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The United States Internal Revenue Code prescribes minimum imputed interest rates and time-value-of-money factors applicable to certain loan transactions and estate planning techniques. These rates are tied formulaically to market interest rates. The Internal Revenue Service updates these rates monthly and the full list can be found at the IRS webpage “Determination of Issue Price in the Case of Certain Debt Instruments Issued for Property.”
These are commonly applicable rates in effect for January 2017:
Short Term AFR (Loans with Terms <= 3 Years): 0.96%
Mid Term AFR (Loans with Terms > 3 Years and <= 9 Years): 1.97%
Long Term AFR (Loans with Terms >9 Years): 2.75%
7520 Rate (Used in many estate planning vehicles): 2.4%
Refer to our Global Matters blog post Easy Access To Federal Interest Rates for more information on the Williams Parker monthly federal interest rates postings.
If you have questions about the federal interest rates or the tax structure in your country and how they may interact with your financial instruments, contact your local Ally Law member firm which will have all current and applicable information. For more information about Ally Law member firm services and outstanding lawyers, contact us at team@ally-law.com.
Click here for the original article by E. John Wagner, II of Ally Law member Williams, Parker, Harrison, Dietz & Getzen.
