511. Can the purchase of a private annuity result in a taxable gift?Stevenrcline202015-04-28T20:23:00Z2015-04-28T20:23:00Z1155889Summit Business Media72104214Site Map/Annuities/Gift Taxation/Private AnnuitySite Map/Transfer Taxation/Federal Gift Taxation/Annuities/Private Annuity2005-01-25T00:00:00ZTaxFactsDefaultArticle118470705-00-tf1.xml705.00;#1561;#2366;#0x010100C568DB52D9D0A14D9B2FDCC96666E9F2007948130EC3DB064584E219954237AF3900242457EFB8B24247815D688C526CD44D009C4E67E972694125ABDA91AC61F5E51FTax Facts 1Can the purchase of a private annuity result in a taxable gift?133600.000000000TaxFactsDefaultArticleSBMEDIA\moss-admin2010-01-15T01:06:58Z511. Can the purchase of a private annuity result in a taxable gift?There is no gift if the purchase of an annuity is a bona fide ordinary business transaction..Rev. Rul. 69-74, 1969-1 CB 43, Treas. Regs. §§25.2511-1(g)(1), 25.2512-8. Where closely related parties are involved, however, a gift is made to the promisor of the amount by which the fair market value of the property exchanged for the annuity exceeds the present value of the annuity..Rev. Rul. 69-74, above; Est. of Bell v. Comm., 60 TC 469 (1973); Fehrs v. U.S., 79-2 USTC ¶13,324 (Ct. Cl. 1979); La Fargue v. Comm., 800 F.2d 936 (9th Cir. 1986). Likewise, a gift can be deemed made to the purchaser of the amount by which the present value of the annuity exceeds the fair market value of the property transferred. There will be no gift even in an intra-family transaction, however, if substantially equal values are exchanged and there is no donative intent found..Ellis Sarasota Bank & Trust Co. v. U.S., 77-2 USTC ¶13,204 (M.D. Fla. 1977). See also Rev. Rul. 76-491, 1976-2 CB 301. Before May 1, 2009, the present value of the annuity generally was determined by use of the current estate and gift tax valuation tables (Q 764)..Notice 89-60, 1989-1 CB 700; Treas. Regs. §§20.2031-1, 25.2512-1; Est. of Cullison v. Comm., 221 F.3d 1347, 2000-1 USTC ¶60,376 (9th Cir. 2000). After May 1, 2009, the present value is determined under Section 7520’s actuarial factors..Treas. Reg. §25.2512-5(d).