applicable period
(2) Interest rate cap on key persons and pre-1986 contracts (A) In general No deduction shall be allowed by reason of paragraph (1) or the last sentence of subsection (a) with respect to interest paid or accrued for any month beginning after December 31, 1995 , to the extent the amount of such interest exceeds the amount which would have been determined if the applicable rate of interest were used for such month. (B) Applicable rate of interest For purposes of subparagraph (A)— (i) In general The applicable rate of interest for any month is the rate of interest described as Moody’s Corporate Bond Yield Average-Monthly Average Corporates as published by Moody’s Investors Service, Inc., or any successor thereto, for such month. (ii) Pre-1986 contracts In the case of indebtedness on a contract purchased on or before June 20, 1986 — (I) which is a contract providing a fixed rate of interest, the applicable rate of interest for any month shall be the Moody’s rate described in clause (i) for the month in which the contract was purchased, or (II) which is a contract providing a variable rate of interest, the applicable rate of interest for any month in an applicable period shall be such Moody’s rate for the third month preceding the first month in such period. For purposes of subclause (II), the term “applicable period” means the 12-month period beginning on the date the policy is issued (and each successive 12-month period thereafter) unless the taxpayer elects a number of months (not greater than 12) other than such 12-month period to be its applicable period. Such an election shall be made not later than the 90th day after the date of the enactment of this sentence and, if made, shall apply to the taxpayer’s first taxable year ending on or after October 13, 1995 , and all subsequent taxable years unless revoked with the consent of the Secretary.
Source
26 USC § 264(e)(2)
Scoping language
None identified, default scope is assumed to be the parent (part IX) of this section.