As computed under the Code provisions applicable to bonds, the internal rate of return that causes the present value of the payments of principal and interest (and, in certain cases, certain other payments) on an issue of bonds to equal the issue price of the bonds.
A term defined in the Code and generally meaning, depending on the context, the dollar price at which a maturity of a Bond Issue or all of the Bond Issue was offered to the public by the Underwriter. The Issue Price is key for many tax calculations including the determination of the Yield on the Bonds.
The Issue Price definition is found in Treasury Regulations Section 1.148-1(f). For Bonds issued for money, the Issue Price is determined by actual sales to the public and, for each Bond with the same credit and payment terms (generally, each maturity) is the first price at which at least 10% of the maturity is sold to the public. There are special rules for Bonds sold through a Competitive Sale and Bonds sold through a Private Placement. If more than one Issue Price rule could apply, the Issuer may select which rule to apply on or prior to the Closing and different rules can apply to different maturities within the same Bond Issue. The above definition applies to Bonds issued for money, which will be the vast majority of cases. In rare cases, Bonds are issued for property that is not money (such as an Issuer who issues Bonds to investors that already hold the Bonds of the Issuer, and the investors deliver their current Bonds to the Issuer in exchange for the new Bonds). Very complicated rules apply in these cases.
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