Part I. Rulings and Decisions Under the Internal Revenue Code of 1986

Section 61.—Gross Income Defined

26 CFR 1.61–21: Taxation of fringe benefits.

Fringe benefits aircraft valuation formula. For purposes of section 1.61– 21(g) of the regulations, relating to the rule for valuing non-commercial flights on employer-provided aircraft, the Standard Industry Fare Level (SIFL), cents-per-mile rates and terminal charges in effect for 1996 are set forth. Rev. Rul. 95–66 modified.

Rev. Rul. 96–25

For purposes of the taxation of fringe benefits under section 61 of the Internal Revenue Code, section 1.61–21(g) of the Income Tax Regulations provides a rule for valuing noncommercial flights on employer-provided aircraft. Section 1.61–21(g)(5) of the Income Tax Regulations provides an aircraft valuation formula to determine the value of such flights. The value of a flight is determined under the base aircraft valuation formula (also known as the Standard

Industry Fare Level formula or SIFL) by multiplying the SIFL cents-per-mile rates applicable for the period during which the flight was taken by the appropriate aircraft multiple provided in section 1.61–21(g)(7) and then adding the applicable terminal charge. The SIFL cents-per-mile rates in the formula and the terminal charge are calculated by the Department of Transportation and are revised semi-annually.

The following chart sets forth the terminal charges and SIFL mileage rates:

Period During Which the Flight Was Taken Terminal Charge SIFL Mileage Rates 1/1/96-6/30/96 $32.20 Up to 500 miles = $.1761 per mile 501–1500 miles = $.1343 Over 1500 miles = $.1291

EFFECT ON OTHER REVENUE RULING

Rev. Rul. 95–66, 1995–40 I.R.B. 4, is modified.

DRAFTING INFORMATION

The principal author of this Revenue ruling is Thomas R. Foley of the Office of the Associate Chief Counsel (Employee Benefits and Exempt Organizations). For further information regarding this revenue ruling contact Mr. Foley on (202) 622-6050 (not a tollfree call).

Section 42.—Low-Income Housing Credit

The adjusted applicable federal short-term, mid-term, and long-term rates are set forth for the month of May 1996. See Rev. Rul. 96–24, page 5.

Section 280G.—Golden Parachute Payments

Federal short-term, mid-term, and long-term rates are set forth for the month of May 1996. See Rev. Rul. 96–24, page 5.

Section 355.—Distribution of stock and securities of a controlled corporation

25 CFR 1.355–1: Distribution of stock and securities of a controlled corporation.

The revenue procedure sets forth in a checklist questionnaire the information that must be included in a request for rulings under § 355. See Rev. Proc. 96–30, page 8.

Section 382.—Limitation on Net Operating Loss Carryforwards and Certain Built-In Losses Following Ownership Change

The adjusted federal long-term rate is set forth for the month of May 1996. See Rev. Rul. 96– 24, page 5.

Section 412.—Minimum Funding Standards

The adjusted applicable federal short-term, mid-term, and long-term rates are set forth for the month of May 1996. See Rev. Rul. 96–24, page 5.

Section 467.—Certain Payments for the Use of Property or Services

The adjusted applicable federal short-term, mid-term, and long-term rates are set forth for the month of May 1996. See Rev. Rul. 96–24, page 5.

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Section 468.—Special Rules for Mining and Solid Waste Reclamation and Closing Costs

The adjusted applicable federal short-term, mid-term, and long-term rates are set forth for the month of May 1996. See Rev. Rul. 96–24, page 5.

Section 483.—Interest on Certain Deferred Payments

The adjusted applicable federal short-term, mid-term, and long-term rates are set forth for the month of May 1996. See Rev. Rul. 96–24, page 5.

Section 807.—Rules for Certain Reserves

The adjusted applicable federal short-term, mid-term, and long-term rates are set forth for the month of May 1996. See Rev. Rul. 96–24, page 5.

Section 846.—Discounted Unpaid Losses Defined

The adjusted applicable federal short-term, mid-term, and long-term rates are set forth for the month of May 1996. See Rev. Rul. 96–24, page 5.

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

(Also Sections 42, 280G, 382, 412, 467, 468, 482, 483, 807, 846, 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 May 1996.

Rev. Rul. 96–24

This revenue ruling provides various prescribed rates for federal income tax purposes for May 1996 (the current month.) Table 1 contains the shortterm, 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).

REV. RUL. 96–24 TABLE 1

Table 3 sets forth the adjusted federal long-term rate and the long-term taxexempt rate described in section 382(f). Table 4 contains the appropriate percentages for determining the lowincome 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.

Applicable Federal Rates (AFR) for May 1996

Period for Compounding

Annual Semiannual Quarterly Monthly

Short-Term

AFR 5.76% 5.68% 5.64% 5.61% 110 AFR 6.35% 6.25% 6.20% 6.17% 120 AFR 6.94% 6.82% 6.76% 6.73% 130 AFR 7.52% 7.38% 7.31% 7.27% Mid-Term

AFR 6.36% 6.26% 6.21% 6.18% 110 AFR 7.01% 6.89% 6.83% 6.79% 120 AFR 7.65% 7.51% 7.44% 7.40% 130 AFR 8.31% 8.14% 8.06% 8.01% 150 AFR 9.61% 9.39% 9.28% 9.21% 175 AFR 11.26% 10.96% 10.81% 10.72%

Long-Term

AFR 6.83% 6.72% 6.66% 6.63% 110 AFR 7.53% 7.39% 7.32% 7.28% 120 AFR 8.22% 8.06% 7.98% 7.93% 130 AFR 8.93% 8.74% 8.65% 8.58%

REV. RUL. 96–24 TABLE 2

Adjusted AFR for May 1996

Period for Compounding Annual Semiannual Quarterly Monthly Short-term adjusted AFR 3.75% 3.72% 3.70% 3.69% Mid-term adjusted AFR 4.69% 4.64% 4.61% 4.60% Long-term adjusted AFR 5.68% 5.60% 5.56% 5.54%

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REV. RUL. 96–24 TABLE 3

Rates Under Section 382 for May 1996

Adjusted federal long-term rate for the current month 5.68%

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.) 5.68%

REV. RUL. 96–24 TABLE 4

Appropriate Percentages Under Section 42(b)(2) for May 1996

Appropriate percentage for the 70% present value low-income housing credit 8.55%

Appropriate percentage for the 30% present value low-income housing credit 3.66%

REV. RUL. 96–24 TABLE 5

Rate Under Section 7520 for May 1996

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 7.6%

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

The adjusted applicable federal short-term, mid-term, and long-term rates are set forth for the month of May 1996. See Rev. Rul. 96–24, page 5.

Section 7520.—Valuation Tables

The adjusted applicable federal short-term, mid-term, and long-term rates are set forth for the month of May 1996. See Rev. Rul. 96–24, page 5.

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Section 7872.—Treatment of Loans with Below-Market Interest Rates

The adjusted applicable federal short-term, mid-term, and long-term rates are set forth for the month of May 1996. See Rev. Rul. 96–24, page 5.