Whether the "substantially level" repayment requirement in I

[Scuba 401]

A client of mine wants to know whether the "substantially level" repayment requirement in IRC section 72(p) means exactly equal. My thinking is that it means payments must be very close to the same but I am wondering if anyone knows how "substantially level" has been interpreted by the IRS.

[Jon Chambers]

At a former employer (Big 5 accounting firm), we used to do loans at a round dollar amount, adjusting the final payment a few dollars (generally, the last payment was lower). No one seemed to have a problem with this approach.

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Jon C. Chambers

Principal

Schultz Collins Lawson Chambers, Inc.

(415) 291-3004

[imchipbrown]

I'd just like to thank Mr. Chambers for joining the discussion group. I've been cruising the questions and found a few "opines" already.

We need fresh blood.

BTW, I agree. I've been through several audits where Client has been quite irregular in repayments. We advised some to pay the loan off before the audit date, others to get current. The auditors (all IRS) were all OK with it. I think our auditors (won't name the District) are looking for gross abusers, not nit-picking. That's what the DOL is for.

[GBurns]

In the audit of 2 fairly large groups in S Florida the auditors looked at "average" repayment per reporting period. This meant each year over a 5 year period, so I guess they really dont nit pick unless offended.