Adjusted issue price
(b) Adjusted issue price(1) In general. The adjusted issue price of a debt instrument at the beginning of the first accrual period is the issue price. Thereafter, the adjusted issue price of the debt instrument is the issue price of the debt instrument (i) Increased by the amount of OID previously includible in the gross income of any holder (determined without regard to section 1272(a)(7) and section 1272(c)(1)); and (ii) Decreased by the amount of any payment previously made on the debt instrument other than a payment of qualified stated interest. See 1.1275-2(f) for rules regarding adjustments to adjusted issue price on a pro rata prepayment. (2) Bond issuance premium. If a debt instrument is issued with bond issuance premium (as defined in 1.163-13(c)), for purposes of determining the issuer's adjusted issue price, the adjusted issue price determined under paragraph (b)(1) of this section is also decreased by the amount of bond issuance premium previously allocable under 1.163-13(d)(3). (3) Adjusted issue price for subsequent holders. For purposes of calculating OID accruals, acquisition premium, or market discount, a holder (other than a purchaser at original issuance) determines adjusted issue price in any manner consistent with the regulations under sections 1271 through 1275.