Prepared for: Donor name
| A. Input Assumptions | |
|---|---|
| Date of transfer | June 2, 2023 |
| Fair market value of property transferred | $1,000,000.00 |
| The term income interest of the trust will last | 20 years |
| Annual annuity rate | 5% |
| Payment frequency | Quarterly |
| Is payment at beginning or end of payment period | End |
| The discount rate (effective 6/2023) is | 4.2% |
| The mortality table is based on the census taken in | 2000 |
| B. Calculation of Income Tax Deduction for Grantor Trust | ||
|---|---|---|
| 1. | Fair market value of property transferred | $1,000,000.00 |
| 2. | Annual annuity rate | 5% |
| 3. | Annuity amount payable on an annual basis | $50,000.00 |
| 4. | Factor for present worth of an annuity (based on Table B) | 13.3528 |
| 5. | Line 3 annuity amount times Line 4 factor | $667,640.00 |
| 6. | Adjustment factor for payment frequency (from Table K) | 1.0156 |
| 7. | Present value of annuity interest (Line 5 * Line 6) | $678,055.18 |
| 8. | Value of annuity interest (lesser of Line 1 and Line 7) | $678,055.18 |
| 9. | Present value of remainder interest = non deductible remainder (Line 1 - Line 8) | $321,944.82 |
| 10. | Percent of property that will revert to the grantor | 32.19% |
| 11. | Is income tax deduction allowed? (Is Line 10 > 15%) | Yes |
| 12. | Income tax deduction | $678,055.18 |
NOTE: This calculation is provided for educational purposes only. The type of assets transferred, the actual date of the gift, and other factors may have a material effect on the amount or use of your deduction. You are advised to seek the advice of your tax advisors before implementing a gift of this type.
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