26-U.S.C.-249
§249 – Limitation On Deduction of Bond Premium On Repurchase
Pathway
Title 26 > Subtitle A > Chapter 1 > Subchapter B > Part VIII > Section 249
Details
- Reference: Section 249
- Legend: §249 – Limitation On Deduction of Bond Premium On Repurchase
- USCode Year: 2013
Provision Content
(a) General rule
No deduction shall be allowed to the issuing corporation for any premium paid or incurred upon the repurchase of a bond, debenture, note, or certificate or other evidence of indebtedness which is convertible into the stock of the issuing corporation, or a corporation in the same parent-subsidiary controlled group (within the meaning of section 1563(a)(1) as the issuing corporation, to the extent the repurchase price exceeds an amount equal to the adjusted issue price plus a normal call premium on bonds or other evidences of indebtedness which are not convertible. The preceding sentence shall not apply to the extent that the corporation can demonstrate to the satisfaction of the Secretary that such excess is attributable to the cost of borrowing and is not attributable to the conversion feature.
(b) Adjusted issue price
For purposes of subsection (a), the adjusted issue price is the issue price (as defined in sections 1273(b) and 1274) increased by any amount of discount deducted before repurchase, or, in the case of bonds or other evidences of indebtedness issued after February 28, 1913, decreased by any amount of premium included in gross income before repurchase by the issuing corporation.
(Added Pub. L. 91–172, title IV, §414(a), Dec. 30, 1969, 83 Stat. 612; amended Pub. L. 94–455, title XIX, §1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 98–369, div. A, title I, §42(a)(5), July 18, 1984, 98 Stat. 557; Pub. L. 112–95, title XI, §1108(a), (b), Feb. 14, 2012, 126 Stat. 154.)
Amendments
2012—Subsec. (a). Pub. L. 112–95, §1108(a), substituted , or a corporation in the same parent-subsidiary controlled group (within the meaning of section 1563(a)(1) as for , or a corporation in control of, or controlled by,.
Subsec. (b). Pub. L. 112–95, §1108(b), substituted Adjusted issue price for Special rules in heading and For purposes of subsection (a), for For purposes of subsection (a)— and par. (1) designation and heading, and the adjusted issue price for The adjusted issue price, and struck out par. (2), which defined control as having the meaning assigned to such term by section 368(c).
1984—Subsec. (b)(1). Pub. L. 98–369 substituted sections 1273(b) and 1274 for section 1232(b).
1976—Subsec. (a). Pub. L. 94–455 struck out or his delegate after Secretary.
Effective Date of 2012 Amendment
Pub. L. 112–95, title XI, §1108(c), Feb. 14, 2012, 126 Stat. 154, provided that: The amendments made by this section [amending this section] shall apply to repurchases after the date of the enactment of this Act [Feb. 14, 2012].
Effective Date of 1984 Amendment
Amendment by Pub. L. 98–369 applicable to taxable years ending after July 18, 1984, see section 44 of Pub. L. 98–369, set out as an Effective Date note under section 1271 of this title.
Effective Date of 1976 Amendment
Amendment by Pub. L. 94–455 effective Feb. 1, 1977, see section 1906(d)(1) of Pub. L. 94–455, set out as a note under section 6013 of this title.
Effective Date
Pub. L. 91–172, title IV, §414(c), Dec. 30, 1969, 83 Stat. 613, as amended by Pub. L. 99–514, §2, Oct. 22, 1986, 100 Stat. 2095, provided that: The amendments made by this section [enacting this section] shall apply to a convertible bond or other convertible evidence of indebtedness repurchased after April 22, 1969, other than such a bond or other evidence of indebtedness repurchased pursuant to a binding obligation incurred on or before April 22, 1969, to repurchase such bond or other evidence of indebtedness at a specified call premium, but no inference shall be drawn from the fact that section 249 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (as added by subsection (a) of this section) does not apply to the repurchase of such convertible bond or other convertible evidence of indebtedness.
U.S. Encyclopedia of Law Coverage
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