Interest in Arrears

Interest that is due only at the maturity date rather than periodically over the life of the loan.

Interest in Arrears

1. Interest on a loan that has not been paid, especially after payment has become late.

2. Interest on a loan that is not paid over the life of the loan, but rather in full upon maturity.

References in periodicals archive ?

Under financing agreements, Leverage Leasing paid interest in arrears that accrued in 1984 but, by the terms of the loan, was not actually due for payment until the following tax year.

The court held that advance payments of accrued interest in arrears were deductible because they represented a charge for the use or forbearance of borrowed money.

Conceding that the advance interest payments resulted in "an odd portrayal of Leverage Leasing's taxable income," the court said Congress had allowed it through taking no action to prevent "the payment of interest in arrears before the due date, so long as the interest was allocable to the year in which it accrued." Consequently, the IRS abused its discretion in determining that Leverage Leasing's deductions for payments of accrued interest in advance did not clearly reflect income.

Federal Circuit allows cash-method issuer to deduct interest payments before due date