(a) A bond or other obligation for the payment of money is principal at its inventory value. No provision shall be made for amortization of premiums or for accumulation for discounts. Except as provided in subsection (b), the proceeds of sale, redemption or other disposition of the bond or other obligation are principal.
     (b) The increment over inventory value of a bond or other obligation for the payment of money that makes no express provision for the payment of interest and (i) that is scheduled to mature not more than one year after its purchase or its otherwise becoming subject to the trust or (ii) that is an issue of the United States and the appreciation in value of which pursuant to a determinable schedule or formula is not required to be included in gross income for federal income tax purposes prior to realization thereof, shall be allocated to income at the time the increment is realized.

Terms Used In Illinois Compiled Statutes 760 ILCS 15/8

  • Amortization: Paying off a loan by regular installments.
  • Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
  • United States: may be construed to include the said district and territories. See Illinois Compiled Statutes 5 ILCS 70/1.14