TREASURY, IRS UPDATE ANNUITIES RULES: The Treasury Department and the Internal Revenue Service issued proposed regulations addressing the tax treatment of an exchange of property for an annuity contract.The proposed regulations would apply the same rule to exchanges for both private annuities and commercial annuities, tightening a popular tax-deferral strategy.
A decades-old IRS ruling generally postpones tax on the exchange of appreciated property for a private annuity, which is inconsistent with the same tax treatment of exchanges for commercial annuities or other kinds of property. It was originally based on the assumption that the value of a private annuity contract could not be determined for federal income tax purposes - an assumption that is no longer correct.
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