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

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(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.


(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.)

1988—Subsec. (a). Pub. L. 100–647substituted “paragraph (7)” for “paragraph (6)” in pars. (1) and (2).
Effective Date of 1988 Amendment

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

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

The table below lists the classification updates, since Jan. 3, 2012, for this section. Updates to a broader range of sections may be found at the update page for containing chapter, title, etc.

The most recent Classification Table update that we have noticed was Tuesday, August 13, 2013

An empty table indicates that we see no relevant changes listed in the classification tables. If you suspect that our system may be missing something, please double-check with the Office of the Law Revision Counsel.

26 USCDescription of ChangeSession YearPublic LawStatutes at Large


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