A bill to amend the Internal Revenue Code of 1954 to simplify the imputed interest rules of sections 1274 and 483, and for other purposes.

Summary

Amends the Internal Revenue Code to reduce the imputation rate on seller-financed transactions from 120 percent to 100 percent of the Federal rate. Eliminates the separate testing rate for the determination of imputed interest. Directs the Secretary of the Treasury to make a determination of the Federal short-term, mid-term, and long-term rates on a monthly basis. Permits the use of a lower rate than the applicable Federal rate where such rate is based on the same principles as the applicable Federal rate and is appropriate for the term of the instrument. Provides that the rate used to test the adequacy of stated interest on the first $2,000,000 of seller financing cannot exceed nine percent. Provides that where the amount of seller financing is greater than $4,000,000, the test rate is 100 percent of the applicable Federal rate. Establishes a blended rate for sales between $2,000,000 and $4,000,000 equal to nine percent on an amount which phases out dollar-for-dollar as the amount of seller financing exceeds $2,000,000 and 100 percent of the applicable Federal rate on the excess. Provides that the $2,000,000 and $4,000,000 threshold amounts will be indexed for inflation after 1988. Allows the parties to elect to account for interest using the cash method of accounting where the transaction amount of seller-financing is not more than $2,000,000. Lengthens the recovery period for real property from 18 to 19 years.

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Documents

5 official files

• Public Law (PDF)

  Public Law · EN · 12 October 1985

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• Conference report filed in House

  summary · EN · 1 August 1985

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• Passed Senate amended

  summary · EN · 26 June 1985

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• Reported to Senate with amendment(s)

  summary · EN · 13 June 1985

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• Introduced in House

  summary · EN · 14 May 1985

  Open at official source

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