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§ 13.11 CHARITABLE CONTRIBUTION DEDUCTIONFifth, a pooled income fund must be maintained by the charitable organizationthat is the holder of the remainder interests contributed. 110 There is no comparablelimitation in the case of a charitable remainder trust.§ 13.11 CHARITABLE CONTRIBUTION DEDUCTIONA charitable contribution deduction is allowed for a transfer of property to apooled income fund. 111In the case of a charitable contribution by means of a pooled income fund,the charitable deduction is equal to the value of the remainder interest. Thevalue of the remainder interest is equal to the fair market value of the propertyless the value of the income interest. 112Thus, the fair market value of a remainder interest in property transferred toa pooled income fund is its present value. 113 The present value of a remainderinterest at the time of the transfer of property to the pooled income fund is determinedby computing the present value (at the time of the transfer) of the lifeincome interest and subtracting that value from the fair market value of thetransferred property on the valuation date. 114 The present value of a remainderinterest in property transferred to a pooled income fund is computed on thebasis of (1) the appropriate life contingencies 115 and (2) the discount at a rate ofinterest, computed annually, equal to the highest yearly rate of return 116 of thepooled income fund for the three years immediately preceding its year in whichthe transfer of property to the fund is made. 117If a pooled income fund has been in existence less than three years immediatelypreceding the year in which the transfer is made to the fund (termed a newpooled income fund), the highest rate of return is deemed to be the interest rate(rounded to the nearest two-tenths of a percent) that is 1 percent less than thehighest annual average of the monthly rates 118 for the three calendar yearsimmediately preceding the calendar year in which the transfer to the pooled110 See § 13.2(e).111 IRC § 170(f)(2)(A); Reg. § 1.642(c)-5(a)(4).112 The process by which this type of remainder interest is valued is the subject of Chapter 11. For purposes ofdetermining the present value of income interests in a pooled income fund, the first tax year of the fund is theyear in which the fund first receives assets. Rev. Rul. 85-20, 1985-1 C.B. 183.113 Reg. §§ 20.2031-7(d)(2), 1.170A-6(b)(2), 1.642(c)-6(a)(1), (d), (e)(1).114 Reg. § 1.642(c)-6(a)(2). Generally, the valuation date is the date on which property is transferred to the fundby a donor. Id.115 Reg. § 20.2031-7(d)(6) (Table 80CNSMT).116 The yearly rate of return generally is computed as provided in Reg. § 1.642(c)-6(c). In the case of a merger oftwo pooled income funds (see § 13.2(e), note 37), the rate of return used to ascertain the value of income interestsin property transferred to the surviving fund should, the IRS ruled,be determined as if both funds had been combined for all of the taxable years in which the fundsare actually combined and for the three preceding taxable years. Thus, for each such year, thepercentage is determined by dividing the income earned by both [f]unds by an amount equal to(i) the average fair market value for the year of the property in both [f]unds less (ii) the correctiveterm adjustment for both [f]unds.Priv. Ltr. Rul. 9642020.117 Reg. § 1.642(c)-6(e)(2).118 That is, the IRC § 7520 rates. 495