### Question
How does NORMAL TAXES AND SURTAXES define market discount?


### Answer
Under *26 U.S.C. § 1278*, **market discount** is defined as:

> the excess (if any) of—


(i) the stated redemption price of the bond at maturity, over


(ii) the basis of such bond immediately after its acquisition by the taxpayer

#### Citation:
  - *26 U.S.C. § 1278*
  - 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 B-Market Discount on Bonds**

