PUBLIC LAW 98-369—JULY 18, 1984

the stated redemption price at maturity over the taxpayer's
basis for the obligation.

"(D) RATABLE SHARE.—For purposes of this paragraph,
the ratable share of the acquisition discount is an amount
which bears the same ratio to such discount as—

"(i) the number of days which the taxpayer held the
obligation, bears to

"(ii) the number of days after the date the taxpayer
acquired the obligation and up to (and including) the
date of its maturity,
"(b) EXCEPTIONS.-—This section shall not apply to—

"(1) NATURAL PERSONS.—Any obligation issued by a natural
person.

"(2) OBLIGATIONS ISSUED BEFORE JULY 2, 1982, BY CERTAIN
ISSUERS.—Any obligation issued before July 2, 1982, by an issuer
which—

"(A) is not a corporation, and

"(B) is not a government or political subdivision thereof,
"(c) TRANSITION RULES.—

"(I) SPECIAL RULE FOR CERTAIN OBLIGATIONS ISSUED BEFORE
JANUARY i, 1955.—Paragraph (1) of subsection (a) shall apply to
a debt instrument issued before January 1, 1955, only if such
instrument was issued with interest coupons or in registered
form, or was in such form on March 1,1954.

"(2) SPECIAL RULE FOR CERTAIN OBLIGATIONS WITH RESPECT TO
WHICH ORIGINAL ISSUE DISCOUNT NOT CURRENTLY INCLUDIBLE.—
"(A) IN GENERAL.—On the sale or exchange of debt instru-
ments issued by a government or political subdivision
thereof after December 31, 1954, and before July 2, 1982, or
by a corporation after December 31, 1954, and on or before
May 27, 1969, any gain realized which does not exceed—
"(i) an amount equal to the original issue discount, or
"(ii) if at the time of original issue there was no
intention to call the debt instrument before maturity,
an amount which bears the same ratio to the original
issue discount as the number of complete months that
the debt instrument was held by the taxpayer bears to
the number of complete months from the date of origi-
nal issue to the date of maturity,
shall be considered as ordinary income.

"(B) SUBSECTION (a) (2) (A) NOT TO APPLY.—Subsection
(a)(2)(A) shall not apply to any debt instrument referred to
in subparagraph (A) of this paragraph.

"(C) CROSS REFERENCE.—
"For current inclusion of original issue discount, see section 1272.

"(d) DOUBLE INCLUSION IN INCOME NOT REQUIRED.—This section
and sections 1272 and 1286 shall not require the inclusion of any
amount previously includible in gross income.

"SEC. 1272. CURRENT INCLUSION IN INCOME OF ORIGINAL ISSUE DIS-
COUNT.

"(a) ORIGINAL ISSUE DISCOUNT ON DEBT INSTRUMENTS ISSUED
AFTER JULY 1, 1982, INCLUDED IN INCOME ON BASIS OF CONSTANT
INTEREST RATE.—

"(1) GENERAL RULE.—For purposes of this title, there shall be
included in the gross income of the holder of any debt instru-

98 STAT. 533

Post, p. 551.

26 USC 1272.