Denial of deduction for interest on certain obligations not in registered form

Nothing in subsection (a) or in any other provision of law shall be construed to provide a deduction for interest on any registration-required obligation unless such obligation is in registered form.

For purposes of this section—

(A) In general The term “registration-required obligation” means any obligation (including any obligation issued by a governmental entity) other than an obligation which— (i) is issued by a natural person, (ii) is not of a type offered to the public, or (iii) has a maturity (at issue) of not more than 1 year.

(B) Authority to include other obligations Clauses (ii) and (iii) of subparagraph (A) shall not apply to any obligation if— (i) such obligation is of a type which the Secretary has determined by regulations to be used frequently in avoiding Federal taxes, and (ii) such obligation is issued after the date on which the regulations referred to in clause (i) take effect.

For purposes of this subsection, rules similar to the rules of section 149(a)(3) shall apply, except that a dematerialized book entry system or other book entry system specified by the Secretary shall be treated as a book entry system described in such section.