For tax purposes, there is no original issue discount on a bond unless the bond is issued for less than its face value and the difference between the face value and the bond issue price is at least one-fourth of 1% of the redemption price at maturity multiplied by the number of years to maturity.

Question

Quizplus · Accepted Answer

This statement is true. The Internal Revenue Service (IRS) specifies that a bond must be issued for less than the face value, and the difference between the face value and the bond issue price must be at least 0.25% of the redemption price at maturity multiplied by the number of years to maturity for it to be considered as having original issue discount for tax purposes.

For Tax Purposes, There Is No Original Issue Discount on a Bond