Stripped Bond

Stripped Bond means:
a bond that has been separated by a brokerage house into its corpus and coupons, which are then sold separately as zero-coupon securities; also called stripped coupon bond. Inn other words, a bond or debenture from which the interest coupons have been removed and sold separately. A variation known by the acronym STRIPS (Separate Trading of Registered /interest and Principal of Securities) is a pre-stripped zero-coupon bond that is a direct obligation of the U.S. Treasury and is treated as a bond issued with an original issue discount equal to the difference between its purchase price and the stated redemption price at maturity. Former IRC (check if this IRC provision is current here) §1286.