A bill to amend the Internal Revenue Code of 1954 to provide that section 265 of such code shall not apply with respect to certain interest paid by certain dealers in connection with the purchase of tax-exempt obligations.

Provides under the Internal Revenue Code that in the case of a taxpayer who holds obligations the interest on which is wholly exempt from taxes primarily for sale to customers in the ordinary course of his trade or business, a deduction shall be allowed for interest paid or accrued during the taxable year on indebtedness incurred or continued to purchase or carry such obligations so held to the extent such interest exceeds the interest received or accrued during the taxable year from such obligation so held.