Interest considered by the IRS for tax purposes to have been paid, even if no interest was actually paid.
Interest included in the principal amount of contracted debt if stated interest is less than the amount required by tax law.
In the case of certain long-term sales of property, the IRS has the authority to convert some of the gain from the sale into interest income if the contract does not provide for a minimum rate of interest to be paid by the purchaser. Such converted interest is called imputed interest.
Interest which is deemed to have been charged on a loan by a court.
The IRS has the authority to impute or assign interest in a contract when none is stated, or the stated interest is too low. This results in reducing the amount of favorable long-term gain and increasing the interest income that is taxed at the higher (ordinary) tax rate.
A portion of a future payment that is treated as interest if parties to the transaction do not provide a stated amount of interest at a rate acceptable to the IRS. (See "Applicable Federal Rates (AFRs).") This prevents improper use of certain tax advantages (capital gains rates or tax deferral). For example: if a business sells an asset on the installment basis, part of all future payments is treated as interest whether the transaction states it or not.
Implied interest. In a mortgage that states an insufficient interest rate, the law will impute the rate is higher, and the principal is less
Interest amounts deemed to have been earned on a debt if the stated interest rates are below the federal rate set by law.
Interest which is not actually paid to bond holders but which the IRS may tax anyway. Common with zero coupon bond interest. See Interest and Bond.
If no interest or an unrealistic amount of interest is charged in a salve involving certain kinds of deferred payments, then the transaction will be treated as if the realistic rate of interest had been used. The difference between the realistic interest and the interest actually used is referred to as imputed interest.
Used in accounting to refer to interest that has effectively been paid to a bondholder, even though no money has actually been paid. Source
An interest rate that is not explicit. For example, if a business lends its majority owner $100,000 at 0% interest, the IRS might determine that a fair interest rate would be 6% and not 0%. The IRS will impute interest of 6%. To Top
A term used to describe interest considered to be paid, even through no interest payment has been made.
Interest implied by the federal tax law.
An interest rate that is stated by the Internal Revenue Service because the interest stated in the mortgage is unrealistically low or it has not been specified.
Imputed interest is interest that the Internal Revenue Service (IRS) considers to have been paid even though no interest was actually paid to the holder of the security. For example, the IRS requires zero coupon bondholders to report the imputed interest on these bonds. See: Zero-Coupon Bond
