I.R.C. § 454(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.
I.R.C. § 454(b) Short-Term Obligations Issued On Discount Basis —
In the case of any obligation—
I.R.C. § 454(b)(1) —
of the United States; or
I.R.C. § 454(b)(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.
I.R.C. § 454(c) Matured United States Savings Bonds —
In the case of a taxpayer who—
I.R.C. § 454(c)(1) —
holds a series E United States savings bond at the date of maturity, and
I.R.C. § 454(c)(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 taxpayer's 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; Sept. 22, 1959,
Pub. L. 86-346, title I, 102, 73 Stat. 621; Oct. 4, 1976, Pub. L. 94-455,
title XIX, 1901(c)(2), 1906(b)(13)(A), 90 Stat. 1803, 1834; Jan. 12, 1983, Pub. L. 97-452, 2(c)(2), 96 Stat. 2478.)
BACKGROUND NOTES
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).
EFFECTIVE DATE OF 1983 AMENDMENT
Amendment by Pub. L. 97-452, Sec. 2(c), effective on the date of the enactment of this Act [Enacted: Jan. 12, 1983].
EFFECTIVE DATE OF 1976 AMENDMENT
Amendment by Pub. L. 94-455, Sec. 1901, effective for tax years beginning after December 31, 1976.
Amendment by Pub. L. 94-455, Sec. 1906, effective February 1, 1977]
EFFECTIVE DATE OF 1959 AMENDMENT
Amendment by Pub. L. 86—346, Sec. 102, effective on the date of the enactment of this Act [Enacted: Sept. 22, 1959].
