ProSeries calculating IRS min Installment payment interest..

[AZ-Tax]

Its my understanding that even though the sales contract between the seller and the buyer does not require interest to be paid, the IRS mandate a % of each installment payment consist of interest. PS tech support has told me PS does not calculate that min interest the IRS mandates. If this is not true how do I calculate within PS? If its true, how do I calculate the interest?

[Koss]

Unstated Interest/OID

I can't address your question regarding ProSeries, because I haven't used that program in years.

This gets really complicated really fast. You'll need to determine whether to apply Section 483 or Section 1274, depending on the facts and circumstances.



The interest rate itself is a function of the AFR (Applicable Federal Rates), which I believe change quarterly. So you may need to look up what the AFR was at the time installment note was executed.

As a starting point, see pages 9-11 of IRS Publication 537, Installment Sales.

http://www.irs.gov/pub/irs-pdf/p537.pdf

Good luck. Hope this helps.

BMK

[AZ-Tax]

I guess I am looking for the Fed applicable rate...

I guess I am looking for the Fed applicable rate on those installment payments that do not included interest.

[Koss]

Applicable Federal Rates

Try this...

http://www.irs.gov/app/picklist/list/federalRates.html

BMK