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and 1283(c), the holder of the obligation is required to include
any "original issue discount" (OID) that accrues while it holds
the obligation during the taxable year, in its interest income
for that year. Second, under section 1281(a)(2), the holder is
required to include any interest payable on that obligation in
income as it accrues.
In Security Bank Minn. v. Commissioner, supra, we considered
the application of the short-term obligation rules to certain
loans made by a bank. After a thorough consideration of the
statutory language, the relevant legislative history, and the
arguments of the parties, we concluded that the short-term
obligation rules did not require the petitioning bank "to accrue
interest on the short-term loans made to customers in the
ordinary course of its business." Security Bank Minn. v.
Commissioner, 98 T.C. at 43.
Petitioner asserts that the short-term obligations at issue
in this case are indistinguishable from the obligations we
considered in Security Bank Minn. v. Commissioner, supra. As a
result, argues petitioner, under the principle of stare decisis,
we must hold that the short-term obligation rules do not require
9(...continued)
(A) sections 1281 and 1282 shall be
applied by taking into account
original issue discount in lieu of
acquisition discount * * *
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