§ 1288. Treatment of original issue discount on tax-exempt obligations
(a)
General rule
Original issue discount on any tax-exempt obligation shall be treated as accruing—
(b)
Definitions and special rules
For purposes of this section—
(1)
Original issue discount
The term “original issue discount” has the meaning given to such term by section
1273
(a) without regard to paragraph (3) thereof. In applying section
483 or
1274, under regulations prescribed by the Secretary, appropriate adjustments shall be made to the applicable Federal rate to take into account the tax exemption for interest on the obligation.