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Internal Revenue Bulletin Update Provides Interest Rates, Other Guidance

Internal Revenue Bulletin Update Provides Interest Rates, Other Guidance

An upcoming issue of the IRS’ Internal Revenue Bulletin (IRB) gives tax professionals updated guidance on federal interest rates in a number of areas.

IRB 2021-10 will come out in March and spotlights Revenue Ruling 2021-05 and Notice 2021-16.

Revenue Ruling 2021-05

Revenue Ruling 2021-05 sets out the various prescribed rates for federal income tax purposes. These include applicable federal interest rates, the adjusted applicable federal interest rates, the adjusted federal long-term rate, and the adjusted federal long-term tax-exempt rate.

The rates are determined as set out in section 1274 of the Code and are published monthly.

RR 2021-05 lays out the various rates, using a series of five tables.

Table 1 contains the short-term, mid-term, and long-term applicable federal rates (AFR) for the current month for the purposes of section 1274(d) of the Internal Revenue Code.

Table 2 has the short-term, mid-term, and long-term adjusted applicable federal rates (adjusted AFR) for the current month as laid out in section 1288(b).

Table 3 sets out the adjusted federal long-term rate and the long-term tax exempt rate described in section 382(f).

Table 4 has the appropriate percentages for figuring the low-income housing credit in section 42(b)(1) for buildings placed into service during the current month. (Note that under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed into service after July 30, 2008, shall not be less than 9%.)

Finally, Table 5 contains the federal rate to determine the present value of an annuity, an interest for life or for a term of years, or a remainder or a reversionary interest as stated in section 7520.

Notice 2021-16

Notice 2021-16 gives tax professionals guidance on the corporate bond yield curve, corresponding spot segment rates used in section 417(e)(3), and the 24-month average segment rates under section 430(h)(2) of the internal Revenue Code.

The notice also has guidance for the interest rate on 30-year Treasury securities.

The IRS says Internal Revenue Bulletin 2021-10 is due out next month and will be dated March 8, 2021.

Bob Williams

Forget genes; I’ve got words in my DNA. Communication has been part of who I am nearly all my life. From a long career in radio news to another one in newspapers – and a University of Georgia journalism degree sandwiched between the two – language has been my life. I’ve also been fortunate to have learned the tax business from the ground up here at Drake, starting with 1040.com online forms some years ago before moving on to work on the Web. In all things tax-ish, we aim to give you tools you can use.

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