Prepared for: Donor name
| A. Input Assumptions | |
|---|---|
| Date of Transfer | September 27, 2023 |
| Fair market value of property transferred | $400,000.00 |
| The term of the life estate will last for | 6 years |
| Current value of depreciable property (improvements) | $360,000.00 |
| Estimated useful life of depreciable property in years | 40 years |
| Expected salvage value of depreciable property (improvements) | $100,000.00 |
| IRC Sec. 7520(a) election to use 7/2023 discount rate of | 4.6% |
| The mortality table is based on the census taken in | 2010 |
| B. Calculation of Income Tax Deduction | ||
|---|---|---|
| 1. | Current fair market value of life estate property | $400,000.00 |
| 2. | Current value of depreciable portion of life estate property | $360,000.00 |
| 3. | Salvage value of depreciable life estate property | $100,000.00 |
| 4. | Portion of property considered to be depreciable (Line 2 minus Line 3) | $260,000.00 |
| 5. | Number of years in term | 6 years |
| 6. | Estimated useful life of depreciable property (in years) | 40 years |
| 7. | Line 5 or 6 (whichever is less), multiplied by Line 4 | $1,560,000.00 |
| 8. | Line 7 divided by Line 6 | $39,000.00 |
| 9. | Ending value of life estate property (Line 1 - Line 8) | $361,000.00 |
| 10. | Remainder factor in Table B opposite number of years on Line 5 | 0.763501 |
| 11. | Present value of remainder interest (Line 10 * Line 9) (the tax deduction) | $275,623.86 |
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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