imputed interest rate

Imputed Interest Rate

The minimum interest rate that the government assumes is paid on a loan, even if the actual interest rate is lower. The U.S. government places an imputed interest rate on some loans to reduce tax avoidance by some organizations that make loans well below market interest rates. The IRS also applies imputed interest on some bonds so that tax is paid every year on the interest, even if the bondholder does not receive coupon payments until maturity.

imputed interest rate

A minimum market rate of interest assumed by the government for tax purposes regardless of the actual rate charged on a loan. The imputing of interest was included as part of the 1984 tax act in order to stop tax avoidance by people making loans at artificially low interest rates.
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This imputed interest rate will vary as the rate that applies to each premium advance will be the rate that is then in effect for the month in which that premium is paid.
Perhaps the easiest way to calculate the imputed interest rate is with Microsoft Excel's internal rate of return (IRR) function.
EXHIBIT 5 Values for the Imputed Interest Rate Calculation Date IRR Values 1/1/2015 ($289,202) 1/1/2016 $25,798 1/1/2017 $25,798 1/1/2018 $25,798 1/1/2019 $25,798 1/1/2020 $25,798 1/1/2021 $25,798 1/1/2022 $25,798 1/1/2023 $25,798 1/1/2024 $25,798 1/1/2025 $25,798 12/31/2025 $100,000
Since there is a market price at which risky Irish technology companies borrow, the imputed interest rate in this transaction could be determined.
The imputed interest rate that they would have to pay would highlight their lower borrowing power.
The facility represents a promissory note with an imputed interest rate of 4%.
However, with intrafamily aggregate sales of land of not more than $500,000 during a calendar year, the imputed interest rate would be the lower of the applicable federal rate or 6 percent.
Alternatively, if the certificates `were accorded an imputed interest rate for budget accounting, while the immediate effect would be to record a lower deficit, the unified balance of the U.
In accordance with the terms of the sale, the Company received cash of $100,000 and a long-term receivable, the fair value of which was $520,000 based on an imputed interest rate of 10.
Therefore, a non-interest bearing security that is long-term in nature will be the most prone to adjustment to an imputed interest rate, if an implicit rate can not be identified from a simple present value calculation that compares what is being exchanged from both sides of the transaction.
If the Fed doesn't show up at the table, the price of bonds will likely drop, which will increase the imputed interest rates.