4. 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 $100 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. 5. 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: Assume: a. That $100,000 is personal property located in Iowa. 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 Government and in what proportions? f. What is the total tax due by life tenant and remainderman less any possible discounts for prompt payment? a. THE VALUE AND TAX IN IOWA. As to the $100,000 invested in Iowa, we find by reference to the table of States that Iowa uses the Combined Actuaries' table on the basis of 4 per cent (Table A). The annual income on $100,000 at 4 per cent is $4,000. By reference to Table A we find that the annuity value of $1.00 at the age of 30 is $17.03961. This multiplied by $4,000 gives $68,158.40 as the value of the life estate and subtraction gives the value of the remainder as $31,841.60. 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 per cent over an exemption of $5,000, giving the tax on the life estate $631.58. The remainder pays the same rate less the same exemption, or $268.41. 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 per cent-Table B. And by reference to that table we find the annuity value of $1.00 at the age of 30 to be $14.8963. The income at the rate of 5 per cent is $5,000, which, multiplied by the annuity value of $1.00 at 30 years, gives $74,481.50 as the value of the life estate and the subtraction shows $25,518.50 as the value of the remainder. By the reference to the table of rates and exemptions in the abstract of the statute of Idaho (see Appendix), we find that the widow and minor child each have an exemption of $10,000. As to the life estate, the tax on the first $25,000 of the excess is 1 per cent or $250, leaving $25,000 to be taxed at 11⁄2 per cent or $375, and $14,481.50 to be taxed at 2 per cent or $289.63, a total tax to the life tenant of $914.63. As to the remainder of $25,518.50, the exemption of $10,000 leaves $15,518.50 taxable at 1 per cent or $155.19 as the tax against the remainder. C. THE VALUE AND TAX IN TENNESSEE. As to the $100,000 invested in Tennessee we find that this State uses the Carlisle table on the basis of 6 per cent-Table F. Referring to Table F, we find that an annuity of $1.00 is valued at $13.020; at 6 per cent the annual income is $6,000, which, multiplied by the present worth of an annual income of $1.00, gives $78,120 as the value of the life estate and by subtraction the remainder value is $21,880. By reference to the table of rates and exemptions in the abstract of the Tennessee statute (see Appendix), we find that the exemption to each is $5,000. The life tenant's interest less $5,000 is $73,120, of which $20,000 pays a tax at 1 per cent or $200 and the balance $53,120 pays a tax of 114 per cent or $664.00, a total of $864 as against the life tenant. The remainder, less the $5,000 exemption, pays a tax of 1 per cent on $16,880 or $168.80. This computation is on the tax as it stood prior to the recent Tennessee amendments. d. THE TAX DUE THE STATE OF NEW YORK. The value of the life estate in New York as we have seen by the first illustration is $226,263.75 and of the remainder $73,736.25. As death occurred in January, 1917, the rates and exemptions prescribed by the statute of 1916 are in force. This gives the widow and child each an exemption of $5,000. The life estate subject to tax is valued at $221,263.75 and it pays The remainder less the exemption is $68,736.25, on which the tax is $1,124.73. e. THE FEDERAL TAX AND VALUATION. The inheritance tax levied by the United States Government took effect September 8, 1916, and the amendment of March 3, 1917, increased the rates by 50 per cent. The assumed testator died in |