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 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.