Page:United States Statutes at Large Volume 98 Part 1.djvu/581

 PUBLIC LAW 98-369—JULY 18, 1984

98 STAT. 533

the stated redemption price at maturity over the taxpayer's basis for the obligation. "(D) RATABLE SHARE.—For purposes of this paragraph, the ratable share of the acquisition discount is an amount which bears the same ratio to such discount as— f- V ^ "(i) the number of days which the taxpayer held the obligation, bears to ?i^.' "(ii) the number of days after the date the taxpayer acquired the obligation and up to (and including) the date of its maturity. "(b) EXCEPTIONS.—This section shall not apply to— "(1) NATURAL PERSONS.—Any obligation issued by a natural person. "(2) OBLIGATIONS ISSUED BEFORE JULY 2, 1982, BY CERTAIN

ISSUERS.—Any obligation issued before July 2, 1982, by an issuer which— "(A) is not a corporation, and "(B) is not a government or political subdivision thereof. "(c) TRANSITION RULES.— "(1) SPECIAL RULE FOR CERTAIN OBLIGATIONS ISSUED BEFORE

JANUARY 1, 1955.—Paragraph (1) of subsection (a) shall apply to a debt instrument issued before January 1, 1955, only if such instrument was issued with interest coupons or in registered form, or was in such form on March 1, 1954. "(2) SPECIAL RULE FOR CERTAIN OBLIGATIONS WITH RESPECT TO WHICH O R I G I N A L ISSUE DISCOUNT NOT CURRENTLY INCLUDIBLE.—

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"(A) IN GENERAL.—On the sale or exchange of debt instruments issued by a government or political subdivision thereof after December 81, 1954, and before July 2, 1982, or by a corporation after December 31, 1954, and on or before May 27, 1969, any gain realized which does not exceed— "(i) an amount equal to the original issue discount, or "(ii) if at the time of original issue there was no intention to call the debt instrument before maturity, an amount which bears the same ratio to the original issue discount as the number of complete months that the debt instrument was held by the taxpayer bears to the number of complete months from the date of original issue to the date of maturity, shall be considered as ordinary income. "(B) SUBSECTION

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(a)(2)(A) NOT TO APPLY.—Subsection

(a)(2)(A) shall not apply to any debt instrument referred to in subparagraph (A) of this paragraph. "(C) CROSS REFERENCE.— "For current inclusion of original issue discount, see section 1272.

"(d) DOUBLE INCLUSION IN INCOME NOT REQUIRED.—This section and sections 1272 and 1286 shall not require the inclusion of any Post, p. 551. amount previously includible in gross income. "SEC. 1272. CURRENT INCLUSION IN INCOME OF ORIGINAL ISSUE DISCOUNT. "(a) ORIGINAL ISSUE DISCOUNT ON DEBT INSTRUMENTS ISSUED AFTER JULY 1, 1982, INCLUDED IN INCOME ON BASIS OF CONSTANT INTEREST RATE.— "(1) GENERAL RULE.—For purposes of this title, there shall be

included in the gross income of the holder of any debt instru-

26 USC 1272.

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