§ 1282. Deferral of interest deduction allocable to accrued discount

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(a) General rule
Except as otherwise provided in this section, the net direct interest expense with respect to any short-term obligation shall be allowed as a deduction for the taxable year only to the extent such expense exceeds the sum of—
(1) the daily portions of the acquisition discount for each day during the taxable year on which the taxpayer held such obligation, and
(2) the amount of any interest payable on the obligation (other than interest taken into account in determining the amount of the acquisition discount) which accrues during the taxable year while the taxpayer held such obligation (and is not included in the gross income of the taxpayer for such taxable year by reason of the taxpayer’s method of accounting).
(b) Section not to apply to obligations to which section 1281 applies
(1) In general
This section shall not apply to any short-term obligation to which section 1281 applies.
(2) Election to have section 1281 apply to all obligations
(A) In general
A taxpayer may make an election under this paragraph to have section 1281 apply to all short-term obligations acquired by the taxpayer on or after the 1st day of the 1st taxable year to which such election applies.
(B) Period to which election applies
An election under this paragraph shall apply to the taxable year for which it is made and for all subsequent taxable years, unless the taxpayer secures the consent of the Secretary to the revocation of such election.
(c) Certain rules made applicable
Rules similar to the rules of subsections (b) and (c) of section 1277 shall apply for purposes of this section.
(d) Cross reference
For special rules limiting the application of this section to original issue discount in the case of nongovernmental obligations, see section 1283 (c).

 

I may have been on that one.

 

Tomorrow I have many meetings that will conflict with my posting
no no no

 

LOL.

 

§ 1283. Definitions and special rules

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(a) Definitions
For purposes of this subpart—
(1) Short-term obligation
(A) In general
Except as provided in subparagraph (B), the term “short-term obligation” means any bond, debenture, note, certificate, or other evidence of indebtedness which has a fixed maturity date not more than 1 year from the date of issue.
(B) Exceptions for tax-exempt obligations
The term “short-term obligation” shall not include any tax-exempt obligation (as defined in section 1275 (a)(3)).
(2) Acquisition discount
The term “acquisition discount” means the excess of—
(A) the stated redemption price at maturity (as defined in section 1273), over
(B) the taxpayer’s basis for the obligation.
(b) Daily portion
For purposes of this subpart—
(1) Ratable accrual
Except as otherwise provided in this subsection, the daily portion of the acquisition discount is an amount equal to—
(A) the amount of such discount, divided by
(B) the number of days after the day on which the taxpayer acquired the obligation and up to (and including) the day of its maturity.
(2) Election of accrual on basis of constant interest rate (in lieu of ratable accrual)
(A) In general
At the election of the taxpayer with respect to any obligation, the daily portion of the acquisition discount for any day is the portion of the acquisition discount accruing on such day determined (under regulations prescribed by the Secretary) on the basis of—
(i) the taxpayer’s yield to maturity based on the taxpayer’s cost of acquiring the obligation, and
(ii) compounding daily.
(B) Election irrevocable
An election under subparagraph (A), once made with respect to any obligation, shall be irrevocable.
(c) Special rules for nongovernmental obligations
(1) In general
In the case of any short-term obligation which is not a short-term Government obligation (as defined in section 1271 (a)(3)(B))—
(A) sections 1281 and 1282 shall be applied by taking into account original issue discount in lieu of acquisition discount, and
(B) appropriate adjustments shall be made in the application of subsection (b) of this section.
(2) Election to have paragraph (1) not apply
(A) In general
A taxpayer may make an election under this paragraph to have paragraph (1) not apply to all obligations acquired by the taxpayer on or after the first day of the first taxable year to which such election applies.
(B) Period to which election applies
An election under this paragraph shall apply to the taxable year for which it is made and for all subsequent taxable years, unless the taxpayer secures the consent of the Secretary to the revocation of such election.
(d) Other special rules
(1) Basis adjustments
The basis of any short-term obligation in the hands of the holder thereof shall be increased by the amount included in his gross income pursuant to section 1281.
(2) Double inclusion in income not required
Section 1281 shall not require the inclusion of any amount previously includible in gross income.
(3) Coordination with other provisions
Section 454 (b) and paragraphs (3) and (4) of section 1271 (a) shall not apply to any short-term obligation to which section 1281 applies.

 

29010 777-228ER Air France 15/01/2000 F-GSPK Active

 

Cancel them in order to post.

 

 

§ 1286. Tax treatment of stripped bonds

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(a) Inclusion in income as if bond and coupons were original issue discount bonds
If any person purchases after July 1, 1982, a stripped bond or a stripped coupon, then such bond or coupon while held by such purchaser (or by any other person whose basis is determined by reference to the basis in the hands of such purchaser) shall be treated for purposes of this part as a bond originally issued on the purchase date and having an original issue discount equal to the excess (if any) of—
(1) the stated redemption price at maturity (or, in the case of coupon, the amount payable on the due date of such coupon), over
(2) such bond’s or coupon’s ratable share of the purchase price.
For purposes of paragraph (2), ratable shares shall be determined on the basis of their respective fair market values on the date of purchase.
(b) Tax treatment of person stripping bond
For purposes of this subtitle, if any person strips 1 or more coupons from a bond and after July 1, 1982, disposes of the bond or such coupon—
(1) such person shall include in gross income an amount equal to the sum of—
(A) the interest accrued on such bond while held by such person and before the time such coupon or bond was disposed of (to the extent such interest has not theretofore been included in such person’s gross income), and
(B) the accrued market discount on such bond determined as of the time such coupon or bond was disposed of (to the extent such discount has not theretofore been included in such person’s gross income),
(2) the basis of the bond and coupons shall be increased by the amount included in gross income under paragraph (1),
(3) the basis of the bond and coupons immediately before the disposition (as adjusted pursuant to paragraph (2)) shall be allocated among the items retained by such person and the items disposed of by such person on the basis of their respective fair market values, and
(4) for purposes of subsection (a), such person shall be treated as having purchased on the date of such disposition each such item which he retains for an amount equal to the basis allocated to such item under paragraph (3).
A rule similar to the rule of paragraph (4) shall apply in the case of any person whose basis in any bond or coupon is determined by reference to the basis of the person described in the preceding sentence.
(c) Retention of existing law for stripped bonds purchased before July 2, 1982
If a bond issued at any time with interest coupons—
(1) is purchased after August 16, 1954, and before January 1, 1958, and the purchaser does not receive all the coupons which first become payable more than 12 months after the date of the purchase, or
(2) is purchased after December 31, 1957, and before July 2, 1982, and the purchaser does not receive all the coupons which first become payable after the date of the purchase,
then the gain on the sale or other disposition of such bond by such purchaser (or by a person whose basis is determined by reference to the basis in the hands of such purchaser) shall be considered as ordinary income to the extent that the fair market value (determined as of the time of the purchase) of the bond with coupons attached exceeds the purchase price. If this subsection and section 1271 (a)(2)(A) apply with respect to gain realized on the sale or exchange of any evidence of indebtedness, then section 1271 (a)(2)(A) shall apply with respect to that part of the gain to which this subsection does not apply.
(d) Special rules for tax-exempt obligations
(1) In general
In the case of any tax-exempt obligation (as defined in section 1275 (a)(3)) from which 1 or more coupons have been stripped—
(A) the amount of the original issue discount determined under subsection (a) with respect to any stripped bond or stripped coupon—
(i) shall be treated as original issue discount on a tax-exempt obligation to the extent such discount does not exceed the tax-exempt portion of such discount, and
(ii) shall be treated as original issue discount on an obligation which is not a tax-exempt obligation to the extent such discount exceeds the tax-exempt portion of such discount,
(B) subsection (b)(1)(A) shall not apply, and
(C) subsection (b)(2) shall be applied by increasing the basis of the bond or coupon by the sum of—
(i) the interest accrued but not paid before such bond or coupon was disposed of (and not previously reflected in basis), plus
(ii) the amount included in gross income under subsection (b)(1)(B).
(2) Tax-exempt portion
For purposes of paragraph (1), the tax-exempt portion of the original issue discount determined under subsection (a) is the excess of—
(A) the amount referred to in subsection (a)(1), over
(B) an issue price which would produce a yield to maturity as of the purchase date equal to the lower of—
(i) the coupon rate of interest on the obligation from which the coupons were separated, or
(ii) the yield to maturity (on the basis of the purchase price) of the stripped obligation or coupon.
The purchaser of any stripped obligation or coupon may elect to apply clause (i) by substituting “original yield to maturity of” for “coupon rate of interest on”.
(e) Definitions and special rules
For purposes of this section—
(1) Bond
The term “bond” means a bond, debenture, note, or certificate or other evidence of indebtedness.
(2) Stripped bond
The term “stripped bond” means a bond issued at any time with interest coupons where there is a separation in ownership between the bond and any coupon which has not yet become payable.
(3) Stripped coupon
The term “stripped coupon” means any coupon relating to a stripped bond.
(4) Stated redemption price at maturity
The term “stated redemption price at maturity” has the meaning given such term by section 1273 (a)(2).
(5) Coupon
The term “coupon” includes any right to receive interest on a bond (whether or not evidenced by a coupon). This paragraph shall apply for purposes of subsection (c) only in the case of purchases after July 1, 1982.
(6) Purchase
The term “purchase” has the meaning given such term by section 1272 (d)(1).
(f) Treatment of stripped interests in bond and preferred stock funds, etc.
In the case of an account or entity substantially all of the assets of which consist of bonds, preferred stock, or a combination thereof, the Secretary may by regulations provide that rules similar to the rules of this section and 305(e),[1] as appropriate, shall apply to interests in such account or entity to which (but for this subsection) this section or section 305 (e), as the case may be, would not apply.
(g) Regulation authority
The Secretary may prescribe regulations providing that where, by reason of varying rates of interest, put or call options, or other circumstances, the tax treatment under this section does not accurately reflect the income of the holder of a stripped coupon or stripped bond, or of the person disposing of such bond or coupon, as the case may be, for any period, such treatment shall be modified to require that the proper amount of income be included for such period.

 

29011 777-228ER Air France 05/12/2000 F-GSPN Active

 

^

 

Six more to go.

 

29029 777-281 All Nippon Airways 17/04/1998 JA705A Active

 

§ 1287. Denial of capital gain treatment for gains on certain obligations not in registered form

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(a) In general
If any registration-required obligation is not in registered form, any gain on the sale or other disposition of such obligation shall be treated as ordinary income (unless the issuance of such obligation was subject to tax under section 4701).
(b) Definitions
For purposes of subsection (a)—
(1) Registration-required obligation
The term “registration-required obligation” has the meaning given to such term by section 163 (f)(2) except that clause (iv) of subparagraph (A), and subparagraph (B), of such section shall not apply.
(2) Registered form
The term “registered form” has the same meaning as when used in section 163 (f).

 

I will try to move them to the afternoon , at least i can get a good morning of posts going