515. What is the applicable federal rate?Nuco Employeercline202014-07-24T17:47:00Z2014-07-24T17:47:00Z13401944UMKC164228014Site Map/General Income Taxation/Individuals/Gross IncomeTaxFactsDefaultArticle2007-01-30T00:00:00Z123801409-00-tf2.xml1409.00;#1727;#0x010100C568DB52D9D0A14D9B2FDCC96666E9F2007948130EC3DB064584E219954237AF3900242457EFB8B24247815D688C526CD44D009C4E67E972694125ABDA91AC61F5E51FTax Facts 2What is the applicable federal rate?51500.0000000000TaxFactsDefaultArticleSBMEDIA\moss-admin2010-01-14T23:09:30Z515. What is the applicable federal rate?The applicable federal rate (AFR) is used in determining the amount of interest in the case of certain below-market loans for both income and gift tax purposes (see Q 508, Q 642), in imputing interest on debt instruments given on the sale or exchange of property (see Q 512, Q 7772), and for determining interest and present values in connection with deferred payments for the use of property or services (see Q 7766).The applicable federal rates are determined by the Secretary on a monthly basis (and published in a revenue ruling). The rates–short-term, mid-term and long-term–are based on the average market yield on the outstanding marketable obligations of the United States with maturity periods of three years or less, more than three but not more than nine years, and over nine years.IRC Sec. 1274(d)(1). The AFRs can be found at: www.taxfactsonline.com.In the case of any sale or exchange, the applicable federal rate will be the lowest 3-month rate. The lowest 3-month rate is the lowest of the AFRs in effect for any month in the 3-month period ending with the first calendar month in which there is a binding contract in writing.IRC Sec. 1274(d)(2).The Secretary may by regulation permit a rate that is lower than the applicable federal rate to be used under certain circumstances.See IRC Sec. 1274(d)(1)(D).To determine the appropriate AFR to apply in the case of below-market loans, see Q 508 and Q 642. To determine the appropriate AFR in the case of deferred rent, see Q 7766.