June 26, 2022

Volume XII, Number 177

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June 24, 2022

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Key Tax Planning Rates for March 2022

The Section 7520 rate for March 2022 is 2.0% an increase from the February rate of 1.6%.The applicable federal rates (“AFRs”) also continue to increase. The AFRs for March 2022 are as follows:

  Annual Semi-Annual Quarterly Monthly
Short-Term 0.97% 0.97% 0.97% 0.97%
Mid-Term 1.74% 1.73% 1.73% 1.72%
Long-Term 2.14% 2.13% 2.12% 2.12%

The Section 7520 rate is used to discount the value of annuities, life estates and remainders to present value such as in the case of charitable remainder trusts, charitable lead trusts, qualified personal residence trusts and grantor retained annuity trusts. Generally, the Section 7520 rate for the month in which the transfer occurs is used to calculate the value of the annuity, life estate or remainder. However, the rate for the month in which the transfer occurs or the rate for either of the two preceding months can be used to determine the value of a charitable life estate or remainder.

The short-term AFRs are used for loans with a term of three years or less, the mid-term AFRs are used for loans with a term of four to nine years and the long-term AFRs are used for loans with a term of longer than nine years. The AFRs are used in planning transactions such as sales to a defective grantor trust and intrafamily loans.

Copyright ©2022 Nelson Mullins Riley & Scarborough LLPNational Law Review, Volume XII, Number 63
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About this Author

Maurice Holloway Tax Attorney Nelson Mullins
Partner

Maurice Holloway practices in the areas of corporate and business entity law, taxation, estate planning, and business law.

864.373.2300
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