Year 1955
First day of | Unpaid balance outstanding |
January | 0 |
February | $350 |
March | 325 |
April | 300 |
May | 275 |
June | 250 |
July | 225 |
August | 200 |
September | 175 |
October | 150 |
November | 125 |
December | 100 |
2,475 |
Sum of unpaid balances $2,475 ÷ 12 = $206.25; 6 percent thereof = $12.38.
Year 1955
First day of | Unpaid balance outstanding |
December | $1,200 |
Sum of unpaid balances $1,200 ÷ 12 = $100; 6 percent thereof = $6.
Carrying charges attributable to 1955 = $4.
Year 1956
First day of | Unpaid balance outstanding |
January | $1,100 |
February | 1,000 |
March | 900 |
April | 800 |
May | 700 |
June | 600 |
July | 500 |
August | 400 |
September | 300 |
October | 200 |
November | 100 |
6,600 |
Sum of unpaid balances $6,600 ÷ 12 = $550; 6 percent thereof = $33.
Carrying charges attributable to 1956 = $44 ($4 * 11).
Year 1956
First day of | Unpaid balance outstanding |
January | $1,100 |
February | 1,000 |
March | 900 |
April | 800 |
May | 700 |
June | 600 |
July-November | 0 |
5,100 |
Sum of unpaid balances $5,100 ÷ 12 = $425. 6 percent thereof = $25.50.
Carrying charges attributable to 1956 = $44 ($4 * 11).
Year 1968
First day of | Unpaid balance outstanding |
January-September | 0 |
October | $800 |
November | 700 |
December | 600 |
Total | 2,100 |
The sum of unpaid balances ($2,100) divided by 12 is $175; 6 percent thereof is $10.50. The carrying charges attributable to 1968 are $18.75 (i.e., the total carrying charges ($50), divided by the total number of payments (8), multiplied by the number of payments made in 1968 (3)). Since the amount to be treated as interest in 1968 ($10.50) does not exceed the carrying charges attributable to 1968 ($18.75), the limitation set forth in paragraph (c) of this section is not applicable.
26 C.F.R. §1.163-2