The following is an example of promissory note which can be used to guide and direct eligibility decisions in which promissory notes are involved. Please also refer to article LTC: Promissory Notes.
$357,000.00
Indio, Oklahoma
for value received, the undersigned, ________ (“borrower”) promises to pay to the order of ___________ (“lender”), at ___________. Oklahoma or at such other place as may be designated in writing by the Lender , on or before July 1, 2031, the principal sum of $357,000.00 together with interest thereon at the current annual Applicable Federal Rate of 1.89% per annum. 201-14 with the Applicable Federal Rate for August 2021 attached hereto as (Exhibit “A”), both principal and interest payable in lawful money of the United States of America in installments as follows (see amortization schedule attached hereto as Exhibit “B”:
10 annual installments commencing on July 1, 2022 and continuing on the same day of each and every year thereafter, with each such installment, except the last installment, to be in the sum of $39.515.18, and the last installment to be in the full amount of the then remaining unpaid balance of principal and interest. The last installment shall be due and payable on July 1, 2031. Each of the foregoing payments of principal and interest shall be applied first to the payment of interest, at the rate aforesaid on the unpaid principal, and the balance, if any, shall be applied to the principal sum.
Prepayment. The privilege is reserved in the Borrower to prepay the indebtedness evidenced by this note, either in whole or in part, at any time, without penalty.
Governing Law. This note is being executed pursuant to 42 U.S.C. §1396p(c)(1)(1) codified by Section 6016(c) of the Deficit Reduction Act of 2005 (P.L. 109-171. This note is to be governed by and construed in accordance with the laws of the State of Oklahoma. Any controversy or claim arising out of or relating to this note shall be litigated in the District Court of County, State of Oklahoma or the District Court of the Western District of Oklahoma.
Actuarially Soundness The lender is a _________, 7 years of age, with a birthdate of _____________. According to the life expectancy tables published by the Office of the Actuary of the Social Security Administration, which tables are contained in §32589B of HCF, the life expectancy of Lender is 10.98 years. All principal and interest due hereunder be paid to Lender on a basis that is actuarially sound if the repayment terms of this note are later determined not to be actuarially sound, the repayment terms shall be modified as little as possible so that the repayment of all principal and interest due hereunder shall be actuarially sound.
No Deferral or Balloon. All payments due under this note shall be paid in equal amounts as stated herein during the term of this note without any deferral or balloon payment of any amounts due hereunder.
No Cancellation. This note and any and all amounts due hereunder shall not be cancelled under the death of Lender.
Default. While any default exists hereunder, the entire unpaid principal balance hereof shall bear interest at the rate of 1.89% per annum. During the existence of any such default , Lender may apply payments received on any amount due hereunder or under the terms of any instrument now or hereafter evidencing or securing any said indebtedness as Lender may determine.
Assignment. Neither the Borrower nor Lender of this note may grant, bargain, sell, assign, convey or transfer this note or any payments hereunder, except Lender may assign or transfer this note for estate planning purposes to a revocable trust which Lender is the settlor. Lender’s revocable trust may not further grant, bargain, sell, assign, convey or transfer this note or any payments hereunder in any way.
In witness whereof, the undersigned makers have executed and delivered this Promissory Note, the day and year first hereinabove written.
________________________
Section 1274. – Determination of Issue Price in the case of Certain Debt Instruments Issued for Property
Also Sections 42, 280G, 382, 467, 468, 1288, 7520, 7872.)
Rev. Rule, 2021-14
This revenue ruling provides various prescribed rates for federal income tax purposes for August 2021 (the current month). Table 1 contains the short-term, mid-term, and long-term applicable federal rates (AFR) for the current month for purposes of section 1274(d) of the Internal Revenue Code. Table 2 contains the short-term, mid-term, and long-term adjusted applicable federal rates (adjusted AFR) for the current month for purposes of section 1288(b). Table 3 sets forth the adjusted federal long-term rate and the long-term tax-exempt rate described in section 382(f). Table 4 contains the appropriate percentages for determining the low-income housing credit described in section 42(b)(1) for buildings placed in service during the current month. However, under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after July 30, 2008, shall not be less than 9%. Finally, Table 5 contains the federal rate for determining the present value of an annuity, an interest for life or for a term of years, or a remainder or a reversionary interest for purposes of section 7520.
| Period for Compounding | ||||
|---|---|---|---|---|
| Annual | Semiannual | Quarterly | Monthly | |
| AFR | 0.19% | 0.19% | 0.19% | 0.19% |
| 110% AFR | 0.21% | 0.21% | 0.21% | 0.21% |
| 120% AFR | 0.23% | 0.23% | 0.23% | 0.23% |
| 130% AFR | 0.25% | 0.25% | 0.25% | 0.25% |
| Mid-term | ||||
| AFR | 1.00% | 1.00% | 1.00% | 1.00% |
| 110% AFR | 1.10% | 1.10% | 1.10% | 1.10% |
| 120% AFR | 1.20% | 1.20% | 1.20% | 1.20% |
| 130% AFR | 1.30% | 1.30% | 1.30% | 1.30% |
| 150% AFR | 1.51% | 1.51% | 1.51% | 1.51% |
| 175% AFR | 1.76% | 1.76% | 1.76% | 1.76% |
| Long term | ||||
| AFR | 1.89% | 1.88% | 1.88% | 1.87% |
| 110% AFR | 2.08% | 2.07% | 2.06% | 2.06% |
| 120% AFR | 2.27% | 2.26% | 2.25% | 2.25% |
| 130% AFR | 2.45% | 2.44% | 2.43% | 2.43% |
| Period for Compounding | ||||
|---|---|---|---|---|
| Annual | Semiannual | Quarterly | Monthly | |
| Short-term adjusted AFR | 0.14% | 0.14% | 0.14% | 0.14% |
| Mid-term adjusted AFR | 0.76% | 0.76% | 0.76% | 0.76% |
| Long-term adjusted AFR | 1.44% | 1.43% | 1.43% | 1.43% |
current month (the highest of the adjusted federal long-term rates for the current month and the prior two months.) 1.58%
Note: Under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after July 30, 2008, shall not be less than 9%.
housing credit 7.33%
housing credit 3.14%
Interest Rate 1.89%
Years 10
Number of Payments in Year 1
Principal 357,000.00
Payment 39,515.18
| Payment Number | Beginning Balance | Payment | Interest | Principal Reduction | Ending Balance |
|---|---|---|---|---|---|
| 1 | 357,000.00 | 39,515.18 | 6,747.30 | 32,767.88 | 324,232.12 |
| 2 | 324,232.12 | 39,515.18 | 6,127.99 | 33,387.19 | 290,844.93 |
| 3 | 290,844.93 | 39,515.18 | 5,496.97 | 34,018.21 | 256,826.72 |
| 4 | 256,826.72 | 39,515.18 | 4,854.02 | 34,661.15 | 222,165.57 |
| 5 | 222,165.57 | 39,515.18 | 4,198.93 | 35,316.25 | 186,849.32 |
| 6 | 186,849.32 | 39,515.18 | 3,531.45 | 35,983.73 | 150,865.59 |
| 7 | 150,865.59 | 39,515.18 | 2,851.36 | 36,663.82 | 114,201.77 |
| 8 | 114,201.77 | 39,515.18 | 2,158.41 | 37,356.77 | 76,845.00 |
| 9 | 76,845.00 | 39,515.18 | 1,452.37 | 38,062.81 | 38,782.20 |
| 10 | 38,782.20 | 39,515.18 | 732.98 | 38,782.20 | 0.00 |
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