Part I. Rulings — Internal Revenue Bulletin 1999-2

methodology used by the Treasury Department in computing the bond factor amounts used in calculating the amount of bond considered satisfactory by the Secretary under § 42(j)(6) of the Internal Revenue Code. It further announced that the Secretary would publish in the Internal Revenue Bulletin a table of “bond factor” amounts for dispositions occurring during each calendar month.

This revenue ruling provides in Table 1 the bond factor amounts for calculating the amount of bond considered satisfactory under § 42(j)(6) for dispositions of qualified low-income buildings or interests therein during the period October through December 1998.

Section 32.—Earned Income

26 CFR 1.32–2: Earned income credit for taxable years beginning after December 31, 1978.

Are payments received by individuals with respect to certain work actitivies performed in state programs under part A of title IV of the Social Security Act, as amended by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (“Temporary Assistance for Needy Families”) earned income for purposes of the earned income credit. See Notice 99–3, page 10.

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 January 1999. See Rev. Rul. 99–2, page 5.

Low-income housing credit; satisfac- tory bond; “bond factor” amounts for the period October through December 1998. This ruling announces the monthly bond factor amounts to be used by taxpayers who dispose of qualified low-income buildings or interests therein during the period October through December 1998.

Rev. Rul. 99–1

In Rev. Rul. 90–60, 1990–2 C.B. 3, the Internal Revenue Service provided guidance to taxpayers concerning the general

Table 1 Rev. Rul. 99–1 Monthly Bond Factor Amounts for Dispositions Expressed As a Percentage of Total Credits

Calendar Year Building Placed in Service or, if Section 42(f)(1)

Election Was Made, the Succeeding Calendar Year

Month of Disposition 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

Oct ‘98 61.09 75.25 74.73 76.61 78.85 81.41 84.01 86.47 88.89 91.53 94.25 97.21 Nov ‘98 61.09 75.25 74.54 76.41 78.65 81.20 83.79 86.25 88.68 91.33 94.09 97.21 Dec ‘98 61.09 75.25 74.35 76.22 78.45 80.99 83.58 86.04 88.47 91.14 93.94 97.21

For a list of bond factor amounts applicable to dispositions occurring during other calendar years, see the following revenue rulings: Rev. Rul. 95–83, 1995-2 C.B. 8, for dispositions occurring during calendar year 1995; Rev. Rul. 98–3, 1998–2 I.R.B. 4, for dispositions occurring during the calendar years 1996 and 1997; Rev. Rul. 98–13, 1998–11 I.R.B. 4, for dispositions occurring during the period January through March 1998; Rev. Rul. 98–31, 1998–25 I.R.B. 4, for dispositions occurring during the period April through June 1998; and Rev. Rul. 98–45, 1998–38 I.R.B. 4, for dispositions occurring during the period July through September 1998.

DRAFTING INFORMATION

The principal author of this revenue ruling is Jack Malgeri of the Office of As

sistant Chief Counsel (Passthroughs and Special Industries). For further information regarding this revenue ruling, contact Mr. Malgeri at (202) 622–3040 (not a toll–free call).

Section 280G.—Golden Parachute Payments

Federal short-term, mid-term, and long-term rates are set forth for the month of January 1999. See Rev. Rul. 99–2, page 5.

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 January 1999. See Rev. Rul. 99–2, page 5.

Section 412.—Minimum Funding Standards

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month of January 1999. See Rev. Rul. 99–2, page 5.

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

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month of January 1999. See Rev. Rul. 99–2, page 5.

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

The adjusted applicable federal short-term, mid

January 11, 1999 4 1999–2 I.R.B.

term, and long-term rates are set forth for the month of January 1999. See Rev. Rul. 99–2, on this page.

Section 482.—Allocation of Income and Deductions Among Taxpayers

Federal short-term, mid-term, and long-term rates are set forth for the month of January 1999. See Rev. Rul. 99–2, on this page.

Section 483.—Interest on Certain Deferred Payments

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month of January 1999. See Rev. Rul. 99–2, on this page.

Section 642.—Special Rules for Credits and Deductions

Federal short-term, mid-term, and long-term rates are set forth for the month of January 1999. See Rev. Rul. 99–2, on this page.

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 January 1999. See Rev. Rul. 99–2, on this page.

Section 846.—Discounted Unpaid Losses Defined

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month of January 1999. See Rev. Rul. 99–2, on this page.

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, 642, 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 January 1999.

Rev. Rul. 99–2

This revenue ruling provides various prescribed rates for federal income tax purposes for January 1999 (the current month.) Table 1 contains the short-term, 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). Table 3 sets forth the adjusted federal long-term rate and the long-term tax-exempt rate described in section 382(f). Table 4 contains the appropriate percentages for determining the low-income housing credit described in section 42(b)(2) for buildings placed in service during the current month. 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. Finally, Table 6 contains the deemed rate of return for transfers made during calendar year 1999 to pooled income funds described in section 642(c)(5) that have been in existence for less than 3 taxable years immediately preceding the taxable year in which the transfer is made.

Applicable Federal Rates (AFR) for January 1999

Period for Compounding

Annual Semiannual Quarterly Monthly Short-Term

AFR 4.57% 4.52% 4.49% 4.48% 110% AFR 5.03% 4.97% 4.94% 4.92% 120% AFR 5.49% 5.42% 5.38% 5.36% 130% AFR 5.97% 5.88% 5.84% 5.81%

Mid-Term

AFR 4.64% 4.59% 4.56% 4.55% 110% AFR 5.11% 5.05% 5.02% 5.00% 120% AFR 5.59% 5.51% 5.47% 5.45% 130% AFR 6.06% 5.97% 5.93% 5.90% 150% AFR 7.01% 6.89% 6.83% 6.79% 175% AFR 8.19% 8.03% 7.95% 7.90%

Long-Term

AFR 5.21% 5.14% 5.11% 5.09% 110% AFR 5.73% 5.65% 5.61% 5.58% 120% AFR 6.27% 6.17% 6.12% 6.09% 130% AFR 6.79% 6.68% 6.63% 6.59%

1999–2 I.R.B 5 January 11, 1999

REV. RUL. 99–2 TABLE 2

Adjusted AFR for January 1999

Period for Compounding

Annual Semiannual Quarterly Monthly Short-term adjusted AFR 3.08% 3.06% 3.05% 3.04%

Mid-term adjusted AFR 3.86% 3.82% 3.80% 3.79%

Long-term adjusted AFR 4.70% 4.65% 4.62% 4.61%

REV. RUL. 99–2 TABLE 3

Rates Under Section 382 for January 1999

Adjusted federal long-term rate for the current month 4.70%

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.) 4.70%

REV. RUL. 99–2 TABLE 4

Appropriate Percentages Under Section 42(b)(2) for January 1999

Appropriate percentage for the 70% present value low-income housing credit 8.15%

Appropriate percentage for the 30% present value low-income housing credit 3.49%

REV. RUL. 99–2 TABLE 5

Rate Under Section 7520 for January 1999

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 5.6%

REV. RUL. 99–2 TABLE 6

Deemed Rate for Transfers to New Pooled Income Funds During 1999

Deemed rate of return for transfers during 1999 to pooled income funds that have been in existence for less than 3 taxable years 6.8%

January 11, 1999 6 1999–2 I.R.B.

Guidance is provided regarding how a taxpayer may designate the application of its federal tax deposits for a particular return period in order to minimize the failure-to-deposit penalty with respect to deposits required to be made after January 18, 1999. See Rev. Proc. 99–10, page 11.

Section 7520.—Valuation Tables

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month of January 1999. See Rev. Rul. 99–2, page 5.

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

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month of January 1999. See Rev. Rul. 99–2, page 5.

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

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month of January 1999. See Rev. Rul. 99–2, page 5.

Section 3121.—Definitions

26 CFR 31.3121(a)–1: Wages.

Are payments received by individuals with respect to certain work activities performed in state programs under part A of title IV of the Social Security Act, as amended by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (“Temporary Assistance for Needy Families”) wages for purposes of federal employment taxes. See Notice 99–3, page 10.

Section 6302.—Mode or Time of Collection

26 CFR 1.6302–2: Use of Government depositaries for payment of tax withheld on nonresident aliens and foreign corporations.

26 CFR 31.6302–1: Federal tax deposit rules for amounts withheld under the backup withholding requirements of section 3406 for payments made after December 31, 1992.

26 CFR 31.6302–2: Federal tax deposit rules for amounts withheld under the Railroad Retirement Act (R.R.T.A.) attributable to payments made after December 31, 1992.

26 CFR 31.6302–4: Federal tax deposit rules for withheld income taxes attributable to nonpayroll payments made after December 31, 1993.

26 CFR 31.6302(c)–3: Use of Government depositiaries in connection with tax under the Federal Unemployment Tax Act.

26 CFR 40.6302(c)–1: Use of Government depositiaries.

Section 6656.—Failure to Make Deposit of Taxes

26 CFR 301.6656–1: Penalty for underpayment of deposits.

1999–2 I.R.B 7 January 11, 1999