Understand IRS Relevant Government Price
Each month, the IRS posts an interest rate index called the Applicable government rate (AFRs). These interest rates is based on several economic issues, including the prior thirty day normal marketplace yields of matching US treasury responsibilities, eg T-bills. The Applicable government rate are used for different reasons under the inside sales laws — like the formula of imputed interest on below markets loans between family unit members.
(We’ll explain what “imputed interest on below market loans” means in a moment.)