U.S. Bancorp, Successor In Interest to West One Bancorp and Subsidiaries, formerly known as Moore Financial Group, Inc. - Page 17

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          considered to be issued with OID.15  We note that final                     
          regulations were not published until 1994 and are generally not             
          applicable to debt instruments issued before April 4, 1994.16  In           
          addition, this Court usually regards proposed regulations as                
          having no more weight than a position asserted in a brief by the            
          Commissioner.17  However, the portion of respondent's brief cited           
          by the majority in Security Bank Minn. v. Commissioner, supra,              
          did refer to the proposed regulations.  Security Bank Minn. v.              
          Commissioner, 98 T.C. at 37-38.  For this reason, we believe that           

               15 Sec. 1273(a)(1) defines the amount of OID an obligation             
          contains to be equal to the excess of the obligation's "stated              
          redemption price at maturity" (SRPM) over the obligation's "issue           
          price".  Under sec. 1.1273-1, Proposed Income Tax Regs., 51 Fed.            
          Reg. 12059-12061 (Apr. 8, 1986), the SRPM of an obligation was in           
          turn defined to be equal to the sum of all payments to be made              
          under the terms of that obligation, other than "qualified                   
          periodic interest payments".  In addition, sec. 1.1273-                     
          1(b)(1)(ii)(D), Proposed Income Tax Regs., 51 Fed. Reg. 12060               
          (Apr. 8, 1986), provided that in the case of short-term                     
          obligations, no interest payments were considered to constitute             
          "qualified periodic interest payments".                                     
               What all this means is that under the 1986 Proposed Regs.,             
          all interest payments on a short-term obligation would be                   
          included in the obligation's SRPM, and would therefore constitute           
               16 Sec. 1.1271-0(a), Income Tax Regs.  It does not appear              
          that the final regulations made any substantive changes to the              
          1986 Proposed Regs.' definition of OID as discussed in the text.            
          See sec. 1.1273-1(b), 1.1273-1(c)(5), Income Tax Regs.                      
               17 For examples of opinions so characterizing proposed                 
          regulations, see Laglia v. Commissioner, 88 T.C. 894, 897-898               
          (1987); F.W. Woolworth Co. v. Commissioner, 54 T.C. 1233, 1265-             
          1266 (1970).                                                                

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