minimum interest rule

Definition

A law stating that some amount of minimum interest must be changed by a lender on each loan transaction. Therefore, even if there is no rate of interest that is charged to a borrower on a loan, there is still an arbitrary interest rate that will automatically be imposed on that loan. The purpose of this law is in part for the purpose of preventing excess gifting that may occur between two taxpayers via loans having very low, or even no rate of interest, among members of a family.
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minimum fluctuation minimum investment