SECTION 13. PAPERWORK REDUCTION ACT

The collections of information contained in this revenue procedure have been reviewed and approved by the Office of Management and Budget in accordance with the Paperwork Reduction Act (44 U.S.C. 3507) under control number 1545–1551. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays

APPENDIX

(Table) Applicable Term of Service Agreement in Years Interest

Rate 1 2 3 4 5 6

1.0% 1.0000 0.5025 0.3367 0.2537 0.2040 0.1708 2.0% 1.0000 0.5050 0.3400 0.2575 0.2080 0.1750 3.0% 1.0000 0.5074 0.3432 0.2612 0.2120 0.1792 4.0% 1.0000 0.5098 0.3465 0.2649 0.2160 0.1834 5.0% 1.0000 0.5122 0.3497 0.2686 0.2200 0.1876 6.0% 1.0000 0.5146 0.3529 0.2723 0.2240 0.1919 7.0% 1.0000 0.5169 0.3561 0.2759 0.2279 0.1961 8.0% 1.0000 0.5192 0.3593 0.2796 0.2319 0.2003 9.0% 1.0000 0.5215 0.3624 0.2832 0.2359 0.2045 10.0% 1.0000 0.5238 0.3656 0.2868 0.2398 0.2087 11.0% 1.0000 0.5261 0.3687 0.2904 0.2438 0.2130 12.0% 1.0000 0.5283 0.3717 0.2940 0.2477 0.2172 13.0% 1.0000 0.5305 0.3748 0.2975 0.2516 0.2214 14.0% 1.0000 0.5327 0.3778 0.3011 0.2555 0.2256 15.0% 1.0000 0.5349 0.3808 0.3046 0.2594 0.2298

1997–33 I.R.B. 47 August 18, 1997

.01 Permissibility. (1) In general. The principal-reduction method of accounting (described in section 5 of this revenue procedure) is a permissible method for use by taxpayers to account for de minimis OID (discount) on one or more categories of loans described in section 4.02 or 4.03 of this revenue procedure. If the principal-reduction method is used to account for any loans in a category of loans, the method must be used for the entire category of loans. As is more fully described in section 5 of this revenue procedure, if the method is used for more than one category, separate data for each category must be kept, and the computations must be made separately for each category.

(2) Adopting principal-reduction method. If a taxpayer does not already have a method of accounting for discount on one or more categories of loans, the taxpayer may adopt the principal-reduction method for discount on all or any of those categories of loans by using it on a federal income tax return. The taxpayer must attach to this return a statement identifying the categories of loans to which the new method will apply and describing any “additional categories” permitted under section 4.03 of this revenue procedure.

(3) Changes to principal-reduction method. A taxpayer wanting to change to the principal-reduction method must follow the provisions of Rev. Proc. 97–37.

.02 Standard categories of loans. The

a valid OMB control number.

The collections of information in this revenue procedure are in section 6. This information is necessary and will be used to determine whether the taxpayer is properly using the service warranty income method. The collections of information are required for the taxpayer to use the service warranty income method. The likely respondents are the following: individuals, business or other for-profit institutions, and small businesses or organizations.

The estimated total annual reporting burden is 5,000 hours.

The estimated annual burden per respondent varies from 2 hours to 3 hours, depending on individual circumstances, with an estimated average of 2.5 hours. The estimated number of respondents is 2,000. The estimated annual frequency of responses is once.

Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.

DRAFTING INFORMATION

This revenue procedure was drafted in the Office of Assistant Chief Counsel (Income Tax & Accounting). For further information regarding this revenue procedure, contact Michael F. Schmit on (202) 622-4960 (not a toll free call).

26 CFR 601.204: Changes in accounting periods and in methods of accounting.

(Also Part I, §§ 1273; 1.1273–1, 1.1273–2.)

Rev. Proc. 97–39