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1993 interest rate for demand loans.

Revenue ruling 93-42 (IRB no. 1993-24) announced the blended annual rate for 1993 demand loans is 4.16%. This is the minimum required interest rate for amounts outstanding for the entire calendar year (see revenue ruling 86-17).

For demand loans with principal amounts that fluctuate during the year, the minimum interest rate is based on a month-by-month computation using the short-term applicable federal rate issued for each month.

Observation: With long-term IRS minimum rates at an all-time low (about 6.5% for long-term notes over nine years originating in mid-1993), taxpayers may wish to convert open demand note to fixed-term obligations.
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Publication:Journal of Accountancy
Article Type:Brief Article
Date:Sep 1, 1993
Words:101
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