Internal Revenue Code · 26 U.S.C.

§ 1282. Deferral of interest deduction allocable to accrued discount

In force Text current through Public Law 119-121 (October 9, 2026) release point 119-121

Official text, no changes From the Office of the Law Revision Counsel, release point 119-121 (current through Public Law 119-121 (October 9, 2026)). Compare it with the official text at uscode.house.gov (external site).

Cite as 26 U.S.C. § 1282

At a glance

Read from the text, the source credit and the official notes. Not part of the law.

Status: In force
Added: July 18, 1984 by Pub. L. 98–369
Last amended: October 22, 1986 by Pub. L. 99–514
Amendments: 1 dated changes in the source credit
Length: 4 subsections · 326 words · about 1 min to read
Cross-references: cites 3; cited by 1 Code section and 2 other regulations

¶(a) General rule Except as otherwise provided in this section, the net direct interest expense with respect to any short-term obligation shall be allowed as a deduction for the taxable year only to the extent such expense exceeds the sum of—

¶(1) the daily portions of the acquisition discount for each day during the taxable year on which the taxpayer held such obligation, and

¶(2) the amount of any interest payable on the obligation (other than interest taken into account in determining the amount of the acquisition discount) which accrues during the taxable year while the taxpayer held such obligation (and is not included in the gross income of the taxpayer for such taxable year by reason of the taxpayer’s method of accounting).

¶(b) Section not to apply to obligations to which section 1281 applies

¶(1) In general

This section shall not apply to any short-term obligation to which section 1281 applies.

¶(2) Election to have section 1281 apply to all obligations

¶(A) In general

A taxpayer may make an election under this paragraph to have section 1281 apply to all short-term obligations acquired by the taxpayer on or after the 1st day of the 1st taxable year to which such election applies.

¶(B) Period to which election applies

An election under this paragraph shall apply to the taxable year for which it is made and for all subsequent taxable years, unless the taxpayer secures the consent of the Secretary to the revocation of such election.

¶(c) Certain rules made applicable

Rules similar to the rules of subsections (b) and (c) of section 1277 shall apply for purposes of this section.

¶(d) Cross reference

For special rules limiting the application of this section to original issue discount in the case of nongovernmental obligations, see section 1283(c).

(Added Pub. L. 98–369, div. A, title I, § 41(a), July 18, 1984, 98 Stat. 549; amended Pub. L. 99–514, title XVIII, § 1803(a)(8)(B), Oct. 22, 1986, 100 Stat. 2794.)

Cross-references

Computed from the citations in the text of Title 26 and 26 CFR.

This section cites 3 other sections

Cited by 1 Code section

§ 1283(c)(1)(A) Definitions and special rules

Cited in 2 regulations not issued under it

Amendment history

From the source credit and the official notes, newest first.

October 22, 1986Amended by Pub. L. 99–514Parts changed in 1986: (a)
July 18, 1984Added by Pub. L. 98–369

Where it sits in the Code

Nearby sections

§ 1281 Current inclusion in income of discount on certain short-term obligations
§ 1282 Deferral of interest deduction allocable to accrued discount
§ 1283 Definitions and special rules

Official notes

Show the Law Revision Counsel's notes (amendments, effective dates)

Editorial Notes

Amendments

1986—Subsec. (a). Pub. L. 99–514 amended subsec. (a) generally, designating existing provisions as par. (1) and adding par. (2).

Effective Date of 1986 Amendment

Amendment by Pub. L. 99–514 effective, except as otherwise provided, as if included in the provisions of the Tax Reform Act of 1984, Pub. L. 98–369, div. A, to which such amendment relates, see section 1881 of Pub. L. 99–514, set out as a note under section 48 of this title.

Effective Date

Section applicable to taxable years ending after July 18, 1984, and to obligations acquired after that date, see section 44 of Pub. L. 98–369, set out as a note under section 1271 of this title.

Plan Amendments Not Required Until January 1, 1989

For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 1800–1899A] of Pub. L. 99–514 require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L. 99–514, as amended, set out as a note under section 401 of this title.