text:
Page:United States Statutes at Large Volume 100 Part 3.djvu/833

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2641

"SEC. 148. ARBITR.4GE. "(a) ARBITRAGE B O N D D E F I N E D. — For purposes of section 103, the

term 'arbitrage bond' means any bond issufed as part of a n issue any portion of the proceeds of which a r e reasonably expected (at the t i m e of issuance of the bond) to be used directly or indirectly— "(1) to acquire higher yielding investments, or "(2) to replace funds which were used directly or indirectly to acquire higher yielding investments. For purposes of this subsection, a bond shall be t r e a t e d a s a n a r b i t r a g e bond if the issuer intentionally uses any portion of the proceeds of the issue of which such bond is a part in a m a n n e r described in paragraph (1) or (2). "(h) H I G H E R YIELDING INVESTMENTS. — For purposes of t h i s sec-

tion— "(1) IN GENERAL.—The term 'higher yielding investments' means any investment property which produces a yield over the term of the issue which is m a t e r i a l l y higher than the yield on the issue. "(2) INVESTMENT PROPERTY.—The term ' investment property '

means— "(A) any security (within the m e a n i n g of section 165(g)(2) (A) or (B)), "(B) any obligation, "(C) any a n n u i t y contract, or "(D) any investment-type property. Such term shall not include any tax-exempt bond.

,

"(c) TEMPORARY P E R I O D EXCEPTION. —

i:

^

"(1) IN GENERAL.—For purposes of subsection (a), a bond shall not be t r e a t e d a s a n a r b i t r a g e bond solely by reason of the fact that the proceeds of the issue of which such bond is a part may be invested in higher yielding investments for a reasonable temporary period until such proceeds a r e needed for the purpose for which such issue was issued. "(2) LIMITATION FINANCINGS.—

ON

TEMPORARY

PERIOD

FOR

POOLED

"(A) IN GENERAL.—The temporary period referred to in paragraph (1) shall not exceed 6 months with respect to the proceeds of an issue which a r e to be used to m a k e or finance loans (other than nonpurpose investments) to 2 or more persons. "(B) SPECIAL RULE FOR CERTAIN STUDENT LOAN POOLS.—In

idab

the case of the proceeds of a n issue to be used to m a k e or finance loans under a program described in section 144(b)(1)(A), subparagraph (A) shall be applied by substituting '18 months ' for '6 months'. The preceding sentence shall not apply to any bond issued after December 31, 1988. "(C) SHORTER TEMPORARY PERIOD FOR LOAN REPAYMENTS,

" '•••'

ETC.—Subparagraph (A) shall be applied by substituting '3 months ' for '6 months ' with respect to the proceeds from the sale or r e payment of any loan which a r e to be used to m a k e or finance any loan. For purposes of the preceding sentence, a nonpurpose investment shall not be t r e a t e d a s a loan.

�


text:
Page:United States Statutes at Large Volume 100 Part 3.djvu/834

 100 STAT. 2642

PUBLIC LAW 99-514—OCT. 22, 1986 "(D) EXCEPTION FOR MORTGAGE REVENUE BONDS.—This

paragraph shall not apply to any qualified mortgage bond or qualified veterans' mortgage bond. "(d) SPECIAL RULES FOR REASONABLY REQUIRED RESERVE OR REPLACEMENT FUND.—

"(1) IN GENERAL.—For purposes of subsection (a), a bond shall not be treated as an arbitrage bond solely by reason of the fact that an amount of the proceeds of the issue of which such bond is a part may be invested in higher yielding investments which are part of a reasonably required reserve or replacement fund. The amount referred to in the preceding sentence shall not exceed 10 percent of the proceeds of such issue unless the issuer establishes to the satisfaction of the Secretary that a higher amount is necessary. "(2) LIMITATION ON AMOUNT IN RESERVE OR REPLACEMENT FUND WHICH MAY BE FINANCED BY ISSUE.—A bond issued as part

of an issue shall be treated as an arbitrage bond if the amount of the proceeds from the sale of such issue which is part of any fund described in paragraph (1) exceeds 10 percent of the proceeds of the issue (or such higher amount which the issuer establishes is necessary to the satisfaction of the Secretary). "(3) LIMITATION MENTS.—

' ' ' = ':

ON INVESTMENT IN NONPURPOSE

INVEST-

"(A) IN GENERAL.—A bond which is part of an issue which does not meet the requirements of subparagraph (B) shall be treated as an arbitrage bond. "(B) REQUIREMENTS.—An issue meets the requirements of this subparagraph only if— "(i) at no time during any bond year may the amount invested in nonpurpose investments with a yield materially higher than the yield on the issue exceed 150 percent of the debt service on the issue for the bond year, and "(ii) the aggregate amount invested as provided in clause (i) is promptly and appropriately reduced as the amount of outstanding bonds of the issue is reduced (or, in the case of a qualified mortgage bond or a qualified veterans' mortgage bond, as the mortgages are repaid).

•' ^

"(C) EXCEPTIONS FOR TEMPORARY PERIOD.—Subparagraph

••

(B) shall not apply to— "(i) proceeds of the issue invested for an initial temporary period until such proceeds are needed for the governmental purpose of the issue, and "(ii) temporary investment periods related to debt service. "(D) DEBT SERVICE DEFINED.—For purposes of this paragraph, the debt service on the issue for any bond year is the scheduled amount of interest and amortization of principal payable for such year with respect to such issue. For purposes of the preceding sentence, there shall not be taken into account amounts scheduled with respect to any bond which has been redeemed before the beginning of the bond year. "(E) No DISPOSITION IN CASE OF LOSS.—This paragraph shall not require the sale or disposition of any investment if such sale or disposition would result in a loss which exceeds

 * .: i

�

license: Creative Commons - Attribution Share-Alike - https://creativecommons.org/licenses/by-sa/4.0/


text:
Page:United States Statutes at Large Volume 100 Part 3.djvu/835

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2643

T.

the amount which, but for such sale or disposition, would at the time of such sale or disposition— "(i) be paid to the United States, or, "(ii) in the case of a qualified mortgage bond or a qualified veterans' mortgage bond, be paid or credited mortgagors under section 143(g)(3)(A).

-mq 8

"(F) EXCEPTION FOR GOVERNMENTAL USE BONDS AND QUALIFIED 501(CX3) BONDS.—This paragraph shall not apply to

-^'- '

any bond which is not a private activity bond or which is a qualified 501(c)(3) bond.

"(e)

MINOR PORTION MAY BE INVESTED IN HIGHER YIELDING

INVESTMENTS.—Notwithstanding subsections (a), (c), and (d), a bond issued as part of an issue shall not be treated as an arbitrage bond solely by reason of the fact that an amount of the proceeds of such issue (in addition to the amounts under subsections (c) and (d)) is invested in higher yielding investments if such amount does not exceed the lesser of— "(1)5 percent of the proceeds of the issue, or "(2) $100,000. "(f) REQUIRED REBATE TO THE UNITED STATES.—

"(1) IN GENERAL.—A bond which is part of an issue shall be treated as an arbitrage bond if the requirements of paragraphs (2) and (3) are not met with respect to such issue. The preceding sentence shall not apply to any qualified mortgage bond or qualified veterans' mortgage bond. "(2) REBATE TO UNITED STATES.—An issue shall be treated as meeting the requirements of this paragraph only if an amount equal to the sum of— ai. "(A) the excess of— "(i) the amount earned on all nonpurpose investments (other than investments attributable to an excess described in this subparagraph), over "(ii) the amount which would have been earned if such nonpurpose investments were invested at a rate equal to the yield on the issue, plus "(B) any income attributable to the excess described in subparagraph (A), is paid to the United States by the issuer in accordance with the requirements of paragraph (3). ^ "(3) DUE DATE OF PAYMENTS UNDER PARAGRAPH (2).—Except to the extent provided by the Secretary, the amount which is required to be paid to the United States by the issuer shall be 'I paid in installments which are made at least once every 5 years. ' Each installment shall be in an amount which ensures that 90 percent of the amount described in paragraph (2) with respect to the issue at the time payment of such installment is required will have been paid to the United States. The last installment shall be made no later than 60 days after the day on which the last bond of the issue is redeemed and shall be in an amount sufficient to pay the remaining balance of the amount described in paragraph (2) with respect to such issue.

J.j. ix '.

"(4) SPECIAL RULES FOR APPLYING PARAGRAPH (2).—

"(A) IN GENERAL.—In determining the aggregate amount earned on nonpurpose investments for purposes of paragraph (2)—

�


text:
Page:United States Statutes at Large Volume 100 Part 3.djvu/836

 100 STAT. 2644

PUBLIC LAW 99-514—OCT. 22, 1986

'-

''

'

ij

( .^ ,,. li ' ,_.

"(i) any gain or loss on the disposition of a nonpurpose investment shall be taken into account, and "(ii) unless the issuer otherwise elects, any amount earned on a bona fide debt service fund shall not be taken into account if the gross earnings on such fund for the bond year is less than $100,000. "(B) TEMPORARY INVESTMENTS.—Under regulations prescribed by the Secretary— "(i) IN GENERAL.—An issue shall, for purposes of this ~ subsection, be treated as meeting the requirements of paragraph (2) if the gross proceeds of such issue are expended for the governmental purpose for which the issue was issued by no later than the day which is 6 months after the date of issuance of such issue. Gross proceeds which are held in a bona fide debt service fund shall not be considered gross proceeds, for purposes of this subparagraph only, "(ii) ADDITIONAL PERIOD FOR CERTAIN BONDS.-^

•Tid l ( i i

•^

"(II) ISSUES TO WHICH SUBCLAUSE (1) APPLIES.—

^)j f. '/ ':} >i f ^ ..

,

"(I) IN GENERAL.—In the case of an issue described in subclause (II), clause (i) shall be applied by substituting '1 year' for '6 months' with respect to the portion of the proceeds of the issue which are not expended in accordance with clause (i) if such portion does not exceed the lesser of 5 percent of the proceeds of the issue or $100,000. An issue is described in this subclause if no bond which is part of such issue is a private activity bond (other than a qualified 501(c)(3) bond) or a tax or revenue anticipation bond.

"(iii) S A F E HARBOR FOR DETERMINING WHEN PROCEEDS OF TAX A N D REVENUE ANTICIPATION BONDS ARE EXPENDED.— "(I) IN GENERAL.—For purposes of clause (i), in the case of a n issue of tax or revenue anticipation .; bonds, the n e t proceeds of such issue (including e a r n i n g s thereon) shall be treated a s expended for ., the government a l purpose of the issue on the 1st

'

day after the date of issuance that the cumulative cash flow deficit to be financed by such issue exceeds 90 percent of the aggregate face amount of such issue. "(II) CUMULATIVE CASH FLOW DEFICIT.—For purposes of subclause (I), the term 'cumulative cash flow deficit' means, as of the date of computation, the excess of the expenses paid during the period described in subclause (III) which would ordinarily be paid out of or financed by anticipated tax or other revenues over the aggregate amount available (other than from the proceeds of the issue) during such period for the payment of such expenses. "(Ill)

• " *' -'*f--i

PERIOD

INVOLVED.—For

purposes

of

subclause (II), the period described in this subclause is the period beginning on the date of issuance of the issue and ending on the earliest of

�


text:
Page:United States Statutes at Large Volume 100 Part 3.djvu/837

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2645

the maturity date of the issue, the date 6 months after such date of issuance, or the date of the computation of cumulative cash flow deficit. "(C) EXCEPTION FOR SMALL GOVERNMENTAL UNITS.—An

issue shall, for purposes of this subsection, be treated as meeting the requirements of paragraphs (2) and (3) if— "(i) the issue is issued by a governmental unit with general taxing powers, "(ii) no bond which is part of such issue is a private activity bond, ilsS "(iii) 95 percent or more of the net proceeds of such issue are to be used for local governmental activities of the issuer (or of a governmental unit the jurisdiction of which is entirely within the jurisdiction of the issuer), and "(iv) the aggregate face amount of all tax-exempt bonds (other than private activity bonds) issued by such ' • unit (and all subordinate entities thereof) during the calendar year in which such issue is issued is not reasonably expected to exceed $5,000,000. Clause (iv) shall not take into account any bond which is not outstanding at the time of a later issue or which is redeemed (other than in an advance refunding) from the i^ ' net proceeds of the later issue. "(D) EXCEPTION FOR CERTAIN QUALIFIED STUDENT LOAN i

BONDS.—

T'

'.

. '

,

"(i) IN GENERAL.—In determining the aggregate amount earned on nonpurpose investments acquired with gross proceeds of an issue of bonds described in section 144(b)(1)(A), the amount earned from investment of net proceeds of such issue during the initial temporary period under subsection (c) shall not be taken into account to the extent that the amount so earned is used to pay the reasonable— "(I) administrative costs of such a program attributable to such issue and the costs of carrying such issue, and "(II) costs of issuing such issue, but only to the extent such costs were financed with proceeds of such issue and for which the issuer was not reimbursed. "(ii) ONLY ARBITRAGE ON AMOUNTS LOANED DURING

V i'i\^ •

TEMPORARY PERIOD TAKEN INTO ACCOUNT FOR ADMINISTRATIVE COSTS, ETC.—The amount earned from investment of net proceeds of an issue during the initial temporary period under subsection (c) shall be taken into account under clause (i)(I) only to the extent attributable to proceeds which were used to make or finance (not later than the close of such period) student loans under a program described in section 144(b)(1)(A). "(iii) ELECTION.—This subparagraph shall not apply to any issue if the issuer elects not to have this subparagraph apply to such issue. "(iv) TERMINATION.—This subparagraph shall not apply to any bond issued after December 31, 1988.

"(5) EXEMPTION FROM GROSS INCOME OF SUM REBATED.—Gross

income shall not include the sum described in paragraph (2).

71_194 0 - 89 - 28: CL. 3 Part3

�


text:
Page:United States Statutes at Large Volume 100 Part 3.djvu/838

 100 STAT. 2646

PUBLIC LAW 99-514—OCT. 22, 1986

d Notwithstanding any other provision of this title, no deduction sfi shall be allowed for any amount paid to the United States under paragraph (2). "(6) DEFINITIONS.—For purposes of this subsection and subsec•- tions (c) and (d)— "(A) NoNPURPOSE INVESTMENT.—The term 'nonpurpose investment' means any investment property which— "(i) is acquired with the gross proceeds of an issue, •'- '. and, "(ii) is not acquired in order to carry out the governmental purpose of the issue. "(B) GROSS PROCEEDS.—Except as otherwise provided by the Secretary, the gross proceeds of an issue include— •" -'*'" "(i) amounts received (including repayments of principal) as a result of investing the original proceeds of the issue, and "(ii) amounts to be used to pay debt service on the issue. "(7) PENALTY IN UEU OF LOSS OF TAX EXEMPTION.—In the case of an issue which would (but for this paragraph) fail to meet the requirements of paragraph (2) or (3), the Secretary may treat . such issue as not failing to meet such requirements if— "(A) no bond which is part of such issue is a private .;/, activity bond (other than a qualified 501(c)(3) bond), "(B) the failure to meet such requirements is due to reasonable cause and not to willful neglect, and "(C) the issuer pays to the United States a penalty in an amount equal to the sum of— "(i) 50 percent of the amount which was not paid in accordance with paragraphs (2) and (3), plus >t "(ii) interest (at the underpayment rate established o J-' ' & under section 6621) on the portion of the amount which was not paid on the date required under paragraph (3) for the period beginning on such date. The Secretary may waive all or any portion of the penalty under this paragraph. "(g) STUDENT LOAN INCENTIVE PAYMENTS.—Except to the extent otherwise provided in regulations, payments made by the Secretary of Education pursuant to section 438 of the Higher Education Act of 1965 are not to be taken into account, for purposes of subsection (a)(D, in determining yields on student loan notes. "(h) DETERMINATIONS OF YIELD.—For purposes of this section, the yield on an issue shall be determined on the basis of the issue price (within the meaning of sections 1273 and 1274). "(i) REGULATIONS.—The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this section. "SEC. 149. BONDS MUST BE REGISTERED TO BE TAX EXEMPT; OTHER REQUIREMENTS. "(a) BONDS MUST B E REGISTERED TO B E TAX EXEMPT.— 5,, "(1) GENERAL RULE.—Nothing in section 103(a) or in any other

provision of law shall be construed to provide an exemption from Federal income tax for interest on any registration-required bond unless such bond is in registered form.

�


text:
Page:United States Statutes at Large Volume 100 Part 3.djvu/839

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2647

"(2) REGISTRATION-REQUIRED BOND.—For purposes of paragraph (1), the term 'registration-required bond' means any bond other than a bond which— "(A) is not of a type offered to the public, "(B) has a maturity (at issue) of not more than 1 year, or r "(C) is described in section 163(fK2XB). "(3) SPECIAL RULES.— "(A) BOOK ENTRIES PERMITTED.—For purposes of para-

 * r
 * r

graph (1), a book entry bond shall be treated as in registered form if the right to the principal of, and stated interest on, such bond may be transferred only through a book entry consistent with regulations prescribed by the Secretary. "(B) NOMINEES.—The Secretary shall prescribe such regulations as may be necessary to carry out the purpose of paragraph (1) where there is a nominee or chain of nominees.

"(b) FEDERALLY GUARANTEED BOND IS NOT TAX EXEMPT.—

"(1) IN GENERAL.—Section 103(a) shall not apply to any State or local bond if such bond is federally guaranteed. "(2) FEDERALLY GUARANTEED DEFINED.—For purposes of paragraph (1), a bond is federally guaranteed if— "(A) the payment of principal or interest with respect to such bond is guaranteed (in whole or in part) by the United States (or any agency or instrumentality thereof), ^^.,^ "(B) such bond is issued as part of an issue and 5 percent or more of the proceeds of such issue is to be— "(i) used in making loans the payment of principal or interest with respect to which are to be guaranteed (in whole or in part) by the United States (or any agency or instrumentality thereof), or "(ii) invested (directly or indirectly) in federally insured deposits or accounts, or "(C) the payment of principal or interest on such bond is otherwise indirectly guaranteed (in whole or in part) by the United States (or an agency or instrumentality thereof)"(3) EXCEPTIONS.— ,., "(A) CERTAIN INSURANCE PROGRAMS.—A bond shall not be

,j,^^

treated as federally guaranteed by reason of— "(i) any guarantee by the Federal Housing Administration, the Veterans' Administration, the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, or the Government National Mortgage Association, "(ii) any guarantee of student loans and any guarantee by the Student Loan Marketing Association to finance student loans, or "(iii) any guarantee by the Bonneville Power Authority pursuant to the Northwest Power Act (16 U.S.C. 839d) as in effect on the date of the enactment of the Tax Reform Act of 1984 with respect to any bond issued before July 1, 1989. "(B) DEBT SERVICE, ETC.—Paragraph (1) shall not apply to— "(i) proceeds of the issue invested for an initial temporary period until such proceeds are needed for the purpose for which such issue was issued,

�


text:
Page:United States Statutes at Large Volume 100 Part 3.djvu/840

 100 STAT. 2648

PUBLIC LAW 99-514—OCT. 22, 1986

-,.- . ••'.s'.', ' 10 /xn^

"(ii) investments of a bona fide debt service fund, "(iii) investments of a reserve which meet the requirements of section 148(d), "(iv) investments in bonds issued by the United States Treasury, or "(v) other investments permitted under regulations. "(C) EXCEPTION FOR HOUSING PROGRAMS.—

••.. - ^ »>i; ' -;' " ii'

'

"(i) IN GENERAL.—Except as provided in clause (ii), paragraph (1) shall not apply to— "(I) a private activity bond for a qualified residential rental project or a housing program obliga• tion under section 11(b) of the United States Housing Act of 1937, "(II) a qualified mortgage bond, or "(III) a qualified veterans' mortgage bond. "(ii) EXCEPTION NOT TO APPLY WHERE BOND INVESTED IN FEDERALLY INSURED DEPOSITS OR ACCOUNTS.—Clause

(i) shall not apply to any bond which is federally guaranteed within the meaning of paragraph (2)(B)(ii). "(D) LOANS TO, OR GUARANTEES BY, FINANCIAL INSTITU-

•'

TIONS.—Except as provided in paragraph (2)(B)(ii), a bond which is issued as part of an issue shall not be treated as federally guaranteed merely by reason of the fact that the proceeds of such issue are used in making loans to a financial institution or there is a guarantee by a financial institution unless such guarantee constitutes a federally insured deposit or account. "(4) DEFINITIONS.—For purposes of this subsection—

fv

"(A) TREATMENT OF CERTAIN ENTITIES WITH AUTHORITY TO

BORROW FROM UNITED STATES.—To the extent provided in regulations prescribed by the Secretary, any entity with be treated as an instrumentality of the United States. Except in the case of an exempt facility bond, a qualified » small issue bond, a qualified student loan bond, and a qualified redevelopment bond, nothing in the preceding sentence shall be construed as treating the District of instrumentality of the United States. "' "(B) FEDERALLY INSURED DEPOSIT OR ACCOUNT.—The term 'federally insured deposit or account' means any deposit or account in a financial institution to the extent such deposit or account is insured under Federal law by the Federal Deposit Insurance Corporation, the Federal Savings and '^" Loan Insurance Corporation, the National Credit Union ' ' ' Administration, or any similar federally chartered corporation. "(c) TAX EXEMPTION MUST B E DERIVED FROM THIS TITLE.— "(1) GENERAL RULE.—Except as provided in paragraph (2), no
 * -•> ^^ statutory authority to borrow from the United States shall
 * '-' > ' Columbia or any possession of the United States as an

^ '^

interest on any bond shall be exempt from taxation under this title unless such interest is exempt from tax^ under this title without regard to any provision of law which is not contained in this title and which is not contained in a revenue Act. "(2) CERTAIN PRIOR EXEMPTIONS.— "(A) PRIOR EXEMPTIONS CONTINUED.—For purposes of this

'^''

title, notwithstanding any provision of this part, any bond the interest on which is exempt from taxation under this

�


text:
Page:United States Statutes at Large Volume 100 Part 3.djvu/841

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2649

title by reason of any provision of law (other than a provision of this title) which is in effect on January 6, 1983, shall be treated as a bond described in section 103(a). "(B) ADDITIONAL REQUIREMENTS FOR BONDS ISSUED AFTER

1983.—Subparagraph (A) shall not apply to a bond (not described in subparagraph (O) issued after 1983 if the appropriate requirements of this part (or the corresponding provisions of prior law) are not met with respect to such bond. "(C) DESCRIPTION OF BOND.—A bond is described in this subparagraph (and treated as described in subparagraph (A))if"(i) such bond is issued pursuant to the Northwest Power Act (16 U.S.C. 839d), as in effect on July 18, 1984; "(ii) such bond is issued pursuant to section 608(a)(6)(A) of Public Law 97-468, as in effect on the date of the enactment of the Tax Reform Act of 1986; or "(iii) such bond is issued before June 19, 1984 under section llOt)) of the United States Housing Act of 1937. '(d) ADVANCE REFUNDINGS.—

"(1) IN GENERAL.—Nothing in section 103(a) or in any other provision of law shall be construed to provide an exemption from Federal income tax for interest on any bond issued as part of an issue described in paragraph (2), (3), or (4). "(2) CERTAIN PRIVATE ACTIVITY BONDS.—An issue is described in this paragraph if any bond (issued as part of such issue) is issued to advance refund a private activity bond (other than a qualified 501(c)(3) bond). "(3) OTHER BONDS.—

''

.. u

^.

"(A) IN GENERAL.—An issue is described in this paragraph if any bond (issued as part of such issue), hereinafter in this paragraph referred to as the 'refunding bond', is issued to advance refund a bond unless— "(i) the refunding bond is only— "(I) the 1st advance refunding of the original bond if the original bond is issued after 1985, or "(II) the 1st or 2nd advance refunding of the original bond if the original bond was issued before 1986, "(ii) in the case of refunded bonds issued before 1986, the refunded bond is redeemed not later than the earliest date on which such bond may be redeemed at par or at a premium of 3 percent or less, "(iii) in the case of refunded bonds issued after 1985, the refunded bond is redeemed not later than the earliest date on which such bond may be redeemed, "(iv) the initial temporary period under section 148(c) ends— "(I) with respect to the proceeds of the refunding bond not later than 30 days after the date of issue of such bond, and "(II) with respect to the proceeds of the refunded bond on the date of issue of the refunding bond, and "(v) in the case of refunded bonds to which section 148(e) did not apply, on and after the date of issue of the refunding bond, the amount of proceeds of the

�


text:
Page:United States Statutes at Large Volume 100 Part 3.djvu/842

 100 STAT. 2650

PUBLIC LAW 99-514—OCT. 22, 1986 . ' !' •^'' '"

'

refunded bond invested in higher yielding investments (as defined in section 148(b)) which are nonpurpose investments (as defined in section 148(0(6)(A)) does not exceed— "(I) the amount so invested as part of a reasonably required reserve or replacement fund or during an allowable temporary period, and "(II) the amount which is equal to the lesser of 5 percent of the proceeds of the issue of which the refunded bond is a part or $100,000 (to the extent such amount is allocable to the refunded bond). "(B) SPECIAL RULES FOR REDEMPTIONS.— "(i) ISSUER MUST REDEEM ONLY IF DEBT SERVICE SAV-

^. '

« " '

iNGS.—Clause (ii) and (iii) of subparagraph (A) shall apply only if the issuer may realize present value debt service savings (determined without regard to administrative expenses) in connection with the issue of which the refunding bond is a part. "(ii) REDEMPTIONS NOT REQUIRED BEFORE 90TH DAY.—

For purposes of clauses (ii) and (iii) of subparagraph (A), the earliest date referred to in such clauses shall not be earlier than the 90th day after the date of issuance of the refunding bond. "(4) ABUSIVE TRANSACTIONS PROHIBITED.—An issue is described ! in this paragraph if any bond (issued as part of such issue) is ^ issued to advance refund another bond and a device is employed in connection with the issuance of such issue to obtain a material financial advantage (based on arbitrage) apart from savings attributable to lower interest rates. "(5) ADVANCE REFUNDING.—For purposes of this part, a bond shall be treated as issued to advance refund another bond if it is issued more than 90 days before the redemption of the refunded bond. i

"(6)

SPECIAL RULES FOR PURPOSES OF PARAGRAPH O).—For

-

purposes of paragraph (3), bonds issued before the date of the enactment of this subsection shall be taken into account under subparagraph (A)(i) thereof except— "(A) a refunding which occurred before 1986 shall be treated as an advance refunding only if the refunding bond ' was issued more than 180 days before the redemption of the i;, refunded bond, and "(B) a bond issued before 1986, shall be treated as advance refunded no more than once before March 15, 1986. "(7) REGULATIONS.—The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this subsection. "(e) INFORMATION REPORTING.—

"(1) IN GENERAL.—Nothing in section 103(a) or any other provision of law shall be construed to provide an exemption from Federal income tax for interest on any bond unless such bond satisfies the requirements of paragraph (2). "(2) INFORMATION REPORTING REQUIREMENTS.—A bond satisfies the requirements of this paragraph if the issuer submits to the Secretary, not later than the 15th day of the 2d calendar month after the close of the calendar quarter in which the bond is issued (or such later time as the Secretary may prescribe with

�


text:
Page:United States Statutes at Large Volume 100 Part 3.djvu/843

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2651

respect to any portion of the statement), a statement concerning the issue of which the bond is a part which contains— "(A) the name and address of the issuer, "(B) the date of issue, the amount of net proceeds of the issue, the stated interest rate, term, and face amount of each bond which is part of the issue, the amount of issuance costs of the issue, and the amount of reserves of the issue, •FiMi "(C) where required, the name of the applicable elected representative who approved the issue, or a description of the voter referendum by which the issue was approved, ,f "(D) the name, address, and employer identification number of— "(i) each initial principal user of any facility provided with the proceeds of the issue, "(ii) the common parent of any affiliated group of corporations (within the meaning of section 1504(a)) of ^, which such initial principal user is a member, and "(iii) if the issue is treated as a separate issue under •.,? section 144(a)(6)(A), any person treated as a principal user under section 144(a)(6)(B), "(E) a description of any property to be financed from the - . proceeds of the issue, "(F) a certification by a State official designated by State •..' law (or, where there is no such official, the Governor) that the bond meets the requirements of section 146 (relating to g. cap on private activity bonds), if applicable, and "(G) such other information as the Secretary may require. Subparagraphs (C) and (D) shall not apply to any bond which is f not a private activity bond. The Secretary may provide that certain information specified in the 1st sentence need not be inclusion of such information is not necessary to carry out the purposes of this subsection. "(3) EXTENSION OF TIME.—The Secretary may grant an extension of time for the filing of any statement required under paragraph (2) if there is reasonable cause for the failure to file • such statement in a timely fashion.
 * ' included in the statement with respect to an issue where the

"Subpart C—Definitions and Special Rules "Sec. 150. Definitions and special rules.

"SEC. 150. DEFINITIONS AND SPECIAL RULES.

"(a) GENERAL RULE.—For purposes of this part— J "(1) BOND.—The term 'bond' includes any obligation. g

"(2) GOVERNMENTAL UNIT NOT TO INCLUDE FEDERAL GOVERN-

i

MENT.—The term 'governmental unit' does not include the United States or any agency or instrumentality thereof. "(3) NET PROCEEDS.—The term 'net proceeds' means, with respect to any issue, the proceeds of such issue reduced by amounts in a reasonably required reserve or replacement fund. "(4) 501(c)(3) ORGANIZATION.—The term '501(c)(3) organization' means any organization described in section 501(c)(3) and exempt from tax under section 501(a).

ei rr

�


text:
Page:United States Statutes at Large Volume 100 Part 3.djvu/844

 100 STAT. 2652 •in

PUBLIC LAW 99-514—OCT. 22, 1986 "(5) OWNERSHIP OF PROPERTY.—Property shall be treated as owned by a governmental unit if it is owned on behalf of such unit. "(6) TAX-EXEMPT BOND.—The term 'tax-exempt' means, with respect to any bond (or issue), that the interest on such bond (or on the bonds issued as part of such issue) is excluded from gross income.

''(b) CHANGE IN USE OF FACILITIES FINANCED WITH TAX-EXEMPT PRIVATE ACTIVITY BONDS.— "(1) MORTGAGE REVENUE BONDS.—

"(A) IN GENERAL.—In the case of any residence with respect to which financing is provided from the proceeds of j„f; ^^ a qualified mortgage bond or qualified veterans' mortgage bond, if there is a continuous period of at least 1 year during which such residence is not the principal residence of at least 1 of the mortgagors who received such financing, then no deduction shall be allowed under this chapter for interest on such financing which accrues on or after the date such period began. ••' "(B) EXCEPTION.—Subparagraph (A) shall not apply to the extent the Secretary determines that its application would '^' " result in undue hardship and that the failure to meet the requirements of subparagraph (A) resulted from circumstances beyond the mortgagor's control. "(2) QUALIFIED RESIDENTIAL RENTAL PROJECTS.—In the case of any project for residential rental property— "(A) with respect to which financing is provided from the v T, proceeds of any private activity bond which, when issued, purported to be a tax-exempt bond described paragraph (7) ' L ' of section 142(a), and "(B) which does not meet the requirements of section 142(d), no deduction shall be allowed under this chapter for interest on such financing which accrues during the period beginning on the 1st day of the taxable year in which such project fails to meet such requirements and ending on the date such project meets such requirements. ,;,

"(3) QUALIFIED 50i(c)(3) BONDS.—

' (A) IN GENERAL.—In the case of any facility with respect to which financing is provided from the proceeds of any private activity bond which, when issued, purported to be a tax-exempt qualified 501(c)(3) bond, if any portion of such facility— "(i) is used in a trade or business of any person other than a 501(c)(3) organization or a governmental unit, but "(ii) continues to be owned by a 501(c)(3) organization, then the owner of such portion shall be treated for purposes of this title as engaged in an unrelated trade or business (as -'* defined in section 513) with respect to such portion. The amount of gross income attributable to such portion for any period shall not be less than the fair rental value of such portion for such period. "(B) DENIAL OF DEDUCTION FOR INTEREST.—No deduction

Dru>,

shall be allowed under this chapter for interest on financing described in subparagraph (A) which accrues during the period beginning on the date such facility is used as de-

�


text:
Page:United States Statutes at Large Volume 100 Part 3.djvu/845

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2653

scribed in subparagraph (A)(i) and ending on the date such facility is not so used. "(4) CERTAIN EXEMPT FACILITY BONDS.—

'• * ' ,,

"(A) IN GENERAL.—In the case of any facility with respect to which financing is provided from the proceeds of any private activity bond to which this paragraph applies, if such facility is not used for a purpose for which a taxexempt bond could be issued on the date of such issue, no deduction shall be allowed under this chapter for interest on such financing which accrues during the period beginning on the date such facility is not so used and ending on the date such facility is so used. "(B) BONDS TO WHICH PARAGRAPH APPLIES.—This paragraph applies to any private activity bond which, when issued, purported to be a tax-exempt exempt facility bond described in a paragraph (other than paragraph (7)) of section 142(a).

•*

"(5) FACILITIES REQUIRED TO BE OWNED BY GOVERNMENTAL UNITS OR 501(C)(3) ORGANIZATIONS.—If—

J "

"(A) financing is provided with respect to any facility from the proceeds of any private activity bond which, when issued, purported to be a tax-exempt bond, "(B) such facility is required to be owned by a governmental unit or a 501(c)(3) organization as a condition of such tax exemption, and "(C) such facility is not so owned, then no deduction shall be allowed under this chapter for interest on such financing which accrues during the period beginning on the date such facility is not so owned and ending on the date such facility is so owned.

'-

"(c) EXCEPTION AND SPECIAL RULES FOR PURPOSES OF SUBSECTION

(b).—For purposes of subsection (b)— "(1) EXCEPTION.—Any use with respect to facilities financed with proceeds of an issue which are not required to be used for ' the exempt purpose of such issue shall not be taken into account. "(2) TREATMENT OF AMOUNTS OTHER THAN INTEREST.—If

n

I

the

amounts payable for the use of a facility are not interest, subsection (b) shall apply to such amounts as if they were interest but only to the extent such amounts for any period do not exceed the amount of interest accrued on the bond financing for such period. "(3) USE OF PORTION OF FACILITY.—In the case of any person which uses only a portion of the facility, only the interest accruing on the financing allocable to such portion shall be taken into account by such person. "(4) CESSATION WITH RESPECT TO PORTION OF FACILITY.—In the

case of any facility where part but not all of the facility is not , used for an exempt purpose, only the interest accruing on the financing allocable to such part shall be taken into account. "(5) REGULATIONS.—The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this subsection and subsection (b). "(d) QUALIFIED SCHOLARSHIP FUNDING BOND.—For purposes of this part and section 103— "(1) TREATMENT AS STATE OR LOCAL BOND.—A qualified scholarship funding bond shall be treated as a State or local bond.

�


text:
Page:United States Statutes at Large Volume 100 Part 3.djvu/846

 100 STAT. 2654

PUBLIC LAW 99-514—OCT. 22, 1986 "(2)

QUALIFIED SCHOLARSHIP FUNDING BOND DEFINED.—The

term 'qualified scholarship funding bond' means a bond issued by a corporation which— "(A) is a corporation not for profit established and operV ated exclusively for the purpose of acquiring student loan ij notes incurred under the Higher Education Act of 1965, and "(B) is organized at the request of the State or 1 or more political subdivisions thereof or is requested to exercise such power by 1 or more political subdivisions and required by its corporate charter and bylaws, or required by State fv ]g^^ ^Q devote any income (after payment of expenses, debt service, and the creation of reserves for the same) to the purchase of additional student loan notes or to pay over any income to the United States. "(e) BONDS OF CERTAIN VOLUNTEER FIRE DEPARTMENTS.—For purposes of this part and section 103— "(1) IN GENERAL.—A bond of a volunteer fire department shall be treated as a bond of a political subdivision of a State if— "(A) such department is a qualified volunteer fire depart'" ment with respect to an area within the jurisdiction of such ' ' political subdivision, and "(B) such bond is issued as part of an issue 95 percent or more of the net proceeds of which are to be used for the acquisition, construction, reconstruction, or improvement of a firehouse or firetruck used or to be used by such department. "(2) QUALIFIED VOLUNTEER FIRE DEPARTMENT.—For purposes of this subsection, the term 'qualified volunteer fire department' means, with respect to a political subdivision of a State, any , organization— "(A) which is organized and operated to provide firefight, ing or emergency medical services for persons in an area (within the jurisdiction of such political subdivision) which is not provided with any other firefighting services, and "(B) which is required (by written agreement) by the ,.? political subdivision to furnish firefighting services in such area." (c) AMENDMENT TO ARBITRAGE REGULATIONS.—The provision in

the Federal income tax regulations relating to the arbitrage requirements which permits a higher yield on acquired obligations if the issuer elects to waive the benefits of the temporary period provisions shall not apply to bonds issued after August 31, 1986. (d) STATE AND LOCAL GOVERNMENT SERIES MODIFICATIONS.—Not-

withstanding any other provision of law or any regulations promulgated thereunder (including the provisions of 31 CFR part 344) the Secretary of the Treasury shall extend by January 1, 1987, the State and Local Government Series program to provide— (1) instruments allowing flexible investment of bond proceeds in a manner eliminating the earning of rebatable arbitrage, (2) demand deposits under such program by eliminating ad*?" vance notice and minimum maturity requirements related to the purchase of bonds, sj (3) operation of such program at no net cost to the Federal Government, and '' (4) deposits for a stated maturity under reasonable advance ^' notice requirements.

�


text:
Page:United States Statutes at Large Volume 100 Part 3.djvu/847

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2655

(e) MANAGEMENT CONTRACTS.—The Secretary of the Treasury or

his delegate shall modify the Secretary's advance ruling guidelines relating to when use of property pursuant to a management contract is not considered a trade or business use by a private person for purposes of section 141(a) of the Internal Revenue Code of 1986 to provide that use pursuant to a management contract generally shall not be treated as trade or business use as long as— (1) the term of such contract (including renewal options) does not exceed 5 years, (2) the exempt owner has the option to cancel such contract at the end of any 3-year period, (3) the manager under the contract is not compensated (in whole or in part) on the basis of a share of net profits, and (4) at least 50 percent of the annual compensation of the manager under such contract is based on a periodic fixed fee. (f) AMENDMENTS RELATING TO MORTGAGE CREDIT CERTIFICATE PROGRAM.— (1) TRADE-IN RATE INCREASED TO 25 PERCENT.—

utn<

(A) Subparagraph (A) of section 25(d)(2) (relating to aggregate limit of certificate credit rates) is amended by striking out "20 percent" and inserting in lieu thereof "25 percent". (B) Subparagraph (A) of section 25(0(2) (defining correction amount) is amended by striking out "0.20" and inserting in lieu thereof "0.25". (2) CONFORMING AMENDMENTS.—

 * i,.

s

 * ,>i.

I, if,: ^

(A) Clause (ii) of section 25(b)(2)(A) (defining certificate indebtedness amount) is amended by striking out "section 103A(1)(6)" and inserting in lieu thereof "section 143(k)(4)". (B) Clause (iii) of section 25(b)(2)(A) is amended by striking out "section 103A(1)(7)" and inserting in lieu thereof "section 143(k)(5)". (C)(i) Subparagraphs (A)(iii) and (B) of section 25(c)(2) are each amended by striking out "section 103A" each place it appears and inserting in lieu thereof "section 143". (ii) Clause (ii) of section 25(c)(2)(A) is amended by striking out "section 103A" and inserting in lieu thereof "section 103". (D) Clause (iii) of section 25(c)(2)(A) (defining qualified mortgage credit certificate program) is amended by striking out all the subclauses thereof and inserting in lieu thereof the following: "(I) subsection (c) (relating to residence requirements), "(II) subsection (d) (relating to 3-year requirement), "(III) subsection (e) (relating to purchsise price requirement), "(IV) subsection (0 (relating to income requirements), "(V) subsection (h) (relating to portion of loans required to be placed in targeted areas), and "(VI) paragraph (1) of subsection (i) (relating to other requirements),". (E) The last sentence of subparagraph (A) of section 25(c)(2) is amended by striking out "section 103A(c)(2)" and inserting in lieu thereof "section 143(a)(2)". (F) Subparagraph (B) of section 25(c)(2) is amended—

�


text:
Page:United States Statutes at Large Volume 100 Part 3.djvu/848

 100 STAT. 2656

PUBLIC LAW 99-514—OCT. 22, 1986
 * '• f «: - I

^

(i) by striking out "subclauses (II) and (IV)" and inserting in lieu thereof "subclauses (II), (IV), and (V)", and (ii) by striking out clause (iii) and all that follows and inserting in lieu thereof the following: Si**;? vi "(iii) paragraph (1) of section 143(d) shall be applied by substituting '100 percent' for '95 percent or more'. i^^i Clause (iii) shall not apply if the issuing authority submits a plan to the Secretary for administering the 95-percent 3s; requirement of section 143(d)(1) and the Secretary is satisfied that such requirement will be met under such plan." (G) Subsection (d) of section 25 (relating to determination of certificate credit rate) is amended by striking out paragraph (3). (H) Paragraph (2) of section 25(e) (relating to indebtedness not treated as certified where certain requirements in fact not met) is amended by striking out "subsection (d)(1), (e), (f), and (j) of section 103A" and inserting in lieu thereof "subsections (c)(1), (d), (e), (f), and (i) of section 143". (I) Paragraph (6) of section 25(e) is amended by striking out "section 1030b)(6)(C)(i)" and inserting in lieu thereof "section 144(a)(3)(A)". ,i!.. (J) Subparagraph (A) of section 25(e)(8) is amended by striking out "section 103A(1)(7)(B)" and inserting in lieu thereof "section 143(k)(5)(B)". ? (K) Subparagraph (B) of section 25(e)(8) is amended by striking out "section 103A(1)(6)" and inserting in lieu thereof "section 143(k)(4)". (L) Paragraph (9) of section 25(e) is amended by striking out "section 103A(c)(l)" and inserting in lieu thereof "section 143(a)(1)". (M) Paragraph (10) of section 25(e) is amended by striking >c out "section 103A" and inserting in lieu thereof "section 143". (N) Paragraph (1) of section 25(f) is amended by striking 1 out "paragraph (4) of section 103A(g)" and inserting in lieu thereof "subsection (d) of section 146". (O) Paragraph (3) of section 25(f) is amended by striking out "section 103A(g)(5)(C)" and inserting in lieu thereof "section 146(d)(3)(C)". (g) PENALTY FOR FAILURE To FILE REPORT ON COMPLIANCE WITH QUALIFIED RESIDENTIAL RENTAL PROJECT RULES.—Section 6652
 * i

(relating to failure to file certain information returns, registration statements, etc.), as amended by section 1501 of this Act, is amended by redesignating subsection (j) as subsection (k) and by inserting after subsection (i) the following new subsection: "(j) FAILURE To FILE CERTIFICATION WITH RESPECT TO CERTAIN RESIDENTIAL RENTAL PROJECTS.—In the case of each failure to pro-

vide a certification as required by section 142(d)(7) at the time prescribed therefor, unless it is shown that such failure is due to reasonable cause and not to willful neglect, there shall be paid, on notice and demand of the Secretary and in the same manner as tax, by the person failing to provide such certification, an amount equal to $100 for each such failure." (h) REPEAL OF REPORT ON MORTGAGE REVENUE BOND PROGRAM.—

Paragraph (7) of section 611(d) of the Tax Reform Apt of 1984 is hereby repealed.

�


text:
Page:United States Statutes at Large Volume 100 Part 3.djvu/849

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2657

(i) AMENDMENT TO OUTPUT REGULATIONS.—The Secretary of the

Treasury or his delegate shall amend the provision in the Federal income tax regulations relating to when use pursuant to certain output contracts is considered to satisfy the private business tests of paragraphs (1) and (2) of section 141(b) of the Internal Revenue Code of 1986 to eliminate the requirement of a 3 percent guaranteed minimum payment. (j) TECHNICAL AND CONFORMING AMENDMENTS.— (1) REPEAL OF SECTION 103A.—Section 103A is hereby repealed. (2) SECTION 1 4 3 REDESIGNATED AS SECTION 7703.— •:> (A) IN GENERAL.—Chapter 79 (relating to definitions) is

amended by adding at the end thereof the following new section: "SEC. 7703. DETERMINATION OF MARITAL STATUS.

"(a) GENERAL RULE.—For purposes of part V of subchapter B of chapter 1 and those provisions of this title which refer to this subsection— "(1) the determination of whether an individual is married shall be made as of the close of his taxable year; except that if his spouse dies during his taxable year such determination shall be made as of the time of such death; and "(2) an individual legally separated from his spouse under a decree of divorce or of separate maintenance shall not be considered as married. "(b) CERTAIN MARRIED INDIVIDUALS LIVING APART.—For purposes

of those provisions of this title which refer to this subsection, if— "(1) an individual who is married (within the meaning of subsection (a)) and who files a separate return maintains as his home a household which constitutes for more than one-half of the taxable year the principal place of abode of a child (within the meaning of section 151(e)(3)) with respect to whom such individual is entitled to a deduction for the taxable year under section 151 (or would be so entitled but for paragraph (2) or (4) of section 152(e)), "(2) such individual furnishes over one-half of the cost of maintaining such household during the taxable year, and "(3) during the last 6 months of the taxable year, such individual's spouse is not a member of such household, such individual shall not be considered as married." (B) CLERICAL AMENDMENT.—The table of sections for chap: ter 79 is amended by adding at the end thereof the following new item: "Sec. 7703. Determination of marital status."

(3) Paragraph (3) of section 163(0 (relating to denial of deductions for interest on certain obligations not in registered form) is amended by striking out "section 103(j)(3)" and inserting in lieu thereof "section 149(a)(3)". (4) Sections 269A(b)(3)", 414(m)(5), 414(n)(6), and 4988(c)(2) (defining related person) are each amended by striking out "section 103(b)(6)(C)" and inserting in lieu thereof "section 144(a)(3)". (5) Paragraph (1) of section 4701(b) (defining registrationrequired obligation) is amended by striking out "section 103(j)" and inserting in lieu thereof "section 149(a)".

�


text:
Page:United States Statutes at Large Volume 100 Part 3.djvu/850

 100 STAT. 2658

PUBLIC LAW 99-514—OCT. 22, 1986

• •

(6) Sections 4940(c)(5), 4942(D(2)(A), and 7871(a)(4) are each amended by striking out "(relating to interest on certain governmental obligations)" and inserting in lieu thereof "(relating to State and local bonds)". (7) Paragraph (2) of section 7871(c) (relating to no exemption for certain private activity bonds) is amended to read as follows: "(2) N o EXEMPTION FOR PRIVATE ACTIVITY BONDS.—Subsection

(a) of section 103 shall not apply to any private activity bond (as defined in section 141(a)) issued by an Indian tribal government (or subdivision thereof)." (8) Sections 22(e)(2), 32(c) and (d), 86(c)(3), 152(a)(9), 153(5), 194(b)(1), 1398(d)(2), 3402(f), and 6362(f)(5) are each amended by striking out "section 143" each place it appears and inserting in lieu thereof "section 7703". (9) Sections 105(d)(5)(C) and 879(c)(3) are each amended by striking out "section 143(a)" and inserting in lieu thereof "section 7703(a)". (10) Section 2(c) is amended by striking out "section 143(b)" and inserting in lieu thereof "section 7703(b)". SEC. 1302. TREATMENT OF SECTION 501(c)(3) BONDS.

>

Nothing in the treatment of section 501(c)(3) bonds as private activity bonds under the amendments made by this title shall be construed as indicating how section 501(c)(3) bonds will be treated in future legislation, and any change in future legislation applicable to private activity bonds shall apply to section 501(c)(3) bonds only if expressly provided in such legislation. SEC. 1303. REPEAL OF PROVISIONS RELATING TO GENERAL STOCK OWNERSHIP CORPORATIONS.

(a) IN GENERAL.—Subchapter U of chapter 1 (relating to general stock ownership corporation) is hereby repealed. (b) TECHNICAL AND CONFORMING AMENDMENTS.—

(1) Paragraph (1) of section 172(b) (relating to net operating loss carrybacks and carryovers) is amended by striking out subparagraph (J) and by redesignating subparagraph (K) as subparagraph (J). (2) Paragraphs (2) and (4) of section 172(k) are each amended by striking out "subsection (b)(l)(K)" and inserting in lieu thereof "subsection (b)(l)(J)". (3) Subsection (a) of section 1016 (relating to adjustments to basis) is amended by striking out paragraph (22) and by redesignating paragraphs (23) through (27) as paragraphs (22) through (26), respectively. (4) Subsection (r) of section 3402 (relating to extension of withholding to GSOC distribution) is hereby repealed. (5) Section 6039B (relating to return of general stock ownership corporation) is hereby repealed, i (c) CLERICAL AMENDMENTS.—

(1) The table of subchapters for chapter 1 is amended by striking out the item relating to subchapter U. (2) The table of sections for subpart A of part III of subchapter A of chapter 61 is amended by striking out the item relating to section 6039B.

�


text:
Page:United States Statutes at Large Volume 100 Part 3.djvu/851

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2659

Subtitle B—Effective Dates and Transitional Rules SEC. 1311. GENERAL EFFECTIVE DATES.

(a) IN GENERAL.—Except as otherwise provided in this subtitle, the amendments made by section 1301 shall apply to bonds issued after August 15, 1986. (b) SECTION 1301(f).— (1) INCREASE IN TRADE-IN RATE.—The amendments made by

' -

paragraph (1) of section 1301(f) shall apply to nonissued bond amounts elected after August 15, 1986. (2) CERTIFICATES.—The amendments made by paragraph (2) of section 1301(f) shall apply to certificates issued after August 15, 1986.

(c) CHANGES IN USE, ETC., OF FACILITIES FINANCED WITH PRIVATE ACTIVITY BONDS.—Subsection (b) of section 150 of the 1986 Code

shall apply to changes in use (and ownership) after August 15, 1986, but only with respect to financing (including refinancings) provided after such date. (d) SECTION 1303.—The amendments made by section 1303 shall take effect on the date of the enactment of this Act. SEC. 1312. T R A N S I T I O N A L RULES FOR CONSTRUCTION OR BINDING AGREEMENTS AND CERTAIN GOVERNMENT BONDS ISSUED AFTER AUGUST 15, 1986. (a) EXCEPTION FOR CONSTRUCTION OR BINDING AGREEMENTS.—

(1) IN GENERAL.—The amendments made by section 1301 shall not apply to bonds (other than a refunding bend) with respect to a facility— ju.; (A)(i) the original use of which commences with the taxpayer, and the construction, reconstruction, or rehabilitation of which began before September 26, 1985, and was completed on or after such date, (ii) the original use of which begins with the taxpayer and with respect to which a binding contract to incur significant expenditures for construction, reconstruction, or rehabilitation was entered into before September 26, 1985, and some J of such expenditures are incurred on or after such date, or ] (iii) acquired on or after September 26, 1985, pursuant to V a binding contract entered into before such date, and j. (B) described in an inducement resolution or other comparable preliminary approval adopted by an issuing authority (or by a voter referendum) before September 26, 1985. (2) SIGNIFICANT EXPENDITURES.—For purposes of paragraph
 * j

dXA), the term "significant expenditures" means expenditures ' greater than 10 percent of the reeisonably anticipated cost of the construction, reconstruction, or rehabilit-ation of the facility involved. (b) CERTAIN AMENDMENTS TO APPLY TO BONDS UNDER SUBSECTION (a) TRANSITIONAL RULE.—

(1) IN GENERAL.—In the case of a bond issued after August 15, 1986, and to which subsection (a) of this section applies, the requirements of the following provisions shall be treated as included in section 103 and section 103A (as appropriate) of the 1954 Code:

�


text:
Page:United States Statutes at Large Volume 100 Part 3.djvu/852

 100 STAT. 2660

PUBLIC LAW 99-514—OCT. 22, 1986 fg^ft

, '"^.^, ^^.,:

!

i

''['

(A) The requirement that 95 percent or more of the net proceeds of an issue are to be used for a purpose described in section 103(b)(4) or (5) of such Code in order for section 103(b)(4) or (5) of such Code to apply, including the application of section 142(b)(2) of the 1986 Code (relating to limitation on office space). (B) The requirement that 95 percent or more of the net proceeds of an issue are to be used for a purpose described in section 1030t)X6XA) of the 1954 Code in order for section 103(b)(6)(A) of such Code to apply. (C) The requirements of section 143 of the 1986 Code (relating to qualified mortgage bonds and qualified veterans' mortgage bonds) in order for section 103AOt)X2) of the 1954 Code to apply. (D) The requirements of section 144(a)(ll) of the 1986 Code (relating to limitation on acquisition of depreciable farm property) in ordei* for section 1030t)X6XA) of the 1954 Code to apply. (E) The requirements of section 1470t)) of the 1986 Code (relating to maturity may not exceed 120 percent of economic life). (F) The requirements of section 147(0 of the 1986 Code (relating to public approval required for private activity bonds). (G) The requirements of section 147(g) of the 1986 Code (relating to restriction on issuance costs financed by issue). (H) The requirements of section 148 of the 1986 Code (relating to arbitrage). (I) The requirements of section 149(e) of the 1986 Code (relating to information reporting). (J) The provisions of section 1500t)) of the 1986 Code (relating to changes in use).

(2) CERTAIN REQUIREMENTS APPLY ONLY TO BONDS ISSUED AFTER

DECEMBER 31, 1986.—In the case of subparagraphs (F) and (I) of paragraphs (1), paragraph (1) shall be applied by substituting "December 31, 1986" for "August 15, 1986". (3) APPLICATION OF VOLUME CAP.—Except as provided in section 1315, any bond to which this subsection applies shall be treated as a private activity bond for purposes of section 146 of the 1986 Code if such bond would have been taken into account under section 103(n) or 103A(g) of the 1954 Code (determined -'' without regard to any carryforward election) were such bond issued before August 16, 1986. (4) APPLICATION OF PROVISIONS.—For purposes of applying the

requirements referred to in any subparagraph of paragraph (1) or of subsection (a)(3) or 0^X3) of section 1313 to any bond, such bond shall be treated as described in the subparagraph of section 141(d)(l) of the 1986 Code to which the use of the proceeds of such bond most closely relates. (c) SPECIAL RULES FOR CERTAIN GOVERNMENT BONDS ISSUED AFTER AUGUST 15, 1986.—

(1) IN GENERAL.—In the case of any bond described in paragraph (2)— (A) section 1311(a) and (c) and subsection (b) of this '* section shall be applied by substituting "August 31, 1986" for "August 15, 1986" each place it appears.

�


text:
Page:United States Statutes at Large Volume 100 Part 3.djvu/853

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2661

-*"

(B) subsection (b)(1) shall be applied without regard to subparagraphs (F), (G), and (J), and ' (C) such bond shall not be treated as a private activity bond for purposes of applying the requirements referred to ^* '* in subparagraphs (H) and (I) of subsection (b)(1). (2) BOND DESCRIBED.—A bond is described in this paragraph if such bond is not— (A) an industrial development bond, as defined in section 103(b)(2) of the 1954 Code but determined— (i) by inserting "directly or indirectly" after "is" in the material preceding clause (i) of subparagraph (B) thereof, and (ii) without regard to subparagraph (B) of section -•• 103(b)(3) of such Code, (B) a mortgage subsidy bond (as defined in section ' 103A(b)(l) of such Code, without regard to any exception from such definition), or '• ' (C) a private loan bond (as defined in section 103(o)(2)(A) of such Code, without regard to any exception from such definition other than section 103(o)(2)(C) of such Code). (d) ELECTION OUT.—This section shall not apply to any issue with respect to which the issuer elects not to have this section apply. SEC. 1313. TRANSITIONAL RULES RELATING TO REFUNDINGS. (a) CERTAIN CURRENT REFUNDINGS.—

(1) IN GENERAL.—Except as provided in paragraph (3), the amendments made by section 1301 shall not apply to any bond the proceeds of which are used exclusively to refund (other than to advance refund) a qualified bond (or a bond which is part of a series of refundings of a qualified bond) if— (A) the amount of the refunding bond does not exceed the outstanding amount of the refunded bond, and (B)(i) the average maturity of the issue of which the • • refunding bond is a part does not exceed 120 percent of the average reasonably expected economic life of the facilities being financed with the proceeds of such issue (determined under section 147(b) of the 1986 Code), or 'Hid' (ii) the refunding bond has a maturity date not later than the date which is 17 years after the date on which the qualified bond was issued. In the case of a qualified bond which was (when issued) a qualified mortgage bond or a qualified veterans' mortgage bond, subparagraph (B)(i) shall not apply and subparagraph (B)(ii) shall be applied by substituting "32 years" for "17 years". (2) QUALIFIED BOND.—For purposes of paragraph (1), the term "qualified bond" means any bond (other than a refunding bond)— (A) issued before August 16, 1986, or (B) issued after August 15, 1986, if section 1312(a) applies -1-5 to such bond. (3) CERTAIN AMENDMENTS TO APPLY.—The following provisions of the 1986 Code shall be treated as included in section 103 and section 103A (as appropriate) of the 1954 Code and shall apply to refunding bonds described in paragraph (1): (A) The requirements of section 147(f) (relating to public approval required for private activity bonds) but only if the

�


text:
Page:United States Statutes at Large Volume 100 Part 3.djvu/854

 100 STAT. 2662

PUBLIC LAW 99-514—OCT. 22, 1986 maturity date of the refunding bond is later than the maturity date of the refunded bond. (B) The requirements of section 147(g) (relating to restric•J tion on issuance costs financed by issue). (C) The requirements of section 148 (relating to arbitrage). (D) The requirements of section 149(e) (relating to information reporting). (E) The provisions of section 150(b) of such Code (relating to changes in use). Subparagraphs (A) and (D) shall apply only if the refunding bond is issued after December 31, 1986. (4) SPECIAL RULES FOR CERTAIN GOVERNMENT BONDS ISSUED

AFTER AUGUST 15, 1986.—In the casc of any bond described in section 1312(c)(2)— (A) paragraph (2) of this subsection shall be applied by substituting "August 31, 1986" for "August 15, 1986", (B) paragraph (3) shall be applied without regard to sub; j^. paragraphs (A), (B), and (E), and (C) such bond shall not be treated as a private activity bond for purposes of applying the requirements referred to in subparagraphs (C) and (D) of paragraph (3). (b) CERTAIN ADVANCE REFUNDINGS.—

(1) IN GENERAL.—Except as provided in paragraph (3), the amendments made by section 1301 shall not apply to any bond the proceeds of which are used exclusively to advance refund a bond if— (A) the refunded bond is described in paragraph (2), and (B) the requirements of subsection (a)(l)(B) are met. (2) NON-IDB'S, ETC.—A bond is described in this paragraph if such bond is not described in subsection (b)(2) or (o)(2)(A) of section 103 of the 1954 Code and was issued (or was issued to refund a bond issued) before August 16, 1986. (3) CERTAIN AMENDMENTS TO APPLY.—The following provisions of the 1986 Code shall be treated as included in section 103 and section 103A (as appropriate) of the 1954 (Dode and shall apply to refunding bonds described in paragraph (1): (A) The requirements of section 147(f) (relating to public approval required for private activity bonds). (B) The requirements of section 147(g) (relating to restriction on issuance costs financed by issue). (C) The requirements of section 148 (relating to arbitrage), except that section 148(d)(3) shall not apply to proceeds of such bonds to be used to discharge the refunded

bonds. ^ (D) The requirements of paragraphs (3) and (4) of section 149(d) (relating to advance refundings). (E) The requirements of section 149(e) (relating to v 5 f ^ information reporting). (F) The provisions of section 150(b) of such Code (relating to changes in use). Subparagraphs (A) and (E) shall apply only if the refunding bond is issued after December 31, 1986. (4) SPECIAL RULE FOR CERTAIN GOVERNMENT BONDS ISSUED AFTER AUGUST 15, 1986.—In the case of any bond described in

section 1312(c)(2)—

�


text:
Page:United States Statutes at Large Volume 100 Part 3.djvu/855

 PUBLIC LAW 99-514—OCT. 22, 1986 "4:r

100 STAT. 2663

t'

(A) paragraph (2) of this subsection shall be applied by substituting "September 1, 1986" for "August 16, 1986, (B) paragraph (3) shall be applied without regard to subparagraphs (A), (B), and (F), and (C) such bond shall not be treated as a private activity bond for purposes of applying the requirements referred to in subparagraphs (C) and (E).

a

(5) CERTAIN REFUNDING BONDS SUBJECT TO VOLUME CAP.—Any

t

refunding bond described in paragraph (1) the proceeds of which are used to refund a bond issued as part of an issue 5 percent or more of the net proceeds of which are to be used to provide an output facility (within the meaning of section 141(b)(4) of the 1986 Code) shall be treated as a private activity bond for purposes of section 146 of the 1986 Code (to the extent of the nongovernmental use of such issue, under rules similar to the rules of section 146(m)(2) of such Code). For purposes of the preceding sentence, use by a 501(c)(3) organization with respect to its activities which do not constitute unrelated trades or businesses (determined by applying section 513(a) of the 1986 Code) shall not be taken into account.

» 5 <

^

(c) TREATMENT OF CURRENT REFUNDINGS OF CERTAIN I D B ' S AND 501(c)(3) BONDS.— (1) $40,000,000 LIMIT FOR CERTAIN SMALL ISSUE BONDS.—Para-

graph (10) of section 144(a) of the 1986 Code shall not apply to any bond the proceeds of which are used exclusively to refund a tax-exempt bond to which such paragraph and the correspond'* ing provision of prior law do not apply if— (A) the refunding bond has a maturity date not later than i the maturity date of the refunded bond, (B) the amount of the refunding bond does not exceed the outstanding amount of the refunded bond, «• (C) the interest rate on the refunding bond is lower than £ the interest rate on the refunded bond, and (D) the net proceeds of the refunding bond are used to redeem the refunded bond not later than 90 days after the date of the issuance of the refunding bond. t' (2) $150,000,000 LIMITATION FOR CERTAIN 501(C)(3) BONDS.— Subsection (b) of section 145 of the 1986 Code (relating to $150,000,000 limitation for nonhospital bonds) shall not apply to 5 any bond the proceeds of which are used exclusively to refund a tax-exempt bond to which such subsection does not apply if— ? (A)(i) the average maturity of the issue of which the u. > refunding bond is a part does not exceed 120 percent of the average reasonably expected economic life of the facilities being financed with the proceeds of such issue (determined j*o i under section 147(b) of the 1986 Code), or (ii) the refunding bond has a maturity date not later than r/ the later of the date which is 17 years after the date on which the qualified bond (as defined in subsection (a)(2)) was issued, and (B) the requirements of subparagraphs (B) and (D) of c paragraph (1) are met with respect to the refunding bond. i Subsection (b) of section 145 of the 1986 Code shall not apply to the 1st advance refunding after March 14, 1986, of a bond issued before January 1, 1986. (3) APPLICATION TO LATER ISSUES.—Any bond to which section 144(a)(10) or 145(b) of the 1986 Code does not apply by reason of

�


text:
Page:United States Statutes at Large Volume 100 Part 3.djvu/856

 100 STAT. 2664

PUBLIC LAW 99-514—OCT. 22, 1986

, i this section shall be taken into account in determining whether such section applies to any later issue. SEC. 1314. SPECIAL RULES WHICH OVERRIDE OTHER RULES IN THIS SUBTITLE. (a) ARBITRAGE RESTRICTION ON INVESTMENTS IN ANNUITIES.—In

the case of a bond issued after September 25, 1985, section 103(c) of the 1954 Code shall be applied by treating the reference to securities in paragraph (2) thereof as including a reference to an annuity contract. Oa) TEMPORARY PERIOD FOR ADVANCE REFUNDINGS.—In the case of a t)ond issued after December 31, 1985, to advance refund a bond, the initial temporary period under section 103(c) of the 1954 Code with respect to the proceeds of the refunding bond shall end not later than 30 days after the date of issue of the refunding bond. (c) DETERMINATION OF YIELD.—In the case of a bond issued after December 31, 1985, for purposes of section 103(c) of the 1954 Code, the yield on an issue shall be determined on the basis of the issue price (within the meaning of sections 1273 and 1274 of the 1986 Code). (d) ARBITRAGE REBATE REQUIREMENT.—

,, f. s,

(1) IN GENERAL.—Except as otherwise provided in this subsection, in the case of a bond issued after December 31, 1985, section 103 of the 1954 Code shall be treated as including the requirements of section 148(f) of the 1986 Code in order for section 103(a) of the 1954 Code to apply. (2) GOVERNMENT BONDS.—In the case of a bond described in section 1312(c)(2) (and not described in paragraph (3) of this subsection), parcigraph (1) shall be applied by substituting "August 31, 1986" for "December 31, 1985". (3) CERTAIN POOLS.—

J, J

(A) IN GENERAL.—In the case of a bond described in section 1312(c)(2) and issued as part of an issue described in subparagraph (B), (C), (D), or (E), paragraph (1) shall be applied by substituting "3 p.m. E.D.T., July 17, 1986" for "December 31, 1985". Such a bond shall not be treated as a private activity bond for purposes of applying section 148(f) of the 1986 Code. (B)

LOANS TO UNRELATED GOVERNMENTAL UNITS.—An

issue is described in this subparagraph if any portion of the proceeds of the issue is to be used to make or finance loans to any governmental unit other than any governmental unit which is subordinate to the issuer and the jurisdiction of which is within— (i) the jurisdiction of the issuer, or (ii) the jurisdiction of the governmental unit on behalf of which such issuer issued the issue.

,

(C) LESS THAN 75 PERCENT OF PROJECTS IDENTIFIED.—An

,f.

issue is described in this subparagraph if less than 75 percent of the proceeds of the issue is to be used to make or finance loans to initial borrowers to finance projects identified (with specificity) by the issuer, on or before the date of issuance of the issue, as projects to be financed with the proceeds of the issue. (D) LESS THAN 25 PERCENT OF FUNDS COMMITTED TO BE

,„^ - BORROWED.—An issue is described in this subparagraph if, on or before the date of issuance of the issue, commitments

�


text:
Page:United States Statutes at Large Volume 100 Part 3.djvu/857

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2665

have not been entered into by initial borrowers to borrow at least 25 percent of the proceeds of the issue. (E) CERTAIN LONG MATURITY ISSUES.—An issue is described in this subparagraph if— (i) the maturity date of any bond issued as part of such issue exceeds 30 years, and (ii) any principal payment on any loan made or financed by the proceeds of the issue is to be used to make or finance additional loans.

,-«r /{ r? Ii

(F) SPECIAL RULES.— (i) EXCEPTION FROM SUBPARAGRAPHS (C) AND (D) WHERE SIMILAR POOLS ISSUED BY ISSUER.—An issue shall

.;>

I f 1,

••':'• & -fe

not be treated as described in subparagraph (C) or (D) with respect to any issue to make or finance loans to governmental units if— (I) the issuer, before 1986, issued 1 or more similar issues to make or finance loans to governmental units, and (II) the aggregate face amount of such issues issued during 1986 does not exceed 250 percent of the average of the annual aggregate face amounts of such similar issues issued during 1983, 1984, or 1985. (ii) DETERMINATION OF ISSUANCE.—For purposes of

• J

subparagraph (A), an issue shall not be treated as issued until— (I) the bonds issued as part of such issue are f- * IT'* offered to the public (pursuant to final offering materials), and J' (II) at least 25 percent of such bonds is sold to the •^* public. " For purposes of the preceding sentence, the sale of a bond to a securities firm, broker, or other person acting in the capacity of an underwriter or wholesaler shall not be treated as a sale to the public. (e) INFORMATION REPORTING.—In the case of a bond issued after December 31, 1986, nothing in section 103(a) of the 1986 Code or any other provision of law shall be construed to provide an exemption from Federal income tax for interest on any bond unless such bond satisfies the requirements of section 149(e) of the 1986 C!ode. A bond described in section 1312(c)(2) shall not be treated as a private activity bond for purposes of applying such requirements. (f) ABUSIVE TRANSACTION LIMITATION ON ADVANCE REFUNDINGS TO

APPLY.—In the case of a bond issued after December 31, 1986, nothing in section 103(a) of the 1986 Code or any other provision of law shall be construed to provide an exemption from Federal income tax for interest on any bond if the issue of which such bond is a part is described in paragraph (4) of section 149(d) of the 1986 Code (relating to abusive transactions). (g) SECTION TO OVERRIDE OTHER RULES.—Except as otherwise

expressly provided by reference to a provision to which a subsection of this section applies, nothing in any other section of this subtitle shall be construed as exempting any bond from the application of such provision.

�


text:
Page:United States Statutes at Large Volume 100 Part 3.djvu/858

 100 STAT. 2666

PUBLIC LAW 99-514—OCT. 22, 1986

SEC. 1315. TRANSITIONAL RULES RELATING TO VOLUME CAP.

(a) IN GENERAL.—Except as otherwise provided in this section, section 146(f) of the 1986 Code shall not apply with respect to an issuing authority's volume cap under section 103(n) of the 1954 Code, and no canyforward under such section 103(n) shall be recognized for bonds issued after August 15, 1986. (b) CERTAIN BONDS FOR CARRYFORWARD PROJECTS OUTSIDE OF VOLUME CAP.—Bonds issued pursuant to an election under section

103(n)(10) of the 1954 Code (relating to elective carryforward of unused limitation for specified project) made before November 1, 1985, shall not be taken into account under section 146 of the 1986 Code if the canyforward project is a facility to which the amendments made by section 1301 do not apply by reason of section 1312(a) of this Act. (c) VOLUME CAP NOT To APPLY WITH RESPECT TO CERTAIN FACILITIES AND PURPOSES.—Section 146 of the 1986 Code shall not apply to

any bond issued with respect to any facility or purpose described in a paragraph of subsection (d) if— (1) such bond would not have been taken into account under section 103(n) of the 1954 Code (determined without regard to ,ij any carryforward election) were such bond issued before t August 16, 1986, or (2) such bond would not have been taken into account under y, section 103(n) of the 1954 Code (determined with regard to any carryforward election made before January 1, 1986) were such bond issued before August 16, 1986. (d) FACILITIES AND PURPOSES DESCRIBED.—

(1) A facility is described in this paragraph if the amendments made by section 201 of this Act (relating to depreciation) do not .. apply to such facility by reason of section 204(a)(8) of this Act (or, in the case of a facility which is governmentally owned, J, would not apply to such facility were it owned by a nongovernmental person). (2) A facility or purpose is described in this paragraph if the facility or purpose is described in a paragraph of section 1317. (3) A facility is described in this paragraph if the facility— (A) serves Los Osos, California, and (B) would be described in paragraph (1) were it a solid waste disposal facility. The aggregate face amount of bonds to which this paragraph '' applies shall not exceed $35,000,000. ' (4) A facility is described in this paragraph if it is a sewage disposal facility with respect to which— (A) on September 13, 1985, the State public facilities "-' authority took official action authorizing the issuance of bonds for such facility, and (B) on December 30, 1985, there was an executive order of " the State Governor granting allocation of the State ceiling under section 103(n) of the 1954 (Dode in the amount of $250,000,000 to the Industrial Development Board of the • Parish of East Baton Rouge, Louisiana. ^ The aggregate face amount of bonds to which this paragraph applies shall not exceed $98,500,000. (5) A facility is described in this paragraph if— (A) such facility is a solid waste disposal facility in Charleston, South Carolina, and

�


text:
Page:United States Statutes at Large Volume 100 Part 3.djvu/859

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2667

(B) a State political subdivision took formal action on April 1, 1980, to commit development funds for such facility. For purposes of determining whether a bond issued as part of an issue for a facility described in the preceding sentence is an exempt facility bond for purposes of part IV of subchapter B of chapter 1 of the 1986 Code, "90 percent" shall be substituted for "95 percent" in section 142(a) of the 1986 Code. The aggregate face amount of bonds to which this paragraph applies shall not exceed $75,000,000. (6) A facility is described in this paragraph if^ (A) such facility is a wastewater treatment facility for .»: which site preparation commenced before September 1985, ' -• and (B) a parish council approved a service agreement with respect to such facility on December 4, 1985. The aggregate face amount of bonds to which this paragraph applies shall not exceed $120,000,000. (e) TREATMENT OF REDEVELOPMENT BONDS.—Any bond to which section 1317(6) of this Act applies shall be treated for purposes of this section as described in subsection (c)(D. SEC. 1316. PROVISIONS RELATING TO CERTAIN ESTABLISHED STATE PROGRAMS.
 * (a) CERTAIN LOANS TO VETERANS FOR THE PURCHASE OF LAND.—

(1) IN GENERAL.—A bond described in paragraph (2) shall be , treated as described in section 141(d)(l) of the 1986 Code, but subsections (a), (b), (c), and (d) of section 147 of such C!ode shall not apply to such bond. (2) BOND DESCRIBED.—A bond is described in this paragraph if— (A) such bond is a private activity bond solely by reason . ^.,.^ of section 141(c) of such Code, and (B) such bond is issued as part of an issue 95 percent or more of the net proceeds of which are to be used to carry ^ out a program established under State law to provide loans I to veterans for the purchsise of land and which has been in effect in substantially the same form during the 30-year period ending on July 18, 1984, but only if such proceeds are used to make loans or to fund similar obligations— '1. (i) in the same manner in which, (ii) in the same (or lesser) amount or multiple of acres per participant, and (iii) for the same purposes for which, J such program was operated on March 15, 1984. ^ (b) RENEWABLE ENERGY PROPERTY.—

(1) IN GENERAL.—A bond described in paragraph (2) shall be treated as described in section 141(d)(l) of the 1986 Code. (2) BOND DESCRIBED.—A bond is described in this paragraph if paragraph (1) of section 1030t>) of the 1954 Code would not (without regard to the amendments made by this title) have applied to such bond by reason of section 243 of the Crude Oil Windfall Profit Tax Act of 1980 if— (A) such section 243 were applied by substituting "95 percent or more of the net proceeds" for "substantially all of the proceeds" in subsection (a)(1) thereof, and

�


text:
Page:United States Statutes at Large Volume 100 Part 3.djvu/860

 100 STAT. 2668

PUBLIC LAW 99-514—OCT. 22, 1986 (B) subparagraph (E) of subsection (a)(1) thereof referred to section 149(b) of the 1986 Code. ., ^^ (c) CERTAIN STATE PROGRAMS.—

(1) IN GENERAL.—A bond described in paragraph (2) shall be treated as described in section 141(d)(1) of the 1986 Code. (2) BOND DESCRIBED.—A bond is described in this paragraph if such bond is issued as part of an issue 95 percent or more of the net proceeds of which are to be used to carry out a program established under sections 280A, 280B, and 280C of the Iowa Code, but only if— (A) such program has been in effect in substantially the lol same form since July 1, 1983, and .i'-H^i i (B) such proceeds are to be used to make loans or fund similar obligations for the same purposes as permitted ?1« under such program on July 1, 1986. (3) $100,000,000 LIMITATION.—The aggregate face amount of 'I- outstanding bonds to which this subsection applies shall not exceed $100,000,000. (d) USE BY CERTAIN FEDERAL INSTRUMENTALITIES TREATED AS USE B GOVERNMENTAL UNITS.—Use by an instrumentality of the United Y

States shall be treated as use by a State or local governmental unit for purposes of section 103, and part IV of subchapter B of chapter 1, of the 1986 Code with respect to a program approved by Congress before August 3, 1972, but only if— ( D a portion of such program has been financed by bonds issued before such date, to which section 103(a) of the 1954 Code applied pursuant to a ruling issued by the Commissioner of the ' Internal Revenue Service, and (2) construction of 1 or more facilities comprising a part of such program commenced before such date. (e) REFUNDING PERMITTED OF CERTAIN BONDS INVESTED IN FEDERALLY INSURED DEPOSITS

(1) IN GENERAL.—Section 149(b)(2)(B)(ii) of the 1986 Code shall not apply to any bond issued to refund a bond— (A) which, when issued, would have been treated as federally guaranteed by reason of being described in clause (ii) of section 103(h)(2)(B) of the 1954 Code if such section had ,». (B)(i) which was issued before April 15, 1983, or (ii) to which such clause did not apply by reason of the except clause in section 631(c)(2) of the Tax Reform Act of 1984. Section 147(c) of the 1986 Code shall not apply to any refunding bond permitted under the preceding sentence if section 103(b)(16) of the 1954 Code did not apply to the refunded bond when issued. (2) REQUIREMENTS.—A refunding bond meets the requirements of this paragraph if— (A) the refunding bond has a maturity date not later than the maturity date of the refunded bond, (B) the amount of the refunding bond does not exceed the outstanding amount of the refunded bond, (C) the weighted average interest rate on the refunding bond is lower than the weighted average interest rate on the refunded bond, and ,.
 * applied to such bond, and

�


text:
Page:United States Statutes at Large Volume 100 Part 3.djvu/861

 PUBLIC LAW 99-514—OCT. 22, 1986 K

100 STAT. 2669

(D) the net proceeds of the refunding bond are used to redeem the refunded bond not later than 90 days after the date of the issuance of the refunding bond. (f) CERTAIN HYDROELECTRIC GENERATING PROPERTY.—

(1) IN GENERAL.—A bond described in paragraph (2) shall be treated as described in section 141(d)(l) of the 1986 Code. (2) DESCRIPTION.—A bond is described in this paragraph if such bond is issued as part of an issue 95 percent or more of the net proceeds of which are to be used to provide a facility described in section 1030t)X4XH) of the 1954 Code determined— ^, E (A) by substituting "an application for a license" for "an application" in section 103(b)(8)(E)(ii) of the 1954 Code, and (B) by applying the requirements of section 14203X2) of the 1986 Code. (g) TREATMENT OF BONDS SUBJECT TO TRANSITIONAL RULES UNDER

TAX REFORM ACT OF 1984.—

t

(1) Subsections (d)(3) and (0 of section 148 of the 1986 Code shall not apply to any bond described in section 624(c)(2) of the Tax Reform Act of 1984. (2)(A) There shall not be taken into account under section 146 of the 1986 Code any bond described in the paragraph (3) of section 631(a) of the Tax Reform Act of 1984 relating to exception for certain bonds for a convention center and resource recovery project. (B) If a bond issued as part of an issue substantially all of the proceeds of which are used to provide the convention center to which such paragraph (3) applies, such bond shall be treated as an exempt facility bond as defined in section 142(a) of the 1986 Code. (C) If a bond which is issued as part of an issue substantially all of the proceeds of which are used to provide the resource recovery project to which paragraph (3) applies, such bond shall be treated as an exempt facility bond as defined in section 142(a) of the 1986 Code and section 1490)) of such Code shall not apply. (3) The amendments made by section 1301 shall not apply to bonds issued to finance any property described in section 631(d)(4) of the Tax Reform Act of 1984. (4) The amendments made by section 1301 shall not apply to— (A) any bond issued to finance property described in section 631(d)(5) of the Tax Reform Act of 1984, (B) any bond described in paragraph (2), (3), (4), (5), (6), or (7) of section 632(a), or section 6320)), of such Act, and (C) any bond to which section 632(g)(2) of such Act applies. In the case of bonds to which this paragraph applies, the requirements of sections 148 and 149(d) shall be treated as included in section 103 of the 1954 Ck>de and shall apply to such bonds. (5) The preceding provisions of this subsection shall not apply to any bond issued after December 31, 1988. (6) The amendments made by section 1301 shall not apply to any bond issued to finance property described in section 216a)X3) of the Tax Equity and Fiscal Responsibility Act of 1982. (7) In the case of a bond described in section 632(d) of the Tax Reform Act of 1984— (A) section 141 of the 1986 Code shall be applied without regard to subsection (a)(2) and subsection (b)(5) and paragraphs (1) and (2) of subsection (b) thereof shall be applied

�


text:
Page:United States Statutes at Large Volume 100 Part 3.djvu/862

 100 STAT. 2670

PUBLIC LAW 99-514—OCT. 22, 1986

OJ i:; by substituting "25 percent" for "10 percent" each place it ^lii f xJt appears, and (B) section 149(b) of the 1986 Code shall not apply. (8)(A) The amendments made by section 1301 shall not apply "* to any bond to which section 629(a)(1) of the Tax Reform Act of f 1984 applies, but such bond shall be treated as a private activity bond for purposes of section 146 of the 1986 Code. (B) Section 629 of the Tax Reform Act of 1984 is amended— (i) in subsection (c)(2), by striking out "$625,000,000" and inserting in lieu thereof "$911,000,000", (ii) in subsection (c)(3), by adding at the end thereof the following new subparagraphs: "(D) Improvements to existing generating facilities. "(E) Transmission lines. use "(F) Electric generating facilities.", and (iii) in subsection (a), by adding at the end thereof the ' following new sentence: ' The preceding sentence shall be applied by inserting 'and a rural electric cooperative utility' after 'regulated public utility' but only if not more than 1 •II percent of the load of the public power authority is sold to such rural electric cooperative utility." (h) CERTAIN POLLUTION BONDS.—Any bond which is treated as described in section 103(b)(4)(F) of the 1954 Code by reason of section 13209 of the Consolidated Omnibus Budget Reconciliation Act of 1985 shall be treated as an exempt facility bond for purposes of part IV of subchapter B of chapter 1 of the 1986 Code, and section 147(d) of the 1986 Code shall not apply to such bond. (i) TRANSITION RULE FOR AGGREGATE LIMIT PER TAXPAYER.—For

purposes of section 144(a)(10) of the 1986 Code, tax increment bonds described in section 1869(c)(3) of this Act which are issued before August 16, 1986, shall not be taken into account under subparagraph (B)(ii) thereof. (j) EXTENSION OF ADVANCE REFUNDING EXCEPTION FOR QUALIFIED

PUBLIC FACILITY.—Paragraph (4) of section 631(c) of the Tax Reform Act of 1984 is amended— (1) by striking out "or the Dade County, Florida, airport" in the last sentence, and (2) by adding at the end thereof the following new sentence: "In the case of refunding obligations not to exceed $40,000,000 with respect to the Dade County, Florida, airport, the first sentence of this paragraph shall be applied by substituting 'December 31, 1987' for 'December 31, 1984' and the amendments made by section 1301 of the Tax Reform Act of 1986 shall not apply." (k) EXPANSION OF EXCEPTION FOR RIVER PLACE PROJECT.—Section

1104 of the Mortgage Subsidy Bond Tax Act of 1980, as added by the Tax Reform Act of 1984, is amended— (1) by striking out "December 31, 1984," in subsection (p) and inserting in lieu thereof "December 31, 1984 (other than obligations described in subsection (r)(l)),", and (2) by striking out "$55,000,000," in subsection (r)(l)(B) and inserting in lieu thereof "$110,000,000 of which $55,000,000 must be redeemed no later than November 1, 1987". (1) CERTAIN REFUNDINGS.—Section 628(g) of the Tax Reform Act of 1984 (and the amendments made by section 1301 of this Act) shall not apply to any refunding obligation if the refunded issue was approved by a city building commission on April 29, 1982, and was

�


text:
Page:United States Statutes at Large Volume 100 Part 3.djvu/863

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2671

issued on Maty 11, 1982, and the refunding obligations were issued before January 1, 1987. SEC. 1317. TRANSITIONAL RULES FOR SPECIFIC FACILITIES.

(1) DOCKS AND WHARVES.—A bond issued as part of an issue 95 percent or more of the net proceeds of which are to be used to provide any dock or wharf (within the meaning of section 103(b)(4)(D) of the 1954 Code) shall be treated as an exempt facility bond (for a facility described in section 142(a)(2) of the 1986 Code) for purposes of part IV of subchapter B of chapter 1 of the 1986 Code if such dock or wharf is described in any of the following subparagraphs: (A) A dock or wharf is described in this subparagraph if— (i) the issue to finance such dock or wharf was approved by official city action on September 3, 1985, and by voters on November 5, 1985, and .,g (ii) such dock or wharf is for a slack water harbor with respect to which a Corps of Engineers grant of approximately $2,000,000 has been made under section I, ^ 107 of the Rivers and Harbors Act. The aggregate face amount of bonds to which this subpara,^-|l= graph applies shall not exceed $2,500,000. (B) A dock or wharf is described in this subparagraph if— (i) inducement resolutions were adopted on May 23, 1985, September 18, 1985, and September 24, 1985, for the issuance of the bonds to finance such dock or wharf, %Q., (ii) a harbor dredging contract with respect thereto was entered into on August 2, 1985, and (iii) a construction management and joint venture agreement with respect thereto was entered into on October 1, 1984. ^ The aggregate face amount of bonds to which this subparagraph applies shall not exceed $625,000,000. (C) A facility is described in this subparagraph if— (i) the legislature first authorized on June 29, 1981, " " the State agency issuing the bond to issue at least $30,000,000 of bonds, (ii) the developer of the facility was selected on April 26, 1985, and (iii) an inducement resolution for the issuance of such issue was adopted on October 9, 1985. The aggregate face amount of bonds to which this subparagraph applies shall not exceed $200,000,000. (D) A facility is described in this subparagraph if— (i) an inducement resolution was adopted on October 17, 1985, for such issue, and [[""' (ii) the city council for the city in which the facility is to be located approved on July 30, 1985, an application for an urban development action grant with respect to such facility. The aggregate face amount of bonds to which this subpara^ graph applies shall not exceed $36,500,000. A facility shall be treated as described in this subparagraph if it would be .^ so described if "90 percent" were substituted for "95 percent" in the material preceding subparagraph (A) of this paragraph.

�


text:
Page:United States Statutes at Large Volume 100 Part 3.djvu/864

 100 STAT. 2672

PUBLIC LAW 99-514—OCT. 22, 1986 (2) POLLUTION CONTROL FACILITIES.—A bond issued as part of an issue 95 percent or more of the net proceeds of which are to be used to provide air or water pollution control facilities (within the meaning of section 103(b)(4)(C) of the 1954 Code) shall be treated as an exempt facility bond for purposes of part IV of subchapter B of chapter 1 of the 1986 Code if such facility is described in any of the following subparagraphs: (A) A facility is described in this subparagraph if— (i) inducement resolutions with respect to such facility were adopted on September 23, 1974, and on April 5, 1985, (ii) a bond resolution for such facility was adopted on September 6, 1985, and < (iii) the issuance of the bonds to finance such facility ^''" was delayed by action of the Securities and Exchange Commission (file number 70-7127). The aggregate face amount of bonds to which this subparagraph applies shall not exceed $120,000,000. (B) A facility is described in this subparagraph if— (i) there was an inducement resolution for such facil•'J' ity on November 19, 1985, and (ii) design and engineering studies for such facility were completed in March of 1985. The aggregate face amount of bonds to which this subparagraph applies shall not exceed $25,000,000. (C) A facility is described in this subparagraph if— ii^'.'UM (i) a resolution was adopted by the county board of supervisors pertaining to an issuance of bonds with i:"'A respect to such facility on April 10, 1974, and (ii) such facility was placed in service on June 12, 1985. The aggregate face amount of bonds to which this subparagraph applies shall not exceed $90,000,000. For purposes of this subparagraph, a pollution control facility includes a ''^' sewage or solid waste disposal facility (within the meaning ^^of section 103(b)(4)(E) of the 1954 Code). (D) A facility is described in this subparagraph if— (i) the issuance of the bonds for such facility was approved by a State agency on August 22, 1979, and ® '' (ii) the authority to issue such bonds was scheduled to expire (under terms of the State approval) on -^^ August 22, 1989. The aggregate face aikiount of bonds to which this subparagraph applies shall not exceed $198,000,000. (E) A facility is described in this subparagraph if— (i) such facility is 1 of 4 such facilities in 4 States with ^ respect to which the Ball Corporation transmitted a ' letter of intent to purchase such facilities on Febru'* ary 26, 1986, and (ii) inducement resolutions were issued on Decem' ber 30, 1985, January 15, 1986, January 22, 1986, and March 17, 1986 with respect to bond issuance in the 4 respective States. The aggregate face amount of bonds to which this subparagraph applies shall not exceed $6,000,000. (F) A facility is described in this subparagraph if—

�


text:
Page:United States Statutes at Large Volume 100 Part 3.djvu/865

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2673

(i) inducement resolutions for bonds with respect to such facility were adopted on September 27, 1977, May 27, 1980, and October 8, 1981, and (ii) such facility is located at a geothermal power complex owned and operated by a single investorowned utility. For purposes of this subparagraph and section 103 of the 1986 Code, all hydrogen sulfide air and water pollution control equipment, together with functionally related and subordinate equipment and structures, located or to be located at such power complex shall be treated as a single pollution control facility. The aggregate face amount of bonds to which this subparagraph applies shall not exceed $600,000,000. (G) A facility is described in this subparagraph if— (i) such facility is an air pollution control facility approved by a State bureau of pollution control on July 10, 1986, and by a State board of economic development on July 17, 1986, and (ii) on August 15, 1986, the State bond attorney gave notice to the clerk to initiate validation proceedings with respect to such issue and on August 28, 1986, the validation decree was entered. The aggregate face amount of bonds to which this subparagraph applies shall not exceed $900,000. (I) A facility is described in this subparagraph if— (i) a private company met with a State air control board on November 14, 1985, to propose construction of a sulften unit, and (ii) the sulften unit is being constructed under a letter of intent to construct which was signed on April 8, 1986. The aggregate face amount of bonds to which this subpara graph applies shall not exceed $11,000,000. (J) A facility is described in this subparagraph if it is part of a 250 megawatt coal-fired electric plant in northeastern Nevada on which the Sierra Pacific Power Company began construction in 1980. The aggregate face amount of bonds to which this subparagraph applies shall not exceed $200,000,000. (K) A facility is described in this subparagraph if— (i) there was an inducement resolution adopted by a State industrial development authority on January 14, 1976, and (ii) such facility is named in a resolution of such authority relating to carryforward of the State's unused 1985 private activity bond limit passed by such industrial development authority on December 18, 1985. This subparagraph shall apply only to obligations issued at the request of the party pursuant to whose request the January 14, 1976, inducement was given. The aggregate face amount of bonds to which this subparagraph applies shall not exceed $75,000,000. (L) A facility is described in this subparagraph if a city council passed an ordinance (ordinance number 4626) agreeing to issue bonds for such project, December 16, 1985. The

�