Interest rate sec 483

[jklcpa]

My client's stock redemption agreement calls for monthly payout over 8 yrs with balloon (if needed), at a fixed payt amount (not fixed principal). Interest rate for this obligation is the lowest rate specified by Code Sec 483 to avoid unstated interest.

The stock payout will be done in about 4 yrs, so no 8 yr or balloon. Still, this obligation is in the mid-term range. For my latest hypothetical presentation, I used the rate from June 07 Table 1 of 4.55%.

One of the minority stockholders said HIS accountant told him that I used the wrong rate, but he couldn't remember why it was wrong. So back at the office I looked again, and reg 1.483.3 referred me to 1.1274-4 for the "test rate." This reg talks about the 3-month rate.

The rates were Apr=4.52% , May=4.53% . Based on this, should I really be using the rate from April?