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What Makes a Bond “Green”?

Most people agree that a “bond” is a financial instrument pursuant to which a creditor (holder of the bond) lends money to a borrower (the issuer of the bond) over a specified period of time in exchange for a periodic interest payment. However, although I occasionally see headlines about green bonds being issued, it was … Continue Reading

2017 – What lies ahead?

The year 2017 promises, and threatens, to be a potentially momentous one for public finance in the United States.  The Trump Administration and the 115th Congress may put in place tax reforms and infrastructure programs that will have transformative consequences for the financing of public projects in all sectors and at all levels.  These are … Continue Reading

Final Issue Price Regulations Issued

The Treasury Department issued final “issue price” regulations on December 9, 2016 (T.D. 9801) (the “Issue Price Regulations”).  Below is a summary of the general and special rules for determining issue price under the Issue Price Regulations: General Rule. The general rule, retained from the existing regulations, provides that issue price is determined by actual … Continue Reading

What Happens When the IRS and Issuer Agree to Disagree?

My last blog post was about how, as a result of a change in the Internal Revenue Code (the “Code”), the IRS will be altering the manner in which it audits many partnerships (and limited liability companies that are taxed as partnerships under the Code). In a nutshell, for tax years beginning on or after January … Continue Reading

An inconvenience of qualified equity

Like me, at some point in your childhood, you were probably told not to “look the gift horse in the mouth.” After reading this blog post, the same could be said to me.  We have written in great detail (see here,  here, and here) about the increased flexibility afforded issuers by the recently promulgated Final … Continue Reading

What’s in your Partnership Agreement? Why Non-Taxpaying Entities Should Care About Allocations of Taxable Income.

Even before the advent of P3s (public-private-partnerships), it was not uncommon for a governmental entity or a 501(c)(3) to enter into a joint venture with a for-profit, taxpaying entity. Sometimes these joint ventures take the form of either a state law partnership or a state law limited liability company (“LLC”).  Most LLCs are taxed as … Continue Reading

Where do the candidates stand on tax-exempt bonds?

What would a Clinton or Trump presidency mean for tax-exempt bonds? Both candidates have declared a desire to change our tax system, but will this mean any changes to the tax-exempt bond rules? Neither candidate has expressed a desire to change how the tax-exempt bond rules work, but their other policy goals may have an … Continue Reading

Update to Revenue Procedure 2016-44

A little over a week after the IRS released Revenue Procedure 2016-44 (the “Revenue Procedure”), it has been updated!  The IRS recently (and covertly) updated Section 7 (“Date of Applicability”) of the Revenue Procedure. Following the update, the prior safe harbors established in Revenue Procedure 97-13, as modified by Notice 2014-67, can be applied to any management contract entered … Continue Reading

Treasury Department Releases 2016-17 Priority Guidance Plan for Tax-Exempt Bonds – And It’s Already About One-Third Complete!

On August 15, 2016, the Treasury Department released its 2016 – 2017 Priority Guidance Plan (the “Plan”).  Tax-exempt bonds are the last category in the Plan, but the Plan lists the priority guidance categories in alphabetical order.  Had these categories been listed in order of esteem, we know that tax-exempt bonds would have been [INSERT … Continue Reading

Bondholders of the Lost Ark

When most bond advisors think of the types of projects that bond proceeds may be used for, they think of roads, bridges, hospital or university buildings, etc.  I think it is safe to say that very few bond advisors visualize an ark, let alone a replica of Noah’s Ark.  However, the City Council of Williamstown, … Continue Reading

A Summary of the Final Regulations on Non-Issue Price Arbitrage Restrictions

On July 18, 2016, the Treasury Department published final regulations on non-issue price arbitrage restrictions (the “Final Regulations”) in the Federal Register. The Final Regulations finalize regulations proposed in 2007 and 2013 (collectively, the “Proposed Regulations”).  Click here for a copy of the Final Regulations, and read below for a high-level summary of them.  We … Continue Reading

Lawmakers target the tax-exemption for municipal bonds……..again

On Friday, June 24th, House Republicans released a blueprint for tax reform that suggests ways to increase federal tax revenue. Among other things, the blueprint may signal lawmakers’ willingness to curb or eliminate certain tax expenditures. A “tax expenditure” is a tax subsidy (including deductions, exclusions, and other tax preferences) in the Internal Revenue Code and corresponding … Continue Reading

Sometimes the Truth is Stranger than Fiction

Although this blog post has nothing to do with tax advantaged bonds,  it does involve taxpayers, large sums of money, allegations of deceit and a strange saga in which the IRS has become embroiled.  The story begins in 1999, when William Esrey, the CEO of Sprint Corporation at the time, and Ronald LeMay, COO of Sprint … Continue Reading

It is Possible to be Too Well-Endowed

That is, according to certain U.S. lawmakers, who believe that private colleges and universities with 501(c)(3) status that have at least a $1 billion endowment should be subject to some extra rules and regulations.  If these well-endowed private colleges and universities fail to abide by such extra rules and regulations, under the proposed legislation (which … Continue Reading

Lessons from Ramapo

The federal government has brought the first ever criminal securities fraud charges in connection with a municipal bond financing, following an investigation by U.S. Attorney for the Southern District of New York Preet Bharara, according to recent news reports.  (NYT, Reuters.) So what lessons are there to be learned from this?… Continue Reading

Enquiring Minds Want to Know – But Are Still Somewhat Confused

By permitting the issuance of tax-advantaged bonds, the federal government has provided an economic subsidy to state and local governments and other issuers of such bonds.   In other words, the federal government is foregoing revenue in order to allow the issuers or conduit borrowers of tax-advantaged bonds to borrow at a lower cost.  In December, … Continue Reading

President’s Budget Proposal – A Lot of Bond Stuff

Earlier this week, the President released his budget proposals for fiscal year 2017 (the “Proposed Budget”) (Treasury Department’s Green Book).  Although it is unlikely that the Proposed Budget will be enacted, it is illustrative of the viewpoints held by the President (and possibly by supporting lawmakers). The Proposed Budget contains a number of noteworthy provisions … Continue Reading

Bond Advisors Behaving Badly

We all know that the federal tax rules and regulations applicable to tax-exempt bonds are very complex.  So are the federal and state securities laws.  At times this is frustrating for bond advisors.  However, we should remember that the federal and state securities laws are intended to protect investors/bondholders by requiring that all material facts … Continue Reading

2015 Blog Year in Review

As we begin a new year with all the new self-set goals that will soon be forgotten, let us pause for a moment to review 2015, or at least, what transpired on the Public Finance Tax Blog. Below the break are some of the posts announcing new guidance from the IRS, some of our most … Continue Reading

No Good Deed Goes Unpunished: When fundraising for a good cause results in bad tax consequences.

The IRS recently issued TAM 201544025 (“TAM”) in which it held that a 501(c)(3) organization’s activities constituted unrelated business taxable income (“UBTI”).  As explained in more detail below, UBTI may negatively impact the tax-exempt character of 501(c)(3) bonds. If you are a regular reader of this Public Finance Tax Blog, you already know that in … Continue Reading

Thoughts on CCA 201537022

In CCA 201537022, the IRS Chief Counsel’s office addressed (1) whether a real estate developer could include amounts advanced to a special district to fund common improvements in the tax basis of the developer’s lots, and (2) whether interest on obligations issued by that district and held by the developer would be tax-exempt.  For purposes … Continue Reading

What happened to Edward Jones and does it impact issue price?

[UPDATE (9/11/2015): At the 2015 NABL Bond Attorneys’ Workshop in Chicago, representatives from the Securities and Exchange Commission (including individuals previously employed at the Internal Revenue Service) discussed whether the Edward Jones case (the topic of the blog post following the jump) should impact bond pricing.  The Bond Buyer was at the Bond Attorneys’ Workshop and … Continue Reading

The Death Star and Taxes (or, how a Taxpayer win shows path to successfully challenging validity of IRS regulations)

While the specific legal issue presented in Altera Corp. v. Commissioner, 145 T.C. No. 3 (July 27, 2015) has nothing to do with tax-exempt bonds, it is nonetheless instructive to many readers of this blog because it shows how a taxpayer may successfully challenge an IRS regulation in court. Want to know how? It’s all … Continue Reading
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