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on certain "short-term obligations" (the short-term obligation
rules).8
Briefly, if the short-term obligation rules apply to a
"nongovernmental" short-term obligation, the following results
obtain, for any taxable year.9 First, under sections 1281(a)(1)
8 These provisions were added to the Code in 1984, by the
Deficit Reduction Act of 1984 (DEFRA), Pub. L. 98-369, sec.
41(a), 98 Stat. 548. The provisions were amended in 1986, by
sec. 1803(a)(8) of TRA 1986, 100 Stat. 2794.
9 Sec. 1281(a) provides as follows:
SEC. 1281. CURRENT INCLUSION IN INCOME OF DISCOUNT ON
CERTAIN SHORT-TERM OBLIGATIONS.
(a) General Rule.--In the case of any short-term
obligation to which this section applies, for purposes
of this title--
(1) there shall be included in the gross
income of the holder an amount equal to the sum of
the daily portions of the acquisition discount for
each day during the taxable year on which such
holder held such obligation, and
(2) any interest payable on the
obligation (other than interest taken into
account in determining the amount of the
acquisition discount) shall be included in
gross income as it accrues.
Sec. 1283(c) provides in part:
SEC. 1283(c). Special Rules for Nongovernmental
Obligations.--
(1) In general.--In the case of any short-
term obligation which is not a short-term
Government obligation * * * --
(continued...)
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