Page:United States Statutes at Large Volume 98 Part 1.djvu/595

 PUBLIC LAW 98-369—JULY 18, 1984

98 STAT. 547

subsection (b)(2) for the taxable year in which such bond is disposed of. "SEC. 1278. DEFINITIONS AND SPECIAL RULES.

26 USC 1278.

"(a) IN GENERAL.—For purposes of this part— "(1) MARKET DISCOUNT BOND.—

"(A) IN GENERAL.—Except as provided in subparagraph (B), the term 'market discount bond' means any bond having market discount. "(B) EXCEPTIONS.—The term 'market discount bond' shall not include— "(i) SHORT-TERM OBLIGATIONS.—Any obligation with a fixed maturity date not exceeding 1 year from the date of issue. "(ii) TAX-EXEMPT OBLIGATIONS.—Any tax-exempt obligation (as defined in section 1275(a)(3)). "(iii) UNITED STATES SAVINGS BONDS.—Any United States savings bond. "(iv) INSTALLMENT OBLIGATIONS.—Any

Ante, p. 540.

installment

obligation to which section 453B applies. mif

"(2) M A R K E T DISCOUNT.—

,.;< yJ ' * "

"(A) IN GENERAL.—The term 'market discount' means the excess (if any) of— "(i) the stated redemption price of the bond at maturity, over "(ii) the basis of such bond immediately after its acquisition by the taxpayer.



"(B) COORDINATION WHERE BOND HAS ORIGINAL ISSUE DIS-

COUNT.—In the case of any bond having original issue discount, for purposes of subparagraph (A), the stated redemption price of such bond at maturity shall be treated as equal to its revised issue price. ii J»<^Q) pg MINIMIS RULE.—If the market discount is less than Vi of 1 percent of the stated redemption price of the iv f bond at maturity multiplied by the number of complete ,r^^ years to maturity (after the taxpayer acquired the bond), ' * ^ then the market discount shall be considered to be zero. "(3) BOND.—The term 'bond' means any bond, debenture, note, certificate, or other evidence of indebtedness. "(4) REVISED ISSUE PRICE.—The term 'revised issue price' "(A) the issue price of the bond, and
 * , means of the sum of—
 * ,a^r-"(B) the aggregate amount of the original issue discount

includible in the gross income of all holders for periods before the acquisition of the bond by the taxpayer (determined without regard to section 1272(a)(6) or (b)(4)). Ante, p. 533. "(5) ORIGINAL ISSUE DISCOUNT, ETC.—The terms 'original issue discount', 'stated redemption price at maturity', and 'issue price' have the respective meanings given such terms by subpart A of this part. "(b) ELECTION TO INCLUDE MARKET DISCOUNT CURRENTLY.—

"(1) IN GENERAL.—If the taxpayer makes an election under this subsection— "(A) sections 1276 and 1277 shall not apply, and Ante, pp. 543, "(B) market discount on any market discount bond shall 545. be included in the gross income of the taxpayer for the

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