Final regulations issued in late October 2015 address the allocation and accounting rules for purposes of the “private activity bond” restrictions under section 141 as applied to tax-exempt bonds issued by state and local governments—including qualified section 501(c)(3) bonds.
The following discussion briefly summarizes provisions included in the final regulations. Read text of the final regulations [PDF 241 KB]
Proposed regulations were issued in 2006 regarding the allocation and accounting rules for tax-exempt bond proceeds. The proposed regulations included special rules for mixed-use projects and rules regarding the treatment of partnerships for purposes of section 141.
The final regulations withdraw certain provisions of the 2006 proposed regulations and clarify other portions of those regulations. Among the changes and clarifications made, the final regulations:
Overall, the final regulations permit additional flexibility in allocating proceeds and expenditures to bond financed facilities and provide additional needed guidance concerning what constitutes qualified equity. It is expected these regulations will encourage issuers to better define their projects in their bond documents that in turn will assist with the identification of facilities and assets that require ongoing tracking.
For more information, contact the Managing Director-in-Charge of KPMG's Washington National Tax Exempt Organizations Tax group:
D. Greg Goller | (703) 286-8391 | firstname.lastname@example.org
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