REVENUE RULE 95-38

1995-17 I.R.B. 12

SPECIAL USE VALUE; FARMS; INTEREST RATES

Published: April 24, 1995

Section 721.--Nonrecognition of Gain or Loss on Contribution
Section 722.--Basis of Contributing Partner's Interest
Section 731.--Extent of Recognition of Gain or Loss on Distribution
Section 733.--Basis of Distributee Partner's Interest
Section 741.--Recognition and Character or Gain or Loss on Sale or Exchange
Section 752.--Treatment of Certain Liabilities
Section 1001.--Determination of Amount of and Recognition of Gain or Loss
Section 1223.--Holding Period of Property
Section 2032A.--Valuation of Certain Farm, etc., Real Property, 26 CFR 20.2032A-4: Method of valuing farm real property.

Conversion of an interest in a domestic partnership into an interest in a domestic limited liability company that is classified as a partnership. See Rev. Rul. 95-37.

Special use value; farms; interest rates. The 1995 interest rates to be used in computing the special use value of farm real property for which an election is made under section 2032A of the Code are listed for estates of decedents.

This revenue ruling contains a list of the average annual effective interest rates on new loans under the Farm Credit Bank system. This revenue ruling also contains a list of the states within each Farm Credit Bank District.

Under s 2032A(e)(7)(A)(ii) of the Internal Revenue Code, rates on new Farm Credit Bank loans are used in computing the special use value of real property used as a farm for which an election is made under s 2032A. The rates in this revenue ruling may be used by estates that value farmland under s 2032A as of a date in 1995.

Average annual effective interest rates, calculated in accordance with s 2032A(e)(7)(A) and s 20.2032A-4(c) of the Estate Tax Regulations, to be used under s 2032A(e)(7)(A)(ii), are set forth in the accompanying Table of Interest Rates (Table 1). The states within each Farm Credit Bank District are set forth in the accompanying Table of Farm Credit Bank Districts (Table 2).

Rev. Rul. 81-170, 1981-1 C.B. 454, contains an illustrative computation of an average annual effective interest rate. The rates applicable for valuation in 1994 are in Rev. Rul. 94-33, 1994-1 C.B. 235. For rate information for years prior to 1994, see Rev.

Rul. 93-28, 1993-1 C.B. 201, and other revenue rulings that are cited therein.

DRAFTING INFORMATION

The principal author of this revenue ruling is Lane Damazo of the Office of Assistant Chief Counsel (Passthroughs and Special Industries). For further information regarding this revenue ruling, contact Lane Damazo on (202) 622- 3090 (not a toll-free call).

Rev. Rul. 95-38 TABLE 1

TABLE OF INTEREST RATES

(Year of Valuation 1995)
Farm Credit Bank District in Which Property Is Located Interest Rate

Rev. Rul. 95-38 TABLE 2

TABLE OF FARM CREDIT BANK DISTRICTS

Rev. Rul. 95-38, 1995-17 I.R.B. 12