### Question
How does the law define regular interest?


### Answer
Under *26 U.S.C. § 860L*, **regular interest** is defined as:

> any interest which is issued by a FASIT on or after the startup date with fixed terms and which is designated as a regular interest if—


(i) such interest unconditionally entitles the holder to receive a specified principal amount (or other similar amount),


(ii) interest payments (or other similar amounts), if any, with respect to such interest are determined based on a fixed rate, or, except as otherwise provided by the Secretary, at a variable rate permitted under section 860G(a)(1)(B)(i),


(iii) such interest does not have a stated maturity (including options to renew) greater than 30 years (or such longer period as may be permitted by regulations),


(iv) the issue price of such interest does not exceed 125 percent of its stated principal amount, and


(v) the yield to maturity on such interest is less than the sum determined under section 163(i)(1)(B) with respect to such interest

#### Citation:
  - *26 U.S.C. § 860L*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter M-Regulated Investment Companies and Real Estate Investment Trusts > PART V-FINANCIAL ASSET SECURITIZATION INVESTMENT TRUSTS**

