26 USC § 249 - Limitation on deduction of bond premium on repurchase

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(a) General rule

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 control of, or controlled by, 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) Special rules

For purposes of subsection (a)—

(1) Adjusted issue price

The adjusted issue price is the issue price (as defined in sections 1273 (b) and 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.

(2) Control

The term “control” has the meaning assigned to such term by section 368 (c).

Source

(Added Pub. L. 91–172, title IV, § 414(a),Dec. 30, 1969, 83 Stat. 612; amended Pub. L. 94–455, title XIX, § 1906(b)(13)(A),Oct. 4, 1976, 90 Stat. 1834; Pub. L. 98–369, div. A, title I, § 42(a)(5),July 18, 1984, 98 Stat. 557.)

Amendments

1984—Subsec. (b)(1). Pub. L. 98–369substituted “sections 1273 (b) and 1274” for “section 1232 (b)”.

1976—Subsec. (a). Pub. L. 94–455struck out “or his delegate” after “Secretary”.

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.

Effective Date of 1976 Amendment

Amendment by Pub. L. 94–455effective Feb. 1, 1977, see section 1906(d)(1) ofPub. L. 94–455, set out as a note under section 6013 of this title.

Effective Date

Section 414(c) ofPub. L. 91–172, 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 Wednesday, December 26, 2012

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.

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"omitted" means the section is omitted.
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"nt ed change" and "ed change" - See the Editorial Classification Change Table [pdf].

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General Reference

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26 USC	Description of Change	Session Year	Public Law	Statutes at Large
§ 249		2012	112-95 [Sec.] 1108(a), (b)	126 Stat. 154
§ 249	nt new	2012	112-95 [Sec.] 1108(c)	126 Stat. 154

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26 USC § 249 - Limitation on deduction of bond premium on repurchase

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