Tax-exempt Obligation Law and Legal Definition

According to 26 USCS § 1275 [Title 26. Internal Revenue Code; 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], tax-exempt obligation means “any obligation if--

(A) the interest on such obligation is not includible in gross income under 26 USCS § 103, or

(B) the interest on such obligation is exempt from tax (without regard to the identity of the holder) under any other provision of law.