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Interest Rates

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Byzim

L1: Interest RatesCan anyone tell me exactly what the IRS considers a “reasonable” interest rate for calculating amounts under the Amortization or Annuity methods? The Interest Rates section on this site lists several different rates accepted my the IRS as reasonable but how do you know which of these to use?2001-08-26 14:57, By: zim, IP: [127.0.0.1]
L2: RE: Interest RatesThere is no exact Reasonable Interest Rate’ that is defined. However, if you review past Private Letter Rulings [PLR], one of the commonly accepted rates is 120% of the Applicable Federal Rate [AFR] for the month in which the first payment is made. I would stay away from using a flat rate [for example 8% or 9%] that have been approved in the past unless of course, you also look to see what the AFRs were at the time that the PLRs for those rates were issued. Hope this helps.2001-08-26 16:01, By: Gfw, IP: [127.0.0.1]

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