Rev. Rul. 86-59

1986-1 C.B. 364, 1986-16 I.R.B. 6.

ADJUSTED INTEREST RATE; UNDERPAYMENTS AND OVERPAYMENTS

Published: April 21, 1986

Section 6621.-Determination of Rate of Interest, 26 CFR 301.6621-1: Interest rate

  Adjusted interest rate; underpayments and overpayments. The adjusted rate of interest on underpayments and overpayments, as determined under section 6621(b) of the Code, will decrease from 10 to 9 percent on July 1, 1986.

  Section 6621(b) of the Internal Revenue Code provides for semiannual adjustment of the interest rate established under that section. Section

6621(b)(1) requires that these adjustments in the rate be established by October 15 and April 15, and be based on the average prime rate for the six- month period ending the previous September 30 or March 31, respectively.

  The Board of Governors of the Federal Reserve System has determined that the average prime interest rate for the six-month period ending March 31, 1986, was

9.43 percent. That rate, rounded to the nearest full percent, is 9 percent, a change of 1 percent from the rate of 10 percent in effect under the last determination made by the Internal Revenue Service. See Rev. Rul. 85-169, 1985-

44 I.R.B. 15. Accordingly, an adjusted rate of interest of 9 percent is established under section 6621(b). The adjusted rate will take effect on July

1, 1986, and will apply to amounts outstanding on that date or arising thereafter.

  Daily rates for compound interest for 9 percent were published in Table 15 of Rev. Proc. 83-7, 1983-1 C.B. 583, 598.

  Compound interest rates for prior periods are set forth in the following table:

                                        DAILY RATE TABLE
PERIOD                            RATE   IN 1983-1 C.B.
January 1, 1983 - June 30, 1983   16%   Table 22, pg. 605
July 1, 1983 - December 31, 1983  11%   Table 17, pg. 600
January 1, 1984 - June 30, 1984   11%   Table 41, pg. 625
July 1, 1984 - December 31, 1984  11%   Table 41, pg. 625
January 1, 1985 - June 30, 1985   13%   Table 19, pg. 602
July 1, 1985 - December 31, 1985  11%   Table 17, pg. 600
January 1, 1986 - June 30, 1986   10%   Table 16, pg. 599

Rev. Rul. 86-59, 1986-1 C.B. 364, 1986-16 I.R.B. 6.