Kathleen ReynoldsKeymasterNovember 20, 2022 at 3:17 pmPost count: 428
Enter the appropriate values into the data input fields for this calculation model.
- Transfer Date: Enter 1 to 12 to indicate the month for the transfer date and then enter the year of the transfer (mm/yyyy). If you enter a two-digit number such as 90, the program will automatically enter it as 1990. See Transition Period Notes.
- §7520 Rate The program automatically displays three allowable 120% Midterm Applicable Federal Interest Rates (the current month and two preceding months) and places the rate that is most favorable in this input. You can override the program’s value by entering another rate. In which case, the phrase “Invalid §7520 Rate” appears. In some cases, 30% will appear as a rate. Thirty percent is the default value that appears when there is not a current AFR available for the chosen month. Download or manually update your AFR table. Check our web site at https://www.brentmark.com for an updated list of AFR Rates.
- Note: For transactions in May or June of 2009, if you select a §7520 discount rate from March or April as required by regulations, the program will apply mortality Table 90CM and not 2000CM. For transactions in May or June of 1999, if you select a §7520 discount rate from March or April 1999, the program will apply mortality Table 80CNSMT.
- CRUT Type: Enter “Normal” for a CRUT that makes the annual distribution regardless of trust, “NIMCRUT” for a trust that is “net income with makeup,” meaning that distributions are made only out of trust income, but past deficiencies in distributions can be “made up” if there is additional trust income in a year, “Flip CRUT” for a trust that switches from a NIMCRUT to a normal CRUT (and loses all make-ups) upon the lapse of time or the occurrence of a particular event or “NICRUT,” which pays either the fixed percentage or the income actually received by the trust, whichever is less.
- Trust Type: Select Life, Term, Shorter, or Longer.
- FMV of Trust: Enter the initial net fair market value of the assets placed in the trust when established.
- Months Valuation Precedes Payout: Enter a value to indicate the number of full months by which the valuation date precedes the first payout. The program will only allow valid input values according to which Payment Period was selected on the previous input field.
- Percentage Payout: Enter the projected payout (percentage) that should go to the beneficiary during the life of the trust.
- Payment Period: Select the payment schedule that should be followed for each year (Annual, Semiannual, Quarterly, Monthly, and Weekly).
- Payment Years: Enter the duration of the trust, for a period not in excess of 20 years. Valid entries are 1-20. This data input field will only be available when Term is chosen as the Calculation Type.
- Lives: Enter the Enter the number of lives (up to five) that will be used to determine the charitable deduction. This data input field is only available when Life is chosen as the Calculation Type.
- Ages: This data input field is only available when Life is chosen as the Calculation Type. Use a value from 0 to 109 to indicate the age of the person whose life is being used to measure the term of the trust. Enter the age of this person(s) using the birth date which is nearest to the transfer date.
- Income Tax: The Tax Cut and Jobs Act of 2017 sunsets in 2026. Indicate whether or not you wish to assume that the income tax provisions of that act will sunset.
- Cost Basis: Enter the amount of basis for the asset being placed in the trust.
- Charity Type: Choose 50%, 30%, or 20%. All qualified non-profit organizations will fit within one of these types (IRS Publication 78).
- Capital Gains Rate: Enter the income tax rate that applies to capital gains property.
- Optimize Annual Payout: Click this button to have the program calculate the highest payout rate that passes the 10% test for the AFR you select. This feature is useful in creating a new trust if you have not designed one before.
- Income Tax Inputs
IMPORTANT NOTE: Mortality table 2010CM was included in version 2022.10 of the software. Table 2010CM reflects longer life expectancies than table 2000CM, and will generally result in life interests worth more, while remainder interests worth less. Once finalized, the new 2010CM table will go in effect on the first day of the first month after regulations have been finalized. If you have a prior version of the software, its advised to update to the latest version before the transition period ends (see below).
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