26 U.S. Code § 1272 - Current inclusion in income of original issue discount
For purposes of this title, there shall be included in the gross income of the holder of any debt instrument having original issue discount issued after July 1, 1982, an amount equal to the sum of the daily portions of the original issue discount for each day during the taxable year on which such holder held such debt instrument.
Any debt instrument which has a fixed maturity date not more than 1 year from the date of issue.
Any obligation issued by a natural person before March 2, 1984.
Clause (i) shall not apply if the loan has as 1 of its principal purposes the avoidance of any Federal tax.
Except as otherwise provided in regulations prescribed by the Secretary, the term “accrual period” means a 6-month period (or shorter period from the date of original issue of the debt instrument) which ends on a day in the calendar year corresponding to the maturity date of the debt instrument or the date 6 months before such maturity date.
For purposes of this subsection, in the case of any purchase after its original issue of a debt instrument to which this subsection applies, the daily portion for any day shall be reduced by an amount equal to the amount which would be the daily portion for such day (without regard to this paragraph) multiplied by the fraction determined under subparagraph (B).
A complete month commences with the date of original issue and the corresponding day of each succeeding calendar month (or the last day of a calendar month in which there is no corresponding day).
In any case where a debt instrument is acquired on any day other than a day determined under subparagraph (A), the ratable monthly portion of original issue discount for the complete month (or partial month) in which such acquisition occurs shall be allocated between the transferor and the transferee in accordance with the number of days in such complete (or partial) month each held the debt instrument.
For purposes of this subsection, the ratable monthly portion of original issue discount shall not include its share of the acquisition premium.
1997—Subsec. (a)(6)(C). Pub. L. 105–34 added cl. (iii) and concluding provisions.
1986—Subsec. (a)(6), (7). Pub. L. 99–514 added par. (6) and redesignated former par. (6) as (7).
Amendment by Pub. L. 99–514 applicable to debt instruments issued after Dec. 31, 1986, in taxable years ending after such date, see section 675(b) of Pub. L. 99–514, set out as an Effective Date note under section 860A of this title.
Section applicable to taxable years ending after July 18, 1984, but not applicable to any obligation issued on or before Dec. 31, 1984, which is not a capital asset in the hands of the taxpayer, and subsec. (a)(6) of this section not applicable to any purchase on or before July 18, 1984, see section 44 of Pub. L. 98–369, as amended, set out as a note under section 1271 of this title.
Written determinations for this section
These documents, sometimes referred to as "Private Letter Rulings", are taken from the IRS Written Determinations page; the IRS also publishes a fuller explanation of what they are and what they mean. The collection is updated (at our end) daily. It appears that the IRS updates their listing every Friday.
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- Other : 2014-08-29
- OID Election : 2014-08-29
- Change With Consent of Commissioner : 2010-12-10
- De Minimis Rule : 2010-12-10
- Constant Interest Rate (Economic Accrual) : 2010-12-10
- Stocks and Bonds : 2005-06-24
- Put/Call Options : 2005-06-24
- Change of Methods (Permissible v. Not Permissible) : 2005-02-11
- Integration : 2003-11-21
- OID Accrual - Principal Subject to Acceleration : 2003-11-21
- Interest : 2001-11-09
- Pools : 2001-11-09
- Reduction of Carryovers : 2000-02-11
- Reduction for Interest Payment : 2000-02-11
- Accuracy-related penalty : 1999-02-19
- Basis of Property--Costs : 1999-02-19
- Original Issue Discount : 1999-02-19
- Determination of Issue Price in the Case of Certain Debt Instruments Issued for Property : 1999-02-19
- Information at Source : 1999-01-08
- Interest on Certain Deferred Payments : 1999-01-08
- Determination of Amount of Original Issue Discount : 1999-01-08
- Determination of Issue Price in the Case of Certain Debt Instruments Issued for Property : 1999-01-08