Understanding Below-Market Loans and Original Issue Discounting
Date: Monday, August 24, 2026
Instructor: Susan Harper
| Begin Time: |
9:00am Pacific Time
10:00am Mountain Time
11:00am Central Time
12:00pm Eastern Time |
| CPE Credit: |
2 hours for CPAs
2 hours Federal Tax Related for EAs and OTRPs
2 hours Federal Tax Law for CTEC |
|
NOTE: Go to My Professional Profile in your CCH CPELink account settings to ensure your name, and PTIN number; matches your PTIN card
Below-market loans and original issue discount (OID) rules introduce complex tax consequences that frequently arise in family lending, shareholder transactions, and business financing arrangements. When loans do not bear adequate stated interest, the Internal Revenue Code may recharacterize the transaction, resulting in deemed interest income, deductible interest expense, or gift implications. This course provides tax and accounting professionals with a practical framework for identifying below-market loans and applying OID rules accurately.
Led by Susan Harper, Certified Fraud Examiner and retired IRS Internal Revenue Agent, this course explores IRC §7872 and the treatment of below-market loans, including applicable federal rate (AFR) comparisons, imputed interest calculations, and statutory exceptions. Participants will also examine original issue discount concepts applicable to both short-term obligations and long-term debt instruments, along with reporting requirements and compliance considerations. Through real-world scenarios and examples, attendees gain actionable guidance to help clients avoid unintended tax consequences and reporting errors.
Who Should Attend
This course is designed for professionals who advise clients on loans, financing arrangements, and debt instrument reporting.
Topics Covered
- Overview of below-market loan rules
- Applicable Federal Rates and imputed interest calculations
- Common below-market loan scenarios and exceptions
- Tax consequences of imputed interest
- Original issue discount fundamentals
- Short-term obligations redeemed at maturity
- Long-term debt instruments and OID accrual
- OID reporting and compliance considerations
Learning Objectives
- Identify the key principles governing below-market loans under IRC §7872
- Distinguish common situations and statutory exceptions involving below-market loans
- Calculate and apply the tax treatment of imputed interest
- Define original issue discount and recognize when OID rules apply
- Differentiate between short-term obligations and long-term debt instruments subject to OID
- Apply proper reporting requirements for original issue discount
Level
Intermediate
Instructional Method
Group: Internet-based
NASBA Field of Study
Taxes (2 hours)
Program Prerequisites
Basic familiarity with debt instruments.
Advance Preparation
None
