NumberCruncher FAQs
Q. How do I perform a NumberCruncher Networked Installation?
A. Refer to the NumberCruncher Networked Installations Help File.
Q. How can I calculate the death tax in a
state that has "decoupled"
from the phase-out of the federal credit for state death taxes?
A. If the state uses the same "taxable
estate" as
the federal estate
tax, then the "decoupled" estate tax can be calculated
in the following
way:
Take the "Gross Federal Estate Tax" calculated by
NumberCruncher and
subtract the "applicable credit amount" that is used
by the state for
purposes of its death tax. (The "applicable credit amount" is
the
federal tax that would be imposed on an estate equal to the applicable
exclusion amount." So, for example, if a state calculates
its tax
using an exclusion of $1 million, the "applicable credit
amount" would
be $345,800.)
The "decoupled" state death tax will be either (a)
that excess of the "Gross Federal Estate
Tax" over the state "applicable
credit amount" or
(b) the "Maximum Credit under §2011(b)(1)" as
shown in the
NumberCruncher calculation, whichever is the lesser amount.
Q. Why is the charitable deduction more than 10% when I click
the
optimize button for a charitable remainder unitrust calculation?
A. A charitable remainder unitrust must provide
a present charitable deduction of at least 10%, as required by
the Taxpayer Relief
Act of
1997, in order to qualify for a charitable income tax, gift tax,
or
estate tax deduction, but there is a disagreement among some
commentators about which section 7520 rate should be used to
calculate
the value of the remainder for purposes of the 10% test.
I.R.C. Section 664(d)(2)(D) states that the value (determined
under
section 7520) of such remainder interest in such property is
at least
10 percent, and section 7520(a) states that if an income, estate,
or
gift tax charitable contribution is allowable, then the taxpayer
may
elect to use the 7520 rate for either of the two preceding months,
instead of the month of the gift or death. However, several
commentators have suggested that the election to use a rate from
a
preceding month cannot be made until after the trust qualifies
for the
charitable deduction, and the trust does not qualify for the
charitable
deduction unless it first qualifies using the rate for the current
month, without regard to the deduction.
Although the IRS has not raised this argument, and informal discussions
with the IRS National Office suggest that the IRS does not intend
to
raise the argument, NumberCruncher errs on the side of caution
and
calculates the optimized payout based on the 7520 rate for
the month
of the transfer, regardless of which month is selected for the
actual
valuation.
To over-ride this feature, and optimize for the same rate you
wish to
use for valuation purposes, simply change the transfer date
to the
date of the month in which the desired 7520 rate occurred. (But
do not
change a date from after 4/1999 to a date before 5/1999, because
then
there will be a change in mortality tables as well as interest
rates.)
Q. What are Tables 80CNSMT and 90CM?
A. Tables 80CNSMT and 90CM are mortality tables
derived from the 1980 and
1990 censuses. They show 100,000 live births at age 0 and the
number
of lives still in being (Lx) at each future age. (So, for example,
you
can calculate the probability of a person age 21 living to age
50 by
taking the Lx for age 50 and dividing by the Lx for age 21.)
Table
90CM is used in the calculation of the life estate, annuity,
and
remainder factors for interests created after 4/30/1999 that
are valued
under I.R.C. section 7520 (subject to the transitional rules
found in
Treas. Reg. section 20.2031-7). Table 90CM can be found in various
places, including Publication 1457, "Actuarial Values: Book
Aleph," and
Treas. Reg. section 20.2031-7. Table 80CNSMT can be found in
Treas.
Reg. section 20.2031-7A, along with a Table S (single life remainder)
based on Table 80CNSMT. |
