§1275 — Other definitions and special rules
4 cases·4 cited
Statute Text — 26 U.S.C. §1275
For purposes of this subpart—
Except as provided in subparagraph (B), the term “debt instrument” means a bond, debenture, note, or certificate or other evidence of indebtedness.
The term “debt instrument” shall not include any annuity contract to which section 72 applies and which—
depends (in whole or in substantial part) on the life expectancy of 1 or more individuals, or
is issued by an insurance company subject to tax under subchapter L (or by an entity described in section 501(c) and exempt from tax under section 501(a) which would be subject to tax under subchapter L were it not so exempt)—
in a transaction in which there is no consideration other than cash or another annuity contract meeting the requirements of this clause,
pursuant to the exercise of an election under an insurance contract by a beneficiary thereof on the death of the insured party under such contract, or
in a transaction involving a qualified pension or employee benefit plan.
In the case of any debt instrument which is publicly offered, the term “date of original issue” means the date on which the issue was first issued to the public.
In the case of any debt instrument to which section 1273(b)(2) applies, the term “date of original issue” means the date on which the debt instrument was sold by the issuer.
In the case of any debt instrument not described in subparagraph (A) or (B), the term “date of original issue” means the date on which the debt instrument was issued in a sale or exchange.
The term “tax-exempt obligation” means any obligation if—
the interest on such obligation is not includible in gross income under section 103, or
the interest on such obligation is exempt from tax (without regard to the identity of the holder) under any other provision of law.
Any debt obligation of a corporation distributed by such corporation with respect to its stock shall be treated as if it had been issued by such corporation for property.
In the case of the obligor under any debt instrument given in consideration for the sale or exchange of property, sections 1274 and 483 shall not apply if such property is personal use property.
In the case of any debt instrument, if—
such instrument—
is incurred in connection with the acquisition or carrying of personal use property, and
has original issue discount (determined after the application of paragraph (1)), and
the obligor under such instrument uses the cash receipts and disbursements method of accounting,
notwithstanding section 163(e), the original issue discount on such instrument shall be deductible only when paid.
For purposes of this subsection, the term “personal use property” means any property substantially all of the use of which by the taxpayer is not in connection with a trade or business of the taxpayer or an activity described in section 212. The determination of whether property is described in the preceding sentence shall be made as of the time of issuance of the debt instrument.
In the case of any debt instrument having original issue discount, the Secretary may by regulations require that—
the amount of the original issue discount, and
the issue date,
be set forth on such instrument.
In the case of any issue of debt instruments not publicly offered, the regulations prescribed under subparagraph (A) shall not require the information to be set forth on the debt instrument before any disposition of such instrument by the first buyer.
In the case of any issue of publicly offered debt instruments having original issue discount, the issuer shall (at such time and in such manner as the Secretary shall by regulation prescribe) furnish the Secretary the following information:
The amount of the original issue discount.
The issue date.
Such other information with respect to the issue as the Secretary may by regulations require.
For purposes of the preceding sentence, any person who makes a public offering of stripped bonds (or stripped coupons) shall be treated as the issuer of a publicly offered debt instrument having original issue discount.
This subsection shall not apply to any obligation referred to in section 1272(a)(2) (relating to exceptions from current inclusion of original issue discount).
For civil penalty for failure to meet requirements of this subsection, see section 6706.
The Secretary may prescribe regulations providing that where, by reason of varying rates of interest, put or call options, indefinite maturities, contingent payments, assumptions of debt instruments, or other circumstances, the tax treatment under this subpart (or section 163(e)) does not carry out the purposes of this subpart (or section 163(e)), such treatment shall be modified to the extent appropriate to carry out the purposes of this subpart (or section 163(e)).
Treasury Regulations
- Treas. Reg. §Treas. Reg. §1.1275-1 Definitions
- Treas. Reg. §Treas. Reg. §1.1275-1(a) Applicability.
- Treas. Reg. §Treas. Reg. §1.1275-1(b) Adjusted issue price—(1) In general.
- Treas. Reg. §Treas. Reg. §1.1275-1(c) OID.
- Treas. Reg. §Treas. Reg. §1.1275-1(d) Debt instrument.
- Treas. Reg. §Treas. Reg. §1.1275-1(e) Tax-exempt obligations.
- Treas. Reg. §Treas. Reg. §1.1275-1(f) Issue.
- Treas. Reg. §Treas. Reg. §1.1275-1(g) Debt instruments issued by a natural person.
- Treas. Reg. §Treas. Reg. §1.1275-1(h) Publicly offered debt instrument.
- Treas. Reg. §Treas. Reg. §1.1275-1(i) §1.1275-1(i)
- Treas. Reg. §Treas. Reg. §1.1275-1(j) Life annuity exception under section 1275(a)(1)(B)(i)—(1) Purpose.
- Treas. Reg. §Treas. Reg. §1.1275-1(k) Exception under section 1275(a)(1)(B)(ii) for annuities issued by an insurance company subject to tax under subchapter L of the Internal Revenue Code—(1) Rule.
- Treas. Reg. §Treas. Reg. §1.1275-2 Special rules relating to debt instruments
- Treas. Reg. §Treas. Reg. §1.1275-2(a) Payment ordering rule—(1) In general.
- Treas. Reg. §Treas. Reg. §1.1275-2(b) Debt instruments distributed by corporations with respect to stock—(1) Treatment of distribution.
- Treas. Reg. §Treas. Reg. §1.1275-2(c) Aggregation of debt instruments—(1) General rule.
- Treas. Reg. §Treas. Reg. §1.1275-2(d) Special rules for Treasury securities—(1) Issue price and issue date.
- Treas. Reg. §Treas. Reg. §1.1275-2(e) Disclosure of certain information to holders.
- Treas. Reg. §Treas. Reg. §1.1275-2(f) Treatment of pro rata prepayments—(1) Treatment as retirement of separate debt instrument.
- Treas. Reg. §Treas. Reg. §1.1275-2(g) Anti-abuse rule—(1) In general.
- Treas. Reg. §Treas. Reg. §1.1275-2(h) Remote and incidental contingencies—(1) In general.
- Treas. Reg. §Treas. Reg. §1.1275-2(i) §1.1275-2(i)
- Treas. Reg. §Treas. Reg. §1.1275-2(j) Treatment of certain modifications.
- Treas. Reg. §Treas. Reg. §1.1275-2(k) Reopenings—(1) In general.
- Treas. Reg. §Treas. Reg. §1.1275-2(l) OID rule for income item subject to section 451(b)—(1) In general.
4 Citing Cases
tal gains. * * * That is precisely what Maginnis has attempted here. [Id. at 1184-1185.] Finally, the Court of Appeals rejected the taxpayer’s argument that capital gains treatment was appropriate because his lottery right is a debt instrument under section 1275. Id. at 1187. Petitioners, relying on McAllister v. Commissioner, 157 F.2d 235 (2d Cir. 1946), revg. 5 T.C. 714 (1945), and Bell’s Estate v. Commissioner, 137 F.2d 454 (8th Cir. 1943), revg. 46 B.T.A. 484 (1942), contend that property no
t, transaction or event." In re Izaguirre, 39In deciding in Reiter v. Cooper, supra, that it made no difference whether the recoupment was considered a counterclaim or defense, the Supreme Court cited 5 Wright & Miller, Federal Practice & Procedure, sec. 1275 (2d ed. 1990), according to which it is not clear whether setoffs and recoupments should be viewed as defenses or counterclaims. Reiter v. Cooper, 507 U.S. at 263. In In re Izaguirre, 166 Bankr. 484, 493 (Bankr. N.D. Ga. 1994), a bankruptcy
ot demonstrate precisely such a development. In deciding in Reiter v. Cooper, supra, that it made no difference whether the recoupment was considered a counterclaim or defense, the Supreme Court cited 5 Wright & Miller, Federal Practice & Procedure, sec. 1275 (2d ed. 1990), according to which it is not clear whether setoffs and recoupments should be viewed as defenses or counterclaims. Reiter v. Cooper, 507 U.S. at 263. In In re Izaguirre, 166 Bankr. 484, 493 (Bankr. N.D. Ga. 1994), a bankruptcy