26 U.S.C. § 1288 | Treatment of original issue discount on tax-exempt obligations

(a)

General rule

Original issue discount on any tax-exempt obligation shall be treated as accruing—

(1)

for purposes of section 163, in the manner provided by section 1272(a) (determined without regard to paragraph (7) thereof), and

(2)

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).

(b)

Definitions and special rules

For purposes of this section—

(1)

Original issue discount

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.

(2)

Tax-exempt obligation

The term “tax-exempt obligation” has the meaning given to such term by section 1275(a)(3).

(3)

Short-term obligations

In applying this section to obligations with maturity of 1 year or less, rules similar to the rules of section 1283(b) shall apply.

Pub. L. 98–369, div. A, title I, § 41(a)July 18, 198498 Stat. 553 Pub. L. 100–647, title I, § 1006(u)(3)Nov. 10, 1988102 Stat. 3427(Added , , ; amended , , .)

Editorial Notes

Amendments

Pub. L. 100–6471988—Subsec. (a). substituted “paragraph (7)” for “paragraph (6)” in pars. (1) and (2).

Statutory Notes and Related Subsidiaries

Effective Date of 1988 Amendment

Pub. L. 100–647 Pub. L. 99–514 section 1019(a) of Pub. L. 100–647 section 1 of this titleAmendment by effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, , to which such amendment relates, see , set out as a note under .

Effective Date

July 18, 1984Sept. 3, 1982Mar. 1, 1984section 44 of Pub. L. 98–369 section 1271 of this titleSection applicable to taxable years ending after , and applicable to obligations issued after , and acquired after , see , set out as a note under .