7635. How is original issue discount treated in the case of Treasury notes and bonds issued before July 2, 1982, and after December 31, 1954?Nuco Employeercline202014-10-01T14:26:00Z2014-10-01T14:26:00Z23381927Summit Business Media164226114Site Map/Investments/Bonds/Discounts_fs_Premiums/Original Issue DiscountTaxFactsDefaultArticle2007-01-30T00:00:00Z121481117-00-tf2.xml1117.00;#1860;#0x010100C568DB52D9D0A14D9B2FDCC96666E9F2007948130EC3DB064584E219954237AF3900242457EFB8B24247815D688C526CD44D009C4E67E972694125ABDA91AC61F5E51FTax Facts 2How is original issue discount treated in the case of Treasury notes and bonds issued before July 2, 1982 and after December 31, 1954?2900.00000000000TaxFactsDefaultArticle2010-01-14T22:05:12ZSBMEDIA\moss-admin7635. How is original issue discount treated in the case of Treasury notes and bonds issued before July 2, 1982, and after December 31, 1954?Any original issue discount on Treasury notes and bonds issued between January 1, 1955, and July 1, 1982 (inclusive), is not included in income until the bond is sold or redeemed.IRC Sec. 1271(c)(2). (If the discount at issue was less than ¼ of 1 percent (.0025) of the stated redemption price, multiplied by the number of full years from the date of original issue to maturity, the bond is not considered issued at a discount).IRC Sec. 1273(a)(3).If the owner purchased the bond at a premium (i.e., at a price above the stated redemption price), no original issue discount is included in income on the sale or maturity of the obligation.IRC Sec. 1271(a)(2)(B). See Treas. Reg. §1.1232-3(d). See also Treas. Reg. §1.1272-2.If the obligation is sold or redeemed by a seller who did not buy at a premium and gain is realized, a part of the proceeds must be treated by the seller as ordinary income attributable to the original issue discount. The amount of discount treated as ordinary income is based on the proportionate part of the time from issue to the date of maturity that the seller held the obligation, and it is computed by multiplying the original issue discount by a fraction having as numerator the number of full months the obligation was held by the seller and as denominator the number of full months from the date of original issue to the stated date of maturity.IRC Sec. 1271(c). Any days amounting to less than a full month are not counted.See Treas. Reg. §1.1232-3(c), Ex.(1).In determining how many months the seller held the obligation, he or she must include any period it was held by another person if the seller’s tax basis for determining gain or loss is the same, in whole or in part, as it would be in the hands of the other person.Treas. Reg. §1.1232-3(c).U.S. Savings Bonds are discussed at Q 7659 to Q 7668. Treasury Bills are discussed in Q 7611 and Q 7612.