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Certain pertinent provisions of section 1283 are as follows:
SEC. 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), the term "short-term obligation"
means any bond, 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" shall not include
any tax-exempt obligation (as defined in section
1275(a)(3)).
* * * * * * *
(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 (as defined in section 1271(a)(3)(B))--
(A) sections 1281 and 1282 shall be applied
by taking into account original issue discount in
lieu of acquisition discount, and
(B) appropriate adjustments shall be made in
the application of subsection (b) of this section.
Respondent's first argument is that petitioner is required
to accrue interest income from its categories X and Y loans
pursuant to section 1281(a)(2). This is not an issue of first
impression. Indeed, respondent recognizes that in Security Bank
Minn. v. Commissioner, 98 T.C. 33, 42 (1992), affd. 994 F.2d 432
(8th Cir. 1993), we held that section 1281(a)(2) does not apply
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Last modified: May 25, 2011