Rev. Rul. 99-20, 1999-18 I.R.B. 5.

                        Internal Revenue Service
                                 Revenue Ruling

                    SPECIAL USE VALUE; FARMS; INTEREST RATES

                             Published: May 3, 1999

Section 1288.--Treatment of Original Issue Discount on Tax-Exempt Obligations

Section 2032A.--Valuation of Certain Farm, Etc., Real Property, 26 CFR 20.2032A-4: Method of valuing farm real property.

Section 7520.--Valuation Tables

Section 7872.--Treatment of Loans With Below-Market Interest Rates

  Special use value; farms; interest rates. The 1999 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.

  The adjusted applicable federal short-term, mid-term, and long-term rates are set forth for the month of May 1999.

  The adjusted applicable federal short-term, mid-term, and long-term rates are set forth for the month of May 1999.

  Special use value; farms; interest rates. The 1999 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 § 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 § 2032A. The rates in this revenue ruling may be used by estates that value farmland under § 2032A as of a date in 1999.

  Average annual effective interest rates, calculated in accordance with § 2032A(e)(7)(A) and § 20.2032A-4(e) of the Estate Tax Regulations, to be used under § 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 1998 are in Rev. Rul. 98-22, 1998-19 I.R.B. 5. For rate information for years prior to 1998, see Rev. Rul. 97-13, 1997-1 C.B. 185, and other revenue rulings that are referenced therein.

DRAFTING INFORMATION

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

                        REV. RUL. 99-20 TABLE 1
           TABLE OF INTEREST RATES (Year of Valuation 1999)
Farm Credit Bank District in Which Property Is Located    Interest Rate
Columbia ......................................................... 9.65
Omaha ............................................................ 8.07
Sacramento ....................................................... 8.25
St. Paul ......................................................... 8.21
Spokane .......................................................... 8.31
Springfield ...................................................... 8.78
Texas ............................................................ 8.11
Wichita .......................................................... 8.25

                            REV. RUL. 99-20 TABLE 2
                      TABLE OF FARM CREDIT BANK DISTRICTS
  District                                  States
Columbia ..... Delaware, District of Columbia, Florida, Georgia, Maryland,
                 North Carolina, Pennsylvania, South Carolina, Virginia, West
                 Virginia.
Omaha ........ Iowa, Nebraska, South Dakota, Wyoming.
Sacramento ... Arizona, California, Hawaii, Nevada, Utah.
St. Paul ..... Arkansas, Illinois, Indiana, Kentucky, Michigan, Minnesota,
                 Missouri, North Dakota, Ohio, Tennessee, Wisconsin.
Spokane ...... Alaska, Idaho, Montana, Oregon, Washington.
Springfield .. Connecticut, Maine, Massachusetts, New Hampshire, New Jersey,
                 New York, Rhode Island, Vermont.
Texas ........ Alabama, Louisiana, Mississippi, Texas.
Wichita ...... Colorado, Kansas, New Mexico, Oklahoma.

Rev. Rul. 99-20, 1999-18 I.R.B. 5.