26 U.S.C. § 1273
Determination of amount of original issue discount
# (a) General rule
For purposes of this subpart— (1) In general The term “original issue discount” means the excess (if any) of— (A) the stated redemption price at maturity, over (B) the issue price. (2) Stated redemption price at maturity The term “stated redemption price at maturity” means the amount fixed by the last modification of the purchase agreement and includes interest and other amounts payable at that time (other than any interest based on a fixed rate, and payable unconditionally at fixed periodic intervals of 1 year or less during the entire term of the debt instrument). (3) ¼ of 1 percent de minimis rule If the original issue discount determined under paragraph (1) is less than— (A) ¼ of 1 percent of the stated redemption price at maturity, multiplied by (B) the number of complete years to maturity, then the original issue discount shall be treated as zero.
# (b) Issue price
For purposes of this subpart— (1) Publicly offered debt instruments not issued for property In the case of any issue of debt instruments— (A) publicly offered, and (B) not issued for property, the issue price is the initial offering price to the public (excluding bond houses and brokers) at which price a substantial amount of such debt instruments was sold.
(2) Other debt instruments not issued for property In the case of any issue of debt instruments not issued for property and not publicly offered, the issue price of each such instrument is the price paid by the first buyer of such debt instrument.
(3) Debt instruments issued for property where there is public trading In the case of a debt instrument which is issued for property and which— (A) is part of an issue a portion of which is traded on an established securities market, or (B) (i) is issued for stock or securities which are traded on an established securities market, or (ii) to the extent provided in regulations, is issued for property (other than stock or securities) of a kind regularly traded on an established market, the issue price of such debt instrument shall be the fair market value of such property.
(4) Other cases Except in any case— (A) to which paragraph (1), (2), or (3) of this subsection applies, or (B) to which section 1274 applies, the issue price of a debt instrument which is issued for property shall be the stated redemption price at maturity.
(5) Property In applying this subsection, the term “property” includes services and the right to use property, but such term does not include money.
# (c) Special rules for applying subsection (b)
For purposes of subsection (b)— (1) Initial offering price; price paid by the first buyer The terms “initial offering price” and “price paid by the first buyer” include the aggregate payments made by the purchaser under the purchase agreement, including modifications thereof. (2) Treatment of investment units In the case of any debt instrument and an option, security, or other property issued together as an investment unit— (A) the issue price for such unit shall be determined in accordance with the rules of this subsection and subsection (b) as if it were a debt instrument, (B) the issue price determined for such unit shall be allocated to each element of such unit on the basis of the relationship of the fair market value of such element to the fair market value of all elements in such unit, and (C) the issue price of any debt instrument included in such unit shall be the portion of the issue price of the unit allocated to the debt instrument under subparagraph (B).
Source: view the official text
Cited by 54
- 26 CFR § 1.1001-1 — Computation of gain or loss.
- 26 CFR § 1.1012-1 — Basis of property.
- 26 CFR § 1.108-2 — Acquisition of indebtedness by a person related to the debtor.
- 26 CFR § 1.1272-2 — Treatment of debt instruments purchased at a premium.
- 26 CFR § 1.1273-1 — Definition of OID.
- 26 CFR § 1.1273-2 — Determination of issue price and issue date.
- 26 CFR § 1.1274-1 — Debt instruments to which section 1274 applies.
- 26 CFR § 1.1275-1 — Definitions.
- 26 CFR § 1.1275-2 — Special rules relating to debt instruments.
- 26 CFR § 1.1275-4 — Contingent payment debt instruments.
- 26 CFR § 1.1286-1 — Tax treatment of certain stripped bonds and stripped coupons.
- 26 CFR § 1.1367-2 — Adjustments to basis of indebtedness to shareholder.
Show 42 more
- 26 CFR § 1.148-1 — Definitions and elections.
- 26 CFR § 1.148-5 — Yield and valuation of investments.
- 26 CFR § 1.1502-13 — Intercompany transactions.
- 26 CFR § 1.163-12 — Deduction of original issue discount on instrument held by related foreign person.
- 26 CFR § 1.163-5 — Denial of interest deduction on certain obligations issued after December 31, 1982, unless issued in registered form.
- 26 CFR § 1.163-7 — Deduction for OID on certain debt instruments.
- 26 CFR § 1.221-1 — Deduction for interest paid on qualified education loans after December 31, 2001.
- 26 CFR § 1.305-5 — Distributions on preferred stock.
- 26 CFR § 1.382-2T — Definition of ownership change under section 382, as amended by the Tax Reform Act of 1986 (temporary).
- 26 CFR § 1.385-1 — General provisions.
- 26 CFR § 1.385-3 — Certain distributions of debt instruments and similar transactions.
- 26 CFR § 1.469-7 — Treatment of self-charged items of interest income and deduction.
- 26 CFR § 1.6045-1 — Returns of information of brokers and barter exchanges.
- 26 CFR § 1.6049-10 — Reporting of original issue discount on a tax-exempt obligation.
- 26 CFR § 1.6049-7 — Returns of information with respect to REMIC regular interests and collateralized debt obligations.
- 26 CFR § 1.860G-1 — Definition of regular and residual interests.
- 26 CFR § 1.884-4 — Branch-level interest tax.
- 26 CFR § 1.988-2 — Recognition and computation of exchange gain or loss.
- 26 CFR § 1.988-5 — Section 988(d) hedging transactions.
- 26 CFR § 1.988-6 — Nonfunctional currency contingent payment debt instruments.
- 26 CFR § 35a.3406-2 — Imposition of backup withholding for notified payee underreporting of reportable interest or dividend payments.
- 26 CFR § 46.4701-1 — Tax on issuer of registration-required obligation not in registered form.
- 26 U.S.C. § 108 — Income from discharge of indebtedness
- 26 U.S.C. § 1274 — Determination of issue price in the case of certain debt instruments issued for property
- 26 U.S.C. § 1275 — Other definitions and special rules
- 26 U.S.C. § 1283 — Definitions and special rules
- 26 U.S.C. § 1286 — Tax treatment of stripped bonds
- 26 U.S.C. § 1288 — Treatment of original issue discount on tax-exempt obligations
- 26 U.S.C. § 1351 — Treatment of recoveries of foreign expropriation losses
- 26 U.S.C. § 143 — Mortgage revenue bonds: qualified mortgage bond and qualified veterans’ mortgage bond
- 26 U.S.C. § 1441 — Withholding of tax on nonresident aliens
- 26 U.S.C. § 148 — Arbitrage
- 26 U.S.C. § 163 — Interest
- 26 U.S.C. § 249 — Limitation on deduction of bond premium on repurchase
- 26 U.S.C. § 305 — Distributions of stock and stock rights
- 26 U.S.C. § 483 — Interest on certain deferred payments
- 26 U.S.C. § 6049 — Returns regarding payments of interest
- 26 U.S.C. § 811 — Accounting provisions
- 26 U.S.C. § 834 — Determination of taxable investment income
- 26 U.S.C. § 860G — Other definitions and special rules
- 26 U.S.C. § 871 — Tax on nonresident alien individuals
- 26 U.S.C. § 881 — Tax on income of foreign corporations not connected with United States business
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