2023 Laws of Puerto Rico › TITLE THIRTEEN - Taxation and Finance (§§ 1 — 33423) › Subtitle 17 - Internal Revenue Code of 2011 (§§ 30001 — 33423) › PART II - Income Taxes (§§ 30041 — 30622) › Chapter 1005 - Computation of Taxable Income (§§ 30101 — 30157) › Subchapter D - Determination of Capital Gains and Losses (§§ 30141 — 30149) › § 30148 - Amortizable bond premium

(a) General rule. — In the case of any bond, as defined in subsection (d), the following rules shall apply to the amortizable bond premium determined under subsection (b):
(1) Taxable bonds. — In the case of a bond other than a bond the interest on which is tax-exempt under this part, the amount of the amortizable bond premium for the taxable year shall be allowed as a deduction.
(2) Tax-exempt bonds. — In the case of any bond the interest on which is tax-exempt under this part, no deduction shall be allowed for the amortizable bond premium for the taxable year.
(3) The adjustment to basis on account of amortizable bond premium, shall be in accordance with § 30142(b)(1)(E) of this title.
(b) Amortizable bond premium. —
(1) Amount of bond premium. — For purposes of clause (2), the amount of bond premium, in the case of the holder of any bond, shall be determined with reference to the amount of the basis for determining loss on sale or exchange of such bond, and with reference to the amount payable on maturity or on earlier call date, with proper adjustments to reflect unamortized bond premium, with respect to the bond, for the period before the date as of which subsection (a) becomes applicable with respect to the taxpayer with respect to such bond.
(2) Amount amortizable. — The amortizable bond premium of the taxable year shall be the amount of the bond premium attributable to such year.
(3) Method of determination. — The determinations required under clauses (1) and (2) shall be made:
(A) Using the bond premium amortization basis regularly used by the bond holder, if such method is reasonable;
(B) in every other case, according to the regulations of the Secretary that set forth reasonable methods for bond premium amortization.
(c) Election as to taxable bonds. —
(1) Eligibility to elect; bonds with respect to which election permitted. — This section shall apply to any taxpayer other than an individual, with respect to bonds the interest on which is not tax exempt, provided that the taxpayer has so elected.
(2) Manner and effect of election. — The election authorized under this subsection shall be made in accordance with such regulations as the Secretary shall prescribe. If such election is made with respect to any bond described in clause (1) of the taxpayer, it shall also apply to all such bonds held by the taxpayer at the beginning of the first taxable year to which the election applies and to all such bonds thereafter acquired by him/her and shall be binding for all subsequent taxable years with respect to all such bonds of the taxpayer, unless, upon request by the taxpayer, the Secretary permits him/her, subject to such conditions as the Secretary deems necessary, to revoke such election.
(d) Bond defined. — For purposes of this section, the term “bond” means any bond, obligation, note, or certificate or other evidence of indebtedness, issued by any corporation and which accrues interest, including any similar obligation issued by a government or political subdivision thereof, with interest coupons or in registered form, but does not include any such obligation which constitutes stock in trade of the taxpayer or any such obligation of a kind which would properly be included in the inventory of the taxpayer if on hand at the close of the taxable year, or any such obligation held by the taxpayer primarily for sale to customers in the ordinary course of his/her trade or business.
History —Jan. 31, 2011, No. 1, § 1034.08, retroactive to Jan. 1, 2011.