SERVICE ANNOUNCES INTEREST RATE ON FEDERAL LAND BANK LOANS USED TO COMPUTE SPECIAL USE VALUATIONS.

Rev. Rul. 88-59

This revenue ruling contains a list of the average annual effective interest rates on new Federal Land Bank loans. Under section 2032A(e)(7)(A)(ii) of the Internal Revenue Code, rates on new Federal Land Bank loans are used in computing the special use value of real property used as a farm for which an election is made under section 2032A. This revenue ruling also contains a list of the states within each land bank district. The rates in this revenue ruling may be used by estates that value farmland under section 2032A as a date in 1988.

Average annual effective interest rates, calculated in accordance with section 2032A(e)(7)(A) of the Code and section 20.2032A-4(e) of the Estate Tax Regulations, to be used under section 2032A(e)(7)(A)(ii) are set forth in the accompanying Table of Interest Rates. The states within each land bank district are set forth in the accompanying Table of Federal Land Bank Districts.

Rev. Rul. 81-170, 1981-1 C.B. 454, which sets forth rates for several prior years, contains an illustrative computation of an average annual effective interest rate. The rates applicable for valuation in years subsequent to 1981 are listed in Rev. Rul. 82-104, 1982-1 C.B. 129 (for 1982); Rev. Rul. 83-71, 1983-1 C.B. 227 (for 1983); Rev. Rul. 84-119, 1984-2 C.B. 193 (for 1984); Rev. Rul. 85-92, 1985-2 C.B. 198 (for 1985); Rev. Rul. 86-85, 1986-1 C.B. 299 (for 1986); and Rev. Rul. 87-142, 1987-52 I.R.B. 17 (for 1987).

DRAFTING INFORMATION

The principal author of this revenue ruling is Lane Damazo of the Individual Tax Division. For further information regarding this revenue ruling contact Lane Damazo on (202) 566-8994 (not a toll-free call).

                        TABLE OF INTEREST RATES