### Question
Can you define what lowest 3-month rate means?


### Answer
**Lowest 3-month rate** is defined as the following in *26 U.S.C. § 1274*:

> the lowest of the applicable Federal rates in effect for any month in the 3-calendar-month period ending with the 1st calendar month in which there is a binding contract in writing for such sale or exchange

#### Citation:
  - *26 U.S.C. § 1274*
  - 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**

