New IRS 2010CM Mortality Table Throws a Curveball

We have learned something unexpected about the new 2010CM mortality table. Published in proposed regulations released by the IRS in May, 2010CM can in some situations produce a higher deduction than the 2000CM mortality table we’ve been using since 2009. This is an important realization, because the proposed regulations allow donors to compute their deductions using 2010CM or 2000CM until the IRS publishes final regulations. Naturally, donors will want to use the table that gives them the greatest benefit during this transitional period.

IRS Announces New Mortality Table for Computing Planned Gift Deductions

On May 5, the IRS finally published proposed regulations that update the mortality assumptions used to compute the value of annuity interests, unitrust interests, income interests, and life estates. The updated mortality table, 2010CM, is based on data from the 2010 U.S. Census. The current mortality table, 2000CM, is based on data from the 2000 U.S. Census. It has been 13 years since 2000CM went into effect, despite a Section 7520 requirement that the mortality table for valuing annuity interests, etc. be updated no less than every ten years.

Beware Dramatic Increases in Estimated Gift Annuity Liabilities

[NOTE: The following is based on a true story.] Some of the numbers just didn’t make sense. It was that most wonderful time of the year for a non-profit organization – the closing of the June 30 fiscal year! Almost like Christmas in July, everyone was busy reviewing tally sheets and running various reports in an effort to provide comprehensive information about the gifts received over the previous 12 months. With outright gifts, of course, the process was fairly straightforward – whatever was received, for the most part, was counted with a few exceptions. With life income gifts, however, the process was a little more complicated, since the organization needs to report the total funding amount, the estimated liability, and the estimate of the charitable remainder.