Interest rates; underpayment and overpayments. The rates for interest determined under section 6621 of the Code for the calendar quarter beginning July 1, 2010, will be 4 percent for overpayments (3 percent in the case of a corporation), 4 percent for underpayments, and 6 percent for large corporate underpayments. The rate of interest paid on the portion of a corporate overpayment exceeding $10,000 will be 1.5 percent.

Application of section 469 to the section 45D new markets tax credit. This ruling provides that the passive activity provisions under section 469 of the Code will not disallow a taxpayer’s new markets tax credit under section 45D, provided that a taxpayer’s acquisition of the qualified equity investment in a qualified community development entity (CDE) does not arise in connection with the conduct of a passive activity by the taxpayer, without regard to a taxpayer’s interest or extent of participation in the CDE’s trade or business.

New markets tax credit. This ruling provides that for purposes of determining the new markets tax credit allowable under section 45D of the Code, the amount of the qualified equity investment made by an LLC classified as a partnership includes cash from a recourse loan to the LLC that the LLC invests as equity in a qualified community development entity. Rev. Rul. 2003-20 amplified.

Final regulations under section 704(c) of the Code respond to the Joint Committee on Taxation’s recommendation that the partnership rules be strengthened to ensure that the allocation rules in the regulations are not used to generate unwarranted tax benefits. The regulations achieve this result by amending the section 1.704-3(a)(10) anti-abuse rule to provide that the tax effect of an allocation method (or combination of methods) on both direct and indirect partners is considered. In addition, the regulations include a cross-reference to the general partnership anti-abuse rule of section 1.701-2 to clarify that section 1.704-3 applies only to contributions of property that are otherwise respected and that one factor that will be considered is the use of remedial allocations between related partners.

Weighted average interest rate update; corporate bond indices; 30-year Treasury securities; segment rates. This notice contains updates for the corporate bond weighted average interest rate for plan years beginning in June 2010; the 24-month average segment rates; the funding transitional segment rates applicable for June 2010; and the minimum present value transitional rates for May 2010.