How do I choose a discount rate when calculating the deduction for the owner of a retained life estate who reassigns her interest to the charity?
When the owner of the life interest in a retained life estate reassigns her interest to the charity, she is entitled to a charitable deduction equal to the value of her remaining life interest. You will maximize the value of this deduction by using the highest discount rate available, as this will maximize the value of the donor's remaining life interest.
To calculate the deduction, run Deductions Calculations and Narratives, select a retained life estate as your gift type, enter the information about the property as determined on the day of reassignment, then print the Non-Charitable Interest Actuarial chart. The value of the life estate at the bottom of the chart is the number you want.
