January 7520 Rate Declines to 1.4%; Deemed Rate for Pooled Income Funds 1.8%

Rev. Rul. 2012-2; 2012-3 I.R.B. 1

Full Text:

Part I

Section 1274. -- Determination of Issue Price in the Case of Certain Debt Instruments Issued for Property

(Also Sections 42, 280G, 382, 412, 467, 468, 482, 483, 642, 807, 846, 1288, 7520, 7872.)

This revenue ruling provides various prescribed rates for federal income tax purposes for January 2012 (the current month). Table 1 contains the short-term, mid-term, and long-term applicable federal rates (AFR) for the current month for purposes of section 1274(d) of the Internal Revenue Code. Table 2 contains the short-term, mid-term, and long-term adjusted applicable federal rates (adjusted AFR) for the current month for purposes of section 1288(b). Table 3 sets forth the adjusted federal long-term rate and the long-term tax-exempt rate described in section 382(f). Table 4 contains the appropriate percentages for determining the low-income housing credit described in section 42(b)(1) for buildings placed in service during the current month. However, under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after July 30, 2008, and before December 31, 2013, shall not be less than 9%. Table 5 contains the federal rate for determining the present value of an annuity, an interest for life or for a term of years, or a remainder or a reversionary interest for purposes of section 7520. Finally, Table 6 contains the deemed rate of return for transfers made during calendar year 2012 to pooled income funds described in section 642(c)(5) that have been in existence for less than 3 taxable years immediately preceding the taxable year in which the transfer was made.

                      REV. RUL. 2012-2 TABLE 1
          Applicable Federal Rates (AFR) for January 2012
 _____________________________________________________________________

                                  Period for Compounding
                         _____________________________________________

                         Annual   Semiannual   Quarterly    Monthly
 _____________________________________________________________________

                               Short-term

      AFR                .19%        .19%        .19%        .19%
      110% AFR           .21%        .21%        .21%        .21%
      120% AFR           .23%        .23%        .23%        .23%
      130% AFR           .25%        .25%        .25%        .25%

                                 Mid-term

      AFR               1.17%       1.17%       1.17%       1.17%
      110% AFR          1.29%       1.29%       1.29%       1.29%
      120% AFR          1.40%       1.40%       1.40%       1.40%
      130% AFR          1.53%       1.52%       1.52%       1.52%
      150% AFR          1.77%       1.76%       1.76%       1.75%
      175% AFR          2.06%       2.05%       2.04%       2.04%

                                Long-term

      AFR               2.63%       2.61%       2.60%       2.60%
      110% AFR          2.89%       2.87%       2.86%       2.85%
      120% AFR          3.15%       3.13%       3.12%       3.11%
      130% AFR          3.42%       3.39%       3.38%       3.37%

                      REV. RUL. 2012-2 TABLE 2
                   Adjusted AFR for January 2012
 _____________________________________________________________________

                                  Period for Compounding
                         _____________________________________________

                         Annual   Semiannual   Quarterly    Monthly
 _____________________________________________________________________

 Short-term
 adjusted AFR             .38%        .38%        .38%        .38%

 Mid-term
 adjusted AFR            1.50%       1.49%       1.49%       1.49%

 Long-term
 adjusted AFR            3.47%       3.44%       3.43%       3.42%

                       REV. RUL. 2012-2 TABLE 3
               Rates Under Section 382 for January 2012
 _____________________________________________________________________

      Adjusted federal long-term rate for the current
      month                                                  3.47%

      Long-term tax-exempt rate for ownership changes
      during the current month (the highest of the
      adjusted federal long-term rates for the current
      month and the prior two months.)                       3.55%

                      REV. RUL. 2012-2 TABLE 4
  Appropriate Percentages Under Section 42(b)(1) for January 2012
 _____________________________________________________________________

      Note: Under Section 42(b)(2), the applicable
      percentage for non-federally subsidized new
      buildings placed in service after July 30, 2008,
      and before December 31, 2013, shall not be less than 9%.

      Appropriate percentage for the 70% present value
      low-income housing credit                              7.44%

      Appropriate percentage for the 30% present value
      low-income housing credit                              3.19%

                      REV. RUL. 2012-2 TABLE 5
             Rate Under Section 7520 for January 2012
 _____________________________________________________________________

      Applicable federal rate for determining the
      present value of an annuity, an interest for life
      or a term of years, or a remainder or
      reversionary interest                                  1.4%

                      Rev. Rul. 2012-2 Table 6
 Deemed Rate for Transfers to New Pooled Income Funds During 2012
 _____________________________________________________________________

      Deemed rate of return for transfers during 2012
      to pooled income funds that have been in existence
      for less than 3 taxable years                          1.8%