
phrased in terms of cost applies to the provision of a fringe benefit,
section 61 does not require the inclusion in the recipient's gross
income of the difference between the fair market value and the
excludable cost of that fringe benefit. For example, section 129
provides an exclusion from an employee's gross income for amounts
contributed by an employer to a dependent care assistance program for
employees. Even if the fair market value of the dependent care
assistance exceeds the employer's cost, the excess is not subject to
inclusion under section 61 and this section. However, if the statutory
cost exclusion is a limited amount, the fair market value of the fringe
benefit attributable to any excess cost is subject to inclusion. This
would be the case, for example, where an employer pays or incurs a cost
of more than $5,000 to provide dependent care assistance to an employee.
(4) Fair market value of the availability of an employer-provided
vehicle--(i) In general. If the vehicle special valuation rules of
paragraph (d), (e), or (f) of this section do not apply with respect to
an employer-provided vehicle, the value of the availability of that
vehicle is determined under the general valuation principles set forth
in this section. In general, that value equals the amount that an
individual would have to pay in an arm's-length transaction to lease the
same or comparable vehicle on the same or comparable conditions in the
geographic area in which the vehicle is available for use. An example of
a comparable condition is the amount of time that the vehicle is
available to the employee for use, e.g., a one-year
[[Page 52]]
period. Unless the employee can substantiate that the same or comparable
vehicle could have been leased on a cents-per-mile basis, the value of
the availability of the vehicle cannot be computed by applying a cents-
per-mile rate to the number of miles the vehicle is driven.
(ii) Certain equipment excluded. The fair market value of a vehicle
does not include the fair market value of any specialized equipment not
susceptible to personal use or any telephone that is added to or carried
in the vehicle, provided that the presence of that equipment or
telephone is necessitated by, and attributable to, the business needs of
the employer. However, the value of specialized equipment must be
included, if the employee to whom the vehicle is available uses the
specialized equipment in a trade or business of the employee other than
the employee's trade or business of being an employee of the employer.
(5) Fair market value of chauffeur services--(i) Determination of
value--(A) In general. The fair market value of chauffeur services
provided to the employee by the employer is the amount that an
individual would have to pay in an arm's-length transaction to obtain
the same or comparable chauffeur services in the geographic area for the
period in which the services are provided. In determining the applicable
fair market value, the amount of time, if any, the chauffeur remains on-
call to perform chauffeur services must be included. For example, assume
that A, an employee of corporation M, needs a chauffeur to be on-call to
provide services to A during a twenty-four hour period. If during that
twenty-four hour period, the chauffeur actually drives A for only six
hours, the fair market value of the chauffeur services would have to be
the value of having a chauffeur on-call for a twenty-four hour period.
The cost of taxi fare or limousine service for the six hours the
chauffeur actually drove A would not be an accurate measure of the fair
market value of chauffeur services provided to A. Moreover, all other
aspects of the chauffeur's services (including any special
qualifications of the chauffeur (e.g., training in evasive driving
skills) or the ability of the employee to choose the particular
chauffeur) must be taken into consideration.
(B) Alternative valuation with reference to compensation paid.
Alternatively, the fair market value of the chauffeur services may be
determined by reference to the compensation (as defined in paragraph
(b)(5)(ii) of this section) received by the chauffeur from the employer.
(C) Separate valuation for chauffeur services. The value of
chauffeur services is determined separately from the value of the
availability of an employer-provided vehicle.
(ii) Definition of compensation--(A) In general. For purposes of
this paragraph (b)(5)(ii), the term ``compensation'' means compensation
as defined in section 414(q)(7) and the fair market value of nontaxable
lodging (if any) provided by the employer to the chauffeur in the
current year.
(B) Adjustments to compensation--For purposes of this paragraph
(b)(5)(ii), a chauffeur's compensation is reduced proportionately to
reflect the amount of time during which the chauffeur performs
substantial services for the employer other than as a chauffeur and is
not on-call as a chauffeur. For example, assume a chauffeur is paid
$25,000 a year for working a ten-hour day, five days a week and also
receives $5,000 in nontaxable lodging. Further assume that during four
hours of each day, the chauffeur is not on-call to perform services as a
chauffeur because that individual is performing secretarial functions
for the employer. Then, for purposes of determining the fair market
value of this chauffeur's services, the employer may reduce the
chauffeur's compensation by \4/10\ or $12,000 (.4x ($25,000+$5,000) =
$12,000). Therefore, in this example, the fair market value of the
chauffeur's services is $18,000 ($30,000 -$12,000). However, for
purposes of this paragraph (b)(5)(ii), a chauffeur's compensation is not
to be reduced by any amounts paid to the chauffeur for time spent ``on-
call,'' even though the chauffeur actually performs other services for
the employer during such time. For purposes of this paragraph
(b)(5)(ii), a determination that a chauffeur is performing substantial
services for the employer other than as a chauffeur is
[[Page 53]]
based upon the facts and circumstances of each situation. An employee
will be deemed to be performing substantial services for the employer
other than as a chauffeur if a certain portion of each working day is
regularly spent performing other services for the employer.
(iii) Calculation of chauffeur services for personal purposes of the
employee. The fair market value of chauffeur services provided to the
employee for personal purposes may be determined by multiplying the fair
market value of chauffeur services, as determined pursuant to paragraph
(b)(5)(i) (A) or (B) of this section, by a fraction, the numerator of
which is equal to the sum of the hours spent by the chauffeur actually
providing personal driving services to the employee and the hours spent
by the chauffeur in ``personal on-call time,'' and the denominator of
which is equal to all hours the chauffeur spends in driving services of
any kind paid for by the employer, including all hours that are ``on-
call.''
(iv) Definition of on-call time. For purposes of this paragraph, the
term ``on-call time'' means the total amount of time that the chauffeur
is not engaged in the actual performance of driving services, but during
which time the chauffeur is available to perform such services. With
respect to a round-trip, time spent by a chauffeur waiting for an
employee to make a return trip is generally not treated as on-call time;
rather such time is treated as part of the round-trip.
(v) Definition of personal on-call time. For purposes of this
paragraph, the term ``personal on-call time'' means the amount of time
outside the employee's normal working hours for the employer when the
chauffeur is available to the employee to perform driving services.
(vi) Presumptions. (A) An employee's normal working hours will be
presumed to consist of a ten hour period during which the employee
usually conducts business activities for that employer.
(B) It will be presumed that if the chauffeur is on-call to provide
driving services to an employee during the employee's normal working
hours, then that on-call time will be performed for business purposes.
(C) Similarly, if the chauffeur is on-call to perform driving
services to an employee after normal working hours, then that on-call
time will be presumed to be ``personal on-call time.''
(D) The presumptions set out in paragraph (b)(5)(vi) (A), (B), and
(C) of this section may be rebutted. For example, an employee may
demonstrate by adequate substantiation that his or her normal working
hours consist of more than ten hours. Furthermore, if the employee keeps
adequate records and is able to substantiate that some portion of the
driving services performed by the chauffeur after normal working hours
is attributable to business purposes, then personal on-call time may be
reduced by an amount equal to such personal on-call time multiplied by a
fraction, the numerator of which is equal to the time spent by the
chauffeur after normal working hours driving the employee for business
purposes, and the denominator of which is equal to the total time spent
by the chauffeur driving the employee after normal working hours for all
purposes.
(vii) Examples. The rules of this paragraph (b)(5) may be
illustrated by the following examples:
Example (1). An employer makes available to employee A an automobile
and a full-time chauffeur B (who performs no other services for A's
employer) for an entire calendar year. Assume that the automobile lease
valuation rule of paragraph (d) of this section is used and that the
Annual Lease Value of the automobile is $9,250. Assume further that B's
compensation for the year is $12,000 (as defined in section 414(q)(7))
and that B is furnished lodging with a value of $3,000 that is
excludable from B's gross income. The maximum amount subject to
inclusion in A's gross income for use of the automobile and chauffeur is
therefore $24,250 ($12,000+$3,000+$9,250). If 70 percent of the miles
placed on the automobile during the year are for A's employer's
business, then $6,475 is excludable from A's gross income with respect
to the automobile as a working condition fringe ($9,250x.70). Thus,
$2,775 is includible in A's gross income with respect to the automobile
($9,250-$6,475). With respect to the chauffeur, if 20 percent of the
chauffeur's time is spent actually driving A or being on-call to drive A
for personal purposes; then $3,000 is includible in A's income
(.20x$15,000). Eighty percent of $15,000, or $12,000, is excluded from
A's income as a working condition fringe.
[[Page 54]]
Example (2). Assume the same facts as in example (1) except that in
addition to providing chauffeur services, B is responsible for
performing substantial non-chauffeur-related duties (such as clerical or
secretarial functions) during which time B is not ``on-call'' as a
chauffeur. If B spends only 75 percent of the time performing chauffeur
services, then the maximum amount subject to inclusion in A's gross
income for use of the automobile and chauffeur is $20,500
(($15,000x.75)+$9,250). If B is actually driving A for personal purposes
or is on-call to drive A for personal purposes for 20 percent of the
time during which B is available to provide chauffeur services, then
$2,250 is includible in A's gross income (.20x$11,250). The income
inclusion with respect to the automobile is the same as in example (1).
Example (3). Assume the same facts as in example (2) except that
while B is performing non-chauffeur-related duties, B is on call as A's
chauffeur. No part of B's compensation is excluded when determining the
value of the benefit provided to A. Thus, as in example (1), $3,000 is
includible in A's gross income with respect to the chauffeur.
(6) Fair market value of a flight on an employer-provided piloted
aircraft--(i) In general. If the non-commercial flight special valuation
rule of paragraph (g) of this section does not apply, the value of a
flight on an employer-provided piloted aircraft is determined under the
general valuation principles set forth in this paragraph.
(ii) Value of flight. If an employee takes a flight on an employer-
provided piloted aircraft and that employee's flight is primarily
personal (see Sec. 1.162-2(b)(2)), the value of the flight is equal to
the amount that an individual would have to pay in an arm's-length
transaction to charter the same or a comparable piloted aircraft for
that period for the same or a comparable flight. A flight taken under
these circumstances may not be valued by reference to the cost of
commercial airfare for the same or a comparable flight. The cost to
charter the aircraft must be allocated among all employees on board the
aircraft based on all the facts and circumstances unless one or more of
the employees controlled the use of the aircraft. Where one or more
employees control the use of the aircraft, the value of the flight shall
be allocated solely among such controlling employees, unless a written
agreement among all the employees on the flight otherwise allocates the
value of such flight. Notwithstanding the allocation required by the
preceding sentence, no additional amount shall be included in the income
of any employee whose flight is properly valued under the special
valuation rule of paragraph (g) of this section. For purposes of this
paragraph (b)(6), ``control'' means the ability of the employee to
determine the route, departure time and destination of the flight. The
rules provided in paragraph (g)(3) of this section will be used for
purposes of this section in defining a flight. Notwithstanding the
allocation required by the preceding sentence, no additional amount
shall be included in the income of an employee for that portion of any
such flight which is excludible from income pursuant to section 132(d)
or Sec. 1.132-5 as a working condition fringe.
(iii) Examples. The rules of paragraph (b)(6) of this section may be
illustrated by the following examples:
Example (1). An employer makes available to employees A and B a
piloted aircraft in New York, New York. A wants to go to Los Angeles,
California for personal purposes. B needs to go to Chicago, Illinois for
business purposes, and then wants to go to Los Angeles, California for
personal purposes. Therefore, the aircraft first flies to Chicago, and B
deplanes and then boards the plane again. The aircraft then flies to Los
Angeles, California where A and B deplane. The value of the flight to
employee A will be no more than the amount that an individual would have
to pay in an arm's length transaction to charter the same or a
comparable piloted aircraft for the same or comparable flight from New
York City to Los Angeles. No amount will be imputed to employee A for
the stop at Chicago. As to employee B, the value of the personal flight
will be no more than the value or the flight from Chicago to Los
Angeles. Pursuant to the rules set forth in Sec. 1.132-5(k), the flight
from New York to Chicago will not be included in employee B's income
since that flight was taken solely for business purposes. The charter
cost must be allocated between A and B, since both employees controlled
portions of the flight. Assume that the employer allocates according to
the relative value of each employee's flight. If the charter value of
A's flight from New York City to Los Angeles is $1,000 and the value of
B's flight from Chicago to Los Angeles is $600 and the value of the
actual flight from New York to Chicago to Los Angeles is $1,200, then
the amount to be allocated to employee A is $750 ($1,000/
[[Page 55]]
($1,000+$600)x$1,200) and the amount to be allocated to employee B is
$450 ($600/($1000+$600)x$1,200).
Example (2). Assume the same facts as in example (1), except that
employee A also deplanes at Chicago, Illinois, but for personal
purposes. The value of the flight to employee A then becomes the value
of a flight from New York to Chicago to Los Angeles, i.e., $1,200.
Therefore, the amount to be allocated to employee A is $800 ($1,200/
($1,200+$600)x$1,200) and the amount to be allocated to employee B is
$400 ($600/($1,200+$600)x $1,200).
(7) Fair market value of the use of an employer-provided aircraft
for which the employer does not furnish a pilot. (i) In general. If the
non-commercial flight special valuation rule of paragraph (g) of this
section does not apply and if an employer provides an employee with the
use of an aircraft without a pilot, the value of the use of the
employer-provided aircraft is determined under the general valuation
principles set forth in this paragraph (b)(7).
(ii) Value of flight. In general, if an employee takes a flight on
an employer-provided aircraft for which the employer does not furnish a
pilot, the value of that flight is equal to the amount that an
individual would have to pay in an arm's-length transaction to lease the
same or comparable aircraft on the same or comparable terms for the same
period in the geographic area in which the aircraft is used. For
example, if an employer makes its aircraft available to an employee who
will pilot the aircraft for a two-hour flight, the value of the use of
the aircraft is the amount that an individual would have to pay in an
arm's-length transaction to rent a comparable aircraft for that period
in the geographic area in which the aircraft is used. As another
example, assume that an employee uses an employer-provided aircraft to
commute between home and work. The value of the use of the aircraft is
the amount that an individual would have to pay in an arm's-length
transaction to rent a comparable aircraft for commuting in the
geographic area in which the aircraft is used. If the availability of
the flight is of benefit to more than one employee, then such value
shall be allocated among such employees on the basis of the relevant
facts and circumstances.
(c) Special valuation rules--(1) In general. Paragraphs (d) through
(k) of this section provide special valuation rules that may be used
under certain circumstances for certain commonly provided fringe
benefits. For general rules relating to the valuation of fringe benefits
not eligible for valuation under the special valuation rules or fringe
benefits with respect to which the special valuation rules are not used,
see paragraph (b) of this section.
(2) Use of the special valuation rules--(i) For benefits provided
before January 1, 1993. The special valuation rules may be used for
income tax, employment tax, and reporting purposes. The employer has the
option to use any of the special valuation rules. However, an employee
may only use a special valuation rule if the employer uses the rule.
Moreover, an employee may only use the special rule that the employer
uses to value the benefit provided; the employee may not use another
special rule to value that benefit. The employee may always use general
valuation rules based on facts and circumstances (see paragraph (b) of
this section) even if the employer uses a special rule. If a special
rule is used, it must be used for all purposes. If an employer properly
uses a special rule and the employee uses the special rule, the employee
must include in gross income the amount determined by the employer under
the special rule reduced by the sum of--
(A) Any amount reimbursed by the employee to the employer, and
(B) Any amount excludable from income under another section of
subtitle A of the Internal Revenue Code of 1986. If an employer properly
uses a special rule and properly determines the amount of an employee's
working condition fringe under section 132 and Sec. 1.132-5 (under the
general rule or under a special rule), and the employee uses the special
valuation rule, the employee must include in gross income the amount
determined by the employer less any amount reimbursed by the employee to
the employer. The employer and employee may use the special rules to
determine the amount of the reimbursement due the employer by the
employee. Thus, if an employee reimburses an employer for the value
[[Page 56]]
of a benefit as determined under a special valuation rule, no amount is
includable in the employee's gross income with respect to the benefit.
The provisions of this paragraph are effective for benefits provided
before January 1, 1993.
(ii) For benefits provided after December 31, 1992. The special
valuation rules may be used for income tax, employment tax, and
reporting purposes. The employer has the option to use any of the
special valuation rules. An employee may use a special valuation rule
only if the employer uses that rule or the employer does not meet the
condition of paragraph (c)(3)(ii)(A) of this section, but one of the
other conditions of paragraph (c)(3)(ii) of this section is met. The
employee may always use general valuation rules based on facts and
circumstances (see paragraph (b) of this section) even if the employer
uses a special rule. If a special rule is used, it must be used for all
purposes. If an employer properly uses a special rule and the employee
uses the special rule, the employee must include in gross income the
amount determined by the employer under the special rule reduced by the
sum of--
(A) Any amount reimbursed by the employee to the employer; and
(B) Any amount excludable from income under another section of
subtitle A of the Internal Revenue Code of 1986. If an employer properly
uses a special rule and properly determines the amount of an employee's
working condition fringe under section 132 and Sec. 1.132-5 (under the
general rule or under a special rule), and the employee uses the special
valuation rule, the employee must include in gross income the amount
determined by the employer less any amount reimbursed by the employee to
the employer. The employer and employee may use the special rules to
determine the amount of the reimbursement due the employer by the
employee. Thus, if an employee reimburses an employer for the value of a
benefit as determined under a special valuation rule, no amount is
includible in the employee's gross income with respect to the benefit.
The provisions of this paragraph are effective for benefits provided
after December 31, 1992.
(iii) Vehicle special valuation rules--(A) Vehicle by vehicle basis.
Except as provided in paragraphs (d)(7)(v) and (e)(5)(v) of this
section, the vehicle special valuation rules of paragraphs (d), (e), and
(f) of this section apply on a vehicle by vehicle basis. An employer
need not use the same vehicle special valuation rule for all vehicles
provided to all employees. For example, an employer may use the
automobile lease valuation rule for automobiles provided to some
employees, and the commuting and vehicle cents-per-mile valuation rules
for automobiles provided to other employees. For purposes of valuing the
use or availability of a vehicle, the consistency rules provided in
paragraphs (d)(7) and (e)(5) of this section (relating to the automobile
lease valuation rule and the vehicle cents-per-mile valuation rule,
respectively) apply.
(B) Shared vehicle usage. If an employer provides a vehicle to
employees for use by more than one employee at the same time, such as
with an employer-sponsored vehicle commuting pool, the employer may use
any of the special valuation rules that may be applicable to value the
use of the vehicle by the employees. The employer must use the same
special valuation rule to value the use of the vehicle by each employee
who shares such use. The employer must allocate the value of the use of
the vehicle based on the relevant facts and circumstances among the
employees who share use of the vehicle. For example, assume that an
employer provides an automobile to four of its employees and that the
employees use the automobile in an employer-sponsored vehicle commuting
pool. Assume further that the employer uses the automobile lease
valuation rule of paragraph (d) of this section and that the Annual
Lease Value of the automobile is $5,000.
The employer must treat $5,000 as the value of the availability of the
automobile to the employees, and must apportion the $5,000 value among
the employees who share the use of the automobile based on the relevant
facts and circumstances. Each employee's share of the value of the
availability of the automobile is then to be reduced by the amount, if
any, of each employee's
[[Page 57]]
working condition fringe exclusion and the amount reimbursed by the
employee to the employer.
(iv) Commercial and noncommercial flight valuation rules. Except as
otherwise provided, if either the commercial flight valuation rule or
the non-commercial flight valuation rule is used, that rule must be used
by an employer to value all eligible flights taken by all employees in a
calendar year. See paragraph (g)(14) of this section for the applicable
consistency rules.
(3) Additional rules for using special valuation--(i) Election to
use special valuation rules for benefits provided before January 1,
1993. A particular special valuation rule is deemed to have been elected
by the employer (and, if applicable, by the employee), if the employer
(and, if applicable, the employee) determines the value of the fringe
benefit provided by applying the special valuation rule and treats that
value as the fair market value of the fringe benefit for income,
employment tax, and reporting purposes. Neither the employer nor the
employee must notify the Internal Revenue Service of the election. The
provisions of this paragraph are effective for benefits provided before
January 1, 1993.
(ii) Conditions on the use of special valuation rules for benefits
provided after December 31, 1992. Neither the employer nor the employee
may use a special valuation rule to value a benefit provided after
December 31, 1992, unless one of the following conditions is satisfied--
(A) The employer treats the value of the benefit as wages for
reporting purposes within the time for filing the returns for the
taxable year (including extensions) in which the benefit is provided;
(B) The employee includes the value of the benefit in income within
the time for filing the returns for the taxable year (including
extensions) in which the benefit is provided;
(C) The employee is not a control employee as defined in paragraphs
(f)(5) and (f)(6) of this section; or
(D) The employer demonstrates a good faith effort to treat the
benefit correctly for reporting purposes.
(4) Application of section 414 to employers. For purposes of
paragraphs (c) through (k) of this section, except as otherwise provided
therein, the term ``employer'' includes all entities required to be
treated as a single employer under section 414 (b), (c), (m), or (o).
(5) Valuation formulae contained in the special valuation rules. The
valuation formula contained in the special valuation rules are provided
only for use in connection with those rules. Thus, when a special
valuation rule is properly applied to a fringe benefit, the Commissioner
will accept the value calculated pursuant to the rule as the fair market
value of that fringe benefit. However, when a special valuation rule is
not properly applied to a fringe benefit (see, for example, paragraph
(g)(13) of this section), or when a special valuation rule is used to
value a fringe benefit by a taxpayer not entitled to use the rule, the
fair market value of that fringe benefit may not be determined by
reference to any value calculated under any special valuation rule.
Under the circumstances described in the preceding sentence, the fair
market value of the fringe benefit must be determined pursuant to the
general valuation rules of paragraph (b) of this section.
(6) Modification of the special valuation rules. The Commissioner
may, to the extent necessary for tax administration, add, delete, or
modify any special valuation rule, including the valuation formulae
contained herein, on a prospective basis by regulation, revenue ruling
or revenue procedure.
(7) Special accounting rule. If the employer is using the special
accounting rule provided in Announcement 85-113 (1985-31 I.R.B. 31,
August 5, 1985) (see Sec. 601.601(d)(2)(ii)(b) of this chapter)
(relating to the reporting of and withholding on the value of noncash
fringe benefits), benefits which are deemed provided in a subsequent
calendar year pursuant to that rule are considered as provided in that
subsequent calendar year for purposes of the special valuation rules.
Thus, if a particular special valuation rule is in effect for a calendar
year, it applies to benefits deemed provided during that calendar year
under the special accounting rule.
(d) Automobile lease valuation rule--(1) In general--(i) Annual
Lease Value.
[[Page 58]]
Under the special valuation rule of this paragraph (d), if an employer
provides an employee with an automobile that is available to the
employee for an entire calendar year, the value of the benefit provided
is the Annual Lease Value (determined under paragraph (d)(2) of this
section) of that automobile. Except as otherwise provided, for an
automobile that is available to an employee for less than an entire
calendar year, the value of the benefit provided is either a pro-rated
Annual Lease Value or the Daily Lease Value (both as defined in
paragraph (d)(4) of this section), whichever is applicable. Absent any
statutory exclusion relating to the employer-provided automobile (see,
for example, section 132(a)(3) and Sec. 1.132-5(b)), the amount of the
Annual Lease Value (or a pro-rated Annual Lease Value or the Daily Lease
Value, as applicable) is included in the gross income of the employee.
(ii) Definition of automobile. For purposes of this paragraph (d),
the term ``automobile'' means any four-wheeled vehicle manufactured
primarily for use on public streets, roads, and highways.
(2) Calculation of Annual Lease Value--(i) In general. The Annual
Lease Value of a particular automobile is calculated as follows:
(A) Determine the fair market value of the automobile as of the
first date on which the automobile is made available to any employee of
the employer for personal use. For an automobile first made available to
any employee for personal use prior to January 1, 1985, determine the
fair market value as of January l of the first year the special
valuation rule of this paragraph (d) is used with respect to the
automobile. For rules relating to determination of the fair market value
of an automobile for purposes of this paragraph (d), see paragraph
(d)(5) of this section.
(B) Select the dollar range in column 1 of the Annual Lease Value
Table, set forth in paragraph (d)(2)(iii) of this section corresponding
to the fair market value of the automobile. Except as otherwise provided
in paragraphs (d)(2) (iv) and (v) of this section, the Annual Lease
Value for each year of availability of the automobile is the
corresponding amount in column 2 of the Table.
(ii) Calculation of Annual Lease Value of automobile owned or leased
by both an employer and an employee--(A) Purchased automobiles.
Notwithstanding anything in this section to the contrary, if an employee
contributes an amount toward the purchase price of an automobile in
return for a percentage ownership interest in the automobile, the Annual
Lease Value or the Daily Lease Value, whichever is applicable, is
determined by reducing the fair market value of the employer-provided
automobile by the lesser of--
(1) The amount contributed, or
(2) An amount equal to the employee's percentage ownership interest
multiplied by the unreduced fair market value of the automobile.
If the automobile is subsequently revalued, the revalued amount
(determined without regard to this paragraph (d)(2)(ii)(A)) is reduced
by an amount which is equal to the employee's percentage ownership
interest in the vehicle). If the employee does not receive an ownership
interest in the employer-provided automobile, then the Annual Lease
Value or the Daily Lease Value, whichever is applicable, is determined
without regard to any amount contributed. For purposes of this paragraph
(d)(2)(ii)(A), an employee's ownership interest in an automobile will
not be recognized unless it is reflected in the title of the automobile.
An ownership interest reflected in the title of an automobile will not
be recognized if under the facts and circumstances the title does not
reflect the benefits and burdens of ownership.
(B) Leased automobiles. Notwithstanding anything in this section to
the contrary, if an employee contributes an amount toward the cost to
lease an automobile in return for a percentage interest in the
automobile lease, the Annual Lease Value or the Daily Lease Value,
whichever is applicable, is determined by reducing the fair market value
of the employer-provided automobile by the amount specified in the
following sentence. The amount specified in this sentence is the
unreduced fair market value of a vehicle multiplied by the lesser of--
[[Page 59]]
(1) The employee's percentage interest in the lease, or
(2) A fraction, the numerator of which is the amount contributed and
the denominator of which is the entire lease cost.
If the automobile is subsequently revalued, the revalued amount
(determined without regard to this paragraph (d)(2)(ii)(B)) is reduced
by an amount which is equal to the employee's percentage interest in the
lease) multiplied by the revalued amount. If the employee does not
receive an interest in the automobile lease, then the Annual Lease Value
or the Daily Lease Value, whichever is applicable, is determined without
regard to any amount contributed. For purposes of this paragraph
(d)(2)(ii)(B), an employee's interest in an automobile lease will not be
recognized unless the employee is a named co-lessee on the lease. An
interest in a lease will not be recognized if under the facts and
circumstances the lease does not reflect the true obligations of the
lessees.
(C) Example. The rules of paragraph (d)(2)(ii) (A) and (B) of this
section are illustrated by the following example:
Example. Assume that an employer pays $15,000 and an employee pays
$5,000 toward the purchase of an automobile. Assume further that the
employee receives a 25 percent interest in the automobile and is named
as a co-owner on the title to the automobile. Under the rule of
paragraph (d)(2)(ii)(A) of this section, the Annual Lease Value of the
automobile is determined by reducing the fair market value of the
automobile ($20,000) by the $5,000 employee contribution. Thus, the
Annual Lease Value of the automobile under the table in paragraph
(d)(2)(iii) of this section is $4,350. If the employee in this example
does not receive an ownership interest in the automobile and is provided
the use of the automobile for two years, the Annual Lease Value would be
determined without regard to the $5,000 employee contribution. Thus, the
Annual Lease Value would be $5,600. The $5,000 employee contribution
would reduce the amount includible in the employee's income after taking
into account the amount, if any, excluded from income under another
provision of subtitle A of the Internal Revenue Code, such as the
working condition fringe exclusion. Thus, if the employee places 50
percent of the mileage on the automobile for the employer's business
each year, then the amount includible in the employee's income in the
first year would be ($5,600-2,800-2,800), or $0, the amount includible
in the employee's income in the second year would be ($5,600-2,800-2,200
($5,000-2,800)) or $600 and the amount includible in the third year
would be ($5,600-2,800) or $2,800 since the employee's contribution has
been completely used in the first two years.
(iii ) Annual Lease Value Table.
------------------------------------------------------------------------
Automobile fair market value Annual
-------------------------------------------------------------- lease
value
(1) ----------
(2)
------------------------------------------------------------------------
$0 to 999.................................................... $600
1,000 to 1,999............................................... 850
2,000 to 2,999............................................... 1,100
3,000 to 3,999............................................... 1,350
4,000 to 4,999............................................... 1,600
5,000 to 5,999............................................... 1,850
6,000 to 6,999............................................... 2,100
7,000 to 7,999............................................... 2,350
8,000 to 8,999............................................... 2,600
9,000 to 9,999............................................... 2,850
10,000 to 10,999............................................. 3,100
11,000 to 11,999............................................. 3,350
12,000 to 12,999............................................. 3,600
13,000 to 13,999............................................. 3,850
14,000 to 14,999............................................. 4,100
15,000 to 15,999............................................. 4,350
16,000 to 16,999............................................. 4,600
17,000 to 17,999............................................. 4,850
18,000 to 18,999............................................. 5,100
19,000 to 19,999............................................. 5,350
20,000 to 20,999............................................. 5,600
21,000 to 21,999............................................. 5,850
22,000 to 22,999............................................. 6,100
23,000 to 23,999............................................. 6,350
24,000 to 24,999............................................. 6,600
25,000 to 25,999............................................. 6,850
26,000 to 27,999............................................. 7,250
28,000 to 29,999............................................. 7,750
30,000 to 31,999............................................. 8,250
32,000 to 33,999............................................. 8,750
34,000 to 35,999............................................. 9,250
36,000 to 37,999............................................. 9,750
38,000 to 39,999............................................. 10,250
40,000 to 41,999............................................. 10,750
42,000 to 43,999............................................. 11,250
44,000 to 45,999............................................. 11,750
46,000 to 47,999............................................. 12,250
48,000 to 49,999............................................. 12,750
50,000 to 51,999............................................. 13,250
52,000 to 53,999............................................. 13,750
54,000 to 55,999............................................. 14,250
56,000 to 57,999............................................. 14,750
58,000 to 59,999............................................. 15,250
------------------------------------------------------------------------
For vehicles having a fair market value in excess of $59,999, the Annual
Lease Value is equal to: (.25 x the fair market value of the automobile)
+ $500.
(iv) Recalculation of Annual Lease Value. The Annual Lease Values
determined under the rules of this paragraph (d) are based on four-year
lease terms. Therefore, except as otherwise provided in paragraph
(d)(2)(v) of this section, the Annual Lease Value calculated by applying
paragraph (d)(2) (i)
[[Page 60]]
or (ii) of this section shall remain in effect for the period that
begins with the first date the special valuation rule of paragraph (d)
of this section is applied by the employer to the automobile and ends on
December 31 of the fourth full calendar year following that date. The
Annual Lease Value for each subsequent four-year period is calculated by
determining the fair market value of the automobile as of the first
January 1 following the period described in the previous sentence and
selecting the amount in column 2 of the Annual Lease Value Table
corresponding to the appropriate dollar range in column 1 of the Table.
If, however, the employer is using the special accounting rule provided
in Announcement 85-113 (1985-31 I.R.B. 31, August 5, 1985) (relating to
the reporting of and withholding on the value of noncash fringe
benefits), the employer may calculate the Annual Lease Value for each
subsequent four-year period as of the beginning of the special
accounting period that begins immediately prior to the January 1
described in the previous sentence. For example, assume that pursuant to
Announcement 85-113, an employer uses the special accounting rule.
Assume further that beginning on November 1, 1988, the special
accounting period is November 1 to October 31 and that the employer
elects to use the special valuation rule of this paragraph (d) as of
January 1, 1989. The employer may recalculate the Annual Lease Value as
of November 1, 1992, rather than as of January 1, 1993.
(v) Transfer of the automobile to another employee. Unless the
primary purpose of the transfer is to reduce Federal taxes, if an
employer transfers the use of an automobile from one employee to another
employee, the employer may recalculate the Annual Lease Value based on
the fair market value of the automobile as of January 1 of the calendar
year of transfer. If, however, the employer is using the special
accounting rule provided in Announcement 85-113 (1985-31 I.R.B. 31,
August 5, 1985) (relating to the reporting of and withholding on the
value of noncash fringe benefits), the employer may recalculate the
Annual Lease Value based on the fair market value of the automobile as
of the beginning of the special accounting period in which the transfer
occurs. If the employer does not recalculate the Annual Lease Value, and
the employee to whom the automobile is transferred uses the special
valuation rule, the employee may not recalculate the Annual Lease Value.
(3) Services included in, or excluded from, the Annual Lease Value
Table--(i) Maintenance and insurance included. The Annual Lease Values
contained in the Annual Lease Value Table include the fair market value
of maintenance of, and insurance for, the automobile. Neither an
employer nor an employee may reduce the Annual Lease Value by the fair
market value of any service included in the Annual Lease Value that is
not provided by the employer, such as reducing the Annual Lease Value by
the fair market value of a maintenance service contract or insurance. An
employer or employee who wishes to take into account only the services
actually provided with respect to an automobile may value the
availability of the automobile under the general valuation rules of
paragraph (b) of this section.
(ii) Fuel excluded--(A) In general. The Annual Lease Values do not
include the fair market value of fuel provided by the employer, whether
fuel is provided in kind or its cost is reimbursed by or charged to the
employer. Thus, if an employer provides fuel, the fuel must be valued
separately for inclusion in income.
(B) Valuation of fuel provided in kind. The provision of fuel in
kind may be valued at fair market value based on all the facts and
circumstances or, in the alternative, it may be valued at 5.5 cents per
mile for all miles driven by the employee. However, the provision of
fuel in kind may not be valued at 5.5 cents per mile for miles driven
outside the United States, Canada or Mexico. For purposes of this
section, the United States includes the United States, its possessions
and its territories.
(C) Valuation of fuel where cost reimbursed by or charged to an
employer. The fair market value of fuel, the cost of which is reimbursed
by or charged to an employer, is generally the amount of the actual
reimbursement or the amount charged, provided the purchase of the fuel
is at arm's-length.
[[Page 61]]
(D) Fleet-average cents-per-mile fuel cost. If an employer with a
fleet of at least 20 automobiles that meets the requirements of
paragraph (d)(5)(v)(D) of this section reimburses employees for the cost
of fuel or allows employees to charge the employer for the cost of fuel,
the fair market value of fuel provided to those automobiles may be
determined by reference to the employer's fleet-average cents-per-mile
fuel cost. The fleet-average cents-per-mile fuel cost is equal to the
fleet-average per-gallon fuel cost divided by the fleet-average miles-
per-gallon rate. The averages described in the preceding sentence must
be determined by averaging the per-gallon fuel costs and miles-per-
gallon rates of a representative sample of the automobiles in the fleet
equal to the greater of ten percent of the automobiles in the fleet or
20 automobiles for a representative period, such as a two-month period.
In lieu of determining the fleet-average cents-per-mile fuel cost, if an
employer is using the fleet-average valuation rule of paragraph
(d)(5)(v) of this section and if determining the amount of the actual
reimbursement or the amount charged for the purchase of fuel would
impose unreasonable administrative burdens on the employer, the
provision of fuel may be valued under the rule provided in paragraph
(d)(3)(ii)(B) of this section.
(iii) Treatment of other services. The fair market value of any
service not specifically identified in paragraph (d)(3)(i) of this
section that is provided by the employer with respect to an automobile
(other than the services of a chauffeur) must be added to the Annual
Lease Value of the automobile in determining the fair market value of
the benefit provided. See paragraph (b) (5) of this section for rules
relating to the valuation of chauffeur services.
(4) Availability of an automobile for less than an entire calendar
year--(i) Pro-rated Annual Lease Value used for continuous availability
of at least 30 days.--(A) In general. Except as otherwise provided in
paragraph (d)(4)(iv) of this section, for periods of continuous
availability of at least 30 days, but less than an entire calendar year,
the value of the availability of an automobile provided by an employer
electing to use the automobile lease valuation rule of this paragraph
(d) is the pro-rated Annual Lease Value. The pro-rated Annual Lease
Value is calculated by multiplying the applicable Annual Lease Value by
a fraction, the numerator of which is the number of days of availability
and the denominator of which is 365.
(B) Special rule for continuous availability of at least 30 days
that straddles two reporting years. If an employee is provided with the
continuous availability of an automobile for at least 30 days, but the
continuous period straddles two calendar years (or two special
accounting periods if the special accounting rule of Announcement 85-113
(1985-31 I.R.B. 31, August 5, 1985) (relating to the reporting of and
withholding on noncash fringe benefits) is used), the pro-rated Annual
Lease Value, rather than the Daily Lease Value, may be applied with
respect to such period of continuous availability.
(ii) Daily Lease Value used for continuous availability of less than
30 days. Except as otherwise provided in paragraph (d)(4)(iii) of this
section, for periods of continuous availability of one or more but less
than 30 days, the value of the availability of the employer-provided
automobile is the Daily Lease Value. The Daily Lease Value is calculated
by multiplying the applicable Annual Lease Value by a fraction, the
numerator of which is four times the number of days of availability and
the denominator of which is 365.
(iii) Election to treat all periods as periods of at least 30 days.
The value of the availability of an employer-provided automobile for a
period of continuous availability of less than 30 days may be determined
by applying the pro-rated Annual Lease Value by treating the automobile
as if it had been available for 30 days, if doing so would result in a
lower valuation than applying the Daily Lease Value to the shorter
period of actual availability.
(iv) Periods of unavailability--(A) General rule. In general, a pro-
rated Annual Lease Value (as provided in paragraph (d)(4)(i) of this
section) is used to value the availability of an employer-provided
automobile when the automobile is available to an employee for a
continuous period of at least 30 days but
[[Page 62]]
less than the entire calendar year. Neither an employer nor an employee,
however, may use a pro-rated Annual Lease Value when the reduction of
Federal taxes is the primary reason the automobile is unavailable to an
employee at certain times during the calendar year.
(B) Unavailability for personal reasons of the employee. If an
automobile is unavailable to an employee because of personal reasons of
the employee, such as while the employee is on vacation, a pro-rated
Annual Lease Value, if used, must not take into account such periods of
unavailability. For example, assume that an automobile is available to
an employee during the first five months of the year and during the last
five months of the year. Assume further that the period of
unavailability occurs because the employee is on vacation. The Annual
Lease Value, if it is applied, must be applied with respect to the
entire 12-month period. The Annual Lease Value may not be pro-rated to
take into account the two-month period of unavailability.
(5) Fair market value--(i) In general. For purposes of determining
the Annual Lease Value of an automobile under the Annual Lease Value
Table, the fair market value of an automobile is the amount that an
individual would have to pay in an arm's-length transaction to purchase
the particular automobile in the jurisdiction in which the vehicle is
purchased or leased. That amount includes all amounts attributable to
the purchase of an automobile such as sales tax and title fees as well
as the purchase price of the automobile. Any special relationship that
may exist between the employee and the employer must be disregarded.
Also, the employee's subjective perception of the value of the
automobile is not relevant to the determination of the automobile's fair
market value, and, except as provided in paragraph (d)(5)(ii) of this
section, the cost incurred by the employer in connection with the
purchase or lease of the automobile is not determinative of the fair
market value of the automobile.
(ii) Safe-harbor valuation rule--(A) General rule. For purposes of
calculating the Annual Lease Value of an automobile under this paragraph
(d), the safe-harbor value of the automobile may be used as the fair
market value of the automobile.
(B) Automobiles owned by the employer. For an automobile owned by
the employer, the safe-harbor value of the automobile is the employer's
cost of purchasing the automobile (including sales tax, title, and other
expenses attributable to such purchase), provided the purchase is made
at arm's-length. Notwithstanding the preceding sentence, the safe-harbor
value of this paragraph (d)(5)(ii)(B) is not available with respect to
an automobile manufactured by the employer. Thus, for example, if one
entity manufactures an automobile and sells it to an entity with which
it is aggregated pursuant to paragraph (c)(4) of this section, this
paragraph (d)(5)(ii)(B) does not apply to value the automobile by the
aggregated employer. In this case, value must be determined under
paragraph (d)(5)(i) of this section.
(C) Automobiles leased by the employer. For an automobile leased but
not manufactured by the employer, the safe-harbor value of the
automobile is either the manufacturer's suggested retail price of the
automobile less eight percent (including sales tax, title, and other
expenses attributable to such purchase), or the value determined under
paragraph (d)(5)(iii) of this section.
(iii) Use of nationally recognized pricing sources. The fair market
value of an automobile that is--
(A) Provided to an employee prior to January 1, 1985,
(B) Being revalued pursuant to paragraph (d)(2) (iv) or (v) of this
section, or
(C) A leased automobile being valued pursuant to paragraph
(d)(5)(ii) of this section, may be determined by reference to the retail
value of such automobile as reported by a nationally recognized pricing
source that regularly reports new or used automobile retail values,
whichever is applicable. That retail value must be reasonable with
respect to the automobile being valued. Pricing sources consist of
publications and electronic data bases.
(iv) Fair market value of special equipment. When determining the
fair market value of an automobile, the employer may exclude the fair
market
[[Page 63]]
value of any specialized equipment or telephone that is added to or
carried in the automobile provided that the presence of that equipment
or telephone is necessitated by, and attributable to, the business needs
of the employer. The value of the specialized equipment must be included
if the employee to whom the automobile is available uses the specialized
equipment in a trade or business of the employee other than the
employee's trade or business of being an employee of the employer.
(v) Fleet-average valuation rule--(A) In general. An employer with a
fleet of 20 or more automobiles meeting the requirements of this
paragraph (d)(5)(v) (including the business-use and fair market value
conditions of paragraph (d)(5)(v)(D) of this section) may use a fleet-
average value for purposes of calculating the Annual Lease Values of the
automobiles in the fleet. The fleet-average value is the average of the
fair market values of all automobiles in the fleet. The fair market
value of each automobile in the fleet shall be determined, pursuant to
the rules of paragraphs (d)(5) (i) through (iv) of this section, as of
the date described in paragraph (d)(2)(i)(A) of this section.
(B) Period for use of rule. The fleet-average valuation rule of this
paragraph (d)(5)(v) may be used by an employer as of January 1 of any
calendar year following the calendar year in which the employer acquires
a sufficient number of automobiles to total a fleet of 20 or more
automobiles. The Annual Lease Value calculated for the automobiles in
the fleet, based on the fleet-average value, shall remain in effect for
the period that begins with the first January 1 the fleet-average
valuation ru1e of this paragraph (d)(5)(v) is applied by the employer to
the automobiles in the fleet and ends on December 31 of the subsequent
calendar year. The Annual Lease Value for each subsequent two-year
period is calculated by determining the fleet-average value of the
automobiles in the fleet as of the first January 1 of such period. An
employer may cease using the fleet-average valuation rule as of any
January 1. If, however, the employer is using the special accounting
rule provided in Announcement 85-113 (1985-31 I.R.B. 31, August 5, 1985)
(relating to the reporting of and withholding on noncash fringe
benefits), the employer may apply the rules of this paragraph
(d)(5)(v)(B) on the basis of the special accounting period rather than
the calendar year. (This is accomplished by substituting (1) the
beginning of the special accounting period that begins immediately prior
to the January 1 described in this paragraph (d)(5)(v)(B) for January 1
wherever it appears in this paragraph (d)(5)(v) (B) and (2) the end of
such accounting period for December 31.) If the number of qualifying
automobiles in the employer's fleet declines to fewer than 20 for more
than 50 percent of the days in a year, then the fleet-average valuation
rule does not apply as of January 1 of such year. In this case, the
Annual Lease Value must be determined separately for each remaining
automobile. The revaluation rules of paragraphs (d)(2) (iv) and (v) of
this section do not apply to automobiles valued under this paragraph
(d)(5)(v).
(C) Automobiles included in the fleet. An employer may include in a
fleet any automobile that meets the requirements of this paragraph
(d)(5)(v) and is available to any employee of the employer for personal
use. An employer may include in the fleet only automobiles the
availability of which is valued under the automobile lease valuation
rule of this paragraph (d). An employer need not include in the fleet
all automobiles valued under the automobile lease valuation rule. An
employer may have more than one fleet for purposes of the fleet-average
rule of this paragraph (d)(5)(v). For example, an employer may group
automobiles in a fleet according to their physical type or use.
(D) Limitations on use of fleet-average rule. The rule provided in
this paragraph (d)(5)(v) may not be used for any automobile the fair
market value of which (determined pursuant to paragraphs (d)(5) (i)
through (iv) of this section as of either the first date on which the
automobile is made available to any employee of the employer for
personal use or, if later, January 1, 1985) exceeds $16,500. The fair
market value limitation of $16,500 shall be adjusted pursuant to section
280F(d)(7) of the Internal Revenue Code of 1986. The first such
adjustment shall be for calendar
[[Page 64]]
year 1989 (substitute October 1986 for October 1987 in applying the
formula). In addition, the rule provided in this paragraph (d)(5)(v) may
only be used for automobiles that the employer reasonably expects will
regularly be used in the employer's trade or business. For rules
concerning when an automobile is regularly used in the employer's
business, see paragraph (e)(1)(iv) of this section.
(E) Additional automobiles added to the fleet. The fleet-average
value in effect at the time an automobile is added to a fleet is treated
as the fair market value of the additional automobile for purposes of
determining the Annual Lease Value of the automobile until the fleet-
average value changes pursuant to paragraph (d)(5)(v)(B) of this
section.
(F) Use of the fleet-average rule by employees. An employee may only
use the fleet-average rule if it is used by the employer. If an employer
uses the fleet-average rule, and the employee uses the special valuation
rule of paragraph (d) of this section, the employee must use the fleet-
average value determined by the employer.
(6) Special rules for continuous availability of certain
automobiles--(i) Fleet automobiles. If an employer is using the fleet-
average valuation ru1e of paragraph (d)(5)(v) of this section and the
employer provides an employee with the continuous availability of an
automobile from the same fleet during a period (though not necessarily
the same fleet automobile for the entire period), the employee is
treated as having the use of a single fleet automobile for the entire
period, e.g., an entire calendar year. Thus, when applying the
automobile lease valuation rule of this paragraph (d), the employer may
treat the fleet-average value as the fair market value of the automobile
deemed available to the employee for the period for purposes of
calculating the Annual Lease Value, (or pro-rated Annual Lease Value or
Daily Lease Value whichever is applicable) of the automobile. If an
employer provides an employee with the continuous availability of more
than one fleet automobile during a period, the employer may treat the
fleet-average value as the fair market value of each automobile provided
to the employee provided that the rules of paragraph (d)(5)(v)(D) of
this section are satisfied.
(ii) Demonstration automobiles--(A) In general. If an automobile
dealership provides an employee with the continuous availability of a
demonstration automobile (as defined in Sec. 1.132-5(o)(3)) during a
period (though not necessarily the same demonstration automobile for the
entire period), the employee is treated as having the use of a single
demonstration automobile for the entire period, e.g., an entire calendar
year. If an employer provides an employee with the continuous
availability of more than one demonstration automobile during a period,
the employer may treat the value determined under paragraph
(d)(6)(ii)(B) of this section as the fair market value of each
automobile provided to the employee. For rules relating to the treatment
as a working condition fringe of the qualified automobile demonstration
use of a demonstration automobile by a full-time automobile salesman,
see Sec. 1.132-5(o).
(B) Determining the fair market value of a demonstration automobile.
When applying the automobile lease valuation rule of this paragraph (d),
the employer may treat the average of the fair market values of the
demonstration automobiles which are available to an employee and held in
the dealership's inventory during the calendar year as the fair market
value of the demonstration automobile deemed available to the employee
for the period for purposes of calculating the Annual Lease Value of the
automobile. If under the facts and circumstances it is inappropriate to
take into account, with respect to an employee, certain models of
demonstration automobiles, the value of the benefit is determined
without reference to the fair market values of such models. For example,
assume that an employee has the continuous availability for an entire
calendar year of one demonstration automobile, although not the same one
for the entire year. Assume further that the fair market values of the
automobiles in the dealership inventory during the year range from
$8,000 to $20,000. If there is not a substantial period (such as three
[[Page 65]]
months) during the year when the employee uses demonstration automobiles
valued at less than $16,000, then those automobiles are not considered
in determining the value of the benefit provided to the employee. In
this case, the average of the fair market values of the demonstration
automobiles in the dealership's inventory valued at $16,000 or more is
treated as the fair market value of the automobile deemed available to
the employee for the calendar year for purposes of calculating the
Annual Lease Value of the automobile.
(7) Consistency rules--(i) Use of the automobile lease valuation
rule by an employer. Except as provided in paragraph (d)(5)(v)(B) of
this section, an employer may adopt the automobile lease valuation rule
of this paragraph (d) for an automobile only if the rule is adopted to
take effect by the later of--
(A) January 1, 1989, or
(B) The first day on which the automobile is made available to an
employee of the employer for personal use (or, if the commuting
valuation rule of paragraph (f) of this section is used when the
automobile is first made available to an employee of the employer for
personal use, the first day on which the commuting valuation rule is not
used).
(ii) An employer must use the automobile lease valuation rule for
all subsequent years. Once the automobile lease valuation rule has been
adopted for an automobile by an employer, the rule must be used by the
employer for all subsequent years in which the employer makes the
automobile available to any employee except that the employer may, for
any year during which (or for any employee for whom) use of the
automobile qualifies for the commuting valuation rule of paragraph (f)
of this section, use the commuting valuation rule with respect to the
automobile.
(iii) Use of the automobile lease valuation rule by an employee. An
employee may adopt the automobile lease valuation rule for an automobile
only if the rule is adopted--
(A) By the employer, and
(B) Beginning with the first day on which the automobile for which
the employer (consistent with paragraph (d)(7)(i) of this section)
adopted the rule is made available to that employee for personal use
(or, if the commuting valuation rule of paragraph (f) of this section is
used when the automobile is first made available to that employee for
personal use, the first day on which the commuting valuation rule is not
used).
(iv) An employee must use the automobile lease valuation rule for
all subsequent years. Once the automobile lease valuation rule has been
adopted for an automobile by an employee, the rule must be used by the
employee for all subsequent years in which the automobile for which the
rule is used is available to the employee. However, the employee may,
for any year during which use of the automobile qualifies for use of the
commuting valuation rule of paragraph (f) of this section and for which
the employer uses such rule, use the commuting valuation rule with
respect to the automobile.
(v) Replacement automobiles. Notwithstanding anything in this
paragraph (d)(7) to the contrary, if the automobile lease valuation rule
is used by an employer, or by an employer and an employee, with respect
to a particular automobile, and a replacement automobile is provided to
the employee for the primary purpose of reducing Federal taxes, then the
employer, or the employer and the employee, using the rule must continue
to use the rule with respect to the replacement automobile.
(e) Vehicle cents-per-mile valuation rule--(1) In general--(i)
General rule. Under the vehicle cents-per-mile valuation rule of this
paragraph (e), if an employer provides an employee with the use of a
vehicle that--
(A) The employer reasonably expects will be regularly used in the
employer's trade or business throughout the calendar year (or such
shorter period as the vehicle may be owned or leased by the employer),
or
(B) Satisfies the requirements of paragraph (e)(1)(ii) of this
section, the value of the benefit provided in the calendar year is the
standard mileage rate provided in the applicable Revenue Ruling or
Revenue Procedure (``cents-per-mile rate'') multiplied by the total
number of miles the vehicle is driven by the employee for personal
purposes. The cents-per-mile rate is to be applied
[[Page 66]]
prospectively from the first day of the taxable year following the date
of publication of the applicable Revenue Ruling or Revenue Procedure. An
employee who uses an employer-provided vehicle, in whole or in part, for
a trade or business other than the employer's trade or business, may
take a deduction for such business use based upon the vehicle cents-per-
mile rule as long as such deduction is at the same standard mileage rate
as that used in calculating the employee's income inclusion. The
standard mileage rate must be applied to personal miles independent of
business miles. Thus, for example, if the standard mileage rate were 24
cents per mile for the first 15,000 miles and 11 cents per mile for all
miles over 15,000 and an employee drives 20,000 personal miles and
45,000 business miles in a year, the value of the personal use of the
vehicle is $4,150 ((15,000x$.24)+(5,000x$.11)). For purposes of this
section, the use of a vehicle for personal purposes is any use of the
vehicle other than use in the employee's trade or business of being an
employee of the employer.
(ii) Mileage rule. A vehicle satisfies the requirements of this
paragraph (e)(1)(ii) for a calendar year if--
(A) It is actually driven at least 10,000 miles in that year; and
(B) Use of the vehicle during the year is primarily by employees.
For example, if a vehicle is used by only one employee during the
calendar year and that employee drives the vehicle at least 10,000 miles
during the year, the vehicle satisfies the requirements of this
paragraph (e)(1)(ii) even if all miles driven by the employee are
personal. A vehicle is considered used during the year primarily by
employees in accordance with the requirement of paragraph (e)(1)(ii)(B)
of this section if employees use the vehicle on a consistent basis for
commuting. If the employer does not own or lease the vehicle during a
portion of the year, the 10,000 mile threshold is to be reduced
proportionately to reflect the periods when the employer did not own or
lease the vehicle. For purposes of this paragraph (e)(1)(ii), use of the
vehicle by an individual (other than the employee) whose use would be
taxed to the employee is not considered use by the employee.
(iii) Limitation on use of the vehicle cents-per-mile valuation
rule--(A) In general. Except as otherwise provided in the last sentence
of this paragraph (e)(1)(iii)(A), the value of the use of an automobile
(as defined in paragraph (d)(1)(ii) of this section) may not be
determined under the vehicle cents-per-mile valuation rule of this
paragraph (e) for a calendar year if the fair market value of the
automobile (determined pursuant to paragraphs (d)(5) (i) through (iv) of
this section as of the later of January 1, 1985, or the first date on
which the automobile is made available to any employee of the employer
for personal use) exceeds the sum of the maximum recovery deductions
allowable under section 280F(a)(2) for a five-year period for an
automobile first placed in service during that calendar year (whether or
not the automobile is actually placed in service during that year) as
adjusted by section 280F(d)(7). With respect to a vehicle placed in
service prior to January 1, 1989, the limitation on value will be not
less than $12,800. With respect to a vehicle placed in service in or
after 1989, the limitation on value is $12,800 as adjusted by section
280F(d)(7).
(B) Application of limitation with respect to a vehicle owned by
both an employer and an employee. If an employee contributes an amount
towards the purchase price of a vehicle in return for a percentage
ownership interest in the vehicle, for purposes of determining whether
the limitation of this paragraph (e)(1)(iii) applies, the fair market
value of the vehicle is reduced by the lesser of--
(1) The amount contributed, or
(2) An amount equal to the employee's percentage ownership interest
multiplied by the unreduced fair market value of the vehicle. If the
employee does not receive an ownership interest in the employer-provided
vehicle, then the fair market value of the vehicle is determined without
regard to any amount contributed. For purposes of this paragraph
(e)(1)(iii)(B), an employee's ownership interest in a vehicle will not
be recognized unless it is reflected in the title of the vehicle. An
ownership interest reflected in the title
[[Page 67]]
of a vehicle will not be recognized if under the facts and circumstances
the title does not reflect the benefits and burdens of ownership.
(C) Application of limitation with respect to a vehicle leased by
both an employer and employee. If an employee contributes an amount
toward the cost to lease a vehicle in return for a percentage interest
in the vehicle lease, for purposes of determining whether the limitation
of this paragraph (e)(1)(iii) applies, the fair market value of the
vehicle is reduced by the amount specified in the following sentence.
The amount specified in this sentence is the unreduced fair market value
of a vehicle multiplied by the lesser of--
(1) The employee's percentage interest in the lease, or
(2) A fraction, the numerator of which is the amount contributed and
the denominator of which is the entire lease cost. If the employee does
not receive an interest in the vehicle lease, then the fair market value
is determined without regard to any amount contributed. For purposes of
this paragraph (e)(1)(iii)(C), an employee's interest in a vehicle lease
will not be recognized unless the employee is a named co-lessee on the
lease. An interest in a lease will not be recognized if under the facts
and circumstances, the lease does not reflect the true obligations of
the lessees.
(iv) Regular use in an employer's trade or business. Whether a
vehicle is regularly used in an employer's trade or business is
determined on the basis of all facts and circumstances. A vehicle is
considered regularly used in an employer's trade or business for
purposes of paragraph (e)(1)(i)(A) of this section if one of the
following safe harbor conditions is satisfied:
(A) At least 50 percent of the vehicle's total annual mileage is for
the employer's business; or
(B) The vehicle is generally used each workday to transport at least
three employees of the employer to and from work in an employer-
sponsored commuting vehicle pool. Infrequent business use of the
vehicle, such as for occasional trips to the airport or between the
employer's multiple business premises, does not constitute regular use
of the vehicle in the employer's trade or business.
(v) Application of rule to shared usage. If an employer regularly
provides a vehicle to employees for use by more than one employee at the
same time, such as with an employer-sponsored vehicle commuting pool,
the employer may use the vehicle cents-per-mile valuation rule to value
the use of the vehicle by each employee who shares such use. See
Sec. 1.61-21(c)(2)(ii)(B) for provisions relating to the allocation of
the value of an automobile to more than one employee.
(2) Definition of vehicle. For purposes of this paragraph (e), the
term ``vehicle'' means any motorized wheeled vehicle manufactured
primarily for use on public streets, roads, and highways. The term
``vehicle'' includes an automobile as defined in paragraph (d)(1)(ii) of
this section.
(3) Services included in, or excluded from, the cents-per-mile rate-
-(i) Maintenance and insurance included. The cents-per-mile rate
includes the fair market value of maintenance of, and insurance for, the
vehicle. The cents-per-mile rate may not be reduced by the fair market
value of any service included in the cents-per-mile rate but not
provided by the employer. An employer or employee who wishes to take
into account only the particular services provided with respect to a
vehicle may value the availability of the vehicle under the general
valuation rules of paragraph (b) of this section.
(ii) Fuel provided by the employer--(A) Miles driven in the United
States, Canada, or Mexico. With respect to miles driven in the United
States, Canada, or Mexico, the cents-per-mile rate includes the fair
market value of fuel provided by the employer. If fuel is not provided
by the employer, the cents-per-mile rate may be reduced by no more than
5.5 cents or the amount specified in any applicable Revenue Ruling or
Revenue Procedure. For purposes of this section, the United States
includes the United States, its possessions and its territories.
(B) Miles driven outside the United States, Canada, or Mexico. With
respect to miles driven outside the United States, Canada, or Mexico,
the fair market value of fuel provided by the
[[Page 68]]
employer is not reflected in the cents-per-mile rate. Accordingly, the
cents-per-mile rate may be reduced but by no more than 5.5 cents or the
amount specified in any applicable Revenue Ruling or Revenue Procedure.
If the employer provides the fuel in kind, it must be valued based on
all the facts and circumstances. If the employer reimburses the employee
for the cost of fuel or allows the employee to charge the employer for
the cost of fuel, the fair market value of the fuel is generally the
amount of the actual reimbursement or the amount charged, provided the
purchase of fuel is at arm's length.
(iii) Treatment of other services. The fair market value of any
service not specifically identified in paragraph (e)(3)(i) of this
section that is provided by the employer with respect to a vehicle is
not reflected in the cents-per-mile rate. See paragraph (b)(5) of this
section for rules relating to valuation of chauffeur services.
(4) Valuation of personal use only. The vehicle cents-per-mile
valuation rule of this paragraph (e) may only be used to value the miles
driven for personal purposes. Thus, the employer must include an amount
in an employee's income with respect to the use of a vehicle that is
equal to the product of the number of personal miles driven by the
employee and the appropriate cents-per-mile rate. The term ``personal
miles'' means all miles for which the employee used the automobile
except miles driven in the employee's trade or business of being an
employee of the employer. Unless additional services are provided with
respect to the vehicle (see paragraph (e)(3)(iii) of this section), the
employer may not include in income a greater amount; for example, the
employer may not include in income 100 percent (all business and
personal miles) of the value of the use of the vehicle.
(5) Consistency rules--(i) Use of the vehicle cents-per-mile
valuation rule by an employer. An employer must adopt the vehicle cents-
per-mile valuation rule of this paragraph (e) for a vehicle to take
effect by the later of--
(A) January 1, 1989, or
(B) The first day on which the vehicle is used by an employee of the
employer for personal use (or, if the commuting valuation rule of
paragraph (f) of this section is used when the vehicle is first used by
an employee of the employer for personal use, the first day on which the
commuting valuation rule is not used).
(ii) An employer must use the vehicle cents-per-mile valuation rule
for all subsequent years. Once the vehicle cents-per-mile valuation rule
has been adopted for a vehicle by an employer, the rule must be used by
the employer for all subsequent years in which the vehicle qualifies for
use of the rule, except that the employer may, for any year during which
use of the vehicle qualifies for the commuting valuation rule of
paragraph (f) of this section, use the commuting valuation rule with
respect to the vehicle. If the vehicle fails to qualify for use of the
vehicle cents-per-mile valuation rule during a subsequent year, the
employer may adopt for such subsequent year and thereafter any other
special valuation rule for which the vehicle then qualifies. If the
employer elects to use the automobile lease valuation rule of paragraph
(d) of this section for a period in which the automobile does not
qualify for use of the vehicle cents-per-mile valuation rule, then the
employer must comply with the requirements of paragraph (d)(7) of this
section. For purposes of paragraph (d)(7) of this section, the first day
on which the automobile with respect to which the vehicle cents-per-mile
rule had been used fails to qualify for use of the vehicle cents-per-
mile valuation rule may be deemed to be the first day on which the
automobile is available to an employee of the employer for personal use.
(iii) Use of the vehicle cents-per-mile valuation rule by an
employee. An employee may adopt the vehicle cents-per-mile valuation
rule for a vehicle only if the rule is adopted--
(A) By the employer, and
(B) Beginning with respect to the first day on which the vehicle for
which the employer (consistent with paragraph (e)(5)(i) of this section)
adopted the rule is available to that employee for personal use (or, if
the commuting valuation rule of paragraph (f) of this section is used
when the vehicle is first used by an employee for
[[Page 69]]
personal use, the first day on which the commuting valuation rule is not
used).
(iv) An employee must use the vehicle cents-per-mile valuation rule
for all subsequent years. Once the vehicle cents-per-mile valuation rule
has been adopted for a vehicle by an employee, the rule must be used by
the employee for all subsequent years of personal use of the vehicle by
the employee for which the rule is used by the employer. However, see
paragraph (f) of this section for rules relating to the use of the
commuting valuation rule for a subsequent year.
(v) Replacement vehicles. Notwithstanding anything in this paragraph
(e)(5) to the contrary, if the vehicle cents-per-mile valuation rule is
used by an employer, or by an employer and an employee, with respect to
a particular vehicle. and a replacement vehicle is provided to the
employee for the primary purpose of reducing Federal taxes, then the
employer, or the employer and the employee, using the rule must continue
to use the rule with respect to the replacement vehicle if the
replacement vehicle qualifies for use of the rule.
(f) Commuting valuation rule--(1) In general. Under the commuting
valuation rule of this paragraph (f), the value of the commuting use of
an employer-provided vehicle may be determined pursuant to paragraph
(f)(3) of this section if the following criteria are met by the employer
and employees with respect to the vehicle:
(i) The vehicle is owned or leased by the employer and is provided
to one or more employees for use in connection with the employer's trade
or business and is used in the employer's trade or business;
(ii) For bona fide noncompensatory business reasons, the employer
requires the employee to commute to and/or from work in the vehicle;
(iii) The employer has established a written policy under which
neither the employee, nor any individual whose use would be taxable to
the employee, may use the vehicle for personal purposes, other than for
commuting or de minimis personal use (such as a stop for a personal
errand on the way between a business delivery and the employee's home);
(iv) Except for de minimis personal use, the employee does not use
the vehicle for any personal purpose other than commuting; and
(v) The employee required to use the vehicle for commuting is not a
control employee of the employer (as defined in paragraphs (f) (5) and
(6) of this section).
Personal use of a vehicle is all use of the vehicle by an employee that
is not used in the employee's trade or business of being an employee of
the employer. An employer-provided vehicle that is generally used each
workday to transport at least three employees of the employer to and
from work in an employer-sponsored commuting vehicle pool is deemed to
meet the requirements of paragraphs (f)(1) (i) and (ii) of this section.
(2) Special rules. Notwithstanding anything in paragraph (f)(1) of
this section to the contrary, the following special rules apply--
(i) Chauffeur-driven vehicles. If a vehicle is chauffeur-driven, the
commuting valuation rule of this paragraph (f) may not be used to value
the commuting use of any person (other than the chauffeur) who rides in
the vehicle. (See paragraphs (d) and (e) of this section for other
vehicle special valuation rules.) The special rule of this paragraph (f)
may be used to value the commuting-only use of the vehicle by the
chauffeur if the conditions of paragraph (f)(1) of this section are
satisfied. For purposes of this paragraph (f)(2), an individual will not
be considered a chauffeur if he or she performs non-driving services for
the employer, is not available to perform driving services while
performing such other services and whose only driving services consist
of driving a vehicle used for commuting by other employees of the
employer.
(ii) Control employee exception. If the vehicle in which the
employee is required to commute is not an automobile as defined in
paragraph (d)(1)(ii) of this section, the restriction of paragraph
(f)(1)(v) of this section (relating to control employees) does not
apply.
(3) Commuting value--(i) $1.50 per one-way commute. If the
requirements of this paragraph (f) are satisfied, the
[[Page 70]]
value of the commuting use of an employer-provided vehicle is $1.50 per
one-way commute (e.g., from home to work or from work to home). The
value provided in this paragraph (f)(3) includes the value of any goods
or services directly related to the vehicle (e.g., fuel).
(ii) Value per employee. If there is more than one employee who
commutes in the vehicle, such as in the case of an employer-sponsored
commuting vehicle pool, the amount includible in the income of each
employee is $1.50 per one-way commute. Thus, the amount includible for
each round-trip commute is $3.00 per employee. See paragraphs (d)(7)(vi)
and (e)(5)(vi) of this section for use of the automobile lease valuation
and vehicle cents-per-mile valuation special rules for valuing the use
or availability of the vehicle in the case of an employer-sponsored
vehicle or automobile commuting pool.
(4) Definition of vehicle. For purposes of this paragraph (f), the
term ``vehicle'' means any motorized wheeled vehicle manufactured
primarily for use on public streets, roads, and highways. The term
``vehicle'' includes an automobile as defined in paragraph (d)(1)(ii) of
this section.
(5) Control employee defined--Non-government employer. For purposes
of this paragraph (f), a control employee of a non-government employer
is any employee--
(i) Who is a Board- or shareholder-appointed, confirmed, or elected
officer of the employer whose compensation equals or exceeds $50,000,
(ii) Who is a director of the employer,
(iii) Whose compensation equals or exceeds $100,000, or
(iv) Who owns a one-percent or greater equity, capital, or profits
interest in the employer.
For purposes of determining who is a one-percent owner under paragraph
(f)(5)(iv) of this section, any individual who owns (or is considered as
owning under section 318(a) or principles similar to section 318(a) for
entities other than corporations) one percent or more of the fair market
value of an entity (the ``owned entity'') is considered a one-percent
owner of all entities which would be aggregated with the owned entity
under the rules of section 414 (b), (c), (m), or (o). For purposes of
determining who is an officer or director with respect to an employer
under this paragraph (f)(5), notwithstanding anything in this section to
the contrary, if an entity would be aggregated with other entities under
the rules of section 414 (b), (c), (m), or (o), the officer definition
(but not the compensation requirement) and the director definition apply
to each such separate entity rather tha to the aggregated employer. An
employee who is an officer or a director of an entity (the ``first
entity'') shall be treated as an officer or a director of all entities
aggregated with the first entity under the rules of section 414 (b),
(c), (m), or (o). Instead of applying the control employee definition of
this paragraph (f)(5), an employer may treat all, and only, employees
who are ``highly compensated'' employees (as defined in Sec. 1.132-8(g))
as control employees for purposes of this paragraph (f).
(6) Control employee defined--Government employer. For purposes of
this paragraph (f), a control employee of a government employer is any--
(i) Elected official, or
(ii) Employee whose compensation equals or exceeds the compensation
paid to a Federal Government employee holding a position at Executive
Level V, determined under Chapter 11 of title 2, United States Code, as
adjusted by section 5318 of Title 5 United States Code.
For purposes of this paragraph (f), the term ``government'' includes any
Federal, state or local governmental unit, and any agency or
instrumentality thereof. Instead of applying the control employee
definition of paragraph (f)(6), an employer may treat all and only
employees who are ``highly compensated'' employees (as defined in
Sec. 1.132-8(f)) as control employees for purposes of this paragraph
(f).
(7) ``Compensation'' defined. For purposes of this paragraph (f),
the term ``compensation'' has the same meaning as in section 414(q)(7).
Compensation includes all amounts received from all entities treated as
a single employer under section 414 (b), (c), (m), or (o). Levels of
compensation shall be adjusted at the same time and in the same manner
as provided in section
[[Page 71]]
415(d). The first such adjustment shall be for calendar year 1988.
(g) Non-commercial flight valuation rule--(1) In general. Under the
non-commercial flight valuation rule of this paragraph (g), except as
provided in paragraph (g)(12) of this section, if an employee is
provided with a flight on an employer-provided aircraft, the value of
the flight is calculated using the aircraft valuation formula of
paragraph (g)(5) of this section. For purposes of this paragraph (g),
the value of a flight on an employer-provided aircraft by an individual
who is less than two years old is deemed to be zero. See paragraph
(b)(1) of this section for rules relating to the amount includible in
income when an employee reimburses the employee's employer for all or
part of the fair market value of the benefit provided.
(2) Eligible flights and eligible aircraft. The valuation rule of
this paragraph (g) may be used to value flights on all employer-provided
aircraft, including helicopters. The valuation rule of this paragraph
(g) may be used to value international as well as domestic flights. The
valuation rule of this paragraph (g) may not be used to value a flight
on any commercial aircraft on which air transportation is sold to the
public on a per-seat basis. For a special valuation rule relating to
certain flights on commercial aircraft, see paragraph (h) of this
section.
(3) Definition of a flight--(i) General rule. Except as otherwise
provided in paragraph (g)(3)(iii) of this section (relating to
intermediate stops), for purposes of this paragraph (g), a flight is the
distance (in statute miles, i.e., 5,280 feet per statute mile) between
the place at which the individual boards the aircraft and the place at
which the individual deplanes.
(ii) Valuation of each flight. Under the valuation rule of this
paragraph (g), value is determined separately for each flight. Thus, a
round-trip is comprised of at least two flights. For example, an
employee who takes a personal trip on an employer-provided aircraft from
New York City to Denver, then Denver to Los Angeles, and finally Los
Angeles to New York City has taken three flights and must apply the
aircraft valuation formula separately to each flight. The value of a
flight must be determined on a passenger-by-passenger basis. For
example, if an individual accompanies an employee and the flight taken
by the individual would be taxed to the employee, the employee would be
taxed on the special rule value of the flight by the employee and the
flight by the individual.
(iii) Intermediate stop. If a landing is necessitated by weather
conditions, by an emergency, for purposes of refueling or obtaining
other services relating to the aircraft or for any other purpose
unrelated to the personal purposes of the employee whose flight is being
valued, that landing is an intermediate stop. Additional mileage
attributable to an intermediate stop is not considered when determining
the distance of an employee's flight.
(iv) Examples. The rules of paragraph (g)(3)(iii) of this section
may be illustrated by the following examples:
Example (1). Assume that an employee's trip originates in St. Louis,
Missouri, with Seattle, Washington as its destination, but, because of
weather conditions, the aircraft lands in Denver, Colorado, and the
employee stays in Denver overnight. Assume further that the next day the
aircraft flies to Seattle where the employee deplanes. The employee's
flight is the distance between the airport in St. Louis and the airport
in Seattle.
Example (2). Assume that a trip originates in New York, New York,
with five passengers and that the aircraft makes a stop in Chicago,
Illinois, so that one of the passengers can deplane for a purpose
unrelated to the personal purposes of the other passengers whose flights
are being valued. The aircraft then goes on to Los Angeles, California,
where the other four passengers will deplane. The flight of the
passenger who deplaned in Chicago is the distance between the airport in
New York and the airport in Chicago. The stop in Chicago is disregarded
as an intermediate stop, however, when measuring the flights taken by
each of the other four passengers. Their flights would be the distance
between the airport in New York and the airport in Los Angeles.
(4) Personal and non-personal flights--(i) In general. The valuation
rule of this paragraph (g) applies to personal flights on employer-
provided aircraft. A personal flight is one the value of which is not
excludable under another section of subtitle A of the Internal Revenue
Code of 1986, such as under section 132(d) (relating to a working
[[Page 72]]
condition fringe). However, solely for purposes of paragraphs (g)(4)(ii)
and (g)(4)(iii) of this section, references to personal flights do not
include flights a portion of which would not be excludable from income
by reason of section 274(c).
(ii) Trip primarily for employer's business. If an employee
combines, in one trip, personal and business flights on an employer-
provided aircraft and the employee's trip is primarily for the
employer's business (see Sec. 1.162-2(b)(2)), the employee must include
in income the excess of the value of all the flights that comprise the
trip over the value of the flights that would have been taken had there
been no personal flights but only business flights. For example, assume
that an employee flies on an employer-provided aircraft from Chicago,
Illinois, to Miami, Florida, for the employer's business and that from
Miami the employee flies on the employer-provided aircraft to Orlando,
Florida, for personal purposes and then flies back to Chicago. Assume
further that the primary purpose of the trip is for the employer's
business. The amount includible in income is the excess of the value of
the three flights (Chicago to Miami, Miami to Orlando, and Orlando to
Chicago), over the value of the flights that would have been taken had
there been no personal flights but only business flights (Chicago to
Miami and Miami to Chicago).
(iii) Primarily personal trip. If an employee combines, in one trip,
personal and business flights on an employer-provided aircraft and the
employee's trip is primarily personal (see Sec. 1.162-2(b)(2)), the
amount includible in the employee's income is the value of the personal
flights that would have been taken had there been no business flights
but only personal flights. For example, assume that an employee flies on
an employer-provided aircraft from San Francisco, California, to Los
Angeles, California, for the employer's business and that from Los
Angeles the employee flies on an employer-provided aircraft to Palm
Springs, California, primarily for personal reasons and then flies back
to San Francisco. Assume further that the primary purpose of the trip is
personal. The amount includible in the employee's income is the value of
personal flights that would have been taken had there been no business
flights but only personal flights (San Francisco to Palm Springs and
Palm Springs to San Francisco).
(iv) Application of section 274(c). The value of employer- provided
travel outside the United States away from home may not be excluded from
the employee's gross income as a working condition fringe, by either the
employer or the employee, to the extent not deductible by reason of
section 274(c). The valuation rule of this paragraph (g) applies to that
portion of the value any flight not excludable by reason of section
274(c). Such value is includible in income in addition to the amounts
determined under paragraphs (g)(4)(ii) and (g)(4)(iii) of this section.
(v) Flights by individuals who are not personal guests. If an
individual who is not an employee of the employer providing the aircraft
is on a flight, and the individual is not the personal guest of any
employee of the employer, the flight by the individual is not taxable to
any employee of the employer providing the aircraft. The rule in the
preceding sentence applies where the individual is provided the flight
by the employer for noncompensatory business reasons of the employer.
For example, assume that G, an employee of company Y, accompanies A, an
employee of company X, on company X's aircraft for the purpose of
inspecting land under consideration for purchase by company X from
company Y. The flight by G is not taxable to A. No inference may be
drawn from this paragraph (g)(4)(v) concerning the taxation of a flight
provided to an individual who is neither an employee of the employer nor
a personal guest of any employee of the employer.
(5) Aircraft valuation formula. Under the valuation rule of this
paragraph (g), the value of a flight is determined under the base
aircraft valuation formula (also known as the Standard Industry Fare
Level formula or SIFL) by multiplying the SIFL cents-per-mile rates
applicable for the period during which the flight was taken by the
appropriate aircraft multiple (as provided in paragraph (g)(7) of this
section) and then adding the applicable terminal charge. The SIFL cents-
per-mile rates
[[Page 73]]
in the formula and the terminal charge are calculated by the Department
of Transportation and are revised semi-annually. The base aircraft
valuation formula in effect from January 1, 1989 through June 30, 1989,
is as follows: a terminal charge of $26.48 plus ($.1449 per mile for the
first 500 miles, $.1105 per mile for miles between 501 and 1500, and
$.1062 per mile for miles over 1500). For example, if a flight taken on
January 15, 1989, by a non-control employee on an employer-provided
aircraft with a maximum certified takeoff weight of 26,000 lbs. is 2,000
miles long, the value of the flight determined under this paragraph
(g)(5) is: $100.36 ((.313x(($.1449x500)+($.1105x1,000)+
($.1062x500)))+$26.48). The aircraft valuation formula applies
separately to each flight being valued under this paragraph (g).
Therefore, the number of miles an employee has flown on employer-
provided aircraft flights prior to the flight being valued does not
affect the determination of the value of the flight.
(6) Discretion to provide new formula. The Commissioner may
prescribe a different base aircraft valuation formula by regulation,
Revenue Ruling or Revenue Procedure in the event that the calculation of
the Standard Industry Fare Level is discontinued.
(7) Aircraft multiples--(i) In general. The aircraft multiples are
based on the maximum certified takeoff weight of the aircraft. When
applying the aircraft valuation formula to a flight, the appropriate
aircraft multiple is multiplied by the product of the applicable SIFL
cents-per-mile rates multiplied by the number of miles in the flight and
then the terminal charge is added to the product. For purposes of
applying the aircraft valuation formula described in paragraph (g)(5) of
this section, the aircraft multiples are as follows:
------------------------------------------------------------------------
Aircraft Aircraft
multiple multiple
Maximum certified take-off weight of the for a for a non-
aircraft control control
employee employee
(percent) (percent)
------------------------------------------------------------------------
6,000 lbs. or less............................ 62.5 15.6
6,001-10,000 lbs.............................. 125 23.4
10,001-25,000 lbs............................. 300 31.3
25,001 lbs. or more........................... 400 31.3
------------------------------------------------------------------------
(ii) Flights treated as provided to a control employee. Except as
provided in paragraph (g)(12) of this section, any fIight provided to an
individual whose flight would be taxable to a control employee (as
defined in paragraphs (g) (8) and (9) of this section) as the recipient
shall be valued as if such flight had been provided to that control
employee. For example, assume that the chief executive officer of an
employer, his spouse, and his two children fly on an employer-provided
aircraft for personal purposes. Assume further that the maximum
certified takeoff weight of the aircraft is 12,000 lbs. The amount
includible in the employee's income is 4x((300 percentxthe applicable
SIFL cents-per-mile rates provided in paragraph (g)(5) of this section
multiplied by the number of miles in the flight) plus the applicable
terminal charge).
(8) Control employee defined--Non-government employer--(i)
Definition. For purposes of this paragraph (g), a control employee of a
non-government employer is any employee--
(A) Who is a Board- or shareholder-appointed, confirmed, or elected
officer of the employer, limited to the lesser of--
(1) One percent of all employees (increased to the next highest
integer, if not an integer) or
(2) Ten employees;
(B) Who is among the top one percent most highly-paid employees of
the employer (increased to the next highest integer, if not an integer)
limited to a maximum of 50;
(C) Who owns a five-percent or greater equity, capital, or profits
interest in the employer; or
(D) Who is a director of the employer.
(ii) Special rules for control employee definition--(A) In general.
For purposes of this paragraph (g), any employee who is a family member
(within the meaning of section 267(c)(4)) of a control employee is also
a control employee. For purposes of paragraph (g)(8)(i)(B) of this
section, the term ``employee'' does not include any individual unless
such individual is a common-law employee, partner, or one-percent or
greater shareholder of the employer. Pursuant to this paragraph (g)(8),
an employee may be a control employee under more than one of the
[[Page 74]]
requirements listed in paragraphs (g)(8)(i) (A) through (D) of this
section. For example, an employee may be both an officer under paragraph
(g)(8)(i)(A) of this section and a highly-paid employee under paragraph
(g)(8)(i)(B) of this section. In this case, for purposes of the officer
limitation rule of paragraph (g)(8)(i)(A) of this section and the
highly-paid employee limitation rule of paragraph (g)(8)(i)(B) of this
section, the employee would be counted in applying both limitations. For
purposes of determining the one-percent limitation under paragraphs
(g)(8)(i) (A) and (B) of this section, an employer shall exclude from
consideration employees described in Sec. 1.132-8(b)(3). Instead of
applying the control employee definition of this paragraph (g)(8), an
employer may treat all (and only) employees who are ``highly
compensated'' employees (as defined in Sec. 1.132-8(f)) as control
employees for purposes of this paragraph (g).
(B) Special rules for officers, owners, and highly-paid control
employees. In no event shall an employee whose compensation is less than
$50,000 be a control employee under paragraph (g)(8)(i) (A) or (B) of
this section. For purposes of determining who is a five-percent (or one-
percent) owner under this paragraph (g)(8), any individual who owns (or
is considered as owning under section 318(a) or principles similar to
section 318(a) for entities other than corporations) five percent (or
one-percent) or more of the fair market value of an entity (the ``owned
entity'') is considered a five-percent (or one-percent) owner of all
entities which would be aggregated with the owned entity under the rules
of section 414(b), (c), (m), or (o). For purposes of determining who is
an officer or director with respect to an employer under this paragraph
(g)(8), notwithstanding anything in this section to the contrary, if the
employer would be aggregated with other employers under the rules of
section 414 (b), (c), (m), or (o), the officer definition and the
limitations and the director definition are applied to each such
separate employer rather than to the aggregated employer. An employee
who is an officer or director of one employer (the ``first employer'')
shall not be counted as an officer or a director of any other employer
aggregated with the first employer under the rules of section 414 (b),
(c), or (m). If applicable, the officer limitations rule of paragraph
(g)(8)(i)(A) of this section is applied to employees in descending order
of their compensation. Thus, if an employer has 11 board-appointed
officers and the limit imposed under paragraph (g)(8)(i)(A) of this
section is 10 officers, the employee with the least compensation of
those officers would not be a control employee under paragraph
(g)(8)(i)(A) of this section.
(9) Control employee defined--Government employer. For purposes of
this paragraph (g), a control employee of a government employer is any--
(i) Elected official, or
(ii) Employee whose compensation equals or exceeds the compensation
paid to a Federal Government employee holding a position at Executive
Level V, determined under Chapter 11 of title 2, United States Code, as
adjusted by section 5318 of title 5 United States Code.
For purposes of paragraph (f), the term ``government'' includes any
Federal, state or local governmental unit, and any agency or
instrumentality thereof. lnstead of applying the control employee
definition of paragraph (f)(6), an employer may treat all and only
employees who are ``highly compensated'' employees (as defined in
Sec. 1.132-8(f)) as control employees for purposes of this paragraph
(f).
(10) ``Compensation'' defined. For purposes of this paragraph (g),
the term ``compensation'' has the same meaning as in section 414(q)(7).
Compensation includes all amounts received from all entities treated as
a single employer under section 414 (b), (c), (m), or (o). Levels of
compensation shall be adjusted at the same time and in the same manner
as provided in section 415(d). The first such adjustment was for
calendar year 1988.
(11) Treatment of former employees. For purposes of this paragraph
(g), an employee who was a control employee of the employer (as defined
in this paragraph (g)) at any time after reaching age 55, or within
three years of separation from the service of the employer, is a control
employee with respect to flights taken after separation from the
[[Page 75]]
service of the employer. An individual who is treated as a control
employee under this paragraph (g)(11) is not counted when determining
the limitation of paragraph (g)(8)(i) (A) and (B) of this section. Thus,
the total number of individuals treated as control employees under such
paragraphs may exceed the limitations of such paragraphs to the extent
that this paragraph (g)(11) applies.
(12) Seating capacity rule--(i) In general--(A) General rule. Where
50 percent or more of the regular passenger seating capacity of an
aircraft (as used by the employer) is occupied by individuals whose
flights are primarily for the employer's business (and whose flights are
excludable from income under section 132(d)), the value of a flight on
that aircraft by any employee who is not flying primarily for the
employer's business (or who is flying primarily for the employer's
business but the value of whose flight is not excludable under section
132(d) by reason of section 274(c)) is deemed to be zero. See
Sec. 1.132-5 which limits the working condition fringe exclusion under
section 132(d) to situations where the employee receives the flight in
connection with the performance of services for the employer providing
the aircraft.
(B) Special rules--(1) Definition of ``employee.'' For purposes of
this paragraph (g)(12), the term ``employee'' includes only employees of
the employer, including a partner of a partnership, providing the
aircraft and does not include independent contractors and directors of
the employer. A flight taken by an individual other than an ``employee''
as defined in the preceding sentence is considered a flight taken by an
employee for purposes of this paragraph (g)(12) only if that individual
is treated as an employee pursuant to section 132(f)(1) or that
individual's flight is treated as a flight taken by an employee pursuant
to section 132(f)(2). If--
(i) A flight by an individual is not considered a flight taken by an
employee (as defined in this paragraph (g)(12)(i)),
(ii) The value of that individual's flight is not excludable under
section 132(d), and
(iii) The seating capacity rule of this paragraph (g) (12) otherwise
applies, then the value of the flight provided to such an individual is
the value of a flight provided to a non-control employee pursuant to
paragraph (g)(5) of this section (even if the individual who would be
taxed on the value of the flight is a control employee).
(2) Example. The special rules of paragraph (g)(12)(i)(B)(1) of this
section are illustrated by the following example:
Example. Assume that 60 percent of the regular passenger seating
capacity of an employer's aircraft is occupied by individuals whose
flights are primarily for the employer's business and are excludable
from income under section 132(d). If a control employee, his spouse, and
his dependent child fly on the employer's aircraft for primarily
personal reasons, the value of the three flights is deemed to be zero.
If, however, the control employee's cousin were provided a flight on the
employer's aircraft, the value of the flight taken by the cousin is
determined by applying the aircraft valuation formula of paragraph
(g)(5) of this section (including the terminal charge) and the non-
control employee aircraft multiples of paragraph (g)(7) of this section.
(ii) Application of 50-percent test to multiple flights. The seating
capacity rule of this paragraph (g)(12) must be met both at the time the
individual whose flight is being valued boards the aircraft and at the
time the individual deplanes. For example, assume that employee A boards
an employer-provided aircraft for personal purposes in New York, New
York, and that at that time 80 percent of the regular passenger seating
capacity of the aircraft is occupied by individuals whose flights are
primarily for the employer's business (and whose flights are excludable
from income under section 132(d)) (``the business passengers''). If the
aircraft flies directly to Hartford, Connecticut where all of the
passengers, including A, deplane, the requirements of the seating
capacity rule of this paragraph (g)(12) have been satisfied. If instead,
some of the passengers, including A, remain on the aircraft in Hartford
and the aircraft continues on to Boston, Massachusetts, where they all
deplane, the requirements of the seating capacity rule of this paragraph
(g)(12) will not be satisfied with respect to A's flight from New York
to Boston unless
[[Page 76]]
at least 50 percent of the seats comprising the aircraft's regular
passenger seating capacity were occupied by the business passengers at
the time A deplanes in Boston.
(iii) Regular passenger seating capacity. (A) General rule. Except
as otherwise provided, the regular passenger seating capacity of an
aircraft is the maximum number of seats that have at any time on or
prior to the date of the flight been on the aircraft (while owned or
leased by the employer). Except to the extent excluded pursuant to
paragraph (g)(12)(v) of this section, regular seating capacity includes
all seats which may be occupied by members of the flight crew. It is
irrelevant that, on a particular flight, less than the maximum number of
seats are available for use because, for example, some of the seats are
removed.
(B) Special rules. When determining the maximum number of seats that
have at any time on or prior to the date of the flight been on the
aircraft (while owned or leased by the employer), seats that could not
at any time be legally used during takeoff and have not at any time been
used during takeoff are not counted. As of the date an employer
permanently reduces the seating capacity of an aircraft, the regular
passenger seating capacity is the reduced number of seats on the
aircraft. The previous sentence shall not apply if at any time within 24
months after such reduction any seats are added in the aircraft. Unless
the conditions of this paragraph (g)(12)(iii)(B) are satisfied,
jumpseats and removable seats used solely for purposes of flight crew
training are counted for purposes of the seating capacity rule of this
paragraph (g)(12).
(iv) Examples. The rules of paragraph (g)(12)(iii) of this section
are illustrated by the following examples:
Example (1). Employer A and employer B order the same aircraft,
except that A orders it with 10 seats and B orders it with eight seats.
A always uses its aircraft as a 10-seat aircraft; B always uses its
aircraft as an eight-seat aircraft. The regular passenger seating
capacity of A's aircraft is 10 and of B's aircraft is eight.
Example (2). Assume the same facts as in example (1), except that
whenever A's chief executive officer and spouse use the aircraft eight
seats are removed. Even if substantially all of the use of the aircraft
is by the chief executive officer and spouse, the regular passenger
seating capacity of the aircraft is 10.
Example (3). Assume the same facts as in example (1), except that
whenever more than eight people want to fly in B's aircraft, two extra
seats are added. Even if substantially all of the use of the aircraft
occurs with eight seats, the regular passenger seating capacity of the
aircraft is 10.
Example (4). Employer C purchases an aircraft with 12 seats. Three
months later C remodels the interior of the aircraft and permanently
removes four of the seats. Upon completion of the remodeling, the
regular passenger seating capacity of the aircraft is eight. If,
however, any seats are added within 24 months after the remodeling, the
regular seating capacity of the aircraft is treated as 12 throughout the
entire period.
(v) Seats occupied by flight crew. When determining the regular
passenger seating capacity of an aircraft, any seat occupied by a member
of the flight crew (whether or not such individual is an employee of the
employer providing the aircraft) shall not be counted, unless the
purpose of the flight by such individual is not primarily to serve as a
member of the flight crew. If the seat occupied by a member of the
flight crew is not counted as a passenger seat pursuant to the previous
sentence, such member of the flight crew is disregarded in applying the
50-percent test described in the first sentence of paragraph (g)(12)(i)
of this section. For example, assume that prior to application of this
paragraph (g)(12)(v) the regular passenger seating capacity of an
aircraft is one. Assume further that an employee pilots the aircraft and
that the employee's flight is nor primarily for the employer's business.
If the employee's spouse occupies the other seat for personal purposes,
the seating capacity rule is not met and the value of both flights must
be included in the employee's income. If, however, the employee's flight
were primarily for the employer's business (unrelated to serving as a
member of the flight crew), then the seating capacity rule is met and
the value of the flight for the employee's spouse is deemed to be zero.
If the employee's flight were primarily to serve as a member of the
flight crew, then the seating capacity rule is not met and the value of
a flight by any
[[Page 77]]
passenger for primarily personal reasons is not deemed to be zero.
(13) Erroneous use of the non-commercial flight valuation rule--(i)
Certain errors in the case of a flight by a control employee. If--
(A) The non-commercial flight valuation rule of this paragraph (g)
is applied by an employer or a control employee, as the case may be, on
a return as originally filed or on an amended return on the grounds that
either--
(1) The control employee is not in fact a control employee, or
(2) The aircraft is within a specific weight classification, and
(B) Either position is subsequently determined to be erroneous, the
valuation rule of this paragraph (g) is not available to value the
flight taken by that control employee by the person or persons taking
the erroneous position. With respect to the weight classifications, the
previous sentence does not apply if the position taken is that the
weight of the aircraft is greater than it is subsequently determined to
be. If, with respect to a flight by a control employee, the seating
capacity rule of paragraph (g)(12) of this section is used by an
employer or the control employee, as the case may be, on a return as
originally filed or on an amended return, the valuation rule of this
paragraph (g) is not available to value the flight taken by that control
employee by the person or persons taking the erroneous position.
(ii) Value of flight excluded as a working condition fringe. If
either an employer or an employee, on a return as originally filed or on
an amended return, excludes from the employee's income or wages all or
any part of the value of a flight on the grounds that the flight was
excludable as a working condition fringe under section 132, and that
position is subsequently determined to be erroneous, the valuation rule
of this paragraph (g) is not available to value the flight taken by that
employee by the person or persons taking the erroneous position.
Instead, the general valuation rules of paragraphs (b) (5) and (6) of
this section apply.
(14) Consistency rules--(i) Use by the employer. Except as otherwise
provided in paragraph (g)(13) of this section or Sec. 1.132-5 (m)(4), if
the non-commercial flight valuation rule of this paragraph (g) is used
by an employer to value any flight provided to an employee in a calendar
year, the rule must be used to value all flights provided to all
employees in the calendar year.
(ii) Use by the employee. Except as otherwise provided in paragraph
(g)(13) of this section or Sec. 1.132-5 (m)(4), if the non-commercial
flight valuation rule of this paragraph (g) is used by an employee to
value a flight provided by an employer in a calendar year, the rule must
be used to value all flights provided to the employee by that employer
in the calendar year.
(h) Commercial flight valuation rule--(1) In general. Under the
commercial flight valuation rule of this paragraph (h), the value of a
space-available flight (as defined in paragraph (h) (2) of this section)
on a commercial aircraft is 25 percent of the actual carrier's highest
unrestricted coach fare in effect for the particular flight taken. The
rule of this paragraph (h) is available only to an individual described
in Sec. 1.132-1(b)(1).
(2) Space-available flight. The commercial flight valuation rule of
this paragraph (h) is available to value a space-available flight. The
term ``space-available flight'' means a flight on a commercial aircraft-
-
(i) Which is subject to the same types of restrictions customarily
associated with flying on an employee ``stand-by'' or ``space-
available'' basis, and
(ii) Which meets the definition of a no-additional-cost service
under section 132(b), except that the flight is provided to an
individual other than the employee or an individual treated as the
employee under section 132(f). Thus, a flight is not a space-available
flight if the employer guarantees the employee a seat on the flight or
if the nondiscrimination requirements of section 132(h)(1) and
Sec. 1.132-8 are not satisfied. A flight may be a space-available flight
even if the airline that is the actual carrier is not the employer of
the employee.
(3) Commercial aircraft. If the actual carrier does not offer, in
the ordinary course of its business, air transportation to customers on
a per-seat basis, the commercial flight valuation rule of this paragraph
(h) is not available.
[[Page 78]]
Thus, if, in the ordinary course of its line of business, the employer
only offers air transportation to customers on a charter basis, the
commercial flight valuation rule of this paragraph (h) may not be used
to value a space-available flight on the employer's aircraft. If the
commercial flight valuation rule is not available, the flight may be
valued under the non-commercial flight valuation rule of paragraph (g)
of this section.
(4) Timing of inclusion. The date that the flight is taken is the
relevant date for purposes of applying section 61(a)(1) and this section
to a space-available flight on a commercial aircraft. The date of
purchase or issuance of a pass or ticket is not relevant. Thus, this
section applies to a flight taken on or after January 1, 1989,
regardless of the date on which the pass or ticket for the flight was
purchased or issued.
(5) Consistency rules--(i) Use by employer. If the commercial flight
valuation rule of this paragraph (h) is used by an employer to value any
flight provided in a calendar year, the rule must be used to value all
flights eligible for use of the rule provided in the calendar year.
(ii) Use by employee. If the commercial flight valuation rule of
this paragraph (h) is used by an employee to value a flight provided by
an employer in a calendar year, the rule must be used to value all
flights provided by that employer eligible for use of the rule taken by
such employee in the calendar year.
(i) [Reserved.]
(j) Valuation of meals provided at an employer-operated eating
facility for employees--(1) In general. The valuation rule of this
paragraph (j) may be used to value a meal provided at an employer-
operated eating facility for employees (as defined in Sec. 1.132-7). For
rules relating to an exclusion for the value of meals provided at an
employer-operated eating facility for employees, see section 132(e)(2)
and Sec. 1.132-7.
(2) Valuation formula--(i) In general. The value of all meals
provided at an employer-operated eating facility for employees during a
calendar year (``total meal value'') is 150 percent of the direct
operating costs of the eating facility determined separately with
respect to such eating facility whether or not the direct operating
costs test is applied separately to such eating facility under
Sec. 1.132-7(b)(2). For purposes of this paragraph (j), the definition
of direct operating costs provided in Sec. 1.132-7(b) and the
adjustments specified in Sec. 1.132-7(a)(2) apply. The taxable value of
meals provided at an eating facility may be determined in two ways. The
``individual meal subsidy'' may be treated as the taxable value of a
meal provided at the eating facility (see paragraph (j)(2)(ii) of this
section) to a particular employee. Alternatively, the employer may
allocate the ``total meal subsidy'' among employees (see paragraph
(j)(2)(iii) of this section).
(ii) ``Individual meal subsidy'' defined. The ``individual meal
subsidy'' is determined by multiplying the amount paid by the employee
for a particular meal by a fraction, the numerator of which is the total
meal value and the denominator of which is the gross receipts of the
eating facility for the calendar year and then subtracting the amount
paid by the employee for the meal. The taxable value of meals provided
to a particular employee during a calendar year, therefore, is the sum
of the individual meal subsidies provided to the employee during the
calendar year. This rule is available only if there is a charge for each
meal selection and if each employee is charged the same price for any
given meal selection.
(iii) Allocation of ``total meal subsidy.'' Instead of using the
individual meal subsidy method provided in paragraph (j)(2)(ii) of this
section, the employer may allocate the ``total meal subsidy'' (total
meal value less the gross receipts of the facility) among employees in
any manner reasonable under the circumstances. It will be presumed
reasonable for an employer to allocate the total meal subsidy on a per-
employee basis if the employer has information that would substantiate
to the satisfaction of the Commissioner that each employee was provided
approximately the same number of meals at the facility.
(k) Commuting valuation rule for certain employees--(1) In general.
Under the rule of this paragraph (k), the value of
[[Page 79]]
the commuting use of employer-provided transportation may be determined
under paragraph (k)(3) of this section if the following criteria are met
by the employer and employee with respect to the transportation:
(i) The transportation is provided, solely because of unsafe
conditions, to an employee who would ordinarily walk or use public
transportation for commuting to or from work;
(ii) The employer has established a written policy (e.g., in the
employer's personnel manual) under which the transportation is not
provided for the employee's personal purposes other than for commuting
due to unsafe conditions and the employer's practice in fact corresponds
with the policy;
(iii) The transportation is not used for personal purposes other
than commuting due to unsafe conditions; and
(iv) The employee receiving the employer-provided transportation is
a qualified employee of the employer (as defined in paragraph (k)(6) of
this section).
(2) Trip-by-trip basis. The special valuation rule of this paragraph
(k) applies on a trip-by-trip basis. If an employer and employee fail to
meet the criteria of paragraph (k)(1) of this section with respect to
any trip, the value of the transportation for that trip is not
determined under paragraph (k)(3) of this section and the amount
includible in the employee's income is determined by reference to the
fair market value of the transportation.
(3) Commuting value--(i) $1.50 per one-way commute. If the
requirements of this paragraph (k) are satisfied, the value of the
commuting use of the employer-provided transportation is $1.50 per one-
way commute (i.e., from home to work or from work to home).
(ii) Value per employee. If transportation is provided to more than
one qualified employee at the same time, the amount includible in the
income of each employee is $1.50 per one-way commute.
(4) Definition of employer-provided transportation. For purposes of
this paragraph (k), ``employer-provided transportation'' means
transportation by vehicle (as defined in paragraph (f)(4) of this
section) that is purchased by the employer (or that is purchased by the
employee and reimbursed by the employer) from a party that is not
related to the employer for the purpose of transporting a qualified
employee to or from work. Reimbursements made by an employer to an
employee to cover the cost of purchasing transportation (e.g., hiring
cabs) must be made under a bona fide reimbursement arrangement.
(5) Unsafe conditions. Unsafe conditions exist if a reasonable
person would, under the facts and circumstances, consider it unsafe for
the employee to walk to or from home, or to walk to or use public
transportation at the time of day the employee must commute. One of the
factors indicating whether it is unsafe is the history of crime in the
geographic area surrounding the employee's workplace or residence at the
time of day the employee must commute.
(6) Qualified employee defined--(i) In general. For purposes of this
paragraph (k), a qualified employee is one who meets the following
requirements with respect to the employer:
(A) The employee performs services during the current year, is paid
on an hourly basis, is not claimed under section 213(a)(1) of the Fair
Labor Standards Act of 1938 (as amended), 29 U.S.C. 201-219 (FLSA), to
be exempt from the minimum wage and maximum hour provisions of the FLSA,
and is within a classification with respect to which the employer
actually pays, or has specified in writing that it will pay,
compensation for overtime equal to or exceeding one and one-half times
the regular rate as provided by section 207 of the FLSA; and
(B) The employee does not receive compensation from the employer in
excess of the amount permitted by section 414(q)(1)(C) of the Code.
(ii) ``Compensation'' and ``paid on an hourly basis'' defined. For
purposes of this paragraph (k), ``compensation'' has the same meaning as
in section 414(q)(7). Compensation includes all amounts received from
all entities treated as a single employer under section 414 (b), (c),
(m), or (o). Levels of compensation shall be adjusted at the same time
and in the same manner as provided in section 415(d). If an employee's
compensation is stated on an
[[Page 80]]
annual basis, the employee is treated as ``paid on an hourly basis'' for
purposes of this paragraph (k) as long as the employee is not claimed to
be exempt from the minimum wage and maximum hour provisions of the FLSA
and is paid overtime wages either equal to or exceeding one and one-half
the employee's regular hourly rate of pay.
(iii) FLSA compliance required. An employee will not be considered a
qualified employee for purposes of this paragraph (k), unless the
employer is in compliance with the recordkeeping requirements concerning
that employee's wages, hours, and other conditions and practices of
employment as provided in section 211(c) of the FLSA and 29 CFR part
516.
(iv) Issues arising under the FLSA. If questions arise concerning an
employee's classification under the FLSA, the pronouncements and rulings
of the Administrator of the Wage and Hour Division, Department of Labor
are determinative.
(v) Non-qualified employees. If an employee is not a qualified
employee within the meaning of this paragraph (k)(6), no portion of the
value of the commuting use of employer-provided transportation is
excluded under this paragraph (k).
(7) Examples. This paragraph (k) is illustrated by the following
examples:
Example 1. A and B are word-processing clerks employed by Y, an
accounting firm in a large metropolitan area, and both are qualified
employees under paragraph (k)(6) of this section. The normal working
hours for A and B are from 11:00 p.m. until 7:00 a.m. and public
transportation, the only means of transportation available to A or B,
would be considered unsafe by a reasonable person at the time they are
required to commute from home to work. In response, Y hires a car
service to pick up A and B at their homes each evening for purposes of
transporting them to work. The amount includible in the income of both A
and B is $1.50 for the one-way commute from home to work.
Example 2. Assume the same facts as in Example 1, except that Y also
hires a car service to return A and B to their homes each morning at the
conclusion of their shifts and public transportation would not be
considered unsafe by a reasonable person at the time of day A and B
commute to their homes. The value of the commute from work to home is
includible in the income of both A and B by reference to fair market
value since unsafe conditions do not exist for that trip.
Example 3. C is an associate for Z, a law firm in a metropolitan
area. The normal working hours for C's law firm are from 9 a.m. until 6
p.m., but C's ordinary office hours are from 10 a.m. until 8 p.m. Public
transportation, the only means of transportation available to C at the
time C commutes from work to home during the evening, would be
considered unsafe by a reasonable person. In response, Z hires a car
service to take C home each evening. C does not receive annual
compensation from Z in excess of the amount permitted by section
414(q)(1)(C) of the Code. However, C is treated as an employee exempt
from the provisions of the FLSA and, accordingly, is not paid overtime
wages. Therefore, C is not a qualified employee within the meaning of
paragraph (k)(6) of this section. The value of the commute from work to
home is includible in C's income by reference to fair market value.
(8) Effective date. This paragraph (k) applies to employer-provided
transportation provided to a qualified employee on or after July 1,
1991.
[T.D. 8256, 54 FR 28582, July 6, 1989, as amended by T.D. 8389, 57 FR
1870, Jan. 16, 1992; T.D. 8457, 57 FR 62195, Dec. 30, 1992]
Sec. 1.62-1 Adjusted gross income.
(a)-(b) [Reserved]
(c) Deductions allowable in computing adjusted gross income. The
deductions specified in section 62(a) for purposes of computing adjusted
gross income are--
(1) Deductions set forth in Sec. 1.62-1T(c); and
(2) Deductions allowable under part VI, subchapter B, chapter 1 of
the Internal Revenue Code, (section 161 and following) that consist of
expenses paid or incurred by the taxpayer in connection with the
performance of services as an employee under a reimbursement or other
expense allowance arrangement (as defined in Sec. 1.62-2) with his or
her employer. For the rules pertaining to expenses paid or incurred in
taxable years beginning before January 1, 1989, see Sec. 1.62-1T (c)(2)
and (f) (as contained in 26 CFR part 1 (Secs. 1.61 to 1.169) revised
April 1, 1992).
(d) through (h) [Reserved]
(i) Effective date. Paragraph (c) of this section is effective for
taxable years beginning on or after January 1, 1989.
[T.D. 8451, 57 FR 57668, Dec. 7, 1992; 57 FR 60568, Dec. 21, 1992]
[[Page 81]]
Sec. 1.62-1T Adjusted gross income (temporary).
(a) Basis for determining the amount of certain deductions. The term
``adjusted gross income'' means the gross income computed under section
61 minus such of the deductions allowed by chapter 1 of the Code as are
specified in section 62(a). Adjusted gross income is used as the basis
for determining the following:
(1) The limitation on the amount of miscellaneous itemized
deductions (under section 67).
(2) The limitation on the amount of the deduction for casualty
losses (under section 165(h)(2)),
(3) The limitation on the amount of the deduction for charitable
contributions (under section 170(b)(1)),
(4) The limitation on the amount of the deduction for medical and
dental expenses (under section 213),
(5) The limitation on the amount of the deduction for qualified
retirement contributions for active participants in certain pension
plans (under section 219(g)), and
(6) The phase-out of the exemption from the disallowance of passive
activity losses and credits (under section 469(i)(3)).
(b) Double deduction not permitted. Section 62 (a) merely specifies
which of the deductions provided in chapter 1 of the Code shall be
allowed in computing adjusted gross income. It does not create any new
deductions. The fact that a particular item may be described in more
than one of the paragraphs under section 62(a) does not permit the item
to be deducted twice in computing adjusted gross income or taxable
income.
(c) Deductions allowable in computing adjusted gross income. The
deductions specified in section 62(a) for purposes of computing adjusted
gross income are:
(1) Deductions allowable under chapter 1 of the Code (other than by
part VII (section 211 and folllowing), subchapter B of such chapter)
that are attributable to a trade or business carried on by the taxpayer
not consisting of services performed as an employee;
(2) [Reserved]
(3) For taxable years beginning after December 31, 1986, deductions
allowable under section 162 that consist of expenses paid or incurred by
a qualified performing artist (as defined in section 62(b)) in
connection with the performance by him or her of services in the
performing arts as an employee;
(4) Deductions allowable under part VI as losses from the sale or
exchange of property;
(5) Deductions allowable under part VI, section 212, or section 611
that are attributable to property held for the production of rents or
royalties;
(6) Deductions for depreciation or depletion allowable under
sections 167 or 611 to a life tenant of property or to an income
beneficiary of property held in trust or to an heir, legatee, or devisee
of an estate;
(7) Deductions allowed by section 404 for contributions on behalf of
a self-employed individual;
(8) Deductions allowed by section 219 for contributions to an
individual retirement account described in section 408(a), or for an
individual retirement annuity described in section 408(b);
(9) Deductions allowed by section 402(e)(3) with respect to a lump-
sum distribution;
(10) For taxable years beginning after December 31, 1972, deductions
allowed by section 165 for losses incurred in any transaction entered
into for profit though not connected with a trade or business, to the
extent that such losses include amounts forfeited to a bank, mutual
savings bank, savings and loan association, building and loan
association, cooperative bank or homestead association as a penalty for
premature withdrawal of funds from a time savings account, certificate
of deposit, or similar class of deposit;
(11) For taxable years beginning after December 31, 1976, deductions
for alimony and separate maintenance payments allowed by section 215;
(12) Deductions allowed by section 194 for the amortization of
reforestation expenditures; and
(13) Deductions allowed by section 165 for the repayment (made in a
taxable year beginning after December 28, 1980) to a trust described in
paragraph (9) or (17) of section 501(c) of supplemental unemployment
compensation benefits received from such trust if such repayment is
required because of the receipt of trade readjustment allowances under
section 231 or 232 of the Trade Act of 1974 (19 U.S.C. 2291 and 2292).
[[Page 82]]
(d) Expenses directly related to a trade or business. For the
purpose of the deductions specified in section 62, the performance of
personal services as an employee does not constitute the carrying on of
a trade or business, except as otherwise expressly provided. The
practice of a profession, not as an employee, is considered the conduct
of a trade or business within the meaning of such section. To be
deductible for the purposes of determining adjusted gross income,
expenses must be those directly, and not those merely remotely,
connected with the conduct of a trade or business. For example, taxes
are deductible in arriving at adjusted gross income only if they
constitute expenditures directly attributable to a trade or business or
to property from which rents or royalties are derived. Thus, property
taxes paid or incurred on real property used in a trade or business are
deductible, but state taxes on net income are not deductible even though
the taxpayer's income is derived from the conduct of a trade or
business.
(e) Reimbursed and unreimbursed employee expenses--(1) In general.
Expenses paid or incurred by an employee that are deductible from gross
income under part VI in computing taxable income (determined without
regard to section 67) and for which the employee is reimbursed by the
employer, its agent, or third party (for whom the employee performs a
benefit as an employee of the employer) under an express agreement for
reimbursement or pursuant to an express expense allowance arrangement
may be deducted from gross income in computing adjusted gross income.
Except as provided in paragraphs (e)(2) and (e)(4) of this section, for
taxable years beginning after December 31, 1986, if the amount of a
reimbursement made by an employer, its agent, or third party to an
employee is less than the total amount of the business expenses paid or
incurred by the employee, the determination of to which of the
employee's business expenses the reimbursement applies and the amount of
each expense that is covered by the reimbursement is made on the basis
of all of the facts and circumstances of the particular case.
(2) Facts and circumstances unclear on business expenses for meals
and entertainment. If--
(i) The facts and circumstances do not make clear--
(A) That a reimbursement does not apply to business expenses for
meals or entertainment, or
(B) The amount of business expenses for meals or entertainment that
is covered by the reimbursement, and
(ii) The employee pays or incurs business expenses for meals or
entertainment,
the amount of the reimbursement that applies to such expenses (or
portion thereof with respect to which the facts and circumstances are
unclear) shall be determined by multiplying the amount of the employee's
business expenses for meals and entertainment (or portion thereof with
respect to which the facts and circumstances are unclear) by a fraction,
the numerator of which is the total amount of the reimbursement (or
portion thereof with respect to which the facts and circumstances are
unclear) and the denominator of which is the aggregate amount of all the
business expenses of the employee (or portion thereof with respect to
which the facts and circumstances are unclear).
(3) Deductibility of unreimbursed expenses. The amount of expenses
that is determined not to be reimbursed pursuant to paragraph (e) (1) or
(2) of this section is deductible from adjusted gross income in
determining the employee's taxable income subject to the limitations
applicable to such expenses (e.g., the 2-percent floor of section 67 and
the 80-percent limitation on meal and entertainment expenses provided
for in section 274(n)).
(4) Unreimbursed expenses of State legislators. For taxable years
beginning after December 31, 1986, any portion of the amount allowed as
a deduction to State legislators pursuant to section 162(h)1)(B) that is
not reimbursed by the State or a third party shall be allocated between
lodging and meals in the same ratio as the amounts allowable for lodging
and meals under the Federal per diem applicable to the legislator's
State capital at the end of the legislator's taxable year (see Appendix
1-A of the Federal Travel Regulations (FTR), which as of March 28, 1988,
are
[[Page 83]]
contained in GSA Bulletin FPMR A-40, Supplement 20). For purposes of
this paragraph (e)(4), the amount allowable for meals under the Federal
per diem shall be the amount of the Federal per diem allowable for meals
and incidental expenses reduced by $2 per legislative day (or other
amount allocated to incidental expenses in 1-7.5(a)(2) of the FTR). The
unreimbursed portion of each type of expense is deductible from adjusted
gross income in determining the State legislator's taxable income
subject to the limitations applicable to such expenses. For example, the
unreimbursed portion allocable to meals shall be reduced by 20 percent
pursuant to section 274(n) before being subjected to the 2-percent floor
of section 67 for purposes of computing the taxable income of a State
legislator. See Sec. 1.67-1T(a)(2).
(5) Expenses paid directly by an employer, its agent, or third
party. In the case of an employer, its agent, or a third party who
provides property or services to an employee or who pays an employee's
expenses directly instead of reimbursing the employee, see section 132
and the regulations thereunder for the income tax treatment of such
expenses.
(6) Examples. The provisions of this paragraph (e) may be
illustrated by the following examples:
Example (1). During 1987, A, an employee, while on business trips
away from home pays $300 for travel fares, $200 for lodging and $100 for
meals. In addition, A pays $50 for business meals in the area of his
place of employment (``local meals''), $250 for continuing education
courses, and $100 for business-related entertainment (other than meals).
The total amount of the reimbursements received by A for his employee
expenses from his employer is $750, and it is assumed that A's expenses
meet the deductibility requirements of sections 162 and 274. A includes
the amount of the reimbursement in his gross income. A's employer
designates the reimbursement to cover in full A's expenses for travel
fares, lodging, and meals while away from home, local meals, and
entertainment, and no facts or circumstances indicate a contrary
intention of the employer. Because the facts and circumstances make
clear the amount of A's business expenses for meals and entertainment
that is covered by the reimbursement, the reimbursement will be
allocated to these expenses. In determining his adjusted gross income
under section 62, A may deduct the full amount of the reimbursement for
travel fares, lodging, and meals while away from home, local meals, and
entertainment. In determining his taxable income under section 63, A may
deduct his expenses for continuing education courses to the extent
allowable by sections 67 and 162.
Example (2). Assume the facts are the same as in example (1) except
that the facts and circumstances make clear that the reimbursement
covers all types of deductible expenses but they do not make clear the
amount of each type of expense that is covered by the reimbursement. The
amount of the reimbursement that is allocated to A's business expenses
for meals and entertainment is $187.50. This amount is determined by
multiplying the total amount of A's business expenses for meals and
entertainment ($250) by the ratio of A's total reimbursement to A's
total business expenses ($750/$1,000). The remaining amount of the
reimbursement, $562.50 ($750-$187.50), is allocated to A's business
expenses other than meal and entertainment expenses. Therefore, in
determining his adjusted gross income under section 62, A may deduct
$750 for reimbursed business expenses (including meals and
entertainment). In determining his taxable income under section 63, A
may deduct (subject to the limitations and conditions of sections 67,
162, and 274) the unreimbursed portion of his expenses for meals and
entertainment ($62.50 ($250-$187.50), and other employee business
expenses ($187.50 ($750-$562.50)).
Example (3). Assume the facts are the same as in example (1) except
that the amount of the reimbursement is $500. Assume further that the
facts and circumstances make clear that the reimbursement covers $100 of
expenses for meals and that the remaining $400 of the reimbursement
covers all types of deductible expenses (including any expenses for
meals in excess of the $100 already designated) other than expenses for
entertainment. The amount of the reimbursement that is allocated to A's
business expenses for meals and entertainment is $125. This amount is
equal to the sum of the amount of the reimbursement that clearly applies
to meals ($100) and the amount of the reimbursement with respect to
which the facts are unclear that is allocated to meals ($25). The latter
amount is determined by multiplying the total amount of A's business
expenses for meals and entertainment with respect to which the facts are
unclear ($50) by the ratio of A's total reimbursement with respect to
which the facts are unclear to A's total business expenses with respect
to which the facts are unclear ($400/$800). The remaining amount of the
reimbursement, $375 ($500-$125) is allocated to A's business expenses
other than meals and entertainment. Therefore, in determining his
adjusted gross income under section 62, A may deduct
[[Page 84]]
$500 for reimbursed business expenses (including meals). In determining
his taxable income under section 63, A may deduct (subject to the
limitations and conditions of sections 67, 162, and 274) the
unreimbursed portion of his expenses for meals ($25 ($150-$125)),
entertainment ($100), and other employee business expenses ($375 ($750-
$375)).
Example (4). During 1987 B, a research scientist, is employed by
Corporation X. B gives a speech before members of Association Y, a
professional organization of scientists, describing her most recent
research findings. Pursuant to a reimbursement arrangement, Y reimburses
B for the full amount of her travel fares to the site of the speech and
for the full amount of her expenses for lodging and meals while there. B
includes the amount of the reimbursement in her gross income. B may
deduct the full amount of her travel expenses pursuant to section
62(a)(2)(A) in computing her adjusted gross income.
(f) [Reserved]
(g) Moving expenses. For taxable years beginning after December 31,
1986, a taxpayer described in section 217(a) shall not take into account
the deduction described in section 217 relating to moving expenses in
computing adjusted gross income under section 62 even if the taxpayer is
reimbursed for his or her moving expenses. Such a taxpayer shall include
the amount of any reimbursement for moving expenses in income pursuant
to section 82. The deduction described in section 217 shall be taken
into account in computing the taxable income of the taxpayer under
section 63. Pursuant to section 67(b)(6), the 2-percent floor described
in section 67(a) does not apply to moving expenses.
(h) Cross-reference. See 26 CFR 1.62-1 (Rev. as of April 1, 1986)
with respect to pre-1987 deductions for travel, meal, lodging,
transportation, and other trade or business expenses of an employee,
reimbursed expenses of an employee, expenses of an outside salesperson,
long-term capital gains, contributions described in section 405(c) to a
bond purchase plan on behalf of a self-employed individual, moving
expenses, amounts not received as benefits pursuant to section
1379(b)(3), and retirement bonds described in section 409 (allowed by
section 219).
[T.D. 8189, 53 FR 9873, Mar. 28, 1988, as amended by T.D. 8276, 54 FR
51024, Dec. 12, 1989; T.D. 8324, 55 FR 51691, Dec. 17, 1990; T.D. 8451,
57 FR 57668, Dec. 7, 1992]
Sec. 1.62-2 Reimbursements and other expense allowance arrangements.
(a) Table of contents. The contents of this section are as follows:
(a) Table of contents.
(b) Scope.
(c) Reimbursement or other expense allowance arrangement.
(1) Defined.
(2) Accountable plans.
(i) In general.
(ii) Special rule for failure to return excess.
(3) Nonaccountable plans.
(i) In general.
(ii) Special rule for failure to return excess.
(4) Treatment of payments under accountable plans.
(5) Treatment of payments under nonaccountable plans.
(d) Business connection.
(1) In general.
(2) Other bona fide expenses.
(3) Reimbursement requirement.
(i) In general.
(ii) Per diem allowances.
(e) Substantiation.
(1) In general.
(2) Expenses governed by section 274(d).
(3) Expenses not governed by section 274(d).
(f) Returning amounts in excess of expenses.
(1) In general.
(2) Per diem or mileage allowances.
(g) Reasonable period.
(1) In general.
(2) Safe harbors.
(i) Fixed date method.
(ii) Periodic payment method.
(3) Pattern of overreimbursements.
(h) Withholding and payment of employment taxes.
(1) When excluded from wages.
(2) When included in wages.
(i) Accountable plans.
(A) General rule.
(B) Per diem or mileage allowances.
(1) In general.
(2) Reimbursements.
(3) Advances.
(4) Special rules.
(ii) Nonaccountable plans.
(i) Application.
(j) Examples.
(k) Anti-abuse provision.
(l) Cross references.
(m) Effective dates.
[[Page 85]]
(b) Scope. For purposes of determining ``adjusted gross income,''
section 62(a)(2)(A) allows an employee a deduction for expenses allowed
by part VI (section 161 and following), subchapter B, chapter 1 of the
Code, paid by the employee, in connection with the performance of
services as an employee of the employer, under a reimbursement or other
expense allowance arrangement with a payor (the employer, its agent, or
a third party). Section 62(c) provides that an arrangement will not be
treated as a reimbursement or other expense allowance arrangement for
purposes of section 62(a)(2)(A) if--
(1) Such arrangement does not require the employee to substantiate
the expenses covered by the arrangement to the payor, or
(2) Such arrangement provides the employee the right to retain any
amount in excess of the substantiated expenses covered under the
arrangement.
This section prescribes rules relating to the requirements of section
62(c).
(c) Reimbursement or other expense allowance arrangement--(1)
Defined. For purposes of Secs. 1.62-1, 1.62-1T, and 1.62-2, the phrase
``reimbursement or other expense allowance arrangement'' means an
arrangement that meets the requirements of paragraphs (d) (business
connection, (e) (substantiation), and (f) (returning amounts in excess
of expenses) of this section. A payor may have more than one arrangement
with respect to a particular employee, depending on the facts and
circumstances. See paragraph (d)(2) of this section (payor treated as
having two arrangements under certain circumstances).
(2) Accountable plans--(i) In general. Except as provided in
paragraph (c)(2)(ii) of this section, if an arrangement meets the
requirements of paragraphs (d), (e), and (f) of this section, all
amounts paid under the arrangement are treated as paid under an
``accountable plan.''
(ii) Special rule for failure to return excess. If an arrangement
meets the requirements of paragraphs (d), (e), and (f) of this section,
but the employee fails to return, within a reasonable period of time,
any amount in excess of the amount of the expenses substantiated in
accordance with paragraph (e) of this section, only the amounts paid
under the arrangement that are not in excess of the substantiated
expenses are treated as paid under an accountable plan.
(3) Nonaccountable plans--(i) In general. If an arrangement does not
satisfy one or more of the requirements of paragraphs (d), (e), or (f)
of this section, all amounts paid under the arrangement are treated as
paid under a ``nonaccountable plan.'' If a payor provides a
nonaccountable plan, an employee who receives payments under the plan
cannot compel the payor to treat the payments as paid under an
accountable plan by voluntarily substantiating the expenses and
returning any excess to the payor.
(ii) Special rule for failure to return excess. If an arrangement
meets the requirements of paragraphs (d), (e), and (f) of this section,
but the employee fails to return, within a reasonable period of time,
any amount in excess of the amount of the expenses substantiated in
accordance with paragraph (e) of this section, the amounts paid under
the arrangement that are in excess of the substantiated expenses are
treated as paid under a nonaccountable plan.
(4) Treatment of payments under accountable plans. Amounts treated
as paid under an accountable plan are excluded from the employee's gross
income, are not reported as wages or other compensation on the
employee's Form W-2, and are exempt from the withholding and payment of
employment taxes (Federal Insurance Contributions Act (FICA), Federal
Unemployment Tax Act (FUTA), Railroad Retirement Tax Act (RRTA),
Railroad Unemployment Repayment Tax (RURT), and income tax.) See
paragraph (l) of this section for cross references.
(5) Treatment of payments under nonaccountable plans. Amounts
treated as paid under a nonaccountable plan are included in the
employee's gross income, must be reported as wages or other compensation
on the employee's Form W-2, and are subject to withholding and payment
of employment taxes (FICA, FUTA, RRTA, RURT, and income tax). See
paragraph (h) of this
[[Page 86]]
section. Expenses attributable to amounts included in the employee's
gross income may be deducted, provided the employee can substantiate the
full amount of his or her expenses (i.e., the amount of the expenses, if
any, the reimbursement for which is treated as paid under an accountable
plan as well as those for which the employee is claiming the deduction)
in accordance with Secs. 1.274-5T and 1.274(d)-1 or Sec. 1.162-17, but
only as a miscellaneous itemized deduction subject to the limitations
applicable to such expenses (e.g., the 80-percent limitation on meal and
entertainment expenses provided in section 274(n) and the 2-percent
floor provided in section 67).
(d) Business connection--(1) In general. Except as provided in
paragraphs (d)(2) and (d)(3) of this section, an arrangement meets the
requirements of this paragraph (d) if it provides advances, allowances
(including per diem allowances, allowances only for meals and incidental
expenses, and mileage allowances), or reimbursements only for business
expenses that are allowable as deductions by part VI (section 161 and
the following), subchapter B, chapter 1 of the Code, and that are paid
or incurred by the employee in connection with the performance of
services as an employee of the employer. The payment may be actually
received from the employer, its agent, or a third party for whom the
employee performs a service as an employee of the employer, and may
include amounts charged directly or indirectly to the payor through
credit card systems or otherwise. In addition, if both wages and the
reimbursement or other expense allowance are combined in a single
payment, the reimbursement or other expense allowance must be identified
either by making a separate payment or by specifically identifying the
amount of the reimbursement or other expense allowance.
(2) Other bona fide expenses. If an arrangement provides advances,
allowances, or reimbursements for business expenses described in
paragraph (d)(1) of this section (i.e., deductible employee business
expenses) and for other bona fide expenses related to the employer's
business (e.g., travel that is not away from home) that are not
deductible under part VI (section 161 and the following), subchapter B,
chapter 1 of the Code, the payor is treated as maintaining two
arrangements. The portion of the arrangement that provides payments for
the deductible employee business expenses is treated as one arrangement
that satisfies this paragraph (d). The portion of the arrangement that
provides payments for the nondeductible employee expenses is treated as
a second arrangement that does not satisfy this paragraph (d) and all
amounts paid under this second arrangement will be treated as paid under
a nonaccountable plan. See paragraphs (c)(5) and (h) of this section.
(3) Reimbursement requirement--(i) In general. If a payor arranges
to pay an amount to an employee regardless of whether the employee
incurs (or is reasonably expected to incur) business expenses of a type
described in paragraph (d)(1) or (d)(2) of this section, the arrangement
does not satisfy this paragraph (d) and all amounts paid under the
arrangement are treated as paid under a nonaccountable plan. See
paragraphs (c)(5) and (h) of this section.
(ii) Per diem allowances. An arrangement providing a per diem
allowance for travel expenses of a type described in paragraph (d)(1) or
(d)(2) of this section that is computed on a basis similar to that used
in computing the employee's wages or other compensation (e.g., the
number of hours worked, miles traveled, or pieces produced) meets the
requirements of this paragraph (d) only if, on December 12, 1989, the
per diem allowance was identified by the payor either by making a
separate payment or by specifically identifying the amount of the per
diem allowance, or a per diem allowance computed on that basis was
commonly used in the industry in which the employee is employed. See
section 274(d) and Sec. 1.274(d)-1. A per diem allowance described in
this paragraph (d)(3)(ii) may be adjusted in a manner that reasonably
reflects actual increases in employee business expenses occurring after
December 12, 1989.
(e) Substantiation--(1) In general. An arrangement meets the
requirements of this paragraph (e) if it requires each business expense
to be substantiated to
[[Page 87]]
the payor in accordance with paragraph (e)(2) or (e)(3) of this section,
whichever is applicable, within a reasonable period of time. See
Sec. 1.274-5T or Sec. 1.162-17.
(2) Expenses governed by section 274(d). An arrangement that
reimburses travel, entertainment, use of a passenger automobile or other
listed property, or other business expenses governed by section 274(d)
meets the requirements of this paragraph (e)(2) if information
sufficient to satisfy the substantiation requirements of section 274(d)
and the regulations thereunder is submitted to the payor. See
Sec. 1.274-5. Under section 274(d), information sufficient to
substantiate the requisite elements of each expenditure or use must be
submitted to the payor. For example, with respect to travel away from
home, Sec. 1.274-5(b)(2) requires that information sufficient to
substantiate the amount, time, place, and business purpose of the
expense must be submitted to the payor. Similarly, with respect to use
of a passenger automobile or other listed property, Sec. 1.274-5(b)(6)
requires that information sufficient to substantiate the amount, time,
use, and business purpose of the expense must be submitted to the payor.
See Sec. 1.274-5(g), however, which grants the Commissioner authority to
prescribe rules permitting the amount of certain expenses to be deemed
substantiated to the payor (in lieu of substantiating the actual amount
of such expenses) by means of per diem or mileage rates for travel away
from home or transportation expenses. See also Sec. 1.274-5(j)(1), which
grants the Commissioner the authority to establish a method under which
a taxpayer may use a specified amount for meals while traveling away
from home in lieu of substantiating the actual cost of meals, and
Sec. 1.274-5(j)(2), which grants the Commissioner the authority to
establish a method under which a taxpayer may use mileage rates to
determine the amount of the ordinary and necessary expenses of using a
vehicle for local transportation and transportation to, from, and at the
destination while traveling away from home in lieu of substantiating the
actual costs. Substantiation of the amount of a business expense in
accordance with rules prescribed pursuant to the authority granted by
Sec. 1.274-5(g) or (j) will be treated as substantiation of the amount
of such expense for purposes of this section.
(3) Expenses not governed by section 274(d). An arrangement that
reimburses business expenses not governed by section 274(d) meets the
requirements of this paragraph (e)(3) if information is submitted to the
payor sufficient to enable the payor to identify the specific nature of
each expense and to conclude that the expense is attributable to the
payor's business activities. Therefore, each of the elements of an
expenditure or use must be substantiated to the payor. It is not
sufficient if an employee merely aggregates expenses into broad
categories (such as ``travel'') or reports individual expenses through
the use of vague, nondescriptive terms (such as ``miscellaneous business
expenses''). See Sec. 1.162-17(b).
(f) Returning amounts in excess of expenses--(1) In general. Except
as provided in paragraph (f)(2) of this section, an arrangement meets
the requirements of this paragraph (f) if it requires the employee to
return to the payor within a reasonable period of time may amount paid
under the arrangement in excess of the expenses substantiated in
accordance with paragraph (e) of this section. The determination of
whether an arrangement requires an employee to return amounts in excess
of substantiated expenses will depend on the facts and circumstances. An
arrangement whereby money is advanced to an employee to defray expenses
will be treated as satisfying the requirements of this paragraph (f)
only if the amount of money advanced is reasonably calculated not to
exceed the amount of anticipated expenditures, the advance of money is
made on a day within a reasonable period of the day that the anticipated
expenditures are paid or incurred, and any amounts in excess of the
expenses substantiated in accordance with paragraph (e) of this section
are required to be returned to the payor within a reasonable period of
time after the advance is received.
(2) Per diem or mileage allowances. The Commissioner may, in his
discretion, prescribe rules in pronouncements of
[[Page 88]]
general applicability under which a reimbursement or other expense
allowance arrangement that provides per diem allowances providing for
ordinary and necessary expenses of traveling away from home (exclusive
of transportation costs to and from destination) or mileage allowances
providing for ordinary and necessary expenses of local travel and
tranportation while traveling away from home will be treated as
satisfying the requirements of this paragraph (f), even though the
arrangement does not require the employee to return the portion of such
an allowance that relates to the days or miles of travel substantiated
and that exceeds the amount of the employee's expenses deemed
substantiated pursuant to rules prescribed under section 274(d),
provided the allowance is paid at a rate for each day or mile of travel
that is reasonably calculated not to exceed the amount of the employee's
expenses or anticipated expenses and the employee is required to return
to the payor within a reasonable period of time any portion of such
allowance which relates to days or miles of travel not substantiated in
accordance with paragraph (e) of this section.
(g) Reasonable period--(1) In general. The determination of a
reasonable period of time will depend on the facts and circumstances.
(2) Safe harbors--(i) Fixed date method. An advance made within 30
days of when an expense is paid or incurred, an expense substantiated to
the payor within 60 days after it is paid or incurred, or an amount
returned to the payor within 120 days after an expense is paid or
incurred will be treated as having occurred within a reasonable period
of time.
(ii) Periodic statement method. If a payor provides employees with
periodic statements (no less frequently than quarterly) stating the
amount, if any, paid under the arrangement in excess of the expenses the
employee has substantiated in accordance with paragraph (e) of this
section, and requesting the employee to substantiate any additional
business expenses that have not yet been substantiated (whether or not
such expenses relate to the expenses with respect to which the original
advance was paid) and/or to return any amounts remaining unsubstantiated
within 120 days of the statement, an expense substantiated or an amount
returned within that period will be treated as being substantiated or
returned within a reasonable period of time.
(3) Pattern of overreimbursements. If, under a reimbursement or
other expense allowance arrangement, a payor has a plan or practice to
provide amounts to employees in excess of expenses substantiated in
accordance with paragraph (e) of this section and to avoid reporting and
withholding on such amounts, the payor may not use either of the safe
harbors provided in paragraph (g)(2) of this section for any years
during which such plan or practice exists.
(h) Withholding and payment of employment taxes--(1) When excluded
from wages. If an arrangement meets the requirements of paragraphs (d),
(e), and (f) of this section, the amounts paid under the arrangement
that are not in excess of the expenses substantiated in accordance with
paragraph (e) of this section (i.e., the amounts treated as paid under
an accountable plan) are not wages and are not subject to withholding
and payment of employment taxes. If an arrangement provides advances,
allowances, or reimbursements for meal and entertainment expenses and a
portion of the payment is treated as paid under a nonaccountable plan
under paragraph (d)(2) of this section due solely to section 274(n),
then notwithstanding paragraph (h)(2)(ii) of this section, these
nondeductible amounts are neither treated as gross income nor subject to
withholding and payment of employment taxes.
(2) When included in wages--(i) Accountable plans--(A) General rule.
Except as provided in paragraph (h)(2)(i)(B) of this section, if the
expenses covered under an arrangement that meets the requirements of
paragraphs (d), (e), and (f) of this section are not substantiated to
the payor in accordance with paragraph (e) of this section within a
reasonable period of time or if any amounts in excess of the
substantiated expenses are not returned to the payor in accordance with
paragraph (f) of this section within a reasonable period of time, the
amount
[[Page 89]]
which is treated as paid under a nonaccountable plan under paragraph
(c)(3)(ii) of this section is subject to withholding and payment of
employment taxes no later than the first payroll period following the
end of the reasonable period. A payor may treat any amount not
substantiated or returned within the periods specified in paragraph
(g)(2) of this section as not substantiated or returned within a
reasonable period of time.
(B) Per diem or mileage allowances--(1) In general. If a payor pays
a per diem or mileage allowance under an arrangement that meets the
requirements of the paragraphs (d), (e), and (f) of this section, the
portion, if any, of the allowance paid that relates to days or miles of
travel substantiated in accordance with paragraph (e) of this section
and that exceeds the amount of the employee's expenses deemed
substantiated for such travel pursuant to rules prescribed under section
274(d) and Sec. 1.274(d)-1 or Sec. 1.274-5T(j) is treated as paid under
a nonaccountable plan. See paragraph (c)(3)(ii) of this section. Because
the employee is not required to return this excess portion, the
reasonable period of time provisions of paragraph (g) of this section
(relating to the return of excess amounts) do not apply to this excess
portion.
(2) Reimbursements. Except as provided in paragraph (h)(2)(i)(B)(4)
of this section, in the case of a per diem or mileage allowance paid as
a reimbursement at a rate for each day or mile of travel that exceeds
the amounts of the employee's expenses deemed substantiated for a day or
mile of travel, the excess portion described in paragraph (h)(2)(i) of
this section is subject to withholding and payment of employment taxes
in the payroll period in which the payor reimburses the expenses for the
days or miles of travel substantiated in accordance with paragraph (e)
of this section.
(3) Advances. Except as provided in paragraph (h)(2)(i)(B)(4) of
this section, in the case of a per diem or mileage allowance paid as an
advance at a rate for each day or mile of travel that exceeds the amount
of the employee's expenses deemed substantiated for a day or mile of
travel, the excess portion described in paragraph (h)(2)(i) of this
section is subject to withholding and payment of employment taxes no
later than the first payroll period following the payroll period in
which the expenses with respect to which the advance was paid (i.e., the
days or miles of travel) are substantiated in accordance with paragraph
(e) of this section. The expenses with respect to which the advance was
paid must be substantiated within a reasonable period of time. See
paragraph (g) of this section.
(4) Special rules. The Commissioner may, in his discretion,
prescribe special rules in pronouncements of general applicability
regarding the timing of withholding and payment of employment taxes on
per diem and mileage allowances.
(ii) Nonaccountable plans. If an arrangement does not satisfy one or
more of the requirements of paragraphs (d), (e), or (f) of this section,
all amounts paid under the arrangement are wages and are subject to
withholding and payment of employment taxes when paid.
(i) Application. The requirements of paragraphs (d) (business
connection), (e) (substantiation), and (f) (returning amounts in excess
of expenses) of this section will be applied on an employee-by-employee
basis. Thus, for example, the failure by one employee to substantiate
expenses under an arrangement in accordance with paragraph (e) of this
section will not cause amounts paid to other employees to be treated as
paid under a nonaccountable plan.
(j) Examples. The rules contained in this section may be illustrated
by the following examples:
Example(1). Reimbursement requirement. Employer S pays its engineers
$200 a day. On those days that an engineer travels away from home on
business for Employer S, Employer S designates $50 of the $200 as paid
to reimburse the engineer's travel expenses. Because Employer S would
pay an engineer $200 a day regardless of whether the engineer was
traveling away from home, the arrangement does not satisfy the
reimbursement requirement of paragraph (d)(3)(i) of this section. Thus,
no part of the $50 Employer S designated as a reimbursement is treated
as paid under an accountable plan. Rather, all payments under the
arrangement are treated as paid under a nonaccountable plan. Employer S
must report the entire $200 as wages or other compensation on the
employees'
[[Page 90]]
Forms W-2 and must withhold and pay employment taxes on the entire $200
when paid.
Example (2). Reimbursement requirement, multiple arrangements.
Airline T pays all its employees a salary. Airline T also pays an
allowance under an arrangement that otherwise meets the requirements of
paragraphs (d), (e), and (f) of this section to its pilots and flight
attendants who travel away from their home base airports, whether or not
they are ``away from home.'' Because the allowance is paid only to those
employees who incur (or are reasonably expected to incur) expenses of a
type described in paragraph (d)(1) or (d)(2) of this section, the
arrangement satisfies the reimbursement requirement of paragraph
(d)(3)(i) of this section. Under paragraph (d)(2) of this section,
Airline T is treated as maintaining two arrangements. The portion of the
arrangement providing the allowances for away from home travel is
treated as an accountable plan. The portion of the arrangement providing
the allowances for non-away from home travel is treated as a
nonaccountable plan. Airline T must report the non-away from home
allowances as wages or other compensation on the employees' Forms W-2
and must withhold and pay employment taxes on these payments when paid.
Example (3). Reimbursement requirement. Corporation R pays all its
salespersons a salary. Corporation R also pays a travel allowance under
an arrangement that otherwise meets the requirements of paragraphs (d),
(e), and (f) of this section. This allowance is paid to all
salespersons, including salespersons that Corporation R knows, or has
reason to know, do not travel away from their offices on Corporation R
business and would not be reasonably expected to incur travel expenses.
Because the allowance is not paid only to those employees who incur (or
are reasonably expected to incur) expenses of a type described in
paragraph (d)(1) or (d)(2) of this section, the arrangement does not
satisfy the reimbursement requirement of paragraph (d)(3)(i) of this
section. Thus, no part of the allowance Corporation R designated as a
reimbursement is treated as paid under an accountable plan. Rather, all
payments under the arrangement are treated as paid under a
nonaccountable plan. Corporation R must report all payments under the
arrangement as wages or other compensation on the employees' Forms W-2
and must withhold and pay employment taxes on the payments when paid.
Example (4). Separate arrangement, miscellaneous expenses. Under an
arrangement that meets the requirements of paragraphs (d), (e), and (f)
of this section, County U reimburses its employees for lodging and meal
expenses incurred when they travel away from home on County U business.
For its own convenience, County U also separately pays certain of its
employees a $25 monthly allowance to cover the cost of small
miscellaneous office expenses. County U does not require its employees
to substantiate these miscellaneous expenses and does not require them
to return the amounts by which the monthly allowance exceeds the
miscellaneous expenses. The monthly allowance arrangement is a
nonaccountable plan. County U must report the monthly allowances as
wages or other compensation on the employees' Forms W-2 and must
withhold and pay employment taxes on the monthly allowances when paid.
The nonaccountable plan providing the monthly allowances is treated as
separate from the accountable plan providing reimbursements for lodging
and meal expenses incurred for travel away from home on County U
business.
Example (5). Excessive advances. In anticipation of employee
business expenses that Corporation V does not reasonably expect to
exceed $400 in any quarter, Corporation V nonetheless advances $1,000 to
Employee A for such expenses. Whenever Employee A substantiates an
expense in accordance with paragraph (e) of this section, Corporation V
provides an additional advance in an amount equal to the amount
substantiated, thereby providing a continuing advance of $1,000. Because
the amounts advanced under this arrangement are not reasonably
calculated so as not to exceed the amount of anticipated expenditures
and because the advance of money is not made on a day within a
reasonable period of the day that the anticipated expenditures are paid
or incurred, the arrangement is a nonaccountable plan. The arrangement
fails to satisfy the requirements of paragraphs (d) (business
connection) and (f) (reasonable calculation of advances) of this
section. Thus, Corporation V must report the entire amount of each
advance as wages or other compensation and must withhold and pay
employment taxes on the entire amount of each advance when paid.
Example (6). Excess mileage advance. Under an arrangement that meets
the requirements of paragraphs (d), (e), and (f) of this section,
Employer W pays its employees a mileage allowance at a rate of 30 cents
per mile (when the amount deemed substantiated for each mile of travel
substantiated is 26 cents per mile) to cover automobile business
expenses. The allowance is paid at a rate for each mile of travel that
is reasonably calculated not to exceed the amount of the employee's
expenses or anticipated expenses. Employer W does not require the return
of the portion of the mileage allowance (4 cents) that exceeds the
amount deemed substantiated for each mile of travel substantiated in
accordance with paragraph (e) of this section. In June, Employer W
advances Employee B $150 for 500 miles to be traveled by Employee B
during the month. In July, Employee B substantiates 500 miles of
business travel. The amount deemed substantiated by Employee
[[Page 91]]
B is $130. However, Employer W does not require Employee B to return the
remaining $20 of the advance. No later than the first payroll period
following the payroll period in which the business miles of travel are
substantiated, Employer W must withhold and pay employment taxes on $20
(500 miles x 4 cents per mile).
Example (7). Excess per diem reimbursement. Under an arrangement
that meets the requirements of paragraphs (d), (e), and (f) of this
section, Employer X pays its employees a per diem allowance to cover
lodging, meal, and incidental expenses incurred for travel away from
home on Employer X business at a rate equal to 120 percent of the amount
deemed substantiated for each day of travel to the localities to which
the employees travel. Employer X does not require the employees to
return the 20 percent by which the reimbursement for those expenses
exceeds the amount deemed substantiated for each day of travel
substantiated in accordance with paragraph (e) of this section. Employee
C substantiates six days of business travel away from home: Two days in
a locality for which the amount deemed substantiated is $100 a day and
four days in a locality for which the amount deemed substantiated is
$125 a day. Employer X reimburses Employee C $840 for the six days of
travel away from home (2x(120%x$100)+4x(120%x$125)), and does not
require Employee C to return the excess portion ($140 excess portion =
(2 daysx$20 ($120-$100)+4 daysx$25 ($150-$125)). For the payroll period
in which Employer X reimburses the expenses, Employer X must withhold
and pay employment taxes on $140.
Example (8). Return Requirement. Employer Y provides expense
allowances to certain of its employees to cover business expenses of a
type described in paragraph (d)(1) of this section under an arrangement
that requires the employees to substantiate their expenses within a
reasonable period of time and to return any excess amounts within a
reasonable period of time. Each time an employee returns an excess
amount to Employer Y, however, Employer Y pays the employee a ``bonus''
equal to the amount returned by the employee. The arrangement fails to
satisfy the requirements of paragraph (f) (returning amounts in excess
of expenses) of this section. Thus, Employer Y must report the entire
amount of the expense allowance payments as wages or other compensation
and must withhold and pay employment taxes on the payments when paid.
Compare example (6) (where the employee is not required to return the
portion of the mileage allowance that exceeds the amount deemed
substantiated for each mile of travel substantiated).
Example (9). Timely substantiation. Employer Z provides a $500
advance to Employee D for a trip away from home on Employer Z business.
Employee D incurs $500 in business expenses on the trip. Employer Z uses
the periodic statement method safe harbor. At the end of the quarter
during which the trip occurred, Employer Z sends a quarterly statement
to Employee D stating that $500 was advanced to Employee D during the
quarter and that no expenses were substantiated and no excess amounts
returned. The statement advises Employee D that Employee D must
substantiate any additional business expenses within 120 days of the
date of the statement, and must return any unsubstantiated excess within
the 120-day period. Employee D fails to substantiate any expenses or to
return the excess within the 120-day period. Employer Z treats the $500
as wages and withholds and pays employment taxes on the $500. After the
120-day period has expired, Employee D substantiates the $500 in travel
expenses in accordance with paragraph (e) of this section. Employer Z
properly reported and withheld and paid employment taxes on the $500 and
no adjustments may be made. Employee D must include the $500 in gross
income and may deduct the $500 of expenses as a miscellaneous itemized
deduction subject to the 2-percent floor provided in section 67.
(k) Anti-abuse provision. If a payor's reimbursement or other
expense allowance arrangement evidences a pattern of abuse of the rules
of section 62(c) and this section, all payments made under the
arrangement will be treated as made under a nonaccountable plan.
(l) Cross references. For employment tax regulations relating to
reimbursement and expense allowance arrangements, see Secs. 31.3121 (a)-
3, 31.3231(e)-(3), 31.3306(b)-2, and 31.3401(a)-4, which generally apply
to payments made under reimbursement or other expense allowance
arrangements received by an employee on or after July 1, 1990 with
respect to expenses paid or incurred on or after July 1, 1990. For
reporting requirements, see Sec. 1.6041-3(i), which generally applies to
payments made under reimbursement or other expense allowance
arrangements received by an employee on or after January 1, 1989 with
respect to expenses paid or incurred on or after January 1, 1989.
(m) Effective dates. This section generally applies to payments made
under reimbursement or other expense allowance arrangements received by
an employee in taxable years of the employee beginning on or after
January 1, 1989, with respect to expenses paid or incurred in taxable
years beginning on or after January 1, 1989. Paragraph (h) of
[[Page 92]]
this section generally applies to payments made under reimbursement or
other expense allowance arrangements received by an employee on or after
July 1, 1990 with respect to expenses paid or incurred on or after July
1, 1990. Paragraphs (d)(3)(ii) and (h)(2)(i)(B) of this section apply to
payments made under reimbursement or other expense allowance
arrangements received by an employee on or after January 1, 1991 with
respect to expenses paid or incurred on or after January 1, 1991.
Paragraph (e)(2) of this section applies to payments made under
reimbursement or other expense allowance arrangements received by an
employee with respect to expenses paid or incurred after December 31,
1997.
[T.D. 8324, 55 FR 51691, Dec. 17, 1990; 56 FR 8911, Mar. 4, 1991, as
amended by T.D. 8451, 57 FR 57668, Dec. 7, 1992; T.D. 8666, 61 FR 27005,
May 30, 1996; T.D. 8784, 63 FR 52600, Oct. 1, 1998; T.D. 8864, 65 FR
4122, Jan. 26, 2000]
Sec. 1.63-1 Change of treatment with respect to the zero bracket amount and itemized deductions.
(a) In general. An individual who files a return on which the
individual itemizes deductions in accordance with section 63(g) may
later make a change of treatment by recomputing taxable income for the
taxable year to which that return relates without itemizing deductions.
Similarly, an individual who files a return on which the individual
computes taxable income without itemizing deductions may later make a
change of treatment by itemizing deductions in accordance with section
63(g) in recomputing taxable income for the taxable year to which that
return relates.
(b) No extension of time for claiming credit or refund. A change of
treatment described in paragraph (a) of this section does not extend the
period of time prescribed in section 6511 within which the taxpayer may
make a claim for credit or refund of tax.
(c) Special requirements if spouse filed separate return--(1)
Requirements. If the spouse of the taxpayer filed a separate return for
a taxable year corresponding to the taxable year of the taxpayer, the
taxpayer may not make a change of treatment described in paragraph (a)
of this section for that year unless--
(i) The spouse makes a change of treatment on the separate return
consistent with the change of treatment sought by the taxpayer; and
(ii) The taxpayer and the taxpayer's spouse file a consent in
writing to the assessment of any deficiency of either spouse to the
extent attributable to the change of treatment, even though the
assessment of the deficiency would otherwise be prevented by the
operation of any law or rule of law. The consent must be filed with the
district director for the district in which the taxpayer applies for the
change of treatment, and the period during which a deficiency may be
assessed shall be established by agreement of the spouses and the
district director.
(2) Corresponding taxable year. A taxable year of one spouse
corresponds to a taxable year of the other spouse if both taxable years
end in the same calendar year. If the taxable year of one spouse ends
with death, however, the corresponding taxable year of the surviving
spouse is that in which the death occurs.
(d) Inapplicable if tax liability has been compromised. The taxpayer
may not make a change of treatment described in paragraph (a) of this
section for any taxable year if--
(1) The tax liability of the taxpayer for the taxable year has been
compromised under section 7122; or
(2) The tax liability of the taxpayer's spouse for a taxable year
corresponding to the taxable year of the taxpayer has been compromised
under section 7122. See paragraph (c)(2) of this section for the
determination of a corresponding taxable year.
(e) Effective date. This section applies to taxable years beginning
after 1976.
[T.D. 7585, 44 FR 1105, Jan. 4, 1979]
Sec. 1.63-2 Cross reference.
For rules with respect to charitable contribution deductions for
nonitemizing taxpayers, see section 63 (b)(1)(C) and (i) and section
170(i) of the Internal Revenue Code of 1954.
(Secs. 170(a)(1) and 7805 of the Internal Revenue Code of 1954 (68A
Stat. 58, 26 U.S.C. 170(a)(1); 68A Stat. 917, 26 U.S.C. 7805)
[T.D. 8002, 49 FR 50666, Dec. 31, 1984]
[[Page 93]]
Sec. 1.67-1T 2-percent floor on miscellaneous itemized deductions (temporary).
(a) Type of expenses subject to the floor--(1) In general. With
respect to individuals, section 67 disallows deductions for
miscellaneous itemized deductions (as defined in paragraph (b) of this
section) in computing taxable income (i.e., so-called ``below-the-line''
deductions) to the extent that such otherwise allowable deductions do
not exceed 2 percent of the individual's adjusted gross income (as
defined in section 62 and the regulations thereunder). Examples of
expenses that, if otherwise deductible, are subject to the 2-percent
floor include but are not limited to--
(i) Unreimbursed employee expenses, such as expenses for
transportation, travel fares and lodging while away from home, business
meals and entertainment, continuing education courses, subscriptions to
professional journals, union or professional dues, professional
uniforms, job hunting, and the business use of the employee's home.
(ii) Expenses for the production or collection of income for which a
deduction is otherwise allowable under section 212 (1) and (2), such as
investment advisory fees, subscriptions to investment advisory
publications, certain attorneys' fees, and the cost of safe deposit
boxes,
(iii) Expenses for the determination of any tax for which a
deduction is otherwise allowable under section 212(3), such as tax
counsel fees and appraisal fees, and
(iv) Expenses for an activity for which a deduction is otherwise
allowable under section 183.
See section 62 with respect to deductions that are allowable in
computing adjusted gross income (i.e., so-called ``above-the-line''
deductions).
(2) Other limitations. Except as otherwise provided in paragraph (d)
of this section, to the extent that any limitation or restriction is
placed on the amount of a miscellaneous itemized deduction, that
limitation shall apply prior to the application of the 2-percent floor.
For example, in the case of an expense for food or beverages, only 80
percent of which is allowable as a deduction because of the limitations
provided in section 274(n), the otherwise deductible 80 percent of the
expense is treated as a miscellaneous itemized deduction and is subject
to the 2-percent limitation of section 67.
(b) Definition of miscellaneous itemized deductions. For purposes of
this section, the term ``miscellaneous itemized deductions'' means the
deductions allowable from adjusted gross income in determining taxable
income, as defined in section 63, other than--
(1) The standard deduction as defined in section 63(c),
(2) Any deduction allowable for impairment-related work expenses as
defined in section 67(d),
(3) The deduction under section 72(b)(3) (relating to deductions if
annuity payments cease before the investment is recovered),
(4) The deductions allowable under section 151 for personal
exemptions,
(5) The deduction under section 163 (relating to interest),
(6) The deduction under section 164 (relating to taxes),
(7) The deduction under section 165(a) for losses described in
subsection (c)(3) or (d) of section 165,
(8) The deduction under section 170 (relating to charitable
contributions and gifts),
(9) The deduction under section 171 (relating to deductions for
amortizable bond premiums),
(10) The deduction under section 213 (relating to medical and dental
expenses),
(11) The deduction under section 216 (relating to deductions in
connection with cooperative housing corporations),
(12) The deduction under section 217 (relating to moving expenses),
(13) The deduction under section 691(c) (relating to the deduction
for estate taxes in the case of income in respect of the decedent),
(14) The deduction under 1341 (relating to the computation of tax if
a taxpayer restores a substantial amount held under claim of right), and
(15) Any deduction allowable in connection with personal property
used in a short sale.
(c) Allocation of expenses. If a taxpayer incurs expenses that
relate to
[[Page 94]]
both a trade or business activity (within the meaning of section 162)
and a production of income or tax preparation activity (within the
meaning of section 212), the taxpayer shall allocate such expenses
between the activities on a reasonable basis.
(d) Members of Congress--(1) In general. With respect to the
deduction for living expenses of Members of Congress referred to in
section 162(a), the 2-percent floor described in section 67 and
paragraph (a) of this section shall be applied to the deduction before
the application of the $3,000 limitation on deductions for living
expenses referred to in section 162(a). (For purposes of this paragraph
(d), the term ``Member(s) of Congress'' includes any Delegate or
Resident Commissioner.) The amount of miscellaneous itemized deductions
of a Member of Congress that is disallowed pursuant to section 67 and
paragraph (a) of this section shall be allocated between deductions for
living expenses (within the meaning of section 162(a)) and other
miscellaneous itemized deductions. The amount of deductions for living
expenses of a Member of Congress that is disallowed pursuant to section
67 and paragraph (a) of this section is determined by multiplying the
aggregate amount of such living expenses (determined without regard to
the $3,000 limitation of section 162(a) but with regard to any other
limitations) by a fraction, the numerator of which is the aggregate
amount disallowed pursuant to section 67 and paragraph (a) of this
section with respect to miscellaneous itemized deductions of the Member
of Congress and the denominator of which is the amount of miscellaneous
itemized deductions (including deductions for living expenses) of the
Member of Congress (determined without regard to the $3,000 limitation
of section 162(a) but without regard to any other limitations). The
amount of deductions for miscellaneous itemized deductions (other than
deductions for living expenses) of a Member of Congress that are
disallowed pursuant to section 67 and paragraph (a) of this section is
determined by multiplying the amount of miscellaneous itemized
deductions (other than deductions for living expenses) of the Member of
Congress (determined with regard to any limitations) by the fraction
described in the preceding sentence.
(2) Example. The provisions of this paragraph (d) may be illustrated
by the following example:
Example For 1987 A, a Member of Congress, has adjusted gross income
of $100,000, and miscellaneous itemized deductions of $10,750 of which
$3,750 is for meals, $3,000 is for other living expenses, and $4,000 is
for other miscellaneous itemized deductions (none of which is subject to
any percentage limitations other than the 2-percent floor of section
67). The amount of A's business meal expenses that are disallowed under
section 274(n) is $750 ($3,750x20%). The amount of A's miscellaneous
itemized deductions that are disallowed under section 67 is $2,000
($100,000x2%). The portion of the amount disallowed under section 67
that is allocated to A's living expenses is $1,200. This portion is
equal to the amount of A's deductions for living expenses allowable
after the application of section 274(n) and before the application of
section 67 ($6,000) multiplied by the ratio of A's total miscellaneous
itemized deductions disallowed under section 67 to A's total
miscellaneous itemized deductions, determined without regard to the
$3,000 limitation of section 162(a) ($2,000/$10,000). Thus, after
application of section 274(n) and section 67, A's deduction for living
expenses is $4,800 ($6,750-$750-$1,200). However, pursuant to section
162(a), A may deduct only $3,000 of such expenses. The amount of A's
other miscellaneous itemized deductions that are disallowed under
section 67 is $800 ($4,000x$2,000/$10,000). Thus, $3,200 ($4,000-$800)
of A's miscellaneous itemized deductions (other than deductions for
living expenses) are allowable after application of section 67. A's
total allowable miscellaneous itemized deductions are $6,200
($3,000+$3,200).
(e) State legislators. See Sec. 1.62-1T(e)(4) with respect to rules
regarding state legislator's expenses.
[T.D. 8189, 53 FR 9875, Mar. 28, 1988]
Sec. 1.67-2T Treatment of pass-through entities (temporary).
(a) Application of section 67. This section provides rules for the
application of section 67 to partners, shareholders, beneficiaries,
participants, and others with respect to their interests in pass-through
entities (as defined in paragraph (g) of this section). In general, an
affected investor (as defined in paragraph (h) of this section) in a
pass-through entity shall separately take into account as an item of
income and
[[Page 95]]
as an item of expense an amount equal to his or her allocable share of
the affected expenses (as defined in paragraph (i) of this section) of
the pass-through entity for purposes of determining his or her taxable
income. Except as provided in paragraph (e)(1)(ii)(B) of this section,
the expenses so taken into account shall be treated as paid or incurred
by the affected investor in the same manner as paid or incurred by the
pass-through entity. For rules regarding the application of section 67
to affected investors in--
(1) Partnerships, S corporations, and grantor trusts, see paragraph
(b) of this section,
(2) Real estate mortgage investment conduits, see paragraph (c) of
this section,
(3) Common trust funds, see paragraph (d) of this section,
(4) Nonpublicly offered regulated investment companies, see
paragraph (e) of this section, and
(5) Publicly offered regulated investment companies, see paragraph
(p) of this section.
(b) Partnerships, S corporations, and grantor trusts--(1) In
general. Pursuant to section 702(a) and 1366(a) of the Code and the
regulations thereunder, each partner of a partnership or shareholder of
an S corporation shall take into account separately his or her
distributive or pro rata share of any items of deduction of such
partnership or corporation that are defined as miscellaneous itemized
deductions pursuant to section 67(b). The 2-percent limitation described
in section 67 does not apply to the partnership or corporation with
respect to such deductions, but such deductions shall be included in the
deductions of the partner or shareholder to which that limitation
applies. Similarly, the limitation applies to the grantor or other
person treated as the owner of a grantor trust with respect to items
that are paid or incurred by a grantor trust and are treated as
miscellaneous itemized deductions of the grantor or other person
pursuant to Subpart E, Part 1, Subchapter J, Chapter 1 of the Code, but
not to the trust itself. The 2-percent limitation applies to amounts
otherwise deductible in taxable years of partners, shareholders, or
grantors beginning after December 31, 1986, regardless of the taxable
year of the partnership, corporation, or trust.
(2) Example. The provisions of this paragraph (b) may be illustrated
by the following example:
Example. P, a partnership, incurs $1,000 in expenses to which
section 212 applies during its taxable year. A, an individual, is a
partner in P. A's distributive share of the expenses to which section
212 applies is $20, determined without regard to the 2-percent
limitation of section 67. Pursuant to section 702(a), A must take $20 of
expenses to which section 212 applies into account in determining his
income tax. Pursuant to section 67, in determining his taxable income A
may deduct his miscellaneous itemized deductions (including his $20
distributive share of deductions from P) to the extent the total amount
exceeds 2 percent of his adjusted gross income.
(c) Real estate mortgage investment conduit. See Sec. 1.67-3T for
rules regarding the application of section 67 to holders of interests in
REMICs.
(d) Common trust funds--(1) In general. For purposes of determining
the taxable income of an affected investor that is a participant in a
common trust fund--
(i) The ordinary taxable income and ordinary net loss of the common
trust fund shall be computed under section 584(d)(2) without taking into
account any affected expenses, and
(ii) Each affected investor shall be treated as having paid or
incurred an expense described in section 212 in an amount equal to the
affected investor's proportionate share of the affected expenses.
The 2-percent limitation described in section 67 applies to amounts
otherwise deductible in taxable years of participants beginning after
December 31, 1986, regardless of the taxable year of the common trust
fund.
(2) Example. The provisions of this paragraph (d) may be illustrated
by the following example:
Example. During 1987, the gross income and deductions of common
trust fund C, a calendar year taxpayer, consist of the following items:
(i) $50,000 of short-term capital gains; (ii) $150,000 of long-term
capital gains; (iii) $1,000,000 of dividend income; (iv) $10,000 of
deductions that are not affected expenses; and (v) $60,000 of deductions
that are affected expenses. The proportionate share of Trust T
[[Page 96]]
in the income and losses of C is one percent. In computing its taxable
income for 1987, T, a calendar year taxpayer, shall take into account
the following items: (A) $500 of short-term capital gains (one percent
of $50,000, C's short-term capital gains); (B) $1,500 of long-term
capital gains (one percent of $150,000, C's long-term capital gains);
(C) $9,900 of ordinary taxable income (one percent of $990,000, the
excess of $100,000, C's gross income after excluding capital gains and
losses, over $10,000, C's deductions that are not affected expenses);
(D) $600 of expenses described in section 212 (one percent of $60,000,
C's affected expenses).
(e) Nonpublicly offered regulated investment companies--(1) In
general. For purposes of determining the taxable income of an affected
investor that is a shareholder of a nonpublicly offered regulated
investment company (as defined in paragraph (g)(3) of this section)
during a calendar year--
(i) The current earnings and profits of the nonpublicly offered
regulated investment company shall be computed without taking into
account any affected RIC expenses that are allocated among affected
investors, and
(ii) The affected investor shall be treated--
(A) As having received or accrued a dividend in an amount equal to
the affected investor's allocable share of the affected RIC expenses of
the nonpublicly offered regulated investment company for the calendar
year, and
(B) As having paid or incurred an expense described in section 212
(or section 162 in the case of an affected investor that is a
nonpublicly offered regulated investment company) in an amount equal to
the affected investor's allocable share of the affected RIC expenses of
the nonpublicly offered regulated investment company for the calendar
year
in the affected investor's taxable year with which (or within which) the
calendar year with respect to which the expenses are allocated ends. An
affected investor's allocable share of the affected RIC expenses is the
amount allocated to that affected investor pursuant to paragraph (k) of
this section.
(2) Shareholders that are not affected investors. A shareholder of a
nonpublicly offered regulated investment company that is not an affected
investor shall not take into account in computing its taxable income any
amount of income or expense with respect to its allocable share of
affected RIC expenses.
(3) Example. The provisions of this paragraph (e) may be illustrated
by the following example:
Example. During calendar year 1987, nonpublicly offered regulated
investment company M distributes to individual shareholder A, a calendar
year taxpayer, capital gain dividends of $1,000 and other dividends of
$5,000. A's allocable share of the affected RIC expenses of M is $200.
In computing A's taxable income for 1987, A shall take into account the
following items: (i) $1,000 of long-term capital gains (the capital gain
dividends received by A); (ii) $5,200 of dividend income (the sum of the
other dividends received by A and A's allocable share of the affected
RIC expenses of M); and (iii) $200 of expenses described in section 212
(A's allocable share of the affected RIC expenses of M). A is allowed a
deduction for miscellaneous itemized deductions (including A's $200
allocable share of the affected RIC expenses of M, which is treated as
an expense described in section 212) for 1987 only to the extent the
aggregate of such deductions exceeds 2 percent of A's adjusted gross
income for 1987.
(f) Cross-reference. See Sec. 1.67-1T with respect to limitations on
deductions for expenses described in section 212 (including amounts
treated as such expenses under this section).
(g) Pass-through entity--(1) In general. Except as provided in
paragraph (g)(2) of this section, for purposes of section 67(c) and this
section, a pass-through entity is--
(i) A trust (or any portion thereof) to which Subpart E, Part 1,
Subchapter J, Chapter 1 of the Code applies,
(ii) A partnership,
(iii) An S corporation,
(iv) A common trust fund described in section 584,
(v) A nonpublicly offered regulated investment company,
(vi) A real estate mortgage investment conduit, and
(vii) Any other person--
(A) Which is not subject to the income tax imposed by Subtitle A,
Chapter 1, or which is allowed a deduction in computing such tax for
distributions to owners or beneficiaries, and
(B) The character of the income of which may affect the character of
the income recognized with respect to that person by its owners or
beneficiaries.
[[Page 97]]
Entities that do not meet the requirements of paragraph (g)(1)(vii) (A)
and (B) of this section, such as qualified pension plans, individual
retirement accounts, and insurance companies holding assets in separate
asset accounts to fund variable contracts defined in section 817(d), are
not described in this paragraph (g)(1).
(2) Exception. For purposes of section 67(c) and this section, a
pass-through entity does not include:
(i) An estate;
(ii) A trust (or any portion thereof) not described in paragraph
(g)(1)(i) of this section,
(iii) A cooperative described in section 1381(a)(2), determined
without regard to subparagraphs (A) and (C) thereof, or
(iv) A real estate investment trust.
(3) Nonpublicly offered regulated investment company--(i) In
general. For purposes of this section, the term ``nonpublicly offered
regulated investment company'' means a regulated investment company to
which Part I of Subchapter M of the Code applies that is not a publicly
offered regulated investment company.
(ii) Publicly offered regulated investment company. For purposes of
this section, the term ``publicly offered regulated investment company''
means a regulated investment company to which Part I of Subchapter M of
the Code applies the shares of which are--
(A) Continuously offered pursuant to a public offering (within the
meaning of section 4 of the Securities Act of 1933, as amended (15
U.S.C. 77a to 77aa)),
(B) Regularly traded on an established securities market, or
(C) Held by or for no fewer than 500 persons at all times during the
taxable year.
(h) Affected investor--(1) In general. For purposes of this section,
the term ``affected investor'' means a partner, shareholder,
beneficiary, participant, or other interest holder in a pass-through
entity at any time during the pass-through entity's taxable year that
is--
(i) An individual (other than a nonresident alien whose income with
respect to his or her interest in the pass-through entity is not
effectively connected with the conduct of a trade or business within the
United States),
(ii) A person, including a trust or estate, that computes its
taxable income in the same manner as in the case of an individual; or
(iii) A pass-through entity if one or more of its partners,
shareholders, beneficiaries, participants, or other interest holders is
(A) a pass-through entity or (B) a person described in paragraph (h)(1)
(i) or (ii) of this section.
(2) Examples. The provisions of this paragraph (h) may be
illustrated by the following examples:
Example (1). Corporation X holds shares of nonpublicly offered
regulated investment company R in its capacity as a nominee or custodian
for individual A, the beneficial owner of the shares. Because the owner
of the shares for Federal income tax purposes is an individual, the
shares are owned by an affected investor.
Example (2). Individual retirement account I owns shares of a
nonpublicly offered regulated investment company. Because an individual
retirement account is not a person described in paragraph (h)(1) of this
section, the shares are not owned by an affected investor.
(i) Affected expenses--(1) In general. In general, for purposes of
this section, the term ``affected expenses'' means expenses that, if
paid or incurred by an individual, would be deductible, if at all, as
miscellaneous itemized deductions as defined in section 67(b).
(2) Special rule for nonpublicly offered regulated investment
companies. In the case of a nonpublicly offered regulated investment
company, the term ``affected expenses'' means only affected RIC
expenses.
(j) Affected RIC expenses--(1) In general. In general, for purposes
of this section the term ``affected RIC expenses'' means the excess of--
(i) The aggregate amount of the expenses (other than expenses
described in sections 62(a)(3) and 67(b) and Sec. 1.67-1T(b)) paid or
incurred in the calendar year that are allowable as a deduction in
determining the investment company taxable income (without regard to
section 852(b)(2)(D)) of the nonpublicly offered regulated investment
company for a taxable year that begins or ends with or within the
calendar year, over
[[Page 98]]
(ii) The amount of expenses taken into account under paragraph
(j)(1)(i) of this section that are allocable to the following items
(whether paid separately or included as part of a fee paid to an
investment advisor or other person for a variety of services):
(A) Registration fees;
(B) Directors' or trustees' fees;
(C) Periodic meetings of directors, trustees, or shareholders;
(D) Transfer agent fees;
(E) Legal and accounting fees (other than fees for income tax return
preparation or income tax advice); and
(F) Shareholder communications required by law (e.g. the preparation
and mailing of prospectuses and proxy statements).
Expenses described in paragraph (j)(1)(ii) (A) through (F) of this
section do not include, for example, expenses allocable to investment
advice, marketing activities, shareholder communications and other
services not specifically described in paragraph (j)(1)(ii) (A) through
(F) of this section, and custodian fees.
(2) Safe harbor. If a nonpublicly offered regulated investment
company makes an election under this paragraph (j)(2), the affected RIC
expenses for a calendar year shall be treated as equal to 40 percent of
the amount determined under paragraph (j)(1)(i) of this section for that
calendar year. The nonpublicly offered regulated investment company
shall make the election by attaching to its income tax return for the
taxable year that includes the last day of the first calendar year for
which the nonpublicly offered regulated investment company makes the
election a statement that it is making an election under paragraph
(j)(2) of this section. An election made pursuant to this paragraph
(j)(2) shall remain in effect for all subsequent calendar years unless
revoked with the consent of the Commissioner.
(3) Reduction for unused RIC expenses. The amount determined under
paragraph (j)(1)(i) of this section shall be reduced by the nonpublicly
offered regulated investment company's net operating loss, if any, for
the taxable year ending with or within the calendar year. In computing
the nonpublicly offered regulated investment company's net operating
loss for purposes of this section, the deduction for dividends paid
shall not be allowed and any net capital gain for the taxable year shall
be excluded.
(4) Exception. The affected RIC expenses of a nonpublicly offered
regulated investment company will be treated as zero if the amount of
its gross income for the calendar year (determined without regard to
capital gain net income) is not greater than 1 percent of the sum of (i)
such gross income and (ii) the amount of its interest income for the
calendar year that is not includible in gross income pursuant to section
103.
(k) Allocation of expenses among nonpublicly offered regulated
investment company shareholders--(1) General rule. A nonpublicly offered
regulated investment company shall allocate to each of its affected
investors that is a shareholder at any time during the calendar year,
the affected investor's allocable share of the affected RIC expenses of
the nonpublicly offered regulated investment company for that calendar
year. (See paragraph (m) of this section for rules regarding estimates
with respect to the amount of an affected investor's share of affected
RIC expenses upon which certain persons can rely for certain purposes.)
A nonpublicly offered regulated investment company may use any
reasonable method to make the allocation. A method of allocation shall
not be reasonable if--
(i) The method can be expected to have the effect, if applied to all
affected RIC expenses and all shareholders (whether or not affected
investors), of allocating to the shareholders an amount of affected RIC
expenses that is less than the affected RIC expenses of the nonpublicly
offered regulated investment company for the calendar year,
(ii) The method can be expected to have the effect of allocating a
disproportionately high share of the affected RIC expenses of the
nonpublicly offered regulated investment company to shareholders that
are not affected investors or affected investors, the amount of whose
miscellaneous itemized deductions (including their allocable share of
affected RIC expenses)
[[Page 99]]
exceeds the 2-percent floor described in section 67, or
(iii) A principal purpose of the method of allocation is to avoid
allocating affected RIC expenses to persons described in paragraph
(h)(1) (i) or (ii) of this section whose miscellaneous itemized
deductions (inclusive of their allocable share of affected RIC expenses)
may not exceed the 2-percent floor described in section 67.
(2) Reasonable allocation method described--(i) In general. The
allocation method described in this paragraph (k)(2) shall be treated as
a reasonable allocation method. Under the method described in this
paragraph, an affected investor's allocable share of the affected RIC
expenses of a nonpublicly offered regulated investment company is the
amount that bears the same ratio to the amount of affected RIC expenses
of the nonpublicly offered regulated investment company for the calendar
year as--
(A) The amount of dividends paid to the affected investor during the
calendar year, bears to
(B) The sum of--
(1) The aggregate amount of dividends paid by the nonpublicly
offered regulated investment company during the calendar year to all
shareholders, and
(2) Any amount on which tax is imposed under section 852(b)(1) for
any taxable year of the nonpublicly offered regulated investment company
ending within or with the calendar year.
(ii) Exception. Paragraph (k)(2)(i) of this section does not apply
if the amount of the deduction for dividends paid during the calendar
year is zero.
(iii) Dividends paid. For purposes of this paragraph (k)(2)--
(A) Dividends that are treated as paid during a calendar year
pursuant to section 852(b)(7) are treated as paid during that calendar
year and not during the succeeding calendar year.
(B) The term ``dividends paid'' does not include capital gain
dividends (as defined in section 852(b)(3)(C)), exempt-interest
dividends (as defined in section 852(b)(5)(A)), or any amount to which
section 302(a) applies.
(C) The dividends paid during a calendar year is determined without
regard to section 855(a).
(3) Reasonable allocation made by District Director. If a
nonpublicly offered regulated investment company does not make a
reasonable allocation of affected RIC expenses to its affected investors
as required by paragraph (k)(1) of this section, a reasonable allocation
shall be made by the District Director of the internal revenue district
in which the principal place of business or principal office or agency
of the nonpublicly offered regulated investment company is located.
(4) Examples. The provisions of this paragraph (k) may be
illustrated by the following examples:
Example (1). Nonpublicly offered regulated investment company M, in
calculating its investment company taxable income, claims a dividends
paid deduction for a portion of redemption distributions (to which
section 302(a) applies) to shareholders, as well as for nonredemption
distributions. M allocates affected expenses among shareholders who have
received nonredemption distributions by multiplying the amount of
nonredemption distributions distributed to each shareholder by a
fraction, the numerator of which is the affected RIC expenses of M and
the denominator of which is M's investment company taxable income,
determined on a calendar year basis and without regard to deductions
described in section 852(b)(2)(D). No affected RIC expenses are
allocated with respect to the redemption distributions. This allocation
method can be expected to have the effect of allocating among the
shareholders an amount of expenses that is less than the total amount of
affected RIC expenses of M. Accordingly, the allocation method is not
reasonable.
Example (2). Nonpublicly offered regulated investment company N has
two classes of stock, a ``capital'' class and an ``income'' class.
Owners of the capital class receive the benefit of all capital
appreciation on the stocks owned by N, and bear the burden of certain
capital expenditures of N; owners of the income class receive the
benefit of all other income of N, and bear the burden of all expenses of
N that are deductible under section 162. M allocates all affected RIC
expenses among shareholders of the income class shares under a method
that would be reasonable if the income class were the only class of N
stock. Corporations and other shareholders that are not affected
investors own a higher proportion of income class shares than of capital
class shares. The affected RIC expenses of N are properly allocated
among the shareholders who bear the burden of those expenses.
Accordingly, the allocation method does not have the effect of
allocating a disproportionately high share of
[[Page 100]]
the affected RIC expenses of N to shareholders that are not affected
investors merely because a disproportionate share of income class shares
are owned by shareholders that are not affected investors. The
allocation method is reasonable.
Example (3). Nonpublicly offered regulated investment company O has
two classes of stock, Class A and Class B. Shares of Class A, which may
be purchased without payment of a sales or brokerage commission, are
charged with the expenses of a Rule 12b-1 distribution plan of O. Shares
of Class B, which may be purchased only upon payment of a sales or
brokerage commission, are not charged with the expenses of the Rule 12b-
1 distribution plan of O. O allocates all affected RIC expenses among
shareholders of Class A and Class B shares under a method that would be
reasonable if Class A or Class B shares, respectively, were the only
class of O stock. The affected RIC expenses attributable to the Rule
12b-1 plan are allocated to the shareholders of Class A shares.
Shareholders that are not affected investors own a higher proportion of
Class A shares than of Class B shares. The affected RIC expenses of O
are properly allocated among the shareholders who bear the burden of
those expenses. Accordingly, the allocation method does not have the
effect of allocating a disproportionately high share of the affected RIC
expenses of O to shareholders that are not affected investors merely
because a disproportionately high share of Class A shares are owned by
persons that are not affected investors. The allocation method is
reasonable.
Example (4). Assume the facts are the same as in example (3) except
that a portion of the affected RIC expenses attributable to the Rule
12b-1 plan are allocated to the shareholders of Class B shares, and
shareholders that are not affected investors own a higher proportion of
Class B shares than of Class A shares. Thus, the affected RIC expenses
are not allocated among the class of shareholders that bear the burden
of the expenses. Accordingly, the allocation method has the effect of
allocating a disproportionate share of the affected RIC expenses of O to
the shareholders of Class B shares. Because shareholders that are not
affected investors own a higher proportion of Class B shares than Class
A shares, the method can be expected to allocate a disproportionately
high share of the affected RIC expenses of O to shareholders that are
not affected investors. Accordingly, the allocation method is not
reasonable.
(l) Affected RIC expenses not subject to backup withholding. The
amount of dividend income that an affected investor in a nonpublicly
offered regulated investment company is treated as having received or
accrued under paragraph (e)(1)(ii) of this section is not subject to
backup withholding under section 3406.
(m) Reliance by nominees and pass-through investors on notices--(1)
General rule. Persons described in paragraph (m)(3) of this section may,
for the purposes described in that paragraph (m)(3), treat an affected
investor's allocable share of the affected RIC expenses of a nonpublicly
offered regulated investment company as being equal to an amount
determined by the nonpublicly offered regulated investment company on
the basis of a reasonable estimate (e.g., of allocable expenses as a
percentage of dividend distributions or allocable expenses per share)
that is (i) reported in writing by the nonpublicly offered regulated
investment company to the person or (ii) reported in a newspaper or
financial publication having a nationwide circulation (e.g., the Wall
Street Journal or Standard and Poor's Weekly Dividend Record).
(2) Estimates must be reasonable. In general, for purposes of
paragraph (m)(1) of this section, estimates of affected RIC expenses of
a nonpublicly offered regulated investment company will be treated as
reasonable only if the nonpublicly offered regulated investment company
makes a reasonable effort to offset material understatements (or
overstatements) of affected RIC expenses for a period by increasing (or
decreasing) estimates of affected RIC expenses for a subsequent period.
Understatements or overstatements of affected RIC expenses that are not
material may be corrected by making offsetting adjustments in future
periods, provided that understatements and overstatements are treated
consistently.
(3) Application. Paragraph (m)(1) of this section shall apply to the
following persons for the following purposes:
(i) A nominee who, pursuant to section 6042(a)(1)(B) and paragraph
(n)(2) of this section, is required to report dividends paid by a
nonpublicly offered regulated investment company to the Internal Revenue
Service and to the person to whom the payment is made,
[[Page 101]]
for purposes of reporting to the Internal Revenue Service and the person
to whom the payment is made the amount of affected RIC expenses
allocated to such person.
(ii) An affected investor to whom a nominee (to which paragraph
(m)(3)(i) of this section applies) reports, for purposes of calculating
the affected investor's taxable income and the amount of its affected
expenses.
(iii) A shareholder that is a pass-through entity, for purposes of
calculating its taxable income and the amount of its affected expenses.
(n) Return of information and reporting to affected investors by a
nonpublicly offered regulated investment company--(1) In general--(i)
Return of information. A nonpublicly offered regulated investment
company shall make an information return (e.g., Form 1099-DIV, Dividends
and Distributions, for 1987) with respect to each affected investor to
which an allocation of affected RIC expenses is required to be made
pursuant to paragraph (k) of this section and for which the nonpublicly
offered regulated investment company is required to make an information
return to the Internal Revenue Service pursuant to section 6042 (or
would be required to make such information return but for the $10
threshold described in section 6042 (a)(1) (A) and (B). The nonpublicly
offered regulated investment company shall make the information return
for each calendar year and shall state separately on such return--
(A) The amount of affected RIC expenses required to be allocated to
the affected investor for the calendar year pursuant to paragraph (k) of
this section,
(B) The sum of--
(1) The aggregate amount of the dividends paid to the affected
investor during the calendar year, and
(2) The amount of the affected RIC expenses required to be allocated
to the affected investor for the calendar year pursuant to paragraph (k)
of this section, and
(C) Such other information as may be specified by the form or its
instructions.
(ii) Statement to be furnished to affected investors. A nonpublicly
offered regulated investment company shall provide to each affected
investor for each calendar year (whether or not the nonpublicly offered
regulated investment company is required to make an information return
with respect to the affected investor pursuant to section 6042), a
written statement showing the following information:
(A) The information described in paragraph (n)(1)(i) of this section
with respect to the affected investor;
(B) The name and address of the nonpublicly offered regulated
investment company;
(C) The name and address of the affected investor; and
(D) If the nonpublicly offered regulated investment company is
required to report the amount of the affected investor's allocation of
affected RIC expense to the Internal Revenue Service pursuant to
paragraph (n)(1)(i) of this section a statement to that effect.
(iii) Affected investor's shares held by a nominee. If an affected
investor's shares in a nonpublicly offered regulated investment company
are held in the name of a nominee, the nonpublicly offered regulated
investment company may make the information return described in
paragraph (n)(1)(i) of this section with respect to the nominee in lieu
of the affected investor and may provide the written statement described
in paragraph (n)(1)(ii) of this section to such nominee in lieu of the
affected investor.
(2) By a nominee--(i) In general. Except as otherwise provided for
in paragraph (n)(2)(iii) of this section, in any case in which a
nonpublicly offered regulated investment company provides, pursuant to
paragraph (n)(1)(iii) of this section, a written statement to the
nominee of an affected investor for a calendar year, the nominee shall--
(A) If the nominee is required to make an information return
pursuant to section 6042 (or would be required to make an information
return but for the $10 threshold described in section 6042(a)(1) (A) and
(B), make an information return (e.g., Form 1099-DIV, Dividends and
Distributions, for 1987) for the calendar year with respect to each
affected investor and state separately on such information return the
information described in paragraph (n)(1)(i) of this section, and
[[Page 102]]
(B) Furnish each affected investor with a written statement for the
calendar year showing the information required by paragraph (n)(2)(ii)
of this section (whether or not the nominee is required to make an
information return with respect to the affected investor pursuant to
section 6042).
(ii) Form of statement. The written statement required to be
furnished for a calendar year pursuant to paragraph (n)(2)(i)(B) of this
section shall show the following information:
(A) The affected investor's proportionate share of the items
described in paragraph (n)(1)(i) of this section for the calendar year,
(B) The name and address of the nominee,
(C) The name and address of the affected investor, and
(D) If the nominee is required to report the affected investor's
share of the allocable investment expenses to the Internal Revenue
Service pursuant to paragraph (n)(2)(i)(A) of this section, a statement
to that effect.
(iii) Return not required. A nominee is not required to make an
information return with respect to an affected investor pursuant to
paragraph (n)(2)(i)(A) of this section if the nominee is excluded from
the requirements of section 6042 pursuant to Sec. 1.6042-2(a)(1) (ii) or
(iii).
(iv) Statement not required. A nominee is not required to furnish a
written statement to an affected investor pursuant to paragraph
(n)(2)(i)(B) of this section if the nonpublicly offered regulated
investment company furnishes the written statement to the affected
investor pursuant to an agreement with the nominee described in
Sec. 1.6042-2(a)(1)(iii).
(v) Special rule. Paragraph (n)(1) (i) and (ii) of this section
applies to a nonpublicly offered regulated investment company that
agrees with the nominee to satisfy the requirements of section 6042 as
described in Sec. 1.6042-2(a)(1)(iii) with respect to the affected
investor.
(3) Time and place for furnishing returns. The returns required by
paragraph (n)(1)(i) and (2)(i)(A) of this section for any calendar year
shall be filed at the time and place that a return required under
section 6042 is required to be filed. See Sec. 1.6042-2(c) .
(4) Time for furnishing statements. The statements required by
paragraph (n)(1)(ii) and (2)(i)(B) of this section to be furnished by a
nonpublicly offered regulated investment company and a nominee,
respectively, to an affected investor for a calendar year shall be
furnished to such affected investor on or before January 31 of the
following year.
(5) Duplicative returns and statements not required--(i) Information
return. The requirements of paragraph (n)(1)(i) and (2)(i)(A) of this
section for the making of an information return shall be met by the
timely filing of an information return pursuant to section 6042 that
contains the information required by paragraph (n)(1)(i).
(ii) Written statement. The requirements of paragraph (n)(1)(ii) and
(2)(i)(B) of this section for the furnishing of a written statement
(including the statement required by paragraph (n)(1)(ii)(D) and
(2)(ii)(D) of this section) shall be met by furnishing the affected
investor a copy of the information return to which section 6042 applies
(whether or not the nonpublicly offered regulated investment company or
nominee is required to file an information return with respect to the
affected investor pursuant to section 6042) that contains the
information required by paragraph (n)(1)(ii) or (2)(ii), whichever is
applicable, of this section. Nonpublicly offered regulated investment
companies and nominees may use a substitute form that contains
provisions substantially similar to those of the prescribed form if the
nonpublicly offered regulated investment company or nominee complies
with all revenue procedures relating to substitute forms in effect at
the time. The statement shall be furnished either in person or in a
statement mailed by first-class mail that includes adequate notice that
the statement is enclosed. A statement shall be considered to be
furnished to an affected investor within the meaning of this section if
it is mailed to such affected investor at its last known address.
(o) Return of information by a common trust fund. With respect to
each affected investor to which paragraph (d) of this section applies,
the common trust fund shall state on the return it
[[Page 103]]
is required to make pursuant to section 6032 for its taxable year, the
following information:
(1) The amount of the affected investor's proportionate share of the
affected expenses for the taxable year as described in paragraph
(d)(1)(ii) of this section.
(2) The amount of the affected investor's proportionate share of
ordinary taxable income or ordinary net loss for the taxable year
determined pursuant to paragraph (d)(1)(i) of this section, and
(3) Such other information as may be specified by the form or its
instructions.
(p) Publicly offered regulated investment companies. [Reserved]
[T.D. 8189, 53 FR 9876, Mar. 28, 1988; 53 FR 13464, Apr. 25, 1988]
Sec. 1.67-3 Allocation of expenses by real estate mortgage investment conduits.
(a) Allocation of allocable investment expenses. [Reserved]
(b) Treatment of allocable investment expenses. [Reserved]
(c) Computation of proportionate share. [Reserved]
(d) Example. [Reserved]
(e) Allocable investment expenses not subject to backup withholding.
[Reserved]
(f) Notice to pass-through interest holders--(1) Information
required. A REMIC must provide to each pass-through interest holder to
which an allocation of allocable investment expense is required to be
made under Sec. 1.67-3T(a)(1) notice of the following--
(i) If, pursuant to paragraph (f)(2)(i) or (ii) of this section,
notice is provided for a calendar quarter, the aggregate amount of
expenses paid or accrued during the calendar quarter for which the REMIC
is allowed a deduction under section 212;
(ii) If, pursuant to paragraph (f)(2)(ii) of this section, notice is
provided to a regular interest holder for a calendar year, the aggregate
amount of expenses paid or accrued during each calendar quarter that the
regular interest holder held the regular interest in the calendar year
and for which the REMIC is allowed a deduction under section 212; and
(iii) The proportionate share of these expenses allocated to that
pass-through interest holder, as determined under Sec. 1.67-3T(c).
(2) Statement to be furnished--(i) To residual interest holder. For
each calendar quarter, a REMIC must provide to each pass-through
interest holder who holds a residual interest during the calendar
quarter the notice required under paragraph (f)(1) of this section on
Schedule Q (Form 1066), as required in Sec. 1.860F-4(e).
(ii) To regular interest holder. For each calendar year, a single-
class REMIC (as described in Sec. 1.67-3T(a)(2)(ii)(B)) must provide to
each pass-through interest holder who held a regular interest during the
calendar year the notice required under paragraph (f)(1) of this
section. Quarterly reporting is not required. The information required
to be included in the notice may be separately stated on the statement
described in Sec. 1.6049-7(f) instead of on a separate statement
provided in a separate mailing. See Sec. 1.6049-7(f)(4). The separate
statement provided in a separate mailing must be furnished to each pass-
through interest holder no later than the last day of the month
following the close of the calendar year.
(3) Returns to the Internal Revenue Service--(i) With respect to
residual interest holders. Any REMIC required under paragraphs (f)(1)
and (2)(i) of this section to furnish information to any pass-through
interest holder who holds a residual interest must also furnish such
information to the Internal Revenue Service as required in Sec. 1.860F-
4(e)(4).
(ii) With respect to regular interest holders. A single-class REMIC
(as described in Sec. 1.67-3T(a)(2)(ii)(B)) must make an information
return on Form 1099 for each calendar year, with respect to each pass-
through interest holder who holds a regular interest to which an
allocation of allocable investment expenses is required to be made
pursuant to Sec. 1.67-3T(a)(1) and (2)(ii). The preceding sentence
applies with respect to a holder for a calendar year only if the REMIC
is required to make an information return to the Internal Revenue
Service with respect to that holder for that year pursuant to section
6049 and Sec. 1.6049-7(b)(2)(i) (or would
[[Page 104]]
be required to make an information return but for the $10 threshold
described in section 6049(a)(1) and Sec. 1.6049-7(b)(2)(i)). The REMIC
must state on the information return--
(A) The sum of--
(1) The aggregate amounts includible in gross income as interest (as
defined in Sec. 1.6049-7(a)(1)(i) and (ii)), for the calendar year; and
(2) The sum of the amount of allocable investment expenses required
to be allocated to the pass-through interest holder for each calendar
quarter during the calendar year pursuant to Sec. 1.67-3T(a); and
(B) Any other information specified by the form or its instructions.
(4) Interest held by nominees and other specified persons--(i) Pass-
through interest holder's interest held by a nominee. If a pass-through
interest holder's interest in a REMIC is held in the name of a nominee,
the REMIC may make the information return described in paragraphs
(f)(3)(i) and (ii) of this section with respect to the nominee in lieu
of the pass-through interest holder and may provide the written
statement described in paragraphs (f)(2)(i) and (ii) of this section to
that nominee in lieu of the pass-through interest holder.
(ii) Regular interests in a single-class REMIC held by certain
persons. If a person specified in Sec. 1.6049-7(e)(4) holds a regular
interest in a single-class REMIC (as described in Sec. 1.67-
3T(a)(2)(ii)(B)), then the single-class REMIC must provide the
information described in paragraphs (f)(1) and (f)(3)(ii)(A) and (B) of
this section to that person with the information specified in
Sec. 1.6049-7(e)(2) as required in Sec. 1.6049-7(e).
(5) Nominee reporting--(i) In general. In any case in which a REMIC
provides information pursuant to paragraph (f)(4) of this section to a
nominee of a pass-through interest holder for a calendar quarter or, as
provided in paragraph (f)(2)(ii) of this section, for a calendar year--
(A) The nominee must furnish each pass-through interest holder with
a written statement described in paragraph (f)(2)(i) or (ii) of this
section, whichever is applicable, showing the information described in
paragraph (f)(1) of this section; and
(B) The nominee must make an information return on Form 1099 for
each calendar year, with respect to the pass-through interest holder and
state on this information return the information described in paragraphs
(f)(3)(ii) (A) and (B) of this section, if--
(1) The nominee is a nominee for a pass-through interest holder who
holds a regular interest in a single-class REMIC (as described in
Sec. 1.67-3T(a)(2)(ii)(B)); and
(2) The nominee is required to make an information return pursuant
to section 6049 and Sec. 1.6049-7 (b)(2)(i) and (b)(2)(ii)(B) (or would
be required to make an information return but for the $10 threshold
described in section 6049(a)(2) and Sec. 1.6049-7(b)(2)(i)) with respect
to the pass-through interest holder.
(ii) Time for furnishing statement. The statement required by
paragraph (f)(5)(i)(A) of this section to be furnished by a nominee to a
pass-through interest holder for a calendar quarter or calendar year
must be furnished to this holder no later than 30 days after receiving
the written statement described in paragraph (f)(2)(i) or (ii) of this
section from the REMIC. If, however, pursuant to paragraph (f)(2)(ii) of
this section, the information is separately stated on the statement
described in Sec. 1.6049-7(f), then the information must be furnished to
the pass-through interest holder in the time specified in Sec. 1.6049-
7(f)(5).
(6) Special rules--(i) Time and place for furnishing returns. The
returns required by paragraphs (f)(3)(ii) and (f)(5)(i)(B) of this
section for any calendar year must be filed at the time and place that a
return required under section 6049 and Sec. 1.6049-7(b)(2) is required
to be filed. See Sec. 1.6049-4(g) and Sec. 1.6049-7(b)(2)(iv).
(ii) Duplicative returns not required. The requirements of
paragraphs (f)(3)(ii) and (f)(5)(i)(B) of this section for the making of
an information return are satisfied by the timely filing of an
information return pursuant to section 6049 and Sec. 1.6049-7(b)(2) that
contains the information required by paragraph (f)(3)(ii) of this
section.
[T.D. 8431, 57 FR 40321, Sept. 3, 1992]
[[Page 105]]
Sec. 1.67-3T Allocation of expenses by real estate mortgage investment conduits (temporary).
(a) Allocation of allocable investment expenses--(1) In general. A
real estate mortgage investment conduit or REMIC (as defined in section
860D) shall allocate to each of its pass-through interest holders that
holds an interest at any time during the calendar quarter the holder's
proportionate share (as determined under paragraph (c) of this section)
of the aggregate amount of allocable investment expenses of the REMIC
for the calendar quarter.
(2) Pass-through interest holder--(i) In general--(A) Meaning of
term. Except as provided in paragraph (a)(2)(ii) of this section, the
term ``pass-through interest holder'' means any holder of a REMIC
residual interest (as definition in section 860G(a)(2)) that is--
(1) An individual (other than a nonresident alien whose income with
respect to his or her interest in the REMIC is not effectively connected
with the conduct of a trade or business within the United States),
(2) A person, including a trust or estate, that computes its taxable
income in the same manner as in the case of an individual, or
(3) A pass-through entity (as defined in paragraph (a)(3) of this
section) if one or more of its partners, shareholders, beneficiaries,
participants, or other interest holders is (i) a pass-through entity or
(ii) a person described in paragraph (a)(2)(i)(A) (1) or (2) of this
section.
(B) Examples. The provisions of this paragraph (a)(2)(i) may be
illustrated by the following examples:
Example (1). Corporation X holds a residual interest in REMIC R in
its capacity as a nominee or custodian for individual A, the beneficial
owner of the interest. Because the owner of the interest for Federal
income tax purposes is an individual, the interest is owned by a pass-
through interest holder.
Example (2). Individual retirement account I holds a residual
interest in a REMIC. Because an individual retirement account is not a
person described in paragraph (a)(2)(i)(A) of this section, the interest
is not held by a pass-through interest holder.
(ii) Single-class REMIC--(A) In general. In the case of a single-
class REMIC, the term ``pass-through interest holder'' means any holder
of either--
(1) A REMIC regular interest (as defined in section 860G(a)(1)), or
(2) A REMIC residual interest, that is described in paragraph
(a)(2)(i)(A) (1), (2), or (3) of this section.
(B) Single-class REMIC. For purposes of paragraph (a)(2)(ii)(A) of
this section, a single-class REMIC IS either--
(1) A REMIC that would be classified as an investment trust under
Sec. 301.7701-4(c)(1) but for its qualification as a REMIC under section
860D and Sec. 1.860D-1T, or
(2) A REMIC that--
(i) Is substantially similar to an investment trust under
Sec. 301.7701-4(c)(1), and
(ii) Is structured with the principal purpose of avoiding the
requirement of paragraphs (a)(1) and (2)(ii)(A) of this section to
allocate allocable investment expenses to pass-through interest holders
that hold regular interests in the REMIC.
For purposes of this paragraph (a)(2)(ii)(B), in determining whether a
REMIC would be classified as an investment trust or is substantially
similar to an investment trust, all interests in the REMIC shall be
treated as ownership interests in the REMIC, without regard to whether
or not they would be classified as debt for Federal income tax purposes
in the absence of a REMIC election.
(C) Examples. The provisions of paragraph (a)(2)(ii) of this section
must be illustrated by the following examples:
Example (1). Corporation M transfers mortgages to a bank under a
trust agreement as described in Example (2) of Sec. 301.7701-4(c)(2).
There are two classes of certificates. Holders of class C certificates
are entitled to receive 90 percent of the payment of principal and
interest on the mortgages; holders of class D certificates are entitled
to receive the remaining 10 percent. The two classes of certificates are
identical except that, in the event of a default on the underlying
mortgages, the payment rights of class D certificates holders are
subordinated to the rights of class C certificate holders. M sells the
class C certificates to investors and retains the class D certificates.
The trust would be classified as an investment trust under
Sec. 301.7701-4(c)(1) but for its qualification a REMIC under section
860D the class C certificates represent regular interests in the
[[Page 106]]
REMIC and the class D certificates represent residual interest in the
REMIC. The REMIC is a single-class REMIC within the meaning of paragraph
(a)(2)(ii)(B)(1) of this section and, accordingly, holders of both the
class C and class D certificates who are described in paragraph
(a)(2)(i)(A) (1), (2), or (3) of this section are treated as pass-
through interest holders.
Example (2). Assume that the facts are the same as in Example (1)
except that M structures the REMIC to include a second regular interest
represented by class E certificates. The principal purpose of M in
structuring the REMIC to include class E certificates is to avoid
allocating allocable investment expenses to class C certificate holders.
The class E certificate holders are entitled to receive the payments
otherwise due the class D certificate holders until they have been paid
a stated amount of principal plus interest. The fair market value of the
class E certificate is ten percent of the fair market value of the class
D certificate and, therefore, less than one percent of the fair market
value of the REMIC. The REMIC would not be classified as an investment
trust under Sec. 301.7701-4(c)(1) because the existence of the class E
certificates is not incidental to the trust's purpose of facilitating
direct investment in the assets of the trust. Nevertheless, because the
fair market value of the class E certificates is de minimis, the REMIC
is substantially similar to an investment trust under Sec. 301.7701-
4(c)(1). In addition, avoidance of the requirement to allocate allocable
investment expenses to regular interest holders is the principal purpose
of M in structuring the REMIC to include class E certificates.
Therefore, the REMIC is a single-class REMIC within the meaning of
paragraph (a)(2)(ii)(B)(2) of this section, and, accordingly, holders of
both residual and regular interests who are described in paragraph
(a)(2)(i)(A) (1), (2), or (3) of this section are treated as pass-
through interest holders.
(3) Pass-through entity--(i) In general. Except as provided in
paragraph (a)(3)(ii) of this section, for purposes of this section, a
pass-through entity is--
(A) A trust (or any portion thereof) to which Subpart E, Part 1,
Subchapter J, Chapter 1 of the Code applies,
(B) A partnership,
(C) An S corporation,
(D) A common trust fund described in section 584,
(E) A nonpublicly offered regulated investment company (as defined
in paragraph (a)(5)(i) of this section),
(F) A REMIC, and
(G) Any other person--
(1) Which is not subject to income tax imposed by Subtitle A,
Chapter 1, or which is allowed a deduction in computing such tax for
distributions to owners or beneficiaries, and
(2) The character of the income of which may affect the character of
the income recognized with respect to that person by its owners or
beneficiaries.
Entities that do not meet the requirements of paragraphs (a)(3)(i)(G)
(1) and (2), such as qualified pension plans, individual retirement
accounts, and insurance companies holding assets in separate asset
accounts to fund variable contracts defined in section 817(d), are not
described in this paragraph (a)(3)(i).
(ii) Exception. For purposes of this section, a pass-through entity
does not include--
(A) An estate,
(B) A trust (or any portion thereof) not described in paragraph
(a)(3)(i)(A) of this section,
(C) A cooperative described without regard to subparagraphs (A) and
(C) thereof, or
(D) A real estate investment trust.
(4) Allocable investment expenses. The term ``allocable investment
expenses'' means the aggregate amount of the expenses paid or accrued in
the calendar quarter for which a deduction is allowable under section
212 in determining the taxable income of the REMIC for the calendar
quarter.
(5) Nonpublicly offered regulated investment company--(i) In
general. For purposes of this section, the term ``nonpublicly offered
regulated investment company'' means a regulated investment company to
which Part I of Subchapter M of the Code applies that is not a publicly
offered regulated investment company.
(ii) Publicly offered regulated investment company. For purposes of
this section, the term ``publicly offered regulated investment company''
means a regulated investment company to which Part I of subchapter M of
the Code applies, the shares of which are--
(A) Continuously offered pursuant to a public offering (within the
meaning of section 4 of the Securities Act of 1933, as amended (15
U.S.C. 77a to 77aa)),
(B) Regularly traded on an established securities market, or
[[Page 107]]
(C) Held by or for no fewer than 500 persons at all times during the
taxable year.
(b) Treatment of allocable investment expenses--(1) By pass-through
interest holders--(i) Taxable year ending with calendar quarter. A pass-
through interest holder whose taxable year is the calendar year or ends
with a calendar quarter shall be treated as having--
(A) Received or accrued income, and
(B) Paid or incurred an expense described in section 212 (or section
162 in the case of a pass-through interest holder that is a regulated
investment company), in an amount equal to the pass-through interest
holder's proportionate share of the allocable investment expenses of the
REMIC for those calendar quarters that fall within the holder's taxable
year.
(ii) Taxable year not ending with calendar quarter. A pass-through
interest holder whose taxable year does not end with a calendar quarter
shall be treated as having--
(A) Received or accrued income, and
(B) Paid or incurred an expense described in section 212 (or section
162 in the case of a pass-through interest holder that is a regulated
investment company), in an amount equal to the sum of--
(C) The pass-through interest holder's proportionate share of the
allocable investment expenses of the REMIC for those calendar quarters
that fall within the holder's taxable year, and
(D) For each calendar quarter that overlaps the beginning or end of
the taxable year, the sum of the daily amounts of the allocable
investment expenses allocated to the holder pursuant to paragraph
(c)(1)(ii) of this section for the days in the quarter that fall within
the holder's taxable year.
(2) Proportionate share of allocable investment expenses. For
purposes of paragraph (b) of this section, a pass-through interest
holder's proportionate share of the allocable investment expenses is the
amount allocated to the pass-through interest holder pursuant to
paragraph (a)(1) of this section.
(3) Cross-reference. See Sec. 1.67-1T with respect to limitations on
deductions for expenses described in section 212 (including amounts
treated as such expenses under this section).
(4) Interest income to holders of regular interests in certain
REMICs. Any amount allocated under this section to the holder of a
regular interest in a single-class REMIC (as described in paragraph
(a)(2)(ii)(B) of this section) shall be treated as interest income.
(5) No adjustment to basis. The basis of any holder's interest in a
REMIC shall not be increased or decreased by the amount of the holder's
proportionate share of allocable investment expenses.
(6) Interest holders other than pass-through interest holders. An
interest holder of a REMIC that is not a pass-through interest holder
shall not take into account in computing its taxable income any amount
of income or expense with respect to its proportionate share of
allocable investment expenses.
(c) Computation of proportionate share--(1) In general. For purposes
of paragraph (a)(1) of this section, a REMIC shall compute a pass-
through interest holder's proportionate share of the REMIC's allocable
investment expenses by--
(i) Determining the daily amount of the allocable investment
expenses for the calendar quarter by dividing the total amount of such
expenses by the number of days in that calendar quarter.
(ii) Allocating the daily amount of the allocable investment
expenses to the pass-through interest holder in proportion to its
respective holdings on that day, and
(iii) Totaling the interest holder's daily amounts of allocable
investment expenses for the calendar quarter.
(2) Other holders taken into account. For purposes of paragraph
(c)(1)(ii) of this section, a pass-through interest holder's
proportionate share of the daily amount of the allocable investment
expenses is determined by taking into account all holders of residual
interests in the REMIC, whether or not pass-through interest holders.
(3) Single-class REMIC--(i) Daily allocation. In lieu of the
allocation specified in paragraph (c)(1)(ii) of this section, a single-
class REMIC (as described in paragraph (a)(2)(ii)(B) of this section)
shall allocate the daily
[[Page 108]]
amount of the allocable investment expenses to each pass-through
interest holder in proportion to the amount of income accruing to the
holder with respect to its interest in the REMIC on that day.
(ii) Other holders taken into account. For purposes of paragraph
(c)(3)(i) of this section, the amount of the allocable investment
expenses that is allocated on any day to each pass-through interest
holder shall be determined by multiplying the daily amount of allocable
investment expenses (determined pursuant to paragraph (c)(1)(i) of this
section) by a fraction, the numerator of which is equal to the amount of
income that accrues (but not less than zero) to the pass-through
interest holder on that day and the denominator of which is the total
amount of income (as determined under paragraph (c)(3)(iii) of this
section) that accrues to all regular and residual interest holders,
whether or not pass-through interest holders, on that day.
(iii) Total income accruing. The total amount of income that accrues
to all regular and residual interest holders is the sum of--
(A) The amount includible under section 860B in the gross income
(but not less than zero) of the regular interest holders, and
(B) The amount of REMIC taxable income (but not less than zero)
taken into account under section 860C by the residual interest holders.
(4) Dates of purchase and disposition. For purposes of this section,
a pass-through interest holder holds an interest on the date of its
purchase but not on the date of its disposition.
(d) Example. The provisions of this section may be illustrated by
the following example:
Example (i) During the calendar quarter ending March 31, 1989, REMIC
X, which is not a single-class REMIC, incurs $900 of allocable
investment expenses. At the beginning of the calendar quarter, X has 4
residual interest holders, who hold equal proportionate shares, and 10
regular interest holders. The residual interest holders, all of whom
have calendar-year taxable years, are as follows:
A, an individual,
C, a C corporation that is a nominee for individual I.
S, an S corporation, and
M, a C corporation that is not a nominee.
(ii) Except for A, all of the residual interest holders hold their
interests in X for the entire calendar quarter. On January 31, 1989, A
sells his interest to S. Thus, for the first month of the calendar
quarter, each residual interest holder holds a 25 percent interest
(100%/4 interest holders) in X. For the last two months, S's holding is
increased to 50 percent and A's holding is decreased to zero. The daily
amount of allocable investment expenses for the calendar quarter is $10
($900/90 days).
(iii) The amount of allocable investment expenses apportioned to the
residual interest holders is as follows:
(A) $75 ($10 x 25% x 30 days) is allocated to A for the 30 days that
A holds an interest in X during the calendar quarter. A includes $75 in
gross income in calendar year 1989. The amount of A's expenses described
in section 212 is increased by $75 in calendar year 1989. A's deduction
under section 212 (including the $75 amount of the allocation) is
subject to the limitations contained in section 67.
(B) $225 ($10 x 25% x 90 days) is allocated to C. Because C is a
nominee for I, C does not include $225 in gross income or increase its
deductible expenses by $225. Instead, I includes $225 in gross income in
calendar year 1989, her taxable year. The amount of I's expenses
described in section 212 is increased by $225. I's deduction under
section 212 (including the $225 amount of the allocation) is subject to
the limitations contained in section 67.
(C) $375 (($10 x 25% x 30 days) + ($10 x 50% x 60 days)) is
allocated to S. S includes in gross income $375 of allocable investment
expenses in calendar year 1989. The amount of S's expenses described in
section 212 for that taxable year is increased by $375. S allocates the
$375 to its shareholders in accordance with the rules described in
sections 1366 and 1377 in calendar year 1989. Thus, each shareholder of
S includes its pro rata share of the $375 in gross income in its taxable
year in which or with which calendar year 1989 ends. The amount of each
shareholder's expenses described in section 212 is increased by the
amount of the shareholder's allocation for the shareholder's taxable
year in which or with which calendar year 1989 ends. The shareholder's
deduction under section 212 (including the allocation under this
section) is subject to the limitations contained in section 67.
(D) No amount is allocated to M. However, M's interest is taken into
account for purposes of determining the proportionate share of those
residual interest holders to whom an allocation is required to be made.
(iv) No allocation is made to the 10 regular interest holders
pursuant to paragraph (a) of this section. In addition, the interests
held by these interest holders are not taken into account for purposes
of determining the proportionate share of the residual interest
[[Page 109]]
holders to whom an allocation is required to be made.
(e) Allocable investment expenses not subject to backup withholding.
The amount of allocable investment expenses required to be allocated to
a pass-through interest holder pursuant to paragraph (a)(1) of this
section is not subject to backup withholding under section 3406.
(f) Notice to pass-through interest holders--(1) Information
required. A REMIC must provide to each pass-through interest holder to
which an allocation of allocable investment expense is required to be
made under paragraph (a)(1) of this section notice of the following--
(i) If, pursuant to paragraph (f)(2) (i) or (ii) of this section,
notice is provided for a calendar quarter, the aggregate amount of
expenses paid or accrued during the calendar quarter for which the REMIC
is allowed a deduction under section 212;
(ii) If, pursuant to paragraph (f)(2)(ii) of this section, notice is
provided to a regular interest holder for a calendar year, the aggregate
amount of expenses paid or accrued during each calendar quarter that the
regular interest holder held the regular interest in the calendar year
and for which the REMIC is allowed a deduction under section 212; and
(iii) The proportionate share of these expenses allocated to that
pass-through interest holder, as determined under paragraph (c) of this
section.
(2) Statement to be furnished--(i) To residual interest holder. For
each calendar quarter, a REMIC shall provide to each pass-through
interest holder who holds a residual interest during the calendar
quarter the notice required under paragraph (f)(1) of this section on
Schedule Q (Form 1066), as required in Sec. 1.860F-4(e).
(ii) To regular interest holder--(A) In general. For each calendar
year, a single-class REMIC (as described in paragraph (a)(2)(ii)(B) of
this section) must provide to each pass-through interest holder who held
a regular interest during the calendar year the notice required under
paragraph (f)(1) of this section. Quarterly reporting is not required.
The information required to be included in the notice may be separately
stated on the statement described in Sec. 1.6049-7(f) instead of on a
separate statement provided in a separate mailing. See Sec. 1.6049-
7(f)(4). The separate statement provided in a separate mailing must be
furnished to each pass-through interest holder no later than the last
day of the month following the close of the calendar year.
(B) Special rule for 1987. The information required under paragraph
(f)(2)(ii)(A) of this section for any calendar quarter of 1987 shall be
mailed (or otherwise delivered) to each pass-through interest holder who
holds a regular interest during that calendar quarter no later than
March 28, 1988.
(3) Returns to the Internal Revenue Service--(i) With respect to
residual interest holders. Any REMIC required under paragraphs (f)(1)
and (2)(i) of this section to furnish information to any pass-through
interest holder who holds a residual interest shall also furnish such
information to the Internal Revenue Service as required in Sec. 1.860F-
4(e)(4).
(ii) With respect to regular interest holders. A single-class REMIC
(as described in paragraph (a)(2)(ii)(B) of this section) shall make an
information return on Form 1099 for each calendar year beginning after
December 31, 1987, with respect to each pass-through interest holder who
holds a regular interest to which an allocation of allocable investment
expenses is required to be made pursuant to paragraphs (a)(1) and
(2)(ii) of this section. The preceding sentence applies with respect to
a holder for a calendar year only if the REMIC is required to make an
information return to the Internal Revenue Service with respect to that
holder for that year pursuant to section 6049 and Sec. 1.6049-7(b)(2)(i)
(or would be required to make an information return but for the $10
threshold described in section 6049(a)(1) and Sec. 1.6049-7(b)(2)(i)).
The REMIC shall state on the information return--
(A) The sum of--
(1) The aggregate amounts includible in gross income as interest (as
defined in Sec. 1.6049-7(a)(1) (i) and (ii)), for the calendar year, and
(2) The sum of the amount of allocable investment expenses required
to
[[Page 110]]
be allocated to the pass-through interest holder for each calendar
quarter during the calendar year pursuant to paragraph (a) of this
section, and
(B) Any other information specified by the form or its instructions.
(4) Interest held by nominees and other specified persons--(i) Pass-
through interest holder's interest held by a nominee. If a pass-through
interest holder's interest in a REMIC is held in the name of a nominee,
the REMIC may make the information return described in paragraphs (f)(3)
(i) and (ii) of this section with respect to the nominee in lieu of the
pass-through interest holder and may provide the written statement
described in paragraphs (f)(2) (i) and (ii) of this section to that
nominee in lieu of the pass-through interest holder.
(ii) Regular interests in a single-class REMIC held by certain
persons. For calendar quarters and calendar years after December 31,
1991, if a person specified in Sec. 1.6049-7(e)(4) holds a regular
interest in a single-class REMIC (as described in paragraph
(a)(2)(ii)(B) of this section), then the single-class REMIC must provide
the information described in paragraphs (f)(1) and (f)(3)(ii) (A) and
(B) of this section to that person with the information specified in
Sec. 1.6049-7(e)(2) as required in Sec. 1.6049-7(e).
(5) Nominee reporting--(i) In general. In any case in which a REMIC
provides information pursuant to paragraph (f)(4) of this section to a
nominee of a pass-through interest holder for a calendar quarter or, as
provided in paragraph (f)(2)(ii) of this section, for a calendar year--
(A) The nominee shall furnish each pass-through interest holder with
a written statement described in paragraph (f)(2) (i) or (ii) of this
section, whichever is applicable, showing the information described in
paragraph (f)(1) of this section, and
(B) If--
(1) The nominee is a nominee for a pass-through interest holder who
holds a regular interest in a single-class REMIC (as described in
paragraph (a)(2)(ii)(B) of this section), and
(2) The nominee is required to make an information return pursuant
to section 6049 and Sec. 1.6049-7(b)(2)(i) and (b)(2)(ii)(B) (or would
be required to make an information return but for the $10 threshold
described in section 6049(a)(2) and Sec. 1.6049-7(b)(2)(i)) with respect
to the pass-through interest holder,
the nominee shall make an information return on Form 1099 for each
calendar year beginning after December 31, 1987, with respect to the
pass-through interest holder and state on this information return the
information described in paragraph (f)(3)(ii) (A) and (B) of this
section.
(ii) Time for furnishing statement. The statement required by
paragraph (f)(5)(i)(A) of this section to be furnished by a nominee to a
pass-through interest holder for a calendar quarter or calendar year
shall be furnished to this holder no later than 30 days after receiving
the written statement described in paragraph (f)(2) (i) or (ii) of this
section from the REMIC. If, however, pursuant to paragraph (f)(2)(ii) of
this section, the information is separately stated on the statement
described in Sec. 1.6049-7(f), then the information must be furnished to
the pass-through interest holder in the time specified in Sec. 1.6049-
7(f)(5).
(6) Special rules--(i) Time and place for furnishing returns. The
returns required by paragraphs (f)(3)(ii) and (f)(5)(i)(B) of this
section for any calendar year shall be filed at the time and place that
a return required under section 6049 and Sec. 1.6049-7(b)(2) is required
to be filed. See Sec. 1.6049-4(g) and Sec. 1.6049-7(b)(2)(iv).
(ii) Duplicative returns not required. The requirements of
paragraphs (f)(3)(ii) and (f)(5)(i)(B) of this section for the making of
an information return shall be met by the timely filing of an
information return pursuant to section 6049 and Sec. 1.6049-7(b)(2) that
contains the information required by paragraph (f)(3)(ii) of this
section.
[T.D. 8186, 53 FR 7507, Mar 9, 1988, as amended by T.D. 8366, 56 FR
49515, Sept. 30, 1991]
[[Page 111]]
Sec. 1.67-4T Allocation of expenses by nongrantor trusts and estates (temporary). [Reserved]
Items Specifically Included in Gross Income
Sec. 1.71-1 Alimony and separate maintenance payments; income to wife or former wife.
(a) In general. Section 71 provides rules for treatment in certain
cases of payments in the nature of or in lieu of alimony or an allowance
for support as between spouses who are divorced or separated. For
convenience, the payee spouse will hereafter in this section be referred
to as the ``wife'' and the spouse from whom she is divorced or separated
as the ``husband.'' See section 7701(a)(17). For rules relative to the
deduction by the husband of periodic payments not attributable to
transferred property, see section 215 and the regulations thereunder.
For rules relative to the taxable status of income of an estate or trust
in case of divorce, etc., see section 682 and the regulations
thereunder.
(b) Alimony or separate maintenance payments received from the
husband--(1) Decree of divorce or separate maintenance. (i) In the case
of divorce or legal separation, paragraph (1) of section 71(a) requires
the inclusion in the gross income of the wife of periodic payments
(whether or not made at regular intervals) received by her after a
decree of divorce or of separate maintenance. Such periodic payments
must be made in discharge of a legal obligation imposed upon or incurred
by the husband because of the marital or family relationship under a
court order or decree divorcing or legally separating the husband and
wife or a written instrument incident to the divorce status or legal
separation status.
(ii) For treatment of payments attributable to property transferred
(in trust or otherwise), see paragraph (c) of this section.
(2) Written separation agreement. (i) Where the husband and wife are
separated and living apart and do not file a joint income tax return for
the taxable year, paragraph (2) of section 71(a) requires the inclusion
in the gross income of the wife of periodic payments (whether or not
made at regular intervals) received by her pursuant to a written
separation agreement executed after August 16, 1954. The periodic
payments must be made under the terms of the written separation
agreement after its execution and because of the marital or family
relationship. Such payments are includable in the wife's gross income
whether or not the agreement is a legally enforceable instrument.
Moreover, if the wife is divorced or legally separated subsequent to the
written separation agreement, payments made under such agreement
continue to fall within the provisions of section 71(a)(2).
(ii) For purposes of section 71(a)(2) any written separation
agreement executed on or before August 16, 1954, which is altered or
modified in writing by the parties in any material respect after that
date will be treated as an agreement executed after August 16, 1954,
with respect to payments made after the date of alteration or
modification.
(iii) For treatment of payments attributable to property transferred
(in trust or otherwise), see paragraph (c) of this section.
(3) Decree for support. (i) Where the husband and wife are separated
and living apart and do not file a joint income tax return for the
taxable year, paragraph (3) of section 71(a) requires the inclusion in
the gross income of the wife of periodic payments (whether or not made
at regular intervals) received by her after August 16, 1954, from her
husband under any type of court order or decree (including an
interlocutory decree of divorce or a decree of alimony pendente lite)
entered after March 1, 1954, requiring the husband to make the payments
for her support or maintenance. It is not necessary for the wife to be
legally separated or divorced from her husband under a court order or
decree; nor is it necessary for the order or decree for support to be
for the purpose of enforcing a written separation agreement.
(ii) For purposes of section 71(a)(3), any decree which is altered
or modified by a court order entered after March 1, 1954, will be
treated as a decree entered after such date.
(4) Scope of section 71(a). Section 71(a) applies only to payments
made because
[[Page 112]]
of the family or marital relationship in recognition of the general
obligation to support which is made specific by the decree, instrument,
or agreement. Thus, section 71(a) does not apply to that part of any
periodic payment which is attributable to the repayment by the husband
of, for example, a bona fide loan previously made to him by the wife,
the satisfaction of which is specified in the decree, instrument, or
agreement as a part of the general settlement between the husband and
wife.
(5) Year of inclusion. Periodic payments are includible in the
wife's income under section 71(a) only for the taxable year in which
received by her. As to such amounts, the wife is to be treated as if she
makes her income tax returns on the cash receipts and disbursements
method, regardless of whether she normally makes such returns on the
accrual method. However, if the periodic payments described in section
71(a) are to be made by an estate or trust, such periodic payments are
to be included in the wife's taxable year in which they are includible
according to the rules as to income of estates and trusts provided in
sections 652, 662, and 682, whether or not such payments are made out of
the income of such estates or trusts.
(6) Examples. The foregoing rules are illustrated by the following
examples in which it is assumed that the husband and wife file separate
income tax returns on the calendar year basis:
Example (1). W files suit for divorce from H in 1953. In
consideration of W's promise to relinquish all marital rights and not to
make public H's financial affairs, H agrees in writing to pay $200 a
month to W during her lifetime if a final decree of divorce is granted
without any provision for alimony. Accordingly, W does not request
alimony and no provision for alimony is made under a final decree of
divorce entered December 31, 1953. During 1954, H pays W $200 a month,
pursuant to the promise. The $2,400 thus received by W is includible in
her gross income under the provisions of section 71(a)(1). Under section
215, H is entitled to a deduction of $2,400 from his gross income.
Example (2). During 1945, H and W enter into an antenuptial
agreement, under which, in consideration of W's relinquishment of all
marital rights (including dower) in H's property, and, in order to
provide for W's support and household expenses, H promises to pay W $200
a month during her lifetime. Ten years after their marriage, W sues H
for divorce but does not ask for or obtain alimony because of the
provision already made for her support in the antenuptial agreement.
Likewise, the divorce decree is silent as to such agreement and H's
obligation to support W. Section 71(a) does not apply to such a case.
If, however, the decree were modified so as to refer to the antenuptial
agreement, or if reference had been made to the antenuptial agreement in
the court's decree or in a written instrument incident to the divorce
status, section 71(a)(1) would require the inclusion in W's gross income
of the payments received by her after the decree. Similarly, if a
written separation agreement were executed after August 16, 1954, and
incorporated the payment provisions of the antenuptial agreement,
section 71(a)(2) would require the inclusion in W's income of payments
received by W after W begins living apart from H, whether or not the
divorce decree was subsequently entered and whether or not W was living
apart from H when the separation agreement was executed, provided that
such payments were made after such agreement was executed and pursuant
to its terms. As to including such payments in W's income, if made by a
trust created under the antenuptial agreement, regardless of whether
referred to in the decree or a later instrument, or created pursuant to
the written separation agreement, see section 682 and the regulations
thereunder.
Example (3). H and W are separated and living apart during 1954. W
sues H for support and on February 1, 1954, the court enters a decree
requiring H to pay $200 a month to W for her support and maintenance. No
part of the $200 a month support payments is includible in W's income
under section 71(a)(3) or deductible by H under section 215. If,
however, the decree had been entered after March 1, 1954, or had been
altered or modified by a court order entered after March 1, 1954, the
payments received by W after August 16, 1954, under the decree as
altered or modified would be includible in her income under section
71(a)(3) and deductible by H under section 215.
Example (4). W sues H for divorce in 1954. On January 15, 1954, the
court awards W temporary alimony of $25 a week pending the final decree.
On September 1, 1954, the court grants W a divorce and awards her $200 a
month permanent alimony. No part of the $25 a week temporary alimony
received prior to the decree is includible in W's income under section
71(a), but the $200 a month received during the remainder of 1954 by W
is includible in her income for 1954. Under section 215, H is entitled
to deduct such $200 payments from his income. If, however, the decree
awarding W temporary alimony had been entered after March 1, 1954, or
had been altered or modified by a court order entered
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after March 1, 1954, temporary alimony received by her after August 16,
1954, would be includible in her income under section 71(a)(3) and
deductible by H under section 215.
(c) Alimony and separate maintenance payments attributable to
property. (1)(i) In the case of divorce or legal separation, paragraph
(1) of section 71(a) requires the inclusion in the gross income of the
wife of periodic payments (whether or not made at regular intervals)
attributable to property transferred, in trust or otherwise, and
received by her after a decree of divorce or of separate maintenance.
Such property must have been transferred in discharge of a legal
obligation imposed upon or incurred by the husband because of the
marital or family relationship under a decree of divorce or separate
maintenance or under a written instrument incident to such divorce
status or legal separation status.
(ii) Where the husband and wife are separated and living apart and
do not file a joint income tax return for the taxable year, paragraph
(2) of section 71(a) requires the inclusion in the gross income of the
wife of periodic payments (whether or not made at regular intervals)
received by her which are attributable to property transferred, in trust
or otherwise, under a written separation agreement executed after August
16, 1954. The property must be transferred because of the marital or
family relationship. The periodic payments attributable to the property
must be received by the wife after the written separation agreement is
executed.
(iii) The periodic payments received by the wife attributable to
property transferred under subdivisions (i) and (ii) of this
subparagraph and includible in her gross income are not to be included
in the gross income of the husband.
(2) The full amount of periodic payments received under the
circumstances described in section 71(a) (1), (2), and (3) is required
to be included in the gross income of the wife regardless of the source
of such payments. Thus, it matters not that such payments are
attributable to property in trust, to life insurance, endowment, or
annuity contracts, or to any other interest in property, or are paid
directly or indirectly by the husband from his income or capital. For
example, if in order to meet an alimony or separate maintenance
obligation of $500 a month the husband purchases or assigns for the
benefit of his wife a commercial annuity contract paying such amount,
the full $500 a month received by the wife is includible in her income,
and no part of such amount is includible in the husband's income or
deductible by him. See section 72(k) and the regulations thereunder.
Likewise, if property is transferred by the husband, subject to an
annual charge of $5,000, payable to his wife in discharge of his alimony
or separate maintenance obligation under the divorce or separation
decree or written instrument incident to the divorce status or legal
separation status or if such property is transferred pursuant to a
written separation agreement and subject to a similar annual charge, the
$5,000 received annually is, under section 71(a) (1) or (2), includible
in the wife's income, regardless of whether such amount is paid out of
income or principal of the property.
(3) The same rule applies to periodic payments attributable to
property in trust. The full amount of periodic payments to which section
71(a) (1) and (2) applies is includible in the wife's income regardless
of whether such payments are made out of trust income. Such periodic
payments are to be included in the wife's income under section 71(a) (1)
or (2) and are to be excluded from the husband's income even though the
income of the trust would otherwise be includible in his income under
Subpart E, Part I, Subchapter J, Chapter 1 of the Code, relating to
trust income attributable to grantors and others as substantial owners.
As to periodic payments received by a wife attributable to property in
trust in cases to which section 71(a) (1) or (2) does not apply because
the husband's obligation is not specified in the decree or an instrument
incident to the divorce status or legal separation status or the
property was not transferred under a written separation agreement, see
section 682 and the regulations thereunder.
[[Page 114]]
(4) Section 71(a) (1) or (2) does not apply to that part of any
periodic payment attributable to that portion of any interest in
property transferred in discharge of the husband's obligation under the
decree or instrument incident to the divorce status or legal separation
status, or transferred pursuant to the written separation agreement,
which interest originally belonged to the wife. It will apply, however,
if she received such interest from her husband in contemplation of or as
an incident to the divorce or separation without adequate and full
consideration in money or money's worth, other than the release of the
husband or his property from marital obligations. An example of the
first rule is a case where the husband and wife transfer securities,
which were owned by them jointly, in trust to pay an annuity to the
wife. In this case, the full amount of that part of the annuity received
by the wife attributable to the husband's interest in the securities
transferred in discharge of his obligation under the decree, or
instrument incident to the divorce status or legal separation status, or
transferred under the written separation agreement, is taxable to her
under section 71(a) (1) or (2), while that portion of the annuity
attributable to the wife's interest in the securities so transferred is
taxable to her only to the extent it is out of trust income as provided
in Part I (sections 641 and following), Subchapter J, Chapter 1 of the
Code. If, however, the husband's transfer to his wife is made before
such property is transferred in discharge of his obligation under the
decree or written instrument, or pursuant to the separation agreement in
an attempt to avoid the application of section 71(a) (1) or (2) to part
of such payments received by his wife, such transfers will be considered
as a part of the same transfer by the husband of his property in
discharge of his obligation or pursuant to such agreement. In such a
case, section 71(a) (1) or (2) will be applied to the full amount
received by the wife. As to periodic payments received under a joint
purchase of a commercial annuity contract, see section 72 and the
regulations thereunder.
(d) Periodic and installment payments. (1) In general, installment
payments discharging a part of an obligation the principal sum of which
is, in terms of money or property, specified in the decree, instrument,
or agreement are not considered ``periodic payments'' and therefore are
not to be included under section 71(a) in the wife's income.
(2) An exception to the general rule stated in subparagraph (1) of
this paragraph is provided, however, in cases where such principal sum,
by the terms of the decree, instrument, or agreement, may be or is to be
paid over a period ending more than 10 years from the date of such
decree, instrument, or agreement. In such cases, the installment payment
is considered a periodic payment for the purposes of section 71(a) but
only to the extent that the installment payment, or sum of the
installment payments, received during the wife's taxable year does not
exceed 10 percent of the principal sum. This 10-percent limitation
applies to installment payments made in advance but does not apply to
delinquent installment payments for a prior taxable year of the wife
made during her taxable year.
(3)(i) Where payments under a decree, instrument, or agreement are
to be paid over a period ending 10 years or less from the date of such
decree, instrument, or agreement, such payments are not installment
payments discharging a part of an obligation the principal sum of which
is, in terms of money or property, specified in the decree, instrument,
or agreement (and are considered periodic payments for the purposes of
section 71(a)) only if such payments meet the following two conditions:
(a) Such payments are subject to any one or more of the
contingencies of death of either spouse, remarriage of the wife, or
change in the economic status of either spouse, and
(b) Such payments are in the nature of alimony or an allowance for
support.
(ii) Payments meeting the requirements of subdivision (i) are
considered periodic payments for the purposes of section 71(a)
regardless of whether--
(a) The contingencies described in subdivision (i)(a) of this
subparagraph are set forth in the terms of the decree, instrument, or
agreement, or are imposed by local law, or
[[Page 115]]
(b) The aggregate amount of the payments to be made in the absence
of the occurrence of the contingencies described in subdivision (i)(a)
of this subparagraph is explicitly stated in the decree, instrument, or
agreement or may be calculated from the face of the decree, instrument,
or agreement, or
(c) The total amount which will be paid may be calculated
actuarially.
(4) Where payments under a decree, instrument, or agreement are to
be paid over a period ending more than ten years from the date of such
decree, instrument, or agreement, but where such payments meet the
conditions set forth in subparagraph (3)(i) of this paragraph, such
payments are considered to be periodic payments for the purpose of
section 71 without regard to the rule set forth in subparagraph (2) of
this paragraph. Accordingly, the rules set forth in subparagraph (2) of
this paragraph are not applicable to such payments.
(5) The rules as to periodic and installment payments are
illustrated by the following examples:
Example (1). Under the terms of a written instrument, H is required
to make payments to W which are in the nature of alimony, in the amount
of $100 a month for nine years. The instrument provides that if H or W
dies the payments are to cease. The payments are periodic.
Example (2). The facts are the same as in example (1) except that
the written instrument explicitly provides that H is to pay W the sum of
$10,800 in monthly payments of $100 over a period of nine years. The
payments are periodic.
Example (3). Under the terms of a written instrument, H is to pay W
$100 a month over a period of nine years. The monthly payments are not
subject to any of the contingencies of death of H or W, remarriage of W,
or change in the economic status of H or W under the terms of the
written instrument or by reason of local law. The payments are not
periodic.
Example (4). A divorce decree in 1954 provides that H is to pay W
$20,000 each year for the next five years, beginning with the date of
the decree, and then $5,000 each year for the next ten years. Assuming
the wife makes her returns on the calendar year basis, each payment
received in the years 1954 to 1958, inclusive, is treated as a periodic
payment under section 71(a)(1), but only to the extent of 10 percent of
the principal sum of $150,000. Thus, for such taxable years, only
$15,000 of the $20,000 received is includible under section 71(a)(1) in
the wife's income and is deductible by the husband under section 215.
For the years 1959 to 1968, inclusive, the full $5,000 received each
year by the wife is includible in her income and is deductible from the
husband's income.
(e) Payments for support of minor children. Section 71(a) does not
apply to that part of any periodic payment which, by the terms of the
decree, instrument, or agreement under section 71(a), is specifically
designated as a sum payable for the support of minor children of the
husband. The statute prescribes the treatment in cases where an amount
or portion is so fixed but the amount of any periodic payment is less
than the amount of the periodic payment specified to be made. In such
cases, to the extent of the amount which would be payable for the
support of such children out of the originally specified periodic
payment, such periodic payment is considered a payment for such support.
For example, if the husband is by terms of the decree, instrument, or
agreement required to pay $200 a month to his divorced wife, $100 of
which is designated by the decree, instrument, or agreement to be for
the support of their minor children, and the husband pays only $150 to
his wife, $100 is nevertheless considered to be a payment by the husband
for the support of the children. If, however, the periodic payments are
received by the wife for the support and maintenance of herself and of
minor children of the husband without such specific designation of the
portion for the support of such children, then the whole of such amounts
is includible in the income of the wife as provided in section 71(a).
Except in cases of a designated amount or portion for the support of the
husband's minor children, periodic payments described in section 71(a)
received by the wife for herself and any other person or persons are
includible in whole in the wife's income, whether or not the amount or
portion for such other person or persons is designated.
Sec. 1.71-1T Alimony and separate maintenance payments (temporary).
(a) In general.
Q-1 What is the income tax treatment of alimony or separate
maintenance payments?
[[Page 116]]
A-1 Alimony or separate maintenance payments are, under section 71,
included in the gross income of the payee spouse and, under section 215,
allowed as a deduction from the gross income of the payor spouse.
Q-2 What is an alimony or separate maintenance payment?
A-2 An alimony or separate maintenance payment is any payment
received by or on behalf of a spouse (which for this purpose includes a
former spouse) of the payor under a divorce or separation instrument
that meets all of the following requirements:
(a) The payment is in cash (see A-5).
(b) The payment is not designated as a payment which is excludible
from the gross income of the payee and nondeductible by the payor (see
A-8).
(c) In the case of spouses legally separated under a decree of
divorce or separate maintenance, the spouses are not members of the same
household at the time the payment is made (see A-9).
(d) The payor has no liability to continue to make any payment after
the death of the payee (or to make any payment as a substitute for such
payment) and the divorce or separation instrument states that there is
no such liability (see A-10).
(e) The payment is not treated as child support (see A-15).
(f) To the extent that one or more annual payments exceed $10,000
during any of the 6-post-separation years, the payor is obligated to
make annual payments in each of the 6-post-separation years (see A-19).
Q-3 In order to be treated as alimony or separate maintenance
payments, must the payments be ``periodic'' as that term was defined
prior to enactment of the Tax Reform Act of 1984 or be made in discharge
of a legal obligation of the payor to support the payee arising out of a
marital or family relationship?
A-3 No. The Tax Reform Act of 1984 replaces the old requirements
with the requirements described in A-2 above. Thus, the requirements
that alimony or separate maintenance payments be ``periodic'' and be
made in discharge of a legal obligation to support arising out of a
marital or family relationship have been eliminated.
Q-4 Are the instruments described in section 71(a) of prior law the
same as divorce or separation instruments described in section 71, as
amended by the Tax Reform Act of 1984?
A-4 Yes.
(b) Specific requirements.
Q-5 May alimony or separate maintenance payments be made in a form
other than cash?
A-5 No. Only cash payments (including checks and money orders
payable on demand) qualify as alimony or separate maintenance payments.
Transfers of services or property (including a debt instrument of a
third party or an annuity contract), execution of a debt instrument by
the payor, or the use of property of the payor do not qualify as alimony
or separate maintenance payments.
Q-6 May payments of cash to a third party on behalf of a spouse
qualify as alimony or separate maintenance payments if the payments are
pursuant to the terms of a divorce or separation instrument?
A-6 Yes. Assuming all other requirements are satisfied, a payment
of cash by the payor spouse to a third party under the terms of the
divorce or separation instrument will qualify as a payment of cash which
is received ``on behalf of a spouse''. For example, cash payments of
rent, mortgage, tax, or tuition liabilities of the payee spouse made
under the terms of the divorce or separation instrument will qualify as
alimony or separate maintenance payments. Any payments to maintain
property owned by the payor spouse and used by the payee spouse
(including mortgage payments, real estate taxes and insurance premiums)
are not payments on behalf of a spouse even if those payments are made
pursuant to the terms of the divorce or separation instrument. Premiums
paid by the payor spouse for term or whole life insurance on the payor's
life made under the terms of the divorce or separation instrument will
qualify as payments on behalf of the payee spouse to the extent that the
payee spouse is the owner of the policy.
Q-7 May payments of cash to a third party on behalf of a spouse
qualify as alimony or separate maintenance payments if the payments are
made to the
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third party at the written request of the payee spouse?
A-7 Yes. For example, instead of making an alimony or separate
maintenance payment directly to the payee, the payor spouse may make a
cash payment to a charitable organization if such payment is pursuant to
the written request, consent or ratification of the payee spouse. Such
request, consent or ratification must state that the parties intend the
payment to be treated as an alimony or separate maintenance payment to
the payee spouse subject to the rules of section 71, and must be
received by the payor spouse prior to the date of filing of the payor's
first return of tax for the taxable year in which the payment was made.
Q-8 How may spouses designate that payments otherwise qualifying as
alimony or separate maintenance payments shall be excludible from the
gross income of the payee and nondeductible by the payor?
A-8 The spouses may designate that payments otherwise qualifying as
alimony or separate maintenance payments shall be nondeductible by the
payor and excludible from gross income by the payee by so providing in a
divorce or separation instrument (as defined in section 71(b)(2)). If
the spouses have executed a written separation agreement (as described
in section 71(b)(2)(B)), any writing signed by both spouses which
designates otherwise qualifying alimony or separate maintenance payments
as nondeductible and excludible and which refers to the written
separation agreement will be treated as a written separation agreement
(and thus a divorce or separation instrument) for purposes of the
preceding sentence. If the spouses are subject to temporary support
orders (as described in section 71(b)(2)(C)), the designation of
otherwise qualifying alimony or separate payments as nondeductible and
excludible must be made in the original or a subsequent temporary
support order. A copy of the instrument containing the designation of
payments as not alimony or separate maintenance payments must be
attached to the payee's first filed return of tax (Form 1040) for each
year in which the designation applies.
Q-9 What are the consequences if, at the time a payment is made,
the payor and payee spouses are members of the same household?
A-9 Generally, a payment made at the time when the payor and payee
spouses are members of the same household cannot qualify as an alimony
or separate maintenance payment if the spouses are legally separated
under a decree of divorce or of separate maintenance. For purposes of
the preceding sentence, a dwelling unit formerly shared by both spouses
shall not be considered two separate households even if the spouses
physically separate themselves within the dwelling unit. The spouses
will not be treated as members of the same household if one spouse is
preparing to depart from the household of the other spouse, and does
depart not more than one month after the date the payment is made. If
the spouses are not legally separated under a decree of divorce or
separate maintenance, a payment under a written separation agreement or
a decree described in section 71(b)(2)(C) may qualify as an alimony or
separate maintenance payment notwithstanding that the payor and payee
are members of the same household at the time the payment is made.
Q-10 Assuming all other requirements relating to the qualification
of certain payments as alimony or separate maintenance payments are met,
what are the consequences if the payor spouse is required to continue to
make the payments after the death of the payee spouse?
A-10 None of the payments before (or after) the death of the payee
spouse qualify as alimony or separate maintenance payments.
Q-11 What are the consequences if the divorce or separation
instrument fails to state that there is no liability for any period
after the death of the payee spouse to continue to make any payments
which would otherwise qualify as alimony or separate maintenance
payments?
A-11 If the instrument fails to include such a statement, none of
the payments, whether made before or after the death of the payee
spouse, will qualify as alimony or separate maintenance payments.
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Example (1). A is to pay B $10,000 in cash each year for a period of
10 years under a divorce or separation instrument which does not state
that the payments will terminate upon the death of B. None of the
payments will qualify as alimony or separate maintenance payments.
Example (2). A is to pay B $10,000 in cash each year for a period of
10 years under a divorce or separation instrument which states that the
payments will terminate upon the death of B. In addition, under the
instrument, A is to pay B or B's estate $20,000 in cash each year for a
period of 10 years. Because the $20,000 annual payments will not
terminate upon the death of B, these payments will not qualify as
alimony or separate maintenance payments. However, the separate $10,000
annual payments will qualify as alimony or separate maintenance
payments.
Q-12 Will a divorce or separation instrument be treated as stating
that there is no liability to make payments after the death of the payee
spouse if the liability to make such payments terminates pursuant to
applicable local law or oral agreement?
A-12 No. Termination of the liability to make payments must be
stated in the terms of the divorce or separation instrument.
Q-13 What are the consequences if the payor spouse is required to
make one or more payments (in cash or property) after the death of the
payee spouse as a substitute for the continuation of pre-death payments
which would otherwise qualify as alimony or separate maintenance
payments?
A-13 If the payor spouse is required to make any such substitute
payments, none of the otherwise qualifying payments will qualify as
alimony or separate maintenance payments. The divorce or separation
instrument need not state, however, that there is no liability to make
any such substitute payment.
Q-14 Under what circumstances will one or more payments (in cash or
property) which are to occur after the death of the payee spouse be
treated as a substitute for the continuation of payments which would
otherwise qualify as alimony or separate maintenance payments?
A-14 To the extent that one or more payments are to begin to be
made, increase in amount, or become accelerated in time as a result of
the death of the payee spouse, such payments may be treated as a
substitute for the continuation of payments terminating on the death of
the payee spouse which would otherwise qualify as alimony or separate
maintenance payments. The determination of whether or not such payments
are a substitute for the continuation of payments which would otherwise
qualify as alimony or separate maintenance payments, and of the amount
of the otherwise qualifying alimony or separate maintenance payments for
which any such payments are a substitute, will depend on all of the
facts and circumstances.
Example (1). Under the terms of a divorce decree, A is obligated to
make annual alimony payments to B of $30,000, terminating on the earlier
of the expiration of 6 years or the death of B. B maintains custody of
the minor children of A and B. The decree provides that at the death of
B, if there are minor children of A and B remaining, A will be obligated
to make annual payments of $10,000 to a trust, the income and corpus of
which are to be used for the benefit of the children until the youngest
child attains the age of majority. These facts indicate that A's
liability to make annual $10,000 payments in trust for the benefit of
his minor children upon the death of B is a substitute for $10,000 of
the $30,000 annual payments to B. Accordingly, $10,000 of each of the
$30,000 annual payments to B will not qualify as alimony or separate
maintenance payments.
Example (2). Under the terms of a divorce decree, A is obligated to
make annual alimony payments to B of $30,000, terminating on the earlier
of the expiration of 15 years or the death of B. The divorce decree
provides that if B dies before the expiration of the 15 year period, A
will pay to B's estate the difference between the total amount that A
would have paid had B survived, minus the amount actually paid. For
example, if B dies at the end of the 10th year in which payments are
made, A will pay to B's estate $150,000 ($450,000-$300,000). These facts
indicate that A's liability to make a lump sum payment to B's estate
upon the death of B is a substitute for the full amount of each of the
annual $30,000 payments to B. Accordingly, none of the annual $30,000
payments to B will qualify as alimony or separate maintenance payments.
The result would be the same if the lump sum payable at B's death were
discounted by an appropriate interest factor to account for the
prepayment.
(c) Child support payments.
Q-15 What are the consequences of a payment which the terms of the
divorce or separation instrument fix as
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payable for the support of a child of the payor spouse?
A-15 A payment which under the terms of the divorce or separation
instrument is fixed (or treated as fixed) as payable for the support of
a child of the payor spouse does not qualify as an alimony or separate
maintenance payment. Thus, such a payment is not deductible by the payor
spouse or includible in the income of the payee spouse.
Q-16 When is a payment fixed (or treated as fixed) as payable for
the support of a child of the payor spouse?
A-16 A payment is fixed as payable for the support of a child of
the payor spouse if the divorce or separation instrument specifically
designates some sum or portion (which sum or portion may fluctuate) as
payable for the support of a child of the payor spouse. A payment will
be treated as fixed as payable for the support of a child of the payor
spouse if the payment is reduced (a) on the happening of a contingency
relating to a child of the payor, or (b) at a time which can clearly be
associated with such a contingency. A payment may be treated as fixed as
payable for the support of a child of the payor spouse even if other
separate payments specifically are designated as payable for the support
of a child of the payor spouse.
Q-17 When does a contingency relate to a child of the payor?
A-17 For this purpose, a contingency relates to a child of the
payor if it depends on any event relating to that child, regardless of
whether such event is certain or likely to occur. Events that relate to
a child of the payor include the following: the child's attaining a
specified age or income level, dying, marrying, leaving school, leaving
the spouse's household, or gaining employment.
Q-18 When will a payment be treated as to be reduced at a time
which can clearly be associated with the happening of a contingency
relating to a child of the payor?
A-18 There are two situations, described below, in which payments
which would otherwise qualify as alimony or separate maintenance
payments will be presumed to be reduced at a time clearly associated
with the happening of a contingency relating to a child of the payor. In
all other situations, reductions in payments will not be treated as
clearly associated with the happening of a contingency relating to a
child of the payor.
The first situation referred to above is where the payments are to
be reduced not more than 6 months before or after the date the child is
to attain the age of 18, 21, or local age of majority. The second
situation is where the payments are to be reduced on two or more
occasions which occur not more than one year before or after a different
child of the payor spouse attains a certain age between the ages of 18
and 24, inclusive. The certain age referred to in the preceding sentence
must be the same for each such child, but need not be a whole number of
years.
The presumption in the two situations described above that payments
are to be reduced at a time clearly associated with the happening of a
contingency relating to a child of the payor may be rebutted (either by
the Service or by taxpayers) by showing that the time at which the
payments are to be reduced was determined independently of any
contingencies relating to the children of the payor. The presumption in
the first situation will be rebutted conclusively if the reduction is a
complete cessation of alimony or separate maintenance payments during
the sixth post-separation year (described in A-21) or upon the
expiration of a 72-month period. The presumption may also be rebutted in
other circumstances, for example, by showing that alimony payments are
to be made for a period customarily provided in the local jurisdiction,
such as a period equal to one-half the duration of the marriage.
Example: A and B are divorced on July 1, 1985, when their children,
C (born July 15, 1970) and D (born September 23, 1972), are 14 and 12,
respectively. Under the divorce decree, A is to make alimony payments to
B of $2,000 per month. Such payments are to be reduced to $1,500 per
month on January 1, 1991 and to $1,000 per month on January 1, 1995. On
January 1, 1991, the date of the first reduction in payments, C will be
20 years 5 months and 17 days old. On January 1, 1995, the date of the
second reduction in payments, D will be 22 years 3 months and 9 days
old. Each of the reductions in payments is to
[[Page 120]]
occur not more than one year before or after a different child of A
attains the age of 21 years and 4 months. (Actually, the reductions are
to occur not more than one year before or after C and D attain any of
the ages 21 years 3 months and 9 days through 21 years 5 months and 17
days.) Accordingly, the reductions will be presumed to clearly be
associated with the happening of a contingency relating to C and D.
Unless this presumption is rebutted, payments under the divorce decree
equal to the sum of the reduction ($1,000 per month) will be treated as
fixed for the support of the children of A and therefore will not
qualify as alimony or separate maintenance payments.
(d) Excess front-loading rules.
Q-19 What are the excess front-loading rules?
A-19 The excess front-loading rules are two special rules which may
apply to the extent that payments in any calendar year exceed $10,000.
The first rule is a minimum term rule, which must be met in order for
any annual payment, to the extent in excess of $10,000, to qualify as an
alimony or separate maintenance payment (see A-2(f)). This rule requires
that alimony or separate maintenance payments be called for, at a
minimum, during the 6 ``post-separation years''. The second rule is a
recapture rule which characterizes payments retrospectively by requiring
a recalculation and inclusion in income by the payor and deducation by
the payee of previously paid alimony or separate maintenance payment to
the extent that the amount of such payments during any of the 6 ``post-
separation years'' falls short of the amount of payments during a prior
year by more than $10,000.
Q-20 Do the excess front-loading rules apply to payments to the
extent that annual payments never exceed $10,000?
A-20 No. For example, A is to make a single $10,000 payment to B.
Provided that the other requirements of section 71 are met, the payment
will qualify as an alimony or separate maintenance payment. If A were to
make a single $15,000 payment to B, $10,000 of the payment would qualify
as an alimony or separate maintenance payment and $5,000 of the payment
would be disqualified under the minimum term rule because payments were
not to be made for the minimum period.
Q-21 Do the excess front-loading rules apply to payments received
under a decree described in section 71(b)(2)(C)?
A-21 No. Payments under decrees described in section 71(b)(2)(C)
are to be disregarded entirely for purposes of applying the excess
front-loading rules.
Q-22 Both the minimum term rule and the recapture rule refer to 6
``post-separation years''. What are the 6 ``post separation years''?
A-22 The 6 ``post-separation years'' are the 6 consecutive calendar
years beginning with the first calendar year in which the payor pays to
the payee an alimony or separate maintenance payment (except a payment
made under a decree described in section 71(b)(2)(C)). Each year within
this period is referred to as a ``post-separation year''. The 6-year
period need not commence with the year in which the spouses separate or
divorce, or with the year in which payments under the divorce or
separation instrument are made, if no payments during such year qualify
as alimony or separate maintenance payments. For example, a decree for
the divorce of A and B is entered in October, 1985. The decree requires
A to make monthly payments to B commencing November 1, 1985, but A and B
are members of the same household until February 15, 1986 (and as a
result, the payments prior to January 16, 1986, do not qualify as
alimony payments). For purposes of applying the excess front-loading
rules to payments from A to B, the 6 calendar years 1986 through 1991
are post-separation years. If a spouse has been making payments pursuant
to a divorce or separation instrument described in section 71(b)(2) (A)
or (B), a modification of the instrument or the substitution of a new
instrument (for example, the substitution of a divorce decree for a
written separation agreement) will not result in the creation of
additional post-separation years. However, if a spouse has been making
payments pursuant to a divorce or separation instrument described in
section 71(b)(2)(C), the 6-year period does not begin until the first
calendar year in which alimony or separate maintenance payments are made
[[Page 121]]
under a divorce or separation instrument described in section 71(b)(2)
(A) or (B).
Q-23 How does the minimum term rule operate?
A-23 The minimum term rule operates in the following manner. To the
extent payments are made in excess of $10,000, a payment will qualify as
an alimony or separate maintenance payment only if alimony or separate
maintenance payments are to be made in each of the 6 post-separation
years. For example, pursuant to a divorce decree, A is to make alimony
payments to B of $20,000 in each of the 5 calendar years 1985 through
1989. A is to make no payment in 1990. Under the minimum term rule, only
$10,000 will qualify as an alimony payment in each of the calendar years
1985 through 1989. If the divorce decree also required A to make a $1
payment in 1990, the minimum term rule would be satisfied and $20,000
would be treated as an alimony payment in each of the calendar years
1985 through 1989. The recapture rule would, however, apply for 1990.
For purposes of determining whether alimony or separate maintenance
payments are to be made in any year, the possible termination of such
payments upon the happening of a contingency (other than the passage of
time) which has not yet occurred is ignored (unless such contingency may
cause all or a portion of the payment to be treated as a child support
payment).
Q-24 How does the recapture rule operate?
A-24 The recapture rule operates in the following manner. If the
amount of alimony or separate maintenance payments paid in any post-
separation year (referred to as the ``computation year'') falls short of
the amount of alimony or separate maintenance payments paid in any prior
post-separation year by more than $10,000, the payor must compute an
``excess amount'' for the computation year. The excess amount for any
computation year is the sum of excess amounts determined with respect to
each prior post-separation year. The excess amount determined with
respect to a prior post-separation year is the excess of (1) the amount
of alimony or separate maintenance payments paid by the payor spouse
during such prior post-separation year, over (2) the amount of the
alimony or separate maintenance payments paid by the payor spouse during
the computation year plus $10,000. For purposes of this calculation, the
amount of alimony or separate maintenance payments made by the payor
spouse during any post-separation year preceding the computation year is
reduced by any excess amount previously determined with respect to such
year. The rules set forth above may be illustrated by the following
example. A makes alimony payments to B of $25,000 in 1985 and $12,000 in
1986. The excess amount with respect to 1985 that is recaptured in 1986
is $3,000 ($25,000- ($12,000+$10,000)). For purposes of subsequent
computation years, the amount deemed paid in 1985 is $22,000. If A makes
alimony payments to B of $1,000 in 1987, the excess amount that is
recaptured in 1987 will be $12,000. This is the sum of an $11,000 excess
amount with respect to 1985 ($22,000-$1,000+$10,000)) and a $1,000
excess amount with respect to 1986 ($12,000-($1,000+$10,000)). If, prior
to the end of 1990, payments decline further, additional recapture will
occur. The payor spouse must include the excess amount in gross income
for his/her taxable year begining with or in the computation year. The
payee spouse is allowed a deduction for the excess amount in computing
adjusted gross income for his/her taxable year beginning with or in the
computation year. However, the payee spouse must compute the excess
amount by reference to the date when payments were made and not when
payments were received.
Q-25 What are the exceptions to the recapture rule?
A-25 Apart from the $10,000 threshold for application of the
recapture rule, there are three exceptions to the recapture rule. The
first exception is for payments received under temporary support orders
described in section 71(b)(2)(C) (see A-21). The second exception is for
any payment made pursuant to a continuing liability over the period of
the post-separation years to pay a fixed portion of the payor's income
from a business or property or from compensation for employment or self-
employment. The third exception is
[[Page 122]]
where the alimony or separate manitenance payments in any post-
separation year cease by reason of the death of the payor or payee or
the remarriage (as defined under applicable local law) of the payee
before the close of the computation year. For example, pursuant to a
divorce decree, A is to make cash payments to B of $30,000 in each of
the calendar years 1985 through 1990. A makes cash payments of $30,000
in 1985 and $15,000 in 1986, in which year B remarries and A's alimony
payments cease. The recapture rule does not apply for 1986 or any
subsequent year. If alimony or separate maintenance payments made by A
decline or cease during a post-separation year for any other reason
(including a failure by the payor to make timely payments, a
modification of the divorce or separation instrument, a reduction in the
support needs of the payee, or a reduction in the ability of the payor
to provide support) excess amounts with respect to prior post-separation
years will be subject to recapture.
(e) Effective dates.
Q-26 When does section 71, as amended by the Tax Reform Act of
1984, become effective?
A-26 Generally, section 71, as amended, is effective with respect
to divorce or separation instruments (as defined in section 71(b)(2))
executed after December 31, 1984. If a decree of divorce or separate
maintenance executed after December 31, 1984, incorporates or adopts
without change the terms of the alimony or separate maintenance payments
under a divorce or separation instrument executed before January 1,
1985, such decree will be treated as executed before January 1, 1985. A
change in the amount of alimony or separate maintenance payments or the
time period over which such payments are to continue, or the addition or
deletion of any contingencies or conditions relating to such payments is
a change in the terms of the alimony or separate maintenance payments.
For example, in November 1984, A and B executed a written separation
agreement. In February 1985, a decree of divorce is entered in
substitution for the written separation agreement. The decree of divorce
does not change the terms of the alimony A pays to B. The decree of
divorce will be treated as executed before January 1, 1985 and hence
alimony payments under the decree will be subject to the rules of
section 71 prior to amendment by the Tax Reform Act of 1984. If the
amount or time period of the alimony or separate maintenance payments
are not specified in the pre-1985 separation agreement or if the decree
of divorce changes the amount or term of such payments, the decree of
divorce will not be treated as executed before January 1, 1985, and
alimony payments under the decree will be subject to the rules of
section 71, as amended by the Tax Reform Act of 1984.
Section 71, as amended, also applies to any divorce or separation
instrument executed (or treated as executed) before January 1, 1985 that
has been modified on or after January 1, 1985, if such modification
expressly provides that section 71, as amended by the Tax Reform Act of
1984, shall apply to the instrument as modified. In this case, section
71, as amended, is effective with respect to payments made after the
date the instrument is modified.
(Secs. 1041(d)(4) (98 Stat. 798, 26 U.S.C. 1041(d)(4), 152(e)(2)(A) (98
Stat. 802, 26 U.S.C. 152(e)(2)(A), 215(c) (98 Stat. 800, 26 U.S.C.
215(c)) and 7805 (68A Stat. 917, 26 U.S.C. 7805) of the Internal Revenue
Code of 1954.
[T.D. 7973, 49 FR 34455, Aug. 31, 1984; 49 FR 36645, Sept. 19, 1984]
Sec. 1.71-2 Effective date; taxable years ending after March 31, 1954, subject to the Internal Revenue Code of 1939.
Pursuant to section 7851(a)(1)(C), the regulations prescribed in
Sec. 1.71-1, to the extent that they relate to payments under a written
separation agreement executed after August 16, 1954, and to the extent
that they relate to payments under a decree for support received after
August 16, 1954, under a decree entered after March 1, 1954, shall also
apply to taxable years beginning before January 1, 1954, and ending
after August 16, 1954, although such years are subject to the Internal
Revenue Code of 1939.
Sec. 1.72-1 Introduction.
(a) General principle. Section 72 prescribes rules relating to the
inclusion
[[Page 123]]
in gross income of amounts received under a life insurance, endowment,
or annuity contract unless such amounts are specifically excluded from
gross income under other provisions of Chapter 1 of the Code. In
general, these rules provide that amounts subject to the provisions of
section 72 are includible in the gross income of the recipient except to
the extent that they are considered to represent a reduction or return
of premiums or other consideration paid.
(b) Amounts to be considered as a return of premiums. For the
purpose of determining the extent to which amounts received represent a
reduction or return of premiums or other consideration paid, the
provisions of section 72 distinguish between ``amounts received as an
annuity'' and ``amounts not received as an annuity''. In general,
``amounts received as an annuity'' are amounts which are payable at
regular intervals over a period of more than one full year from the date
on which they are deemed to begin, provided the total of the amounts so
payable or the period for which they are to be paid can be determined as
of that date. See paragraph (b) (2) and (3) of Sec. 1.72-2. Any other
amounts to which the provisions of section 72 apply are considered to be
``amounts not received as an annuity''. See Sec. 1.72-11.
(c) ``Amounts received as an annuity.'' (1) In the case of ``amounts
received as an annuity'' (other than certain employees' annuities
described in section 72(d) and in Sec. 1.72-13), a proportionate part of
each amount so received is considered to represent a return of premiums
or other consideration paid. The proportionate part of each annuity
payment which is thus excludable from gross income is determined by the
ratio which the investment in the contract as of the date on which the
annuity is deemed to begin bears to the expected return under the
contract as of that date. See Sec. 1.72-4.
(2) In the case of employees' annuities of the type described in
section 72(d), no amount received as an annuity in a taxable year to
which the Internal Revenue Code of 1954 applies is includible in the
gross income of a recipient until the aggregate of all amounts received
thereunder and excluded from gross income under the applicable income
tax law exceeds the consideration contributed (or deemed contributed) by
the employee under Sec. 1.72-8. Thereafter, all amounts so received are
includible in the gross income of the recipient. See Sec. 1.72-13.
(d) ``Amounts not received as an annuity''. In the case of ``amounts
not received as an annuity'', if such amounts are received after an
annuity has begun and during its continuance, amounts so received are
generally includible in the gross income of the recipient. Amounts not
received as an annuity which are received at any other time are
generally includible in the gross income of the recipient only to the
extent that such amounts, when added to all amounts previously received
under the contract which were excludable from the gross income of the
recipient under the income tax law applicable at the time of receipt,
exceed the premiums or other consideration paid (see Sec. 1.72-11).
However, if the aggregate of premiums or other consideration paid for
the contract includes amounts for which a deduction was allowed under
section 404 as contributions on behalf of an owner-employee, the amounts
received under the circumstances of the preceding sentence shall be
includible in gross income until the amount so included equals the
amount for which the deduction was so allowed. See paragraph (b) of
Sec. 1.72-17.
(e) Classification of recipients. For the purpose of the regulations
under section 72, a recipient shall be considered an ``annuitant'' if he
receives amounts under an annuity contract during the period that the
annuity payments are to continue, whether for a term certain or during
the continuing life or lives of the person or persons whose lives
measure the duration of such annuity. However, a recipient shall be
considered a ``beneficiary'' rather than an ``annuitant'' if the amounts
he receives under a contract are received after the term of the annuity
for a life or lives has expired and such amounts are paid by reason of
the fact that the contract guarantees that payments of some minimum
amount or for some minimum period shall be made. For special
[[Page 124]]
rules with respect to beneficiaries, see paragraphs (a)(1)(iii) and (c)
of Sec. 1.72-11.
[T.D. 6500, 25 FR 11402, Nov. 26, 1960, as amended by T.D. 6676, 28 FR
10134, Sept. 17, 1963]
Sec. 1.72-2 Applicability of section.
(a) Contracts. (1) The contracts under which amounts paid will be
subject to the provisions of section 72 include contracts which are
considered to be life insurance, endowment, and annuity contracts in
accordance with the customary practice of life insurance companies. For
the purposes of section 72, however, it is immaterial whether such
contracts are entered into with an insurance company. The term
``endowment contract'' also includes the ``face-amount certificates''
described in section 72(1).
(2) If two or more annuity obligations or elements to which section
72 applies are acquired for a single consideration, such as an
obligation to pay an annuity to A for his life accompanied by an
obligation to pay an annuity to B for his life, there being a single
consideration paid for both obligations (whether paid by one or more
persons in equal or different amounts, and whether paid in a single sum
or otherwise), such annuity elements shall be considered to comprise a
single contract for the purpose of the application of section 72 and the
regulations thereunder. For rules relating to the allocation of
investment in the contract in the case of annuity elements payable to
two or more persons, see paragraph (b) of Sec. 1.72-6.
(3)(i) Sections 402 and 403 provide that certain distributions by
employees' trusts and certain payments under employee plans are taxable
under section 72. For taxable years beginning before January 1, 1964,
section 72(e)(3), as in effect before such date, does not apply to such
distributions or payments. For purposes of applying section 72 to such
distributions and payments (other than those described in subdivision
(iii) of this subparagraph), each separate program of the employer
consisting of interrelated contributions and benefits shall be
considered a single contract. Therefore, all distributions or payments
(other than those described in subdivision (iii) of this subparagraph)
which are attributable to a separate program of interrelated
contributions and benefits are considered as received under a single
contract. A separate program of interrelated contributions and benefits
may be financed by the purchase from an insurance company of one or more
group contracts or one or more individual contracts, or may be financed
partly by the purchase of contracts from an insurance company and partly
through an investment fund, or may be financed completely through an
investment fund. A program may be considered separate for purposes of
section 72 although it is only a part of a plan which qualifies under
section 401. There may be several trusts under one separate program, or
several separate programs may make use of a single trust. See, however,
subdivision (iii) of this subparagraph for rules relating to what
constitutes a ``contract'' for purposes of applying section 72 to
distributions commencing before October 20, 1960.
(ii) The following types of benefits, and the contributions used to
provide them, are examples of separate programs of interrelated
contributions and benefits:
(a) Definitely determinable retirement benefits.
(b) Definitely determinable benefits payable prior to retirement in
case of disability.
(c) Life insurance.
(d) Accident and health insurance.
However, retirement benefits and life insurance will be considered part
of a single separate program of interrelated contributions and benefits
to the extent they are provided under retirement income, endowment, or
other contracts providing life insurance protection. See examples (6),
(7), and (8) contained in subdivision (iv) of this subparagraph for
illustrations of the principles of this subdivision. See, also,
Sec. 1.72-15 for rules relating to the taxation of amounts received
under an employee plan which provides both retirement benefits and
accident and health benefits.
(iii) If any amount which is taxable under section 72 by reason of
section 402 or 403 is actually distributed or made available to any
person under an employees' trust or plan (other than the Civil Service
Retirement Act, 5
[[Page 125]]
U.S.C. ch. 14) before October 20, 1960, section 72 shall,
notwithstanding any other provisions in this subparagraph, be applied to
all the distributions with respect to such person (or his beneficiaries)
under such trust or plan (whether received before or after October 20,
1960) as though such distributions were provided under a single
contract. For purposes of applying section 72 to distributions to which
this subdivision applies, therefore, the term ``contract'' shall be
considered to include the entire interest of an employee in each trust
or plan described in sections 402 and 403 to the extent that
distributions thereunder are subject to the provisions of section 72.
Section 72 shall be applied to distributions received under the Civil
Service Retirement Act in the manner prescribed in subdivision (i) of
this subparagraph (see example (4) in subdivision (iv) of this
subparagraph).
(iv) The application of this subparagraph may be illustrated by the
following examples:
Example (1). On January 1, 1961, X Corporation established a
noncontributory profit-sharing plan for its employees providing that the
amount standing to the account of each participant will be paid to him
at the time of his retirement and also established a contributory
pension plan for its employees providing for the payment to each
participant of a lifetime pension after retirement. The profit-sharing
plan is designed to enable the employees to participate in the profits
of X Corporation; the amount of the contributions to it are determined
by reference to the profits of X Corporation; and the amount of any
distribution is determined by reference to the amount of contributions
made on behalf of any participant and the earnings thereon. On the other
hand, the pension plan is designed to provide a lifetime pension for a
retired employee; the amount of the pension is to be determined by a
formula set forth in the plan; and the amount of contributions to the
plan is the amount necessary to provide such pensions. In view of the
fact that each of these plans constitutes a separate program of
interrelated contributions and benefits, the distributions from each
shall be treated as received under a separate contract. If these plans
had been established before October 20, 1960, then, in the case of an
employee who receives a distribution under the plans before October 20,
1960, the determination as to whether that distribution and all
subsequent distributions to such employee are received under a single
contract or under more than one contract shall be made by applying the
rules in subdivision (iii) of this subparagraph. On the other hand, in
the case of an employee who does not receive any distribution under
these plans before October 20, 1960, the determination as to whether
distributions to him are received under a single contract or under more
than one contract shall be made in accordance with the rules illustrated
by this example.
Example (2). On January 1, 1961, Z Corporation established a profit-
sharing plan for its employees providing that any employee may make
contributions, not in excess of 6 percent of his compensation, to a
trust and that the employer would make matching contributions out of
profits. Under the plan, a participant may receive a periodic
distribution of the amount standing in his account during any period
that he is absent from work due to a personal injury or sickness. On
separation from service, the participant is entitled to receive a
distribution of the balance standing in his account in accordance with
one of several options. One option provides for the immediate
distribution of one-half of the account and for the periodic
distribution of the remaining one-half of the account. In addition, any
participant may, after the completion of five years of participation,
withdraw any part of his account, but in the case of such a withdrawal,
the participant forfeits his rights to participate in the plan for a
period of two years. Thus, a participant may receive distributions
before separation from service; he may receive a distribution of a lump
sum upon separation from service; he may also receive periodic
distributions upon separation from service. However, since it is the
total amount received under all the options that is interrelated with
the contributions to the plan and not the amount received under any one
option, this profit-sharing plan consists of only one separate program
of interrelated contributions and benefits and all distributions under
the plan (regardless of the option under which received) are treated as
received under one contract. However, if, instead of providing that the
amount standing in an employee's account would be paid to him during any
period that he is absent from work due to a personal injury or sickness,
the plan provided that a portion of the amount in the employee's account
would be used to purchase incidental accident and health insurance, this
plan would consist of two separate programs of interrelated
contributions and benefits. The accident and health insurance, and the
contributions used to purchase it, would be considered as one separate
program of interrelated contributions and benefits and, therefore, a
separate
[[Page 126]]
contract; whereas, the remaining contributions and benefits would be
considered another separate program of interrelated contributions and
benefits and, consequently, another separate contract.
Example (3). On January 1, 1961, N Corporation established a profit-
sharing plan for its employees providing that the employees may make
contributions, not in excess of 6 percent of their compensation, to a
trust and that N Corporation would make matching contributions out of
its profits. Under the plan, the employee may elect each year to have
his and the employer's contributions for such year placed in either a
savings arrangement or a retirement arrangement. Such an election is
irrevocable. Under the savings arrangement, contributions to such
arrangement for any one year and the earnings thereon will be
distributed five years later. The retirement arrangement provides that
all contributions thereto and the earnings thereon will be distributed
when the employee is separated from the service of N Corporation. Since
the distributions under the retirement arrangement are attributable
solely to the contributions made to such arrangement and are not
affected in any manner by contributions or distributions under the
savings arrangement or any other plan, such distributions are treated as
received under a separate program of interrelated contributions and
benefits. Similarly, since distributions during any year under the
savings arrangement are attributable only to contributions to such
arrangement made during the fifth preceding year and are not affected in
any manner by any other contributions to or distributions from such
arrangement or any other plan, the savings arrangement constitutes a
series of separate programs of interrelated contributions and benefits.
The contributions to the savings arrangement for any year and the
distribution in a subsequent year based thereon constitute a separate
contract for purposes of section 72.
Example (4). The Civil Service Retirement Act (5 U.S.C. Ch. 14)
which provides retirement benefits for participating employees, consists
of a compulsory program and a voluntary program. Under the compulsory
program, all participating employees are required to make certain
contributions and, upon retirement, are provided retirement benefits
computed on the basis of compensation and length of service. Under the
voluntary program, such participating employees are permitted to make
contributions in addition to those required under the compulsory program
and, upon retirement, are provided additional retirement benefits
computed on the basis of their voluntary contributions. Distributions
received under the Act constitute distributions from two separate
contracts for purposes of section 72. Distributions received under the
compulsory program are considered as received under a separate program
of interrelated contributions and benefits since they are computed
solely under the compulsory program and are not affected by any
contributions or distributions under the voluntary program or under any
other plan. For similar reasons, distributions which are attributable to
the voluntary contributions are considered as received under a separate
program of interrelated contributions and benefits.
Example (5). On January 1, 1961, M Corporation established a
contributory pension plan for its employees and created a trust to which
it makes contributions to fund such plan. The plan provides that each
participant will receive after age 65 a pension of 1\1/2\ percent of his
compensation for each year of service performed subsequent to the
establishment of such plan. In order to fund part of the benefits under
the plan, the trustee purchased a group annuity contract. The remaining
part of the benefits are to be paid out of a separate investment fund.
This pension plan constitutes a single program of interrelated
contributions and benefits and, therefore, all distributions received by
an employee under the plan are considered as received under a single
contract for purposes of section 72.
Example (6). On January 1, 1961, Y Corporation established a
noncontributory pension plan (including incidental death benefits) for
its employees and created a trust to which it makes contributions to
fund such plan. The plan provides that each participant will receive
after age 65 a pension of 1\1/2\ percent of his compensation for each
year of service performed subsequent to the establishment of such plan.
In addition, such plan provides for the payment of a death benefit if
the employee dies before age 65. The trustee funded the death benefits
through the purchase of a group term insurance policy and funded the
retirement benefits through the purchase of a group annuity contract.
Because of a subsequent change in funding from the deferred annuity
method to the deposit administration method, the trustee purchased a
second group annuity contract to provide the retirement benefits under
the plan accruing after the effective date of the change in method of
funding. Thus, retirement benefits distributed to an employee whose
service with Y Corporation commenced before the effective date of the
change in method of funding will be attributable to both group annuity
contracts. This pension plan includes two separate programs of
interrelated contributions and benefits. The death benefits, and the
contributions required to provide them, are considered as one separate
program of interrelated contributions and benefits; whereas,
[[Page 127]]
the retirement benefits, and the contributions required to provide them,
are considered as another separate program of interrelated contributions
and benefits. Therefore, any retirement benefits received by an
employee, whether attributable to one or both of the group annuity
contracts, shall be considered as received under a single contract for
purposes of section 72. In determining the tax treatment of any such
retirement benefits under section 72, no amount of the premiums used to
purchase the group term insurance policy shall be taken into account,
since such premiums, and the death benefits which they purchased,
constitute a separate program of interrelated contributions and
benefits.
Example (7). Assume the same facts as in example (6) except that, in
lieu of funding the benefits in the manner described in that example,
the trustee purchased individual retirement income contracts from an
insurance company. Additional individual retirement income contracts are
purchased in order to fund any increase in benefits resulting from
increases in salary. Therefore, distributions to a particular employee
may be attributable to a single retirement income contract or to more
than one such contract. All distributions received by an employee under
the pension plan, whether attributable to one or more retirement income
contracts and whether made directly from the insurance company to the
employee or made through the trustee, are considered as received under a
single contract for purposes of section 72. For rules relating to the
tax treatment of contributions and distributions under retirement
income, endowment, or other life insurance contracts purchased by a
trust described in section 401(a) and exempt under section 501(a), see
paragraph (a) (2), (3), and (4) of Sec. 1.402(a)-1.
Example (8). Assume the same facts as in example (6) except that, in
lieu of funding the benefits in the manner described in that example,
the trustee funded the death benefits and part of the retirement
benefits by purchasing individual retirement income contracts from an
insurance company. The remaining part of the retirement benefits (such
as any increase in benefits resulting from increases in salary) are to
be paid out of a separate investment fund. This pension plan includes,
with respect to each participant, two separate contracts for purposes of
section 72. The retirement income contract purchased by the trust for
each participant is a separate program of interrelated contributions and
benefits and all distributions attributable to such contract (whether
made directly from the insurance company to the employee or made through
the trustee) are considered as received under a single contract. For
rules relating to the tax treatment of contributions and distributions
under retirement income, endowment, or other life insurance contracts
purchased by a trust described in section 401(a) and exempt under
section 501(a), see paragraph (a) (2), (3), and (4) of Sec. 1.402(a)-1.
The remaining distributions under the plan are considered as received
under another separate program of interrelated contributions and
benefits.
(b) Amounts. (1)(i) In general, the amounts to which section 72
applies are any amounts received under the contracts described in
paragraph (a)(1) of this section. However, if such amounts are
specifically excluded from gross income under other provisions of
Chapter 1 of the Code, section 72 shall not apply for the purpose of
including such amounts in gross income. For example, section 72 does not
apply to amounts received under a life insurance contract if such
amounts are paid by reason of the death of the insured and are
excludable from gross income under section 101(a). See also sections
101(d), relating to proceeds of life insurance paid at a date later than
death, and 104(a)(4), relating to compensation for injuries or sickness.
(ii) Section 72 does not exclude from gross income any amounts
received under an agreement to hold an amount and pay interest thereon.
See paragraph (a) of Sec. 1.72-14. However, section 72 does apply to
amounts received by a surviving annuitant under a joint and survivor
annuity contract since such amounts are not considered to be paid by
reason of the death of an insured. For a special deduction for the
estate tax attributable to the inclusion of the value of the interest of
a surviving annuitant under a joint and survivor annuity contract in the
estate of the deceased primary annuitant, see section 691(d) and the
regulations thereunder.
(2) Amounts subject to section 72 in accordance with subparagraph
(1) of this paragraph are considered ``amounts received as an annuity''
only in the event that all of the following tests are met:
(i) They must be received on or after the ``annuity starting date''
as that term is defined in paragraph (b) of Sec. 1.72-4;
(ii) They must be payable in periodic installments at regular
intervals (whether annually, semiannually, quarterly, monthly, weekly,
or otherwise) over a period of more than one full
[[Page 128]]
year from the annuity starting date; and
(iii) Except as indicated in subparagraph (3) of this paragraph, the
total of the amounts payable must be determinable at the annuity
starting date either directly from the terms of the contract or
indirectly by the use of either mortality tables or compound interest
computations, or both, in conjunction with such terms and in accordance
with sound actuarial theory.
For the purpose of determining whether amounts subject to section 72(d)
and Sec. 1.72-13 are ``amounts received as an annuity'', however, the
provisions of subdivision (i) of this subparagraph shall be disregarded.
In addition, the term ``amounts received as an annuity'' does not
include amounts received to which the provisions of paragraph (b) or (c)
of Sec. 1.72-11 apply, relating to dividends and certain amounts
received by a beneficiary in the nature of a refund. If an amount is to
be paid periodically until a fund plus interest at a fixed rate is
exhausted, but further payments may be made thereafter because of
earnings at a higher interest rate, the requirements of subdivision
(iii) of this subparagraph are met with respect to the payments
determinable at the outset by means of computations involving the fixed
interest rate, but any payments received after the expiration of the
period determinable by such computations shall be taxable as dividends
received after the annuity starting date in accordance with paragraph
(b)(2) of Sec. 1.72-11.
(3)(i) Notwithstanding the requirement of subparagraph (2)(iii) of
this paragraph, if amounts are to be received for a definite or
determinable time (whether for a period certain or for a life or lives)
under a contract which provides:
(a) That the amount of the periodic payments may vary in accordance
with investment experience (as in certain profit-sharing plans), cost of
living indices, or similar fluctuating criteria, or
(b) For specified payments the value of which may vary for income
tax purposes, such as in the case of any annuity payable in foreign
currency,
each such payment received shall be considered as an amount received as
an annuity only to the extent that it does not exceed the amount
computed by dividing the investment in the contract, as adjusted for any
refund feature, by the number of periodic payments anticipated during
the time that the periodic payments are to be made. If payments are to
be made more frequently than annually, the amount so computed shall be
multiplied by the number of periodic payments to be made during the
taxable year for the purpose of determining the total amount which may
be considered received as an annuity during such year. To this extent,
the payments received shall be considered to represent a return of
premium or other consideration paid and shall be excludable from gross
income in the taxable year in which received. See paragraph (d) (2) and
(3) of Sec. 1.72-4. To the extent that the payments received under the
contract during the taxable year exceed the total amount thus considered
to be received as an annuity during such year, they shall be considered
to be amounts not received as an annuity and shall be included in the
gross income of the recipient. See section 72(e) and paragraph (b)(2) of
Sec. 1.72-11.
(ii) For purposes of subdivision (i) of this subparagraph, the
number of periodic payments anticipated during the time payments are to
be made shall be determined by multiplying the number of payments to be
made each year (a) by the number of years payments are to be made, or
(b) if payments are to be made for a life or lives, by the multiple
found by the use of the appropriate tables contained in Sec. 1.72-9, as
adjusted in accordance with the table in paragraph (a)(2) of Sec. 1.72-
5.
(iii) For an example of the computation to be made in accordance
with this subparagraph and a special election which may be made in a
taxable year subsequent to a taxable year in which the total payments
received under a contract described in this subparagraph are less than
the total of the amounts excludable from gross income in such year under
subdivision (i) of
[[Page 129]]
this subparagraph, see paragraph (d)(3) of Sec. 1.72-4.
[T.D. 6500, 25 FR 11402, Nov. 26, 1960, as amended by T.D. 6497, 25 FR
10019, Oct. 20, 1960; T.D. 6885, 31 FR 7798, June 2, 1966]
Sec. 1.72-3 Excludable amounts not income.
In general, amounts received under contracts described in paragraph
(a)(1) of Sec. 1.72-2 are not to be included in the income of the
recipient to the extent that such amounts are excludable from gross
income as the result of the application of section 72 and the
regulations thereunder.
Sec. 1.72-4 Exclusion ratio.
(a) General rule. (1)(i) To determine the proportionate part of the
total amount received each year as an annuity which is excludable from
the gross income of a recipient in the taxable year of receipt (other
than amounts received under (a) certain employee annuities described in
section 72(d) and Sec. 1.72-13, or (b) certain annuities described in
section 72(o) and Sec. 1.122-1), an exclusion ratio is to be determined
for each contract. In general, this ratio is determined by dividing the
investment in the contract as found under Sec. 1.72-6 by the expected
return under such contract as found under Sec. 1.72-5. Where a single
consideration is given for a particular contract which provides for two
or more annuity elements, an exclusion ratio shall be determined for the
contract as a whole by dividing the investment in such contract by the
aggregate of the expected returns under all the annuity elements
provided thereunder. However, where the provisions of paragraph (b)(3)
of Sec. 1.72-2 apply to payments received under such a contract, see
paragraph (b)(3) of Sec. 1.72-6. In the case of a contract to which
Sec. 1.72-6(d) (relating to contracts in which amounts were invested
both before July 1, 1986, and after June 30, 1986) applies, the
exclusion ratio for purposes of this paragraph (a) is determined in
accordance with Sec. 1.72-6(d) and, in particular, Sec. 1.72-6(d)(5)(i).
(ii) The exclusion ratio for the particular contract is then applied
to the total amount received as an annuity during the taxable year by
each recipient. See, however, paragraph (e)(3) of Sec. 1.72-5. Any
excess of the total amount received as an annuity during the taxable
year over the amount determined by the application of the exclusion
ratio to such total amount shall be included in the gross income of the
recipient for the taxable year of receipt.
(2) The principles of subparagraph (1) may be illustrated by the
following example:
Example Taxpayer A purchased an annuity contract providing for
payments of $100 per month for a consideration of $12,650. Assuming that
the expected return under this contract is $16,000 the exclusion ratio
to be used by A is $12,650/16,000; or 79.1 percent (79.06 rounded to the
nearest tenth). If 12 such monthly payments are received by A during his
taxable year, the total amount he may exclude from his gross income in
such year is $949.20 ($1,200x79.1 percent).The balance of $250.80
($1,200 less $949.20) is the amount to be included in gross income. If A
instead received only five such payments during the year, he should
exclude $395.50 (500x79.1 percent) of the total amounts received.
For examples of the computation of the exclusion ratio in cases where
two annuity elements are acquired for a single consideration, see
paragraph (b)(1) of Sec. 1.72-6.
(3) The exclusion ratio shall be applied only to amounts received as
an annuity within the meaning of that term under paragraph (b) (2) and
(3) of Sec. 1.72-2. Where the periodic payments increase in amount after
the annuity starting date in a manner not provided by the terms of the
contract at such date, the portion of such payments representing the
increase is not an amount received as an annuity. For the treatment of
amounts not received as an annuity, see section 72(e) and Sec. 1.72-11.
For special rules where paragraph (b)(3) of Sec. 1.72-2 applies to
amounts received, see paragraph (d)(3) of this section.
(4) After an exclusion ratio has been determined for a particular
contract, it shall be applied to any amounts received as an annuity
thereunder unless or until one of the following occurs:
(i) The contract is assigned or transferred for a valuable
consideration (see section 72(g) and paragraph (a) of Sec. 1.72-10);
(ii) The contract matures or is surrendered, redeemed, or discharged
in
[[Page 130]]
accordance with the provisions of paragraph (c) or (d) of Sec. 1.72-11;
(iii) The contract is exchanged (or is considered to have been
exchanged) in a manner described in paragraph (e) of Sec. 1.72-11.
(b) Annuity starting date. (1) Except as provided in subparagraph
(2) of this paragraph, the annuity starting date is the first day of the
first period for which an amount is received as an annuity, except that
if such date was before January 1, 1954, then the annuity starting date
is January 1, 1954. The first day of the first period for which an
amount is received as an annuity shall be whichever of the following is
the later:
(i) The date upon which the obligations under the contract became
fixed, or
(ii) The first day of the period (year, half-year, quarter, month,
or otherwise, depending on whether payments are to be made annually,
semiannually, quarterly, monthly, or otherwise) which ends on the date
of the first annuity payment.
(2) Notwithstanding the provisions of paragraph (b)(1) of this
section, the annuity starting date shall be determined in accordance
with whichever of the following provisions is appropriate:
(i) In the case of a joint and survivor annuity contract described
in section 72(i) and paragraph (b)(3) of Sec. 1.72-5, the annuity
starting date is January 1, 1954, or the first day of the first period
for which an amount is received as an annuity by the surviving
annuitant, whichever is the later;
(ii) In the case of the transfer of an annuity contract for a
valuable consideration, as described in section 72(g) and paragraph (a)
of Sec. 1.72-10, the annuity starting date shall be January 1, 1954, or
the first day of the first period for which the transferee received an
amount as an annuity, whichever is the later;
(iii) If the provisions of paragraph (e) of Sec. 1.72-11 apply to an
exchange of one contract for another, or to a transaction deemed to be
such an exchange, the annuity starting date of the contract received (or
deemed received) in exchange shall be January 1, 1954, or the first day
of the first period for which an amount is received as an annuity under
such contract, whichever is the later; and
(iv) In the case of an employee who has retired from work because of
personal injuries or sickness, and who is receiving amounts under a plan
that is a wage continuation plan under section 105(d) and Sec. 1.105-4,
the annuity starting date shall be the date the employee reaches
mandatory retirement age, as defined in Sec. 1.105-4(a)(3)(i)(B). (See
also Secs. 1.72-15 and 1.105-6 for transitional and other special
rules.)
(c) Fiscal year taxpayers. Fiscal year taxpayers receiving amounts
as annuities in a taxable year to which the Internal Revenue Code of
1954 applies shall determine the annuity starting date in accordance
with section 72(c)(4) and this section. The annuity starting date for
fiscal year taxpayers receiving amounts as an annuity in a taxable year
to which the Internal Revenue Code of 1939 applies shall be January 1,
1954, except where the first day of the first period for which an amount
is received by such a taxpayer as an annuity is subsequent thereto and
before the end of a fiscal year to which the Internal Revenue Code of
1939 applied. In such case, the latter date shall be the annuity
starting date. In all cases where a fiscal year taxpayer received an
amount as an annuity in a taxable year to which the Internal Revenue
Code of 1939 applied and subsequent to the annuity starting date
determined in accordance with the provisions of this paragraph, such
amount shall be disregarded for the purposes of section 72 and the
regulations thereunder.
(d) Exceptions to the general rule. (1) Where the provisions of
section 72 would otherwise require an exclusion ratio to be determined,
but the investment in the contract (determined under Sec. 1.72-6) is an
amount of zero or less, no exclusion ratio shall be determined and all
amounts received under such a contract shall be includible in the gross
income of the recipient for the purposes of section 72.
(2) Where the investment in the contract is equal to or greater than
the total expected return under such contract found under Sec. 1.72-5,
the exclusion
[[Page 131]]
ratio shall be considered to be 100 percent and all amounts received as
an annuity under such contract shall be excludable from the recipient's
gross income. See, for example, paragraph (f)(1) of Sec. 1.72-5. In the
case of a contract to which Sec. 1.72-6(d) (relating to contracts in
which amounts were invested both before July 1, 1986, and after June 30,
1986) applies, this paragraph (d)(2) is applied in the manner prescribed
in Sec. 1.72-6(d) and, in particular, Sec. 1.72-6(d)(5)(ii).
(3)(i) If a contract provides for payments to be made to a taxpayer
in the manner described in paragraph (b)(3) of Sec. 1.72-2, the
investment in the contract shall be considered to be equal to the
expected return under such contract and the resulting exclusion ratio
(100%) shall be applied to all amounts received as an annuity under such
contract. For any taxable year, payments received under such a contract
shall be considered to be amounts received as an annuity only to the
extent that they do not exceed the portion of the investment in the
contract which is properly allocable to that year and hence excludable
from gross income as a return of premiums or other consideration paid
for the contract. The portion of the investment in the contract which is
properly allocable to any taxable year shall be determined by dividing
the investment in the contract (adjusted for any refund feature in the
manner described in paragraph (d) of Sec. 1.72-7) by the applicable
multiple (whether for a term certain, life, or lives) which would
otherwise be used in determining the expected return for such a contract
under Sec. 1.72-5. The multiple shall be adjusted in accordance with the
provisions of the table in paragraph (a)(2) of Sec. 1.72-5, if any
adjustment is necessary, before making the above computation. If
payments are to be made more frequently than annually and the number of
payments to be made in the taxable year in which the annuity begins are
less than the number of payments to be made each year thereafter, the
amounts considered received as an annuity (as otherwise determined under
this subdivision) shall not exceed, for such taxable year (including a
short taxable year), an amount which bears the same ratio to the portion
of the investment in the contract considered allocable to each taxable
year as the number of payments to be made in the first year bears to the
number of payments to be made in each succeeding year. Thus, if payments
are to be made monthly, only seven payments will be made in the first
taxable year, and the portion of the investment in the contract
allocable to a full year of payments is $600, the amounts considered
received as an annuity in the first taxable year cannot exceed $350
($600x\7/12\). See subdivision (iii) of this subparagraph for an example
illustrating the determination of the portion of the investment in the
contract allocable to one taxable year of the taxpayer.
(ii) If subdivision (i) of this subparagraph applies to amounts
received by a taxpayer and the total amount of payments he receives in a
taxable year is less than the total amount excludable for such year
under subdivision (i) of this subparagraph, the taxpayer may elect, in a
succeeding taxable year in which he receives another payment, to
redetermine the amounts to be received as an annuity during the current
and succeeding taxable years. This shall be computed in accordance with
the provisions of subdivision (i) of this subparagraph except that:
(a) The difference between the portion of the investment in the
contract allocable to a taxable year, as found in accordance with
subdivision (i) of this subparagraph, and the total payments actually
received in the taxable year prior to the election shall be divided by
the applicable life expectancy of the annuitant (or annuitants), found
in accordance with the appropriate table in Sec. 1.72-9 (and adjusted in
accordance with paragraph (a)(2) of Sec. 1.72-5), or by the remaining
term of a term certain annuity, computed as of the first day of the
first period for which an amount is received as an annuity in the
taxable year of the election; and
(b) The amount determined under (a) of this subdivision shall be
added to the portion of the investment in the contract allocable to each
taxable year (as otherwise found). To the extent that the total periodic
payments received under the contract in the taxable year
[[Page 132]]
of the election or any succeeding taxable year does not equal this total
sum, such payments shall be excludable from the gross income of the
recipient. To the extent such payments exceed the sum so found, they
shall be fully includible in the recipient's gross income. See
subdivision (iii) of this subparagraph for an example illustrating the
redetermination of amounts to be received as an annuity and subdivision
(iv) of this subparagraph for the method of making the election provided
by this subdivision.
(iii) The application of the principles of paragraph (d)(3) (i) and
(ii) of this section may be illustrated by the following example:
Example. Taxpayer A, a 64 year old male, files his return on a
calendar year basis and has a life expectancy of 15.6 years on June 30,
1954, the annuity starting date of a contract to which Sec. 1.72-2(b)(3)
applies and which he purchased for $20,000. The contract provides for
variable annual payments for his life. He receives a payment of $1,000
on June 30, 1955, but receives no other payment until June 30, 1957. He
excludes the $1,000 payment from his gross income for the year 1955
since this amount is less than $1,324.50, the amount determined by
dividing his investment in the contract ($20,000) by his life expectancy
adjusted for annual payments, 15.1 (15.6-0.5), as of the original
annuity starting date. Taxpayer A may elect, in his return for the
taxable year 1957, to redetermine amounts to be received as an annuity
under his contract as of June 30, 1956. For the purpose of determining
the extent to which amounts received in 1957 or thereafter shall be
considered amounts received as an annuity (to which a 100 percent
exclusion ratio shall apply) he shall add $118.63 to the $1,324.50
originally determined to be receivable as an annuity under the contract,
making a total of $1,443.13. This is determined by dividing the
difference between what was excludable in 1955 and 1956, $2,649
(2x$1,324.50) and what he actually received in those years ($1,000) by
his life expectancy adjusted for annual payments, 13.9 (14.4-0.5), as of
his age at his nearest birthday (66) on the first day of the first
period for which he received an amount as an annuity in the taxable year
of election (June 30, 1956). The result, $1,443.13, is excludable in
that year and each year thereafter as an amount received as an annuity
to which the 100% exclusion ratio applies. It will be noted that in this
example the taxpayer received amounts less than the excludable amounts
in two successive years and deferred making his election until the third
year, and thus was able to accumulate the portion of the investment in
the contract allocable to each taxable year to the extent he failed to
receive such portion in both years. Assuming that he received $1,500 in
the taxable year of his election, he would include $56.87 in his gross
income and exclude $1,443.13 therefrom for that year.
(iv) If the taxpayer chooses to make the election described in
subdivision (ii) of this subparagraph, he shall file with his return a
statement that he elects to make a redetermination of the amounts
excludable from gross income under his annuity contract in accordance
with the provisions of paragraph (d)(3) of Sec. 1.72-4. This statement
shall also contain the following information:
(a) The original annuity starting date and his age on that date,
(b) The date of the first day of the first period for which he
received an amount in the current taxable year,
(c) The investment in the contract originally determined (as
adjusted for any refund feature), and
(d) The aggregate of all amounts received under the contract between
the date indicated in (a) of this subdivision and the day after the date
indicated in (b) of this subdivision to the extent such amounts were
excludable from gross income.
He shall include in gross income any amounts received during the taxable
year for which the return is made in accordance with the redetermination
made under this subparagraph.
(v) In the case of a contract to which Sec. 1.72-6(d) (relating to
contracts in which amounts were invested both before July 1, 1986, and
after June 30, 1986) applies, this paragraph (d)(3) is applied in the
manner prescribed in Sec. 1.72-6(d) and, in particular, Sec. 1.72-
6(d)(5)(iii). This application may be illustrated by the following
example:
Example B, a male calendar year taxpayer, purchases a contract which
provides for variable annual payments for life and to which Sec. 1.72-
2(b)(3) applies. The annuity starting date of the contract is June 30,
1990, when B is 64 years old. B receives a payment of $1,000 on June 30,
1991, but receives no other payment until June 30, 1993. B's total
investment in the contract is $25,000. B's pre-July 1986 investment in
the contract is $12,000. If B makes the election described in Sec. 1.72-
6(d)(6), separate computations are required to determine the amounts
received as an annuity and excludable from gross income with
[[Page 133]]
respect to the pre-July 1986 investment in the contract and the post-
June 1986 investment in the contract. In the separate computations, B
first determines the applicable portions of the total payment received
which are allocable to the pre-July 1986 investment in the contract and
the post-June 1986 investment in the contract. The portion of the
payment received allocable to the pre-July 1986 investment in the
contract is $480 ($12,000/$25,000 x $1,000). The portion of the payment
received allocable to the post-June 1986 investment in the contract is
$520 ($13,000/$25,000 x $1,000).
Second, B determines the pre-July 1986 investment in the contract
and the post-June 1986 investment in the contract allocable to the
taxable year by dividing the pre-July 1986 and post-June 1986
investments in the contract by the applicable life expectancy multiple.
The life expectancy multiple applicable to pre-July 1986 investment in
the contract is B's life expectancy as of the original annuity starting
date adjusted for annual payments and is determined under Table I of
Sec. 1.72-9 [15.1 (15.6-0.5)]. The life expectancy multiple applicable
to post-June 1986 investment in the contract is determined under Table V
of Sec. 1.72-9 (20.3 (20.8-0.5)). Thus, the pre-July 1986 investment in
the contract allocable to each taxable year is $794.70 ($12,000/15.1),
and the post-June 1986 investment in the contract so allocable is
$640.39 ($13,000/20.3). Because the applicable portions of the total
payment received in 1991 under the contract ($480 allocable to the pre-
July 1986 investment in the contract and $520 allocable to the post-June
1986 investment in the contract) are treated as amounts received as an
annuity and are excludable from gross income to the extent they do not
exceed the portion of the corresponding investment in the contract
allocable to 1991 ($794.70 pre-July 1986 investment in the contract and
$640.39 post-June 1986 investment in the contract), the entire amount of
each applicable portion of the total payment is excludable from gross
income. B may elect, in the return filed for taxable year 1993, to
redetermine amounts to be received as an annuity under the contract as
of June 30, 1992. The extent to which the amounts received in 1993 or
thereafter shall be considered amounts received as an annuity is
determined as follows:
Pre-July 1986 investment in the contract allocable to $1,589.40
taxable years 1991 and 1992 ($794.70 x 2).................
Less: Portion of total payments allocable to pre-July 1986 480.00
investment in the contract actually received as an annuity
in taxable years 1991 and 1992............................
------------
1,109.40
Divided by: Life expectancy multiple applicable to pre-July 13.9
1986 investment in the contract for B, age 66 (14.4--0.5).
------------
79.81
Plus: Amount originally determined with respect to pre-July 794.70
1986 investment in the contract...........................
------------
Pre-July 1986 amount....................................... 874.51
============
Post-June 1986 investment in the contract allocable to $1,280.78
taxable years 1991 and 1992 ($640.39 x 2).................
Less: Portion of total payments allocable to post-June 1986 520.00
investment in the contract actually received as an annuity
in taxable years 1991 and 1992............................
------------
760.78
Divided by: Life expectancy multiple applicable to post- 18.7
June 1986 investment in the contract for B, age 66 (19.2-
0.5)......................................................
------------
40.68
Plus: Amount originally determined with respect to post- 640.39
June 1986 investment in the contract......................
------------
Post-June 1986 amount...................................... 681.07
(vi) The method of making an election to perform the separate
computations illustrated in paragraph (d)(3)(v) of this section is
described in Sec. 1.72-6(d)(6).
(e) Exclusion ratio in the case of two or more annuity elements
acquired for a single consideration. (1)(i) Where two or more annuity
elements are provided under a contract described in paragraph (a)(2) of
Sec. 1.72-2, an exclusion ratio shall be determined for the contract as
a whole and applied to all amounts received as an annuity under any of
the annuity elements. To obtain this ratio, the investment in the
contract determined in accordance with Sec. 1.72-6 shall be divided by
the aggregate of the expected returns found with respect to each of the
annuity elements in accordance with Sec. 1.72-5. For this purpose, it is
immaterial that payments under one or more of the annuity elements
involved have not commenced at the time when an amount is first received
as an annuity under one or more of the other annuity elements.
[[Page 134]]
(ii) The exclusion ratio found under subdivision (i) of this
subparagraph does not apply to:
(a) An annuity element payable to a surviving annuitant under a
joint and survivor annuity contract to which section 72(i) and
paragraphs (b)(3) and (e)(3) of Sec. 1.72-5 apply, or to
(b) A contract under which one or more of the constituent annuity
elements provides for payments described in paragraph (b)(3) of
Sec. 1.72-2.
For rules with respect to a contract providing for annuity elements
described in (b) of this subdivision, see subparagraph (2) of this
paragraph.
(2) If one or more of the annuity elements under a contract
described in paragraph (a)(2) of Sec. 1.72-2 provides for payments to
which paragraph (b)(3) of Sec. 1.72-2 applies:
(i) With respect to the annuity elements to which paragraph (b)(3)
of Sec. 1.72-2 does not apply, an exclusion ratio shall be determined by
dividing the portion of the investment in the entire contract which is
properly allocable to all such elements (in the manner provided in
paragraph (b)(3)(ii) of Sec. 1.72-6) by the aggregate of the expected
returns thereunder and such ratio shall be applied in the manner
described in subdivision (i) of subparagraph (1); and
(ii) With respect to the annuity elements to which paragraph (b)(3)
of Sec. 1.72-2 does apply, the investment in the entire contract shall
be reduced by the portion thereof found in subdivision (i) of this
subparagraph and the resulting amount shall be used to determine the
extent to which the aggregate of the payments received during the
taxable year under all such elements is excludable from gross income.
The amount so excludable shall be allocated to each recipient under such
elements in the same ratio that the total of payments he receives each
year bears to the total of the payments received by all such recipients
during the year. The exclusion ratio with respect to the amounts so
allocated shall be 100 percent. See paragraph (f)(2) of Sec. 1.72-5 and
paragraph (b)(3) of Sec. 1.72-6.
(iii) In the case of a contract to which Sec. 1.72-6(d) (relating to
contracts in which amounts were invested both before July 1, 1986, and
after June 30, 1986) applies, this paragraph (e) is applied in the
manner prescribed in Sec. 1.72-6(d) and, in particular, Sec. 1.72-
6(d)(5)(iv).
[T.D. 6500, 25 FR 11402, Nov. 26, 1960, as amended by T.D. 7352, 40 FR
16663, Apr. 14, 1975; T.D. 8115, 51 FR 45691, Dec. 19, 1986; 52 FR
10223, Mar. 31, 1987]
Sec. 1.72-5 Expected return.
(a) Expected return for but one life. (1) If a contract to which
section 72 applies provides that one annuitant is to receive a fixed
monthly income for life, the expected return is determined by
multiplying the total of the annuity payments to be received annually by
the multiple shown in Table I or V (whichever is applicable) of
Sec. 1.72-9 under the age (as of the annuity starting date) and, if
applicable, sex of the measuring life (usually the annuitant's). Thus,
where a male purchases a contract before July 1, 1986, providing for an
immediate annuity of $100 per month for his life and, as of the annuity
starting date (in this case the date of purchase), the annuitant's age
at his nearest birthday is 66, the expected return is computed as
follows:
Monthly payment of $100x12 months equals annual payment of.... $1,200
Multiple shown in Table I, male, age 66....................... 14.4
---------
Expected return (1,200x14.4).................................. 17,280
If, however, the taxpayer had purchased the contract after June 30,
1986, the expected return would be $23,040, determined by multiplying
19.2 (multiple shown in Table V, age 66) by $1,200.
(2)(i) If payments are to be made quarterly, semiannually, or
annually, an adjustment of the applicable multiple shown in Table I or V
(whichever is applicable) may be required. A further adjustment may be
required where the interval between the annuity starting date and the
date of the first payment is less than the interval between future
payments. Neither adjustment shall be made, however, if the payments are
to be made more frequently than quarterly. The amount of the adjustment,
if any, is to be found in accordance with the following table:
[[Page 135]]
--------------------------------------------------------------------------------------------------------------------------------------------------------
If the number of whole months from the annuity starting
date to the first payment date is-- 0-1 2 3 4 5 6 7 8 9 10 11 12
--------------------------------------------------------------------------------------------------------------------------------------------------------
And the payments under the contract are to be made:
Annually............................................ +0.5 +0.4 +0.3 +0.2 +0.1 0 0 -0.1 -0.2 -0.3 -0.4 -0.5
-----------------------------------------------------------------------------------------------
Semiannually........................................ +.2 +.1 0 0 -.1 -.2 ....... ....... ....... ....... ....... .......
-----------------------------------------------------------------------------------------------
Quarterly........................................... +.1 0 -.1 ..... ..... ..... ....... ....... ....... ....... ....... .......
--------------------------------------------------------------------------------------------------------------------------------------------------------
Thus, for a male, age 66, the multiple found in Table I, adjusted for
quarterly payments the first of which is to be made one full month after
the annuity starting date, is 14.5 (14.4+0.1); for semiannual payments
the first of which is to be made six full months from the annuity
starting date, the adjusted multiple is 14.2 (14.4-0.2); for annual
payments the first of which is to be made one full month from the
annuity starting date, the adjusted multiple is 14.9 (14.4+0.5). If the
annuitant in the example shown in subparagraph (1) of this paragraph
were to receive an annual payment of $1,200 commencing 12 full months
after his annuity starting date, the amount of the expected return would
be $16,680 ($1,200x13.9 [14.4-0.5]). Similarly, for an annuitant, age
50, the multiple found in Table V, adjusted for quarterly payments the
first of which is to be made one full month after the annuity starting
date, is 33.2 (33.1+0.1); for semiannual payments the first of which is
to be made six full months from the annuity starting date, the adjusted
multiple is 32.9 (33.1-0.2); for annual payments the first of which is
to be made one full month from the annuity starting date, the adjusted
multiple is 33.6 (33.1+0.5).
(ii) Notwithstanding the table in subdivision (i) of this
subparagraph, adjustments of multiples for early or other than monthly
payments determined prior to February 19, 1956, under the table
prescribed in paragraph 1(b)(4) of T.D. 6118 (19 FR 9897, C.B. 1955-1,
699), approved December 30, 1954, need not be redetermined.
(3) If the contract provides for fixed payments to be made to an
annuitant until death or until the expiration of a specified limited
period, whichever occurs earlier, the expected return of such temporary
life annuity is determined by multiplying the total of the annuity
payments to be received annually by the multiple shown in Table IV or
VIII (whichever is applicable) of Sec. 1.72-9 for the age (as of the
annuity starting date) and, if applicable, sex of the annuitant and the
nearest whole number of years in the specified period. For example, if a
male annuitant, age 60 (at his nearest birthday), is to receive $60 per
month for five years or until he dies, whichever is earlier, and there
is no post-June 1986, investment in the contract, the expected return
under such a contract is $3,456, computed as follows:
Monthly payments of $60x12 months equals annual payment of.... $720
Multiple shown in Table IV for male, age 60, for term of 5 4.8
years........................................................
---------
Expected return for 5 year temporary life annuity of $720 per $3,456
year ($720x4.8)..............................................
If the annuitant purchased the same contract after June 30, 1986, the
expected return under the contract would be $3,528, computed as follows:
Monthly payments of $60x12 months equals annual payment $720.00
of....................................................
Multiple shown in Table VIII for annuitant, age 60, for 4.9
term of 5 years.......................................
----------------
Expected return for 5-year temporary life annuity of $3,528.00
$720 per year ($720x4.9)..............................
The adjustment provided by subparagraph (2) of this paragraph shall not
be made with respect to the multiple found in Table IV or VIII
(whichever is applicable).
(4) If the contract provides for payments to be made to an annuitant
for the annuitant's lifetime, but the amount of the annual payments is
to
[[Page 136]]
be decreased after the expiration of a specified limited period, the
expected return is computed by considering the contract as a combination
of a whole life annuity for the smaller amount plus a temporary life
annuity for an amount equal to the difference between the larger and the
smaller amount. For example, if a male annuitant, age 60, is to receive
$150 per month for five years or until his earlier death, and is to
receive $90 per month for the remainder of his lifetime after such five
years, the expected return is computed as if the annuitant's contract
consisted of a whole life annuity for $90 per month plus a five year
temporary life annuity of $60 per month. In such circumstances, the
expected return if there is no post-June 1986 investment in the contract
is computed as follows:
Monthly payments of $90x12 months equals annual payment $1,080
of....................................................
Multiple shown in Table I for male, age 60............. 18.2
----------------
Expected return for whole life annuity of $1,080 per $19,656
year..................................................
Expected return for 5-year temporary life annuity of $3,456
$720 per year (as found in subparagraph (3) of this
paragraph (a))........................................
----------------
Total expected return.............................. $23,112
If the annuitant purchased the same contract after June 30, 1986, the
expected return would be $29,664, computed as follows:
Monthly payments of $90x12 months equals annual payment $1,080
of....................................................
Multiple shown in Table V for annuitant, age 60........ 24.2
----------------
Expected return for whole life annuity of $1,080 per $26,136
year..................................................
Plus: Expected return for 5-year temporary life annuity $3,528
of $720 per year (as found in subparagraph (3) of this
paragraph (a))........................................
----------------
Total expected return.............................. $29,664
If payments are to be made quarterly, semiannually, or annually, an
appropriate adjustment of the multiple found in Table I or V (whichever
is applicable) for the whole life annuity should be made in accordance
with subparagraph (2) of this paragraph.
(5) If the contract described in subparagraph (4) of this paragraph
provided that the amount of the annual payments to the annuitant were to
be increased (instead of decreased) after the expiration of a specified
limited period, the expected return would be computed as if the
annuitant's contract consisted of a whole life annuity for the larger
amount minus a temporary life annuity for an amount equal to the
difference between the larger and smaller amount. Thus, if the annuitant
described in subparagraph (4) of this paragraph were to receive $90 per
month for five years or until his earlier death, and to receive $150 per
month for the remainder of his lifetime after such five years, the
expected return would be computed by subtracting the expected return
under a five year temporary life annuity of $60 per month from the
expected return under a whole life annuity of $150 per month. In such
circumstances, the expected return if there is no post-June 1986
investment in the contract is computed as follows:
Monthly payments of $150x12 months equals annual $1,800
payment of............................................
Multiple shown in Table 1 (male, age 60)............... 18.2
----------------
Expected return for annuity for whole life of $1,800 $32,760
per year..............................................
Less expected return for 5-year temporary life annuity $3,456
of $720 per year (as found in subparagraph (3)).......
----------------
Net expected return................................ $29,304
If the annuitant purchased the same contract after June 30, 1986, the
expected return would be $40,032, computed as follows:
Monthly payments of $150x12 months equals annual $1,800
payments of...........................................
Multiple shown in Table V (age 60)..................... 24.2
----------------
Expected return for annuity for whole life of $1,800 $43,560
per year..............................................
[[Page 137]]
Less expected return for 5-year temporary life annuity $3,528
of $720 per year (as found in subparagraph (3) of this
paragraph (a))........................................
----------------
Net expected return................................ $40,032
If payments are to be made quarterly, semiannually, or annually, an
appropriate adjustment of the multiple found in Table I or V (whichever
is applicable) for the whole life annuity should be made in accordance
with subparagraph (2) of this paragraph.
(b) Expected return under joint and survivor and joint annuities.
(1) In the case of a joint and survivor annuity contract involving two
annuitants which provides the first annuitant with a fixed monthly
income for life and, after the death of the first annuitant, provides an
identical monthly income for life to a second annuitant, the expected
return shall be determined by multiplying the total amount of the
payments to be received annually by the multiple obtained from Table II
or VI (whichever is applicable) of Sec. 1.72-9 under the ages (as of the
annuity starting date) and, if applicable, sexes of the living
annuitants. For example, a husband purchases a joint and survivor
annuity contract providing for payments of $100 per month for life and,
after his death, for the same amount to his wife for the remainder of
her life. As of the annuity starting date his age at his nearest
birthday is 70 and that of his wife at her nearest birthday is 67. If
there is no post-June 1986 investment in the contract, the expected
return is computed as follows:
Monthly payments of $100x12 months equals annual $1,200
payment of............................................
Multiple shown in Table II (male, age 70, female, age 19.7
67)...................................................
----------------
Expected return ($1,200x19.7).......................... $23,640
If the annuitants purchased the same contract after June 30, 1986, the
expected return would be $26,400, computed as follows:
Monthly payments of $100x12 months equals annual $1,200
payment of............................................
Multiple shown in Table VI (ages 70, 67)............... 22.0
----------------
Expected return ($1,200x22.0).......................... $26,400
If payments are to be made quarterly, semiannually, or annually, an
appropriate adjustment of the multiple found in Table II or VI
(whichever is applicable) should be made in accordance with paragraph
(a)(2) of this section.
(2) If a contract of the type described in subparagraph (1) of this
paragraph provides that a different (rather than an identical) monthly
income is payable to the second annuitant, the expected return is
computed in the following manner. The applicable multiple in Table II or
VI (whichever is applicable) is first found as in the example in
subparagraph (1) of this paragraph. The multiple applicable to the first
annuitant is then found in Table I or V (whichever is applicable) as
though the contract were for a single life annuity. The multiple from
Table I or V is then subtracted from the multiple obtained from Table II
or VI and the resulting multiple is applied to the total payments to be
received annually under the contract by the second annuitant. The result
is the expected return with respect to the second annuitant. The portion
of the expected return with respect to payments to be made during the
first annuitant's life is then computed by applying the multiple found
in Table I or V to the total annual payments to be received by such
annuitant under the contract. The expected returns with respect to each
of the annuitants separately are then aggregated to obtain the expected
return under the entire contract.
Example (1). A husband purchases a joint and survivor annuity
providing for payments of $100 per month for his life and, after his
death, payments to his wife of $50 per month for her life. As of the
annuity starting date his age at his nearest birthday is 70 and that of
his wife at her nearest birthday is 67. There is no post-June 1986
investment in the contract.
Multiple from Table II (male, age 70, female, age 67).. 19.7
Multiple from Table I (male, age 70)................... 12.1
----------------
Difference (multiple applicable to second annuitant)... 7.6
================
Portion of expected return, second annuitant ($600x7.6) $4,560
[[Page 138]]
Portion of expected return, first annuitant $14,520
($1,200x12.1).........................................
----------------
Expected return under the contract................. $19,080
The expected return thus found, $19,080, is to be used in computing the
amount to be excluded from gross income. Thus, if the investment in the
contract in this example is $14,310, the exclusion ratio is $14,310/
$19,080; or 75 percent. The amount excludable from each monthly payment
made to the husband is 75 percent of $100, or $75, and the remaining $25
of each payment received by him shall be included in his gross income.
After the husband's death, the amount excludable by the second annuitant
(the surviving wife) would be 75 percent of each monthly payment of $50,
or $37.50, and the remaining $12.50 of each payment shall be included in
her gross income.
Example (2). If the same contract were purchased after June 30,
1986, the expected return would be $22,800, computed as follows:
Multiple from Table VI (ages 70, 67)................... 22.0
Multiple from Table V (age 70)......................... 16.0
----------------
Difference (multiple applicable to second annuitant)... 6.0
================
Portion of expected return, second annuitant ($600x6.0) $3,600
Plus: Portion of expected return, first annuitant $19,200
($1,200x16.0).........................................
----------------
Expected return under the contract..................... $22,800
If the investment in the contract is $14,310, the exclusion ratio is
$14,310/$22,800, or 62.8 percent. Thus, the husband would exclude $62.80
of each $100 payment received by him. After his death, his wife would
exclude 62.8 percent, or $31.40, of each $50 monthly payment.
Example (3). If amounts were invested in the same contract both
before July 1, 1986, and after June 30, 1986, and the election described
in Sec. 1.72-6(d)(6) were made, two exclusion ratios would be determined
pursuant to Sec. 1.72-6(d). Assume that the husband's total investment
in the contract is $14,310 and that $7,310 is the pre-July 1986
investment in the contract. The pre-July 1986 exclusion ratio would be
$7,310/$19,080, or 38.3 percent. The post-June 1986 exclusion ratio
would be $7,000/$22,800, or 30.7 percent. The husband would exclude
$69.00 ($38.30+$30.70) of the $100 monthly payment received by him. The
remaining $31.00 would be included in his gross income. After the
husband's death, the amount excludable by his wife would be $34.50 (38.3
percent of $50 plus 30.7 percent of $50). The remaining $15.50 would be
included in gross income.
The same method is used if the payments are to be increased after the
death of the first annuitant. Thus, if the payments to be made until the
husband's death were $50 per month and his widow were to receive $100
per month thereafter until her death, the 7.6 multiple in example (1)
above would be applied to the $100 payments, yielding an expected return
with respect to this portion of the annuity contract of $9,120
($1,200x7.6). An expected return of $7,260 ($600x12.1) would be obtained
with respect to the payments to be made to the husband, yielding a total
expected return under the contract of $16,380 ($9,120 plus $7,260). If
payments are to be made quarterly, semiannually, or annually, an
appropriate adjustment of the multiples found in Tables I and II or
Tables V and VI (whichever are applicable) should be made in accordance
with paragraph (a)(2) of this section.
(3) In the case of a joint and survivor annuity contract in respect
of which the first annuitant died in 1951, 1952, or 1953, and the basis
of the surviving annuitant's interest in the contract was determinable
under section 113(a)(5) of the Internal Revenue Code of 1939, such basis
shall be considered the ``aggregate of premiums or other consideration
paid'' by the surviving annuitant for the contract. (For rules governing
this determination, see 26 CFR (1939) 39.22(b)(2)-2 and 39.113(a)(5)-1
(Regulations 118).) In determining such an annuitant's investment in the
contract, such aggregate shall be reduced by any amounts received under
the contract by the surviving annuitant before the annuity starting
date, to the extent such amounts were excludable from his gross income
at the time of receipt. The expected return of the surviving annuitant
in such cases shall be determined in the manner prescribed in paragraph
(a) of this section, as though the surviving annuitant alone were
involved. For this purpose, the appropriate multiple for the survivor
shall be obtained from Table I as of the annuity starting date
determined in accordance with paragraph (b)(2)(i) of Sec. 1.72-4.
[[Page 139]]
(4) If a contract involving two annuitants provides for fixed
monthly payments to be made as a joint life annuity until the death of
the first annuitant to die (in other words, only as long as both remain
alive), the expected return under such contract shall be determined by
multiplying the total of the annuity payments to be received annually
under the contract by the multiple obtained from Table IIA or VIA
(whichever is applicable) of Sec. 1.72-9 under the ages (as of the
annuity starting date) and, if applicable, sexes of the annuitants. If,
however, payments are to be made under the contract quarterly,
semiannually, or annually, an appropriate adjustment of the multiple
found in Table IIA or VIA shall be made in accordance with paragraph
(a)(2) of this section.
(5) If a joint and survivor annuity contract involving two
annuitants provides that a specified amount shall be paid during their
joint lives and a different specified amount shall be paid to the
survivor upon the death of whichever of the annuitants is the first to
die, the following preliminary computation shall be made in all cases
preparatory to determining the expected return under the contract:
(i) From Table II or VI (whichever is applicable), obtain the
multiple under both of the annuitants' ages (as of the annuity starting
date) and, if applicable, their appropriate sexes;
(ii) From Table IIA or VIA (whichever is applicable), obtain the
multiple applicable to both annuitants' ages (as of the annuity starting
date) and, if applicable, their appropriate sexes;
(iii) Apply the multiple found in subdivision (i) of this
subparagraph to the total of the amounts to be received annually after
the death of the first to die; and
(iv) Apply the multiple found in subdivision (ii) of this
subparagraph to the difference between the total of the amounts to be
received annually before and the total of the amounts to be received
annually after the death of the first to die.
If the original annual payment is in excess of the annual payment to be
made after the death of the first to die, the expected return is the sum
of the amounts determined under subdivisions (iii) and (iv) of this
subparagraph. This may be illustrated by the following examples:
Example (1). A husband purchases a joint and survivor annuity
providing for payments of $100 a month for as long as both he and his
wife live, and, after the death of the first to die, payments to the
survivor of $75 a month for life. As of the annuity starting date, his
age at his nearest birthday is 70 and that of his wife at her nearest
birthday is 67. If there is no post-June 1986 investment in the
contract, the expected return under the contract is computed as follows:
Multiple from Table II (male age 70, female age 67).... 19.7
Multiple from Table IIA (male age 70, female age 67)... 9.3
================
Portion of expected return ($900x19.7--sum per year $17,730
after first death)....................................
Plus: Portion of expected return ($300x9.3--amount of $2,790
change in sum at first death).........................
Expected return under the contract................. $20,520
The total expected return in this example, $20,520, is to be used in
computing the amount to be excluded from gross income. Thus, if the
investment in the contract is $17,887, the exclusion ratio is $17,887/
$20,520, or 87.2 percent. The amount excludable from each monthly
payment made while both are alive is 87.2 percent of $100, or $87.20,
and the remaining $12.80 of each payment shall be included in gross
income. After the death of the first to die, the amount excludable by
the survivor shall be 87.2 percent of each monthly payment of $75, or
$65.40, and the remaining $9.60 of each payment shall be included in
gross income.
Example (2). Assume the same facts as in example (1), except that
the contract is purchased after June 30, 1986.
The expected return under the contract is computed as follows:
Multiple from Table VI (ages 70, 67)................... 22.0
Multiple from Table VIA (ages 70, 67).................. 12.4
================
Portion of expected return ($900x22.0--sum per year $19,800
after first death)....................................
Plus: Portion of expected return ($300x12.4--amount of $3,720
change in sum at first death).........................
----------------
Expected return under the contract................. $23,520
Thus, if the investment in the contract is $17,887, the exclusion ratio
is $17,887/$23,520, or 76.1 percent. The amount excludable from
[[Page 140]]
each monthly payment made while both are alive would be 76.1 percent of
$100, or $76.10, and the remaining $23.90 of each payment would be
included in gross income. After the death of the first to die, the
amount excludable by the survivor would be 76.1 percent of each monthly
payment of $75, or $57.08, and the remaining $17.92 of each payment
would be included in gross income.
Example (3). Assume the same facts as in examples (1) and (2),
except that the total investment in the contract is $17,887, and that
the pre-July 1986 investment in the contract is $8,000. Assume also that
one of the annuitants makes the election described in Sec. 1.72-6(d)(6).
Separate computations shall be performed pursuant to Sec. 1.72-6(d) to
determine the amount excludable from gross income. The pre-July 1986
exclusion ratio would be $8,000/$20,520, or 39 percent. The post-June
1986 exclusion ratio would be $9,887/$23,520, or 42 percent. The amount
excludable from each monthly payment made while both are alive would be
$81 ((.39x100)+(.42x100)), and the remaining $19 would be included in
gross income. After the death of the first to die, the amount excludable
by the survivor would be $60.75 ((.39x75)+(.42x75)), and the remaining
$14.25 would be included in gross income.
If the original annual payment is less than the annual payment to be
made after the death of the first to die, the expected return is the
difference between the amounts determined under subdivisions (iii) and
(iv) of this subparagraph. If, however, payments are to be made
quarterly, semiannually, or annually under the contract, the multiples
obtained from both Tables II and IIA or Tables VI and VIA (whichever are
applicable) shall first be adjusted in a manner prescribed in paragraph
(a)(2) of this section.
(6) If a contract provides for the payment of life annuities to two
persons during their respective lives and, after the death of one
(without regard to which one dies first), provides that the survivor
shall receive for life both his own annuity payments and the payments
made formerly to the deceased person, the expected return shall be
determined in accordance with paragraph (e)(4) of this section.
(7) If paragraph (b)(3) of Sec. 1.72-2 applies to payments provided
under a contract and this paragraph applies to such payments, the
principles of this paragraph shall be used in making the computations
described in paragraph (d)(3) of Sec. 1.72-4. This may be illustrated by
the following examples, examples (1) through (3) of which assume that
there is no post-June 1986 investment in the contract:
Example (1). Taxpayer A, a male age 63, pays $24,000 for a contract
which provides that the proceeds (both income and return of capital)
from eight units of an investment fund shall be paid monthly to him for
his life and that after his death the proceeds from six such units shall
be paid monthly to B, a female age 55, for her life. The portion of the
investment in the contract allocable to each taxable year of A is
$955.20 and that allocable to each taxable year of B is $716.40. This is
determined in the following manner:
Multiple from Table II (male, age 63, and female, age 28.1
55)...................................................
Number of units to be paid, in effect, as a joint and x6
survivor annuity......................................
----------------
Number of total annual unit payments anticipatable with 168.6
respect to the joint and survivor annuity element.....
----------------
Multiple from Table I (male, age 63)................... 16.2
Number of units to be paid, in effect, as a single life x2
annuity...............................................
----------------
Number of total annual unit payments anticipatable with 32.4
respect to A alone....................................
----------------
Total number of unit payments anticipatable............ 201
================
Portion of investment in the contract allocable to unit $119.40
payments ($24,000/201) on an annual basis.............
Number of units payable to A while he continues to live x8
----------------
Portion of the investment in the contract allocable to $955.20
each taxable year of A................................
----------------
Portion of investment in the contract allocable to unit $119.40
payments ($24,000/201) on an annual basis.............
Number of units payable to B for her life after A's x6
death.................................................
----------------
Portion of the investment in the contract allocable to $716.40
each taxable year of B................................
For the purpose of the above computation it is immaterial whether or not
A lives to or beyond the life expectancy shown for him in Table I.
[[Page 141]]
Example (2). Assume that Taxpayer A in example (1) receives payments
for five years which are at least as large as the portion of the
investment in the contract allocable to such years, but in the sixth
year he receives a total of only $626.40 rather than the $955.20
allocable to such year. A is 69 and B is 61 at the beginning of the
first monthly period for which an amount is payable in the seventh
taxable year. A makes the election in that year provided under paragraph
(d)(3) of Sec. 1.72-4. The difference between the portion of the
investment in the contract allocable to the sixth year and the amount
actually received in that year is $328.80 ($955.20 less $626.40). In
this case, 139.2 unit payments are anticipatable (on an annual basis),
since the appropriate multiple from Table II of Sec. 1.72-9, 23.2,
multiplied by the number of units payable, in effect, as a joint and
survivor annuity yields this result (6x23.2). A's appropriate multiple
from Table I of Sec. 1.72-9 for the two units which will cease to be
paid at his death is 12.6, and the total number of unit payments
anticipatable (on an annual basis) is, therefore, 164.4 (2x12.6 plus
139.2). Dividing the difference previously found ($328.80) by the total
number of unit payments thus determined (164.4) indicates that A will
have an additional allocation of the investment in the contract of $16
to the seventh and every succeeding full taxable year (8 unitsx$2), and
B will have an additional allocation of the investment in the contract
of $12 (6 unitsx$2) to each taxable year in which she receives 12
monthly payments subsequent to the death of A. The total allocable to
each taxable year of A is, therefore, $971.20, and that allocable to
each taxable year of B will be $728.40.
Example (3). If, in example (2), A had died at the end of the fifth
year, in the sixth year B would have received a payment of $469.80 (that
portion of the $626.40 that A would have received which is in the same
ratio that 6 units bear to 8 units) and would thus have received $246.60
less than the portion of the investment in the contract originally
determined to be allocable to each of her taxable years. In these
circumstances, B would be entitled to elect to redetermine the portion
of the investment in the contract allocable to the taxable year of
election and all subsequent years. The new amount allocable thereto
would be found by dividing the $246.60 difference by her life expectancy
as of the first day of the first period for which she received an amount
as an annuity in the seventh year of the annuity contract, and adding
the result to her originally determined allocation of $716.40.
Example (4). On July 1, 1986, Taxpayer C, age 60, pays $28,000 for a
contract which provides that the proceeds (both income and return of
capital) from 10 units of an investment fund shall be paid monthly to C
for C's life and that after C's death the proceeds from 4 such units
shall be paid monthly to D, age 57, for D's life. The portion of the
investment in the contract allocable to each taxable year of C is
$1,037.00 and that allocable to each taxable year of D is $414.80. This
is determined as follows:
Multiple from Table VI (ages 60, 57)................... 31.2
Number of units to be paid, in effect, as a joint and x4
survivor annuity......................................
----------------
Number of total annual unit payments anticipatable with 124.8
respect to the joint and survivor annuity element.....
================
Multiple from Table V (age 60)......................... 24.2
Number of units to be paid, in effect, as a single life x6
annuity...............................................
----------------
Number of total annual unit payments anticipatable with 145.2
respect to C alone....................................
----------------
Total number of unit payments anticipatable............ 270
================
Portion of investment in the contract allocable to unit 103.70
payments ($28,000/270) on an annual basis.............
Number of units payable to C while C continues to live. x10
----------------
Portion of the investment in the contract allocable to $1,037.00
each taxable year of C................................
----------------
Portion of investment in the contract allocable to unit $103.70
payments ($28,000/270) on an annual basis.............
Number of units payable to D for D's life after C's x4
death.................................................
----------------
Portion of the investment in the contract allocable to $414.80
each taxable year of D................................
For purposes of the above computation it is immaterial whether or not C
lives to or beyond the life expectancy shown in Table V.
Example (5). Assume the same facts as in example (4), except that
C's total investment in the contract is $28,000, and C's pre-July 1986
investment in the contract is $16,000. If C makes the election described
in Sec. 1.72-6(d)(6), separate computations are required to determine
the amount excludable from gross income with respect to the pre-July
1986 investment in the contract and the post-June 1986 investment in the
contract. The annuitant shall apply the appropriate pre-July 1986 and
post-June 1986 life expectancy multiples to the applicable portions of
the
[[Page 142]]
units to be paid as a joint and survivor annuity, and as a single life
annuity.
Pre-July 1986 Computation (all references to unit payments are to
the pre-July 1986 applicable portion of such payments):
Multiple from Table II (male, age 60, female, age 57).. 27.6
Number of units to be paid, in effect, as a joint and x4
survivor annuity......................................
----------------
Number of total annual unit payments anticipatable with 110.40
respect to the joint and survivor annuity element.....
================
Multiple from Table I (male, age 60)................... 18.2
Number of units to be paid, in effect, as a single life x6
annuity...............................................
----------------
Number of total annual unit payments anticipatable with 109.20
respect to C alone....................................
================
Total number of unit payments anticipatable............ 219.6
================
Portion of pre-July 1986 investment in the contract $72.86
allocable to unit payments ($16,000/219.60) on an
annual basis..........................................
----------------
Number of units payable to C while C continues to live. x10
----------------
Portion of pre-July 1986 investment in the contract 728.60
allocable to each taxable year of C...................
----------------
Portion of pre-July 1986 investment in the contract 72.86
allocable to unit payments ($16,000/219.60) on an
annual basis..........................................
Number of units payable to D for D's life after C's x4
death.................................................
----------------
Portion of pre-July 1986 investment in the contract $291.44
allocable to each taxable year of D...................
Post-June 1986 Computation (all references to unit payments are to
the post-June 1986 applicable portion of such payments):
Multiple from Table VI (ages 60, 57)................... 31.2
Number of units to be paid, in effect, as a joint and x4
survivor annuity......................................
----------------
Number of total annual unit payments anticipatable with 124.80
respect to the joint and survivor annuity element.....
================
Multiple from Table V (age 60)......................... 24.2
Number of units to be paid, in effect, as a single life x6
annuity...............................................
----------------
Number of total annual unit payments anticipatable with 145.20
respect to C alone....................................
----------------
Total number of unit payments anticipatable............ 270
================
Portion of post-June 1986 investment in the contract $44.44
allocable to unit payments ($12,000/270) on an annual
basis.................................................
Number of units payable to C while C continues to live. x10
----------------
Portion of post-June 1986 investment in the contract $444.40
allocable to each taxable year of C...................
================
Portion of post-June 1986 investment in the contract 44.44
allocable to unit payments ($12,000/270) on an annual
basis.................................................
Number of units payable to D for D's life after C's x4
death.................................................
----------------
Portion of post-June 1986 investment in the contract $177.78
allocable to each taxable year of D...................
Total computation:
Total portion of the investment in the contract $1,173.00
allocable to each taxable year of C
($728.60+$444.40)...................................
Total portion of the investment in the contract $469.22
allocable to each taxable year of D
($291.44+$177.78)...................................
Example (6). Assume that taxpayer C in example (4) receives payments
for four years which are at least as large as the portion of the
investment in the contract allocable to such years, but in the fifth
year receives a total of only $600 rather than the $1,037 allocable to
such year. C is 65 and D is 62 at the beginning of the first monthly
period for which an amount is payable in the sixth taxable year. C makes
the election in that year provided under paragraph (d)(3) of Sec. 1.72-
4. The difference between the portion of the investment in the contract
allocable to the fifth year and the amount actually received
[[Page 143]]
in that year is $437 ($1,037-$600). In this case, 106 unit payments are
anticipatable with respect to the joint and survivor annuity element,
since the appropriate multiple from Table VI of Sec. 1.72-9, 26.5,
multiplied by the number of units payable, in effect, as a joint and
survivor annuity yields this result (4 x 26.0). C's appropriate multiple
from Table V of Sec. 1.72-9 for the six units which will cease to be
paid at C's death is 20.0, and the number of unit payments anticipatable
with respect to C alone is 120 (6 x 20). The total number of unit
payments anticipatable is, therefore, 226 (120 plus 106). Dividing the
difference previously found ($437) by the total number of unit payments
thus determined (226) indicates that C will have an additional
allocation of the investment in the contract of $19.30 to the sixth and
every succeeding full taxable year (10 units x $1.93), and D will have
an additional allocation of the investment in the contract of $7.72 (4
units x $1.93) to each taxable year in which D receives 12 monthly
payments subsequent to the death of C. The total allocable to each
taxable year of C is, therefore, $1,056.30, and that allocable to each
taxable year of D will be $422.52.
Example (7). If, in example (6), C had died at the end of the fourth
year, in the fifth year D would have received a payment of $240 (that
portion of the $600 that C would have received which is in the same
ratio that 4 units bear to 10 units) and would thus have received
$174.80 less than the portion of the investment in the contract
allocable to each of D's taxable years. In these circumstances, D would
be entitled to elect to redetermine the portion of the investment in the
contract allocable to the taxable year of election and all subsequent
years. The new amount allocable thereto would be found by dividing the
$174.80 difference by D's life expectancy as of the first day of the
first period for which D received an amount as an annuity in the sixth
year of the annuity contract, and adding the result to D's originally
determined allocation of $414.80.
(c) Expected return for term certain. In the case of a contract
providing for specific periodic payments which are to be paid for a term
certain such as a fixed number of months or years, without regard to
life expectancy, the expected return is determined by multiplying the
fixed number of years or months for which payments are to be made on or
after the annuity starting date by the amount of the payment provided in
the contract for each such period.
(d) Expected return with respect to amount certain. In the case of
contracts involving no life or lives as a measurement of their duration,
but under which a determinable total amount is to be paid in
installments of lesser amounts paid at periodic intervals, the expected
return shall be the total amount guaranteed. If an amount is to be paid
periodically until a fund plus interest at a fixed rate is exhausted,
but further payments may be made thereafter because of earnings at a
higher interest rate, this paragraph shall apply to the total amount
anticipatable as a result of the amount of the fund plus the fixed
interest thereon. Any amount which may be paid as the result of earnings
at a greater interest rate shall be disregarded in determining the
expected return. If such an amount is later received, it shall be
considered an amount not received as an annuity after the annuity
starting date. See paragraph (b)(2) of Sec. 1.72-11.
(e) Expected return where two or more annuity elements providing for
fixed payments are acquired for a single consideration. (1) In the case
of a contract described in paragraph (a)(2) of Sec. 1.72-2, which
provides for specified payments to be made under two or more annuity
elements, the expected return shall be found for the contract as a whole
by aggregating the expected returns found with respect to each annuity
element. If individual life annuity elements are involved (including
joint and survivor annuities where the primary annuitant died before
January 1, 1954) the expected return for each of them shall be
determined in the manner prescribed in paragraph (a) of this section. If
joint and survivor annuity elements are involved, the expected return
for such elements shall be determined under the appropriate subparagraph
of paragraph (b) of this section. If terms certain or amounts certain
are involved, the expected returns for such elements shall be determined
under paragraph (c) or (d) of this section, respectively.
(2) The aggregate expected return found in accordance with the rules
set forth in subparagraph (1) of this paragraph shall constitute the
expected return for the contract as a whole. The investment in the
contract shall be divided by the amount thus determined to obtain the
exclusion ratio for the contract as a whole, This exclusion ratio shall
be applied to all amounts
[[Page 144]]
received as a annuity under the contract by any recipient (in accordance
with the provisions of Sec. 1.72-4), except in the case of amounts
received by a surviving annuitant under a joint and survivor annuity
element to which the provisions of section 72(i) and paragraph (b)(3) of
this section would apply if it were a separate contract. See
subparagraph (3) of this paragraph.
(3) In the case of a contract providing two or more annuity
elements, one of which is a joint and survivor annuity element of the
type described in section 72(i) and paragraph (b)(3) of this section,
the general exclusion ratio for the contract as a whole, for the purpose
of computations with respect to all the other annuity elements shall be
determined in accordance with the principles of subparagraphs (1) and
(2) of this paragraph. A special exclusion ratio shall thereafter be
determined for the surviving annuitant receiving payments under the
annuity element described in section 72(i) and paragraph (b)(3) of this
section by using the investment in the contract and the expected return
determined in accordance with the provisions of paragraph (b)(3) of this
section.
(4) In the case of a contract providing for payments to be made to
two persons in the manner described in paragraph (b)(6) of this section,
the expected return is to be computed as though there were two joint and
survivor annuities under the same contract, in the following manner.
First, the multiple appropriate to the ages (as of the annuity starting
date) and, if applicable, sexes of the annuitants involved shall be
found in Table II or VI (whichever is applicable) of Sec. 1.72-9 and
adjusted, if necessary, in the manner described in paragraph (a)(2) of
this section. Second, the multiple so found shall be applied to the sum
of the payments to be made each year to both annuitants. The result is
the expected return for the contract as a whole.
(5) For rules relating to expected return where two or more annuity
elements are acquired for a single consideration and one or more of such
elements does not specify a fixed payment for each period, see paragraph
(f) of this section.
(f) Expected return with respect to obligations providing for
payments described in paragraph (b)(3) of Sec. 1.72-2. (1) If a contract
to which section 72 applies provides only for payments to be made in a
manner described in paragraph (b)(3) of Sec. 1.72-2, the expected return
for such contract as a whole shall be an amount equal to the investment
in the contract found in accordance with section 72(c)(1) and Sec. 1.72-
6, as adjusted for any refund feature in accordance with Sec. 1.72-7.
(2) If a contract to which section 72 applies provides for annuity
elements, one or more of which (but not all) provide for payments to be
made in a manner described in paragraph (b)(3) of Sec. 1.72-2:
(i) With respect to the portion of the contract providing for
annuity elements to which paragraph (b)(3) of Sec. 1.72-2 does not
apply, the expected return shall be the aggregate of the expected
returns found for each of such elements in accordance with the
appropriate paragraph of this section; and
(ii) With respect to all annuity elements to which paragraph (b)(3)
of Sec. 1.72-2 does apply, the expected return for all such elements
shall be an amount equal to the portion of the investment in the
contract allocable to such elements in accordance with the provisions of
paragraph (e)(2)(ii) of Sec. 1.72-4 and paragraph (b)(3)(ii)(b) of
Sec. 1.72-6.
(g) Expected return with respect to contracts subject to Sec. 1.72-
6(d). In the case of a contract to which Sec. 1.72-6(d) (relating to
contracts in which amounts were invested both before July 1, 1986, and
after June 30, 1986) applies, an expected return is computed using the
multiples in Tables I through IV of Sec. 1.72-9 with respect to the pre-
July 1986 investment in the contract and a second expected return is
computed using the multiples in Tables V through VIII of Sec. 1.72-9
with respect to the post-June 1986 investment in the contract.
[T.D. 6500, 25 FR 11402, Nov. 26, 1960; 25 FR 14021, Dec. 21, 1960, as
amended by T.D. 8115, 51 FR 45694, Dec. 19, 1986]
[[Page 145]]
Sec. 1.72-6 Investment in the contract.
(a) General rule. (1) For the purpose of computing the ``investment
in the contract'', it is first necessary to determine the ``aggregate
amount of premiums or other consideration paid'' for such contract. See
section 72(c)(1). This determination is made as of the later of the
annuity starting date of the contract or the date on which an amount is
first received thereunder as an annuity. The amount so found is then
reduced by the sum of the following amounts in order to find the
investment in the contract:
(i) The total amount of any return of premiums or dividends received
(including unrepaid loans or dividends applied against the principal or
interest on such loans) on or before the date on which the foregoing
determination is made, and
(ii) The total of any other amounts received with respect to the
contract on or before such date which were excludable from the gross
income of the recipient under the income tax law applicable at the time
of receipt.
Amounts to which subdivision (ii) of this subparagraph applies shall
include, for example, amounts considered to be return of premiums or
other consideration paid under section 22(b)(2) of the Internal Revenue
Code of 1939 and amounts considered to be an employer-provided death
benefit under section 22(b)(1)(B) of such Code. For rules relating to
the extent to which an employee or his beneficiary may include employer
contributions in the aggregate amount of premiums or other consideration
paid, see Sec. 1.72-8. If the aggregate amount of premiums or other
consideration paid for the contract includes amounts for which
deductions were allowed under section 404 as contributions on behalf of
a self-employed individual, such amounts shall not be included in the
investment in the contract.
(2) For the purpose of subparagraph (1) of this paragraph, amounts
received subsequent to the receipt of an amount as an annuity or
subsequent to the annuity starting date, whichever is the later, shall
be disregarded. See, however, Sec. 1.72-11.
(3) The application of this paragraph may be illustrated by the
following examples:
Example (1). In 1950, B purchased an annuity contract for $10,000
which was to provide him with an annuity of $1,000 per year for life. He
received $1,000 in each of the years 1950, 1951, 1952, and 1953, prior
to the annuity starting date (January 1, 1954). Under the Internal
Revenue Code of 1939, $300 of each of these payments (3 percent of
$10,000) was includible in his gross income, and the remaining $700 was
excludable therefrom during each of the taxable years mentioned. In
computing B's investment in the contract as of January 1, 1954, the
total amount excludable from his gross income during the years 1950
through 1953 ($2,800) must be subtracted from the consideration paid
($10,000). Accordingly, B's investment in the contract as of January 1,
1954, is $7,200 ($10,000 less $2,800).
Example (2). In 1945, C contracted for an annuity to be paid to him
beginning December 31, 1960. In 1945 and in each successive year until
1960, he paid a premium of $5,000. Assuming he receives no payments of
any kind under the contract until the date on which he receives the
first annual payment as an annuity (December 31, 1960), his investment
in the contract as of the annuity starting date (December 31, 1959) will
be $75,000 ($5,000 paid each year for the 15 years from 1945 to 1959,
inclusive).
Example (3). Assume the same facts as in example (2), except that
prior to the annuity starting date C has already received from the
insurer dividends of $1,000 each in 1949, 1954, and 1959, such dividends
not being includible in his gross income in any of those years. C's
investment in the contract, as of the annuity starting date, will then
be $72,000 ($75,000-$3,000).
(b) Allocation of the investment in the contract where two or more
annuity elements are acquired for a single consideration. (1) In the
case of a contract described in Sec. 1.72-2(a)(2) which provides for two
or more annuity elements, the investment in the contract determined
under paragraph (a) shall be allocated to each of the annuity elements
in the ratio that the expected return under each annuity element bears
to the aggregate of the expected returns under all the annuity elements.
The exclusion ratio for the contract as a whole shall be determined by
dividing the investment in the contract (after adjustment for the
present value of any or all refund features) by the aggregate of the
expected returns under all the annuity elements. This may be illustrated
by the following examples:
[[Page 146]]
Example (1). If a contract provides for annuity payments of $1,000
per year for life (with no refund feature) to both A and B, a male and
female, respectively, each 70 years of age as of the annuity starting
date, such contract is acquired for consideration of $19,575 (without
regard to whether paid by A, B, or both), and there is no post-June 1986
investment in the contract, the investment in the contract shall be
allocated by determining the exclusion ratio for the contract as a whole
in the following manner:
Expectancy of A under Table I and Sec. 1.72-5(a)(2), 11.6 $11,600
(12.1-0.5), multiplied by $1,000.............................
Plus: Expectancy of B computed in a similar manner 14,500
($1,000x14.5 [15.0-0.5]).....................................
---------
Total expected return..................................... 26,100
The exclusion ratio for both A and B is then $19,575/$26,100, or 75
percent. A and B shall each exclude from gross income three-fourths
($750) of each $1,000 annual payment received and shall include the
remaining one-fourth ($250) of each $1,000 annual payment received in
gross income.
Example (2). Assume the same facts as in example (1) except that of
the total investment in the contract of $19,575, the pre-July 1986
investment in the contract is $10,000. If the election described in
Sec. 1.72-6(d)(6) is made with respect to the contract, the investment
in the contract shall be allocated by determining an exclusion ratio for
the contract as a whole based on separately computed exclusion ratios
with respect to the pre-July 1986 investment in the contract and the
post-June 1986 investment in the contract in the following manner:
Expectancy of A under Table I and Sec. 1.72-5(a)(2), 11.6 $11,600
(12.1-0.5), multiplied by $1,000.............................
Plus: Expectancy of B under Table I and Sec. 1.72-5(a)(2), $14,500
14.5 (15.0-0.5), multiplied by $1,000........................
---------
Pre-July 1986 expected return................................. $26,100
Expectancy of A under Table V and Sec. 1.72-5(a)(2), 15.5 $15,500
(16.0-0.5), multiplied by $1,000.............................
Plus: Expectancy of B under Table V and Sec. 1.72-5(a)(2), $15,500
15.5 (16.0-0.5), multiplied by $1,000........................
---------
Post-June 1986 expected return................................ $31,000
=========
Pre-July 1986 exclusion ratio ($10,000/$26,100)............... 38.3
Post-June 1986 exclusion ratio ($9,575/31,000)................ 30.9
A and B shall each exclude from gross income $692 (38.3
percent of $1,000+30.9 percent of $1,000) of each $1,000
payment and include the remaining $308 in gross income
(2) In the case of a contract providing for specified annual annuity
payments to be made to two persons during their joint lives and the
payment of the aggregate of the two individual payments to the survivor
for his life, the investment in the contract shall be allocated in
accordance with the provisions of subparagraph (1) of this paragraph.
For this purpose, the investment in the contract (without regard to the
fact that differing amounts may have been contributed by the two
annuitants) shall be divided by the expected return determined in
accordance with paragraph (e)(4) of Sec. 1.72-5. The resulting exclusion
ratio shall then be applied to any amounts received as an annuity by
either annuitant.
(3) In the case of a contract providing two or more annuity
elements, one or more of which provides for payments to be made in a
manner described in paragraph (b)(3) of Sec. 1.72-2, the investment in
the contract shall be allocated to the various annuity elements in the
following manner.
(i) If all the annuity elements provide for payments to be made in
the manner described in paragraph (b)(3) of Sec. 1.72-2, the investment
in the contract shall be allocated on the basis of the amounts received
by each recipient by apportioning the amount determined to be excludable
under that section to each recipient in the same ratio as the total of
the amounts received by him in the taxable year bears to the total of
the amounts received by all recipients during the same period; and
(ii) If one or more, but not all, of the annuity elements provide
for payments to be made in a manner described in paragraph (b)(3) of
Sec. 1.72-2:
(a) With respect to all annuity elements to which that section does
not apply, the investment in the contract for all such elements shall be
the portion of the investment in the contract as a whole (found in
accordance with the provisions of this section) which is properly
allocable to all such elements; and
[[Page 147]]
(b) With respect to all annuity elements to which paragraph (b)(3)
of Sec. 1.72-2 does apply, the investment in the contract for all such
elements shall be the investment in the contract as a whole (found in
accordance with the provisions of this section) as reduced by the
portion thereof determined under (a) of this subdivision.
For the purpose of determining, pursuant to (a) of this subdivision, the
portion of the investment in the contract as a whole properly allocable
to a particular annuity element, reference shall be made to the present
value of such annuity element determined in accordance with paragraph
(e)(1)(iii) (b) of Sec. 1.101-2.
(iii) In the case of a contract to which paragraph (d) of this
section applies, this paragraph (b) is applied in the manner prescribed
in paragraph (d) and, in particular, paragraph (d)(5)(v) of this
section.
(c) Special rules. (1) For the special rule for determining the
investment in the contract for a surviving annuitant in cases where the
prior annuitant of a joint and survivor annuity contract died in 1951,
1952, or 1953, see paragraph (b)(3) of Sec. 1.72-5.
(2) For special rules relating to the determination of the
investment in the contract where employer contributions are involved,
see Sec. 1.72-8. See also paragraph (b) of Sec. 1.72-16 for a special
rule relating to the determination of the premiums or other
consideration paid for a contract where an employee is taxable on the
premiums paid for life insurance protection that is purchased by and
considered to be a distribution from an exempt employees' trust.
(3) For the determination of an adjustment in investment in the
contract in cases where a contract contains a refund feature, see
Sec. 1.72-7.
(4) In the case of ``face-amount certificates'' described in section
72(1), the amount of consideration paid for purposes of computing the
investment in the contract shall include any amount added to the
holder's basis by reason of section 1232(a)(3)(E) (relating to basis
adjustment for amount of original issue discount ratably included in
gross income as interest under section 1232(a)(3)).
(d) Pre-July 1986 and post-June 1986 investment in the contract. (1)
This paragraph (d) applies to an annuity contract if:
(i) The investment in the contract includes a pre-July 1986
investment in the contract and a post-June 1986 investment in the
contract (both as defined in Sec. 1.72-6(d)(3));
(ii) The use of a multiple found in Tables I through VIII of
Sec. 1.72-9 is required to determine the expected return under the
contract; and
(iii) The election described in paragraph (d)(6) of this section is
made with respect to the contract.
(2) In the case of annuity contract to which this paragraph (d)
applies--
(i) All computations required to determine the amount excludable
from gross income shall be performed separately with respect to the pre-
July 1986 investment in the contract and the post-June 1986 investment
in the contract as if each such amount were the entire investment in the
contract;
(ii) The multiples in Tables I through IV shall be used for
computations involving the pre-July 1986 investment in the contract and
the multiples in Tables V through VIII shall be used for computations
involving the post-June 1986 investment in the contract; and
(iii) The amount excludable from gross income shall be the sum of
the amounts determined under the separate computations required by
paragraph (d)(2)(i) of this section.
(3) For purposes of the regulations under section 72, the pre-July
1986 investment in the contract and post-June 1986 investment in the
contract are determined in accordance with the following rules:
(i)(A) Except as provided in Sec. 1.72-9, if the annuity starting
date of the contract occurs before July 1, 1986, the pre-July 1986
investment in the contract is the total investment in the contract as of
the annuity starting date;
(B) Except as provided in Sec. 1.72-9, if the annuity starting date
of the contract occurs after June 30, 1986, and the contract does not
provide for a disqualifying form of payment or settlement, the pre-July
1986 investment in the contract is the investment in the contract
computed as of June 30, 1986,
[[Page 148]]
as if June 30, 1986, had been the later of the annuity starting date of
the contract or the date on which an amount is first received thereunder
as an annuity;
(C) If the annuity starting date of the contract occurs after June
30, 1986, and the contract provides, at the option of the annuitant or
of any other person (including, in the case of an employee's annuity, an
option exercisable only by, or with the consent of, the employer), for a
disqualifying form of payment or settlement, the pre-July 1986
investment in the contract is zero (i.e., the total investment in the
contract is post-June 1986 investment in the contract).
(ii) The post-June 1986 investment in the contract is the amount by
which the total investment in the contract as of the annuity starting
date exceeds the pre-July 1986 investment in the contract.
(iii) For purposes of paragraph (d)(3)(i) of this section, a
disqualifying form of payment or settlement is any form of payment or
settlement (whether or not selected) that permits the receipt of amounts
under the contract in a form other than a life annuity. For example,
each of the following options provides for a disqualifying form of
payment or settlement:
(A) An option to receive a lump sum in full discharge of the
obligation under the contract.
(B) An option to receive an amount under the contract after June 30,
1986, and before the annuity starting date.
(C) An option to receive an annuity for a period certain.
(D) An option to receive payments under a refund feature (within the
meaning of paragraphs (b) and (c) of Sec. 1.72-7) that is substantially
equivalent to an annuity for a period certain.
(E) An option to receive a temporary life annuity (within the
meaning of Sec. 1.72-5 (a)(3)) that is substantially equivalent to an
annuity for a period certain.
An option to receive alternative forms of life annuity is not a
disqualifying option for purposes of paragraph (d)(3)(i) of this
section. Thus, if the sole options provided under a contract are a
single life annuity and a joint and survivor life annuity, paragraph
(d)(3)(i) (C) of this section does not apply to such contract.
(iv) For purposes of paragraph (d)(3)(iii) of this section, a refund
feature is substantially equivalent to an annuity for a period certain
if its value determined under Table VII of Sec. 1.72-9 exceeds 50
percent. Similarly, a temporary life annuity is substantially equivalent
to an annuity for a period certain if the multiple determined under
Table VIII of Sec. 1.72-9 exceeds 50 percent of the maximum duration of
the annuity.
(4) In any separate computation under this paragraph (d), only the
applicable portion of other amounts (such as the total expected return
under the contract, or the total amount guaranteed under the contract as
of the annuity starting date) shall be taken into account if the use of
the entire amount in such computation is inconsistent with the use in
the computation of only a portion of the investment in the contract. For
example, such use is generally inconsistent if the computation requires
a comparison of the investment in the contract and such other amount for
the purpose of using the greater (or lesser) amount or the difference
between the two. For purposes of the first sentence of this paragraph
(d)(4), the applicable portion is the amount that bears the same ratio
to the entire amount as the pre-July 1986, investment in the contract or
the post-June 1986 investment in the contract, whichever is applicable,
bears to the total investment in the contract as of the annuity starting
date.
(5) Application to particular computations. (i) In the case of a
contract to which this paragraph (d) applies, the exclusion ratio for
purposes of Sec. 1.72-4 (a) is the sum of the exclusion ratios
separately computed in accordance with this paragraph (d). The exclusion
ratio with respect to the pre-July 1986 investment in the contract is
determined by dividing the pre-July 1986 investment in the contract by
the expected return as found under Sec. 1.72-5 by applying the
appropriate multiples of Tables I through IV of Sec. 1.72-9. Similarly,
the exclusion ratio with respect to the post-June 1986 investment in the
contract is determined by dividing the
[[Page 149]]
post-June 1986 investment in the contract by the expected return as
found under Sec. 1.72-5 by applying the appropriate multiples in Tables
V through VIII of Sec. 1.72-9.
(ii) The applicability of Sec. 1.72-4(d)(2) to a contract to which
this paragraph (d) applies shall be determined separately with respect
to the post-June 1986 investment in the contract and the pre-July 1986
investment in the contract and in each such determination only the
applicable portion of the total expected return under the contract shall
be taken into account. If Sec. 1.72-4(d)(2) applies with respect to
either such investment in the contract, the separately computed
exclusion ratio shall be considered to be the applicable portion of 100
percent.
(iii) If Sec. 1.72-4(d)(3) applies to a contract to which this
paragraph (d) applies--
(A) The applicable portions (as defined in paragraph (d)(4) of this
section) of payments received under the contract for a taxable year
shall be separately computed;
(B) The pre-July 1986 investment in the contract and the post-June
1986 investment in the contract shall be separately allocated to the
taxable year; and
(C) The separate applicable portions of the payments received under
the contract for the taxable year shall be considered to be amounts
received as an annuity (for which the exclusion ratio is 100 percent)
only to the extent they do not exceed the portions of the corresponding
investments in the contract which are properly allocable to that year.
See the example in Sec. 1.72-4(d)(3)(v).
(iv) If Sec. 1.72-4(e) applies to a contract to which this paragraph
(d) applies, the exclusion ratio shall be separately computed with
respect to the pre-July 1986 investment in the contract and the post-
June 1986 investment in the contract. For purposes of the separate
computations under Sec. 1.72-4(e)(2)(ii), only the applicable portion of
payments received shall be taken into account and the exclusion ratio
(100%) shall be applied to the separately computed portion allocated to
each participant.
(v) If paragraph (b)(3) of this section applies to a contract to
which this paragraph (d) applies, separate allocations are required with
respect to the pre-July 1986 investment in the contract and the post-
June 1986 investment in the contract.
For purposes of the separate computations required to determine the
portion of the investment in the contract properly allocable to a
particular annuity element, only the applicable portion of the present
value of the annuity element determined in accordance with Sec. 1.101-
2(e)(1)(iii)(b) is taken into account.
(vi) If Sec. 1.72-7 applies to a contract to which this paragraph
(d) applies, separate computations are required to determine the
adjustment to the pre-July 1986 investment in the contract and the post-
June 1986 investment in the contract. For purposes of such separate
computations, only the applicable portions of the amounts described in
Sec. 1.72-7 (b)(3)(ii), (c)(1)(ii)(B), (c)(2)(vii)(B), and (d)(1)(ii)
are taken into account. Similarly, in the case of computations with
respect to the guarantee of a specified amount under Sec. 1.72-7(d)(1),
only the applicable portion of such amount is taken into account.
(6) This paragraph (d) applies to a contract only if the first
taxpayer to receive an amount as an annuity under the contract elects to
perform separate computations with respect to the pre-July 1986
investment in the contract and the post-June 1986 investment in the
contract as if each such amount were the entire investment in contract.
If two or more annuitants receive an amount as an annuity under the
contract at the same time (such as under a joint-and-last-survivorship
annuity contract), an election by one of the annuitants is treated as an
election by each of the annuitants. The election is made by attaching a
statement to the first return filed by the taxpayer for the first
taxable year in which an amount is received as an annuity under the
contract. The statement must indicate that the taxpayer is electing to
apply the provisions of paragraph (d) of Sec. 1.72-6, and must also
contain the name, address, and taxpayer identification number of each
annuitant under the contract, and the amount of the
[[Page 150]]
pre-July 1986 investment in the contract.
(7) If the investment in the contract includes a post-June 1986
investment in the contract and the election described in paragraph
(d)(6) of this section is not made--
(i) The amount excludable from gross income shall be determined
without regard to the separate computations described in this paragraph
(d); and
(ii) Only the multiples found in Tables V through VIII shall be used
in determining the amount excludable from gross income.
[T.D. 6500, 25 FR 11402, Nov. 26, 1960, as amended by T.D. 6676, 28 FR
10134, Sept. 17, 1963; T.D. 7311, 39 FR 11880, Apr. 1, 1974; T.D. 8115,
51 FR 45700, Dec. 19, 1986; 52 FR 10223, Mar. 31, 1987]
Sec. 1.72-7 Adjustment in investment where a contract contains a refund feature.
(a) Definition of a contract containing a refund feature. A contract
to which section 72 applies, contains a refund feature if:
(1) The total amount receivable as an annuity under such contract
depends, in whole or in part, on the continuing life of one or more
persons,
(2) The contract provides for payments to be made to a beneficiary
or the estate of an annuitant on or after the death of the annuitant if
a specified amount or a stated number of payments has not been paid to
the annuitant or annuitants prior to death, and
(3) Such payments are in the nature of a refund of the consideration
paid. See paragraph (c)(1) of Sec. 1.72-11.
(b) Adjustment of investment for the refund feature in the case of a
single life annuity. Where a single life annuity contract to which
section 72 applies contains a refund feature and the special rule of
paragraph (d) of this section does not apply, the investment in the
contract shall be adjusted in the following manner:
(1) Determine the number of years necessary for the guaranteed
amount to be fully paid by dividing the maximum amount guaranteed as of
the annuity starting date by the amount to be received annually under
the contract to the extent such amount reduces the guaranteed amount.
The number of years should be stated in terms of the nearest whole year,
considering for this purpose a fraction of one-half or more as an
additional whole year.
(2) Consult Table III or VII (whichever is applicable) of Sec. 1.72-
9 for the appropriate percentage under the whole number of years found
in subparagraph (1) of this paragraph and the age (as of the annuity
starting date) and, if applicable, sex of the annuitant.
(3) Multiply the percentage found in subparagraph (2) of this
paragraph by whichever of the following is the smaller: (i) The
investment in the contract found in accordance with Sec. 1.72-6 or (ii)
the total amount guaranteed as of the annuity starting date.
(4) Subtract the amount found in subparagraph (3) of this paragraph
from the investment in the contract found in accordance with Sec. 1.72-
6.
The resulting amount is the investment in the contract adjusted for the
present value of the refund feature without discount for interest and is
to be used in determining the exclusion ratio to be applied to the
payments received as an annuity. The percentage found in Tables III or
VII shall not be adjusted in a manner described in paragraph (a)(2) of
Sec. 1.72-5. These principles may be illustrated by the following
examples:
Example (1). On January 1, 1954, a husband, age 65, purchased for
$21,053, an immediate installment refund annuity payable $100 per month
for life. The contract provided that in the event the husband did not
live long enough to recover the full purchase price, payments were to be
made to his wife until the total payments under the contract equaled the
purchase price. The investment in the contract adjusted for the purpose
of determining the exclusion ratio is computed in the following manner:
Cost of the annuity contract (investment in the contract, $21,053
unadjusted)...............................................
Amount to be received annually............................. $1,200
Number of years for which payment guaranteed ($21,053 17.5
divided by $1,200)........................................
Rounded to nearest whole number of years................... 18
Percentage located in Table III for age 65 (age of the 30
annuitant as of the annuity starting date) and 18 (the
number of whole years) (percent)..........................
[[Page 151]]
Subtract value of the refund feature to the nearest dollar $6,316
(30 percent of $21,053)...................................
------------
Investment in the contract adjusted for the present value $14,737
of the refund feature without discount for interest.......
Example (2). Assume the same facts as in example (1), except that
the total investment in the contract was made after June 30, 1986. The
investment in the contract adjusted for the purpose of determining the
exclusion ratio is computed as follows:
Cost of the annuity contract (investment in the contract, $21,053
unadjusted)...............................................
Amount to be received annually............................. $1,200
Number of years for which payment guaranteed ($21,053/ 17.5
$1,200)...................................................
Rounded to nearest whole number of years................... 18
Percentage in Table VII for age 65 and 18 years (percent).. 15
Subtract value of the refund feature to the nearest dollar $3,158
(15 percent of $21,053)...................................
------------
Investment in the contract adjusted for the present value $17,895
of the refund feature without discount for interest.......
Example (3). Assume the same facts as in example (1), except that
the pre-July 1986 investment in the contract is $10,000 and the post-
June 1986 investment in the contract is $11,053. If the annuitant makes
the election described in Sec. 1.72-6(d)(6), separate computations must
be performed pursuant to Sec. 1.72-6(d) to determine the adjusted
investment in the contract. The pre-July 1986 investment in the contract
and the post-June 1986 investment in the contract adjusted for the
purpose of determining the exclusion ratios are, respectively, $7,000
and $9,395, determined as follows:
Pre-July 1986 investment in the contract (unadjusted)...... $10,000
Pre-July 1986 portion of the amount to be received annually $570.00
($10,000/$21,053x$1,200)..................................
Number of years for which payment guaranteed ($10,000/ 17.50
$570).................................................
Rounded to nearest whole number of years............... 18
Percentage in Table III for age 65 and 18 years 30
(percent).............................................
Subtract value of the refund feature to the nearest $3,000
dollar (30 percent of $10,000)........................
Pre-July 1986 investment in the contract adjusted for the $7,000
present value of the refund feature without discount for
interest..................................................
============
Post-June 1986 investment in the contract (unadjusted)..... $11,053
Post-June 1986 portion of the amount to be received $630
annually ($11,053/$21,053x$1,200).........................
Number of years for which payment guaranteed ($11,053/$630) 17.54
Rounded to nearest whole number of years................... 18
Percentage in Table VII for age 65 and 18 years (percent).. 15
Subtract value of the refund feature to the nearest dollar $1,658
(15 percent of $11,053)...................................
------------
Post-June 1986 investment in the contract adjusted for the $9,395
present value of the refund feature without discount for
interest..................................................
If, in the above examples, the guaranteed amount had exceeded the
investment in the contract (or applicable portion thereof), the
percentage found in Table III or VII (whichever is applicable) should
have been applied to the lesser of these amounts since any excess of the
guaranteed amount over the investment in the contract (as found under
Sec. 1.72-6) would not have constituted a refund of premiums or other
consideration paid. In such a case, however, a different multiple might
have been obtained from Table III or VII (whichever is applicable) since
the number of years for which payments were guaranteed would have been
greater.
(c) Adjustment of investment for the refund feature in the case of a
joint and survivor annuity. (1) Except as provided in paragraph (c)(2)
of this section, if a joint and survivor annuity contract described in
paragraph (b) (1), (2) or (6) of Sec. 1.72-5 contains a refund feature
and the special rule of paragraph (d) of this section does not apply,
the investment in the contract shall be adjusted in the following
manner:
(i) Find the percentage determined under the following formula:
[[Page 152]]
[GRAPHIC] [TIFF OMITTED] TC05OC91.042
In which:
V = The percentage, rounded to the nearest whole percent,
x = The age at the nearest birthday of the primary annuitant,
y = The age at the nearest birthday of the survivor annuitant,
N = The guaranteed amount divided by the annual annuity payable to the
primary annuitant, rounded to the nearest integer,
P = The annual annuity continued to the survivor annuitant divided by
the annual annuity payable to the primary annuitant,
[GRAPHIC] [TIFF OMITTED] TC05OC91.043
(ii) Multiply the percentage found in paragraph (c)(1)(i) of this
section by the lesser of (A) the investment in the contract found in
accordance with Sec. 1.72-6, or (B) the total amount guaranteed as of
the annuity starting date.
(iii) Subtract the amount found in paragraph (c)(1)(ii) of this
section from the investment in the contract found in accordance with
Sec. 1.72-6.
In the case of a contract providing for payments to be made to two
persons in the manner described in paragraph (b)(6) of Sec. 1.72-5, this
paragraph (c)(1) is applied as though the older person were the primary
annuitant and the younger person were the survivor annuitant. For
purposes of this paragraph (c)(1), the number of survivors at
agex (lx) is determined under the following table:
------------------------------------------------------------------------
x lx
------------------------------------------------------------------------
5.................................................... 1000000.
6.................................................... 999729.
7.................................................... 999493.
8.................................................... 999284.
9.................................................... 999069.
10................................................... 998849.
11................................................... 998620.
12................................................... 998382.
13................................................... 998135.
14................................................... 997876.
15................................................... 997606.
16................................................... 997322.
17................................................... 997025.
18................................................... 996714.
19................................................... 996387.
20................................................... 996044.
21................................................... 995684.
22................................................... 995304.
23................................................... 994905.
24................................................... 994484.
25................................................... 994041.
26................................................... 993573.
27................................................... 993080.
28................................................... 992563.
29................................................... 992024.
30................................................... 991461.
31................................................... 990876.
32................................................... 990269.
33................................................... 989638.
34................................................... 988984.
35................................................... 988303.
36................................................... 987593.
37................................................... 986846.
38................................................... 986055.
39................................................... 985210.
40................................................... 984298.
41................................................... 983310.
42................................................... 982230.
43................................................... 981046.
[[Page 153]]
44................................................... 979742.
45................................................... 978302.
46................................................... 976709.
47................................................... 974945.
48................................................... 972992.
49................................................... 970832.
50................................................... 968447.
51................................................... 966000.
52................................................... 963313.
53................................................... 960375.
54................................................... 957175.
55................................................... 953705.
56................................................... 949954.
57................................................... 945912.
58................................................... 941568.
59................................................... 936908.
60................................................... 931903.
61................................................... 926451.
62................................................... 920540.
63................................................... 914090.
64................................................... 907011.
65................................................... 899221.
66................................................... 890428.
67................................................... 880797.
68................................................... 870298.
69................................................... 858904.
70................................................... 846565.
71................................................... 832316.
72................................................... 816861.
73................................................... 800078.
74................................................... 781837.
75................................................... 762012.
76................................................... 740743.
77................................................... 717689.
78................................................... 692780.
79................................................... 665977.
80................................................... 637260.
81................................................... 607339.
82................................................... 575531.
83................................................... 541919.
84................................................... 506647.
85................................................... 469931.
86................................................... 432459.
87................................................... 394138.
88................................................... 355393.
89................................................... 316712.
90................................................... 278663.
91................................................... 242020.
92................................................... 207150.
93................................................... 174602.
94................................................... 144828.
95................................................... 118151.
96................................................... 94871.7
97................................................... 74863.6
98................................................... 58042.2
99................................................... 44176.1
100.................................................. 32956.4
101.................................................. 24044.8
102.................................................. 17104.1
103.................................................. 11815.5
104.................................................. 7886.75
105.................................................. 5054.94
106.................................................. 3086.95
107.................................................. 1778.82
108.................................................. 955.465
109.................................................. 470.955
110.................................................. 208.668
111.................................................. 80.7899
112.................................................. 26.2340
113.................................................. 6.69620
114.................................................. 1.19385
115.................................................. .111460
------------------------------------------------------------------------
(2) If the multiples in Tables I through IV of Sec. 1.72-9 are used
to determine any portion of the expected return under a contract
described in paragraph (c)(1) of this section, only the post-June 1986
investment in the contract (if any) shall be adjusted in the manner
described in paragraph (c)(1) of this section, and the pre-July 1986
investment in the contract shall, in the case of a contract described in
paragraph (b) (1) or (6) of Sec. 1.72-5, be adjusted in the following
manner:
(i) Determine the number of years necessary for the guaranteed
amount to be fully paid by dividing the maximum amount guaranteed as of
the annuity starting date by the amount to be received annually under
the contract. The number of years should be stated in terms of the
nearest whole year, considering for this purpose a fraction of one-half
or more as an additional whole year.
(ii) Consult Table III of Sec. 1.72-9 for the appropriate
percentages under the whole number of years found in subdivision (i) of
this subparagraph and the age (as of the annuity starting date) and sex
of each annuitant. If the annuitants are not of the same sex, substitute
for the female annuitant a male annuitant 5 years younger, or for the
male annuitant a female annuitant 5 years older, so that Table III will
be entered in both cases with the ages of annuitants of the same sex.
(iii) Find the sum of the two percentages found in accordance with
subdivision (ii) of this subparagraph.
(iv) To the age of the elder of the two annuitants (as determined
under subdivision (ii) of this subparagraph), add the number of years
(indicated in the table below) opposite the number of years by which
such annuitants' ages differ:
------------------------------------------------------------------------
Addition to
Number of years difference in age (2 male annuitants or 2 older age
female annuitants) in years
------------------------------------------------------------------------
0 to 1, inclusive.......................................... 9
2 to 3, inclusive.......................................... 8
4 to 5, inclusive.......................................... 7
6 to 8, inclusive.......................................... 6
9 to 11, inclusive......................................... 5
12 to 15, inclusive........................................ 4
16 to 20, inclusive........................................ 3
21 to 27, inclusive........................................ 2
28 to 42, inclusive........................................ 1
Over 42.................................................... 0
------------------------------------------------------------------------
[[Page 154]]
(v) Consult Table III for the appropriate percentage under the whole
number of years found in subdivision (i) of this subparagraph and the
age and sex of the elder annuitant as adjusted under subdivision (iv) of
this subparagraph.
(vi) Subtract the percentage obtained in subdivision (v) of this
subparagraph from the sum of the percentages found under subdivision
(iii) of this subparagraph. If the result is less than one, subdivisions
(vii) and (viii) of this subparagraph shall be disregarded and no
adjustment made to the investment in the contract.
(vii) Multiply the percentage found in subdivision (vi) of this
subparagraph by whichever of the following is the smaller: (A) the
investment in the contract found in accordance with Sec. 1.72-6 or (B)
the total amount guaranteed as of the annuity starting date.
(viii) Subtract the amount found in subdivision (vii) of this
subparagraph from the investment in the contract found in accordance
with Sec. 1.72-6.
(3) The principles of this paragraph (c) may be illustrated by the
following examples:
Example (1). Prior to July 1, 1986, Taxpayer A, a 70-year-old male,
purchases a joint and last survivor annuity for $33,050. The contract
provides for payments of $100 a month to be paid first to himself for
life and then to B, his 40-year-old daughter, if she survives him. The
contract further provides that in the event both die before ten years'
payments have been made, payments will be continued to C, a beneficiary,
or to C's estate, until ten years' payments have been made. If there is
no post-June 1986 investment in the contract, the investment in the
contract adjusted for the purpose of determining the exclusion ratio is
computed in the following manner:
Cost of the annuity contract (investment in the contract $33,050
unadjusted)...............................................
Guaranteed amount ($1,200x10).............................. $12,000
============
Percentage in Table III for male, age 70 (or female, age 21
75) for duration of the guarantee (10)....................
Percentage in Table III for female, age 40 (or male, age 2
35) for duration of the guarantee (10)....................
------------
Sum of percentages obtained............................ 23
============
Difference in years of age between two males, aged 70 and 35
35 (or 2 females, aged 75 and 40).........................
Addition, in years, to older age........................... 1
Percentage in Table III for male one year older than A..... 22
Difference between percentages obtained (23 percent less 22 1
percent)..................................................
Value of the refund feature to the nearest dollar (1 $120
percent of $12,000).......................................
------------
Investment in the contract adjusted for present value $32,930
of the refund feature.................................
Example (2). The facts are the same as in example (1), except that
the total investment in the contract was made after June 30, 1986, A is
73 years of age, and B is A's 70 year old spouse. The percentage
determined under the formula in paragraph (c)(1)(i) of this section is
two percent. Thus, the amount determined under paragraph (c)(1)(ii) of
this section is $240 (2 percent of $12,000), and the investment in the
contract adjusted for the present value of the refund feature is $32,810
($33,050--$240).
(4) If an annuity described in paragraph (b) of Sec. 1.72-5 contains
a refund feature and the manner of determining the adjustment to the
investment in the contract (or to any part of such investment) is not
prescribed or requires use of the formula in paragraph (c)(1)(i) of this
section, the Commissioner will determine the amount of the adjustment
upon request. The request must contain the date of birth of each
annuitant, the guaranteed amount, the annual annuity payable to each
annuitant, and the annuity starting date. Send the request to the
Commissioner of Internal Revenue, Attention: OP:E:EP:GA, Washington,
D.C. 20224.
(d) Adjustment of investment in the contract where paragraph (b)(3)
of Sec. 1.72-2 applies to payments. (1) If paragraph (b)(3) of
Sec. 1.72-2 applies to payments to be made under a contract and this
section also applies because of the provision for a refund feature, an
adjustment shall be made to the investment in the contract in accordance
with this paragraph before making the computations required by paragraph
(d)(3) of Sec. 1.72-4 and paragraph (d)(7) of Sec. 1.72-5. In the case
of the guarantee of a specified amount, the adjustment shall be made by
applying the appropriate multiple from Table III or VII (whichever
[[Page 155]]
is applicable), as otherwise determined under this section, to the
investment in the contract or the guranteed amount, whichever is the
lesser. The guarantee period shall be found by dividing the amount
guaranteed by the amount determined by placing the payments received
during the first taxable year (to guaranteed amount) on an annual basis.
Thus, if monthly payments are first received by a taxpayer on a calendar
year basis in August, his total payments (to the extent that they reduce
the guaranteed amount) for the taxable year would be divided by 5 and
multiplied by 12. The guaranteed amount would then be divided by the
result of this computation to obtain the guarantee period. If the
contract merely guarantees that proceeds from a unit or units of a fund
shall be paid for a fixed number of years or the life (or lives) of an
annuitant (or annuitants), whichever is the longer, the fixed number of
years is the guarantee period. The appropriate percentage in Table III
or VII shall be applied to whichever of the following is the smaller:
(i) the investment in the contract; or (ii) the product of the payments
received in the first taxable year, placed on an annual basis,
multiplied by the number of years for which payment of the proceeds of a
unit or units is guaranteed.
(2) The principles of this paragraph may be illustrated by the
following examples:
Example (1). Taxpayer A, a 50-year-old male purchases for $25,000 a
contract which provides for variable monthly payments to be paid to him
for his life. The contract also provides that if he should die before
receiving payments for fifteen years, payments shall continue according
to the original formula to his estate or beneficiary until payments have
been made for that period. Beginning with the month of September, A
receives payments which total $450 for the first taxable year of
receipt. This amount, placed on an annual basis, is $1,350 ($450 divided
by 4, or $112.50; $112.50 multiplied by 12, or $1,350). If there is no
post-June 1986 investment in the contract, the guaranteed amount is
considered to be $20,250 ($1,350x15), and the multiple from Table III
(found in the same manner as in paragraph (b) of this section), 9
percent, applied to $20,250 (since this amount is less than the
investment in the contract), results in a refund adjustment of
$1,822,50. The latter amount, subtracted from the investment in the
contract of $25,000, results in an adjusted investment in the contract
of $23,177.50. If A dies before receiving payments for 15 years and the
remaining payments are made to B, his beneficiary, B shall exclude the
entire amount of such payments from his gross income until the amounts
so received by B, together with the amount received by A and excludable
from A's gross income, equal or exceed $25,000. Any excess and any
payments thereafter received by B shall be fully includible in gross
income.
Example (2). Assume the same facts as in example (1), except that
the total investment in the contract was made after June 30, 1986. The
applicable multiple found in Table VII is 3 percent. When this is
applied to the guaranteed amount of $20,250, it results in a refund
adjustment of $607.50. The adjusted investment in the contract in
$24,392.50 ($25,000--$607.50).
(e) Adjustment of the investment in the contract where more than one
annuity element is provided for a single consideration. In the case of
contracts to which paragraph (b) of Sec. 1.72-6 applies for the purpose
of allocating the investment in the contract to two or more annuity
elements which are provided for a single consideration, if one or more
of such elements involves a refund feature, the portion of the
investment in the contract properly allocable to each such element shall
be adjusted for the refund feature before aggregating all the
investments in order to obtain the exclusion ratio which is to apply to
the contract as a whole.
Example (1). If taxpayer A, an insured 70 years of age, upon
maturity of an endowment policy which cost him a net amount of $86,000,
elected a dual settlement consisting of (1) monthly payments for his
life aggregating $4,146 per year with 10 years' payments certain, and
(2) monthly payments for his 60-year-old brother, B, aggregating $2,820
per year with 20 years' payments certain, the exclusion ratio to be used
by both A and B if there is no post-June 1986 investment in the contract
would be determined in the following manner:
A's expected return (A's payments per year of $4,146 $50,166.60
multiplied by his life expectancy from Table 1 of
12.1)...............................................
B's expected return (B's payments per year of $2,820 $51,324.00
multiplied by his life expectancy from Table 1 of
18.2)...............................................
------------------
[[Page 156]]
Sum of expected returns to be used in determining $101,490.60
exclusion ratio.................................
==================
Percentage of total expected return attributable to 49.4
A's expectancy of life ($50,166.60/$101,490.60).....
Percentage of total expected return attributable to 50.6
B's expectancy of life ($51,324/$101,490.60)........
Portion of investment in the contract allocable to $42,484.00
A's annuity (49.4 percent of $86,000)...............
Portion of investment in the contract allocable to $43,516.00
B's annuity (50.6 percent of $86,000)...............
Value of the refund feature with respect to A's $8,707.00
annuity (percentage from Table III for male, age 70,
and duration 10, or 21 percent, multiplied by lesser
of guaranteed amount and allocable portion of
investment in the contract, $41,460)................
A's allocable portion of the investment in the $33,777.00
contract adjusted for refund feature ($42,484 less
$8,707.00)..........................................
Value of the refund feature with respect to B's $10,879.00
annuity (percentage from Table III for male, age 60,
and duration 20, or 25 percent, multiplied by lesser
of guaranteed amount and allocable portion of
investment in the contract, $43,516)................
B's allocable portion of the investment in the $32,637.00
contract adjusted for refund feature ($43,516 less
$10,879.00).........................................
Sum of A's and B's allocable portions of the $66,414.00
investment in the contract after adjustment for the
refund feature......................................
Exclusion ratio for the contract as a whole (total 65.4
adjusted investment in the contract, $66,414,
divided by the total expected return from above,
$101,490.60) (percent)..............................
Example (2). Assume the same facts as in example (1) except that the
total investment in the contract was made after June 30, 1986. The
exclusion ratio to be used by both A and B would be 56.9 percent,
determined as follows:
A's expected return (A's payments per year of $4,146 $66,336.00
multiplied by his life expectancy from Table V of
16.0)...............................................
B's expected return (B's payments per year of $2,820 $68,244.00
multiplied by his life expectancy from Table V of
24.2)...............................................
------------------
Sum of expected returns to be used in determining $134,580.00
exclusion ratio.....................................
==================
Percentage of total expected return attributable to 49.3
A's expectancy of life ($66,336.00/$134,580.00).....
Percentage of total expected return attributable to 50.7
B's expectancy of life ($68,244.00/$134,580.00).....
Portion of investment in the contract allocable to $42,398.00
A's annuity (49.3 percent of $86,000)...............
Portion of investment in the contract allocable to $43,602.00
B's annuity (50.7 percent of $86,000)...............
Value of the refund feature with respect to A's $4,560.60
annuity (percentage from Table VII for age 70 and
duration 10, or 11 percent, multiplied by lesser of
the guaranteed amount and allocable portion of
investment in the contract, $41,460)................
A's allocable portion of the investment in the $37,837.40
contract adjusted for refund feature ($42,398 less
$4,560.60)..........................................
Value of the refund feature with respect to B's $4,796.22
annuity (percentage from Table VII for age 60 and
duration 20, or 11 percent, multiplied by lesser of
guaranteed amount and allocable portion of
investment in the contract, $43,602)................
B's allocable portion of the investment in the $38,805.78
contract adjusted for refund feature ($43,602 less
$4,796.22)..........................................
------------------
Sum of A's and B's allocable portions of the $76,643.18
investment in the contract after adjustment for the
refund feature......................................
[[Page 157]]
Exclusion ratio for the contract as a whole (total 56.9
adjusted investment in the contract, $76,643.18,
divided by the total expected return from above,
$134,580.00) (percent)..............................
(f) Adjustment of investment in the contract with respect to
contracts subject to Sec. 1.72-6(d). In the case of a contract to which
Sec. 1.72-6(d) (relating to contracts in which amounts were invested
both before July 1, 1986, and after June 30, 1986) applies, this section
is applied in the manner prescribed in Sec. 1.72-6(d) and, in
particular, Sec. 1.72-6(d)(5)(vi).
[T.D. 6500, 25 FR 11402, Nov. 26, 1960; 25 FR 14021, Dec. 21, 1960, as
amended by T.D. 8115, 51 FR 45702, Dec. 19, 1986]
Sec. 1.72-8 Effect of certain employer contributions with respect to premiums or other consideration paid or contributed by an employee.
(a) Contributions in the nature of compensation--(1) Amounts
includible in gross income of employee under subtitle A of the Code or
prior income tax laws. Section 72(f) provides that for the purposes of
section 72 (c), (d), and (e), amounts contributed by an employer for the
benefit of an employee or his beneficiaries shall constitute
consideration paid or contributed by the employee to the extent that
such amounts were includible in the gross income of the employee under
subtitle A of the Code or prior income tax laws. Amounts to which this
paragraph applies include, for example, contributions made by an
employer to or under a trust or plan which fails to qualify under the
provisions of section 401(a), provided that the employee's rights to
such contributions are nonforfeitable at the time the contributions are
made. See sections 402(b) and 403(c) and the regulations thereunder.
This subparagraph also applies to premiums paid by an employer (other
than premiums paid on behalf of an owner-employee) for life insurance
protection for an employee if such premiums are includible in the gross
income of the employee when paid. See Sec. 1.72-16. However, such
premiums shall only be considered as premiums and other consideration
paid by the employee with respect to any benefits attributable to the
contract providing the life insurance protection. See Sec. 1.72-16.
(2) Amounts not includible in gross income of employee at time
contributed if paid directly to employee at that time. Except as
provided in subparagraph (3) of this paragraph, section 72(f) provides
that for the purposes of section 72 (c), (d), and (e), amounts
contributed by an employer for the benefit of an employee or his
beneficiaries shall constitute consideration paid or contributed by the
employee to the extent that such amounts would not have been includible
in the gross income of the employee at the time contributed had they
been paid directly to the employee at that time. Amounts to which this
subparagraph applies include, for example, contributions made by an
employer after December 31, 1950, and before January 1, 1963, if made on
account of foreign services rendered by an employee during a period in
which the employee qualified as a bona fide resident of a foreign
country under section 911(a) of the Internal Revenue Code of 1954, or
under section 116(a) of the Internal Revenue Code of 1939. In such a
case, it would be immaterial whether such contributions were made under
a qualified plan or otherwise. See subparagraph (4) of this paragraph
for rules governing the determination of the amount of employer foreign
service contributions to which this subparagraph applies. On the other
hand, if contributions are made by an employer to a qualified plan at a
time when compensation paid directly to the employee concerned with
respect to the same services rendered would have been includible in the
gross income of the employee, such as in the case of an employee of a
State government where contributions are made in 1955 with respect to
services rendered by the employee prior to the year 1939, this
subparagraph does not apply to such contributions.
(3) Limitation--(i) In general. Except as provided in subdivision
(ii) of this subparagraph, the provisions of subparagraph (2) of this
paragraph shall not apply to amounts which were contributed by the
employer after December 31, 1962, and which would not have been
includible in the gross income of
[[Page 158]]
the employee by reason of the application of section 911, if such
amounts had been paid directly to the employee at the time of
contribution. Employer contributions attributable to foreign services
performed by the employee after December 31, 1962, do not constitute,
for purposes of section 72 (c), (d), and (e), consideration paid or
contributed by the employee.
(ii) Exception. The provisions of subdivision (i) of this
subparagraph shall not apply to amounts which were contributed by the
employer to provide pension or annuity credits (determined in accordance
with the provisions of subparagraph (4) of this paragraph) to the extent
such credits are--
(a) Attributable to foreign services performed before January 1,
1963, with respect to which the employee qualified for the benefits of
section 911(a) (or corresponding provisions of prior revenue laws), and
(b) Provided pursuant to pension or annuity plan provisions in
existence on March 12, 1962, and on that date applicable to such
services.
Amounts described in this subdivision constitute, for purposes of
section 72 (c), (d), and (e), consideration paid or contributed by the
employee even though such amounts are contributed by the employer after
December 31, 1962.
(4) Determination of employer foreign service contributions which
constitute consideration paid or contributed by employee. For purposes
of subparagraphs (2) and (3)(ii) of this paragraph, employer foreign
service contributions which constitute, for purposes of section 72 (c),
(d), and (e), consideration paid or contributed by the employee shall be
determined as follows:
(i) Treatment of identifiable contributions. If, under the terms of
the pension or annuity plan under which employer contributions were
made, such contributions may be identified as--
(a) Attributable to foreign services performed before January 1,
1963, with respect to which the employee qualified for the benefits of
section 911(a) (or corresponding provisions of prior revenue laws), and
(b) Made under pension or annuity plan provisions in existence on
March 12, 1962, which were applicable to the services referred to in (a)
of this subdivision on that date,
the amount of employer contributions so identified shall be considered
paid or contributed by the employee.
(ii) Alternative rule for unidentifiable contributions. If employer
contributions may not be identified in the manner described in
subdivision (i) of this subparagraph, the amount of employer
contributions attributable to foreign services performed before January
1, 1963, and considered paid or contributed by the employee shall be
determined on the basis of an estimated allocation which is reasonable
and consistent with the circumstances and the provisions of the pension
or annuity plan under which such contributions are made. For example, if
an employee's benefits under a pension or annuity plan, which is
unchanged after March 12, 1962, are determined with respect to his basic
compensation during his entire period of credited service, the amount of
employer contributions considered paid or contributed by the employee
shall be an amount which bears the same ratio to total employer
contributions for such employee under the pension or annuity plan as his
basic compensation attributable to foreign services performed before
January 1, 1963, with respect to which he qualified for the benefits of
section 911(a) (or corresponding provisions of prior revenue laws) bears
to his total basic compensation. On the other hand, if an employee's
benefits under a pension or annuity plan, which is unchanged after March
12, 1962, are determined with respect to his basic compensation during
his final five years of credited service, the amount of employer
contributions considered paid or contributed by the employee shall be an
amount which bears the same ratio to total employer contributions for
such employee as his number of years of credited service before January
1, 1963, with respect to which he qualified for the benefits of section
911(a) (or corresponding provisions of prior revenue laws) bears to his
total number of years of credited service.
(5) Amounts not includible in gross income of employee under
subtitle A of the Code or prior income tax laws. Amounts contributed by
an employer which were
[[Page 159]]
not includible in the gross income of the employee under Subtitle A of
the Code or prior income tax laws, but which would have been includible
therein had they been paid directly to the employee, do not constitute
consideration paid or contributed by the employee for the purposes of
section 72. For example, contributions made by an employer under a
qualified employees' trust or plan, which contributions would have been
includible in the gross income of the employee had such contributions
been paid to him directly as compensation, do not constitute
consideration paid or contributed by the employee. Accordingly, the
aggregate amount of premiums or other consideration paid or contributed
by an employee, insofar as compensatory employer contributions are
concerned, consists solely of the (i) sum of all amounts actually
contributed by the employee, plus (ii) contributions in the nature of
compensation which are deemed to be paid or contributed by the employee
under this paragraph.
(b) Contributions in the nature of death benefits. In the case of an
employee's beneficiary, the aggregate amount of premiums or other
consideration paid or deemed to be paid or contributed by the employee
shall also include:
(1) Amounts (other than amounts paid as an annuity) to the extent
such amounts are excludable from the beneficiary's gross income as a
death benefit under section 101(b), and
(2) Any amount or amounts of death benefits which are treated as
additional consideration contributed by the employee under section
101(b)(2)(D) and the regulations thereunder, or which were excludable
from the beneficiary's gross income as a death benefit under section
22(b)(1)(B) of the Internal Revenue Code of 1939 and the regulations
thereunder.
Accordingly, in the case of an employee's beneficiary, any such amount
shall be added to any amount or amounts deemed paid or contributed by
the employee under paragraph (a)(1) of this section and to any amounts
actually contributed by the employee for the purpose of finding the
aggregate amount of premiums or other consideration paid or contributed
by the employee.
(c) Amounts ``made available'' to an employee or his beneficiary.
Any amount which, although not actually paid, is made available to and
includable in the gross income of an employee or his beneficiary under
the rules of sections 402 and 403 and the regulations thereunder, shall
be considered an amount contributed by the employee and shall be
aggregated with amounts, if any, to which paragraphs (a) and (b) of this
section apply for the purpose of determining the aggregate amount of
premiums or other consideration paid by the employee.
(d) Amounts includable in gross income of employee when his rights
under annuity contract change to nonforfeitable rights. Any amount
which, by reason of section 403(d) and after the application of
paragraph (b) of Sec. 1.403 (b)-1, is required to be included in an
employee's gross income for the year when his rights under an annuity
contract change from forfeitable to nonforfeitable rights shall be
considered an amount contributed by the employee and shall be aggregated
with amounts, if any, to which paragraphs (a), (b), and (c) of this
section apply for the purpose of determining the aggregate amount of
premiums or other consideration paid or contributed by the employee for
such annuity contract. In other words, if, under section 403(d), an
employee of an organization exempt from tax under section 501(a) or
521(a) is required to include an amount in gross income by reason of his
rights under an annuity contract changing from forfeitable to
nonforfeitable rights, such amount, to the extent it is not excludable
from gross income under paragraph (b) of Sec. 1.403 (b)-1, shall be
considered an amount contributed by such employee for the annuity
contract.
[T.D. 6500, 25 FR 11402, Nov. 26, 1960, as amended by T.D. 6665, 28 FR
7245, July 16, 1963; T.D. 6783, 29 FR 18356, Dec. 24, 1964]
Sec. 1.72-9 Tables.
The following tables are to be used in connection with computations
under section 72 and the regulations thereunder. Tables I, II, IIA, III,
and IV are to be used if the investment in the contract does not include
a post-June 1986 investment in the contract (as defined in Sec. 1.72-
6(d)(3)). Tables V, VI, VIA, VII,
[[Page 160]]
and VIII are to be used if the investment in the contract includes a
post-June 1986 investment in the contract (as defined in Sec. 1.72-
6(d)(3)).
In the case of a contract under which amounts are received as an
annuity after June 30, 1986, a taxpayer receiving such amounts may elect
to treat the entire investment in the contract as post-June 1986
investment in the contract and thus apply Tables V through VIII. A
taxpayer may make the election for any taxable year in which such
amounts are received by attaching to the taxpayer's return for such
taxable year a statement that the taxpayer is electing under Sec. 1.72-9
to treat the entire investment in the contract as post-June 1986
investment in the contract. The statement must contain the taxpayer's
name, address, and taxpayer identification number. The election is
irrevocable and applies with respect to all amounts that the taxpayer
receives as an annuity under the contract in the taxable year for which
the election is made or in any subsequent taxable year. (Note that for
purposes of the examples in Secs. 1.72-4 through 1.72-11 the election
described in this section is disregarded (i.e., it assumed that the
taxpayer does not make an election under this section).) See also
Sec. 1.72-6(d)(3) for rules treating the entire investment in a contract
as post-June 1986 investment in a contract if the annuity starting date
of the contract is after June 30, 1986, and the contract provides for a
disqualifying form of payment or settlement, such as an option to
receive a lump sum in full discharge of the obligation under the
contract. In addition, see Sec. 1.72-6(d) for special rules concerning
the tables to be used and the separate computations required if the
investment in the contract includes both a pre-July 1986 investment in
the contract and a post-June 1986 investment in the contract and the
election described in Sec. 1.72-6(d)(6) is made with respect to the
contract.
Table I--Ordinary Life Annuities--One Life--Expected Return Multiples
------------------------------------------------------------------------
Ages
------------------------------------------------------------- Multiples
Male Female
------------------------------------------------------------------------
6............................................... 11 65.0
7............................................... 12 64.1
8............................................... 13 63.2
9............................................... 14 62.3
10.............................................. 15 61.4
11.............................................. 16 60.4
12.............................................. 17 59.5
13.............................................. 18 58.6
14.............................................. 19 57.7
15.............................................. 20 56.7
16.............................................. 21 55.8
17.............................................. 22 54.9
18.............................................. 23 53.9
19.............................................. 24 53.0
20.............................................. 25 52.1
21.............................................. 26 51.1
22.............................................. 27 50.2
23.............................................. 28 49.3
24.............................................. 29 48.3
25.............................................. 30 47.4
26.............................................. 31 46.5
27.............................................. 32 45.6
28.............................................. 33 44.6
29.............................................. 34 43.7
30.............................................. 35 42.8
31.............................................. 36 41.9
32.............................................. 37 41.0
33.............................................. 38 40.0
34.............................................. 39 39.1
35.............................................. 40 38.2
36.............................................. 41 37.3
37.............................................. 42 36.5
38.............................................. 43 35.6
39.............................................. 44 34.7
40.............................................. 45 33.8
41.............................................. 46 33.0
42.............................................. 47 32.1
43.............................................. 48 31.2
44.............................................. 49 30.4
45.............................................. 50 29.6
46.............................................. 51 28.7
47.............................................. 52 27.9
48.............................................. 53 27.1
49.............................................. 54 26.3
50.............................................. 55 25.5
51.............................................. 56 24.7
52.............................................. 57 24.0
53.............................................. 58 23.2
54.............................................. 59 22.4
55.............................................. 60 21.7
56.............................................. 61 21.0
57.............................................. 62 20.3
58.............................................. 63 19.6
59.............................................. 64 18.9
60.............................................. 65 18.2
61.............................................. 66 17.5
62.............................................. 67 16.9
63.............................................. 68 16.2
64.............................................. 69 15.6
[[Page 161]]
65.............................................. 70 15.0
66.............................................. 71 14.4
67.............................................. 72 13.8
68.............................................. 73 13.2
69.............................................. 74 12.6
70.............................................. 75 12.1
71.............................................. 76 11.6
72.............................................. 77 11.0
73.............................................. 78 10.5
74.............................................. 79 10.1
75.............................................. 80 9.6
76.............................................. 81 9.1
77.............................................. 82 8.7
78.............................................. 83 8.3
79.............................................. 84 7.8
80.............................................. 85 7.5
81.............................................. 86 7.1
82.............................................. 87 6.7
83.............................................. 88 6.3
84.............................................. 89 6.0
85.............................................. 90 5.7
86.............................................. 91 5.4
87.............................................. 92 5.1
88.............................................. 93 4.8
89.............................................. 94 4.5
90.............................................. 95 4.2
91.............................................. 96 4.0
92.............................................. 97 3.7
93.............................................. 98 3.5
94.............................................. 99 3.3
95.............................................. 100 3.1
96.............................................. 101 2.9
97.............................................. 102 2.7
98.............................................. 103 2.5
99.............................................. 104 2.3
100............................................. 105 2.1
101............................................. 106 1.9
102............................................. 107 1.7
103............................................. 108 1.5
104............................................. 109 1.3
105............................................. 110 1.2
106............................................. 111 1.0
107............................................. 112 .8
108............................................. 113 .7
109............................................. 114 .6
110............................................. 115 .5
111............................................. 116 0
------------------------------------------------------------------------
[[Page 162]]
Table II--Ordinary Joint Life and Last Survivor Annuities--Two Lives--Expected Return Multiples
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Ages
-------------------------------------------------------------------------------------------------------------------------------------------
Male Female Male 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
-------------------------------------------------------------------------------------------------------------------------------------------
Female 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
6............................... 11................ 73.5 73.0 72.6 72.2 71.8 71.4 71.0 70.7 70.4 70.0 69.7 69.5 69.2 68.9 68.7
7............................... 12................ 73.0 72.6 72.1 71.7 71.3 70.9 70.5 70.1 69.8 69.4 69.1 68.8 68.5 68.3 68.0
8............................... 13................ 72.6 72.1 71.6 71.2 70.8 70.4 70.0 69.6 69.2 68.9 68.5 68.2 67.9 67.6 67.3
9............................... 14................ 72.2 71.7 71.2 70.7 70.3 69.9 69.4 69.0 68.7 68.3 67.9 67.6 67.3 67.0 66.7
10.............................. 15................ 71.8 71.3 70.8 70.3 69.8 69.4 68.9 68.5 68.1 67.7 67.4 67.0 66.7 66.4 66.1
11.............................. 16................ 71.4 70.9 70.4 69.9 69.4 68.9 68.5 68.0 67.6 67.2 66.8 66.5 66.1 65.8 65.4
12.............................. 17................ 71.0 70.5 70.0 69.4 68.9 68.5 68.0 67.5 67.1 66.7 66.3 65.9 65.5 65.2 64.8
13.............................. 18................ 70.7 70.1 69.6 69.0 68.5 68.0 67.5 67.1 66.6 66.2 65.8 65.4 65.0 64.6 64.2
14.............................. 19................ 70.4 69.8 69.2 68.7 68.1 67.6 67.1 66.6 66.1 65.7 65.3 64.8 64.4 64.0 63.7
15.............................. 20................ 70.0 69.4 68.9 68.3 67.7 67.2 66.7 66.2 65.7 65.2 64.8 64.3 63.9 63.5 63.1
16.............................. 21................ 69.7 69.1 68.5 67.9 67.4 66.8 66.3 65.8 65.3 64.8 64.3 63.8 63.4 63.0 62.6
17.............................. 22................ 69.5 68.8 68.2 67.6 67.0 66.5 65.9 65.4 64.8 64.3 63.8 63.4 62.9 62.5 62.0
18.............................. 23................ 69.2 68.5 67.9 67.3 66.7 66.1 65.5 65.0 64.4 63.9 63.4 62.9 62.4 62.0 61.5
19.............................. 24................ 68.9 68.3 67.6 67.0 66.4 65.8 65.2 64.6 64.0 63.5 63.0 62.5 62.0 61.5 61.0
20.............................. 25................ 68.7 68.0 67.3 66.7 66.1 65.4 64.8 64.2 63.7 63.1 62.6 62.0 61.5 61.0 60.6
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Ages
----------------------------------------------------------------------------------------------------------------------------------
Male Female Male 21 22 23 24 25 26 27 28 29 30 31 32 33 34
----------------------------------------------------------------------------------------------------------------------------------
Female 26 27 28 29 30 31 32 33 34 35 36 37 38 39
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
6................................... 11..................... 68.4 68.2 68.0 67.8 67.6 67.5 67.3 67.1 67.0 66.8 66.7 66.6 66.5 66.4
7................................... 12..................... 67.8 67.5 67.3 67.1 66.9 66.7 66.5 66.4 66.2 66.1 65.9 65.8 65.7 65.6
8................................... 13..................... 67.1 66.8 66.6 66.4 66.2 66.0 65.8 65.6 65.4 65.3 65.1 65.0 64.9 64.7
9................................... 14..................... 66.4 66.2 65.9 65.7 65.4 65.2 65.0 64.8 64.7 64.5 64.3 64.2 64.1 63.9
10.................................. 15..................... 65.8 65.5 65.2 65.0 64.7 64.5 64.3 64.1 63.9 63.7 63.6 63.4 63.3 63.1
11.................................. 16..................... 65.1 64.8 64.6 64.3 64.1 63.8 63.6 63.4 63.2 63.0 62.8 62.6 62.5 62.3
12.................................. 17..................... 64.5 64.2 63.9 63.6 63.4 63.1 62.9 62.7 62.4 62.2 62.0 61.9 61.7 61.5
13.................................. 18..................... 63.9 63.6 63.3 63.0 62.7 62.4 62.2 61.9 61.7 61.5 61.3 61.1 60.9 60.8
14.................................. 19..................... 63.3 63.0 62.7 62.3 62.0 61.8 61.5 61.2 61.0 60.8 60.6 60.4 60.2 60.0
15.................................. 20..................... 62.7 62.4 62.0 61.7 61.4 61.1 60.8 60.6 60.3 60.1 59.8 59.6 59.4 59.2
16.................................. 21..................... 62.2 61.8 61.4 61.1 60.8 60.5 60.2 59.9 59.6 59.4 59.1 58.9 58.7 58.5
17.................................. 22..................... 61.6 61.2 60.9 60.5 60.2 59.8 59.5 59.2 58.9 58.7 58.4 58.2 57.9 57.7
18.................................. 23..................... 61.1 60.7 60.3 59.9 59.6 59.2 58.9 58.6 58.3 58.0 57.7 57.5 57.2 57.0
19.................................. 24..................... 60.6 60.2 59.7 59.4 59.0 58.6 58.3 57.9 57.6 57.3 57.0 56.8 56.5 56.3
20.................................. 25..................... 60.1 59.6 59.2 58.8 58.4 58.0 57.7 57.3 57.0 56.7 56.4 56.1 55.8 55.6
[[Page 163]]
21.................................. 26..................... 59.6 59.1 58.7 58.3 57.9 57.5 57.1 56.7 56.4 56.0 55.7 55.4 55.1 54.9
22.................................. 27..................... 59.1 58.7 58.2 57.7 57.3 56.9 56.5 56.1 55.8 55.4 55.1 54.8 54.5 54.2
23.................................. 28..................... 58.7 58.2 57.7 57.2 56.8 56.4 55.9 55.5 55.2 54.8 54.4 54.1 53.8 53.5
24.................................. 29..................... 58.3 57.7 57.2 56.8 56.3 55.8 55.4 55.0 54.6 54.2 53.8 53.5 53.2 52.8
25.................................. 30..................... 57.9 57.3 56.8 56.3 55.8 55.3 54.9 54.4 54.0 53.6 53.2 52.9 52.5 52.2
26.................................. 31..................... 57.5 56.9 56.4 55.8 55.3 54.8 54.4 53.9 53.5 53.1 52.7 52.3 51.9 51.6
27.................................. 32..................... 57.1 56.5 55.9 55.4 54.9 54.4 53.9 53.4 53.0 52.5 52.1 51.7 51.3 50.9
28.................................. 33..................... 56.7 56.1 55.5 55.0 54.4 53.9 53.4 52.9 52.4 52.0 51.6 51.1 50.7 50.3
29.................................. 34..................... 56.4 55.8 55.2 54.6 54.0 53.5 53.0 52.4 52.0 51.5 51.0 50.6 50.2 49.3
30.................................. 35..................... 56.0 55.4 54.8 54.2 53.6 53.1 52.5 52.0 51.5 51.0 50.5 50.1 49.6 49.2
31.................................. 36..................... 55.7 55.1 54.4 53.8 53.2 52.7 52.1 51.6 51.0 50.5 50.0 49.5 49.1 48.7
32.................................. 37..................... 55.4 54.8 54.1 53.5 52.9 52.3 51.7 51.1 50.6 50.1 49.5 49.1 48.6 48.1
33.................................. 38..................... 55.1 54.5 53.8 53.2 52.5 51.9 51.3 50.7 50.2 49.6 49.1 48.6 48.1 47.6
34.................................. 39..................... 54.9 54.2 53.5 52.8 52.2 51.6 50.9 50.3 49.8 49.2 48.7 48.1 47.6 47.1
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Ages
--------------------------------------------------------------------------------------------------------------------------------------------
Male Female Male 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49
--------------------------------------------------------------------------------------------------------------------------------------------
Female 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
6.............................. 11................ 66.3 66.2 66.1 66.0 65.9 65.9 65.8 65.7 65.7 65.6 65.6 65.5 65.5 65.5 65.4
7.............................. 12................ 65.4 65.3 65.3 65.2 65.1 65.0 64.9 64.9 64.8 64.8 64.7 64.7 64.6 64.6 64.5
8.............................. 13................ 64.6 64.5 64.4 64.3 64.2 64.2 64.1 64.0 64.0 63.9 63.8 63.8 63.7 63.7 63.7
9.............................. 14................ 63.8 63.7 63.6 63.5 63.4 63.3 63.2 63.2 63.1 63.0 63.0 62.9 62.9 62.8 62.8
10............................. 15................ 63.0 62.9 62.8 62.7 62.6 62.5 62.4 62.3 62.2 62.2 62.1 62.0 62.0 61.9 61.9
11............................. 16................ 62.2 62.1 61.9 61.8 61.7 61.6 61.5 61.4 61.4 61.3 61.2 61.2 61.1 61.0 61.0
12............................. 17................ 61.4 61.3 61.1 61.0 60.9 60.8 60.7 60.6 60.5 60.4 60.4 60.3 60.2 60.2 60.1
13............................. 18................ 60.6 60.5 60.3 60.2 60.1 60.0 59.9 59.8 59.7 59.6 59.5 59.4 59.4 59.3 59.2
14............................. 19................ 59.8 59.7 59.5 59.4 59.3 59.1 59.0 58.9 58.8 58.7 58.6 58.6 58.5 58.4 58.4
15............................. 20................ 59.0 58.9 58.7 58.6 58.4 58.3 58.2 58.1 58.0 57.9 57.8 57.7 57.6 57.6 57.5
16............................. 21................ 58.3 58.1 57.9 57.8 57.6 57.5 57.4 57.2 57.1 57.0 56.9 56.8 56.8 56.7 56.6
17............................. 22................ 57.5 57.3 57.2 57.0 56.8 56.7 56.6 56.4 56.3 56.2 56.1 56.0 55.9 55.8 55.7
18............................. 23................ 56.8 56.6 56.4 56.2 56.0 55.9 55.7 55.6 55.5 55.4 55.2 55.1 55.1 55.0 54.9
19............................. 24................ 56.0 55.8 55.6 55.4 55.3 55.1 54.9 54.8 54.7 54.5 54.4 54.3 54.2 54.1 54.0
20............................. 25................ 55.3 55.1 54.9 54.7 54.5 54.3 54.1 54.0 53.8 53.7 53.6 53.5 53.4 53.3 53.2
21............................. 26................ 54.6 54.4 54.1 53.9 53.7 53.5 53.4 53.2 53.0 52.9 52.8 52.6 52.5 52.4 52.3
22............................. 27................ 53.9 53.6 53.4 53.2 53.0 52.8 52.6 52.4 52.2 52.1 51.9 51.8 51.7 51.6 51.5
23............................. 28................ 53.2 52.9 52.7 52.5 52.2 52.0 51.8 51.6 51.5 51.3 51.1 51.0 50.9 50.7 50.6
24............................. 29................ 52.5 52.3 52.0 51.7 51.5 51.3 51.1 50.9 50.7 50.5 50.3 50.2 50.0 49.9 49.8
25............................. 30................ 51.9 51.6 51.3 51.0 50.8 50.5 50.3 50.1 49.9 49.7 49.6 49.4 49.2 49.1 49.0
26............................. 31................ 51.2 50.9 50.6 50.3 50.1 49.8 49.6 49.4 49.2 49.0 48.8 48.6 48.4 48.3 48.1
27............................. 32................ 50.6 50.3 50.0 49.7 49.4 49.1 48.9 48.6 48.4 48.2 48.0 47.8 47.6 47.5 47.3
[[Page 164]]
28............................. 33................ 50.0 49.6 49.3 49.0 48.7 48.4 48.2 47.9 47.7 47.5 47.2 47.1 46.9 46.7 46.5
29............................. 34................ 49.4 49.0 48.7 48.3 48.0 47.7 47.5 47.2 47.0 46.7 46.5 46.3 46.1 45.9 45.7
30............................. 35................ 48.8 48.4 48.1 47.7 47.4 47.1 46.8 46.5 46.2 46.0 45.8 45.5 45.3 45.2 45.0
31............................. 36................ 48.2 47.8 47.5 47.1 46.8 46.4 46.1 45.8 45.6 45.3 45.0 44.8 44.6 44.4 44.2
32............................. 37................ 47.7 47.3 46.9 46.5 46.1 45.8 45.5 45.2 44.9 44.6 44.3 44.1 43.9 43.7 43.4
33............................. 38................ 47.2 46.7 46.3 45.9 45.5 45.2 44.8 44.5 44.2 43.9 43.7 43.4 43.2 42.9 42.7
34............................. 39................ 46.7 46.2 45.8 45.4 45.0 44.6 44.2 43.9 43.6 43.3 43.0 42.7 42.5 42.2 42.0
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[[Page 165]]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Ages
------------------------------------------------------------------------------------------------------
Male Female Male 50 51 52 53 54 55 56 57 58 59 60 61 62 63
------------------------------------------------------------------------------------------------------
Female 55 56 57 58 59 60 61 62 63 64 65 66 67 68
--------------------------------------------------------------------------------------------------------------------------------------------------------
6............................. 11............... 65.4 65.4 65.3 65.3 65.3 65.3 65.3 65.2 65.2 65.2 65.2 65.2 65.2 65.2
7............................. 12............... 64.5 64.5 64.4 64.4 64.4 64.4 64.3 64.3 64.3 64.3 64.3 64.3 64.3 64.2
8............................. 13............... 63.6 63.6 63.5 63.5 63.5 63.5 63.4 63.4 63.4 63.4 63.4 63.4 63.3 63.3
9............................. 14............... 62.7 62.7 62.7 62.6 62.6 62.6 62.5 62.5 62.5 62.5 62.5 62.4 62.4 62.4
10............................ 15............... 61.8 61.8 61.8 61.7 61.7 61.7 61.6 61.6 61.6 61.6 61.6 61.5 61.5 61.5
11............................ 16............... 61.0 60.9 60.9 60.8 60.8 60.8 60.7 60.7 60.7 60.7 60.6 60.6 60.6 60.6
12............................ 17............... 60.1 60.0 60.0 59.9 59.9 59.9 59.8 59.8 59.8 59.8 59.7 59.7 59.7 59.7
13............................ 18............... 59.2 59.1 59.1 59.0 59.0 59.0 58.9 58.9 58.9 58.9 58.8 58.8 58.8 58.8
14............................ 19............... 58.3 58.2 58.2 58.2 58.1 58.1 58.0 58.0 58.0 57.9 57.9 57.9 57.9 57.9
15............................ 20............... 57.4 57.4 57.3 57.3 57.2 57.2 57.1 57.1 57.1 57.0 57.0 57.0 57.0 56.9
16............................ 21............... 56.5 56.5 56.4 56.4 56.3 56.3 56.2 56.2 56.2 56.1 56.1 56.1 56.1 56.0
17............................ 22............... 55.7 55.6 55.5 55.5 55.4 55.4 55.3 55.3 55.3 55.2 55.2 55.2 55.1 55.1
18............................ 23............... 54.8 54.7 54.7 54.6 54.6 54.5 54.5 54.4 54.4 54.3 54.3 54.3 54.2 54.2
19............................ 24............... 53.9 53.9 53.8 53.7 53.7 53.6 53.6 53.5 53.5 53.4 53.4 53.4 53.3 53.3
20............................ 25............... 53.1 53.0 52.9 52.8 52.8 52.7 52.7 52.6 52.6 52.5 52.5 52.4 52.4 52.4
21............................ 26............... 52.2 52.1 52.0 52.0 51.9 51.8 51.8 51.7 51.7 51.6 51.6 51.5 51.5 51.5
22............................ 27............... 51.4 51.3 51.2 51.1 51.0 51.0 50.9 50.8 50.8 50.7 50.7 50.6 50.6 50.6
23............................ 28............... 50.5 50.4 50.3 50.2 50.2 50.1 50.0 50.0 49.9 49.8 49.8 49.7 49.7 49.7
24............................ 29............... 49.7 49.6 49.5 49.4 49.3 49.2 49.1 49.1 49.0 49.0 48.9 48.9 48.8 48.8
25............................ 30............... 48.8 48.7 48.6 48.5 48.4 48.3 48.3 48.2 48.1 48.1 48.0 48.0 47.9 47.9
26............................ 31............... 48.0 47.9 47.8 47.7 47.6 47.5 47.4 47.3 47.3 47.2 47.1 47.1 47.0 47.0
27............................ 32............... 47.2 47.1 46.9 46.8 46.7 46.6 46.5 46.5 46.4 46.3 46.2 46.2 46.1 46.1
28............................ 33............... 46.4 46.3 46.1 46.0 45.9 45.8 45.7 45.6 45.5 45.4 45.4 45.3 45.2 45.2
29............................ 34............... 45.6 45.4 45.3 45.2 45.1 44.9 44.8 44.7 44.7 44.6 44.5 44.4 44.4 44.3
30............................ 35............... 44.8 44.6 44.5 44.4 44.2 44.1 44.0 43.9 43.8 43.7 43.6 43.6 43.5 43.4
31............................ 36............... 44.0 43.9 43.7 43.6 43.4 43.3 43.2 43.1 43.0 42.9 42.8 42.7 42.6 42.0
32............................ 37............... 43.3 43.1 42.9 42.8 42.6 42.5 42.4 42.2 42.1 42.0 41.9 41.9 41.8 41.7
33............................ 38............... 42.5 42.3 42.1 42.0 41.8 41.7 41.5 41.4 41.3 41.2 41.1 41.0 40.9 40.8
34............................ 39............... 41.8 41.6 41.4 41.2 41.0 40.9 40.7 40.6 40.5 40.4 40.3 40.2 40.1 40.0
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[[Page 166]]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Ages
-------------------------------------------------------------------------------------------------------------------------------------------
Male Female Male 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78
-------------------------------------------------------------------------------------------------------------------------------------------
Female 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
6............................... 11................ 65.1 65.1 65.1 65.1 65.1 65.1 65.1 65.1 65.1 65.1 65.1 65.1 65.1 65.1 65.1
7............................... 12................ 64.2 64.2 64.2 64.2 64.2 64.2 64.2 64.2 64.2 64.2 64.2 64.2 64.2 64.1 64.1
8............................... 13................ 63.3 63.3 63.3 63.3 63.3 63.3 63.3 63.3 63.3 63.2 63.2 63.2 63.2 63.2 63.2
9............................... 14................ 62.4 62.4 62.4 62.4 62.4 62.4 62.3 62.3 62.3 62.3 62.3 62.3 62.3 62.3 62.3
10.............................. 15................ 61.5 61.5 61.5 61.5 61.4 61.4 61.4 61.4 61.4 61.4 61.4 61.4 61.4 61.4 61.4
11.............................. 16................ 60.6 60.6 60.6 60.5 60.5 60.5 60.5 60.5 60.5 60.5 60.5 60.5 60.5 60.5 60.5
12.............................. 17................ 59.7 59.6 59.6 59.6 59.6 59.6 59.6 59.6 59.6 59.6 59.6 59.6 59.6 59.5 59.5
13.............................. 18................ 58.8 58.7 58.7 58.7 58.7 58.7 58.7 58.7 58.7 58.7 58.6 58.6 58.6 58.6 58.6
14.............................. 19................ 57.8 57.8 57.8 57.8 57.8 57.8 57.8 57.7 57.7 57.7 57.7 57.7 57.7 57.7 57.7
15.............................. 20................ 56.9 56.9 56.9 56.9 56.9 56.8 56.8 56.8 56.8 56.8 56.8 56.8 56.8 56.8 56.8
16.............................. 21................ 56.0 56.0 56.0 56.0 55.9 55.9 55.9 55.9 55.9 55.9 55.9 55.9 55.9 55.9 55.8
17.............................. 22................ 55.1 55.1 55.1 55.0 55.0 55.0 55.0 55.0 55.0 55.0 55.0 54.9 54.9 54.9 54.9
18.............................. 23................ 54.2 54.2 54.1 54.1 54.1 54.1 54.1 54.1 54.0 54.0 54.0 54.0 54.0 54.0 54.0
19.............................. 24................ 53.3 53.2 53.2 53.2 53.2 53.2 53.2 53.1 53.1 53.1 53.1 53.1 53.1 53.1 53.1
20.............................. 25................ 52.4 52.3 52.3 52.3 52.3 52.2 52.2 52.2 52.2 52.2 52.2 52.2 52.2 52.1 52.1
21.............................. 26................ 51.4 51.4 51.4 51.4 51.3 51.3 51.3 51.3 51.3 51.3 51.3 51.2 51.2 51.2 51.2
22.............................. 27................ 50.5 50.5 50.5 50.5 50.4 50.4 50.4 50.4 50.4 50.3 50.3 50.3 50.3 50.3 50.3
23.............................. 28................ 49.6 49.6 49.6 49.5 49.5 49.5 49.5 49.5 49.4 49.4 49.4 49.4 49.4 49.4 49.4
24.............................. 29................ 48.7 48.7 48.7 48.6 48.6 48.6 48.6 48.5 48.5 48.5 48.5 48.5 48.5 48.4 48.4
25.............................. 30................ 47.8 47.8 47.8 47.7 47.7 47.7 47.6 47.6 47.6 47.6 47.6 47.5 47.5 47.5 47.5
26.............................. 31................ 46.9 46.9 46.8 46.8 46.8 46.8 46.7 46.7 46.7 46.7 46.6 46.6 46.6 46.6 46.6
27.............................. 32................ 46.0 46.0 45.9 45.9 45.9 45.8 45.8 45.8 45.8 45.7 45.7 45.7 45.7 45.7 45.7
28.............................. 33................ 45.1 45.1 45.1 45.0 45.0 44.9 44.9 44.9 44.9 44.8 44.8 44.8 44.8 44.8 44.8
29.............................. 34................ 44.3 44.2 44.2 44.1 44.1 44.0 44.0 44.0 44.0 43.9 43.9 43.9 43.9 43.9 43.8
30.............................. 35................ 43.4 43.3 43.3 43.2 43.2 43.1 43.1 43.1 43.1 43.0 43.0 43.0 43.0 42.9 42.9
31.............................. 36................ 42.5 42.4 42.4 42.3 42.3 42.3 42.2 42.2 42.2 42.1 42.1 42.1 42.1 42.0 42.0
32.............................. 37................ 41.6 41.6 41.5 41.5 41.4 41.4 41.3 41.3 41.3 41.2 41.2 41.2 41.2 41.1 41.1
33.............................. 38................ 40.8 40.7 40.7 40.6 40.5 40.5 40.5 40.4 40.4 40.3 40.3 40.3 40.3 40.2 40.2
34.............................. 39................ 39.9 39.9 39.8 39.7 39.7 39.6 39.6 39.5 39.5 39.5 39.4 39.4 39.4 39.3 39.3
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Ages
----------------------------------------------------------------------------------------------------------------------------------
Male Female Male 79 80 81 82 83 84 85 86 87 88 89 90 91 92
----------------------------------------------------------------------------------------------------------------------------------
Female 84 85 86 87 88 89 90 91 92 93 94 95 96 97
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
6................................... 11..................... 65.1 65.1 65.1 65.1 65.1 65.1 65.1 65.1 65.1 65.0 65.0 65.0 65.0 65.0
7................................... 12..................... 64.1 64.1 64.1 64.1 64.1 64.1 64.1 64.1 64.1 64.1 64.1 64.1 64.1 64.1
8................................... 13..................... 63.2 63.2 63.2 63.2 63.2 63.2 63.2 63.2 63.2 63.2 63.2 63.2 63.2 63.2
9................................... 14..................... 62.3 62.3 62.3 62.3 62.3 62.3 62.3 62.3 62.3 62.3 62.3 62.3 62.3 62.3
[[Page 167]]
10.................................. 15..................... 61.4 61.4 61.4 61.4 61.4 61.4 61.4 61.4 61.4 61.4 61.4 61.4 61.4 61.4
11.................................. 16..................... 60.5 60.5 60.5 60.5 60.5 60.5 60.4 60.4 60.4 60.4 60.4 60.4 60.4 60.4
12.................................. 17..................... 59.5 59.5 59.5 59.5 59.5 59.5 59.5 59.5 59.5 59.5 59.5 59.5 59.5 59.5
13.................................. 18..................... 58.6 58.6 58.6 58.6 58.6 58.6 58.6 58.6 58.6 58.6 58.6 58.6 58.6 58.6
14.................................. 19..................... 57.7 57.7 57.7 57.7 57.7 57.7 57.7 57.7 57.7 57.7 57.7 57.7 57.7 57.7
15.................................. 20..................... 56.8 56.8 56.8 56.8 56.8 56.8 56.7 56.7 56.7 56.7 56.7 56.7 56.7 56.7
16.................................. 21..................... 55.8 55.8 55.8 55.8 55.8 55.8 55.8 55.8 55.8 55.8 55.8 55.8 55.8 55.8
17.................................. 22..................... 54.9 54.9 54.9 54.9 54.9 54.9 54.9 54.9 54.9 54.9 54.9 54.9 54.9 54.9
18.................................. 23..................... 54.0 54.0 54.0 54.0 54.0 54.0 54.0 54.0 54.0 54.0 54.0 54.0 54.0 53.9
19.................................. 24..................... 53.1 53.1 53.1 53.0 53.0 53.0 53.0 53.0 53.0 53.0 53.0 53.0 53.0 53.0
20.................................. 25..................... 52.1 52.1 52.1 52.1 52.1 52.1 52.1 52.1 52.1 52.1 52.1 52.1 52.1 52.1
21.................................. 26..................... 51.2 51.2 51.2 51.2 51.2 51.2 51.2 51.2 51.2 51.2 51.2 51.2 51.2 51.2
22.................................. 27..................... 50.3 50.3 50.3 50.3 50.3 50.2 50.2 50.2 50.2 50.2 50.2 50.2 50.2 50.2
23.................................. 28..................... 49.4 49.3 49.3 49.3 49.3 49.3 49.3 49.3 49.3 49.3 49.3 49.3 49.3 49.3
24.................................. 29..................... 48.4 48.4 48.4 48.4 48.4 48.4 48.4 48.4 48.4 48.4 48.4 48.4 48.4 48.4
25.................................. 30..................... 47.5 47.5 47.5 47.5 47.5 47.5 47.5 47.5 47.4 47.4 47.4 47.4 47.4 47.4
26.................................. 31..................... 46.6 46.6 46.6 46.6 46.5 46.5 46.5 46.5 46.5 46.5 46.5 46.5 46.5 46.5
27.................................. 32..................... 45.7 45.6 45.6 45.6 45.6 45.6 45.6 45.6 45.6 45.6 45.6 45.6 45.6 45.6
28.................................. 33..................... 44.7 44.7 44.7 44.7 44.7 44.7 44.7 44.7 44.7 44.7 44.7 44.7 44.7 44.7
29.................................. 34..................... 43.8 43.8 43.8 43.8 43.8 43.8 43.8 43.8 43.8 43.7 43.7 43.7 43.7 43.7
30.................................. 35..................... 42.9 42.9 42.9 42.9 42.9 42.9 42.8 42.8 42.8 42.8 42.8 42.8 42.8 42.8
31.................................. 36..................... 42.0 42.0 42.0 42.0 42.0 41.9 41.9 41.9 41.9 41.9 41.9 41.9 41.9 41.9
32.................................. 37..................... 41.1 41.1 41.1 41.1 41.0 41.0 41.0 41.0 41.0 41.0 41.0 41.0 41.0 41.0
33.................................. 38..................... 40.2 40.2 40.2 40.2 40.1 40.1 40.1 40.1 40.1 40.1 40.1 40.1 40.1 40.1
34.................................. 39..................... 39.3 39.3 39.3 39.3 39.2 39.2 39.2 39.2 39.2 39.2 39.2 39.2 39.2 39.2
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Ages
----------------------------------------------------------------------------------------------------------------------------------------------------
Male Female Male 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108
----------------------------------------------------------------------------------------------------------------------------------------------------
Female 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
6.............................................. 11................................ 65.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0 65.0
7.............................................. 12................................ 64.1 64.1 64.1 64.1 64.1 64.1 64.1 64.1 64.1 64.1 64.1 64.1 64.1 64.1 64.1 64.1
8.............................................. 13................................ 63.2 63.2 63.2 63.2 63.2 63.2 63.2 63.2 63.2 63.2 63.2 63.2 63.2 63.2 63.2 63.2
9.............................................. 14................................ 62.3 62.3 62.3 62.3 62.3 62.3 62.3 62.3 62.3 62.3 62.3 62.3 62.3 62.3 62.3 62.3
10............................................. 15................................ 61.4 61.4 61.4 61.4 61.4 61.4 61.4 61.4 61.4 61.4 61.4 61.4 61.4 61.4 61.4 61.4
11............................................. 16................................ 60.4 60.4 60.4 60.4 60.4 60.4 60.4 60.4 60.4 60.4 60.4 60.4 60.4 60.4 60.4 60.4
12............................................. 17................................ 59.5 59.5 59.5 59.5 59.5 59.5 59.5 59.5 59.5 59.5 59.5 59.5 59.5 59.5 59.5 59.5
13............................................. 18................................ 58.6 58.6 58.6 58.6 58.6 58.6 58.6 58.6 58.6 58.6 58.6 58.6 58.6 58.6 58.6 58.6
14............................................. 19................................ 57.7 57.7 57.7 57.7 57.7 57.7 57.7 57.7 57.7 57.7 57.7 57.7 57.7 57.7 57.7 57.7
15............................................. 20................................ 56.7 56.7 56.7 56.7 56.7 56.7 56.7 56.7 56.7 56.7 56.7 56.7 56.7 56.7 56.7 56.7
16............................................. 21................................ 55.8 55.8 55.8 55.8 55.8 55.8 55.8 55.8 55.8 55.8 55.8 55.8 55.8 55.8 55.8 55.8
[[Page 168]]
17............................................. 22................................ 54.9 54.9 54.9 54.9 54.9 54.9 54.9 54.9 54.9 54.9 54.9 54.9 54.9 54.9 54.9 54.9
18............................................. 23................................ 53.9 53.9 53.9 53.9 53.9 53.9 53.9 53.9 53.9 53.9 53.9 53.9 53.9 53.9 53.9 53.9
19............................................. 24................................ 53.0 53.0 53.0 53.0 53.0 53.0 53.0 53.0 53.0 53.0 53.0 53.0 53.0 53.0 53.0 53.0
20............................................. 25................................ 52.1 52.1 52.1 52.1 52.1 52.1 52.1 52.1 52.1 52.1 52.1 52.1 52.1 52.1 52.1 52.1
21............................................. 26................................ 51.2 51.2 51.2 51.2 51.2 51.2 51.1 51.1 51.1 51.1 51.1 51.1 51.1 51.1 51.1 51.1
22............................................. 27................................ 50.2 50.2 50.2 50.2 50.2 50.2 50.2 50.2 50.2 50.2 50.2 50.2 50.2 50.2 50.2 50.2
23............................................. 28................................ 49.3 49.3 49.3 49.3 49.3 49.3 49.3 49.3 49.3 49.3 49.3 49.3 49.3 49.3 49.3 49.3
24............................................. 29................................ 48.4 48.4 48.4 48.4 48.4 48.4 48.4 48.4 48.4 48.4 48.4 48.4 48.4 48.4 48.3 48.3
25............................................. 30................................ 47.4 47.4 47.4 47.4 47.4 47.4 47.4 47.4 47.4 47.4 47.4 47.4 47.4 47.4 47.4 47.4
26............................................. 31................................ 46.5 46.5 46.5 46.5 46.5 46.5 46.5 46.5 46.5 46.5 46.5 46.5 46.5 46.5 46.5 46.5
27............................................. 32................................ 45.6 45.6 45.6 45.6 45.6 45.6 45.6 45.6 45.6 45.6 45.6 45.6 45.6 45.6 45.6 45.6
28............................................. 33................................ 44.7 44.6 44.6 44.6 44.6 44.6 44.6 44.6 44.6 44.6 44.6 44.6 44.6 44.6 44.6 44.6
29............................................. 34................................ 43.7 43.7 43.7 43.7 43.7 43.7 43.7 43.7 43.7 43.7 43.7 43.7 43.7 43.7 43.7 43.7
30............................................. 35................................ 42.8 42.8 42.8 42.8 42.8 42.8 42.8 42.8 42.8 42.8 42.8 42.8 42.8 42.8 42.8 42.8
31............................................. 36................................ 41.9 41.9 41.9 41.9 41.9 41.9 41.9 41.9 41.9 41.9 41.9 41.9 41.9 41.9 41.9 41.9
32............................................. 37................................ 41.0 41.0 41.0 41.0 41.0 41.0 41.0 41.0 41.0 41.0 41.0 41.0 41.0 41.0 41.0 41.0
33............................................. 38................................ 40.1 40.1 40.1 40.1 40.1 40.1 40.1 40.1 40.1 40.1 40.1 40.1 40.1 40.1 40.1 40.0
34............................................. 39................................ 39.2 39.2 39.2 39.2 39.2 39.2 39.2 39.2 39.2 39.2 39.2 39.1 39.1 39.1 39.1 39.1
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Ages
-------------------------------------------------------------------------------------------------------------------------
Male Female Male 35 36 37 38 39 40 41 42 43 44 45 46 47
-------------------------------------------------------------------------------------------------------------------------
Female 40 41 42 43 44 45 46 47 48 49 50 51 52
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
35....................................... 40......................... 46.2 45.7 45.3 44.8 44.4 44.0 43.6 43.3 43.0 42.6 42.3 42.0 41.8
36....................................... 41......................... 45.7 45.2 44.8 44.3 43.9 43.5 43.1 42.7 42.3 42.0 41.7 41.4 41.1
37....................................... 42......................... 45.3 44.8 44.3 43.8 43.4 42.9 42.5 42.1 41.8 41.4 41.1 40.7 40.4
38....................................... 43......................... 44.8 44.3 43.8 43.3 42.9 42.4 42.0 41.6 41.2 40.8 40.5 40.1 39.8
39....................................... 44......................... 44.4 43.9 43.4 42.9 42.4 41.9 41.5 41.0 40.6 40.2 39.9 39.5 39.2
40....................................... 45......................... 44.0 43.5 42.9 42.4 41.9 41.4 41.0 40.5 40.1 39.7 39.3 38.9 38.6
41....................................... 46......................... 43.6 43.1 42.5 42.0 41.5 41.0 40.5 40.0 39.6 39.2 38.8 38.4 38.0
42....................................... 47......................... 43.3 42.7 42.1 41.6 41.0 40.5 40.0 39.6 39.1 38.7 38.2 37.8 37.5
43....................................... 48......................... 43.0 42.3 41.8 41.2 40.6 40.1 39.6 39.1 38.6 38.2 37.7 37.3 36.9
44....................................... 49......................... 42.6 42.0 41.4 40.8 40.2 39.7 39.2 38.7 38.2 37.7 37.2 36.8 36.4
45....................................... 50......................... 42.3 41.7 41.1 40.5 39.9 39.3 38.8 38.2 37.7 37.2 36.8 36.3 35.9
46....................................... 51......................... 42.0 41.4 40.7 40.1 39.5 38.9 38.4 37.8 37.3 36.8 36.3 35.9 35.4
47....................................... 52......................... 41.8 41.1 40.4 39.8 39.2 38.6 38.0 37.5 36.9 36.4 35.9 35.4 35.0
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[[Page 169]]
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Ages
-------------------------------------------------------------------------------------------------------------------------
Male Female Male 48 49 50 51 52 53 54 55 56 57 58 59 60
-------------------------------------------------------------------------------------------------------------------------
Female 53 54 55 56 57 58 59 60 61 62 63 64 65
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35....................................... 40......................... 41.5 41.3 41.0 40.8 40.6 40.4 40.3 40.1 40.0 39.8 39.7 39.6 39.5
36....................................... 41......................... 40.8 40.6 40.3 40.1 39.9 39.7 39.5 39.3 39.2 39.0 38.9 38.8 38.6
37....................................... 42......................... 40.2 39.9 39.6 39.4 39.2 39.0 38.8 38.6 38.4 38.3 38.1 38.0 37.9
38....................................... 43......................... 39.5 39.2 39.0 38.7 38.5 38.3 38.1 37.9 37.7 37.5 37.3 37.2 37.1
39....................................... 44......................... 38.9 38.6 38.3 38.0 37.8 37.6 37.3 37.1 36.9 36.8 36.6 36.4 36.3
40....................................... 45......................... 38.3 38.0 37.7 37.4 37.1 36.9 36.6 36.4 36.2 36.0 35.9 35.7 35.5
41....................................... 46......................... 37.7 37.3 37.0 36.7 36.5 36.2 36.0 35.7 35.5 35.3 35.1 35.0 34.8
42....................................... 47......................... 37.1 36.8 36.4 36.1 35.8 35.6 35.3 35.1 34.8 34.6 34.4 34.2 34.1
43....................................... 48......................... 36.5 36.2 35.8 35.5 35.2 34.9 34.7 34.4 34.2 33.9 33.7 33.5 33.3
44....................................... 49......................... 36.0 35.6 35.3 34.9 34.6 34.3 34.0 33.8 33.5 33.3 33.0 32.8 32.6
45....................................... 50......................... 35.5 35.1 34.7 34.4 34.0 33.7 33.4 33.1 32.9 32.6 32.4 32.2 31.9
46....................................... 51......................... 35.0 34.6 34.2 33.8 33.5 33.1 32.8 32.5 32.2 32.0 31.7 31.5 31.3
47....................................... 52......................... 34.5 34.1 33.7 33.3 32.9 32.6 32.2 31.9 31.6 31.4 31.1 30.9 30.6
48....................................... 53......................... 34.0 33.6 33.2 32.8 32.4 32.0 31.7 31.4 31.1 30.8 30.5 30.2 30.0
49....................................... 54......................... 33.6 33.1 32.7 32.3 31.9 31.5 31.2 30.8 30.5 30.2 29.9 29.6 29.4
50....................................... 55......................... 33.2 32.7 32.3 31.8 31.4 31.0 30.6 30.3 29.9 29.6 29.3 29.0 28.8
51....................................... 56......................... 32.8 32.3 31.8 31.4 30.9 30.5 30.1 29.8 29.4 29.1 28.8 28.5 28.2
52....................................... 57......................... 32.4 31.9 31.4 30.9 30.5 30.1 29.7 29.3 28.9 28.6 28.2 27.9 27.6
53....................................... 58......................... 32.0 31.5 31.0 30.5 30.1 29.6 29.2 28.8 28.4 28.1 27.7 27.4 27.1
54....................................... 59......................... 31.7 31.2 30.6 30.1 29.7 29.2 28.8 28.3 27.9 27.6 27.2 26.9 26.5
55....................................... 60......................... 31.4 30.8 30.3 29.8 29.3 28.8 28.3 27.9 27.5 27.1 26.7 26.4 26.0
56....................................... 61......................... 31.1 30.5 29.9 29.4 28.9 28.4 27.9 27.5 27.1 26.7 26.3 25.9 25.5
57....................................... 62......................... 30.8 30.2 29.6 29.1 28.6 28.1 27.6 27.1 26.7 26.2 25.8 25.4 25.1
58....................................... 63......................... 30.5 29.9 29.3 28.8 28.2 27.7 27.2 26.7 26.3 25.8 25.4 25.0 24.6
59....................................... 64......................... 30.2 29.6 29.0 28.5 27.9 27.4 26.9 26.4 25.9 25.4 25.0 24.6 24.2
60....................................... 65......................... 30.0 29.4 28.8 28.2 27.6 27.1 26.5 26.0 25.5 25.1 24.6 24.2 23.8
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Ages
-------------------------------------------------------------------------------------------------------------------------
Male Female Male 61 62 63 64 65 66 67 68 69 70 71 72 73
-------------------------------------------------------------------------------------------------------------------------
Female 66 67 68 69 70 71 72 73 74 75 76 77 78
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35....................................... 40......................... 39.4 39.3 39.2 39.1 39.0 38.9 38.9 38.8 38.8 38.7 38.7 38.6 38.6
36....................................... 41......................... 38.5 38.4 38.3 38.2 38.2 38.1 38.0 38.0 37.9 37.9 37.8 37.8 37.7
37....................................... 42......................... 37.7 37.6 37.5 37.4 37.3 37.3 37.2 37.1 37.1 37.0 36.9 36.9 36.9
38....................................... 43......................... 36.9 36.8 36.7 36.6 36.5 36.4 36.4 36.3 36.2 36.2 36.1 36.0 36.0
39....................................... 44......................... 36.2 36.0 35.9 35.8 35.7 35.6 35.5 35.5 35.4 35.3 35.3 35.2 35.2
40....................................... 45......................... 35.4 35.3 35.1 35.0 34.9 34.8 34.7 34.6 34.6 34.5 34.4 34.4 34.3
41....................................... 46......................... 34.6 34.5 34.4 34.2 34.1 34.0 33.9 33.8 33.8 33.7 33.6 33.5 33.5
[[Page 170]]
42....................................... 47......................... 33.9 33.7 33.6 33.5 33.4 33.2 33.1 33.0 33.0 32.9 32.8 32.7 32.7
43....................................... 48......................... 33.2 33.0 32.9 32.7 32.6 32.5 32.4 32.3 32.2 32.1 32.0 31.9 31.9
44....................................... 49......................... 32.5 32.3 32.1 32.0 31.8 31.7 31.6 31.5 31.4 31.3 31.2 31.1 31.1
45....................................... 50......................... 31.8 31.6 31.4 31.3 31.1 31.0 30.8 30.7 30.6 30.5 30.4 30.4 30.3
46....................................... 51......................... 31.1 30.9 30.7 30.5 30.4 30.2 30.1 30.0 29.9 29.8 29.7 29.6 29.5
47....................................... 52......................... 30.4 30.2 30.0 29.8 29.7 29.5 29.4 29.3 29.1 29.0 28.9 28.8 28.7
48....................................... 53......................... 29.8 29.5 29.3 29.2 29.0 28.8 28.7 28.5 28.4 28.3 28.2 28.1 28.0
49....................................... 54......................... 29.1 28.9 28.7 28.5 28.3 28.1 28.0 27.8 27.7 27.6 27.5 27.4 27.3
50....................................... 55......................... 28.5 28.3 28.1 27.8 27.6 27.5 27.3 27.1 27.0 26.9 26.7 26.6 26.5
51....................................... 56......................... 27.9 27.7 27.4 27.2 27.0 26.8 26.6 26.5 26.3 26.2 26.0 25.9 25.8
52....................................... 57......................... 27.3 27.1 26.8 26.6 26.4 26.2 26.0 25.8 25.7 25.5 25.4 25.2 25.1
53....................................... 58......................... 26.8 26.5 26.2 26.0 25.8 25.6 25.4 25.2 25.0 24.8 24.7 24.6 24.4
54....................................... 59......................... 26.2 25.9 25.7 25.4 25.2 25.0 24.7 24.6 24.4 24.2 24.0 23.9 23.8
55....................................... 60......................... 25.7 25.4 25.1 24.9 24.6 24.4 24.1 23.9 23.8 23.6 23.4 23.3 23.1
56....................................... 61......................... 25.2 24.9 24.6 24.3 24.1 23.8 23.6 23.4 23.2 23.0 22.8 22.6 22.5
57....................................... 62......................... 24.7 24.4 24.1 23.8 23.5 23.3 23.0 22.8 22.6 22.4 22.2 22.0 21.9
58....................................... 63......................... 24.3 23.9 23.6 23.3 23.0 22.7 22.5 22.2 22.0 21.8 21.6 21.4 21.3
59....................................... 64......................... 23.8 23.5 23.1 22.8 22.5 22.2 21.9 21.7 21.5 21.2 21.0 20.9 20.7
60....................................... 65......................... 23.4 23.0 22.7 22.3 22.0 21.7 21.4 21.2 20.9 20.7 20.5 20.3 20.1
61....................................... 66......................... 23.0 22.6 22.2 21.9 21.6 21.3 21.0 20.7 20.4 20.2 20.0 19.8 19.6
62....................................... 67......................... 22.6 22.2 21.8 21.5 21.1 20.8 20.5 20.2 19.9 19.7 19.5 19.2 19.0
63....................................... 68......................... 22.2 21.8 21.4 21.1 20.7 20.4 20.1 19.8 19.5 19.2 19.0 18.7 18.5
64....................................... 69......................... 21.9 21.5 21.1 20.7 20.3 20.0 19.6 19.3 19.0 18.7 18.5 18.2 18.0
65....................................... 70......................... 21.6 21.1 20.7 20.3 19.9 19.6 19.2 18.9 18.6 18.3 18.0 17.8 17.5
66....................................... 71......................... 21.3 20.8 20.4 20.0 19.6 19.2 18.8 18.5 18.2 17.9 17.6 17.3 17.1
67....................................... 72......................... 21.0 20.5 20.1 19.6 19.2 18.8 18.5 18.1 17.8 17.5 17.2 16.9 16.7
68....................................... 73......................... 20.7 20.2 19.8 19.3 18.9 18.5 18.1 17.8 17.4 17.1 16.8 16.5 16.2
69....................................... 74......................... 20.4 19.9 19.5 19.0 18.6 18.2 17.8 17.4 17.1 16.7 16.4 16.1 15.8
70....................................... 75......................... 20.2 19.7 19.2 18.7 18.3 17.9 17.5 17.1 16.7 16.4 16.1 15.8 15.5
71....................................... 76......................... 20.0 19.5 19.0 18.5 18.0 17.6 17.2 16.8 16.4 16.1 15.7 15.4 15.1
72....................................... 77......................... 19.8 19.2 18.7 18.2 17.8 17.3 16.9 16.5 16.1 15.8 15.4 15.1 14.8
73....................................... 78......................... 19.6 19.0 18.5 18.0 17.5 17.1 16.7 16.2 15.8 15.5 15.1 14.8 14.4
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[[Page 171]]
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Ages
----------------------------------------------------------------------------------------------------------------
Male Female Male 74 75 76 77 78 79 80 81 82 83 84 85
----------------------------------------------------------------------------------------------------------------
Female 79 80 81 82 83 84 85 86 87 88 89 90
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35........................................... 40.............................. 38.6 38.5 38.5 38.5 38.4 38.4 38.4 38.4 38.4 38.4 38.3 38.3
36........................................... 41.............................. 37.7 37.6 37.6 37.6 37.6 27.5 37.5 37.5 37.5 37.5 37.5 37.4
37........................................... 42.............................. 36.8 36.8 36.7 36.7 36.7 36.7 36.6 36.6 36.6 36.6 36.6 36.6
38........................................... 43.............................. 36.0 35.9 35.9 35.9 35.8 35.8 35.8 35.8 35.7 35.7 35.7 35.7
39........................................... 44.............................. 35.1 35.1 35.0 35.0 35.0 34.9 34.9 34.9 34.9 34.8 34.8 34.8
40........................................... 45.............................. 34.3 34.2 34.2 34.1 34.1 34.1 34.1 34.0 34.0 34.0 34.0 34.0
41........................................... 46.............................. 33.4 33.4 33.3 33.3 33.3 33.2 33.2 33.2 33.2 33.1 33.1 33.1
42........................................... 47.............................. 32.6 32.6 32.5 32.5 32.4 32.4 32.4 32.3 32.3 32.3 32.3 32.3
43........................................... 48.............................. 31.8 31.8 31.7 31.7 31.6 31.6 31.5 31.5 31.5 31.5 31.4 31.4
44........................................... 49.............................. 31.0 30.9 30.9 30.8 30.8 30.8 30.7 30.7 30.7 30.6 30.6 30.6
45........................................... 50.............................. 30.2 30.1 30.1 30.0 30.0 29.9 29.9 29.9 29.8 29.8 29.8 29.8
46........................................... 51.............................. 29.4 29.4 29.3 29.2 29.2 29.2 29.1 29.1 29.0 29.0 29.0 28.9
47........................................... 52.............................. 28.7 28.6 28.5 28.5 28.4 28.4 28.3 28.3 28.2 28.2 28.2 28.1
48........................................... 53.............................. 27.9 27.8 27.8 27.7 27.6 27.6 27.5 27.5 27.5 27.4 27.4 27.4
49........................................... 54.............................. 27.2 27.1 27.0 26.9 26.9 26.8 26.8 26.7 26.7 26.6 26.6 26.6
50........................................... 55.............................. 26.4 26.3 26.3 26.2 26.1 26.1 26.0 26.0 25.9 25.9 25.8 25.8
51........................................... 56.............................. 25.7 25.6 25.5 25.5 25.4 25.3 25.3 25.2 25.2 25.1 25.1 25.0
52........................................... 57.............................. 25.0 24.9 24.8 24.7 24.7 24.6 24.5 24.5 24.4 24.4 24.3 24.3
53........................................... 58.............................. 24.3 24.2 24.1 24.0 23.9 23.9 23.8 23.7 23.7 23.6 23.6 23.5
54........................................... 59.............................. 23.6 23.5 23.4 23.3 23.2 23.2 23.1 23.0 23.0 22.9 22.9 22.8
55........................................... 60.............................. 23.0 22.9 22.8 22.7 22.6 22.5 22.4 22.3 22.3 22.2 22.2 22.1
56........................................... 61.............................. 22.3 22.2 22.1 22.0 21.9 21.8 21.7 21.6 21.6 21.5 21.5 21.4
57........................................... 62.............................. 21.7 21.6 21.5 21.3 21.2 21.1 21.1 21.0 20.9 20.8 20.8 20.7
58........................................... 63.............................. 21.1 21.0 20.8 20.7 20.6 20.5 20.4 20.3 20.2 20.2 20.1 20.0
59........................................... 64.............................. 20.5 20.4 20.2 20.1 20.0 19.9 19.8 19.7 19.6 19.5 19.4 19.4
60........................................... 65.............................. 19.9 19.8 19.6 19.5 19.4 19.3 19.1 19.0 19.0 18.9 18.8 18.7
61........................................... 66.............................. 19.4 19.2 19.1 18.9 18.8 18.7 18.5 18.4 18.3 18.3 18.2 18.1
62........................................... 67.............................. 18.8 18.7 18.5 18.3 18.2 18.1 18.0 17.8 17.7 17.7 17.6 17.5
63........................................... 68.............................. 18.3 18.1 18.0 17.8 17.6 17.5 17.4 17.3 17.2 17.1 17.0 16.9
64........................................... 69.............................. 17.8 17.6 17.4 17.3 17.1 17.0 16.8 16.7 16.6 16.5 16.4 16.3
65........................................... 70.............................. 17.3 17.1 16.9 16.7 16.6 16.4 16.3 16.2 16.0 15.9 15.8 15.8
66........................................... 71.............................. 16.9 16.6 16.4 16.3 16.1 15.9 15.8 15.6 15.5 15.4 15.3 15.2
67........................................... 72.............................. 16.4 16.2 16.0 15.8 15.6 15.4 15.3 15.1 15.0 14.9 14.8 14.7
68........................................... 73.............................. 16.0 15.7 15.5 15.3 15.1 15.0 14.8 14.6 14.5 14.4 14.3 14.2
69........................................... 74.............................. 15.6 15.3 15.1 14.9 14.7 14.5 14.3 14.2 14.0 13.9 13.8 13.7
70........................................... 75.............................. 15.2 14.9 14.7 14.5 14.3 14.1 13.9 13.7 13.6 13.4 13.3 13.2
71........................................... 76.............................. 14.8 14.5 14.3 14.1 13.8 13.6 13.5 13.3 13.1 13.0 12.8 12.7
72........................................... 77.............................. 14.5 14.2 13.9 13.7 13.5 13.2 13.0 12.9 12.7 12.5 12.4 12.3
[[Page 172]]
73........................................... 78.............................. 14.1 13.8 13.6 13.3 13.1 12.9 12.7 12.5 12.3 12.1 12.0 11.8
74........................................... 79.............................. 13.8 13.5 13.2 13.0 12.7 12.5 12.3 12.1 11.9 11.7 11.6 11.4
75........................................... 80.............................. 13.5 13.2 12.9 12.6 12.4 12.2 11.9 11.7 11.5 11.4 11.2 11.0
76........................................... 81.............................. 13.2 12.9 12.6 12.3 12.1 11.8 11.6 11.4 11.2 11.0 10.8 10.7
77........................................... 82.............................. 13.0 12.6 12.3 12.1 11.8 11.5 11.3 11.1 10.8 10.7 10.5 10.3
78........................................... 83.............................. 12.7 12.4 12.1 11.8 11.5 11.2 11.0 10.7 10.5 10.3 10.1 10.0
79........................................... 84.............................. 12.5 12.2 11.8 11.5 11.2 11.0 10.7 10.5 10.2 10.0 9.8 9.6
80........................................... 85.............................. 12.3 11.9 11.6 11.3 11.0 10.7 10.4 10.2 10.0 9.7 9.5 9.3
81........................................... 86.............................. 12.1 11.7 11.4 11.1 10.7 10.5 10.2 9.9 9.7 9.5 9.3 9.1
82........................................... 87.............................. 11.9 11.5 11.2 10.8 10.5 10.2 10.0 9.7 9.4 9.2 9.0 8.8
83........................................... 88.............................. 11.7 11.4 11.0 10.7 10.3 10.0 9.7 9.5 9.2 9.0 8.7 8.5
84........................................... 89.............................. 11.6 11.2 10.8 10.5 10.1 9.8 9.5 9.3 9.0 8.7 8.5 8.3
85........................................... 90.............................. 11.4 11.0 10.7 10.3 10.0 9.6 9.3 9.1 8.8 8.5 8.3 8.1
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------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Ages
----------------------------------------------------------------------------------------------------------------
Male Female Male 86 87 88 89 90 91 92 93 94 95 96 97
----------------------------------------------------------------------------------------------------------------
Female 91 92 93 94 95 96 97 98 99 100 101 102
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
35........................................... 40.............................. 38.3 38.3 38.3 38.3 38.3 38.3 38.3 38.3 38.3 38.3 38.3 38.3
36........................................... 41.............................. 37.4 37.4 37.4 37.4 37.4 37.4 37.4 37.4 37.4 37.4 37.4 37.4
37........................................... 42.............................. 36.5 36.5 36.5 36.5 36.5 36.5 36.5 36.5 36.5 36.5 36.5 36.5
38........................................... 43.............................. 35.7 35.7 35.6 35.6 35.6 35.6 35.6 35.6 35.6 35.6 35.6 35.6
39........................................... 44.............................. 34.8 34.8 34.8 34.8 34.8 34.8 34.7 34.7 34.7 34.7 34.7 34.7
40........................................... 45.............................. 33.9 33.9 33.9 33.9 33.9 33.9 33.9 33.9 33.9 33.9 33.9 33.9
41........................................... 46.............................. 33.1 33.1 33.1 33.0 33.0 33.0 33.0 33.0 33.0 33.0 33.0 33.0
42........................................... 47.............................. 32.2 32.2 32.2 32.2 32.2 32.2 32.2 32.2 32.2 32.1 32.1 32.1
43........................................... 48.............................. 31.4 31.4 31.4 31.3 31.3 31.3 31.3 31.3 31.3 31.3 31.3 31.3
44........................................... 49.............................. 30.6 30.5 30.5 30.5 30.5 30.5 30.5 30.5 30.5 30.5 30.5 30.4
45........................................... 50.............................. 29.7 29.7 29.7 29.7 29.7 29.7 29.7 29.6 29.6 29.6 29.6 29.6
46........................................... 51.............................. 28.9 28.9 28.9 28.9 28.9 28.8 28.8 28.8 28.8 28.8 28.8 28.8
47........................................... 52.............................. 28.1 28.1 28.1 28.1 28.0 28.0 28.0 28.0 28.0 28.0 28.0 28.0
48........................................... 53.............................. 27.3 27.3 27.3 27.3 27.2 27.2 27.2 27.2 27.2 27.2 27.2 27.2
49........................................... 54.............................. 26.5 26.5 26.5 26.5 26.5 26.4 26.4 26.4 26.4 26.4 26.4 26.4
50........................................... 55.............................. 25.8 25.7 25.7 25.7 25.7 25.7 25.6 25.6 25.6 25.6 25.6 25.6
51........................................... 56.............................. 25.0 25.0 24.9 24.9 24.9 24.9 24.9 24.9 24.8 24.8 24.8 24.8
52........................................... 57.............................. 24.3 24.2 24.2 24.2 24.1 24.1 24.1 24.1 24.1 24.1 24.1 24.0
53........................................... 58.............................. 23.5 23.5 23.4 23.4 23.4 23.4 23.4 23.3 23.3 23.3 23.3 23.3
54........................................... 59.............................. 22.8 22.7 22.7 22.7 22.7 22.6 22.6 22.6 22.6 22.6 22.6 22.5
[[Page 173]]
55........................................... 60.............................. 22.1 22.0 22.0 22.0 21.9 21.9 21.9 21.9 21.8 21.8 21.8 21.8
56........................................... 61.............................. 21.4 21.3 21.3 21.3 21.2 21.2 21.2 21.1 21.1 21.1 21.1 21.1
57........................................... 62.............................. 20.7 20.6 20.6 20.6 20.5 20.5 20.5 20.4 20.4 20.4 20.4 20.4
58........................................... 63.............................. 20.0 19.9 19.9 19.9 19.8 19.8 19.8 19.8 19.7 19.7 19.7 19.7
59........................................... 64.............................. 19.3 19.3 19.2 19.2 19.2 19.1 19.1 19.1 19.0 19.0 19.0 19.0
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------------------------------
Ages
-------------------------------------------------------------------------------------------------------
Male Female Male 98 99 100 101 102 103 104 105 106 107 108
-------------------------------------------------------------------------------------------------------
Female 103 104 105 106 107 108 109 110 111 112 113
--------------------------------------------------------------------------------------------------------------------------------------------------------
35............................ 40.............. 38.3 38.3 38.3 38.3 38.3 38.3 38.2 38.2 38.2 38.2 38.2
36............................ 41.............. 37.4 37.4 37.4 37.4 37.4 37.4 37.4 37.4 37.4 37.4 37.3
37............................ 42.............. 36.5 36.5 36.5 36.5 36.5 36.5 36.5 36.5 36.5 36.5 36.5
38............................ 43.............. 35.6 35.6 35.6 35.6 35.6 35.6 35.6 35.6 35.6 35.6 35.6
39............................ 44.............. 34.7 34.7 34.7 34.7 34.7 34.7 34.7 34.7 34.7 34.7 34.7
40............................ 45.............. 33.9 33.8 33.8 33.8 33.8 33.8 33.8 33.8 33.8 33.8 33.8
41............................ 46.............. 33.0 33.0 33.0 33.0 33.0 33.0 33.0 33.0 33.0 33.0 33.0
42............................ 47.............. 32.1 32.1 32.1 32.1 32.1 32.1 32.1 32.1 32.1 32.1 32.1
43............................ 48.............. 31.3 31.3 31.3 31.3 31.3 31.3 31.3 31.3 31.3 31.3 31.3
44............................ 49.............. 30.4 30.4 30.4 30.4 30.4 30.4 30.4 30.4 30.4 30.4 30.4
45............................ 50.............. 29.6 29.6 29.6 29.6 29.6 29.6 29.6 29.6 29.6 29.6 29.6
46............................ 51.............. 28.8 28.8 28.8 28.8 28.8 28.8 28.8 28.8 28.8 28.8 28.7
47............................ 52.............. 28.0 28.0 28.0 28.0 28.0 28.0 28.0 27.9 27.9 27.9 27.9
48............................ 53.............. 27.2 27.2 27.2 27.2 27.2 27.1 27.1 27.1 27.1 27.1 27.1
49............................ 54.............. 26.4 26.4 26.4 26.4 26.4 26.3 26.3 26.3 26.3 26.3 26.3
50............................ 55.............. 25.6 25.6 25.6 25.6 25.6 25.6 25.6 25.6 25.5 25.5 25.5
51............................ 56.............. 24.8 24.8 24.8 24.8 24.8 24.8 24.8 24.8 24.8 24.8 24.7
52............................ 57.............. 24.0 24.0 24.0 24.0 24.0 24.0 24.0 24.0 24.0 24.0 24.0
53............................ 58.............. 23.3 23.3 23.3 23.3 23.3 23.3 23.2 23.2 23.2 23.2 23.2
54............................ 59.............. 22.5 22.5 22.5 22.5 22.5 22.5 22.5 22.5 22.5 22.5 22.5
55............................ 60.............. 21.8 21.8 21.8 21.8 21.8 21.8 21.8 21.8 21.8 21.7 21.7
56............................ 61.............. 21.1 21.1 21.1 21.1 21.1 21.0 21.0 21.0 21.0 21.0 21.0
57............................ 62.............. 20.4 20.4 20.4 20.3 20.3 20.3 20.3 20.3 20.3 20.3 20.3
58............................ 63.............. 19.7 19.7 19.7 19.6 19.6 19.6 19.6 19.6 19.6 19.6 19.6
59............................ 64.............. 19.0 19.0 19.0 19.0 19.0 18.9 18.9 18.9 18.9 18.9 18.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Ages
----------------------------------------------------------------------------------------------------------------
Male Female Male 86 87 88 89 90 91 92 93 94 95 96 97
----------------------------------------------------------------------------------------------------------------
Female 91 92 93 94 95 96 97 98 99 100 101 102
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
60........................................... 65.............................. 18.7 18.6 18.6 18.5 18.5 18.5 18.4 18.4 18.4 18.4 18.3 18.3
[[Page 174]]
61........................................... 66.............................. 18.1 18.0 17.9 17.9 17.9 17.8 17.8 17.8 17.7 17.7 17.7 17.7
62........................................... 67.............................. 17.4 17.4 17.3 17.3 17.2 17.2 17.1 17.1 17.1 17.1 17.0 17.0
63........................................... 68.............................. 16.8 16.8 16.7 16.7 16.6 16.6 16.5 16.5 16.5 16.4 16.4 16.4
64........................................... 69.............................. 16.2 16.2 16.1 16.1 16.0 16.0 15.9 15.9 15.9 15.8 15.8 15.8
65........................................... 70.............................. 15.7 15.6 15.5 15.5 15.4 15.4 15.3 15.3 15.3 15.2 15.2 15.2
66........................................... 71.............................. 15.1 15.0 15.0 14.9 14.8 14.8 14.7 14.7 14.7 14.6 14.6 14.6
67........................................... 72.............................. 14.6 14.5 14.4 14.4 14.3 14.2 14.2 14.1 14.1 14.1 14.1 14.0
68........................................... 73.............................. 14.1 14.0 13.9 13.8 13.8 13.7 13.6 13.6 13.6 13.5 13.5 13.5
69........................................... 74.............................. 13.6 13.5 13.4 13.3 13.2 13.2 13.1 13.1 13.0 13.0 13.0 12.9
70........................................... 75.............................. 13.1 13.0 12.9 12.8 12.7 12.7 12.6 12.5 12.5 12.5 12.4 12.4
71........................................... 76.............................. 12.6 12.5 12.4 12.3 12.2 12.2 12.1 12.1 12.0 12.0 11.9 11.9
72........................................... 77.............................. 12.1 12.0 11.9 11.8 11.8 11.7 11.6 11.6 11.5 11.5 11.4 11.4
73........................................... 78.............................. 11.7 11.6 11.5 11.4 11.3 11.2 11.2 11.1 11.0 11.0 11.0 10.9
74........................................... 79.............................. 11.3 11.2 11.1 11.0 10.9 10.8 10.7 10.7 10.6 10.6 10.5 10.5
75........................................... 80.............................. 10.9 10.8 10.7 10.5 10.5 10.4 10.3 10.2 10.2 10.1 10.1 10.0
76........................................... 81.............................. 10.5 10.4 10.3 10.2 10.1 10.0 9.9 9.8 9.7 9.7 9.7 9.6
77........................................... 82.............................. 10.2 10.0 9.9 9.8 9.7 9.6 9.5 9.4 9.3 9.3 9.2 9.2
78........................................... 83.............................. 9.8 9.7 9.5 9.4 9.3 9.2 9.1 9.0 9.0 8.9 8.9 8.8
79........................................... 84.............................. 9.5 9.3 9.2 9.2 8.9 8.8 8.8 8.7 8.6 8.5 8.5 8.4
80........................................... 85.............................. 9.2 9.0 8.9 8.7 8.6 8.5 8.4 8.3 8.3 8.2 8.1 8.1
81........................................... 86.............................. 8.9 8.7 8.6 8.4 8.3 8.2 8.1 8.0 7.9 7.9 7.8 7.7
82........................................... 87.............................. 8.6 8.4 8.3 8.1 8.0 7.9 7.8 7.7 7.6 7.5 7.5 7.4
83........................................... 88.............................. 8.3 8.2 8.0 7.9 7.7 7.6 7.5 7.4 7.3 7.2 7.2 7.1
84........................................... 89.............................. 8.1 7.9 7.8 7.6 7.5 7.3 7.2 7.1 7.0 7.0 6.9 6.8
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------------------------------
Ages
-------------------------------------------------------------------------------------------------------
Male Female Male 98 99 100 101 102 103 104 105 106 107 108
-------------------------------------------------------------------------------------------------------
Female 103 104 105 106 107 108 109 110 111 112 113
--------------------------------------------------------------------------------------------------------------------------------------------------------
60............................ 65.............. 18.3 18.3 18.3 18.3 18.3 18.3 18.3 18.2 18.2 18.2 18.2
61............................ 66.............. 17.7 17.7 17.6 17.6 17.6 17.6 17.6 17.6 17.6 17.6 17.5
62............................ 67.............. 17.0 17.0 17.0 17.0 17.0 17.0 16.9 16.9 16.9 16.9 16.9
63............................ 68.............. 16.4 16.4 16.4 16.3 16.3 16.3 16.3 16.3 16.3 16.3 16.2
64............................ 69.............. 15.8 15.8 15.7 15.7 15.7 15.7 15.7 15.7 15.7 15.7 15.6
65............................ 70.............. 15.2 15.2 15.1 15.1 15.1 15.1 15.1 15.1 15.1 15.0 15.0
66............................ 71.............. 14.6 14.6 14.5 14.5 14.5 14.5 14.5 14.5 14.5 14.4 14.4
67............................ 72.............. 14.0 14.0 14.0 14.0 13.9 13.9 13.9 13.9 13.9 13.9 13.8
68............................ 73.............. 13.5 13.4 13.4 13.4 13.4 13.4 13.3 13.3 13.3 13.3 13.2
[[Page 175]]
69............................ 74.............. 12.9 12.9 12.9 12.8 12.8 12.8 12.8 12.8 12.8 12.7 12.7
70............................ 75.............. 12.4 12.4 12.3 12.3 12.3 12.3 12.3 12.2 12.2 12.2 12.1
71............................ 76.............. 11.9 11.9 11.8 11.8 11.8 11.8 11.7 11.7 11.7 11.7 11.6
72............................ 77.............. 11.4 11.4 11.3 11.3 11.3 11.3 11.2 11.2 11.2 11.2 11.1
73............................ 78.............. 10.9 10.9 10.9 10.8 10.8 10.8 10.7 10.7 10.7 10.7 10.6
74............................ 79.............. 10.5 10.4 10.4 10.4 10.3 10.3 10.3 10.3 10.2 10.2 10.1
75............................ 80.............. 10.0 10.0 9.9 9.9 9.9 9.8 9.8 9.8 9.8 9.7 .......
76............................ 81.............. 9.6 9.5 9.5 9.5 9.4 9.4 9.4 9.4 9.3 9.3 .......
77............................ 82.............. 9.2 9.1 9.1 9.1 9.0 9.0 9.0 8.9 8.9 8.9 .......
78............................ 83.............. 8.8 8.7 8.7 8.7 8.6 8.6 8.5 8.5 8.5 8.4 .......
79............................ 84.............. 8.4 8.4 8.3 8.3 8.2 8.2 8.2 8.1 8.1 8.0 .......
80............................ 85.............. 8.0 8.0 7.9 7.9 7.9 7.8 7.8 7.7 7.7 7.6 .......
81............................ 86.............. 7.7 7.6 7.6 7.6 7.5 7.5 7.4 7.4 7.3 7.3 .......
82............................ 87.............. 7.4 7.3 7.3 7.2 7.2 7.1 7.1 7.0 7.0 6.9 .......
83............................ 88.............. 7.1 7.0 6.9 6.9 6.8 6.8 6.7 6.7 6.7 6.6 .......
84............................ 89.............. 6.8 6.7 6.6 6.6 6.5 6.5 6.4 6.4 6.3 ....... .......
--------------------------------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------------------------------
Ages
-------------------------------------------------------------------------------------------------------
Male Female Male 86 87 88 89 90 91 92 93 94 95 96
-------------------------------------------------------------------------------------------------------
Female 91 92 93 94 95 96 97 98 99 100 101
--------------------------------------------------------------------------------------------------------------------------------------------------------
85............................ 90.............. 7.9 7.7 7.5 7.4 7.2 7.1 7.0 6.9 6.8 6.7 6.6
86............................ 91.............. 7.7 7.5 7.3 7.1 7.0 6.8 6.7 6.6 6.5 6.4 6.4
87............................ 92.............. 7.5 7.3 7.1 6.9 6.8 6.6 6.5 6.4 6.3 6.2 6.1
88............................ 93.............. 7.3 7.1 6.9 6.7 6.6 6.4 6.3 6.2 6.1 6.0 5.9
89............................ 94.............. 7.1 6.9 6.7 6.5 6.4 6.2 6.1 6.0 5.9 5.8 5.7
90............................ 95.............. 7.0 6.8 6.6 6.4 6.2 6.1 5.9 5.8 5.7 5.6 5.5
91............................ 96.............. 6.8 6.6 6.4 6.2 6.1 5.9 5.8 5.7 5.5 5.4 5.3
92............................ 97.............. 6.7 6.5 6.3 6.1 5.9 5.8 5.6 5.5 5.4 5.3 5.2
93............................ 98.............. 6.6 6.4 6.2 6.0 5.8 5.7 5.5 5.4 5.2 5.1 5.0
94............................ 99.............. 6.5 6.3 6.1 5.9 5.7 5.5 5.4 5.2 5.1 5.0 4.9
95............................ 100............. 6.4 6.2 6.0 5.8 5.6 5.4 5.3 5.1 5.0 4.9 4.7
96............................ 101............. 6.4 6.1 5.9 5.7 5.5 5.3 5.2 5.0 4.9 4.7 4.6
97............................ 102............. 6.3 6.1 5.8 5.6 5.4 5.2 5.1 4.9 4.8 4.6 4.5
98............................ 103............. 6.2 6.0 5.8 5.5 5.3 5.1 5.0 4.8 4.7 4.5 4.4
99............................ 104............. 6.2 5.9 5.7 5.5 5.2 5.1 4.9 4.7 4.6 4.4 4.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 176]]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Ages
----------------------------------------------------------------------------------------------
Male Female Male 97 98 99 100 101 102 103 104 105 106
----------------------------------------------------------------------------------------------
Female 102 103 104 105 106 107 108 109 110 111
--------------------------------------------------------------------------------------------------------------------------------------------------------
85................................ 90................... 6.6 6.5 6.4 6.4 6.3 6.2 6.2 6.1 6.1 6.0
86................................ 91................... 6.3 6.2 6.2 6.1 6.0 6.0 5.9 5.9 5.8 5.7
87................................ 92................... 6.1 6.0 5.9 5.8 5.8 5.7 5.6 5.6 5.5 5.4
88................................ 93................... 5.8 5.8 5.7 5.6 5.5 5.5 5.4 5.3 5.3 5.1
89................................ 94................... 5.6 5.5 5.5 5.4 5.3 5.2 5.2 5.1 5.0 .......
90................................ 95................... 5.4 5.3 5.2 5.2 5.1 5.0 4.9 4.9 4.8 .......
91................................ 96................... 5.2 5.1 5.1 5.0 4.9 4.8 4.7 4.6 4.5 .......
92................................ 97................... 5.1 5.0 4.9 4.8 4.7 4.6 4.5 4.4 ....... .......
93................................ 98................... 4.9 4.8 4.7 4.6 4.5 4.4 4.3 4.2 ....... .......
94................................ 99................... 4.8 4.7 4.6 4.5 4.4 4.3 4.1 ....... ....... .......
95................................ 100.................. 4.6 4.5 4.4 4.3 4.2 4.1 4.0 ....... ....... .......
96................................ 101.................. 4.5 4.4 4.3 4.2 4.1 3.9 ....... ....... ....... .......
97................................ 102.................. 4.4 4.3 4.1 4.0 3.9 3.7 ....... ....... ....... .......
98................................ 103.................. 4.3 4.1 4.0 3.9 3.7 ....... ....... ....... ....... .......
99................................ 104.................. 4.1 4.0 3.9 3.7 ....... ....... ....... ....... ....... .......
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[[Page 177]]
Table IIA--Annuities for Joint Life Only--Two Lives--Expected Return Multiples
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Ages
-------------------------------------------------------------------------------------------------------------------------------------------
Male Female Male 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
-------------------------------------------------------------------------------------------------------------------------------------------
Female 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
6............................... 11................ 56.6 56.1 55.7 55.1 54.6 54.1 53.5 52.9 52.3 51.7 51.1 50.5 49.8 49.1 48.4
7............................... 12................ 56.1 55.7 55.2 54.7 54.2 53.7 53.1 52.6 52.0 51.4 50.8 50.2 49.5 48.9 48.2
8............................... 13................ 55.7 55.2 54.8 54.3 53.8 53.3 52.8 52.2 51.6 51.1 50.5 49.9 49.2 48.6 47.9
9............................... 14................ 55.1 54.7 54.3 53.8 53.3 52.9 52.3 51.8 51.3 50.7 50.1 49.5 48.9 48.3 47.7
10.............................. 15................ 54.6 54.2 53.8 53.3 52.9 52.4 51.9 51.4 50.9 50.3 49.8 49.2 48.6 48.0 47.4
11.............................. 16................ 54.1 53.7 53.3 52.9 52.4 52.0 51.5 51.0 50.5 50.0 49.4 48.8 48.3 47.7 47.1
12.............................. 17................ 53.5 53.1 52.8 52.3 51.9 51.5 51.0 50.6 50.1 49.6 49.0 48.5 47.9 47.3 46.7
13.............................. 18................ 52.9 52.6 52.2 51.8 51.4 51.0 50.6 50.1 49.6 49.1 48.6 48.1 47.5 47.0 46.4
14.............................. 19................ 52.3 52.0 51.6 51.3 50.9 50.5 50.1 49.6 49.2 48.7 48.2 47.7 47.2 46.6 46.1
15.............................. 20................ 51.7 51.4 51.1 50.7 50.3 50.0 49.6 49.1 48.7 48.2 47.8 47.3 46.8 46.2 45.7
16.............................. 21................ 51.1 50.8 50.5 50.1 49.8 49.4 49.0 48.6 48.2 47.8 47.3 46.8 46.3 45.8 45.3
17.............................. 22................ 50.5 50.2 49.9 49.5 49.2 48.8 48.5 48.1 47.7 47.3 46.8 46.4 45.9 45.4 44.9
18.............................. 23................ 49.8 49.5 49.2 48.9 48.6 48.3 47.9 47.5 47.2 46.8 46.3 45.9 45.4 45.0 44.5
19.............................. 24................ 49.1 48.9 48.6 48.3 48.0 47.7 47.3 47.0 46.6 46.2 45.8 45.4 45.0 44.5 44.0
20.............................. 25................ 48.4 48.2 47.9 47.7 47.4 47.1 46.7 46.4 46.1 45.7 45.3 44.9 44.5 44.0 43.6
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Ages
----------------------------------------------------------------------------------------------------------------------------------
Male Female Male 21 22 23 24 25 26 27 28 29 30 31 32 33 34
----------------------------------------------------------------------------------------------------------------------------------
Female 26 27 28 29 30 31 32 33 34 35 36 37 38 39
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
6................................... 11..................... 47.7 47.0 46.3 45.6 44.8 44.1 43.3 42.5 41.8 41.0 40.2 39.4 38.6 37.8
7................................... 12..................... 47.5 46.8 46.1 45.4 44.6 43.9 43.2 42.4 41.6 40.9 40.1 39.3 38.5 37.7
8................................... 13..................... 47.3 46.6 45.9 45.2 44.5 43.7 43.0 42.2 41.5 40.7 39.9 39.2 38.4 37.6
9................................... 14..................... 47.0 46.3 45.6 45.0 44.2 43.5 42.8 42.1 41.3 40.6 39.8 39.0 38.3 37.5
10.................................. 15..................... 46.7 46.1 45.4 44.7 44.0 43.3 42.6 41.9 41.1 40.4 39.7 38.9 38.1 37.4
11.................................. 16..................... 46.4 45.8 45.1 44.5 43.8 43.1 42.4 41.7 41.0 40.2 39.5 38.8 38.0 37.2
12.................................. 17..................... 46.1 45.5 44.9 44.2 43.6 42.9 42.2 41.5 40.8 40.1 39.3 38.6 37.9 37.1
13.................................. 18..................... 45.8 45.2 44.6 43.9 43.3 42.6 42.0 41.3 40.6 39.9 39.2 38.4 37.7 37.0
14.................................. 19..................... 45.5 44.9 44.3 43.7 43.0 42.4 41.7 41.0 40.4 39.7 39.0 38.3 37.5 36.8
15.................................. 20..................... 45.1 44.6 44.0 43.4 42.7 42.1 41.5 40.8 40.1 39.5 38.8 38.1 37.4 36.6
16.................................. 21..................... 44.8 44.2 43.6 43.0 42.4 41.8 41.2 40.5 39.9 39.2 38.6 37.9 37.2 36.5
17.................................. 22..................... 44.4 43.8 43.3 42.7 42.1 41.5 40.9 40.3 39.6 39.0 38.3 37.7 37.0 36.3
18.................................. 23..................... 44.0 43.5 42.9 42.4 41.8 41.2 40.6 40.0 39.4 38.7 38.1 37.4 36.8 36.1
19.................................. 24..................... 43.6 43.1 42.5 42.0 41.4 40.9 40.3 39.7 39.1 38.5 37.8 37.2 36.5 35.9
20.................................. 25..................... 43.1 42.6 42.1 41.6 41.1 40.5 40.0 39.4 38.8 38.2 37.6 36.9 36.3 35.7
21.................................. 26..................... 42.7 42.2 41.7 41.2 40.7 40.2 39.6 39.1 38.5 37.9 37.3 36.7 36.1 35.4
[[Page 178]]
22.................................. 27..................... 42.2 41.8 41.3 40.8 40.3 39.8 39.3 38.7 38.2 37.6 37.0 36.4 35.8 35.2
23.................................. 28..................... 41.7 41.3 40.8 40.4 39.9 39.4 38.9 38.4 37.8 37.3 36.7 36.1 35.5 34.9
24.................................. 29..................... 41.2 40.8 40.4 39.9 39.5 39.0 38.5 38.0 37.5 36.9 36.4 35.8 35.2 34.6
25.................................. 30..................... 40.7 40.3 39.9 39.5 39.0 38.6 38.1 37.6 37.1 36.6 36.0 35.5 34.9 34.4
26.................................. 31..................... 40.2 39.8 39.4 39.0 38.6 38.1 37.7 37.2 36.7 36.2 35.7 35.2 34.6 34.1
27.................................. 32..................... 39.6 39.3 38.9 38.5 38.1 37.7 37.2 36.8 36.3 35.8 35.3 34.8 34.3 33.7
28.................................. 33..................... 39.1 38.7 38.4 38.0 37.6 37.2 36.8 36.3 35.9 35.4 34.9 34.5 33.9 33.4
29.................................. 34..................... 38.5 38.2 37.8 37.5 37.1 36.7 36.3 35.9 35.5 35.0 34.6 34.1 33.6 33.1
30.................................. 35..................... 37.9 37.6 37.3 36.9 36.6 36.2 35.8 35.4 35.0 34.6 34.1 33.7 33.2 32.7
31.................................. 36..................... 37.3 37.0 36.7 36.4 36.0 35.7 35.3 34.9 34.6 34.1 33.7 33.3 32.8 32.3
32.................................. 37..................... 36.7 36.4 36.1 35.8 35.5 35.2 34.8 34.5 34.1 33.7 33.3 32.9 32.4 32.0
33.................................. 38..................... 36.1 35.8 35.5 35.2 34.9 34.6 34.3 33.9 33.6 33.2 32.8 32.4 32.0 31.6
34.................................. 39..................... 35.4 35.2 34.9 34.6 34.4 34.1 33.7 33.4 33.1 32.7 32.3 32.0 31.6 31.1
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Ages
-------------------------------------------------------------------------------------------------------------------------------------------
Male Female Male 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49
-------------------------------------------------------------------------------------------------------------------------------------------
Female 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
6............................... 11................ 37.0 36.2 35.4 34.6 33.8 33.0 32.2 31.4 30.6 29.8 29.0 28.2 27.5 26.7 25.9
7............................... 12................ 36.9 36.1 35.3 34.5 33.7 32.9 32.1 31.3 30.5 29.8 29.0 28.2 27.4 26.7 25.9
8............................... 13................ 36.8 36.0 35.2 34.4 33.7 32.9 32.1 31.3 30.5 29.7 28.9 28.2 27.4 26.6 25.9
9............................... 14................ 36.7 35.9 35.1 34.4 33.6 32.8 32.0 31.2 30.4 29.7 28.9 28.1 27.3 26.6 25.8
10.............................. 15................ 36.6 35.8 35.1 34.3 33.5 32.7 31.9 31.2 30.4 29.6 28.8 28.1 27.3 26.5 25.8
11.............................. 16................ 36.5 35.7 34.9 34.2 33.4 32.6 31.9 31.1 30.3 29.5 28.8 28.0 27.3 26.5 25.7
12.............................. 17................ 36.4 35.6 34.8 34.1 33.3 32.5 31.8 31.0 30.2 29.5 28.7 28.0 27.2 26.4 25.7
13.............................. 18................ 36.2 35.5 34.7 34.0 33.2 32.4 31.7 30.9 30.2 29.4 28.7 27.9 27.1 26.4 25.7
14.............................. 19................ 36.1 35.3 34.6 33.8 33.1 32.3 31.6 30.8 30.1 29.3 28.6 27.8 27.1 26.3 25.6
15.............................. 20................ 35.9 35.2 34.5 33.7 33.0 32.2 31.5 30.7 30.0 29.3 28.5 27.8 27.0 26.3 25.6
16.............................. 21................ 35.8 35.0 34.3 33.6 32.9 32.1 31.4 30.6 29.9 29.2 28.4 27.7 27.0 26.2 25.5
17.............................. 22................ 35.6 34.9 34.2 33.4 32.7 32.0 31.3 30.5 29.8 29.1 28.3 27.6 26.9 26.2 25.4
18.............................. 23................ 35.4 34.7 34.0 33.3 32.6 31.9 31.2 30.4 29.7 29.0 28.3 27.5 26.8 26.1 25.4
19.............................. 24................ 35.2 34.5 33.8 33.1 32.4 31.7 31.0 30.3 29.6 28.9 28.2 27.4 26.7 26.0 25.3
20.............................. 25................ 35.0 34.3 33.7 33.0 32.3 31.6 30.9 30.2 29.5 28.8 28.1 27.3 26.6 25.9 25.2
21.............................. 26................ 34.8 34.1 33.5 32.8 32.1 31.4 30.7 30.0 29.3 28.6 27.9 27.2 26.5 25.8 25.1
22.............................. 27................ 34.5 33.9 33.3 32.6 31.9 31.3 30.6 29.9 29.2 28.5 27.8 27.1 26.4 25.7 25.1
23.............................. 28................ 34.3 33.7 33.0 32.4 31.7 31.1 30.4 29.7 29.1 28.4 27.7 27.0 26.3 25.6 25.0
24.............................. 29................ 34.0 33.4 32.8 32.2 31.5 30.9 30.2 29.6 28.9 28.2 27.6 26.9 26.2 25.5 24.9
25.............................. 30................ 33.8 33.2 32.6 32.0 31.3 30.7 30.1 29.4 28.8 28.1 27.4 26.8 26.1 25.4 24.8
[[Page 179]]
26.............................. 31................ 33.5 32.9 32.3 31.7 31.1 30.5 29.9 29.2 28.6 27.9 27.3 26.6 26.0 25.3 24.6
27.............................. 32................ 33.2 32.6 32.1 31.5 30.9 30.3 29.6 29.0 28.4 27.8 27.1 26.5 25.8 25.2 24.5
28.............................. 33................ 32.9 32.3 31.8 31.2 30.6 30.0 29.4 28.8 28.2 27.6 27.0 26.3 25.7 25.0 24.4
29.............................. 34................ 32.6 32.0 31.5 30.9 30.4 29.8 29.2 28.6 28.0 27.4 26.8 26.2 25.5 24.9 24.3
30.............................. 35................ 32.2 31.7 31.2 30.6 30.1 29.5 29.0 28.4 27.8 27.2 26.6 26.0 25.4 24.7 24.1
31.............................. 36................ 31.9 31.4 30.9 30.3 29.8 29.3 28.7 28.1 27.6 27.0 26.4 25.8 25.2 24.6 24.0
32.............................. 37................ 31.5 31.0 30.5 30.0 29.5 29.0 28.4 27.9 27.3 26.8 26.2 25.6 25.0 24.4 23.8
33.............................. 38................ 31.1 30.7 30.2 29.7 29.2 28.7 28.2 27.6 27.1 26.5 26.0 25.4 24.8 24.2 23.6
34.............................. 39................ 30.7 30.3 29.8 29.3 28.9 28.4 27.9 27.3 26.8 26.3 25.7 25.2 24.6 24.0 23.5
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Ages
----------------------------------------------------------------------------------------------------------------------------------
Male Female Male 50 51 52 53 54 55 56 57 58 59 60 61 62 63
----------------------------------------------------------------------------------------------------------------------------------
Female 55 56 57 58 59 60 61 62 63 64 65 66 67 68
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
6................................... 11..................... 25.2 24.4 23.7 22.9 22.2 21.5 20.8 20.1 19.4 18.7 18.0 17.4 16.7 16.1
7................................... 12..................... 25.1 24.4 23.6 22.9 22.2 21.5 20.8 20.1 19.4 18.7 18.0 17.4 16.7 16.1
8................................... 13..................... 25.1 24.4 23.6 22.9 22.2 21.4 20.7 20.0 19.4 18.7 18.0 17.4 16.7 16.1
9................................... 14..................... 25.1 24.3 23.6 22.9 22.1 21.4 20.7 20.0 19.3 18.7 18.0 17.3 16.7 16.1
10.................................. 15..................... 25.0 24.3 23.6 22.8 22.1 21.4 20.7 20.0 19.3 18.6 18.0 17.3 16.7 16.1
11.................................. 16..................... 25.0 24.3 23.5 22.8 22.1 21.4 20.7 20.0 19.3 18.6 18.0 17.3 16.7 16.1
12.................................. 17..................... 25.0 24.2 23.5 22.8 22.1 21.4 20.7 20.0 19.3 18.6 18.0 17.3 16.7 16.0
13.................................. 18..................... 24.9 24.2 23.5 22.7 22.0 21.3 20.6 19.9 19.3 18.6 17.9 17.3 16.7 16.0
14.................................. 19..................... 24.9 24.1 23.4 22.7 22.0 21.3 20.6 19.9 19.2 18.6 17.9 17.3 16.6 16.0
15.................................. 20..................... 24.8 24.1 23.4 22.7 22.0 21.3 20.6 19.9 19.2 18.5 17.9 17.3 16.6 16.0
16.................................. 21..................... 24.8 24.0 23.3 22.6 21.9 21.2 20.5 19.9 19.2 18.5 17.9 17.2 16.6 16.0
17.................................. 22..................... 24.7 24.0 23.3 22.6 21.9 21.2 20.5 19.8 19.2 18.5 17.8 17.2 16.6 16.0
18.................................. 23..................... 24.7 23.9 23.2 22.5 21.8 21.1 20.5 19.8 19.1 18.5 17.8 17.2 16.6 15.9
19.................................. 24..................... 24.6 23.9 23.2 22.5 21.8 21.1 20.4 19.8 19.1 18.4 17.8 17.2 16.5 15.9
20.................................. 25..................... 24.5 23.8 23.1 22.4 21.7 21.1 20.4 19.7 19.1 18.4 17.8 17.1 16.5 15.9
21.................................. 26..................... 24.4 23.7 23.1 22.4 21.7 21.0 20.3 19.7 19.0 18.4 17.7 17.1 16.5 15.9
22.................................. 27..................... 24.4 23.7 23.0 22.3 21.6 21.0 20.3 19.6 19.0 18.3 17.7 17.1 16.5 15.9
23.................................. 28..................... 24.3 23.6 22.9 22.2 21.6 20.9 20.2 19.6 18.9 18.3 17.7 17.0 16.4 15.8
24.................................. 29..................... 24.2 23.5 22.8 22.2 21.5 20.8 20.2 19.5 18.9 18.3 17.6 17.0 16.4 15.8
25.................................. 30..................... 24.1 23.4 22.8 22.1 21.4 20.8 20.1 19.5 18.8 18.2 17.6 17.0 16.4 15.8
26.................................. 31..................... 24.0 23.3 22.7 22.0 21.4 20.7 20.1 19.4 18.8 18.2 17.5 16.9 16.3 15.7
27.................................. 32..................... 23.9 23.2 22.6 21.9 21.3 20.6 20.0 19.4 18.7 18.1 17.5 16.9 16.3 15.7
28.................................. 33..................... 23.8 23.1 22.5 21.8 21.2 20.6 19.9 19.3 18.7 18.1 17.4 16.8 16.2 15.6
29.................................. 34..................... 23.6 23.0 22.4 21.7 21.1 20.5 19.8 19.2 18.6 18.0 17.4 16.8 16.2 15.6
30.................................. 35..................... 23.5 22.9 22.3 21.6 21.0 20.4 19.8 19.1 18.5 17.9 17.3 16.7 16.1 15.6
31.................................. 36..................... 23.4 22.7 22.1 21.5 20.9 20.3 19.7 19.1 18.5 17.9 17.3 16.7 16.1 15.5
32.................................. 37..................... 23.2 22.6 22.0 21.4 20.8 20.2 19.6 19.0 18.4 17.8 17.2 16.6 16.0 15.5
[[Page 180]]
33.................................. 38..................... 23.1 22.5 21.9 21.3 20.7 20.1 19.5 18.9 18.3 17.7 17.1 16.5 16.0 15.4
34.................................. 39..................... 22.9 22.3 21.7 21.1 20.5 20.0 19.4 18.8 18.2 17.6 17.0 16.5 15.9 15.3
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Ages
-------------------------------------------------------------------------------------------------------------------------------------------
Male Female Male 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78
-------------------------------------------------------------------------------------------------------------------------------------------
Female 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
6............................... 11................ 15.5 14.9 14.3 13.7 13.1 12.6 12.0 11.5 11.0 10.5 10.0 9.6 9.1 8.7 8.2
7............................... 12................ 15.5 14.9 14.3 13.7 13.1 12.6 12.0 11.5 11.0 10.5 10.0 9.6 9.1 8.7 8.2
8............................... 13................ 15.5 14.9 14.3 13.7 13.1 12.6 12.0 11.5 11.0 10.5 10.0 9.6 9.1 8.7 8.2
9............................... 14................ 15.5 14.9 14.3 13.7 13.1 12.6 12.0 11.5 11.0 10.5 10.0 9.5 9.1 8.7 8.2
10.............................. 15................ 15.4 14.8 14.3 13.7 13.1 12.6 12.0 11.5 11.0 10.5 10.0 9.5 9.1 8.7 8.2
11.............................. 16................ 15.4 14.8 14.2 13.7 13.1 12.6 12.0 11.5 11.0 10.5 10.0 9.5 9.1 8.7 8.2
12.............................. 17................ 15.4 14.8 14.2 13.7 13.1 12.5 12.0 11.5 11.0 10.5 10.0 9.5 9.1 8.6 8.2
13.............................. 18................ 15.4 14.8 14.2 13.6 13.1 12.5 12.0 11.5 11.0 10.5 10.0 9.5 9.1 8.6 8.2
14.............................. 19................ 15.4 14.8 14.2 13.6 13.1 12.5 12.0 11.5 11.0 10.5 10.0 9.5 9.1 8.6 8.2
15.............................. 20................ 15.4 14.8 14.2 13.6 13.1 12.5 12.0 11.5 11.0 10.5 10.0 9.5 9.1 8.6 8.2
16.............................. 21................ 15.4 14.8 14.2 13.6 13.1 12.5 12.0 11.5 11.0 10.5 10.0 9.5 9.1 8.6 8.2
17.............................. 22................ 15.4 14.8 14.2 13.6 13.0 12.5 12.0 11.5 10.9 10.5 10.0 9.5 9.1 8.6 8.2
18.............................. 23................ 15.3 14.7 14.2 13.6 13.0 12.5 12.0 11.4 10.9 10.4 10.0 9.5 9.1 8.6 8.2
19.............................. 24................ 15.3 14.7 14.1 13.6 13.0 12.5 12.0 11.4 10.9 10.4 10.0 9.5 9.1 8.6 8.2
20.............................. 25................ 15.3 14.7 14.1 13.6 13.0 12.5 11.9 11.4 10.9 10.4 10.0 9.5 9.0 8.6 8.2
21.............................. 26................ 15.3 14.7 14.1 13.5 13.0 12.5 11.9 11.4 10.9 10.4 9.9 9.5 9.0 8.6 8.2
22.............................. 27................ 15.3 14.7 14.1 13.5 13.0 12.4 11.9 11.4 10.9 10.4 9.9 9.5 9.0 8.6 8.2
23.............................. 28................ 15.2 14.6 14.1 13.5 13.0 12.4 11.9 11.4 10.9 10.4 9.9 9.5 9.0 8.6 8.2
24.............................. 29................ 15.2 14.6 14.0 13.5 12.9 12.4 11.9 11.4 10.9 10.4 9.9 9.5 9.0 8.6 8.2
25.............................. 30................ 15.2 14.6 14.0 13.5 12.9 12.4 11.9 11.4 10.9 10.4 9.9 9.5 9.0 8.6 8.2
26.............................. 31................ 15.1 14.6 14.0 13.4 12.9 12.4 11.9 11.3 10.8 10.4 9.9 9.4 9.0 8.6 8.2
27.............................. 32................ 15.1 14.5 14.0 13.4 12.9 12.4 11.8 11.3 10.8 10.4 9.9 9.4 9.0 8.6 8.2
28.............................. 33................ 15.1 14.5 13.9 13.4 12.9 12.3 11.8 11.3 10.8 10.3 9.9 9.4 9.0 8.6 8.1
29.............................. 34................ 15.0 14.5 13.9 13.4 12.8 12.3 11.8 11.3 10.8 10.3 9.9 9.4 9.0 8.5 8.1
30.............................. 35................ 15.0 14.4 13.9 13.3 12.8 12.3 11.8 11.3 10.8 10.3 9.8 9.4 9.0 8.5 8.1
31.............................. 36................ 14.9 14.4 13.8 13.3 12.8 12.2 11.7 11.2 10.8 10.3 9.8 9.4 8.9 8.5 8.1
32.............................. 37................ 14.9 14.3 13.8 13.3 12.7 12.2 11.7 11.2 10.7 10.3 9.8 9.4 8.9 8.5 8.1
33.............................. 38................ 14.8 14.3 13.8 13.2 12.7 12.2 11.7 11.2 10.7 10.2 9.8 9.3 8.9 8.5 8.1
34.............................. 39................ 14.8 14.2 13.7 13.2 12.7 12.2 11.7 11.2 10.7 10.2 9.8 9.3 8.9 8.5 8.1
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[[Page 181]]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Ages
-------------------------------------------------------------------------------------------------------------------------------------------
Male Female Male 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93
-------------------------------------------------------------------------------------------------------------------------------------------
Female 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
6............................... 11................ 7.8 7.4 7.1 6.7 6.3 6.0 5.7 5.4 5.1 4.8 4.5 4.2 4.0 3.7 3.5
7............................... 12................ 7.8 7.4 7.1 6.7 6.3 6.0 5.7 5.4 5.1 4.8 4.5 4.2 4.0 3.7 3.5
8............................... 13................ 7.8 7.4 7.0 6.7 6.3 6.0 5.7 5.4 5.1 4.8 4.5 4.2 4.0 3.7 3.5
9............................... 14................ 7.8 7.4 7.0 6.7 6.3 6.0 5.7 5.4 5.1 4.8 4.5 4.2 4.0 3.7 3.5
10.............................. 15................ 7.8 7.4 7.0 6.7 6.3 6.0 5.7 5.4 5.1 4.8 4.5 4.2 4.0 3.7 3.5
11.............................. 16................ 7.8 7.4 7.0 6.7 6.3 6.0 5.7 5.4 5.1 4.8 4.5 4.2 4.0 3.7 3.5
12.............................. 17................ 7.8 7.4 7.0 6.7 6.3 6.0 5.7 5.4 5.1 4.8 4.5 4.2 4.0 3.7 3.5
13.............................. 18................ 7.8 7.4 7.0 6.7 6.3 6.0 5.7 5.3 5.1 4.8 4.5 4.2 4.0 3.7 3.5
14.............................. 19................ 7.8 7.4 7.0 6.7 6.3 6.0 5.7 5.3 5.0 4.8 4.5 4.2 4.0 3.7 3.5
15.............................. 20................ 7.8 7.4 7.0 6.7 6.3 6.0 5.7 5.3 5.0 4.8 4.5 4.2 4.0 3.7 3.5
16.............................. 21................ 7.8 7.4 7.0 6.7 6.3 6.0 5.7 5.3 5.0 4.8 4.5 4.2 4.0 3.7 3.5
17.............................. 22................ 7.8 7.4 7.0 6.7 6.3 6.0 5.7 5.3 5.0 4.8 4.5 4.2 4.0 3.7 3.5
18.............................. 23................ 7.8 7.4 7.0 6.7 6.3 6.0 5.7 5.3 5.0 4.8 4.5 4.2 4.0 3.7 3.5
19.............................. 24................ 7.8 7.4 7.0 6.7 6.3 6.0 5.7 5.3 5.0 4.8 4.5 4.2 4.0 3.7 3.5
20.............................. 25................ 7.8 7.4 7.0 6.7 6.3 6.0 5.6 5.3 5.0 4.8 4.5 4.2 4.0 3.7 3.5
21.............................. 26................ 7.8 7.4 7.0 6.7 6.3 6.0 5.6 5.3 5.0 4.8 4.5 4.2 4.0 3.7 3.5
22.............................. 27................ 7.8 7.4 7.0 6.7 6.3 6.0 5.6 5.3 5.0 4.8 4.5 4.2 4.0 3.7 3.5
23.............................. 28................ 7.8 7.4 7.0 6.6 6.3 6.0 5.6 5.3 5.0 4.8 4.5 4.2 4.0 3.7 3.5
24.............................. 29................ 7.8 7.4 7.0 6.6 6.3 6.0 5.6 5.3 5.0 4.7 4.5 4.2 4.0 3.7 3.5
25.............................. 30................ 7.8 7.4 7.0 6.6 6.3 6.0 5.6 5.3 5.0 4.7 4.5 4.2 4.0 3.7 3.5
26.............................. 31................ 7.8 7.4 7.0 6.6 6.3 6.0 5.6 5.3 5.0 4.7 4.5 4.2 4.0 3.7 3.5
27.............................. 32................ 7.7 7.4 7.0 6.6 6.3 5.9 5.6 5.3 5.0 4.7 4.5 4.2 4.0 3.7 3.5
28.............................. 33................ 7.7 7.4 7.0 6.6 6.3 5.9 5.6 5.3 5.0 4.7 4.5 4.2 4.0 3.7 3.5
29.............................. 34................ 7.7 7.3 7.0 6.6 6.3 5.9 5.6 5.3 5.0 4.7 4.5 4.2 4.0 3.7 3.5
30.............................. 35................ 7.7 7.3 7.0 6.6 6.3 5.9 5.6 5.3 5.0 4.7 4.5 4.2 4.0 3.7 3.5
31.............................. 36................ 7.7 7.3 7.0 6.6 6.3 5.9 5.6 5.3 5.0 4.7 4.5 4.2 4.0 3.7 3.5
32.............................. 37................ 7.7 7.3 7.0 6.6 6.3 5.9 5.6 5.3 5.0 4.7 4.5 4.2 4.0 3.7 3.5
33.............................. 38................ 7.7 7.3 6.9 6.6 6.2 5.9 5.6 5.3 5.0 4.7 4.5 4.2 3.9 3.7 3.5
34.............................. 39................ 7.7 7.3 6.9 6.6 6.2 5.9 5.6 5.3 5.0 4.7 4.4 4.2 3.9 3.7 3.5
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Ages
-------------------------------------------------------------------------------------------------------------------------------------------
Male Female Male 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108
-------------------------------------------------------------------------------------------------------------------------------------------
Female 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
6............................... 11................ 3.3 3.1 2.9 2.7 2.5 2.3 2.1 1.9 1.7 1.5 1.3 1.2 1.0 0.8 0.7
7............................... 12................ 3.3 3.1 2.9 2.7 2.5 2.3 2.1 1.9 1.7 1.5 1.3 1.2 1.0 0.8 0.7
8............................... 13................ 3.3 3.1 2.9 2.7 2.5 2.3 2.1 1.9 1.7 1.5 1.3 1.2 1.0 0.8 0.7
9............................... 14................ 3.3 3.1 2.9 2.7 2.5 2.3 2.1 1.9 1.7 1.5 1.3 1.2 1.0 0.8 0.7
[[Page 182]]
10.............................. 15................ 3.3 3.1 2.9 2.7 2.5 2.3 2.1 1.9 1.7 1.5 1.3 1.2 1.0 0.8 0.7
11.............................. 16................ 3.3 3.1 2.9 2.7 2.5 2.3 2.1 1.9 1.7 1.5 1.3 1.2 1.0 0.8 0.7
12.............................. 17................ 3.3 3.1 2.9 2.7 2.5 2.3 2.1 1.9 1.7 1.5 1.3 1.2 1.0 0.8 0.7
13.............................. 18................ 3.3 3.1 2.9 2.7 2.5 2.3 2.1 1.9 1.7 1.5 1.3 1.2 1.0 0.8 0.7
14.............................. 19................ 3.3 3.1 2.9 2.7 2.5 2.3 2.1 1.9 1.7 1.5 1.3 1.2 1.0 0.8 0.7
15.............................. 20................ 3.3 3.1 2.9 2.7 2.5 2.3 2.1 1.9 1.7 1.5 1.3 1.2 1.0 0.8 0.7
16.............................. 21................ 3.3 3.1 2.9 2.7 2.5 2.3 2.1 1.9 1.7 1.5 1.3 1.2 1.0 0.8 0.7
17.............................. 22................ 3.3 3.1 2.9 2.7 2.5 2.3 2.1 1.9 1.7 1.5 1.3 1.2 1.0 0.8 0.7
18.............................. 23................ 3.3 3.1 2.9 2.7 2.5 2.3 2.1 1.9 1.7 1.5 1.3 1.2 1.0 0.8 0.7
19.............................. 24................ 3.3 3.1 2.9 2.7 2.5 2.3 2.1 1.9 1.7 1.5 1.3 1.2 1.0 0.8 0.7
20.............................. 25................ 3.3 3.1 2.9 2.7 2.5 2.3 2.1 1.9 1.7 1.5 1.3 1.2 1.0 0.8 0.7
21.............................. 26................ 3.3 3.1 2.9 2.7 2.5 2.3 2.1 1.9 1.7 1.5 1.3 1.2 1.0 0.8 0.7
22.............................. 27................ 3.3 3.1 2.9 2.7 2.5 2.3 2.1 1.9 1.7 1.5 1.3 1.2 1.0 0.8 0.7
23.............................. 28................ 3.3 3.1 2.9 2.7 2.5 2.3 2.1 1.9 1.7 1.5 1.3 1.2 1.0 0.8 0.7
24.............................. 29................ 3.3 3.1 2.9 2.7 2.5 2.3 2.1 1.9 1.7 1.5 1.3 1.2 1.0 0.8 0.7
25.............................. 30................ 3.3 3.1 2.9 2.7 2.5 2.3 2.1 1.9 1.7 1.5 1.3 1.2 1.0 0.8 0.7
26.............................. 31................ 3.3 3.1 2.9 2.7 2.5 2.3 2.1 1.9 1.7 1.5 1.3 1.2 1.0 0.8 0.7
27.............................. 32................ 3.3 3.1 2.9 2.7 2.5 2.3 2.1 1.9 1.7 1.5 1.3 1.2 1.0 0.8 0.7
28.............................. 33................ 3.3 3.1 2.9 2.7 2.5 2.3 2.1 1.9 1.7 1.5 1.3 1.2 1.0 0.8 0.7
29.............................. 34................ 3.3 3.1 2.9 2.7 2.5 2.3 2.1 1.9 1.7 1.5 1.3 1.2 1.0 0.8 0.7
30.............................. 35................ 3.3 3.1 2.9 2.7 2.5 2.3 2.1 1.9 1.7 1.5 1.3 1.2 1.0 0.8 0.7
31.............................. 36................ 3.3 3.1 2.9 2.7 2.5 2.3 2.1 1.9 1.7 1.5 1.3 1.2 1.0 0.8 0.7
32.............................. 37................ 3.3 3.1 2.9 2.7 2.5 2.3 2.1 1.9 1.7 1.5 1.3 1.2 1.0 0.8 0.7
33.............................. 38................ 3.3 3.1 2.9 2.7 2.5 2.3 2.1 1.9 1.7 1.5 1.3 1.2 1.0 0.8 0.7
34.............................. 39................ 3.3 3.1 2.9 2.7 2.5 2.3 2.1 1.9 1.7 1.5 1.3 1.2 1.0 0.8 0.7
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Ages
-------------------------------------------------------------------------------------------------------------------------
Male Female Male 35 36 37 38 39 40 41 42 43 44 45 46 47
-------------------------------------------------------------------------------------------------------------------------
Female 40 41 42 43 44 45 46 47 48 49 50 51 52
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
35....................................... 40......................... 30.3 29.9 29.4 29.0 28.5 28.0 27.5 27.0 26.5 26.0 25.5 24.9 24.4
36....................................... 41......................... 29.9 29.5 29.0 28.6 28.2 27.7 27.2 26.7 26.2 25.7 25.2 24.7 24.2
37....................................... 42......................... 29.4 29.0 28.6 28.2 27.8 27.3 26.9 26.4 25.9 25.5 25.0 24.4 23.9
38....................................... 43......................... 29.0 28.6 28.2 27.8 27.4 27.0 26.5 26.1 25.6 25.2 24.7 24.2 23.7
39....................................... 44......................... 28.5 28.2 27.8 27.4 27.0 26.6 26.2 25.8 25.3 24.8 24.4 23.9 23.4
40....................................... 45......................... 28.0 27.7 27.3 27.0 26.6 26.2 25.8 25.4 25.0 24.5 24.1 23.6 23.1
41....................................... 46......................... 27.5 27.2 26.9 26.5 26.2 25.8 25.4 25.0 24.6 24.2 23.8 23.3 22.9
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42....................................... 47......................... 27.0 26.7 26.4 26.1 25.8 25.4 25.0 24.6 24.2 23.8 23.4 23.0 22.6
43....................................... 48......................... 26.5 26.2 25.9 25.6 25.3 25.0 24.6 24.2 23.9 23.5 23.1 22.7 22.2
44....................................... 49......................... 26.0 25.7 25.5 25.2 24.8 24.5 24.2 23.8 23.5 23.1 22.7 22.3 21.9
45....................................... 50......................... 25.5 25.2 25.0 24.7 24.4 24.1 23.8 23.4 23.1 22.7 22.4 22.0 21.6
46....................................... 51......................... 24.9 24.7 24.4 24.2 23.9 23.6 23.3 23.0 22.7 22.3 22.0 21.6 21.2
47....................................... 52......................... 24.4 24.2 23.9 23.7 23.4 23.1 22.9 22.6 22.2 21.9 21.6 21.2 20.9
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Ages
-------------------------------------------------------------------------------------------------------------------------
Male Female Male 48 49 50 51 52 53 54 55 56 57 58 59 60
-------------------------------------------------------------------------------------------------------------------------
Female 53 54 55 56 57 58 59 60 61 62 63 64 65
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35....................................... 40......................... 23.8 23.3 22.7 22.1 21.6 21.0 20.4 19.8 19.3 18.7 18.1 17.5 17.0
36....................................... 41......................... 23.6 23.1 22.5 22.0 21.4 20.8 20.3 19.7 19.1 18.6 18.0 17.4 16.9
37....................................... 42......................... 23.4 22.9 22.3 21.8 21.2 20.7 20.1 19.6 19.0 18.4 17.9 17.3 16.8
38....................................... 43......................... 23.2 22.6 22.1 21.6 21.1 20.5 20.0 19.4 18.9 18.3 17.8 17.2 16.7
39....................................... 44......................... 22.9 22.4 21.9 21.4 20.9 20.3 19.8 19.3 18.7 18.2 17.7 17.1 16.6
40....................................... 45......................... 22.7 22.2 21.7 21.2 20.7 20.1 19.6 19.1 18.6 18.0 17.5 17.0 16.5
41....................................... 46......................... 22.4 21.9 21.4 20.9 20.4 19.9 19.4 18.9 18.4 17.9 17.4 16.9 16.3
42....................................... 47......................... 22.1 21.6 21.2 20.7 20.2 19.7 19.2 18.7 18.2 17.7 17.2 16.7 16.2
43....................................... 48......................... 21.8 21.4 20.9 20.5 20.0 19.5 19.0 18.6 18.1 17.6 17.1 16.6 16.1
44....................................... 49......................... 21.5 21.1 20.6 20.2 19.8 19.3 18.8 18.4 17.9 17.4 16.9 16.4 15.9
45....................................... 50......................... 21.2 20.8 20.4 19.9 19.5 19.1 18.6 18.1 17.7 17.2 16.7 16.3 15.8
46....................................... 51......................... 20.9 20.5 20.1 19.7 19.2 18.8 18.4 17.9 17.5 17.0 16.6 16.1 15.6
47....................................... 52......................... 20.5 20.1 19.8 19.4 19.0 18.5 18.1 17.7 17.3 16.8 16.4 15.9 15.5
48....................................... 53......................... 20.2 19.8 19.4 19.1 18.7 18.3 17.9 17.5 17.0 16.6 16.2 15.7 15.3
49....................................... 54......................... 19.8 19.5 19.1 18.8 18.4 18.0 17.6 17.2 16.8 16.4 16.0 15.5 15.1
50....................................... 55......................... 19.4 19.1 18.8 18.4 18.1 17.7 17.3 16.9 16.6 16.2 15.8 15.3 14.9
51....................................... 56......................... 19.1 18.8 18.4 18.1 17.8 17.4 17.0 16.7 16.3 15.9 15.5 15.1 14.7
52....................................... 57......................... 18.7 18.4 18.1 17.8 17.4 17.1 16.8 16.4 16.0 15.7 15.3 14.9 14.5
53....................................... 58......................... 18.3 18.0 17.7 17.4 17.1 16.8 16.4 16.1 15.8 15.4 15.1 14.7 14.3
54....................................... 59......................... 17.9 17.6 17.3 17.0 16.8 16.4 16.1 15.8 15.5 15.1 14.8 14.4 14.1
55....................................... 60......................... 17.5 17.2 16.9 16.7 16.4 16.1 15.8 15.5 15.2 14.9 14.5 14.2 13.9
56....................................... 61......................... 17.0 16.8 16.6 16.3 16.0 15.8 15.5 15.2 14.9 14.6 14.3 13.9 13.6
57....................................... 62......................... 16.6 16.4 16.2 15.9 15.7 15.4 15.1 14.9 14.6 14.3 14.0 13.7 13.4
58....................................... 63......................... 16.2 16.0 15.8 15.5 15.3 15.1 14.8 14.5 14.3 14.0 13.7 13.4 13.1
59....................................... 64......................... 15.7 15.5 15.3 15.1 14.9 14.7 14.4 14.2 13.9 13.7 13.4 13.1 12.8
60....................................... 65......................... 15.3 15.1 14.9 14.7 14.5 14.3 14.1 13.9 13.6 13.4 13.1 12.8 12.6
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[[Page 184]]
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Ages
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Male Female Male 61 62 63 64 65 66 67 68 69 70 71 72 73
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Female 66 67 68 69 70 71 72 73 74 74 76 77 78
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35....................................... 40......................... 16.4 15.8 15.3 14.7 14.2 13.7 13.1 12.6 12.1 11.6 11.1 10.7 10.2
36....................................... 41......................... 16.3 15.8 15.2 14.7 14.1 13.6 13.1 12.6 12.1 11.6 11.1 10.6 10.2
37....................................... 42......................... 16.2 15.7 15.1 14.6 14.1 13.6 13.0 12.5 12.0 11.5 11.1 10.6 10.1
38....................................... 43......................... 16.1 15.6 15.1 14.5 14.0 13.5 13.0 12.5 12.0 11.5 11.0 10.6 10.1
39....................................... 44......................... 16.0 15.5 15.0 14.5 13.9 13.4 12.9 12.4 11.9 11.5 11.0 10.5 10.1
40....................................... 45......................... 15.9 15.4 14.9 14.4 13.9 13.4 12.9 12.4 11.9 11.4 11.0 10.5 10.0
41....................................... 46......................... 15.8 15.3 14.8 14.3 13.8 13.3 12.8 12.3 11.8 11.4 10.9 10.5 10.0
42....................................... 47......................... 15.7 15.2 14.7 14.2 13.7 13.2 12.7 12.3 11.8 11.3 10.9 10.4 10.0
43....................................... 48......................... 15.6 15.1 14.6 14.1 13.6 13.1 12.7 12.2 11.7 11.3 10.8 10.4 9.9
44....................................... 49......................... 15.5 15.0 14.5 14.0 13.5 13.1 12.6 12.1 11.7 11.2 10.8 10.3 9.9
45....................................... 50......................... 15.3 14.8 14.4 13.9 13.4 13.0 12.5 12.0 11.6 11.1 10.7 10.3 9.8
46....................................... 51......................... 15.2 14.7 14.2 13.8 13.3 12.9 12.4 12.0 11.5 11.1 10.6 10.2 9.8
47....................................... 52......................... 15.0 14.6 14.1 13.7 13.2 12.8 12.3 11.9 11.4 11.0 10.6 10.1 9.7
48....................................... 53......................... 14.9 14.4 14.0 13.5 13.1 12.6 12.2 11.8 11.3 10.9 10.5 10.1 9.7
49....................................... 54......................... 14.7 14.3 13.8 13.4 13.0 12.5 12.1 11.7 11.3 10.8 10.4 10.0 9.6
50....................................... 55......................... 14.5 14.1 13.7 13.3 12.8 12.4 12.0 11.6 11.2 10.7 10.3 9.9 9.5
51....................................... 56......................... 14.3 13.9 13.5 13.1 12.7 12.3 11.9 11.5 11.1 10.7 10.3 9.9 9.5
52....................................... 57......................... 14.1 13.7 13.3 12.9 12.5 12.1 11.7 11.3 10.9 10.6 10.2 9.8 9.4
53....................................... 58......................... 13.9 13.6 13.2 12.8 12.4 12.0 11.6 11.2 10.8 10.5 10.1 9.7 9.3
54....................................... 59......................... 13.7 13.4 13.0 12.6 12.2 11.9 11.5 11.1 10.7 10.3 10.0 9.6 9.2
55....................................... 60......................... 13.5 13.2 12.8 12.4 12.1 11.7 11.3 11.0 10.6 10.2 9.9 9.5 9.1
56....................................... 61......................... 13.3 12.9 12.6 12.2 11.9 11.5 11.2 10.8 10.5 10.1 9.8 9.4 9.0
57....................................... 62......................... 13.0 12.7 12.4 12.1 11.7 11.4 11.0 10.7 10.3 10.0 9.6 9.3 8.9
58....................................... 63......................... 12.8 12.5 12.2 11.8 11.5 11.2 10.9 10.5 10.2 9.8 9.5 9.2 8.8
59....................................... 64......................... 12.6 12.3 11.9 11.6 11.3 11.0 10.7 10.4 10.0 9.7 9.4 9.1 8.7
60....................................... 65......................... 12.3 12.0 11.7 11.4 11.1 10.8 10.5 10.2 9.9 9.6 9.3 8.9 8.6
61....................................... 66......................... 12.0 11.8 11.5 11.2 10.9 10.6 10.3 10.0 9.7 9.4 9.1 8.8 8.5
62....................................... 67......................... 11.8 11.5 11.2 11.0 10.7 10.4 10.1 9.8 9.6 9.3 9.0 8.7 8.4
63....................................... 68......................... 11.5 11.2 11.0 10.7 10.5 10.2 9.9 9.7 9.4 9.1 8.8 8.5 8.2
64....................................... 69......................... 11.2 11.0 10.7 10.5 10.2 10.0 9.7 9.5 9.2 8.9 8.7 8.4 8.1
65....................................... 70......................... 10.9 10.7 10.5 10.2 10.0 9.8 9.5 9.3 9.0 8.8 8.5 8.2 8.0
66....................................... 71......................... 10.6 10.4 10.2 10.0 9.8 9.5 9.3 9.1 8.8 8.6 8.3 8.1 7.8
67....................................... 72......................... 10.3 10.1 9.9 9.7 9.5 9.3 9.1 8.9 8.6 8.4 8.1 7.9 7.7
68....................................... 73......................... 10.0 9.8 9.7 9.5 9.3 9.1 8.9 8.6 8.4 8.2 8.0 7.7 7.5
69....................................... 74......................... 9.7 9.6 9.4 9.2 9.0 8.8 8.6 8.4 8.2 8.0 7.8 7.6 7.3
70....................................... 75......................... 9.4 9.3 9.1 8.9 8.8 8.6 8.4 8.2 8.0 7.8 7.6 7.4 7.2
71....................................... 76......................... 9.1 9.0 8.8 8.7 8.5 8.3 8.1 8.0 7.8 7.6 7.4 7.2 7.0
72....................................... 77......................... 8.8 8.7 8.5 8.4 8.2 8.1 7.9 7.7 7.6 7.4 7.2 7.0 6.8
[[Page 185]]
73....................................... 78......................... 8.5 8.4 8.2 8.1 8.0 7.8 7.7 7.5 7.3 7.2 7.0 6.8 6.7
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Ages
-------------------------------------------------------------------------------------------------------------------------
Male Female Male 74 75 76 77 78 79 80 81 82 83 84 85 86
-------------------------------------------------------------------------------------------------------------------------
Female 79 80 81 82 83 84 85 86 87 88 89 90 91
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35....................................... 40......................... 9.7 9.3 8.9 8.5 8.1 7.7 7.3 6.9 6.6 6.2 5.9 5.6 5.3
36....................................... 41......................... 9.7 9.3 8.9 8.4 8.0 7.7 7.3 6.9 6.6 6.2 5.9 5.6 5.3
37....................................... 42......................... 9.7 9.3 8.8 8.4 8.0 7.6 7.3 6.9 6.5 6.2 5.9 5.6 5.3
38....................................... 43......................... 9.7 9.2 8.8 8.4 8.0 7.6 7.2 6.9 6.5 6.2 5.9 5.6 5.3
39....................................... 44......................... 9.6 9.2 8.8 8.4 8.0 7.6 7.2 6.9 6.5 6.2 5.9 5.6 5.3
40....................................... 45......................... 9.6 9.2 8.8 8.4 8.0 7.6 7.2 6.9 6.5 6.2 5.9 5.5 5.2
41....................................... 46......................... 9.6 9.2 8.7 8.3 7.9 7.6 7.2 6.8 6.5 6.2 5.8 5.5 5.2
42....................................... 47......................... 9.5 9.1 8.7 8.3 7.9 7.5 7.2 6.8 6.5 6.2 5.8 5.5 5.2
43....................................... 48......................... 9.5 9.1 8.7 8.3 7.9 7.5 7.2 6.8 6.5 6.1 5.8 5.5 5.2
44....................................... 49......................... 9.5 9.0 8.6 8.2 7.9 7.5 7.1 6.8 6.4 6.1 5.8 5.5 5.2
45....................................... 50......................... 9.4 9.0 8.6 8.2 7.8 7.5 7.1 6.8 6.4 6.1 5.8 5.5 5.2
46....................................... 51......................... 9.4 9.0 8.6 8.2 7.8 7.4 7.1 6.7 6.4 6.1 5.8 5.5 5.2
47....................................... 52......................... 9.3 8.9 8.5 8.1 7.8 7.4 7.1 6.7 6.4 6.1 5.8 5.5 5.2
48....................................... 53......................... 9.3 8.9 8.5 8.1 7.7 7.4 7.0 6.7 6.4 6.0 5.7 5.4 5.1
49....................................... 54......................... 9.2 8.8 8.4 8.1 7.7 7.3 7.0 6.7 6.3 6.0 5.7 5.4 5.1
50....................................... 55......................... 9.1 8.8 8.4 8.0 7.7 7.3 7.0 6.6 6.3 6.0 5.7 5.4 5.1
51....................................... 56......................... 9.1 8.7 8.3 8.0 7.6 7.3 6.9 6.6 6.3 6.0 5.7 5.4 5.1
52....................................... 57......................... 9.0 8.6 8.3 7.9 7.6 7.2 6.9 6.6 6.2 5.9 5.6 5.4 5.1
53....................................... 58......................... 8.9 8.6 8.2 7.9 7.5 7.2 6.9 6.5 6.2 5.9 5.6 5.3 5.1
54....................................... 59......................... 8.9 8.5 8.2 7.8 7.5 7.1 6.8 6.5 6.2 5.9 5.6 5.3 5.0
55....................................... 60......................... 8.8 8.4 8.1 7.7 7.4 7.1 6.8 6.4 6.1 5.8 5.6 5.3 5.0
56....................................... 61......................... 8.7 8.4 8.0 7.7 7.3 7.0 6.7 6.4 6.1 5.8 5.5 5.3 5.0
57....................................... 62......................... 8.6 8.3 7.9 7.6 7.3 7.0 6.7 6.4 6.1 5.8 5.5 5.2 5.0
58....................................... 63......................... 8.5 8.2 7.9 7.5 7.2 6.9 6.6 6.3 6.0 5.7 5.5 5.2 4.9
59....................................... 64......................... 8.4 8.1 7.8 7.5 7.1 6.8 6.5 6.3 6.0 5.7 5.4 5.2 4.9
60....................................... 65......................... 8.3 8.0 7.7 7.4 7.1 6.8 6.5 6.2 5.9 5.6 5.4 5.1 4.9
61....................................... 66......................... 8.2 7.9 7.6 7.3 7.0 6.7 6.4 6.1 5.9 5.6 5.3 5.1 4.8
62....................................... 67......................... 8.1 7.8 7.5 7.2 6.9 6.6 6.4 6.1 5.8 5.5 5.3 5.0 4.8
63....................................... 68......................... 8.0 7.7 7.4 7.1 6.8 6.6 6.3 6.0 5.7 5.5 5.2 5.0 4.7
64....................................... 69......................... 7.8 7.6 7.3 7.0 6.7 6.5 6.2 5.9 5.7 5.4 5.2 4.9 4.7
65....................................... 70......................... 7.7 7.4 7.2 6.9 6.6 6.4 6.1 5.9 5.6 5.4 5.1 4.9 4.7
66....................................... 71......................... 7.6 7.3 7.1 6.8 6.5 6.3 6.0 5.8 5.5 5.3 5.1 4.8 4.6
67....................................... 72......................... 7.4 7.2 6.9 6.7 6.4 6.2 6.0 5.7 5.5 5.2 5.0 4.8 4.6
68....................................... 73......................... 7.3 7.0 6.8 6.6 6.3 6.1 5.9 5.6 5.4 5.2 4.9 4.7 4.5
69....................................... 74......................... 7.1 6.9 6.7 6.4 6.2 6.0 5.8 5.5 5.3 5.1 4.9 4.7 4.5
70....................................... 75......................... 7.0 6.8 6.5 6.3 6.1 5.9 5.7 5.4 5.2 5.0 4.8 4.6 4.4
[[Page 186]]
71....................................... 76......................... 6.8 6.6 6.4 6.2 6.0 5.8 5.6 5.3 5.1 4.9 4.7 4.5 4.3
72....................................... 77......................... 6.6 6.4 6.3 6.1 5.9 5.7 5.5 5.3 5.0 4.9 4.7 4.5 4.3
73....................................... 78......................... 6.5 6.3 6.1 5.9 5.7 5.5 5.3 5.1 5.0 4.8 4.6 4.4 4.2
74....................................... 79......................... 6.3 6.1 6.0 5.8 5.6 5.4 5.2 5.0 4.9 4.7 4.5 4.3 4.1
75....................................... 80......................... 6.1 6.0 5.8 5.6 5.5 5.3 5.1 4.9 4.8 4.6 4.4 4.2 4.1
76....................................... 81......................... 6.0 5.8 5.6 5.5 5.3 5.2 5.0 4.8 4.7 4.5 4.3 4.1 4.0
77....................................... 82......................... 5.8 5.6 5.5 5.3 5.2 5.0 4.9 4.7 4.5 4.4 4.2 4.1 3.9
78....................................... 83......................... 5.6 5.5 5.3 5.2 5.0 4.9 4.7 4.6 4.4 4.3 4.1 4.0 3.8
79....................................... 84......................... 5.4 5.3 5.2 5.0 4.9 4.7 4.6 4.5 4.3 4.2 4.0 3.9 3.7
80....................................... 85......................... 5.2 5.1 5.0 4.9 4.7 4.6 4.5 4.3 4.2 4.1 3.9 3.8 3.6
81....................................... 86......................... 5.0 4.9 4.8 4.7 4.6 4.5 4.3 4.2 4.1 3.9 3.8 3.7 3.6
82....................................... 87......................... 4.9 4.8 4.7 4.5 4.4 4.3 4.2 4.1 4.0 3.8 3.7 3.6 3.5
83....................................... 88......................... 4.7 4.6 4.5 4.4 4.3 4.2 4.1 3.9 3.8 3.7 3.6 3.5 3.4
84....................................... 89......................... 4.5 4.4 4.3 4.2 4.1 4.0 3.9 3.8 3.7 3.6 3.5 3.4 3.3
85....................................... 90......................... 4.3 4.2 4.1 4.1 4.0 3.9 3.8 3.7 3.6 3.5 3.4 3.3 3.2
86....................................... 91......................... 4.1 4.1 4.0 3.9 3.8 3.7 3.6 3.6 3.5 3.4 3.3 3.2 3.1
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--------------------------------------------------------------------------------------------------------------------------------------------------------
Ages
-------------------------------------------------------------------------------------------------------
Male Female Male 87 88 89 90 91 92 93 94 95 96 97
-------------------------------------------------------------------------------------------------------
Female 92 93 94 95 96 97 98 99 100 101 102
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35............................ 40.............. 5.0 4.7 4.4 4.2 3.9 3.7 3.5 3.3 3.1 2.9 2.7
36............................ 41.............. 5.0 4.7 4.4 4.2 3.9 3.7 3.5 3.3 3.1 2.9 2.7
37............................ 42.............. 5.0 4.7 4.4 4.2 3.9 3.7 3.5 3.3 3.1 2.9 2.7
38............................ 43.............. 5.0 4.7 4.4 4.2 3.9 3.7 3.5 3.3 3.1 2.8 2.6
39............................ 44.............. 5.0 4.7 4.4 4.2 3.9 3.7 3.5 3.3 3.0 2.8 2.6
40............................ 45.............. 5.0 4.7 4.4 4.2 3.9 3.7 3.5 3.3 3.0 2.8 2.6
41............................ 46.............. 5.0 4.7 4.4 4.2 3.9 3.7 3.5 3.2 3.0 2.8 2.6
42............................ 47.............. 4.9 4.7 4.4 4.2 3.9 3.7 3.5 3.2 3.0 2.8 2.6
43............................ 48.............. 4.9 4.7 4.4 4.1 3.9 3.7 3.5 3.2 3.0 2.8 2.6
44............................ 49.............. 4.9 4.7 4.4 4.1 3.9 3.7 3.4 3.2 3.0 2.8 2.6
45............................ 50.............. 4.9 4.6 4.4 4.1 3.9 3.7 3.4 3.2 3.0 2.8 2.6
46............................ 51.............. 4.9 4.6 4.4 4.1 3.9 3.7 3.4 3.2 3.0 2.8 2.6
47............................ 52.............. 4.9 4.6 4.4 4.1 3.9 3.7 3.4 3.2 3.0 2.8 2.6
48............................ 53.............. 4.9 4.6 4.4 4.1 3.9 3.6 3.4 3.2 3.0 2.8 2.6
49............................ 54.............. 4.9 4.6 4.3 4.1 3.9 3.6 3.4 3.2 3.0 2.8 2.6
50............................ 55.............. 4.8 4.6 4.3 4.1 3.9 3.6 3.4 3.2 3.0 2.8 2.6
[[Page 187]]
51............................ 56.............. 4.8 4.6 4.3 4.1 3.8 3.6 3.4 3.2 3.0 2.8 2.6
52............................ 57.............. 4.8 4.5 4.3 4.1 3.8 3.6 3.4 3.2 3.0 2.8 2.6
53............................ 58.............. 4.8 4.5 4.3 4.0 3.8 3.6 3.4 3.2 3.0 2.8 2.6
54............................ 59.............. 4.8 4.5 4.3 4.0 3.8 3.6 3.4 3.2 3.0 2.8 2.6
55............................ 60.............. 4.7 4.5 4.3 4.0 3.8 3.6 3.4 3.2 3.0 2.8 2.6
56............................ 61.............. 4.7 4.5 4.2 4.0 3.8 3.6 3.3 3.1 2.9 2.8 2.6
57............................ 62.............. 4.7 4.5 4.2 4.0 3.8 3.5 3.3 3.1 2.9 2.7 2.6
58............................ 63.............. 4.7 4.4 4.2 4.0 3.7 3.5 3.3 3.1 2.9 2.7 2.5
59............................ 64.............. 4.6 4.4 4.2 3.9 3.7 3.5 3.3 3.1 2.9 2.7 2.5
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--------------------------------------------------------------------------------------------------------------------------------------------------------
Ages
-------------------------------------------------------------------------------------------------------
Male Female Male 98 99 100 101 102 103 104 105 106 107 108
-------------------------------------------------------------------------------------------------------
Female 103 104 105 106 107 108 109 110 111 112 113
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35............................ 40.............. 2.5 2.3 2.1 1.9 1.7 1.5 1.3 1.2 1.0 0.8 0.7
36............................ 41.............. 2.5 2.3 2.1 1.9 1.7 1.5 1.3 1.2 1.0 0.8 0.7
37............................ 42.............. 2.5 2.3 2.1 1.9 1.7 1.5 1.3 1.1 1.0 0.8 0.7
38............................ 43.............. 2.5 2.3 2.1 1.9 1.7 1.5 1.3 1.1 1.0 0.8 0.7
39............................ 44.............. 2.4 2.3 2.1 1.9 1.7 1.5 1.3 1.1 1.0 0.8 0.7
40............................ 45.............. 2.4 2.2 2.1 1.9 1.7 1.5 1.3 1.1 1.0 0.8 0.7
41............................ 46.............. 2.4 2.2 2.1 1.9 1.7 1.5 1.3 1.1 1.0 0.8 0.7
42............................ 47.............. 2.4 2.2 2.0 1.9 1.7 1.5 1.3 1.1 1.0 0.8 0.7
43............................ 48.............. 2.4 2.2 2.0 1.9 1.7 1.5 1.3 1.1 1.0 0.8 0.7
44............................ 49.............. 2.4 2.2 2.0 1.9 1.7 1.5 1.3 1.1 1.0 0.8 0.7
45............................ 50.............. 2.4 2.2 2.0 1.8 1.7 1.5 1.3 1.1 1.0 0.8 0.7
46............................ 51.............. 2.4 2.2 2.0 1.8 1.7 1.5 1.3 1.1 1.0 0.8 0.7
47............................ 52.............. 2.4 2.2 2.0 1.8 1.7 1.5 1.3 1.1 1.0 0.8 0.7
48............................ 53.............. 2.4 2.2 2.0 1.8 1.7 1.5 1.3 1.1 1.0 0.8 0.7
49............................ 54.............. 2.4 2.2 2.0 1.8 1.7 1.5 1.3 1.1 1.0 0.8 0.7
50............................ 55.............. 2.4 2.2 2.0 1.8 1.6 1.5 1.3 1.1 1.0 0.8 0.7
51............................ 56.............. 2.4 2.2 2.0 1.8 1.6 1.5 1.3 1.1 1.0 0.8 0.7
52............................ 57.............. 2.4 2.2 2.0 1.8 1.6 1.5 1.3 1.1 1.0 0.8 0.7
53............................ 58.............. 2.4 2.2 2.0 1.8 1.6 1.5 1.3 1.1 1.0 0.8 0.7
54............................ 59.............. 2.4 2.2 2.0 1.8 1.6 1.5 1.3 1.1 1.0 0.8 0.7
55............................ 60.............. 2.4 2.2 2.0 1.8 1.6 1.4 1.3 1.1 1.0 0.8 0.7
56............................ 61.............. 2.4 2.2 2.0 1.8 1.6 1.4 1.3 1.1 1.0 0.8 0.7
57............................ 62.............. 2.4 2.2 2.0 1.8 1.6 1.4 1.3 1.1 0.9 0.8 0.7
58............................ 63.............. 2.4 2.2 2.0 1.8 1.6 1.4 1.3 1.1 0.9 0.8 0.7
59............................ 64.............. 2.3 2.2 2.0 1.8 1.6 1.4 1.3 1.1 0.9 0.8 0.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 188]]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Ages
-------------------------------------------------------------------------------------------------------
Male Female Male 87 88 89 90 91 92 93 94 95 96 97
-------------------------------------------------------------------------------------------------------
Female 92 93 94 95 96 97 98 99 100 101 102
--------------------------------------------------------------------------------------------------------------------------------------------------------
60............................ 65.............. 4.6 4.4 4.1 3.9 3.7 3.5 3.3 3.1 2.9 2.7 2.5
61............................ 66.............. 4.6 4.3 4.1 3.9 3.7 3.5 3.3 3.1 2.9 2.7 2.5
62............................ 67.............. 4.5 4.3 4.1 3.9 3.7 3.5 3.3 3.1 2.9 2.7 2.5
63............................ 68.............. 4.5 4.3 4.1 3.8 3.6 3.4 3.2 3.0 2.9 2.7 2.5
64............................ 69.............. 4.5 4.2 4.0 3.8 3.6 3.4 3.2 3.0 2.8 2.7 2.5
65............................ 70.............. 4.4 4.2 4.0 3.8 3.6 3.4 3.2 3.0 2.8 2.6 2.5
66............................ 71.............. 4.4 4.2 4.0 3.8 3.6 3.4 3.2 3.0 2.8 2.6 2.4
67............................ 72.............. 4.3 4.1 3.9 3.7 3.5 3.3 3.1 3.0 2.8 2.6 2.4
68............................ 73.............. 4.3 4.1 3.9 3.7 3.5 3.3 3.1 2.9 2.8 2.6 2.4
69............................ 74.............. 4.2 4.0 3.8 3.6 3.5 3.3 3.1 2.9 2.7 2.6 2.4
70............................ 75.............. 4.2 4.0 3.8 3.6 3.4 3.2 3.1 2.9 2.7 2.5 2.4
71............................ 76.............. 4.1 3.9 3.8 3.6 3.4 3.2 3.0 2.9 2.7 2.5 2.3
72............................ 77.............. 4.1 3.9 3.7 3.5 3.3 3.2 3.0 2.8 2.7 2.5 2.3
73............................ 78.............. 4.0 3.8 3.7 3.5 3.3 3.1 3.0 2.8 2.6 2.5 2.3
74............................ 79.............. 3.9 3.8 3.6 3.4 3.3 3.1 2.9 2.8 2.6 2.4 2.3
75............................ 80.............. 3.9 3.7 3.5 3.4 3.2 3.0 2.9 2.7 2.6 2.4 2.2
76............................ 81.............. 3.8 3.6 3.5 3.3 3.2 3.0 2.8 2.7 2.5 2.4 2.2
77............................ 82.............. 3.7 3.6 3.4 3.3 3.1 3.0 2.8 2.6 2.5 2.3 2.2
78............................ 83.............. 3.7 3.5 3.4 3.2 3.1 2.9 2.7 2.6 2.4 2.3 2.1
79............................ 84.............. 3.6 3.4 3.3 3.1 3.0 2.8 2.7 2.5 2.4 2.2 2.1
80............................ 85.............. 3.5 3.4 3.2 3.1 2.9 2.8 2.6 2.5 2.3 2.2 2.0
81............................ 86.............. 3.4 3.3 3.1 3.0 2.9 2.7 2.6 2.4 2.3 2.1 2.0
82............................ 87.............. 3.3 3.2 3.1 2.9 2.8 2.7 2.5 2.4 2.2 2.1 2.0
83............................ 88.............. 3.2 3.1 3.0 2.9 2.7 2.6 2.5 2.3 2.2 2.0 1.9
84............................ 89.............. 3.1 3.0 2.9 2.8 2.7 2.5 2.4 2.3 2.1 2.0 1.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------------------------------
Ages
-------------------------------------------------------------------------------------------------------
Male Female Male 98 99 100 101 102 103 104 105 106 107 108
-------------------------------------------------------------------------------------------------------
Female 103 104 105 106 107 108 109 110 111 112 113
--------------------------------------------------------------------------------------------------------------------------------------------------------
60............................ 65.............. 2.3 2.1 2.0 1.8 1.6 1.4 1.3 1.1 0.9 0.8 0.7
61............................ 66.............. 2.3 2.1 2.0 1.8 1.6 1.4 1.2 1.1 0.9 0.8 0.7
62............................ 67.............. 2.3 2.1 1.9 1.8 1.6 1.4 1.2 1.1 0.9 0.8 0.7
63............................ 68.............. 2.3 2.1 1.9 1.7 1.6 1.4 1.2 1.1 0.9 0.8 0.7
64............................ 69.............. 2.3 2.1 1.9 1.7 1.6 1.4 1.2 1.1 0.9 0.8 0.7
65............................ 70.............. 2.3 2.1 1.9 1.7 1.6 1.4 1.2 1.1 0.9 0.8 0.7
66............................ 71.............. 2.3 2.1 1.9 1.7 1.5 1.4 1.2 1.1 0.9 0.8 0.7
67............................ 72.............. 2.2 2.1 1.9 1.7 1.5 1.4 1.2 1.0 0.9 0.7 0.7
[[Page 189]]
68............................ 73.............. 2.2 2.0 1.9 1.7 1.5 1.4 1.2 1.0 0.9 0.7 0.7
69............................ 74.............. 2.2 2.0 1.8 1.7 1.5 1.3 1.2 1.0 0.9 0.7 0.6
70............................ 75.............. 2.2 2.0 1.8 1.7 1.5 1.3 1.2 1.0 0.9 0.7 0.6
71............................ 76.............. 2.2 2.0 1.8 1.6 1.5 1.3 1.2 1.0 0.9 0.7 0.6
72............................ 77.............. 2.1 2.0 1.8 1.6 1.5 1.3 1.1 1.0 0.8 0.7 0.6
73............................ 78.............. 2.1 1.9 1.8 1.6 1.4 1.3 1.1 1.0 0.8 0.7 0.6
74............................ 79.............. 2.1 1.9 1.7 1.6 1.4 1.3 1.1 1.0 0.8 0.7 0.6
75............................ 80.............. 2.1 1.9 1.7 1.6 1.4 1.3 1.1 1.0 0.8 0.7 .......
76............................ 81.............. 2.0 1.9 1.7 1.5 1.4 1.2 1.1 0.9 0.8 0.7 .......
77............................ 82.............. 2.0 1.8 1.7 1.5 1.4 1.2 1.1 0.9 0.8 0.7 .......
78............................ 83.............. 2.0 1.8 1.6 1.5 1.3 1.2 1.0 0.9 0.8 0.7 .......
79............................ 84.............. 1.9 1.8 1.6 1.5 1.3 1.2 1.0 0.9 0.8 0.7 .......
80............................ 85.............. 1.9 1.7 1.6 1.4 1.3 1.1 1.0 0.9 0.7 0.7 .......
81............................ 86.............. 1.8 1.7 1.5 1.4 1.3 1.1 1.0 0.8 0.7 0.6 .......
82............................ 87.............. 1.8 1.7 1.5 1.4 1.2 1.1 1.0 0.8 0.7 0.6 .......
83............................ 88.............. 1.8 1.6 1.5 1.3 1.2 1.1 0.9 0.8 0.7 0.6 .......
84............................ 89.............. 1.7 1.6 1.4 1.3 1.2 1.0 0.9 0.8 0.7 ....... .......
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 190]]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Ages
----------------------------------------------------------------------------------------------
Male Female Male 87 88 89 90 91 92 93 94 95 96
----------------------------------------------------------------------------------------------
Female 92 93 94 95 96 97 98 99 100 101
--------------------------------------------------------------------------------------------------------------------------------------------------------
85................................ 90................... 3.1 2.9 2.8 2.7 2.6 2.5 2.3 2.2 2.1 1.9
86................................ 91................... 3.0 2.8 2.7 2.6 2.5 2.4 2.3 2.1 2.0 1.9
87................................ 92................... 2.9 2.8 2.6 2.5 2.4 2.3 2.2 2.1 1.9 1.8
88................................ 93................... 2.8 2.7 2.6 2.4 2.3 2.2 2.1 2.0 1.9 1.7
89................................ 94................... 2.6 2.6 2.5 2.4 2.2 2.1 2.0 1.9 1.8 1.7
90................................ 95................... 2.5 2.4 2.4 2.3 2.2 2.0 1.9 1.8 1.7 1.6
91................................ 96................... 2.4 2.3 2.2 2.2 2.1 2.0 1.9 1.7 1.6 1.5
92................................ 97................... 2.3 2.2 2.1 2.0 2.0 1.9 1.8 1.7 1.6 1.5
93................................ 98................... 2.2 2.1 2.0 1.9 1.9 1.8 1.7 1.6 1.5 1.4
94................................ 99................... 2.1 2.0 1.9 1.8 1.7 1.7 1.6 1.5 1.4 1.3
95................................ 100.................. 1.9 1.9 1.8 1.7 1.6 1.6 1.5 1.4 1.3 1.2
96................................ 101.................. 1.8 1.7 1.7 1.6 1.5 1.5 1.4 1.3 1.2 1.1
97................................ 102.................. 1.7 1.6 1.6 1.5 1.4 1.4 1.3 1.2 1.1 1.1
98................................ 103.................. 1.6 1.5 1.4 1.4 1.3 1.3 1.2 1.1 1.0 1.0
99................................ 104.................. 1.4 1.4 1.3 1.3 1.2 1.1 1.1 1.0 1.0 0.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------------------------------
Ages
----------------------------------------------------------------------------------------------
Male Female Male 97 98 99 100 101 102 103 104 105 106
----------------------------------------------------------------------------------------------
Female 102 103 104 105 106 107 108 109 110 111
--------------------------------------------------------------------------------------------------------------------------------------------------------
85................................ 90................... 1.8 1.7 1.5 1.4 1.3 1.1 1.0 0.9 0.8 0.7
86................................ 91................... 1.7 1.6 1.5 1.3 1.2 1.1 1.0 0.8 0.7 0.7
87................................ 92................... 1.7 1.6 1.4 1.3 1.2 1.1 0.9 0.8 0.7 0.6
88................................ 93................... 1.6 1.5 1.4 1.3 1.1 1.0 0.9 0.8 0.7 0.6
89................................ 94................... 1.6 1.4 1.3 1.2 1.1 1.0 0.9 0.7 0.7 .......
90................................ 95................... 1.5 1.4 1.3 1.2 1.0 0.9 0.8 0.7 0.6 .......
91................................ 96................... 1.4 1.3 1.2 1.1 1.0 0.9 0.8 0.7 0.6 .......
92................................ 97................... 1.4 1.3 1.1 1.0 0.9 0.8 0.7 0.7 ....... .......
93................................ 98................... 1.3 1.2 1.1 1.0 0.9 0.8 0.7 0.6 ....... .......
94................................ 99................... 1.2 1.1 1.0 0.9 0.8 0.7 0.7 ....... ....... .......
95................................ 100.................. 1.1 1.0 1.0 0.9 0.8 0.7 0.6 ....... ....... .......
96................................ 101.................. 1.1 1.0 0.9 0.8 0.7 0.7 ....... ....... ....... .......
97................................ 102.................. 1.0 0.9 0.8 0.7 0.7 0.6 ....... ....... ....... .......
98................................ 103.................. 0.9 0.8 0.7 0.7 0.6 ....... ....... ....... ....... .......
99................................ 104.................. 0.8 0.7 0.7 0.6 ....... ....... ....... ....... ....... .......
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[[Page 191]]
Table III--Percent Value of Refund Feature
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Ages Duration of guaranteed amount--[Years]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Male Female 1 2 3 4 5 6 7 8 9 10 11 12 13
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
6.......................................... 11............................ ....... ....... ....... ....... ....... ....... ....... ....... 1 1 1 1 1
7.......................................... 12............................ ....... ....... ....... ....... ....... ....... ....... ....... 1 1 1 1 1
8.......................................... 13............................ ....... ....... ....... ....... ....... ....... ....... 1 1 1 1 1 1
9.......................................... 14............................ ....... ....... ....... ....... ....... ....... ....... 1 1 1 1 1 1
10......................................... 15............................ ....... ....... ....... ....... ....... ....... ....... 1 1 1 1 1 1
11......................................... 16............................ ....... ....... ....... ....... ....... ....... ....... 1 1 1 1 1 1
12......................................... 17............................ ....... ....... ....... ....... ....... ....... ....... 1 1 1 1 1 1
13......................................... 18............................ ....... ....... ....... ....... ....... ....... ....... 1 1 1 1 1 1
14......................................... 19............................ ....... ....... ....... ....... ....... ....... ....... 1 1 1 1 1 1
15......................................... 20............................ ....... ....... ....... ....... ....... ....... ....... 1 1 1 1 1 1
16......................................... 21............................ ....... ....... ....... ....... ....... ....... ....... 1 1 1 1 1 1
17......................................... 22............................ ....... ....... ....... ....... ....... ....... ....... 1 1 1 1 1 1
18......................................... 23............................ ....... ....... ....... ....... ....... ....... ....... 1 1 1 1 1 1
19......................................... 24............................ ....... ....... ....... ....... ....... ....... ....... 1 1 1 1 1 1
20......................................... 25............................ ....... ....... ....... ....... ....... ....... ....... 1 1 1 1 1 1
21......................................... 26............................ ....... ....... ....... ....... ....... ....... ....... 1 1 1 1 1 1
22......................................... 27............................ ....... ....... ....... ....... ....... ....... 1 1 1 1 1 1 1
23......................................... 28............................ ....... ....... ....... ....... ....... ....... 1 1 1 1 1 1 1
24......................................... 29............................ ....... ....... ....... ....... ....... ....... 1 1 1 1 1 1 1
25......................................... 30............................ ....... ....... ....... ....... ....... ....... 1 1 1 1 1 1 1
26......................................... 31............................ ....... ....... ....... ....... ....... 1 1 1 1 1 1 1 1
27......................................... 32............................ ....... ....... ....... ....... ....... 1 1 1 1 1 1 1 1
28......................................... 33............................ ....... ....... ....... ....... ....... 1 1 1 1 1 1 1 1
29......................................... 34............................ ....... ....... ....... ....... ....... 1 1 1 1 1 1 1 2
30......................................... 35............................ ....... ....... ....... ....... 1 1 1 1 1 1 1 2 2
31......................................... 36............................ ....... ....... ....... ....... 1 1 1 1 1 1 1 2 2
32......................................... 37............................ ....... ....... ....... ....... 1 1 1 1 1 1 2 2 2
33......................................... 38............................ ....... ....... ....... 1 1 1 1 1 1 1 2 2 2
34......................................... 39............................ ....... ....... ....... 1 1 1 1 1 1 2 2 2 2
35......................................... 40............................ ....... ....... ....... 1 1 1 1 1 2 2 2 2 2
36......................................... 41............................ ....... ....... ....... 1 1 1 1 1 2 2 2 2 3
37......................................... 42............................ ....... ....... 1 1 1 1 1 2 2 2 2 3 3
38......................................... 43............................ ....... ....... 1 1 1 1 1 2 2 2 2 3 3
39......................................... 44............................ ....... ....... 1 1 1 1 2 2 2 2 3 3 3
40......................................... 45............................ ....... ....... 1 1 1 1 2 2 2 3 3 3 4
41......................................... 46............................ ....... ....... 1 1 1 1 2 2 2 3 3 3 4
42......................................... 47............................ ....... ....... 1 1 1 2 2 2 3 3 3 4 4
[[Page 192]]
43......................................... 48............................ ....... 1 1 1 1 2 2 2 3 3 4 4 4
44......................................... 49............................ ....... 1 1 1 1 2 2 3 3 3 4 4 5
45......................................... 50............................ ....... 1 1 1 2 2 2 3 3 4 4 5 5
46......................................... 51............................ ....... 1 1 1 2 2 3 3 3 4 4 5 5
47......................................... 52............................ ....... 1 1 1 2 2 3 3 4 4 5 5 6
48......................................... 53............................ ....... 1 1 2 2 2 3 3 4 5 5 6 6
49......................................... 54............................ ....... 1 1 2 2 3 3 4 4 5 5 6 7
50......................................... 55............................ ....... 1 1 2 2 3 3 4 5 5 6 7 7
51......................................... 56............................ ....... 1 1 2 3 3 4 4 5 6 6 7 8
52......................................... 57............................ 1 1 2 2 3 3 4 5 5 6 7 8 8
53......................................... 58............................ 1 1 2 2 3 4 4 5 6 7 7 8 9
54......................................... 59............................ 1 1 2 2 3 4 5 5 6 7 8 9 10
55......................................... 60............................ 1 1 2 3 3 4 5 6 7 8 8 9 10
56......................................... 61............................ 1 1 2 3 4 4 5 6 7 8 9 10 11
57......................................... 62............................ 1 1 2 3 4 5 6 7 8 9 10 11 12
58......................................... 63............................ 1 2 2 3 4 5 6 7 8 9 10 12 13
59......................................... 64............................ 1 2 3 4 5 6 7 8 9 10 11 12 14
60......................................... 65............................ 1 2 3 4 5 6 7 8 10 11 12 13 15
61......................................... 66............................ 1 2 3 4 5 6 8 9 10 12 13 14 16
62......................................... 67............................ 1 2 3 4 6 7 8 10 11 12 14 15 17
63......................................... 68............................ 1 2 4 5 6 7 9 10 12 13 15 16 18
64......................................... 69............................ 1 3 4 5 7 8 9 11 13 14 16 17 19
65......................................... 70............................ 1 3 4 6 7 9 10 12 13 15 17 19 20
66......................................... 71............................ 1 3 4 6 8 9 11 13 14 16 18 20 22
67......................................... 72............................ 2 3 5 6 8 10 12 14 15 17 19 21 23
68......................................... 73............................ 2 3 5 7 9 11 13 14 16 18 21 23 25
69......................................... 74............................ 2 4 6 7 9 11 13 16 18 20 22 24 26
70......................................... 75............................ 2 4 6 8 10 12 14 17 19 21 23 26 28
71......................................... 76............................ 2 4 6 9 11 13 15 18 20 22 25 27 29
72......................................... 77............................ 2 5 7 9 12 14 16 19 21 24 26 29 31
73......................................... 78............................ 2 5 7 10 12 15 18 20 23 25 28 30 33
74......................................... 79............................ 3 5 8 11 13 16 19 22 24 27 30 32 35
75......................................... 80............................ 3 6 8 11 14 17 20 23 26 29 31 34 37
76......................................... 81............................ 3 6 9 12 15 18 21 24 27 30 33 36 39
77......................................... 82............................ 3 7 10 13 16 20 23 26 29 32 35 38 41
78......................................... 83............................ 4 7 11 14 17 21 24 28 31 34 37 40 43
79......................................... 84............................ 4 8 11 15 19 22 26 29 33 36 39 42 45
[[Page 193]]
80......................................... 85............................ 4 8 12 16 20 24 27 31 34 38 41 44 47
81......................................... 86............................ 4 9 13 17 21 25 29 33 36 40 43 46 49
82......................................... 87............................ 5 9 14 18 23 27 31 35 38 42 45 48 51
83......................................... 88............................ 5 10 15 19 24 28 33 37 40 44 47 50 53
84......................................... 89............................ 5 11 16 21 26 30 34 38 42 46 49 52 55
85......................................... 90............................ 6 11 17 22 27 32 36 41 44 48 51 55 57
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Ages Duration of guaranteed amount--[Years]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Male Female 14 15 16 17 18 19 20 21 22 23 24 25 26
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
6.......................................... 11............................ 1 1 1 1 1 1 1 1 1 1 2 2 2
7.......................................... 12............................ 1 1 1 1 1 1 1 1 1 1 2 2 2
8.......................................... 13............................ 1 1 1 1 1 1 1 1 1 1 2 2 2
9.......................................... 14............................ 1 1 1 1 1 1 1 1 1 1 2 2 2
10......................................... 15............................ 1 1 1 1 1 1 1 1 1 2 2 2 2
11......................................... 16............................ 1 1 1 1 1 1 1 1 1 2 2 2 2
12......................................... 17............................ 1 1 1 1 1 1 1 1 1 2 2 2 2
13......................................... 18............................ 1 1 1 1 1 1 1 1 2 2 2 2 2
14......................................... 19............................ 1 1 1 1 1 1 1 1 2 2 2 2 2
15......................................... 20............................ 1 1 1 1 1 1 1 1 2 2 2 2 2
16......................................... 21............................ 1 1 1 1 1 1 1 2 2 2 2 2 2
17......................................... 22............................ 1 1 1 1 1 1 1 2 2 2 2 2 2
18......................................... 23............................ 1 1 1 1 1 1 2 2 2 2 2 2 2
19......................................... 24............................ 1 1 1 1 1 2 2 2 2 2 2 2 2
20......................................... 25............................ 1 1 1 1 1 2 2 2 2 2 2 2 3
21......................................... 26............................ 1 1 1 1 2 2 2 2 2 2 2 3 3
22......................................... 27............................ 1 1 1 1 2 2 2 2 2 2 3 3 3
23......................................... 28............................ 1 1 1 2 2 2 2 2 2 2 3 3 3
24......................................... 29............................ 1 1 2 2 2 2 2 2 2 3 3 3 3
25......................................... 30............................ 1 1 2 2 2 2 2 2 3 3 3 3 3
26......................................... 31............................ 1 2 2 2 2 2 2 3 3 3 3 3 4
27......................................... 32............................ 2 2 2 2 2 2 3 3 3 3 3 4 4
28......................................... 33............................ 2 2 2 2 2 3 3 3 3 3 4 4 4
29......................................... 34............................ 2 2 2 2 2 3 3 3 3 4 4 4 5
30......................................... 35............................ 2 2 2 2 3 3 3 3 4 4 4 5 5
31......................................... 36............................ 2 2 2 3 3 3 3 4 4 4 5 5 5
32......................................... 37............................ 2 2 3 3 3 3 4 4 4 5 5 5 6
33......................................... 38............................ 2 3 3 3 3 4 4 4 5 5 5 6 6
34......................................... 39............................ 3 3 3 3 4 4 4 5 5 5 6 6 7
35......................................... 40............................ 3 3 3 4 4 4 5 5 5 6 6 7 7
36......................................... 41............................ 3 3 4 4 4 5 5 5 6 6 7 7 8
37......................................... 42............................ 3 3 4 4 4 5 5 6 6 7 7 8 8
[[Page 194]]
38......................................... 43............................ 3 4 4 4 5 5 6 6 7 7 8 8 9
39......................................... 44............................ 4 4 4 5 5 6 6 7 7 8 8 9 9
40......................................... 45............................ 4 4 5 5 6 6 7 7 8 8 9 9 10
41......................................... 46............................ 4 5 5 6 6 7 7 8 8 9 9 10 11
42......................................... 47............................ 5 5 5 6 6 7 8 8 9 9 10 11 12
43......................................... 48............................ 5 6 6 7 8 8 9 9 10 11 12 12
44......................................... 49............................ 5 6 6 7 7 8 9 9 10 11 12 12 13
45......................................... 50............................ 6 6 7 7 8 9 9 10 11 12 12 13 14
46......................................... 51............................ 6 7 7 8 9 9 10 11 12 12 13 14 15
47......................................... 52............................ 7 7 8 9 9 10 11 12 12 13 14 15 16
48......................................... 53............................ 7 8 8 9 10 11 12 12 13 14 15 16 17
49......................................... 54............................ 8 8 9 10 11 11 12 13 14 15 16 17 18
50......................................... 55............................ 8 9 10 11 11 12 13 14 15 16 17 18 20
51......................................... 56............................ 9 10 10 11 12 13 14 15 16 17 18 20 21
52......................................... 57............................ 9 10 11 12 13 14 15 16 17 18 20 21 22
53......................................... 58............................ 10 11 12 13 14 15 16 17 19 20 21 22 24
54......................................... 59............................ 11 12 13 14 15 16 17 18 20 21 22 24 25
55......................................... 60............................ 11 13 14 15 16 17 18 20 21 22 24 25 26
56......................................... 61............................ 12 13 15 16 17 18 20 21 22 24 25 27 28
57......................................... 62............................ 13 14 16 17 18 20 21 22 24 25 27 28 30
58......................................... 63............................ 14 15 17 18 19 21 22 24 25 27 28 30 31
59......................................... 64............................ 15 16 18 19 21 22 24 25 27 28 30 31 33
60......................................... 65............................ 16 18 19 20 22 24 25 27 28 30 32 33 35
61......................................... 66............................ 17 19 20 22 23 25 27 28 30 32 33 35 37
62......................................... 67............................ 18 20 22 23 25 27 28 30 32 33 35 37 38
63......................................... 68............................ 20 21 23 25 26 28 30 32 33 35 37 39 40
64......................................... 69............................ 21 23 24 26 28 30 32 33 35 37 39 41 42
65......................................... 70............................ 22 24 26 28 30 32 33 35 37 39 41 42 44
66......................................... 71............................ 24 26 28 29 31 33 35 37 39 41 43 44 46
67......................................... 72............................ 25 27 29 31 33 35 37 39 41 43 45 46 48
68......................................... 73............................ 27 29 31 33 35 37 39 41 43 45 47 48 50
69......................................... 74............................ 28 30 33 35 37 39 41 43 45 47 48 50 52
70......................................... 75............................ 30 32 34 37 39 41 43 45 47 49 50 52 54
71......................................... 76............................ 32 34 36 39 41 43 45 47 49 51 52 54 56
72......................................... 77............................ 34 36 38 41 43 45 47 49 51 53 54 56 58
73......................................... 78............................ 35 38 40 43 45 47 49 51 53 55 56 58 59
74......................................... 79............................ 37 40 42 45 47 49 51 53 55 57 58 60 61
75......................................... 80............................ 39 42 44 47 49 51 53 55 57 58 60 62 63
76......................................... 81............................ 41 44 46 49 51 53 55 57 59 60 62 63 65
[[Page 195]]
77......................................... 82............................ 43 46 48 51 53 55 57 59 61 62 64 65 66
78......................................... 83............................ 45 48 50 53 55 57 59 61 62 64 65 67 68
79......................................... 84............................ 48 50 53 55 57 59 61 63 64 66 67 68 70
80......................................... 85............................ 50 52 55 57 59 61 63 64 66 67 69 70 71
81......................................... 86............................ 52 54 57 59 61 63 65 66 68 69 70 72 73
82......................................... 87............................ 54 56 59 61 63 65 66 68 69 71 72 73 74
83......................................... 88............................ 56 58 61 63 65 66 68 70 71 72 73 74 75
84......................................... 89............................ 58 60 63 65 67 68 70 71 73 74 75 76 77
85......................................... 90............................ 60 62 65 67 68 70 71 73 74 75 76 77 .......
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------------------------------
Ages Duration of guaranteed amount--[Years]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Male Female 27 28 29 30 31 32 33 34 35
--------------------------------------------------------------------------------------------------------------------------------------------------------
6............................... 11................. 2 2 2 2 2 2 2 2 2
7............................... 12................. 2 2 2 2 2 2 2 2 3
8............................... 13................. 2 2 2 2 2 2 2 2 3
9............................... 14................. 2 2 2 2 2 2 2 3 3
10.............................. 15................. 2 2 2 2 2 2 3 3 3
11.............................. 16................. 2 2 2 2 2 2 3 3 3
12.............................. 17................. 2 2 2 2 2 3 3 3 3
13.............................. 18................. 2 2 2 2 2 3 3 3 3
14.............................. 19................. 2 2 2 2 3 3 3 3 3
15.............................. 20................. 2 2 2 3 3 3 3 3 3
16.............................. 21................. 2 2 3 3 3 3 3 3 4
17.............................. 22................. 2 2 3 3 3 3 3 4 4
18.............................. 23................. 2 3 3 3 3 3 4 4 4
19.............................. 24................. 3 3 3 3 3 4 4 4 4
20.............................. 25................. 3 3 3 3 4 4 4 4 5
21.............................. 26................. 3 3 3 4 4 4 4 5 5
22.............................. 27................. 3 3 4 4 4 4 5 5 5
23.............................. 28................. 3 3 4 4 4 5 5 5 5
24.............................. 29................. 3 4 4 4 5 5 5 5 6
25.............................. 30................. 4 4 4 5 5 5 6 6 6
26.............................. 31................. 4 4 5 5 5 6 6 6 7
27.............................. 32................. 4 5 5 5 6 6 6 7 7
28.............................. 33................. 5 5 5 6 6 6 7 7 8
29.............................. 34................. 5 5 6 6 6 7 7 8 8
30.............................. 35................. 5 6 6 6 7 7 8 8 9
31.............................. 36................. 6 6 6 7 7 8 8 9 9
32.............................. 37................. 6 7 7 7 8 8 9 10 10
33.............................. 38................. 7 7 7 8 8 9 10 10 11
34.............................. 39................. 7 8 8 9 9 10 10 11 12
35.............................. 40................. 8 8 9 9 10 10 11 12 12
[[Page 196]]
36.............................. 41................. 8 9 9 10 10 11 12 13 13
37.............................. 42................. 9 9 10 11 11 12 13 13 14
38.............................. 43................. 9 10 11 11 12 13 13 14 15
39.............................. 44................. 10 11 11 12 13 14 14 15 16
40.............................. 45................. 11 11 12 13 14 15 15 16 17
41.............................. 46................. 11 12 13 14 15 16 16 17 18
42.............................. 47................. 12 13 14 15 16 17 18 18 19
43.............................. 48................. 13 14 15 16 17 18 19 20 21
44.............................. 49................. 14 15 16 17 18 19 20 21 22
45.............................. 50................. 15 16 17 18 19 20 21 22 23
46.............................. 51................. 16 17 18 19 20 21 22 24 25
47.............................. 52................. 17 18 19 20 21 23 24 25 26
48.............................. 53................. 18 19 20 22 23 24 25 26 28
49.............................. 54................. 19 21 22 23 24 25 27 28 29
50.............................. 55................. 21 22 23 24 26 27 28 29 31
51.............................. 56................. 22 23 25 26 27 28 30 31 32
52.............................. 57................. 23 25 26 27 29 30 31 33 34
53.............................. 58................. 25 26 28 29 30 32 33 34 36
54.............................. 59................. 26 28 29 31 32 33 35 36 38
55.............................. 60................. 28 29 31 32 34 35 36 38 39
56.............................. 61................. 29 31 32 34 35 37 38 40 41
57.............................. 62................. 31 33 34 36 37 39 40 41 43
58.............................. 63................. 33 34 36 37 39 40 42 43 45
59.............................. 64................. 35 36 38 39 41 42 44 45 47
60.............................. 65................. 36 38 40 41 43 44 46 47 48
61.............................. 66................. 38 40 41 43 44 46 47 49 50
62.............................. 67................. 40 42 43 45 46 48 49 51 52
63.............................. 68................. 42 44 45 47 48 50 51 52 54
64.............................. 69................. 44 46 47 49 50 52 53 54 55
65.............................. 70................. 46 47 49 50 52 53 55 56 57
66.............................. 71................. 48 49 51 52 54 55 56 58 59
67.............................. 72................. 50 51 53 54 56 57 58 59 61
68.............................. 73................. 52 53 55 56 57 59 60 61 62
69.............................. 74................. 53 55 56 58 59 60 62 63 64
70.............................. 75................. 55 57 58 60 61 62 62 64 65
71.............................. 76................. 57 59 60 61 63 64 65 66 67
72.............................. 77................. 59 60 62 63 64 65 66 67 68
73.............................. 78................. 61 62 64 65 66 67 68 69 70
[[Page 197]]
74.............................. 79................. 63 64 65 66 67 68 69 70 71
75.............................. 80................. 64 66 67 68 69 70 71 72 72
76.............................. 81................. 66 67 68 69 70 71 72 73 .........
77.............................. 82................. 68 69 70 71 72 73 74 ......... .........
78.............................. 83................. 69 70 71 72 73 74 ......... ......... .........
79.............................. 84................. 71 72 73 74 75 ......... ......... ......... .........
80.............................. 85................. 72 73 74 75 ......... ......... ......... ......... .........
81.............................. 86................. 74 75 75 ......... ......... ......... ......... ......... .........
82.............................. 87................. 75 76 ......... ......... ......... ......... ......... ......... .........
83.............................. 88................. 76 ......... ......... ......... ......... ......... ......... ......... .........
84.............................. 89................. ......... ......... ......... ......... ......... ......... ......... ......... .........
85.............................. 90................. ......... ......... ......... ......... ......... ......... ......... ......... .........
--------------------------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Ages Duration of guaranteed amount--[Years]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Male Female 1 2 3 4 5 6 7 8 9 10 11 12 13 14
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
86..................................... 91....................... 6 12 18 24 29 34 38 43 47 50 54 57 59 62
87..................................... 92....................... 7 13 19 25 31 36 40 45 49 52 56 59 61 64
88..................................... 93....................... 7 14 21 27 32 38 42 47 51 55 58 61 63 66
89..................................... 94....................... 8 15 22 28 34 40 45 49 53 57 60 63 65 68
90..................................... 95....................... 8 16 23 30 36 42 47 51 55 59 62 65 67 70
91..................................... 96....................... 9 17 25 32 38 44 49 53 57 61 64 67 69 71
92..................................... 97....................... 9 18 26 34 40 46 51 55 59 63 66 69 71 73
93..................................... 98....................... 10 20 28 36 42 48 53 58 62 65 68 70 73 75
94..................................... 99....................... 11 21 30 37 44 50 55 60 64 67 70 72 74 76
95..................................... 100...................... 12 22 31 39 46 52 58 62 66 69 72 74 76 78
96..................................... 101...................... 12 24 33 42 49 55 60 64 68 71 73 76 78 79
97..................................... 102...................... 13 25 35 44 51 57 62 66 70 73 75 77 79 .......
98..................................... 103...................... 14 27 37 46 54 60 65 69 72 75 77 79 ....... .......
99..................................... 104...................... 15 29 40 49 56 62 67 71 74 77 79 ....... ....... .......
100.................................... 105...................... 17 31 43 52 59 65 70 74 76 79 ....... ....... ....... .......
101.................................... 106...................... 18 33 46 55 63 68 73 76 79 ....... ....... ....... ....... .......
102.................................... 107...................... 20 36 49 59 66 71 75 78 ....... ....... ....... ....... ....... .......
103.................................... 108...................... 22 40 53 62 69 74 78 ....... ....... ....... ....... ....... ....... .......
104.................................... 109...................... 24 43 57 66 73 77 ....... ....... ....... ....... ....... ....... ....... .......
105.................................... 110...................... 27 48 61 70 76 ....... ....... ....... ....... ....... ....... ....... ....... .......
106.................................... 111...................... 53 66 74 ....... ....... ....... ....... ....... ....... ....... ....... ....... .......
107.................................... 112...................... 35 53 71 ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... .......
108.................................... 113...................... 40 64 ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... .......
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 198]]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Ages Duration of guaranteed amount--[Years]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Male Female 15 16 17 18 19 20 21 22 23 24 25
--------------------------------------------------------------------------------------------------------------------------------------------------------
86.............................. 91................. 64 66 68 70 72 73 74 75 76 77 .......
87.............................. 92................. 66 68 70 72 73 74 76 77 78 ....... .......
88.............................. 93................. 68 70 72 73 75 76 77 78 ....... ....... .......
89.............................. 94................. 70 72 73 75 76 77 78 ....... ....... ....... .......
90.............................. 95................. 72 73 75 76 77 79 ....... ....... ....... ....... .......
91.............................. 96................. 73 75 76 78 79 ....... ....... ....... ....... ....... .......
92.............................. 97................. 75 76 78 79 ....... ....... ....... ....... ....... ....... .......
93.............................. 98................. 76 78 79 ....... ....... ....... ....... ....... ....... ....... .......
94.............................. 99................. 78 79 ....... ....... ....... ....... ....... ....... ....... ....... .......
95.............................. 100................ 79 ....... ....... ....... ....... ....... ....... ....... ....... ....... .......
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table IV--Temporary Life Annuities \1\--One Life--Expected Return Multiples
[See footnote at end of table]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Ages Temporary period--maximum duration of annuity--[Years]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Male Female 1 2 3 4 5 6 7 8 9 10
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
0 to 8......................................... 0 to 13.......................... 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 8.9 9.9
9.............................................. 14............................... 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 8.9 9.9
10............................................. 15............................... 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 8.9 9.9
11............................................. 16............................... 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 8.9 9.9
12............................................. 17............................... 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 8.9 9.9
13............................................. 18............................... 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 8.9 9.9
14............................................. 19............................... 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 8.9 9.9
15............................................. 20............................... 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 8.9 9.9
16............................................. 21............................... 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 8.9 9.9
17............................................. 22............................... 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 8.9 9.9
18............................................. 23............................... 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 8.9 9.9
19............................................. 24............................... 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 8.9 9.9
20............................................. 25............................... 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 8.9 9.9
21............................................. 26............................... 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 8.9 9.9
22............................................. 27............................... 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 8.9 9.9
23............................................. 28............................... 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 8.9 9.9
24............................................. 29............................... 1.0 2.0 3.0 4.0 5.0 6.0 7.0 7.9 8.9 9.9
25............................................. 30............................... 1.0 2.0 3.0 4.0 5.0 6.0 7.0 7.9 8.9 9.9
26............................................. 31............................... 1.0 2.0 3.0 4.0 5.0 6.0 7.0 7.9 8.9 9.9
27............................................. 32............................... 1.0 2.0 3.0 4.0 5.0 6.0 7.0 7.9 8.9 9.9
28............................................. 33............................... 1.0 2.0 3.0 4.0 5.0 6.0 7.0 7.9 8.9 9.9
29............................................. 34............................... 1.0 2.0 3.0 4.0 5.0 6.0 6.9 7.9 8.9 9.9
30............................................. 35............................... 1.0 2.0 3.0 4.0 5.0 6.0 6.9 7.9 8.9 9.9
[[Page 199]]
31............................................. 36............................... 1.0 2.0 3.0 4.0 5.0 6.0 6.9 7.9 8.9 9.9
32............................................. 37............................... 1.0 2.0 3.0 4.0 5.0 6.0 6.9 7.9 8.9 9.9
33............................................. 38............................... 1.0 2.0 3.0 4.0 5.0 6.0 6.9 7.9 8.9 9.9
34............................................. 39............................... 1.0 2.0 3.0 4.0 5.0 5.9 6.9 7.9 8.9 9.8
35............................................. 40............................... 1.0 2.0 3.0 4.0 5.0 5.9 6.9 7.9 8.9 9.8
36............................................. 41............................... 1.0 2.0 3.0 4.0 5.0 5.9 6.9 7.9 8.9 9.8
37............................................. 42............................... 1.0 2.0 3.0 4.0 5.0 5.9 6.9 7.9 8.8 9.8
38............................................. 43............................... 1.0 2.0 3.0 4.0 5.0 5.9 6.9 7.9 8.8 9.8
39............................................. 44............................... 1.0 2.0 3.0 4.0 4.9 5.9 6.9 7.9 8.8 9.8
40............................................. 45............................... 1.0 2.0 3.0 4.0 4.9 5.9 6.9 7.8 8.8 9.7
41............................................. 46............................... 1.0 2.0 3.0 4.0 4.9 5.9 6.9 7.8 8.8 9.7
42............................................. 47............................... 1.0 2.0 3.0 4.0 4.9 5.9 6.9 7.8 8.8 9.7
43............................................. 48............................... 1.0 2.0 3.0 4.0 4.9 5.9 6.9 7.8 8.8 9.7
44............................................. 49............................... 1.0 2.0 3.0 4.0 4.9 5.9 6.8 7.8 8.7 9.7
45............................................. 50............................... 1.0 2.0 3.0 3.9 4.9 5.9 6.8 7.8 8.7 9.6
46............................................. 51............................... 1.0 2.0 3.0 3.9 4.9 5.9 6.8 7.8 8.7 9.6
47............................................. 52............................... 1.0 2.0 3.0 3.9 4.9 5.9 6.8 7.7 8.7 9.6
48............................................. 53............................... 1.0 2.0 3.0 3.9 4.9 5.9 6.8 7.7 8.6 9.5
49............................................. 54............................... 1.0 2.0 3.0 3.9 4.9 5.8 6.8 7.7 8.6 9.5
50............................................. 55............................... 1.0 2.0 3.0 3.9 4.9 5.8 6.8 7.7 8.6 9.5
51............................................. 56............................... 1.0 2.0 3.0 3.9 4.9 5.8 6.7 7.7 8.6 9.4
52............................................. 57............................... 1.0 2.0 3.0 3.9 4.9 5.8 6.7 7.6 8.5 9.4
53............................................. 58............................... 1.0 2.0 2.9 3.9 4.9 5.8 6.7 7.6 8.5 9.3
54............................................. 59............................... 1.0 2.0 2.9 3.9 4.8 5.8 6.7 7.6 8.4 9.3
55............................................. 60............................... 1.0 2.0 2.9 3.9 4.8 5.8 6.7 7.5 8.4 9.2
56............................................. 61............................... 1.0 2.0 2.9 3.9 4.8 5.7 6.6 7.5 8.4 9.2
57............................................. 62............................... 1.0 2.0 2.9 3.9 4.8 5.7 6.6 7.5 8.3 9.1
58............................................. 63............................... 1.0 2.0 2.9 3.9 4.8 5.7 6.6 7.4 8.3 9.1
59............................................. 64............................... 1.0 2.0 2.9 3.9 4.8 5.7 6.5 7.4 8.2 9.0
60............................................. 65............................... 1.0 2.0 2.9 3.8 4.8 5.6 6.5 7.3 8.1 8.9
61............................................. 66............................... 1.0 2.0 2.9 3.8 4.7 5.6 6.5 7.3 8.1 8.8
62............................................. 67............................... 1.0 2.0 2.9 3.8 4.7 5.6 6.4 7.2 8.0 8.8
63............................................. 68............................... 1.0 2.0 2.9 3.8 4.7 5.6 6.4 7.2 7.9 8.7
64............................................. 69............................... 1.0 1.9 2.9 3.8 4.7 5.5 6.3 7.1 7.9 8.6
65............................................. 70............................... 1.0 1.9 2.9 3.8 4.6 5.5 6.3 7.1 7.8 8.5
66............................................. 71............................... 1.0 1.9 2.9 3.8 4.6 5.4 6.2 7.0 7.7 8.4
67............................................. 72............................... 1.0 1.9 2.9 3.7 4.6 5.4 6.2 6.9 7.6 8.3
68............................................. 73............................... 1.0 1.9 2.8 3.7 4.6 5.4 6.1 6.8 7.5 8.2
69............................................. 74............................... 1.0 1.9 2.8 3.7 4.5 5.3 6.1 6.8 7.4 8.0
70............................................. 75............................... 1.0 1.9 2.8 3.7 4.5 5.3 6.0 6.7 7.3 7.9
71............................................. 76............................... 1.0 1.9 2.8 3.7 4.5 5.2 5.9 6.6 7.2 7.8
[[Page 200]]
72............................................. 77............................... 1.0 1.9 2.8 3.6 4.4 5.2 5.8 6.5 7.1 7.6
73............................................. 78............................... 1.0 1.9 2.8 3.6 4.4 5.1 5.8 6.4 7.0 7.5
74............................................. 79............................... 1.0 1.9 2.8 3.6 4.3 5.0 5.7 6.3 6.8 7.3
75............................................. 80............................... 1.0 1.9 2.7 3.5 4.3 5.0 5.6 6.2 6.7 7.1
76............................................. 81............................... 1.0 1.9 2.7 3.5 4.2 4.9 5.5 6.1 6.5 7.0
77............................................. 82............................... 1.0 1.9 2.7 3.5 4.2 4.8 5.4 5.9 6.4 6.8
78............................................. 83............................... 1.0 1.9 2.7 3.4 4.1 4.7 5.3 5.8 6.2 6.6
79............................................. 84............................... 1.0 1.8 2.7 3.4 4.1 4.7 5.2 5.7 6.1 6.4
80............................................. 85............................... 1.0 1.8 2.6 3.4 4.0 4.6 5.1 5.5 5.9 6.2
81............................................. 86............................... 1.0 1.8 2.6 3.3 3.9 4.5 5.0 5.4 5.7 6.0
82............................................. 87............................... 1.0 1.8 2.6 3.3 3.9 4.4 4.8 5.2 5.6 5.8
83............................................. 88............................... .9 1.8 2.6 3.2 3.8 4.3 4.7 5.1 5.4 5.6
84............................................. 89............................... .9 1.8 2.5 3.2 3.7 4.2 4.6 4.9 5.2 5.4
85............................................. 90............................... .9 1.8 2.5 3.1 3.6 4.1 4.5 4.8 5.0 5.2
86............................................. 91............................... .9 1.8 2.5 3.1 3.6 4.0 4.3 4.6 4.8 5.0
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Ages Temporary period--maximum duration of annuity--[Years]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Male Female 11 12 13 14 15 16 17 18 19 20
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
0 to 8......................................... 0 to 13.......................... 10.9 11.9 12.9 13.9 14.9 15.8 16.8 17.8 18.8 19.7
9.............................................. 14............................... 10.9 11.9 12.9 13.9 14.9 15.8 16.8 17.8 18.8 19.7
10............................................. 15............................... 10.9 11.9 12.9 13.9 14.9 15.8 16.8 17.8 18.8 19.7
11............................................. 16............................... 10.9 11.9 12.9 13.9 14.9 15.8 16.8 17.8 18.8 19.7
12............................................. 17............................... 10.9 11.9 12.9 13.9 14.9 15.8 16.8 17.8 18.8 19.7
13............................................. 18............................... 10.9 11.9 12.9 13.9 14.9 15.8 16.8 17.8 18.8 19.7
14............................................. 19............................... 10.9 11.9 12.9 13.9 14.9 15.8 16.8 17.8 18.8 19.7
15............................................. 20............................... 10.9 11.9 12.9 13.9 14.9 15.8 16.8 17.8 18.7 19.7
16............................................. 21............................... 10.9 11.9 12.9 13.9 14.8 15.8 16.8 17.8 18.7 19.7
17............................................. 22............................... 10.9 11.9 12.9 13.9 14.8 15.8 16.8 17.8 18.7 19.7
18............................................. 23............................... 10.9 11.9 12.9 13.9 14.8 15.8 16.8 17.8 18.7 19.7
19............................................. 24............................... 10.9 11.9 12.9 13.9 14.8 15.8 16.8 17.7 18.7 19.7
20............................................. 25............................... 10.9 11.9 12.9 13.9 14.8 15.8 16.8 17.7 18.7 19.7
21............................................. 26............................... 10.9 11.9 12.9 13.8 14.8 15.8 16.8 17.7 18.7 19.6
22............................................. 27............................... 10.9 11.9 12.9 13.8 14.8 15.8 16.7 17.7 18.7 19.6
23............................................. 28............................... 10.9 11.9 12.9 13.8 14.8 15.8 16.7 17.7 18.7 19.6
24............................................. 29............................... 10.9 11.9 12.9 13.8 14.8 15.8 16.7 17.7 18.6 19.6
25............................................. 30............................... 10.9 11.9 12.8 13.8 14.8 15.7 16.7 17.7 18.6 19.6
[[Page 201]]
26............................................. 31............................... 10.9 11.9 12.8 13.8 14.8 15.7 16.7 17.6 18.6 19.5
27............................................. 32............................... 10.9 11.9 12.8 13.8 14.8 15.7 16.7 17.6 18.6 19.5
28............................................. 33............................... 10.9 11.8 12.8 13.8 14.7 15.7 16.6 17.6 18.5 19.5
29............................................. 34............................... 10.9 11.8 12.8 13.8 14.7 15.7 16.6 17.6 18.5 19.4
30............................................. 35............................... 10.9 11.8 12.8 13.7 14.7 15.6 16.6 17.5 18.4 19.4
31............................................. 36............................... 10.8 11.8 12.8 13.7 14.7 15.6 16.5 17.5 18.4 19.3
32............................................. 37............................... 10.8 11.8 12.7 13.7 14.6 15.6 16.5 17.4 18.4 19.3
33............................................. 38............................... 10.8 11.8 12.7 13.7 14.6 15.6 16.5 17.4 18.3 19.2
34............................................. 39............................... 10.8 11.8 12.7 13.6 14.6 15.5 16.4 17.4 18.3 19.2
35............................................. 40............................... 10.8 11.7 12.7 13.6 14.6 15.5 16.4 17.3 18.2 19.1
36............................................. 41............................... 10.8 11.7 12.7 13.6 14.5 15.4 16.3 17.2 18.1 19.0
37............................................. 42............................... 10.8 11.7 12.6 13.6 14.5 15.4 16.3 17.2 18.1 18.9
38............................................. 43............................... 10.7 11.7 12.6 13.5 14.4 15.3 16.2 17.1 18.0 18.9
39............................................. 44............................... 10.7 11.6 12.6 13.5 14.4 15.3 16.2 17.1 17.9 18.8
40............................................. 45............................... 10.7 11.6 12.5 13.5 14.4 15.2 16.1 17.0 17.8 18.7
41............................................. 46............................... 10.7 11.6 12.5 13.4 14.3 15.2 16.1 16.9 17.8 18.6
42............................................. 47............................... 10.6 11.6 12.5 13.4 14.3 15.1 16.0 16.8 17.7 18.5
43............................................. 48............................... 10.6 11.5 12.4 13.3 14.2 15.1 15.9 16.7 17.6 18.4
44............................................. 49............................... 10.6 11.5 12.4 13.3 14.1 15.0 15.8 16.7 17.5 18.3
45............................................. 50............................... 10.5 11.4 12.3 13.2 14.1 14.9 15.7 16.6 17.4 18.1
46............................................. 51............................... 10.5 11.4 12.3 13.2 14.0 14.8 15.7 16.5 17.2 18.0
47............................................. 52............................... 10.5 11.4 12.2 13.1 13.9 14.7 15.6 16.3 17.1 17.8
48............................................. 53............................... 10.4 11.3 12.2 13.0 13.8 14.7 15.4 16.2 17.0 17.7
49............................................. 54............................... 10.4 11.3 12.1 12.9 13.8 14.6 15.3 16.1 16.8 17.5
50............................................. 55............................... 10.3 11.2 12.0 12.9 13.7 14.5 15.2 16.0 16.7 17.4
51............................................. 56............................... 10.3 11.1 12.0 12.8 13.6 14.3 15.1 15.8 16.5 17.2
52............................................. 57............................... 10.2 11.1 11.9 12.7 13.5 14.2 14.9 15.6 16.3 17.0
53............................................. 58............................... 10.2 11.0 11.8 12.6 13.4 14.1 14.8 15.5 16.1 16.8
54............................................. 59............................... 10.1 10.9 11.7 12.5 13.2 14.0 14.6 15.3 15.9 16.5
55............................................. 60............................... 10.1 10.9 11.6 12.4 13.1 13.8 14.5 15.1 15.7 16.3
56............................................. 61............................... 10.0 10.8 11.5 12.3 13.0 13.7 14.3 14.9 15.5 16.1
57............................................. 62............................... 9.9 10.7 11.4 12.2 12.8 13.5 14.1 14.7 15.3 15.8
58............................................. 63............................... 9.8 10.6 11.3 12.0 12.7 13.3 13.9 14.5 15.0 15.5
59............................................. 64............................... 9.8 10.5 11.2 11.9 12.5 13.2 13.7 14.3 14.8 15.3
60............................................. 65............................... 9.7 10.4 11.1 11.7 12.4 13.0 13.5 14.0 14.5 15.0
61............................................. 66............................... 9.6 10.3 11.0 11.6 12.2 12.8 13.3 13.8 14.2 14.7
62............................................. 67............................... 9.5 10.2 10.8 11.4 12.0 12.5 13.1 13.5 14.0 14.3
63............................................. 68............................... 9.4 10.0 10.7 11.3 11.8 12.3 12.8 13.2 13.7 14.0
64............................................. 69............................... 9.3 9.9 10.5 11.1 11.6 12.1 12.5 13.0 13.3 13.7
65............................................. 70............................... 9.1 9.8 10.3 10.9 11.4 11.9 12.3 12.7 13.0 13.3
66............................................. 71............................... 9.0 9.6 10.2 10.7 11.2 11.6 12.0 12.4 12.7 13.0
[[Page 202]]
67............................................. 72............................... 8.9 9.5 10.0 10.5 10.9 11.3 11.7 12.0 12.3 12.6
68............................................. 73............................... 8.7 9.3 9.8 10.3 10.7 11.1 11.4 11.7 12.0 12.2
69............................................. 74............................... 8.6 9.1 9.6 10.0 10.4 10.8 11.1 11.4 11.6 11.8
70............................................. 75............................... 8.4 8.9 9.4 9.8 10.2 10.5 10.8 11.0 11.2 11.4
71............................................. 76............................... 8.3 8.7 9.2 9.6 9.9 10.2 10.4 10.7 10.9 11.0
72............................................. 77............................... 8.1 8.6 8.9 9.3 9.6 9.9 10.1 10.3 10.5 10.6
73............................................. 78............................... 7.9 8.3 8.7 9.0 9.3 9.6 9.8 9.9 10.1 10.2
74............................................. 79............................... 7.7 8.1 8.5 8.8 9.0 9.2 9.4 9.6 9.7 9.8
75............................................. 80............................... 7.6 7.9 8.2 8.5 8.7 8.9 9.1 9.2 9.3 9.4
76............................................. 81............................... 7.4 7.7 8.0 8.2 8.4 8.6 8.7 8.8 8.9 9.0
77............................................. 82............................... 7.1 7.5 7.7 7.9 8.1 8.3 8.4 8.5 8.5 8.6
78............................................. 83............................... 6.9 7.2 7.4 7.6 7.8 7.9 8.0 8.1 8.2 8.2
79............................................. 84............................... 6.7 7.0 7.2 7.3 7.5 7.6 7.7 7.7 7.8 7.8
80............................................. 85............................... 6.5 6.7 6.9 7.1 7.2 7.3 7.3 7.4 7.4 7.4
81............................................. 86............................... 6.3 6.5 6.6 6.8 6.9 6.9 7.0 7.0 7.1 .........
82............................................. 87............................... 6.0 6.2 6.4 6.5 6.5 6.6 6.7 6.7 ......... .........
83............................................. 88............................... 5.8 6.0 6.1 6.2 6.2 6.3 6.3 ......... ......... .........
84............................................. 89............................... 5.6 5.7 5.8 5.9 5.9 6.0 ......... ......... ......... .........
85............................................. 90............................... 5.3 5.5 5.5 5.6 5.6 ......... ......... ......... ......... .........
86............................................. 91............................... 5.1 5.2 5.3 5.3 ......... ......... ......... ......... ......... .........
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