Rev. Proc. 83-31

Section 1. Background

Rev. Proc. 83-22, page 680, this Bulletin, sets forth areas in which advance rulings or determination letters will not be issued by the Internal Revenue Service. Section 3 of Rev. Proc. 83-22 is entitled, Areas In Which Rulings Or Determination Letters Will Not Be Issued.

Sec. 2. Procedure

Rev. Proc. 83-22 is hereby amended by adding to section 3 the following new section:

Section 163.--Interest.--The income tax consequences of transactions involving "shared appreciation mortgage" (SAM) loans in which a taxpayer, borrowing money to purchase real property, pays a fixed rate of interest on the mortgage loan below the prevailing market rate and will also pay the lender a percentage of the appreciation in value of the real property upon termination of the mortgage. This applies to all SAM arrangements where the loan proceeds are used for commercial or business activities, or where used to finance a personal residence if the facts are not similar to those described in Rev. Rul. 83-51, page 48, this Bulletin. (Also sections 61, 451, 461, 856, 1001, and 7701).

Sec. 3. Effective Date

This revenue procedure will apply to all ruling requests on hand in the National Office on May 2, 1983, the date of publication of this revenue procedure in the Internal Revenue Bulletin, as well as to requests received thereafter.

Sec. 4. Effect on Other Revenue Procedures

Rev. Proc. 83-22 is amplified.