Page:United States Statutes at Large Volume 96 Part 1.djvu/540

 96 STAT. 498

PUBLIC LAW 97-248—SEPT. 3, 1982 able 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 n u m b e r of days in such complete (or partial) month each held the bond. "(4) REDUCTION IN CASE OF CERTAIN SUBSEQUENT HOLDERS.—

For purposes of this subsection, the r a t a b l e monthly portion of original issue discount shall not include a n a m o u n t, determined at the time of any purchase after the original issue of the bond, equal to the excess of— "(A) the cost of such bond incurred by the holder, over "(B) the issue price of such bond, increased by the portion of original discount previously includible in the gross income of any holder (computed without regard to this paragraph), divided by the n u m b e r of complete months (plus any fractional part of a month) from the date of such purchase to the stated m a t u r i t y date of such bond. "(c) DEFINITIONS AND SPECIAL RULES. — "(1) B O N D INCLUDES OTHER EVIDENCES OF INDEBTEDNESS.—For

purposes of this section, the term 'bond' means a bond, debenture, note, or certificate or other evidence of indebtedness. "(2) P U R C H A S E DEFINED.—For purposes of t h i s section,

26 USC 1014.

term 'purchase' means any acquisition basis of the bond is not determined reference to the adjusted basis of such person from whom acquired, or under to property acquired from a decedent).

the

of a bond, b u t only if the in whole or in part by bond in the h and s of the section 1014(a) (relating

"(3) O R I G I N A L ISSUE DISCOUNT, ETC.—For purposes of t h i s sec-

tion, the term s 'original issue discount', 'issue price', and 'date of original issue' shall have the respective m e a n i n g s given to such term s by section 1232(b). "(4) EXCEPTIONS.—This section shall not apply to any holder— "(A) w h o has purchased the bond a t a p r e m i u m, or "(B) which is a life insurance company to which section 818(b) applies. "(5) BASIS ADJUSTMENTS. — The basis of any bond in the h and s

of the holder thereof shall be increased by the a m o u n t included in his gross income pursuant to this section." (b) DEDUCTION

26 USC 163.

DETERMINED

ON BASIS

OF CONSTANT

INTEREST

RATE.—Section 163 (relating to deduction for interest) is amended by redesignating subsection (e) as subsection (0 and by inserting after subsection (d) the following new subsection: "(e) O R I G I N A L ISSUE D I S C O U N T. —

"(1) IN GENERAL.—In the case of any bond issued after July 1, 1982, by a n issuer (other than a n a t u r a l person), the portion of the original issue discount with respect to such bond which is allowable as a deduction to the issuer for any taxable year shall be equal to the aggregate daily portions of the original issue discount for days during such taxable year. "(2) DEFINITIONS AND SPECIAL RULES.—For purposes of t h i s

section— "(A) BOND.—The term 'bond' has the m e a n i n g given to such term by section 1232A(c)(l). "(B) DAILY PORTIONS.—The daily portion of the original

issue discount for any day shall be determined under section 1232A(a) (without regard to paragraph s (2)(B) and (6)

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