Applicable Federal Rate (AFR),
What is Applicable Federal Rate (AFR)?
The applicable federal rate (AFR) is the lowest interest rate allowed for personal loans by the Inland Revenue Service (IRS). Each month, the IRS issues a series of interest rates that allow agents to consider the lowest market rates for any loan. Interest rates lower than AFR will be tax related. The IRS issues these fees in accordance with Section 1274 (d) of the Income Tax Code.
- If the interest on the loan is less than the applicable AFR, it could result in a cost to the parties involved.
- AFR is used to determine the results of initial issue rebates, non-exported interest, gift tax, and down-to-market borrowing tax.
- The parties should use the AFR issued by the IRS when approving the initial loan by the lender.
Literal Meanings of Applicable Federal Rate (AFR)
Meanings of Applicable:
Relevant or appropriate.
Sentences of Applicable
Accident claims are also considered.
Synonyms of Applicable
related, apposite, significant, felicitous, connected, relevant, germane, material, pertinent, appropriate
Meanings of Federal:
Refers to a system of ownership or government in which several states form a single entity but remain independent in internal affairs.
Sentences of Federal
Agreement of the Russian Federation that divides power between the Russian federal and local governments
Meanings of Rate:
Set a pattern or value for a particular scale (object).
Think of it as a particular quality, standard or area.
A measure, quantity or frequency that is usually measured in relation to another quantity or unit of measure.
Pay a fixed price or charge something for something, especially good or service.
Scolding (someone) in anger
Sentences of Rate
This event was considered a great success.
Synonyms of Rate
gauge, cost, hold to be, figure, consider to be, reckon to be, appraise, amount, find to be, fare, weigh up, assess, measure, value, price, estimate, think to be, calculate, adjudge, judge to be, evaluate, compute, tariff, deem to be, charge