Get Revenue Ruling 2000-45 - Federal Rates; Adjusted Federal Rates; Adjusted Federal Long- Term Rate

Rev. Rul. 2023-2 clarifies which assets transferred by a decedent to a beneficiary receive the coveted stepup in basis to fair market value under Sec. 1014 and which do not.

January 2024 The AFRs are as follows:AnnualSemi- annualShort-term (up to 3 years)5.00%4.94%Mid-term (3 to 9 years)4.37%4.32%Long-term (over 9 years)4.54%4.49%

Section 382(f)(2) provides that the term “adjusted Federal long-term rate” means the Federal long-term rate determined under section 1274(d), except that sections 1274(d)(2) and (3) shall not apply, and such rate shall be properly adjusted for differences between rates on long-term taxable and tax-exempt obligations.

Calculation of AFR Short-term: Less than 3 years. Mid-term: 3 to 9 years. Long-term: Greater than 9 years.

When you make a demand loan, which can be called in anytime, the AFR isn't fixed in the month you make the deal. Instead, you must charge a floating AFR, based on fluctuating short-term AFRs.

Calculation of AFR There are three types of rates depending on the term of the loan, and rates are determined based on the term: Short-term: Less than 3 years. Mid-term: 3 to 9 years. Long-term: Greater than 9 years.

In 1984, the Tax Reform Act set provisions for applicable federal rates (AFRs). This is a minimum tax rate that must be charged on all loans, including personal/family loans.

December 2023 The AFRs are as follows:AnnualSemi- annualShort-term (up to 3 years)5.26%5.19%Mid-term (3 to 9 years)4.82%4.76%Long-term (over 9 years)5.03%4.97%