IRS PUBLISHES 1998 INTEREST RATES FOR COMPUTING SPECIAL USE VALUE OF FARM PROPERTY.

Rev. Rul. 98-22

[1] SPECIAL USE VALUE; FARMS; INTEREST RATES. The 1998 interest rates to be used in computing the special use value of farm real property for which an election is made under section 2032A of the Code are listed for estates of decedents.

[2] This revenue ruling contains a list of the average annual effective interest rates on new loans under the Farm Credit Bank system. This revenue ruling also contains a list of the states within each Farm Credit Bank District.

[3] Under section 2032A(e)(7)(A)(ii) of the Internal Revenue Code, rates on new Farm Credit 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. The rates in this revenue ruling may be used by estates that value farmland under section 2032A as of a date in 1998.

[4] Average annual effective interest rates, calculated in accordance with section 2032A(e)(7)(A) 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 (Table 1). The states within each Farm Credit Bank District are set forth in the accompanying Table of Farm Credit Bank Districts (Table 2).

[5] Rev. Rul. 81-170, 1981-1 C.B. 454, contains an illustrative computation of an average annual effective interest rate. The rates applicable for valuation in 1997 are in Rev. Rul. 97-13, 1997-16 I.R.B. 4. For rate information for years prior to 1997, see Rev. Rul. 96-23, 1996-1 C.B. 198, and other revenue rulings that are referenced therein.

DRAFTING INFORMATION

[6] The principal author of this revenue ruling is Lane Damazo of the Office of Assistant Chief Counsel (Passthrough and Special Industries). For further information regarding this revenue ruling, contact Lane Damazo on (202) 622-3090 (not a toll-free call).

                        REV. RUL. 98-22 TABLE 1