- NY Credits : 3.0
- TX Credits : 3.0
- IRS Enrolled Agent Credits : Federal Tax/Tax Related Matters - 3.0
Imputed Interest Rules and Regulations
When a sales contract involving deferred payments fails to provide for interest of at least the applicable federal rate, part of the payments received may be treated as imputed, or unstated, interest. Likewise, when a loan provides for inadequate interest a (below-market loan), an amount of interest is treated as being incorporated into the transaction regardless of the specific terms used by the parties. Determining when these imputed interest rules apply, calculating the imputed interest amounts imposed by the Internal Revenue Code, and recognizing the tax consequences that flow therefrom are the subject matter of this course. Practitioners who represent businesses that engage in installment sales or lending transactions, or individual taxpayers who engage in low-interest lending transactions with family members or others need to be aware of the imputed interest rules and adept at ascertaining their impact. This course is designed to equip the practitioner with the tools needed to grapple with this complex area of the law. The Tax Cuts and Jobs Act of 2017 includes a conformity rule that requires certain accrual method taxpayers to coordinate income recognition on their financial statements with that recognized for federal income tax purposes. This may affect taxpayers with original issue discount debt instruments. The changes include a special rule for spreading out the effect of the change over a six-year period in some circumstances. The new law also affects inflation adjustments related to imputed interest under Section 1274A. This course is most appropriate for the professional with detailed knowledge in imputed interest rules and regulations who may be at a mid-level position within an organization with operational or supervisory responsibilities, or both.
Upon successful completion of this course, the user should be able to:
recognize when Code imposes imputed interest on sales or transfers of property,
describe the original issue discount (OID) rules,
determine when Code section 483 applies to a transaction in lieu of Code section 1274,
distinguish the tax consequences of Code sections 483 and 1274,
recognize the exceptions to imputed interest treatment,
calculate imputed interest amounts,
distinguish gift loans from compensation-related loans and other below-market loans,
determine the proper gift tax and income tax treatment of gift loans, and
identify the reporting requirements related to imputed interest.