Rev. Rul. 89-86

Modified by 89-86A

                       Internal Revenue Service

                                 Revenue Ruling

     FEDERAL RATES; ADJUSTED FEDERAL RATES; ADJUSTED FEDERAL LONG-TERM RATE,

                          AND THE LONG-TERM EXEMPT RATE

                            Published: June 20, 1989

Section 1274. -- Determination of Issue Price in the Case of Certain Debt Instruments Issued for Property

(Also Sections 42, 280G, 382, 467, 468, 483, 1288, 7520, 7872.)

  Federal rates; adjusted federal rates; adjusted federal long-term rate, and the long-term exempt rate.  For purposes of sections 1274, 1288, 382, and other sections of the Code tables set forth the rates for July 1989.

  This revenue ruling provides various prescribed rates for federal income tax purposes for July 1989 (the current month). Table 1 contains the short-term, mid-term, and long-term applicable federal rates (AFR) for the current month for purposes of section 1274(d) of the Internal Revenue Code. Table 2 contains the short-term, mid-term, and long-term adjusted applicable federal rates (adjusted AFR) for the current month for purposes of section 1288(b). Table 3 sets forth the adjusted federal long-term rate and the long-term tax-exempt rate described in section 382(f). Table 4 contains the appropriate percentages for determining the low-income housing credit described in section 42(b)(2) for buildings placed in service during the current month. Finally, Table 5 contains the federal rate for determining the present value of an annuity, an interest for life or for a term of years, or a remainder or a reversionary interest for purposes of section 7520.

                       REV. RUL. 89-86 TABLE 1
            APPLICABLE FEDERAL RATES (AFR) FOR JULY 1989
                              PERIOD FOR COMPOUNDING
               Annual    Semiannual    Quarterly     Monthly
               ______    __________    _________     _______
Short-Term
__________
     AFR         8.86%      8.67%        8.58%         8.52%
110% AFR         9.77%      9.54%        9.43%         9.36%
120% AFR        10.67%     10.40%       10.27%        10.18%
Mid-Term
________
     AFR         8.75%      8.57%        8.48%         8.42%
110% AFR         9.65%      9.43%        9.32%         9.25%
120% AFR        10.54%     10.28%       10.15%        10.07%
Long-Term
_________
     AFR         8.70%      8.52%        8.43%         8.37%
110% AFR         9.59%      9.37%        9.26%         9.19%
120% AFR        10.48%     10.22%       10.09%        10.01%
                       REV. RUL. 89-86 TABLE 2
                     ADJUSTED AFR FOR JULY 1989
                              PERIOD FOR COMPOUNDING
               Annual    Semiannual    Quarterly    Monthly
               ______    __________    _________    _______
Short-term
adjusted AFR     6.28%      6.18%        6.13%         6.10%
Mid-term
adjusted AFR     6.54%      6.44%        6.39%         6.36%
Long-term
adjusted AFR     6.85%      6.74%        6.68%         6.65%
                       REV. RUL. 89-86 TABLE 3
                RATES UNDER SECTION 382 FOR JULY 1989
Adjusted federal long-term rate for the current month  6.85%
Long-term tax-exempt rate for ownership changes
during the current month (the highest of the adjusted
federal long-term rates for the current month and the
prior two months).                                     7.39%
                       REV. RUL. 89-86 TABLE 4
           APPROPRIATE PERCENTAGES UNDER SECTION 42(b)(2)
                            FOR JULY 1989
Appropriate percentage for the 70% present
value low-income housing credit                        9.07%
Appropriate percentage for the 30% present
value low-income housing credit                        3.89%
                       REV. RUL. 89-86 TABLE 5
                RATE UNDER SECTION 7520 FOR JULY 1989
Applicable federal rate for determining the present
value of an annuity, an interest for life or a term
of years, or a remainder or reversionary interest     10.60%

Rev. Rul. 89-86, 1989-2 C.B. 208, 1989-27 I.R.B. 8.