### Question
What is the definition of applicable high yield discount obligation?


### Answer
The definition of **applicable high yield discount obligation** is as follows in *26 U.S.C. § 163*:

> any debt instrument if—



(A) the maturity date of such instrument is more than 5 years from the date of issue,



(B) the yield to maturity on such instrument equals or exceeds the sum of—



(i) the applicable Federal rate in effect under section 1274(d) for the calendar month in which the obligation is issued, plus



(ii) 5 percentage points, and


  


(C) such instrument has significant original issue discount

#### Citation:
  - *26 U.S.C. § 163*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter B-Computation of Taxable Income > PART VI-ITEMIZED DEDUCTIONS FOR INDIVIDUALS AND CORPORATIONS**

