# Prop. Treas. Reg. § 1.72-6: Investment in the contract.

Proposed regulation, not in force. REG-141901-05, 71 FR 61441, published 2006-10-18 <https://www.federalregister.gov/documents/2006/10/18/E6-17301/exchanges-of-property-for-an-annuity>. Interprets 26 U.S.C. § 72.

Par. 2. In § 1.72-6, paragraph (e) is added to read as follows:

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(e) Certain annuity contracts received in exchange for property —(1) In general. If an annuity contract is received in an exchange subject to § 1.1001-1(j), the aggregate amount of premiums or other consideration paid for the contract equals the amount realized attributable to the annuity contract, determined according to § 1.1001-1(j).

(2) Effective date —(i) In general. Except as provided in paragraph (e)(2)(ii), this paragraph (e) is applicable for annuity contracts received after October 18, 2006 in an exchange subject to § 1.1001-1(j).

(ii) This paragraph (e) is applicable for annuity contracts received after April 18, 2007 in an exchange subject to § 1.1001-1(j) if the following conditions are met—

(A) The issuer of the annuity contract is an individual;

(B) The obligations under the annuity contract are not secured, either directly or indirectly; and

(C) The property transferred in exchange for the annuity contract is not subsequently sold or otherwise disposed of by the transferee during the two-year period beginning on the date of the exchange. For purposes of this provision, a disposition includes without limitation a transfer to a trust (whether a grantor trust, a revocable trust, or any other trust) or to any other entity even if solely owned by the transferor.