Page:United States Statutes at Large Volume 96 Part 1.djvu/538

 96 STAT. 496

PUBLIC LAW 97-248—SEPT. 3, 1982 "(A) QUALIFIED PARTNERSHIP.—The term 'qualified

26 USC 1371.

part-

nership' means a partnership which is engaged in a qualified farming trade or business and each of the part n e r s of which is a corporation other than — "(i) a n electing small business corporation (within the m e a n i n g of section 1371(b)), or "(ii) a personal holding company (within the m e a n i n g of section 542(a)). "(B) QUALIFIED FARMING TRADE OR BUSINESS.—The term

26 USC 447 note.

'qualified farming trade or business' means the trade or business of farming sugar cane.". (b) EFFECTIVE DATE.—The amendments made by this section shall apply to taxable years beginning after December 31, 1981. PART VII—ORIGINAL ISSUE DISCOUNT SEC. 231. ORIGINAL ISSUE DISCOUNT TAKEN INTO ACCOUNT ON BASIS OF CONSTANT INTEREST RATE.

(a) IN GENERAL. — Part IV of subchapter P of chapter 1 (relating to special rules for determining capital gains and losses) is amended by inserting after section 1232 the following new section: 26 USC 1232A.

"SEC. 1232A. ORIGINAL ISSUE DISCOUNT. "(a) ORIGINAL ISSUE DISCOUNT ON BONDS ISSUED AFTER J U L Y 1, 1982, INCLUDED IN INCOME ON BASIS O F CONSTANT INTEREST R A T E. —

"(1) GENERAL RULE.—For purposes of this subtitle, the r e shall be included in the gross income of the holder of any bond having an original issue discount issued after July 1, 1982 (and which is a capital asset in the h and s of the holder) a n a m o u n t equal to the s u m of the daily portions of the original issue discount for each day during the taxable year on which such holder held such bond. "(2) EXCEPTIONS.—Paragraph (1) shall not apply to— "(A) NATURAL PERSONS.—Any obligation issued by a n a t u -

ral person. "(B) TAX-EXEMPT OBLIGATIONS.—Any obligation if—

"(i) the interest on such obligation is not includible in gross income under section 103, or "(ii) the interest on such obligation is exempt from tax (without regard to the identity of the holder) under any other provision of law. "(C) SHORT-TERM GOVERNMENT OBLIGATIONS.—Any short-

term Government obligation (within the m e a n i n g of section 1232(a)(3)). "(D) UNITED STATES SAVINGS BONDS.—Any United States

savings bond. "(3) DETERMINATION

OF DAILY

PORTIONS.—For

purposes

of

paragraph (1), the daily portion of the original issue discount on any bond shall be determined by allocating to each day in any bond period its ratable portion of the increase during such bond period in the adjusted issue price of the bond. For purposes of the preceding sentence, the increase in the adjusted issue price for any bond period shall be a n a m o u n t equal to the excess (if any) of— "(A) the product of— "(i) the adjusted issue price of the bond a t the beginning of such bond period, and

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