Internal Revenue Service
Revenue Ruling
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smFor 2001, taxpayer may lend up to $144,111 to qualifying continuing care facility without incurring imputed interest. Rev Rul 99-49, 1999-50 IRB 667, is supplemented and superseded.
This revenue ruling publishes the amount that section 7872(g) of the Internal Revenue Code permits a taxpayer to lend to a qualifying continuing care facility without incurring imputed interest. The amount is adjusted for inflation for the years after 1986.
Section 7872 generally treats loans bearing a below-market interest rate as if they bore interest at the market rate.
Section 7872(g)(1) provides that, in general, section 7872 does not apply for any calendar year to any below-market loan made by a lender to a qualified continuing care facility pursuant to a continuing care contract if the lender (or the lender's spouse) attains age 65 before the close of the year.
Section 7872(g)(2) provides that, in the case of loans made after October 11, 1985, and before 1987, section 7872(g)(1) applies only to the extent that the aggregate outstanding amount of any loan to which section 7872(g) applies (determined without regard to section 7872(g)(2)), when added to the aggregate outstanding amount of all other previous loans between the lender (or the lender's spouse) and any qualified continuing care facility to which section 7872(g)(1) applies, does not exceed $90,000.
Section 7872(g)(5) provides that, for loans made during any calendar year after 1986 to which section 7872(g)(1) applies, the $90,000 limit specified in section 7872(g)(2) is increased by an inflation adjustment. The inflation adjustment for any calendar year is the percentage (if any) by which the Consumer Price Index (CPI) for the preceding calendar year exceeds the CPI for calendar year 1985. Section 7872(g)(5) states that the CPI for any calendar year is the average of the CPI as of the close of the 12-month period ending on September 30 of that calendar year.
Table 1 sets forth the amount specified in section 7872(g)(2) of the Code. The amount is increased by the inflation adjustment for the years 1987-2001. REV. RUL. 2000-56
TABLE 1
Limit under 7872(g)(2)
Year
Amount
----
------
Before 1987 $ 90,000
1987
$ 92,200
1988
$ 94,800
1989
$ 98,800
1990
$103,500
1991
$108,600
1992
$114,100
1993
$117,500
1994
$121,100
1995
$124,300
1996
$127,800
1997
$131,300
1998
$134,800
1999
$137,000
2000
$139,700
2001
$144,111
Note: These
inflation adjustments were computed
using the
All-Urban, Consumer Price Index
1982-1984 base,
published by the Bureau of Labor
Statistics.
Rev. Rul. 99-49, 1999-50 I.R.B. 667, is supplemented and superseded.
The author of this revenue ruling is Courtney Shepardson of the Office of Assistant Chief Counsel (Financial Institutions and Products). For further information regarding this revenue ruling, contact Ms. Shepardson on (202) 622-3930 (not a toll-free).