43-904. Inclusion of income in the case of non-interest-bearing obligations issued at a discount
In the case of a taxpayer owning non-interest-bearing obligations issued at a discount and redeemable for fixed amounts increasing at stated intervals, if the increase in the redemption price of the obligations occurring in the taxable year does not, under the method of accounting used in computing its taxable income, constitute income to the taxpayer in such year, the taxpayer may, at its election made in its return for any taxable year, treat the increase as income received in the taxable year. If election is made with respect to 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 the taxpayer and shall be binding for all subsequent income years, unless upon application by the taxpayer the department permits the taxpayer, subject to such conditions as the department deems necessary, to change to a different method. In the case of any obligations owned by the taxpayer at the beginning of the first income year to which its election applies, the increase in the redemption price of the obligations occurring between the date of acquisition and the first day of the taxable year shall also be treated as income received in such taxable year.
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