--- kind: "section" citation: "26 U.S.C. § 1283" title: "26" title_heading: "Internal Revenue Code" number: "1283" heading: "Definitions and special rules" release: "119-102" date: "2026-07-12" url: "https://uscodex.org/usc/26/1283" units: - "Subtitle A — Income Taxes" - "Chapter 1 — Normal Taxes and Surtaxes" - "Subchapter P — Capital Gains and Losses" - "Part V — Special Rules for Bonds and Other Debt Instruments" - "Subpart C — Discount on Short-Term Obligations" --- # §1283. Definitions and special rules - (a) **Definitions—** For purposes of this subpart— - (1) **Short-term obligation—** - (A) **In general—** Except as provided in [subparagraph (B)](#a-1-B), the term “short-term obligation” means any [bond](/usc/26/150.md?p=a-1), debenture, note, certificate, or other evidence of indebtedness which has a fixed maturity date not more than 1 year from the date of issue. - (B) **Exceptions for tax-exempt obligations—** The term “[short-term obligation](#a-1-A)” shall not include any [tax-exempt obligation](/usc/26/1275.md?p=a-3) (as defined in [section 1275(a)(3)](/usc/26/1275.md?p=a-3)). - (2) **Acquisition discount—** The term “acquisition discount” means the excess of— - (A) the [stated redemption price at maturity](/usc/26/1278.md?p=a-5) (as defined in [section 1273](/usc/26/1273.md)), over - (B) the [taxpayer](/usc/26/1313.md?p=b)’s basis for the obligation. - (b) **Daily portion—** For purposes of this subpart— - (1) **Ratable accrual—** Except as otherwise provided in this subsection, the daily portion of the [acquisition discount](#a-2) is an amount equal to— - (A) the amount of such discount, divided by - (B) the number of days after the day on which the [taxpayer](/usc/26/1313.md?p=b) acquired the obligation and up to (and including) the day of its maturity. - (2) **Election of accrual on basis of constant interest rate (in lieu of ratable accrual)—** - (A) **In general—** At the election of the [taxpayer](/usc/26/1313.md?p=b) with respect to any obligation, the daily portion of the [acquisition discount](#a-2) for any day is the portion of the [acquisition discount](#a-2) accruing on such day determined (under regulations prescribed by the Secretary) on the basis of— - (i) the [taxpayer](/usc/26/1313.md?p=b)’s yield to maturity based on the [taxpayer](/usc/26/1313.md?p=b)’s cost of acquiring the obligation, and - (ii) compounding daily. - (B) **Election irrevocable—** An election under [subparagraph (A)](#b-2-A), once made with respect to any obligation, shall be irrevocable. - (c) **Special rules for nongovernmental obligations—** - (1) **In general—** In the case of any [short-term obligation](#a-1-A) which is not a short-term Government obligation (as defined in [section 1271(a)(3)(B)](/usc/26/1271.md?p=a-3-B))— - (A) sections [1281](/usc/26/1281.md) and [1282](/usc/26/1282.md) shall be applied by taking into account [original issue discount](/usc/26/1278.md?p=a-5) in lieu of [acquisition discount](#a-2), and - (B) appropriate adjustments shall be made in the application of [subsection (b)](#b) of this section. - (2) **Election to have paragraph (1) not apply—** - (A) **In general—** A [taxpayer](/usc/26/1313.md?p=b) may make an election under this paragraph to have [paragraph (1)](#c-1) not apply to all obligations acquired by the [taxpayer](/usc/26/1313.md?p=b) on or after the first day of the first taxable year to which such election applies. - (B) **Period to which election applies—** An election under this paragraph shall apply to the taxable year for which it is made and for all subsequent taxable years, unless the [taxpayer](/usc/26/1313.md?p=b) secures the consent of the Secretary to the revocation of such election. - (d) **Other special rules—** - (1) **Basis adjustments—** The basis of any [short-term obligation](#a-1-A) in the hands of the holder thereof shall be increased by the amount included in his gross income pursuant to section 1281. - (2) **Double inclusion in income not required—** [Section 1281](/usc/26/1281.md) shall not require the inclusion of any amount previously includible in gross income. - (3) **Coordination with other provisions—** [Section 454(b)](/usc/26/454.md?p=b) and paragraphs [(3)](/usc/26/1271.md?p=a-3) and [(4)](/usc/26/1271.md?p=a-4) of section 1271(a) shall not apply to any [short-term obligation](#a-1-A) to which [section 1281](/usc/26/1281.md) applies. ## Source credit (Added Pub. L. 98–369, div. A, title I, § 41(a), July 18, 1984, 98 Stat. 549; amended Pub. L. 99–514, title XVIII, § 1803(a)(1)(B), Oct. 22, 1986, 100 Stat. 2792.) ## Notes ### Editorial Notes ### Amendments 1986—Subsec. (d)(3). Pub. L. 99–514 substituted “paragraphs (3) and (4) of section 1271(a)” for “section 1271(a)(3)”. ### Statutory Notes and Related Subsidiaries ### Effective Date of 1986 Amendment Amendment by Pub. L. 99–514 effective, except as otherwise provided, as if included in the provisions of the Tax Reform Act of 1984, Pub. L. 98–369, div. A, to which such amendment relates, see section 1881 of Pub. L. 99–514, set out as a note under section 48 of this title. ### Effective Date Section applicable to taxable years ending after July 18, 1984, and to obligations acquired after that date, see section 44 of Pub. L. 98–369, set out as a note under section 1271 of this title. ### Plan Amendments Not Required Until January 1, 1989 For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 1800–1899A] of Pub. L. 99–514 require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L. 99–514, as amended, set out as a note under section 401 of this title.