Rev. Rul. 88-94
1988-2 C.B. 301, 1988-45 I.R.B. 12.
Internal Revenue Service
Revenue Ruling
TAXATION OF DISC INCOME TO SHARHOLDERS
Published: November 7, 1988
SECTION 995. - TAXATION OF DISC INCOME TO SHAREHOLDERS
Taxation of DISC income to shareholders. This revenue ruling sets forth the "base period T-bill rate" for the period ending September 30, 1988, as required by section 995(f)(4) of the Code.
Section 995(f)(1) of the Internal Revenue Code of 1986 provides that a shareholder of a DISC shall pay interest each taxable year in an amount equal to the product of the shareholder's DISC-related deferred tax liability for the year and the 'base period T-bill rate.' Under section 995(f)(4) of the Code, the base period T-bill rate is the annual rate of interest determined by the Secretary to be equivalent to the average investment yield of United States Treasury bills with maturities of 52 weeks which were auctioned during the one- year period ending on September 30 of the calendar year ending with (or of the most recent calendar year ending before) the close of the taxable year of the shareholder. The base period T-bill rate for the period ending September 30, 1988, is 7.32 percent.
Pursuant to section 6622 of the Code, interest must be compounded daily. The table below provides factors for compounding the base period T-bill rate daily for any number of days in the shareholder's taxable year (including a 52-53 week accounting period) for the 1988 base period T-bill rate. To compute the amount of the interest charge for the shareholder's taxable year, multiply the amount of the shareholder's DISC-related deferred tax liability (as defined in section 995(f)(2) of the Code) for that year by the base period T-bill rate factor corresponding to the number of days in the shareholder's taxable year for which the interest charge is being computed. Generally, one would use the factor for 365 days. One would use a different factor only if the shareholder's taxable year for which the interest charge is being determined is a short taxable year, if the shareholder uses the 52-53 week taxable year, if the shareholder's taxable year is a leap year.
For the base period T-bill rates for the periods ending in prior years, see Rev. Rul. 86-132, 1986-2 C.B. 137, and Rev. Rul. 87-129, 1987-2 C.B. 196.
DRAFTING INFORMATION
The principle author of this revenue ruling is David Bergkuist of the Office of the Associate Chief Counsel (International). For further information about this revenue ruling, contact Mr. Bergkuist on (202) 566-6457 (not a toll-free call).
ANNUAL RATE,
COMPOUNDED DAILY
------------------------
7.32 PERCENT
DAYSFACTOR
------------------------
1 .000200000
2 .000400040
3 .000600120
4 .000800240
5 .001000400
6 .001200600
7 .001400840
8 .001601120
9 .001801441
10 .002001801
11 .002202201
12 .002402642
13 .002603122
14 .002803643
15 .003004204
16 .003204804
17 .003405445
18 .003606127
19 .003806848
20 .004007609
21 .004208411
22 .004409252
23 .004610134
24 .004811056
25 .005012018
26 .005213021
27 .005414063
28 .005615146
29 .005816269
30 .006017433
31 .006218636
32 .006419880
33 .006621164
34 .006822488
35 .007023852
36 .007225257
37 .007426702
38 .007628188
39 .007829713
40 .008031279
41 .008232885
42 .008434532
43 .008636219
44 .008837946
45 .009039714
46 .009241522
47 .009443370
48 .009645259
49 .009847188
50 .010049157
51 .010251167
52 .010453217
53 .010655308
54 .010857439
55 .011059610
56 .011261822
57 .011464075
58 .011666368
59 .011868701
60 .012071075
61 .012273489
62 .012475943
63 .012678439
64 .012880974
65 .013083551
66 .013286167
67 .013488824
68 .013691522
69 .013894261
70 .014097039
71 .014299859
72 .014502719
73 .014705619
74 .014908560
75 .015111542
76 .015314564
77 .015517627
78 .015720731
79 .015923875
80 .016127060
81 .016330285
82 .016533551
83 .016736858
84 .016940205
85 .017143593
86 .017347022
87 .017550492
88 .017754002
89 .017957552
90 .018161144
91 .018364776
92 .018568449
93 .018772163
94 .018975917
95 .019179712
96 .019383548
97 .019587425
98 .019791343
99 .019995301
100 .020199300
101 .020403340
102 .020607420
103 .020811542
104 .021015704
105 .021219907
106 .021424151
107 .021628436
108 .021832762
109 .022037128
110 .022241536
111 .022445984
112 .022650473
113 .022855003
114 .023059574
115 .023264186
116 .023468839
117 .023673533
118 .023878268
119 .024083043
120 .024287860
121 .024492717
122 .024697616
123 .024902556
124 .025107536
125 .025312558
126 .025517620
127 .025722724
128 .025927868
129 .026133054
130 .026338280
131 .026543548
132 .026748857
133 .026954206
134 .027159597
135 .027365029
136 .027570502
137 .027776016
138 .027981572
139 .028187168
140 .028392805
141 .028598484
142 .028804204
143 .029009964
144 .029215766
145 .029421610
146 .029627494
147 .029833419
148 .030039386
149 .030245394
150 .030451443
151 .030657533
152 .030863665
153 .031069838
154 .031276052
155 .031482307
156 .031688603
157 .031894941
158 .032101320
159 .032307740
160 .032514202
161 .032720705
162 .032927249
163 .033133834
164 .033340461
165 .033547129
166 .033753838
167 .033960589
168 .034167381
169 .034374215
170 .034581090
171 .034788006
172 .034994963
173 .035201962
174 .035409003
175 .035616085
176 .035823208
177 .036030372
178 .036237579
179 .036444826
180 .036652115
181 .036859445
182 .037066817
183 .037274231
184 .037481686
185 .037689182
186 .037896720
187 .038104299
188 .038311920
189 .038519582
190 .038727286
191 .038935032
192 .039142819
193 .039350647
194 .039558517
195 .039766429
196 .039974382
197 .040182377
198 .040390414
199 .040598492
200 .040806612
201 .041014773
202 .041222976
203 .041431220
204 .041639507
205 .041847835
206 .042056204
207 .042264615
208 .042473068
209 .042681563
210 .042890099
211 .043098677
212 .043307297
213 .043515958
214 .043724662
215 .043933407
216 .044142193
217 .044351022
218 .044559892
219 .044768804
220 .044977758
221 .045186753
222 .045395790
223 .045604870
224 .045813991
225 .046023153
226 .046232358
227 .046441605
228 .046650893
229 .046860223
230 .047069595
231 .047279009
232 .047488465
233 .047697962
234 .047907502
235 .048117084
236 .048326707
237 .048536372
238 .048746080
239 .048955829
240 .049165620
241 .049375453
242 .049585328
243 .049795245
244 .050005204
245 .050215205
246 .050425248
247 .050635333
248 .050845461
249 .051055630
250 .051265841
251 .051476094
252 .051686389
253 .051896726
254 .052107106
255 .052317527
256 .052527991
257 .052738496
258 .052949044
259 .053159634
260 .053370266
261 .053580940
262 .053791656
263 .054002414
264 .054213215
265 .054424057
266 .054634942
267 .054845869
268 .055056838
269 .055267850
270 .055478903
271 .055689999
272 .055901137
273 .056112317
274 .056323540
275 .056534804
276 .056746111
277 .056957461
278 .057168852
279 .057380286
280 .057591762
281 .057803280
282 .058014841
283 .058226444
284 .058438089
285 .058649777
286 .058861507
287 .059073279
288 .059285094
289 .059496951
290 .059708850
291 .059920792
292 .060132776
293 .060344803
294 .060556872
295 .060768983
296 .060981137
297 .061193333
298 .061405572
299 .061617853
300 .061830176
301 .062042542
302 .062254951
303 .062467402
304 .062679895
305 .062892431
306 .063105010
307 .063317631
308 .063530294
309 .063743000
310 .063955749
311 .064168540
312 .064381374
313 .064594250
314 .064807169
315 .065020130
316 .065233135
317 .065446181
318 .065659270
319 .065872402
320 .066085577
321 .066298794
322 .066512054
323 .066725356
324 .066938701
325 .067152089
326 .067365519
327 .067578992
328 .067792508
329 .068006067
330 .068219668
331 .068433312
332 .068646998
333 .068860728
334 .069074500
335 .069288315
336 .069502173
337 .069716073
338 .069930016
339 .070144002
340 .070358031
341 .070572103
342 .070786217
343 .071000374
344 .071214574
345 .071428817
346 .071643103
347 .071857432
348 .072071803
349 .072286217
350 .072500675
351 .072715175
352 .072929718
353 .073144304
354 .073358933
355 .073573604
356 .073788319
357 .074003077
358 .074217877
359 .074432721
360 .074647608
361 .074862537
362 .075077510
363 .075292525
364 .075507584
365 .075722685
366 .075937830
367 .076153017
368 .076368248
369 .076583522
370 .076798838
371 .077014198
Rev. Rul. 88-94, 1988-2 C.B. 301, 1988-45 I.R.B. 12.