### Question
Can you define what tax-exempt obligation means?


### Answer
**Tax-exempt obligation** is defined as the following in *26 U.S.C. § 1275*:

> any obligation if—


(A) the interest on such obligation is not includible in gross income under section 103, or


(B) the interest on such obligation is exempt from tax (without regard to the identity of the holder) under any other provision of law

#### Citation:
  - *26 U.S.C. § 1275*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter P-Capital Gains and Losses > PART V-SPECIAL RULES FOR BONDS AND OTHER DEBT INSTRUMENTS > Subpart A-Original Issue Discount**

