### Question
What is the definition of cash method debt instrument?


### Answer
The definition of **cash method debt instrument** is as follows in *26 U.S.C. § 1274A*:

> any qualified debt instrument if—


(A) the stated principal amount does not exceed $2,000,000,


(B) the lender does not use an accrual method of accounting and is not a dealer with respect to the property sold or exchanged,


(C) section 1274 would have applied to such instrument but for an election under this subsection, and


(D) an election under this subsection is jointly made with respect to such debt instrument by the borrower and lender

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

