26 U.S.C. § 1275 — Other definitions and special rules

(a)(1) “Debt instrument” means a bond^*, debenture, note, certificate, or other evidence of indebtedness, but not an annuity contract covered by section 72 that depends wholly or substantially on one or more people's life expectancy, or is issued by a taxable insurance company or qualifying tax-exempt entity in a transaction involving only qualifying cash or annuity consideration, an insured's death-benefit election, or a qualified pension or employee^*-benefit plan. (2) For a publicly offered instrument, “date of original issue” means the first date issued to the public. For an instrument covered by section 1273(b)(2), it means the date the issuer sold it. For any other instrument, it means the date issued in a sale or exchange. (3) “Tax-exempt obligation” means an obligation whose interest is excluded from gross income under section 103 or exempt from tax under another law without regard to the holder. (4) A corporation's debt obligation distributed with its stock^* is treated as issued by the corporation^* for property^*.
(b)(1) Sections 1274 and 483 do not apply to an obligor's debt instrument given for property if the property is “personal use property.” (2) If an instrument is incurred to acquire or carry personal-use property, has original issue discount^* after paragraph (1), and the obligor uses the cash method, the discount is deductible only when paid, despite section 163(e). (3) “Personal use property” means any property for which substantially all of the taxpayer's use is not in connection with the taxpayer's trade or business^* or an activity described in section 212. This is decided when the instrument is issued.
(c)(1) For a debt instrument with original issue discount, the Secretary^* may require by regulation that the instrument state the discount amount and issue date. For an issue not publicly offered, the regulation may not require this information before the first buyer disposes of the instrument. (2) An issuer of a publicly offered issue with original issue discount must provide the Secretary, at the time and in the way regulations require, the discount amount, issue date, and any other required information. A person publicly offering stripped bonds or coupons is treated as the issuer. (3) This subsection does not apply to an obligation described in section 1272(a)(2). (4) Civil penalties are addressed in section 6706.
(d) The Secretary may issue regulations modifying the tax treatment under this subpart or section 163(e), as appropriate to carry out their purposes, when varying interest rates, put or call options, indefinite maturities, contingent payments, assumptions of debt, or other circumstances would otherwise prevent that treatment.