26 U.S.C. § 1288 — Treatment of original issue discount on tax-exempt obligations
submitted 42 years ago by Pub. L. 98-369 to r/title-26-INTERNAL-REVENUE-CODE · 173 words · no verdicts yet
This section explains how original issue discount on tax-exempt obligations accrues. It uses different related rules for interest deductions and for the holder’s adjusted basis.
(a) General rule. Original issue discount on a tax-exempt obligation is treated as accruing for section 163 under section 1272(a), ignoring paragraph (7) of that section. For the holder’s adjusted basis, it accrues under section 1272(a) while taking paragraph (7) into account.
(b) Definitions and special rules. (1) “Original issue discount” has the meaning in section 1273(a), except paragraph (3) is ignored. When section 483 or 1274 is applied, regulations of the Secretary* must make appropriate adjustments to the applicable Federal rate to account for the tax exemption for interest on the obligation. (2) “Tax-exempt obligation” has the meaning in section 1275(a)(3). (3) For an obligation maturing in one year or less, rules like section 1283(b) apply. This section does not define the quoted terms itself.
Original issue discount on any tax-exempt obligation shall be treated as accruing—
for purposes of section 163, in the manner provided by section 1272(a) (determined without regard to paragraph (7) thereof), and
for purposes of determining the adjusted basis of the holder, in the manner provided by section 1272(a) (determined with regard to paragraph (7) thereof).
For purposes of this section—
The term “original issue discount” has the meaning given to such term by section 1273(a) without regard to paragraph (3) thereof. In applying section 483 or 1274, under regulations prescribed by the Secretary*, appropriate adjustments shall be made to the applicable Federal rate to take into account the tax exemption for interest on the obligation.
The term “tax-exempt obligation” has the meaning given to such term by section 1275(a)(3).
In applying this section to obligations with maturity of 1 year or less, rules similar to the rules of section 1283(b) shall apply.
Source credit: (Added Pub. L. 98–369, div. A, title I, § 41(a), July 18, 1984, 98 Stat. 553; amended Pub. L. 100–647, title I, § 1006(u)(3), Nov. 10, 1988, 102 Stat. 3427.)
- 1984Enacted · Pub. L. 98-369 · 98 Stat. 553
- 1988Amended · Pub. L. 100-647 · 102 Stat. 3427
A history note hasn’t been published yet. The record shows enactment by Pub. L. 98-369 on 1984-07-18.
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