3. Section 1.1502-13 is amended by: 1. Adding a sentence after the second sentence of paragraph (c)(6)(ii)(A). 2. Adding paragraph (c)(6)(iii). 3. Revising the first sentence of Example 1 (d) of paragraph (g)(5). The revisions and additions read as follows:
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(c) * * *
(6) * * *
(ii) * * *
(A) * * * However, see § 1.265-2(c) for special rules related to the application of paragraph (c)(6)(i) of this section to interest income with respect to certain intercompany obligations the interest deduction on which is disallowed under section 265(a)(2). * * *
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(iii) Effective date. The third sentence of paragraph (c)(6)(ii)(A) of this section shall apply to taxable years beginning on or after the date these regulations are published as final regulations in the Federal Register .
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(g) * * *
(5) * * *
Example 1 * * *
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(d) Tax-exempt income. The facts are the same as in paragraph (a) of this Example 1 , except that B's borrowing from S is allocable under section 265 to B's purchase of state and local bonds to which section 103 applies and § 1.265-2(c) does not apply. * * *
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