Page:United States Statutes at Large Volume 68A.djvu/101

 CH. 1—NORMAL TAXES AND SURTAXES

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for the use of the United States, see section 2 of the Act of May 15, 1952 (66 Stat. 73, as amended by the Act of July 9, 1952, 66 Stat. 479, 31 U.S.C. 725S-4). SEC. 171. AMORTIZABLE BOND PREMIUM. (a) GENERAL RULE. — I n the case of any bond, as defined in sub-

section (d), the following rules shall apply to the amortizable bond premium (determined under subsection (b)) on the bond: (1) INTEREST WHOLLY OR PARTIALLY TAXABLE.—In the case of a bond (other than a bond the interest on which is excludable from gross income), the amount of the amortizable bond premium for the taxable year shall be allowed as a deduction. (2) INTEREST WHOLLY TAX-EXEMPT.—In the case of any bond the interest on which is excludable from gross income, no deduction shall be allowed for the amortizable bond premium for the taxable year. (3) ADJUSTMENT OP CREDIT OR DEDUCTION FOR INTEREST PARTIALLY TAX-EXEMPT.—

(A) INDIVIDUALS.—In the case of any bond the interest on which is allowable as a credit under section 35, the amount which would otherwise be taken into account in computing such credit shall be reduced by the amount of the amortizable bond premium for the taxable year. (B) CORPORATIONS.—In the case of any bond the interest on which is allowable as a deduction under section 242, such deduction shall be reduced by the amount of the amortizable bond premium for the taxable year. (4) CROSS R E F E R E N C E. —

For adjustment to basis on account of amortizable bond premium* see section 1016(a)(5). (b) AMORTIZABLE B O N D. P R E M I U M. — (1) AMOUNT OF BOND PREMIUM.—For purposes of paragraph (2),

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the amount of bond premium, in the case of the holder of any bond, shall be determined— (A) with reference to the amount of the basis (for determining loss on sale or exchange) of such bond, (B) with reference to the amount payable on maturity or on earlier call date (but in the case of bonds described in subsection (c)(1)(B) issued after January 22, 1951, and acquired after January 22, 1954, only if such earlier call date is a date more than 3 years after the date of such issue), and (C) with adjustments proper to reflect unamortized bond premium, with respect to the bond, for the period before the date as of which subsection (a) becomes applicable with respect to the taxpayer with respect to such bond. In no case shall the amount of bond premium on a convertible bond include any amount attributable to the conversion features of the bond. (2) AMOUNT AMORTIZABLE.—The amortizable bond premium of the taxable year shall be the amount of the bond premium attributable to such year. In the case of a bond described in subsection (c)(1)(B) issued after January 22, 1951, and acquired after January 22, 1954, which has a call date not more than 3 years after the date of such issue, the amount of bond premium attributable to 1171(b)(2)

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