Rev. Rul. 67-378
Rev. Rul. 67-378; 1967-2 C.B. 45
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- Tax Analysts Electronic Citationnot available
Amplified by Rev. Rul. 68-545
The purpose of this Revenue Ruling is to prescribe the standard mortality dispersion table referred to in paragraph (e)(2) of section 1.47-1 of the Income Tax Regulations (Treasury Decision 6931, published in the Federal Register on October 10, 1967, 32 F.R. 14025), page 12, this Bulletin, which taxpayers may use, in lieu of data from mortality dispersion tables based on their own actual experience, in computing or recomputing qualified investment in the case of mass assets for purposes of sections 46 and 47 of the Internal Revenue Code of 1954, relating to the investment credit.
The provisions of this Revenue Ruling will apply to any taxpayer electing to use a standard mortality dispersion table in computing qualified investment and recapture with respect to his mass assets.
The following standard mortality dispersion table for mass assets is based on the normal probability distribution which is widely used in statistical theory and practice. The normal distribution is one which is characterized by a symmetrical dispersion of cases around the average, an assumption which is generally made if there is no contrary knowledge with regard to the actual distribution.
STANDARD MORTALITY DISPERSION TABLE /*/
[For determining qualified investment for mass assets]
--------------------------------------------------------------------
Percent of property assumed to
have a useful life of--
------------------------------------ Total
Average useful Less 4 years 6 years 8 years qualified
life category than 4 or more, or more, or more investment
years but less but less (percent)
than 6 than 8 /**/
years years
(1) (2) (3) (4) (5)
--------------------------------------------------------------------
2 years or less 100.00
3 years 84.13 15.87 5.29
4 years 50.00 43.32 6.68 18.89
5 years 27.42 45.16 23.83 3.59 34.52
6 years 15.87 34.13 34.13 15.87 50.00
7 years 9.85 23.51 33.28 33.36 63.39
8 years 6.68 15.98 27.34 50.00 73.56
9 years 4.75 11.12 21.20 62.93 80.77
10 years 3.59 7.92 15.91 72.58 85.83
11 years 2.81 5.88 11.92 79.39 89.30
12 years 2.28 4.40 9.19 84.13 91.73
13 years 1.88 3.38 7.25 87.49 93.46
14 years 1.62 2.74 5.49 90.15 94.72
15 years 1.39 2.20 4.49 91.92 95.64
16 years 1.22 1.78 3.68 93.32 96.36
17 years 1.10 1.52 2.97 94.41 96.90
18 years .99 1.29 2.47 95.25 97.33
19 years .89 1.13 2.07 95.91 97.67
20 years .82 .97 1.80 96.41 97.93
/*/ The equation of the normal probability curve or distribution in which N is the number _ of mass assets in the group, _2 is the variance of x, and (x - X) is the deviation of x from the mean or average of the mass assets in the group, is
_ 2
1 (x-X)
- - ---------------
N 2 [sigma squared]
y = ------------------------------- e
[sigma] X [square root of 2 pi]
In the application of the normal probability distribution to the estimated life of assets in mass accounts, the average useful life of the assets serves as the arithmetic mean of the distribution with a symmetrical disperson of useful lives below and above the average. The range of the useful life is assumed to extend from the time of acquisition to double the average useful life, the upper limit derived from the symmetrical shape of the distribution. The computation of the values shown in the standard mortality dispersion table was based on the standard table for the integrals of the normal curve.
Dispersion and percent of total qualified investment are shown in the standard table for mass assets with average useful life for discrete, full-year periods from 3 to 20 years. The ranges of useful lives are assumed to extend from the time of acquisition (-3 Standard Deviation) to double the average useful life (+ 3 Standard Deviation). Where the average useful life is more than 20 years, taxpayers may determine the investment credit using 98.0 percent as the applicable percentage of total qualified investment (column 5). Taxpayers, however, have the option of computing the standard mortality dispersion and percent of qualified investment for average lives not shown.
/**/ Computed as the sum of--
33 1/8 percent times the percentage applicable to 4 years or more but less than 6 years (column 2).
66 2/3 percent times the percentage applicable to 6 years or more but less than 8 years (column 3).
100 percent times the percentage applicable to 8 years or more (column 4).
1 Also released as Technical Information Release 935, dated Oct. 10, 1967.
- LanguageEnglish
- Tax Analysts Electronic Citationnot available
