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option to use either Table 2000CM a grantor establishes a charitable lead factor for someone who needs to take
or Table 2010CM. trust in January 2021 and elected to a first required minimum distribution
■ For estate tax purposes, if the use the November Sec. 7520 rate of (RMD) at age 72 increased almost two
decedent dies on or after Jan. 1, 2021, 0.4% because the lower interest rate years from 25.6 to 27.4. For a $1 mil-
and before the effective date of final is more desirable for a lead trust. lion taxable retirement account, that
regulations, the decedent’s executor The text of the conforming updates reduces the RMD from $39,062.50
has the option of choosing which to numerous regulations affected by to $36,496.35. The $2,566 difference
table to use, although the same table the new tables goes on for another is not a huge spread, but it is another
must be used to value all interests in 100 pages or so, but, practically speak- incremental opportunity to stretch out
the same property. ing, nothing changed here other than the tax deferral of the account over
■ The Sec. 7520 interest rate will the underlying mortality data and the time.
remain the appropriate rate for the resulting tables. The IRS website was From Cathleen S. Lorenz, CPA,
month of the valuation date; i.e., it already updated to include both sets MST, and Scott J. Swain, CPA, CFA,
is not affected by the selection of of tables for each of the available uses. CFP, MT, Cleveland
the table. One exception to this rule Presumably, third-party software servic-
would occur with the valuation of a es used in modeling split-interest trusts
charitable interest where the interest and other vehicles affected by these Expenses & Deductions
was created in January or February changes will be updated in fairly short
2021 and the election to use the order as well. As such, the changeover Bargain sales to charities:
Sec. 7520 interest rate for one of the should be rather seamless for the aver- What are they and how do
prior two months was made. In that age professional. they work?
instance, Table 2000CM must be The more impactful change might Despite the concerns over the poten-
used. Otherwise, the optional provi- be the update of the life expectancy tially negative economic impact the
IMAGE BY TETRA IMAGES/GETTY IMAGES 2020 and then moved to 0.6% for Table is the most commonly used table of their portfolios. However, as the
pandemic was expected to have, many
tables based on the same mortality
sion is available. Note that the Sec.
taxpayers saw an increase in the value
information. The Uniform Lifetime
7520 rate was 0.4% for November
December 2020, January 2021,
for retirement plan and IRA distribu-
calendar turned to 2022, geopolitical
tions, as it covers unmarried owners,
events, rising inflation, and supply
and February 2021. So, practically
speaking, only gifts in January 2021
married owners whose spouses are
chain challenges have caused many
investors to contemplate exiting their
not more than 10 years younger, and
where an election was made to use
the November rate would be affected.
married owners whose spouses are not
holdings and monetizing previous
For example, this might occur where
August 2022 15
www.thetaxadviser.com the sole beneficiaries. The distribution increases in their fair market value