26 U.S.C. § 1273: Determination of amount of original issue discount

the stated redemption price at maturity, over the issue price. The term “stated redemption price at maturity” means the amount fixed by the last modification of the purchase agreement and includes interest and other amounts payable at that time (other than any interest based on a fixed rate, and payable unconditionally at fixed periodic intervals of 1 year or less during the entire term of the debt instrument). ¼ of 1 percent of the stated redemption price at maturity, multiplied by the number of complete years to maturity, publicly offered, and not issued for property, In the case of any issue of debt instruments not issued for property and not publicly offered, the issue price of each such instrument is the price paid by the first buyer of such debt instrument. is part of an issue a portion of which is traded on an established securities market, or is issued for stock or securities which are traded on an established securities market, or to the extent provided in regulations, is issued for property (other than stock or securities) of a kind regularly traded on an established market, to which paragraph (1), (2), or (3) of this subsection applies, or to which section 1274 applies, In applying this subsection, the term “property” includes services and the right to use property, but such term does not include money. The terms “initial offering price” and “price paid by the first buyer” include the aggregate payments made by the purchaser under the purchase agreement, including modifications thereof. the issue price for such unit shall be determined in accordance with the rules of this subsection and subsection (b) as if it were a debt instrument, the issue price determined for such unit shall be allocated to each element of such unit on the basis of the relationship of the fair market value of such element to the fair market value of all elements in such unit, and the issue price of any debt instrument included in such unit shall be the portion of the issue price of the unit allocated to the debt instrument under subparagraph (B).