As we have discussed in previous posts (here), most practitioners treat a management contract for services at bond-financed property that does not fit within a safe harbor from private business use as giving rise to private business use of the bonds for tax purposes. However, the Treasury Regulations provide that whether or not a management … Continue Reading
Search Results for: facts and circumstances
The IRS Comes Through: New Guidance Allows Phone TEFRA Hearings and Helps Issuers Repurchase their VRDOs Without Extinguishing Them
As described in our previous post, NABL hasn’t been binge watching Tiger King and binge eating like the rest of us during this time at home during the COVID-19 pandemic. Instead, on March 25, 2020, NABL asked the IRS to adopt a proposed notice that would address two municipal bond concerns caused by the pandemic: … Continue Reading
PLR 201726007 – Insights into the Facts & Circumstances Test for Private Business Use after Rev. Proc. 2017-13
The IRS recently released PLR 201726007, the first private letter ruling to interpret the revised management contract safe harbor in Rev. Proc. 2017-13. On one level, the PLR is quite straightforward – it concludes that a teaching agreement between a hospital and a school to provide clinical practice for pharmacy students does not result in … Continue Reading
The New Issue Price Regulations – “Bought Deals,” Bored Bidders, and Other Problems
As you have heard, and as we noted last week, Treasury and the IRS recently released final regulations that tell issuers how to calculate the “issue price” of tax-advantaged bonds that are issued for money. The regulations don’t take effect until June 7, 2017, so we can spend some time luxuriating in their nuances and … Continue Reading
The Invisible Hand
An unnecessary (but hopefully interesting) introduction: Earlier this year, the great economist and mathematician, John Nash, passed away in a car accident outside his home in New Jersey. In 1994, John Nash won the Nobel Prize (formally referred to as the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel) for economics for … Continue Reading
Toll-Free Telephone TEFRA Hearings Available Permanently
The IRS will permanently allow state and local governments to hold public hearings using a toll-free telephone number to satisfy the TEFRA hearing requirement for private activity bonds.[1] No in-person option will be required to satisfy the TEFRA public hearing requirement, but state and local governments must continue to follow applicable local laws, which may … Continue Reading
IRS Releases Helpful Private Letter Ruling for Calculating the Weighted Average Economic Life of Bond-Financed Property (but Mind the Footnote)
On May 3, 2019, the Internal Revenue Service released Private Letter Ruling 201918008. The IRS concluded in that PLR that an issuer of exempt facility bonds used a reasonable method, under all the facts and circumstances, to determine whether the term of an operating agreement entered into with a private party exceeded 80% of the … Continue Reading
What does “control” mean in the context of affiliated 501(c)(3) organizations?
The IRS recently issued Private Letter Ruling 201811009, which provides helpful insight into how the IRS construes the term “control” for purposes of determining whether two affiliated 501(c)(3) organizations are “related” for purposes of the definition of “refunding issue.” The ruling involved a 501(c)(3) university (“Seller”) that sold its medical center to another 501(c)(3) organization … Continue Reading
How Poker Reminded Me that the Rev. Proc. 97-13 Safe Harbors for Management Contracts Live On
Poker has a well-established hierarchy of winning hands. If you’re holding a full house, you’ve got a right fine hand, but if you reach for the pot when the last bets are called and another player has four deuces, you will at best be the object of ridicule and at worst the subject of grievous … Continue Reading
More on Rev. Proc. 2016-44: What Light Is Shed on Net Profits Compensation?
As reported several times in this blog (here, here, and here), Rev. Proc. 2016-44 significantly expands the opportunities for management/service contracts that don’t result in private business use. One such post was Joel Swearingen’s very thoughtful piece on the future of the facts and circumstances test as applied to these contracts (here). Of course, Rev. … Continue Reading