Tribal Economic Development Bonds (I.R.C. § 7871)

January 3, 2016

Volume Cap:

Notice 2015-83 modified Notice 2012-48 regarding the process for allocation of the available amount of national bond volume limitation authority for tax-exempt tribal economic development bonds under I.R.C. § 7871(f).  The notice provides a special rule for bonds issued under a “draw-down” loan structure in which the lender advances funds for the loan on different dates.  The notice allows additional time to use allocated volume cap for issuance of draw-down bonds if the issuer meets certain requirements.



Fees vs. Taxes

December 27, 2015

General Resources:

Colorado Union of Taxpayers Foundation v. City of Aspen (  Whether a $0.20 per bag fee imposed by stores is an unvoted tax or fee.  The court of appeals determined that the fee is a fee that does not violate constitutional debt limits because the primary purpose of the fee was to reduce waste, and the majority of the revenues was used to provide reusable bags to residents and visitors.  No part of the balance of the revenues was deposited to the City’s general fund for general governmental use.


December 10, 2015

Tax-exempt bonds may now be issued in connection with WIFIA loans.  See FAST Act signed into law on December 4, 2015 (Sec. 1445, page 331).

Public/Private Partnerships (I.R.C. 141 and I.R.C. 145)

October 3, 2015


See ABA Section of Taxation, “Comments on Safe Harbors under Sections 141 and 145” published October 2, 2015 for a discussion of suggested safe harbors under section 141 and section 145 for public/private arrangements relating to the provision of capital improvements to be owned by qualified users.  (P3 arrangements)

Also see NABL, “REG-140379-02; REG-142599-02: Allocation of and Accounting for
Tax-Exempt Bond Proceeds for Purposes of the Private Activity Bond Restrictions” published September 17, 2014 for a discussion of partnership matters relating to allocation and accounting of bond proceeds.

Note that, on October 25, 2015, the Treasury Department published final regulations regarding allocation and accounting rules under Sections 141 and 145.  Click here to view the regulations and a discussion of any particular allocation and accounting matters.

What is Interest (I.R.C. 103)

September 17, 2015

CCA 201537022:  Developer includes costs of improvements in basis of lots sold.  Developer also receives a bond from the district and bond interest payments.  Developer treats interest payments as tax-exempt interest and does not reduce basis of lots sold correspondingly.  IRS determines that this is inconsistent treatment.  Interest payments, given the Developer’s treatment of costs, will be treated as ordinary income that is taxable to the Developer.  See also Rev. Proc. 92-29.

Rescission (Rev. Rul. 80-58)

September 1, 2015

See Rev. Rul. 80-58.  No gain is recognized under section 1001 of the Code on the sale of land by a taxpayer who accepts reconveyance of the land and returns the buyer’s funds in the taxable year of the sale.  If the reconveyance occurs after the taxable year of sale, the seller reports the sale in the taxable year of sale and acquires a new basis in the property when it is reconveyed equal to the amount paid for the reconveyance.  Query whether this analysis can apply to rescind bond redemptions.

Also consider a slightly related situation in private letter ruling 9507010 (dated November 14, 1994).  This is an important ruling relating to a frequently discussed issue, namely, whether proceeds of bonds must be used directly for payment of debt service on a prior issue to enable the bonds to qualify as refunding bonds.  In other words, may there be a gap of some sort between the refunding bonds and the bonds that are treated as the refunded bonds?  The ruling holds, in the context of timing necessitated by GNMA procedures, that bonds are refunding bonds even though the proceeds are used to reimburse a bank for prepayment of a GNMA security where the GNMA security prepayment was used to redeem the prior issue.

Protected: Qualified Hedges and the 80/20 Rule (I.R.C. 148)

July 26, 2015

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