[Code of Federal Regulations]
[Title 26, Volume 11]
[Revised as of April 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.1021-1]

[Page 78-79]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1--INCOME TAXES--Table of Contents
 
Sec. 1.1021-1  Sale of annuities.

    In the case of a transfer for value of an annuity contract to which 
section 72(g) and paragraph (a) of Sec. 1.72-10 apply, the transferor 
shall adjust his basis in such contract as of the time immediately prior 
to such transfer by subtracting from the premiums or other consideration 
he has paid or is deemed to have paid for such contract all amounts he 
has received or is deemed to have received under such annuity contract 
to the extent that such amounts were not includible in the

[[Page 79]]

gross income of the transferor or other recipient under the applicable 
income tax law. In any case where the amounts which were not includible 
in the gross income of the recipient were received or deemed to have 
been received by such transferor exceed the amounts paid or deemed paid 
by him, the adjusted basis of the contract shall be zero. The income 
realized by the transferor on such a transfer shall not exceed the total 
of the amounts received as consideration for the transfer.

                       Common Nontaxable Exchanges