IRS Updates Rules for Computing Planned Gift Deductions

On June 1, 2023, the IRS made public Treasury Decision 9974 (TD 9974). TD 9974 contains final regulations relating to the use of actuarial tables in valuing annuities, interests for life or a term of years in property, and remainder or reversionary interests in property.  

A change of immediate importance to gift planners, TD 9974 requires use of the 2010CM mortality table when computing the deduction for a gift annuity, charitable remainder trust, or other split-interest gift made on or after June 2, 2023.  

Key Provisions for Gift Planners

Provisions in the final regulations of particular interest to gift planners: 

1. Table 2010CM must be used to compute deductions and other split-interest factors for planned gifts made on or after June 2, 2023.
   
   
2. The transition period during which a donor may choose to use either Table 2000CM or Table 2010CM when computing their deduction has been expanded. In the final regulations, this transition period applies to gifts made on or after May 1, 2019 and on or before June 1, 2023. This is a change from the transition period found in the proposed regulations published in May 2022. In the proposed regulations, the transition period applied to gifts made on or after January 1, 2021 until the first day of the month following the publication date of the final regulations.
   
   The final regulations explain that the start date of the transition period was moved to May 1, 2019 because that date is the tenth anniversary of the applicability date for Table 2000CM. Per Sec. 7520 of the Internal Revenue Code, this mortality table is to be updated no less than every ten years.
   
   
3. If a donor wishes to amend a tax return to take advantage of the option to use either Table 2000CM or Table 2010CM for a gift made during the transition period, the taxpayer must include the caption “AMENDED PURSUANT TO TD 9974” at the top of an amended income tax return or “SUPPLEMENTED PURSUANT TO TD 9974” at the top of a supplemental gift or estate tax return.
   
   Note: A taxpayer must file an amended tax return no more than three years after the filing date of their original return. This means that it is too late for taxpayers who made a gift in 2019 to amend their 2019 tax return if they filed their original return on time (April 15, 2020 or earlier). If they took an extension, however, they may still have time to file an amended return before their three years are up.

Analysis of 2000CM vs. 2010CM

For our analysis of Table 2000CM versus Table 2010CM and advice on the situations where a donor should choose each one, see our blog post published shortly after the IRS made the proposed regulations public.

When PG Calc Software Will be Updated?

We expect to update our planned gift illustration software within a week to reflect the transition period date range defined in the final regulations. In the meantime, when performing calculations for a gift made on or after June 2, 2023, be sure to choose Table 2010CM as the IRS mortality table. In PGM Anywhere, you make this choice in the Date-Lives-Term window. In Planned Giving Manager (desktop), you make this choice in the Gift Date-IRS Discount Rate window. If the gift is for a fixed term of years, you do not need to choose a mortality table.

Caveat

While we expect the final regulations scheduled to be included in the Federal Register on June 7 to be identical to the final regulations the IRS published on June 1, they cannot be considered truly final until they appear in the Federal Register. We will update this blog, as needed, once we have a chance to review the final regulations in the Federal Register.