26-U.S.C.-454
§454 – Obligations Issued At Discount
Pathway
Title 26 > Subtitle A > Chapter 1 > Subchapter E > Part II > Subpart B > Section 454
Details
- Reference: Section 454
- Legend: §454 – Obligations Issued At Discount
- USCode Year: 2013
Provision Content
(a) Non-interest-bearing obligations issued at a discount
If, in the case of a taxpayer owning any non-interest-bearing obligation issued at a discount and redeemable for fixed amounts increasing at stated intervals or owning an obligation described in paragraph (2) of subsection (c), the increase in the redemption price of such obligation occurring in the taxable year does not (under the method of accounting used in computing his taxable income) constitute income to him in such year, such taxpayer may, at his election made in his return for any taxable year, treat such increase as income received in such taxable year. If any such election is made with respect to any such obligation, it shall apply also to all such obligations owned by the taxpayer at the beginning of the first taxable year to which it applies and to all such obligations thereafter acquired by him and shall be binding for all subsequent taxable years, unless on application by the taxpayer the Secretary permits him, subject to such conditions as the Secretary deems necessary, to change to a different method. In the case of any such obligations owned by the taxpayer at the beginning of the first taxable year to which his election applies, the increase in the redemption price of such obligations occurring between the date of acquisition (or, in the case of an obligation described in paragraph (2) of subsection (c), the date of acquisition of the series E bond involved) and the first day of such taxable year shall also be treated as income received in such taxable year.
(b) Short-term obligations issued on discount basis
In the case of any obligation—
(1) of the United States; or
(2) of a State or a possession of the United States, or any political subdivision of any of the foregoing, or of the District of Columbia,
which is issued on a discount basis and payable without interest at a fixed maturity date not exceeding 1 year from the date of issue, the amount of discount at which such obligation is originally sold shall not be considered to accrue until the date on which such obligation is paid at maturity, sold, or otherwise disposed of.
(c) Matured United States savings bonds
In the case of a taxpayer who—
(1) holds a series E United States savings bond at the date of maturity, and
(2) pursuant to regulations prescribed under chapter 31 of title 31 (A) retains his investment in such series E bond in an obligation of the United States, other than a current income obligation, or (B) exchanges such series E bond for another nontransferable obligation of the United States in an exchange upon which gain or loss is not recognized because of section 1037 (or so much of section 1031 as relates to section 1037),
the increase in redemption value (to the extent not previously includible in gross income) in excess of the amount paid for such series E bond shall be includible in gross income in the taxable year in which the obligation is finally redeemed or in the taxable year of final maturity, whichever is earlier. This subsection shall not apply to a corporation, and shall not apply in the case of any taxable year for which the taxpayers taxable income is computed under an accrual method of accounting or for which an election made by the taxpayer under subsection (a) applies.
(Aug. 16, 1954, ch. 736, 68A Stat. 156; Pub. L. 86–346, title I, §102, Sept. 22, 1959, 73 Stat. 621; Pub. L. 94–455, title XIX, §§1901(c)(2), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1803, 1834; Pub. L. 97–452, §2(c)(2), Jan. 12, 1983, 96 Stat. 2478.)
Amendments
1983—Subsec. (c)(2). Pub. L. 97–452 substituted chapter 31 of title 31 for the Second Liberty Bond Act.
1976—Subsec. (a). Pub. L. 94–455, §1906(b)(13)(A), struck out or his delegate after Secretary in two places.
Subsec. (b)(2). Pub. L. 94–455, §1901(c)(2), struck out , a Territory, after a State.
1959—Subsec. (c)(2). Pub. L. 86–346 designated existing provisions as cl. (A), inserted of the United States after an obligation and struck out the maturity value of before such series E bond and which matures not more than 10 years from the date of maturity of such series E bond after income obligation in such cl. (A), and added cl. (B).
U.S. Encyclopedia of Law Coverage
26-U.S.C.-453B in the Legal Encyclopedia: Income Taxes
In this entry about 26-U.S.C.-453B, find legal reference material, bibliographies and premiere content related to income taxes in the American Encyclopedia of Law, presenting a comprehensive view of the United States income taxes-specific issues, written by authorities in the field.
26-U.S.C.-451 in the Legal Encyclopedia: Taxation
In this entry about 26-U.S.C.-451, find legal reference material, bibliographies and premiere content related to taxation in the American Encyclopedia of Law, presenting a comprehensive view of the United States taxation-specific issues, written by authorities in the field.
26-U.S.C.-452 in the Legal Encyclopedia: Accounting
In this entry about 26-U.S.C.-452, find legal reference material, bibliographies and premiere content related to accounting in the American Encyclopedia of Law, presenting a comprehensive view of the United States accounting-specific issues, written by authorities in the field.
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