Private Annuity and Irrevocable Trust

[S T]

Another one I inherit after the fact, and the prior accountant that set this up in 2006, is rude, and so ugly to the client it is ridiculous!. So basically what we have, is all we are going to receive.

I have this irrevocable trust, which I am okay with. However, the beneficiary of the Irrevocable trust receives an income from the Private Annuity, and I have the total amount received along with the relaized gains and the amount that was contributed to the Private Annuity.

I have the prior year worksheet calculating Capital Gain and Oridinary Income and even gives me the realized gain, exclusion ratio, capital gain ratio, ordinary income ratio and life expectancy. So I understand all of that.

My question is how to figure for 2007, is it like RMD where the life expectancy factor changes year to year , or do I have to change the interest rate that was set in 2006. It was 6%.

Can someone please point me in the right direction to calculate 2007 ordinary income and capital gain.

Thanks,

Sandy

[Jesse]

Sandy, I can't help you w/ an answer to your queation but I'll bump you back to the top before the post is lost to page 2.

[JG EA]

Sandy I really know nothing about this, but would this apply?

"Consistent treatment. If a power must be exercised consistently, the
trustee chooses the tax treatment in the first year and treats the
item the same way in following years. See Regulation Section
1.643(a)-3 examples 1 through 3."

TTB Estates, Trusts, and Fiduciaries SB10-11