AFRs and 7520 Rates for January 2014

AFRs - When a taxpayer makes a loan or sells something on installment, a minimum interest rate normally has to be charged.  The minimum rate depends on the month of the loan or sale.  The IRS releases the Applicable Federal Rates (AFRs) each month.  They are broken down into short-term (3 years or less), mid-term (more than 3 years, but not more than 9 years), and long-term (more than 9 years).  They are further broken down into Annual, Semi-Annual, Quarterly, or Monthly compounding periods.

The January 2014 applicable federal rates (AFRs) are (annual, semi-annual, quarterly, monthly):
Short-term---0.25---0.25---0.25---0.25
Mid-term---1.75---1.74---1.74—1.73
Long-term---3.49---3.46---3.45---3.44

IRC 7520 Rates – These rates are normally used when determining life estate & remainder interests when property has been gifted with the giver retaining a life estate.  The rate for January is 2.2%.

Revenue Ruling 2014-1

Recent revenue rulings containing AFRs can be found by searching for “afr” on www.irs.gov.