Archives: Sequestration

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Crossover Refunding – Does It Really Have to Come to This?

Suppose you, or a friend, issued build America bonds or another form of direct payment subsidy bonds in 2009 or 2010, as permitted by the American Recovery and Reinvestment Act, to do your bit to stimulate aggregate demand during the depths of the Great Recession.  You, or your friend, as applicable, did not, however, include … Continue Reading

Another Year of (Slightly Less) Pain for Direct Pay Bonds

  Noted public finance tax lawyer Clubber Lang remains correct in his prediction about Direct-Pay bonds. For those issuers that haven’t yet redeemed their direct-pay bonds with tax-exempt bonds, sequestration cuts to interest subsidies for direct pay bonds will continue for federal fiscal year 2016 (October 1, 2015 through September 30, 2016), according to a report that the … Continue Reading

More on the BAB Defeasance Memo

Naomi Jagoda has an article in The Bond Buyer ($) today with more commentary on Advice Memorandum 2014-009, where the IRS says that BABs don’t get the benefit of the rule that the defeasance of a “tax-exempt bond” doesn’t cause the bond to be reissued. Note that others in the community are raising the same point that was raised in yesterday’s … Continue Reading

Bah. Humbug. How the IRS Took Away Direct Subsidies from Defeased BABs

Earlier this year, we wrote about issuers that are weary of losing interest subsidies to sequestration and that have paid off their direct pay bonds with tax-exempt bonds. We noted two main questions where the issuer doesn’t pay off the direct pay bonds immediately, but instead puts the refunding bond proceeds into a defeasance escrow … Continue Reading

Flashback: The Beastie Boys and Direct Pay Bonds

The Beastie Boys are considered rap pioneers in part for their extensive use of “sampling,” or cutting and splicing the music of other groups into works of their own. In particular, their 1989 album, Paul’s Boutique, was an early leading example of the possibilities of the technique. (There are plenty of interesting copyright questions raised by … Continue Reading

Another Year of Pain for Direct-Pay Bonds

Noted 103 tax lawyer Clubber Lang was correct in his prediction about Direct-Pay bonds. For those issuers that haven’t yet redeemed their direct-pay bonds with tax-exempt bonds, sequestration cuts to direct payments will continue for federal fiscal year 2015, at a slightly higher rate – 7.3%, up from 7.2%. The higher cuts took effect at … Continue Reading
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