610
PUBLIC LAW 91-172-DEC. 30, 1969
[83 STAT.
before maturity, an amount which bears the same ratio to the original issue discount (as defined in subsection (j^u as the number of complete months that the bond or other evidence of indebtedness was held by the taxpayer bears to the number of complete months from the date of original issue to the date of maturity, shall be considered as gain from the sale or exchange of prop. erty which is not a capital asset. Gain in excess of such amount shall be considered gain from the sale or exchange of a capital asset held more than 6 months. " (C) EXCEPTIONS.—This paragraph shall not apply to— " (i) obligations the interest on which is not includible in gross income under section 103 (relating to certain ^ governmental obligations), or "(ii) any holder who has purchased the bond or other evidence of indebtedness at a premium.
J Post, p. 656.
"(D)
DOUBLE INCLUSION IN INCOME NOT REQUIRED.—This
section shall not require the inclusion of any amount previously includible in gross income. "(3) INCLUSION IN INCOME or ORIGINAL ISSUE DISCOUNT ON CORPORATE BONDS ISSUED AFTER MAY 27, 1 969.— " (A) GENERAL RULE.—There shall be included in the gross
income of the holder of any bond or other evidence of indebtedness issued by a corporation after May 27, 1969, the ratable monthly portion of original issue discount multiplied by the ' number of complete months (plus any fractional part of a month determined in accordance with the last sentence of this subparagraph) such holder held such bond or other evidence of indebtedness during the taxable year. Except as provided in subparagraph (B), the ratable monthly portion of original issue discount shall equal the original issue discount (as ' • defined in subsection (b)) divided by the number of complete months from the date of original issue to the stated maturity date of such bond or other evidence of indebtedness. For purposes of this section, a complete month commences with the date of original issue and the corresponding day of each succeeding calendar month (or the last day of a calendar month in which there is no corresponding d a y); and, in any case where a bond or other evidence of indebtedness is acquired on any other day, the ratable monthly portion of original issue dis' count for the complete month in which such acquisition occurs shall be allocated between the transferor and the transferee in accordance with the number of days in such complete month each held the bond or other evidence of indebtedness. "(B)
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REDUCTION IN CASE OF ANY SUBSEQUENT HOLDER.—
For purposes of this paragraph, the ratable monthly portion of original issue discount shall not include an amount, determined at the time of any purchase after the original issue of such bond or other evidence of indebtedness, equal to the excess of— " (i) the cost of such bond or other evidence of indebtedness incurred by such holder, over "(ii) the issue price of such bond or other evidence of indebtedness increased by the portion of original discount previously includible in the gross income of any holder (computed without regard to this subparagraph),
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