(a) For purposes of subsection (b), the amount of bond premium, in the case of the holder of any bond, shall be determined—

1. (1) With reference to the amount of the basis (for determining loss on sale or exchange) of such bond;
2. (2) With reference to the amount payable on maturity or on earlier call date; and

3. (3) With adjustments proper to reflect unamortized bond premium, with respect to the bond, for the period before the date as of which Section 24360 becomes applicable with respect to the taxpayer with respect to such bond.

   In no case shall the amount of bond premium on a convertible bond include any amount attributable to the conversion features of the bond.

(c)

1. (1) Except as provided in regulations, the determinations required under subdivisions (a) and (b) shall be made on the basis of the taxpayer’s yield to maturity determined by—

   1. (A) Using the taxpayer’s basis for purposes of determining loss on sale or exchange of the obligation, and
   2. (B) Compounding at the close of each accrual period (as defined in Section 1272(a)(5) of the Internal Revenue Code).
2. (2) For purposes of paragraph (1), if the amount payable on an earlier call date is used under subparagraph (B) of paragraph (1) in determining the amortizable bond premium attributable to the period before the earlier call date, that bond shall be treated as maturing on that date for the amount so payable and then reissued on that date for the amount so payable.