TITLE 26. INTERNAL REVENUE CODE § 1274. Determination of issue price in the case of certain debt instruments issued for property., 26 USCS § 1274

Summary

(a) In general. In the case of any debt instrument to which this section applies, for purposes of this subpart [26 USCS §§ 1271 et seq.], the issue price shall be—

(1) where there is adequate stated interest, the stated principal amount, or

(2) in any other case, the imputed principal amount.

(b) Imputed principal amount. For purposes of this section—

(1) In general. Except as provided in paragraph (3), the imputed principal amount of any debt instrument shall be equal to the sum of the present values of all payments due under such debt instrument.

(2) Determination of present value. For purposes of paragraph (1), the present value of a payment shall be determined in the manner provided by regulations prescribed by the Secretary—

(A) as of the date of the sale or exchange, and

(B) by using a discount rate equal to the applicable Federal rate, compounded semiannually.

(3) Fair market value rule in potentially abusive situations.

(A) In general. In the case of any potentially abusive situation, the imputed ...