TABLE E.

CARLISLE TABLE OF MORTALITY, WITH INTEREST AT 5 PER

TABLE F.

CARLISLE TABLE OF MORTALITY, WITH INTEREST AT 6 PER

3. How to Use the Tables.

a. THE NECESSARY FACTORS.

First ascertain the rate of interest to be employed and the mortality table to be used.

The tables give the present value of an income of $1.00 per annum at the various ages, based on their expectation of life from year to year.

To find the present value of the annual income from a specified principal sum during the lifetime of a person, find the annual income on the basis of the given rate of interest and then multiply this annual income by the value of one dollar at the given age as shown in the table.

To find the value of dower make the same calculation and divide it by three.

To find the remainder deduct the life estate value from the principal sum.

b. ASCERTAINING THE VALUE.

A New York testator dying in January, 1917, leaves a net estate of $300,000 to his widow, aged 30, for life; on her death remainder to their only child, then a minor.

By reference to the table of states we find that New York uses the American experience table on the basis of 5 per cent, and by reference to that table - Table D—we find that the present worth of an annuity of $1.00 at 5 per cent to a life tenant 30 years of age is $15.08425.

The annual income of $300,000 at 5 per cent is $15,000 which multiplied by the present worth of the annuity of $1.00 gives $226,263.75 as the value of the life estate and subtracting from the principal sum $300,000, the value of the remainder is $73,736.25.

4. Application to the Problems of Inheritance Taxation. Taking the above example of a life estate and a remainder created by the will of a New York decedent in

favor of his widow of 30 and his minor child in $300,000 net estate, the date of death being January, 1917:

a.

Assume:

a. That $100,000 is personal property located in Arizona.

b. That $100,000 is personal property invested in Idaho.

c. That $100,000 is personal property located in
Tennessee. What inheritance taxes must be paid
in those states?

d. What tax must be paid in the state of New York?
e. What tax must be paid the United States govern-
ment and in what proportions?

f. What is the total tax due by life tenant and
remainderman less any possible discounts for
prompt payment?

THE VALUE AND TAX IN ARIZONA.

As to the $100,000 invested in Arizona we find by reference to the table of states that Arizona uses the Combined Actuaries' table on the basis of 4% (Table A.) The annual income on $100,000 at 4% is $4,000. By reference to Table A we find that the annuity value of $1.00 at the age of 30 is $17.040. This multiplied by $4,000 gives $68,160 as the value of the life estate and subtraction gives the value of the remainder as $31,840.

By reference to the table of rates and exemptions given in the abstract of the Arizona statute (see appendix) we find that the life tenant pays 1% over an exemption of $5,000 giving the tax on the life estate $631.60. The remainder pays the same rate less the same exemption or $268.40.

b. THE VALUE AND TAX IN IDAHO.

As to the $100,000 invested in Idaho we find that state uses the Actuaries' combined table on the basis of 5% Table B. And by reference to that table we find the