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IRS eliminating key tax break for using private annuity.(ANNUITIES)
Kiplinger Tax Letter, The, October, 2006
IRS is eliminating a key tax break for using a private annuity:
Sellers will no longer be able to defer gain over several years as payments are received, the Service says in newly proposed regulations. Instead, sellers will owe tax on the difference between the up-front value of the annuity and their tax basis in the asset sold. Typically, taxpayers use private annuities to sell assets to younger family members to reduce their estates and to defer capital gains tax on the sale.
The tax break is already effectively gone, although the rules won't be made final until 2007. They apply to sales after Oct. 18, 2006.
Some sales before April 19, 2007 will be excepted. To qualify, the asset purchaser must be an individual, the annuity cannot be...
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