An annuity contract that is transferred before the annuity starting date, for less than full and adequate consideration, is treated as a distribution under the contract as an amount that is “not received as an annuity.”
(b) In the case of a transfer of such a contract (ed. - a contract to which section 72 applies) without valuable consideration, the annuity starting date and the expected return under the contract shall be determined as though no such transfer had taken place. See paragraph (b) of § 1.72-4. The transferee shall include the aggregate of premiums or other consideration paid or deemed to have been paid by his transferor in the aggregate of premiums or other consideration as though paid by him. In determining the transferee's investment in the contract, the transferee's aggregate amount of premiums or other consideration paid (as so found) shall be reduced by all amounts either received or deemed to have been received by himself or his transferor before the annuity starting date, or before the date on which an amount is first received as an annuity, whichever is the later, to the extent that such amounts were excludable from the gross income of the actual recipient under the applicable income tax law at the time of receipt. For treatment of amounts received subsequent to both the above dates by such transferee, but not received as annuity payments, see § 1.72-11.
, because 1.72-4(b) doesn't seem to cover an annuity received w/o consideration.See paragraph (b) of § 1.72-4
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