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§ 12.11 CALCULATION OF CHARITABLE DEDUCTIONvaluation date—of the property placed in the trust, less the present value of theannuity income interest. 410 Simply stated, the value of the remainder interest isequal to the value of the property transferred to the trust less the value of theannuity interest.Thus, valuation of a remainder interest in a CRAT requires identification of avaluation date. The rules for determining this date dependent on the type of charitablecontribution deduction involved.In the case of a gift involving an income tax charitable contribution deductionor a gift tax charitable contribution deduction, the term valuation date means, ingeneral, the date on which the property is transferred to the trust by the donor. 411The present value of an annuity interest is determined basically by two factors:mortality tables promulgated by the IRS and an interest rate that is set bythe Department of the Treasury each month. 412In an instance of a gift involving an estate tax charitable contribution deduction,the valuation date generally is the date of death. In the estate tax context,however, an alternative valuation date may be elected by the decedent’s estate, 413in which case the valuation date is the alternative valuation date. If the alternativevaluation date is elected, and the decedent’s estate also elects to use theinterest rate component for one of the two months preceding the alternative valuationdate, 414 the month selected containing that date is the one used to determinethe interest rate and mortality tables. 415The present value of an annuity is computed using rules in the estate taxregulations. 416 If the interest to be valued is the right of a person to receive anannuity that is payable, at the end of each year, for a term of years or one life, thepresent value of that interest is ascertained by multiplying the amount that isannually payable by the appropriate annuity actuarial factor. That factor is theone that corresponds to the applicable interest rate and the annuity period. 417As noted, this annuity actuarial factor assumes that the annuity is paidannually. If, however, the annuity is payable at the end of semiannual, quarterly,monthly, or weekly periods, the product obtained by multiplying theannuity factor by the annual annuity amount must be multiplied by an adjustmentfactor. 418 Likewise, an adjustment must be made if the annuity is payableat the beginning of one of these periods. 419 This adjustment is required toadjust (lower) the charitable deduction in light of the more frequent annuitypayments.410 Reg. § 1.664-2(c).411 Id. The valuation date is not determined by the date on which the trust was created.412 IRC § 7520(a). See Chapter 11.413 IRC § 2032.414 See § 8.3(c).415 Reg. § 1.664-2(c).416 Reg. § 20.2031-7(d).417 Reg. § 20.2031-7(d)(6)(iv)(A).418 Reg. § 20.2031-7(d)(6)(iv)(B).419 Reg. § 20.2031-7(d)(6)(iv)(C). 473