Part I. Rulings — Internal Revenue Bulletin 1998-51

Section 162.—Trade or Business Expenses

What procedures must a lawyer, handling cases on a contingent fee basis, use to obtain automatic consent of the Commissioner to change its method of accounting for advances paid to clients. See Rev. Proc. 98–60, page 16.

Section 165.—Losses

26 CFR 1.165–2: Obsolescence of nondepreciable property.

What procedures must a taxpayer use to obtain automatic consent of the Commissioner to change its method of accounting for package design costs. See Rev. Proc. 98–60, page 16.

Section 166.—Bad Debts

What procedures must a taxpayer use to obtain automatic consent of the Commissioner to change from the § 585 reserve method of accounting to the § 166 specific charge-off method. See Rev. Proc. 98–60, page 16.

Section 167.—Depreciation

26 CFR 1.167(a)–11: Depreciation based on class lives and asset depreciation ranges for property placed in service after December 31, 1970.

26 CFR 1.167(e)–1: Change in method.

What procedures must a taxpayer use to obtain automatic consent of the Commissioner to change its method of accounting for depreciation. See Rev. Proc. 98–60, page 16.

Section 168.—Accelerated Cost Recovery System

What procedures must a taxpayer use to obtain automatic consent of the Commissioner to change its method of accounting for depreciation. See Rev. Proc. 98–60, page 16.

Section 174.—Research and Experimental Expenditures

26 CFR 1.174–1: Research and exprimental expenditures in general.

26 CFR 1.174–3: Treatment as expenses.

26 CFR 1.174–4: Treatment as deferred expenses.

What procedures must a taxpayer use to obtain automatic consent of the Commissioner to change its method of accounting for research and experimental expenditures. See Rev. Proc. 98–60, page 16.

Section 197.—Amortization of Goodwill and Other Intangibles

What procedures must a taxpayer use to obtain automatic consent of the Commissioner to change its method of accounting for amortization. See Rev. Proc. 98–60, page 16.

Section 263.—Capital Expenditures

26 CFR 1.263(a)–2: Examples of capital expenditures.

What procedures must a taxpayer use to obtain automatic consent of the Commissioner to change its method of accounting for package design costs. See Rev. Proc. 98–60, page 16.

Section 263A.—Capitalization and Inclusion in Inventory Costs of Certain Expenses

26 CFR 1.263A–1: Uniform capitalization of costs.

What procedures must a taxpayer use to obtain automatic consent of the Commissioner to change its method of accounting. See Rev. Proc. 98–60, page 16.

26 CFR 1.263A–3: Rules relating to property acquired for resale.

What procedures must a taxpayer use to obtain automatic consent of the Commissioner to change its method of accounting. See Rev. Proc. 98–60, page 16.

Section 446.—General Rule for Methods of Accounting

26 CFR 1.446–1: General rule for methods of ac- counting.

What procedures must a taxpayer use to obtain automatic consent of the Commissioner to change its method of accounting for package design costs. See Rev. Proc. 98–60, page 16.

Section 451.—General Rule for Taxable Year of Inclusion

What procedures must a taxpayer use to obtain automatic consent of the Commissioner to change its method of accounting for the income from an advance payment related to the sale of a multi-year service warranty contract. See Rev. Proc. 98–60, page 16.

Section 454.—Obligations Issued at a Discount

26 CFR 1.454–1: Obligations issued at a discount.

What procedures must a taxpayer use to obtain automatic consent of the Commissioner to change its method of accounting for the interest income on Series E or EE U.S. savings bonds. See Rev. Proc. 98–60, page 16.

Section 455.—Prepaid Subscription Income

26 CFR 1.455–6: Time and manner of making elec- tion.

What procedures must a taxpayer use to obtain automatic consent of the Commissioner to change its method of accounting for prepaid subscription income. See Rev. Proc. 98–60, page 16.

Section 461.—General Rule for Taxable Year of Deduction

26 CFR 1.461–4: Economic performance.

What procedures must a taxpayer use to obtain automatic consent of the Commissioner to change its method of accounting. See Rev. Proc. 98–60, page 16.

Section 471.—General Rule for Inventories

26 CFR 1.471–1: Need for inventories.

26 CFR 1.471–2: Valuation of inventories.

26 CFR 1.471–3: Inventories at cost.

What procedures must a taxpayer use to obtain automatic consent of the Commissioner to change its method of accounting for certain cash discounts. See Rev. Proc. 98–60, page 16.

Section 472.—Last-in, First-out Inventories

26 CFR 1.472-1: Last-in, first-out inventories.

LIFO; price indexes; department stores. The October 1998 Bureau of Labor Statistics price indexes are accepted for use by department stores employing the retail inventory and last-in, first-out inventory methods for valuing inventories for tax years ended on, or with reference to, October 31, 1998.

Rev. Rul. 98–62

The following Department Store Inventory Price Indexes for October 1998 were issued by the Bureau of Labor Statistics. The indexes are accepted by the Internal Revenue Service, under § 1.472–1(k) of the Income Tax Regulations and Rev. Proc. 86–46, 1986–2 C.B. 739, for appropriate application to inventories of department stores employing the retail inventory and last-in, first-out inventory methods for tax years ended on, or with reference to, October 31, 1998.

The Department Store Inventory Price Indexes are prepared on a national basis

December 21, 1998 4 1998–51 I.R.B.

and include (a) 23 major groups of departments, (b) three special combinations of the major groups - soft goods, durable

goods, and miscellaneous goods, and (c) a store total, which covers all departments, including some not listed separately, ex

cept for the following: candy, food, liquor, tobacco, and contract departments

BUREAU OF LABOR STATISTICS, DEPARTMENT STORE INVENTORY PRICE INDEXES BY DEPARTMENT GROUPS

(January 1941 = 100, unless otherwise noted)

Percent Change Groups Oct. Oct. from Oct.1997 1997 1998 to Oct. 1998 ¹

Piece Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 534.5 548.9 2.7
Domestics and Draperies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 638.4 637.5 –0.1
Women’s and Children’s Shoes . . . . . . . . . . . . . . . . . . . . . . . . . . . 672.2 679.2 1.0
Men’s Shoes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 910.2 921.6 1.3
Infants’ Wear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 615.5 640.2 4.0
Women’s Underwear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 560.1 572.6 2.2
Women’s Hosiery. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 301.6 308.9 2.4
Women’s and Girls’Accessories . . . . . . . . . . . . . . . . . . . . . . . . . . 541.7 551.6 1.8
Women’s Outerwear and Girls’ Wear. . . . . . . . . . . . . . . . . . . . . . . 431.3 423.5 –1.8
Men’s Clothing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 625.3 620.1 –0.8
Men’s Furnishings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601.0 607.8 1.1
Boys’ Clothing and Furnishings. . . . . . . . . . . . . . . . . . . . . . . . . . . 505.9 521.0 3.0
Jewelry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 995.5 982.7 –1.3
Notions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 844.4 757.6 –10.3
Toilet Articles and Drugs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 916.4 946.4 3.3
Furniture and Bedding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 666.2 673.7 1.1
Floor Coverings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 578.2 601.0 3.9
Housewares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 812.1 817.1 0.6
Major Appliances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 243.3 238.3 –2.1
Radio and Television. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74.5 70.6 –5.2
Recreation and Education ² . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108.6 102.8 –5.3
Home Improvements ² . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132.7 129.5 –2.4
Auto Accessories ² . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107.9 107.9 0.0

Groups 1 – 15: Soft Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 610.1 612.7 0.4

Groups 16 – 20: Durable Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 463.9 460.5 –0.7

Groups 21 – 23: Misc. Goods ² . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111.6 107.3 –3.9

Store Total ³ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 558.5 556.9 –0.3

1Absence of a minus sign before percentage change in this column signifies price increase. 2Indexes on a January 1986 = 100 base. 3The store total index covers all departments, including some not listed separately, except for the following: candy, food, liquor, tobacco, and contract departments.

1998–51 I.R.B. 5 December 21, 1998

DRAFTING INFORMATION

The principal author of this revenue ruling is Stan Michaels of the Office of Assistant Chief Counsel (Income Tax and Accounting). For further information regarding this revenue ruling, contact Mr. Michaels on (202) 622-4970 (not a tollfree call).

26 CFR 1.472–6: Change from LIFO inventory method.

26 CFR 1.472–8: Dollar value method of pricing LIFO inventories.

What procedures must a taxpayer use to obtain automatic consent of the Commissioner to change from the LIFO method of accounting for all its LIFO inventory, or to change to an alternate LIFO inventory method. See Rev. Proc. 98–60, page 16.

Section 475.—Mark to Market Accounting Method for Dealers in Securities

What procedures must a taxpayer use to obtain automatic consent of the Commissioner to change its method of accounting for certain mark to market items for dealers in securities. See Rev. Proc. 98–60, page 16.

Section 481.—Adjustments Required by Changes in Methods of Accounting

26 CFR 1.481–1: Adjustments in general.

26 CFR 1.481–4: Adjustments taken into account with consent.

What procedures must a taxpayer use to obtain automatic consent of the Commissioner to change a method of accounting. See Rev. Proc. 98–60, page 16.

Section 585.—Reserves for Losses on Loans of Banks

Section 1272.—Current Inclusion in Income of Original Issue Discount

26 CFR 1.1272–1: Current inclusion of OID in income.

What procedures must a taxpayer use to obtain

automatic consent of the Commissioner to change its method of accounting for OID income. See Rev. Proc. 98–60, page 16.

Section 1273.—Determination of Amount of Original Issue Discount

26 CFR 1.1273–1: Definition of OID.

26 CFR 1.1273–2: Determination of issue price and issue date.

What procedures must a taxpayer use to obtain automatic consent of the Commissioner to change its method of accounting for certain de minimis original issue discount. See Rev. Proc. 98–60, page 16.

Section 1281.—Current Inclusion in Income of Discount on Certain Short-term Obligations

What procedures must a taxpayer use to obtain automatic consent of the Commissioner to change its method of accounting for interest income on short-term obligations, or for stated interest on short-term loans of cash method banks in the Eighth Circuit. See Rev. Proc. 98–60, page 16.

Section 1363.—Effect of Election on Corporation

What procedures must a taxpayer use to obtain automatic consent of the Commissioner to change its method of accounting. See Rev. Proc. 98–60, page 16.

Section 856.—Definition of Real Estate Investment Trust

26 CFR 1.856–1: Definition of a real estate investment trust.

REIT impermissible tenant service income. If a REIT receives impermissible tenant service income equal to or less than one percent of its total income from a property, then only the impermissible tenant service income fails to qualify as rents from real property. If the impermissible tenant service income exceeds one percent, then all income derived by the REIT from that property fails to qualify as rents from real property.

Rev. Rul. 98–60

ISSUE

If a real estate investment trust (REIT) receives “impermissible tenant service income” within the meaning of § 856(d)(7)

of the Internal Revenue Code for services rendered by the REIT to one or more tenants of a multi-tenant property, in what situations will other amounts received by the REIT with respect to the property continue to qualify as “rents from real property” under § 856(d)?

FACTS

Y, a REIT that files its returns on a calendar year basis, owns a high-rise apartment building, Building P . Building P has 100 apartments, of which 95 are standard, unfurnished apartments rented on an annual basis. The remaining five apartments are guest apartments. A guest apartment is a furnished apartment available for lease on a short-term basis to guests of tenants. Employees of Y render maid service in connection with the lease of guest apartments. Y also provides heat and light to all of the tenants in Building P. Y does not render any other services to the tenants of Building P or engage in any other activity at Building P that could give rise to impermissible tenant service income.

For 1998, Y derives a total of $1,000 x from all the tenants of Building P, of which $90 x is from visitors who rented guest apartments. Of the $90 x received from tenants of the guest apartments, the amount received with respect to maid service is $9 x, which is greater than 150 percent of the direct costs of Y in rendering the service. Of the $1,000 x received from all the tenants, the amount paid to Y for heat and light is $100 x ($1 x for each unit, including the guest units), which also is greater than 150 percent of the direct costs of Y for providing heat and light. The amount of rent attributable to personal property leased in connection with the rental of each guest apartment in Building P for 1998 does not exceed 15 percent of the total rent for such apartment attributable to both the real property and the personal property as provided in § 856(d)(1).

Situation 2

The facts are the same as those in Situ- ation 1 except that Y derives $110 x from visitors who rented guest apartments. Of the $110 x received from tenants of the guest apartments, the amount received with respect to maid service is $11 x,

Situation 1

Situation 2

December 21, 1998 6 1998–51 I.R.B.

which is greater than 150 percent of the direct costs of Y in rendering the service.

LAW AND ANALYSIS

For an entity to qualify as a REIT, the entity must derive at least 95 percent of its gross income from certain sources described in § 856(c)(2) and at least 75 percent of its gross income from certain sources described in § 856(c)(3). Rents from real property are among the sources described in both § 856(c)(2) and § 856(c)(3).

Section 856(d)(1) provides that rents from real property include (subject to the exclusions in § 856(d)(2)): (i) rents from interests in real property, (ii) charges for services customarily furnished or rendered in connection with the rental of real property (whether or not the charges are separately stated), and (iii) rent attributable to personal property that is leased under, or in connection with, a lease of real property, but only if the rent attributable to the personal property for the taxable year does not exceed 15 percent of the total rent for the year attributable to both the real and personal property leased under, or in connection with, the lease.

Section 856(d)(2)(C) (as modified by the Taxpayer Relief Act of 1997) excludes from the definition of rents from real property any impermissible tenant service income as defined in § 856(d)(7). Section 856(d)(7)(A) provides that impermissible tenant service income means, with respect to any real or personal property, any amount received or accrued directly or indirectly by a REIT for furnishing or rendering services to the tenants of the property or managing or operating the property.

Section 856(d)(7)(C)(i) excludes from impermissible tenant service income amounts received for services furnished or rendered, or management or operation provided, through an independent contractor from whom the REIT itself does not derive or receive any income.

Section 856(d)(7)(C)(ii) excludes from the definition of impermissible tenant service income any amount that would be excluded from unrelated business taxable income (UBTI) under § 512(b)(3) if received by an organization described in § 511(a)(2). Section 512(b)(3)(A)(i) excludes rents from real property from UBTI. Section 1.512(b)–1(c)(5) of the

Income Tax Regulations provides, however, that payments for the occupancy of space where services are also rendered to the occupant are not rents from real property. Generally, services are considered rendered to the occupant if they are primarily for the occupant’s convenience and are other than those usually or customarily rendered in connection with the rental of space for occupancy only. Under § 1.512(b)–1(c)(5), the provision of maid service is given as an example of a service that is considered rendered to the occupant. Maid service provided by an employee of a REIT is, therefore, an impermissible tenant service that gives rise to impermissible tenant service income under § 856(d)(7). Conversely, under § 1.512(b)–1(c)(5), the provision of heat and light is given as an example of a service that is not considered rendered to the occupant. Accordingly, the provision of heat and light by a REIT is a permissible tenant service.

Section 1.512(b)–1(c)(5) taints all payments received under a lease as other than rents from real property where any impermissible tenant service is provided to the tenant. Accordingly, a strict application of § 1.512(b)–1(c) in the context of § 856(d)(7)(C)(ii) could cause all tenant service income (that is, service income and income from management and operations) derived under a lease to fail to qualify for this exception where any impermissible tenant service is rendered to the tenant. However, the legislative history discussing § 856(d)(7) indicates that only income attributable to impermissible tenant services should be treated as impermissible tenant service income after the application of § 856(d)(7)(C)(ii) (unless § 856(d)(7)(B) applies). H.R. Conf. Rep. No. 105–220, 105th Cong., 1st Sess. 696 (1997) (“The value of the impermissible services may not exceed one percent of the gross income from the property” (emphasis added)). Accordingly, under § 856(d)(7)(C)(ii), an amount attributable to a service or activity is excluded from impermissible tenant service income unless the service or activity to which that amount relates would cause the related rents to be treated as UBTI if received by an organization described in § 511(a)(2).

less than 150 percent of the direct cost of the REIT in furnishing or rendering the service (or providing the management or operation).

Section 856(d)(7)(B) provides that, if the amount of impermissible tenant service income with respect to a property for any taxable year exceeds one percent of all amounts received or accrued during such taxable year directly or indirectly by the REIT with respect to the property, the impermissible tenant service income of the REIT with respect to the property includes all such amounts.

In Situation 1, the $9 x attributable to the impermissible tenant services rendered to tenants of the guest apartments is impermissible tenant service income within the meaning of § 856(d)(7). Thus, pursuant to § 856(d)(2)(C), the $9 x fails to qualify as rents from real property. Because the provision of heat and light is a permissible tenant service, no amount attributable to this service (including amounts paid by tenants of the guest units) is treated as impermissible tenant service income in applying the one percent de minimis rule. The $9 x of impermissible tenant service income received by Y from Building P for 1998 does not exceed one percent of the $1,000 x received or accrued directly or indirectly by Y with respect to Building P . Therefore, the rendering of impermissible tenant services to tenants of the guest apartments does not prevent otherwise qualifying amounts received by Y from the tenants of Building P (including tenants of the guest apartments) from qualifying as rents from real property under § 856(d), and the total impermissible tenant service income received with respect to Building P is $9 x .

In Situation 2, the $11 x attributable to the impermissible tenant services rendered to tenants of the guest apartments is impermissible tenant service income within the meaning of § 856(d)(7). The $11 x of impermissible tenant service income received by Y from Building P for 1998 exceeds one percent of the $1,000 x received or accrued directly or indirectly by Y with respect to Building P . Therefore, all $1,000 x derived by Y from Building P is impermissible tenant service income that, pursuant to § 856(d)(2)(C), fails to qualify as rents from real property.

Rev. Rul. 72–353, 1972–2 C.B. 413, illustrates how § 856(d)(2)(A), which ex

Section 856(d)(7)(D) provides that the amount treated as received for any service (or management or operation) must not be

1998–51 I.R.B. 7 December 21, 1998

cludes rents derived under net profit leases from the definition of rents from real property, is applied in a multiple tenant situation. In Rev. Rul. 72–353, a REIT leased office space in a building to 10 different tenants under separate leases. Nine of the leases provided for a fixedsum rental. The tenth lease, however, provided for a rental based on a percentage of the tenant’s net profits. Rev. Rul. 72–353 holds that the payments by the tenth tenant to the REIT, which do not qualify as rents from real property, do not prevent amounts paid to the REIT by the other tenants of the office building that otherwise qualified as rents from real property from so qualifying.

Section 6621(b)(1) provides that the Secretary will determine the federal shortterm rate for the first month in each calendar quarter.

Section 6621(b)(2)(A) provides that the federal short-term rate determined under § 6621(b)(1) for any month applies during the first calendar quarter beginning after such month.

Section 6621(b)(2)(B) provides that in determining the addition to tax under § 6654 for failure to pay estimated tax for any taxable year, the federal short-term rate that applies during the third month following such taxable year also applies during the first 15 days of the fourth month following such taxable year.

Section 6621(b)(3) provides that the federal short-term rate for any month is the federal short-term rate determined during such month by the Secretary in accordance with § 1274(d), rounded to the nearest full percent (or, if a multiple of 1/2 of 1 percent, the rate is increased to the next highest full percent).

Notice 88–59, 1988– C.B. 546, announced that, in determining the quarterly interest rates to be used for overpayments and underpayments of tax under § 6621, the Internal Revenue Service will use the federal short-term rate based on daily compounding because that rate is most consistent with § 6621 which, pursuant to § 6622, is subject to daily compounding.

Rounded to the nearest full percent, the federal short- term rate based on daily compounding determined during the month of October 1998 is 4 percent. Accordingly, an overpayment rate of 7 percent (6 percent in the case of a corporation) and an underpayment rate of 7 percent are established for the calendar quarter beginning January 1, 1999. The overpayment rate for the portion of a corporate overpayment exceeding $10,000 for the calendar quarter beginning January 1, 1999, is 4.5 percent. The underpayment rate for large corporate underpayments for the calendar quarter beginning January 1, 1999, is 9 percent. These rates apply to amounts bearing interest during that calendar quarter.

The 7 percent rate also applies to estimated tax underpayments for the first calendar quarter in 1999 and for the first 15 days in April 1999.

Interest factors for daily compound in

Section 856(d)(7)(B) allows a REIT to provide a limited amount of impermissible tenant services with respect to property without causing all of the income from the property to fail to qualify as rents from real property. In the case of many of the services that Congress intended to cover, it would be very difficult to allocate the services to particular tenants. Consistent with this intent, § 856(d)(7)(B) expressly applies on a property-by-property basis. Consequently, the one-percent limitation in that section is applied to aggregate amounts received with respect to a property.

DRAFTING INFORMATION

The principal author of this revenue ruling is Eric E. Boody of the Office of Assistant Chief Counsel (Financial Institutions and Products). For further information regarding this revenue ruling contact Mr. Boody on (202) 622-3960 (not a toll-free call).

Section 6621.— Determination of Interest Rate

26 CFR 301.6621–1: Interest rate.

Interest rates; underpayments and overpayments. The rate of interest determined under section 6621 of the Code for the calendar quarter beginning January 1, 1999, will be 7 percent for overpayment (6 percent in the case of a corporation), 7 percent for underpayments, and 9 percent for large corporate underpayments. The rate of interest paid on the portion of a corporate overpayment exceeding $10,000 is 4.5 percent.

Rev. Rul. 98–61

Section 6621 of the Internal Revenue Code establishes the rates for interest on tax overpayments and tax underpayments. Under § 6621(a)(1), the overpayment rate beginning January 1, 1999, is the sum of the federal short-term rate plus 3 percentage points (2 percentage points in the case of a corporation), except the rate for the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the sum of the federal short-term rate plus 0.5 of a percentage point for interest computations made after December 31, 1994. Under § 6621(a)(2), the underpayment rate is the sum of the federal short-term rate plus 3 percentage points.

Section 6621(c) provides that for purposes of interest payable under § 6601 on any large corporate underpayment, the underpayment rate under § 6621(a)(2) is determined by substituting “5 percentage points” for “3 percentage points.” See § 6621(c) and § 301.6621–3 of the Regulations on Procedure and Administration for the definition of a large corporate underpayment and for the rules for determining the applicable date. Section 6621(c) and § 301.6621–3 are generally effective for periods after December 31, 1990.

Rev. Rul. 72–353, which makes a determination under § 856(d)(2)(A) on a lease-by-lease basis, is distinguishable. Section 856(d)(2)(A) relates to contingent rents determined by reference to any person’s income or profits derived from a property. In contrast to amounts allocable to tenant services, the presence or absence of contingent rents can be determined on a lease-by-lease basis in all cases.

HOLDING

(1) In Situation 1, only the $9 x attributable to the impermissible tenant services rendered to tenants of the guest apartments fails to qualify as rents from real property.

(2) In Situation 2, all $1,000 x of income derived from Building P fails to qualify as rents from real property.

EFFECT ON OTHER REVENUE RULINGS

Rev. Rul. 72–353 is distinguished.

December 21, 1998 8 1998–51 I.R.B.

terest for annual rates of 7 percent, 6 percent, 4.5 percent, and 9 percent are published in Tables 19, 17, 14, and 23 of Rev. Proc. 95–7, 1995–1 C.B. 556, 573, 571, 568, and 577. Annual interest rates to be compounded

daily pursuant to § 6622 that apply for prior periods are set forth in the tables accompanying this revenue ruling.

DRAFTING INFORMATION

The principal author of this revenue ruling is Raymond Bailey of the Office of Assistant Chief Counsel (Income Tax and Accounting). For further information regarding this revenue ruling, contact Mr. Bailey on (202) 622-6226 (not a toll-free call).

PERIODS BEFORE JUL. 1, 1975 – PERIODS ENDING DEC. 31, 1986

OVERPAYMENTS AND UNDERPAYMENTS

In 1995–1 C.B. PERIOD RATE DAILY RATE TABLE

Before Jul. 1, 1975 6% Table 2, pg. 557 Jul. 1, 1975—Jan. 31, 1976 9% Table 4, pg. 559 Feb. 1, 1976—Jan. 31, 1978 7% Table 3, pg. 558 Feb. 1, 1978—Jan. 31, 1980 6% Table 2, pg. 557 Feb. 1, 1980—Jan. 31, 1982 12% Table 5, pg. 560 Feb. 1, 1982—Dec. 31, 1982 20% Table 6, pg. 560 Jan. 1, 1983—Jun. 30, 1983 16% Table 37, pg. 591 Jul. 1, 1983—Dec. 31, 1983 11% Table 27, pg. 581 Jan. 1, 1984—Jun. 30, 1984 11% Table 75, pg. 629 Jul. 1, 1984—Dec. 31, 1984 11% Table 75, pg. 629 Jan. 1, 1985—Jun. 30, 1985 13% Table 31, pg. 585 Jul. 1, 1985—Dec. 31, 1985 11% Table 27, pg. 581 Jan. 1, 1986—Jun. 30, 1986 10% Table 25 pg. 579 Jul. 1, 1986—Dec. 31, 1986 9% Table 23, pg. 577

TABLE OF INTEREST RATES

FROM JAN. 1, 1987 – Dec. 31, 1998

OVERPAYMENTS UNDERPAYMENTS

1995–1 C.B. 1995–1 C.B. RATE TABLE PG RATE TABLE PG

Jan. 1, 1987—Mar. 31, 1987 8% 21 575 9% 23 577 Apr. 1, 1987—Jun. 30, 1987 8% 21 575 9% 23 577 Jul. 1, 1987—Sep. 30, 1987 8% 21 575 9% 23 577 Oct. 1, 1987—Dec. 31, 1987 9% 23 577 10% 25 579 Jan. 1, 1988—Mar. 31, 1988 10% 73 627 11% 75 629 Apr. 1, 1988—Jun. 30, 1988 9% 71 625 10% 73 627 Jul. 1, 1988—Sep. 30, 1988 9% 71 625 10% 73 627 Oct. 1, 1988—Dec. 31, 1988 10% 73 627 11% 75 629 Jan. 1, 1989—Mar. 31, 1989 10% 25 579 11% 27 581 Apr. 1, 1989—Jun. 30, 1989 11% 27 581 12% 29 583 Jul. 1, 1989—Sep. 30, 1989 11% 27 581 12% 29 583 Oct. 1, 1989—Dec. 31, 1989 10% 25 579 11% 27 581 Jan. 1, 1990—Mar. 31, 1990 10% 25 579 11% 27 581 Apr. 1, 1990—Jun. 30, 1990 10% 25 579 11% 27 581 Jul. 1, 1990—Sep. 30, 1990 10% 25 579 11% 27 581 Oct. 1, 1990—Dec. 31, 1990 10% 25 579 11% 27 581 Jan. 1, 1991—Mar. 31, 1991 10% 25 579 11% 27 581

1998–51 I.R.B. 9 December 21, 1998

December 21, 1998 10 1998–51 I.R.B.

1998–51 I.R.B. 11 December 21, 1998

TABLE OF INTEREST RATES FOR CORPORATE

OVERPAYMENTS EXCEEDING $10,000

FROM JANUARY 1, 1995 – PRESENT

1995–1 C.B. RATE TABLE PG

Jan. 1, 1995—Mar. 31, 1995 6.5% 18 572 Apr. 1, 1995—Jun. 30, 1995 7.5% 20 574 Jul. 1, 1995—Sep. 30, 1995 6.5% 18 572 Oct. 1, 1995—Dec. 31, 1995 6.5% 18 572 Jan. 1, 1996—Mar. 31, 1996 6.5% 66 620 Apr. 1, 1996—Jun. 30, 1996 5.5% 64 618 Jul. 1, 1996—Sep. 30, 1996 6.5% 66 620 Oct. 1, 1996—Dec. 31, 1996 6.5% 66 620 Jan. 1, 1997—Mar. 31, 1997 6.5% 18 572 Apr. 1, 1997—Jun. 30, 1997 6.5% 18 572 Jul. 1, 1997—Sep. 30, 1997 6.5% 18 572 Oct. 1, 1997—Dec. 31, 1997 6.5% 18 572 Jan. 1, 1998—Mar. 31, 1998 6.5% 18 572 Apr. 1, 1998—Jun. 30, 1998 5.5% 16 570 Jul. 1. 1998—Sep. 30, 1998 5.5% 16 570 Oct. 1, 1998—Dec. 31, 1998 5.5% 16 570 Jan. 1, 1999—Mar. 31, 1999 4.5% 14 568

December 21, 1998 12 1998–51 I.R.B.