No deduction shall be allowed to the issuing corporation for any premium paid or incurred upon the repurchase of a bond, debenture, note, or certificate or other evidence of indebtedness which is convertible into the stock of the issuing corporation, or a corporation in the same parent-subsidiary controlled group (within the meaning of section
1563(a)(1) as the issuing corporation, to the extent the repurchase price exceeds an amount equal to the adjusted issue price plus a normal call premium on bonds or other evidences of indebtedness which are not convertible. The preceding sentence shall not apply to the extent that the corporation can demonstrate to the satisfaction of the Secretary that such excess is attributable to the cost of borrowing and is not attributable to the conversion feature.
(b) Adjusted issue price
For purposes of subsection (a), the adjusted issue price is the issue price (as defined in sections
1274) increased by any amount of discount deducted before repurchase, or, in the case of bonds or other evidences of indebtedness issued after February 28, 1913, decreased by any amount of premium included in gross income before repurchase by the issuing corporation.
 So in original. Probably should be followed by a closing parenthesis.
2012—Subsec. (a). Pub. L. 112–95, § 1108(a), substituted “, or a corporation in the same parent-subsidiary controlled group (within the meaning of section
1563(a)(1) as” for “, or a corporation in control of, or controlled by,”.
Subsec. (b). Pub. L. 112–95, § 1108(b), substituted “Adjusted issue price” for “Special rules” in heading and “For purposes of subsection (a),” for “For purposes of subsection (a)—” and par. (1) designation and heading, and “the adjusted issue price” for “The adjusted issue price”, and struck out par. (2), which defined “control” as having the meaning assigned to such term by section
1976—Subsec. (a). Pub. L. 94–455struck out “or his delegate” after “Secretary”.
Effective Date of 2012 Amendment
Pub. L. 112–95, title XI, § 1108(c),Feb. 14, 2012, 126 Stat. 154, provided that: “The amendments made by this section [amending this section] shall apply to repurchases after the date of the enactment of this Act [Feb. 14, 2012].”
Effective Date of 1984 Amendment
Amendment by Pub. L. 98–369applicable to taxable years ending after July 18, 1984, see section 44 ofPub. L. 98–369, set out as an Effective Date note under section
1271 of this title.
Pub. L. 91–172, title IV, § 414(c),Dec. 30, 1969, 83 Stat. 613, as amended by Pub. L. 99–514, § 2,Oct. 22, 1986, 100 Stat. 2095, provided that: “The amendments made by this section [enacting this section] shall apply to a convertible bond or other convertible evidence of indebtedness repurchased after April 22, 1969, other than such a bond or other evidence of indebtedness repurchased pursuant to a binding obligation incurred on or before April 22, 1969, to repurchase such bond or other evidence of indebtedness at a specified call premium, but no inference shall be drawn from the fact that section 249 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (as added by subsection (a) of this section) does not apply to the repurchase of such convertible bond or other convertible evidence of indebtedness.”
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
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