Archives: Hedge Bonds

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Final Arbitrage Regulations Require “Look Through” to a Grantee’s Use of Bond Proceeds: A Big “So What?”

From time to time, issuers will use bond proceeds to make grants to accomplish a governmental purpose. For example, a State bond issuer may make grants to various counties and cities to help with the cost of local transportation improvements. Under the arbitrage regulations (Reg. 1.148-6(d)(4)), the bond proceeds are treated as spent once an issuer … 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

Random Musings on Reasonable Expectations and on the Big Ten Conference

We’ve previously reported that the Internal Revenue Service (IRS) has issued eight private letter rulings under Internal Revenue Code (Code) Section 54A(d)(2)(B)(iii) that grant an extension of the three-year expenditure period that applies to an issue of qualified tax credit bonds (QTCBs).  An issuer of QTCBs must reasonably expect on the issuance date of the … Continue Reading

IRS Audits and Hindsight: Do Unspent Proceeds Mean No Reasonable Expectations?

A recent article in The Bond Buyer ($) reported that IRS agents have been raising concerns during audits about bond proceeds that remain unspent or that haven’t been spent in a timely manner.  The article reports further that IRS agents are not “buying the argument” that those transactions were originally sized reasonably even though changed … Continue Reading
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