Issue price.
(ii) Issue price. Under paragraph (g)(2)(ii) of this section, the stated principal amount of B's debt instrument is $686,000 ($700,000 minus $14,000). Assuming a test rate of 9 percent, compounded semiannually, the imputed principal amount of B's debt instrument under 1.12742(c)(1) is $686,153. Under 1.12742(b)(1), the issue price of B's debt instrument is the stated principal amount of $686,000. Because the amount of OID on the debt instrument ($700,000$686,000, or $14,000) is more than a de minimis amount of OID, A accounts for the OID under 1.12721 and B accounts for the OID under 1.1637. B's basis in the property purchased is $1,000,000 ($686,000 debt instrument plus $314,000 cash payments).