[Code of Federal Regulations]
[Title 26, Volume 13]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR]

[Page 622-623]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
Procedure and Administration--Table of Contents
 
Sec.  1.9002-5  Special rules relating to interest.

    (a) In general. Where an election is made under section 4(a) of the 
Act interest is computed under section 6601 of the Code (or 
corresponding provisions of prior law) on any increase in tax 
attributable to such election for each taxable year involved for the 
period from the last date prescribed for payment of the tax for such 
year (determined without regard to any extensions of time for filing the 
return) through the date preceding the date on which the election is 
made. Where the election under section 4(a) of the Act results in a 
decrease in tax for any year to which the election applies, interest is 
computed in accordance with section 6611 of the Code (or corresponding 
provisions of prior law) from the date of overpayment through

[[Page 623]]

the date preceding the date on which the election is made. Where there 
is a net increase in tax as a result of the election under section 4(a) 
of the Act, no interest shall be imposed on any underpayment (and no 
interest shall be paid on any overpayment) attributable to the dealer 
reserve income adjustment for any year to which the election applies for 
the period commencing with the date such election is made and ending on 
the date prescribed for filing the return (determined without regard to 
extensions of time) for the taxable year in which the election is made. 
This rule applies regardless of whether the election under section 4(b) 
of the Act is made. If there is no net increase in tax, interest on any 
underpayment or overpayment attributable to the dealer reserve income 
adjustment for any taxable year to which the election applies for the 
period commencing with the date of the election shall be determined in 
accordance with Sec. Sec.  301.6601-1 and 301.6611-1 of this chapter 
(Regulations on Procedure and Administration).
    (b) Installment period--(1) Where payment is not accelerated. If the 
election under section 4(b) of the Act is made to pay the net increase 
in tax in installments, no interest will be imposed on such net increase 
in tax for the period beginning with the due date fixed under section 
4(c) of the Act for the first installment payment and ending with the 
date fixed under such section for the last installment payment unless 
payment of the unpaid installments is accelerated under other provisions 
of the Act. See subsections (f) and (g) of section 4 of the Act.
    (2) Where payment is accelerated. Where payment of the unpaid 
installments is accelerated because of the termination of the 
installment privilege, interest will be computed under section 6601 of 
the Code on the entire unpaid net increase in tax for the applicable 
period set forth below:
    (i) In the case of acceleration under section 4(f) of the Act for 
reasons other than nonpayment of an installment, from the date of the 
notice and demand for payment of the unpaid tax to the date of payment; 
or
    (ii) In the case of acceleration under section 4(g) of the Act for 
nonpayment of an installment, from the date fixed for payment of the 
installment to the date of payment.

When payment is accelerated under section 4(f) of the Act, however, no 
interest will be charged where payment of the unpaid installments is 
made within 10 days of issuance of the notice and demand for such 
payment.

[T.D. 6490, 25 FR 8373, Sept. 1, 1960]