Is the naming of an irrevocable beneficiary under a refund annuity a gift?
Thus, if the donee spouse's interest is not treated as a "qualifying income interest for life," the gift of a refund annuity will not qualify if the refund is payable to the donor or a third party in the event of the donee's death during the refund period.
cash refund annuity
: A cash refund annuity
pays a lump-sum cash benefit to a beneficiary if the annuitant dies before a recovery of premiums paid.
benefits passing under a refund annuity
, a joint and survivor annuity, a fixed period annuity, and a fixed amount annuity).
On January 1, 2009, a husband, age 65, purchased for $21,053 an immediate installment refund annuity which pays $100 a month for life.
To find the duration of the guaranteed amount, in years, for a cash or installment refund annuity, divide the total amount guaranteed under the contract by the amount of one year's annuity payments.
annuity, installment refund: See: installment refund annuity
Revenue Ruling 61-201 states, "In determining the amount of loss sustained by the original purchaser upon his surrender of a single premium refund annuity
contract for a cash consideration, the basis of the contract is its cost less the amounts previously received under the contract which were properly excluded from the gross income of the recipient under the law applicable at the time of receipt.
1) But where a decedent has directed his executor to purchase a refund annuity
for a personal beneficiary and to name a charitable organization as refund beneficiary, decedent's estate is not entitled to a charitable deduction for the value of the refund.