For purposes of this part-
The term "bond" includes any obligation.
The term "governmental unit" does not include the United States or any agency or instrumentality thereof.
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.
The term "501(c)(3) organization" means any organization described in section 501(c)(3) and exempt from tax under section 501(a).
Property shall be treated as owned by a governmental unit if it is owned on behalf of such unit.
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.
In the case of any residence with respect to which financing is provided from the proceeds of a tax-exempt 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 and before the date such residence is again the principal residence of at least 1 of the mortgagors who received such financing.
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.
In the case of any project for residential rental property-
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. If the provisions of prior law corresponding to section 142(d) apply to a refunded bond, such provisions shall apply (in lieu of section 142(d)) to the refunding bond.
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-
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.
No deduction 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 described in subparagraph (A)(i) and ending on the date such facility is not so used.
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 tax-exempt 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.
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) or a qualified small issue bond.
If-
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.
In the case of any financing provided from the proceeds of any bond which, when issued, purported to be a qualified small issue bond, no deduction shall be allowed under this chapter for interest on such financing which accrues during the period such bond is not a qualified small issue bond.
For purposes of subsection (b)-
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.
If 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.
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.
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.
The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this subsection and subsection (b).
For purposes of this part and section 103-
A qualified scholarship funding bond shall be treated as a State or local bond.
The term "qualified scholarship funding bond" means a bond issued by a corporation which-
Any qualified scholarship funding bond, and qualified student loan bond, outstanding on the date of the issuer's election under this paragraph (and any bond (or series of bonds) issued to refund such a bond) shall not fail to be a tax-exempt bond solely because the issuer ceases to be described in subparagraphs (A) and (B) of paragraph (2) if the issuer meets the requirements of subparagraphs (B) and (C) of this paragraph.
The requirements of this subparagraph are met by an issuer if-
The requirements of this subparagraph are met by an issuer if, within a reasonable period after the transfer referred to in subparagraph (B)-
For purposes of this paragraph, the term "senior stock" means stock-
The term "independent member" means a member of the board of directors of the issuer who (except for services as a member of such board) receives no compensation directly or indirectly-
For purposes of clause (ii), the term "officer" includes any individual having powers or responsibilities similar to those of officers.
For purposes of sections 4942 (relating to the excise tax on a failure to distribute income) and 4943 (relating to the excise tax on excess business holdings), the transferee corporation referred to in subparagraph (B) shall be treated as a functionally related business (within the meaning of section 4942(j)(4)) with respect to the issuer during the period commencing with the date on which an election is made under this paragraph and ending on the date that is the earlier of-
An election under this paragraph may be revoked only with the consent of the Secretary.
For purposes of this part and section 103-
A bond of a volunteer fire department shall be treated as a bond of a political subdivision of a State if-
For purposes of this subsection, the term "qualified volunteer fire department" means, with respect to a political subdivision of a State, any organization-
For purposes of subparagraph (A), other firefighting services provided in an area shall be disregarded in determining whether an organization is a qualified volunteer fire department if such other firefighting services are provided by a qualified volunteer fire department (determined with the application of this sentence) and such organization and the provider of such other services have been continuously providing firefighting services to such area since January 1, 1981.
Bonds which are part of an issue which meets the requirements of paragraph (1) shall not be treated as private activity bonds except for purposes of sections 147(f) and 149(d).
26 U.S.C. § 150
EDITORIAL NOTES
REFERENCES IN TEXTThe Higher Education Act of 1965, referred to in subsec. (d)(2)(A), (3)(F)(i), is Pub. L. 89-329, Nov. 8, 1965, 79 Stat. 1219, which is classified generally to chapter 28 (§1001 et seq.) of Title 20, Education. For complete classification of this Act to the Code, see Short Title note set out under section 1001 of Title 20 and Tables.
AMENDMENTS1996-Subsec. (d)(3). Pub. L. 104-188 added par. (3).1988-Subsec. (b)(1)(A). Pub. L. 100-647, §1013(a)(23)(C), inserted "tax-exempt" before "qualified mortgage bond".Pub. L. 100-647, §1013(a)(30), inserted before period at end "and before the date such residence is again the principal residence of at least 1 of the mortgagors who received such financing".Subsec. (b)(2). Pub. L. 100-647, §1013(a)(32), inserted at end "If the provisions of prior law corresponding to section 142(d) apply to a refunded bond, such provisions shall apply (in lieu of section 142(d)) to the refunding bond." Subsec. (b)(2)(A). Pub. L. 100-647, §1013(a)(31), substituted "described in paragraph" for "described paragraph".Subsec. (b)(4). Pub. L. 100-647, §1013(a)(23)(A), (B), inserted "and small issue bonds" after "bonds" in heading, and "or a qualified small issue bond" before period at end of subpar. (B).Subsec. (b)(6). Pub. L. 100-647, §1013(a)(33), added par. (6).Subsec. (e)(1)(B). Pub. L. 100-647, §6182(b), inserted "(including land which is functionally related and subordinate thereto)" after "a firehouse". Subsec. (e)(2). Pub. L. 100-647, §6182(a), inserted at end "For purposes of subparagraph (A), other firefighting services provided in an area shall be disregarded in determining whether an organization is a qualified volunteer fire department if such other firefighting services are provided by a qualified volunteer fire department (determined with the application of this sentence) and such organization and the provider of such other services have been continuously providing firefighting services to such area since January 1, 1981."Subsec. (e)(3). Pub. L. 100-647, §1013(a)(24)(A), added par. (3).
STATUTORY NOTES AND RELATED SUBSIDIARIES
EFFECTIVE DATE OF 1996 AMENDMENT Pub. L. 104-188, §1614(b), Aug. 20, 1996, 110 Stat. 1853, provided that: "The amendment made by this section [amending this section] shall take effect on the date of the enactment of this Act [Aug. 20, 1996]."
EFFECTIVE DATE OF 1988 AMENDMENT Pub. L. 100-647, title I, §1013(a)(24)(B), Nov. 10, 1988, 102 Stat. 3543, provided that: "The amendment made by subparagraph (A) [amending this section] shall apply to bonds issued after October 21, 1988." Amendment by section 1013(a)(23), (30)-(33) of Pub. L. 100-647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99-514, to which such amendment relates, see section 1019(a) of Pub. L. 100-647, set out as a note under section 1 of this title.Pub. L. 100-647, title VI, §6182(c), Nov. 10, 1988, 102 Stat. 3729, provided that: "The amendments made by this section [amending this section] shall apply to bonds issued after the date of the enactment of this Act [Nov. 10, 1988]."
EFFECTIVE DATESection applicable to bonds issued after Aug. 15, 1986, except as otherwise provided, with subsec. (b) applicable to changes in use (and ownership) after Aug. 15, 1986, but only with respect to financing (including refinancings) provided after such date, and with subsec. (d) applicable to payments made after Aug. 15, 1986, see sections 1311 to 1318 of Pub. L. 99-514, as amended, set out as an Effective Date; Transitional Rules note under section 141 of this title.
- Secretary
- The term "Secretary" means the Secretary of the Treasury or his delegate.
- State
- The term "State" shall be construed to include the District of Columbia, where such construction is necessary to carry out provisions of this title.
- corporation
- The term "corporation" includes associations, joint-stock companies, and insurance companies.
- person
- The term "person" shall be construed to mean and include an individual, a trust, estate, partnership, association, company or corporation.
- stock
- The term "stock" includes shares in an association, joint-stock company, or insurance company.
- student
- The term "student" means any individual-(i) who is temporarily present in the United States-(I) under subparagraph (F) or (M) of section 101(15) of the Immigration and Nationality Act, or(II) as a student under subparagraph (J) or (Q) of such section 101(15), and(ii) who substantially complies with the requirements for being so present.
- taxable year
- The term "taxable year" means the calendar year, or the fiscal year ending during such calendar year, upon the basis of which the taxable income is computed under subtitle A. "Taxable year" means, in the case of a return made for a fractional part of a year under the provisions of subtitle A or under regulations prescribed by the Secretary, the period for which such return is made.
- trade or business
- The term "trade or business" includes the performance of the functions of a public office.