PUBLIC LAW 97-248—SEPT. 3, 1982 "(ii) the yield to m a t u r i t y (determined on the basis of compounding a t the close of each bond period), over "(B) the s u m of the a m o u n t s payable as interest on such bond during such bond period. "(4) ADJUSTED ISSUE PRICE.—For purposes of this subsection,
the adjusted issue price of any bond a t the beginning of any bond period is the s u m of— "(A) the issue price of such bond, plus "(B) the adjustments under this subsection to such issue price for all periods before the first day of such bond period. "(5) BOND PERIOD.—Except as otherwise provided in regulations prescribed by the Secretary, the term 'bond period' means a 1-year period (or the shorter period to m a t u r i t y) beginning on the day in the calendar year which corresponds to the date of original issue of the bond. "(6) REDUCTION IN CASE OF CERTAIN SUBSEQUENT HOLDERS.—
For purposes of this subsection, in the case of any purchase of a bond to which this subsection applies after its original issue, the daily portion shall not include an a m o u n t (determined a t the time of purchase) equal to the excess (if any) of— "(A) the cost of such bond incurred by the purchaser, over "(B) the issue price of such bond, increased by the s u m of the daily portions for such bond for all days before the date of purchase (computed without regard to this paragraph), divided by the n u m b e r of days beginning on the date of such purchase and ending on the day before the stated m a t u r i t y date. "(7) REGULATION AUTHORITY.—The Secretary may prescribe
regulations providing that w h e r e, by reason of varying rates of interest, put or call options, or other circumstances, the inclusion under paragraph (1) for the taxable year does not accurately reflect the income of the holder, the program o u n t of income shall be included for such taxable year (and a p p r o p r i a t e adjustments shall be made in the a m o u n t s included for subsequent taxable years). "(b) RATABLE INCLUSION R E T A I N E D FOR CORPORATE BONDS ISSUED BEFORE J U L Y 2, 1982.—
"(1) GENERAL RULE.—There shall be included in the gross income of the holder of any bond issued by corporation after May 27, 1969, and before July 2, 1982 (and which is a capital asset in the h and s of the holder)— "(A) the r a t a b l e monthly portion of original issue discount, multiplied by "(B) the n u m b e r of complete months (plus any fractional part of a month determined under paragraph (3)) such holder held such bond during the taxable year. "(2) DETERMINATION OF RATABLE MONTHLY PORTION —Except
as provided in paragraph (4), the r a t a b l e monthly portion of original issue discount shall equal— "(A) the original issue discount, divided by "iB) the n u m b e r of complete months from the date of original issue to the stated m a t u r i t y date of the bond. "(3) M O N T H DEFINED.—For purposes of this subsection, 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 c a l e n d a r month in which the r e is no corresponding day). In any case w h e r e a bond is acquired on any day other than a day determined under the preceding sentence, the rat-
96 STAT. 497
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