Qualified 501(c)(3) Bonds

501(c)(3) Organizations are permitted to finance projects with Tax-Exempt Bonds if they meet the requirements of Section 145 of the Code. These requirements include (1) all property that is to be provided by the Net Proceeds of the Bonds must be owned by a 501(c)(3) Organization or by a governmental unit; (2) the Private Business Tests under Section 141(b) of the Code must not be satisfied, treating the 501(c)(3) Organization which is the Conduit Borrower and any other 501(c(3) Organization using the Bond-financed facilities as a governmental unit with respect to its activities that do not constitute an unrelated trade or business with respect to its respective exempt purpose and by substituting 5% for 10% in the private business use tests; and (3) the Private Loan Financing Test must not be met.

See Also

Private Activity Bond (PAB)

The term used in the Code to describe any bond issued as part of a bond issue that meets both of the private business tests or meets the private loan financing test.

501(c)(3) Organization

An organization that is exempt from federal income taxation under Section 501(a) of the Code.

Conduit Financing

Financing in which the Issuer issues the bonds to finance a project to be used primarily by a third party.


Port of Seattle, Washington. Source: Wikimedia Commons
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Expand Private Activity Bonds (PABs)

Expand Financing Options for Innovative and Critical Projects

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Tax Issues in 501(c)(3) Financings [Workshop 2022]

This panel focuses on Section 501(c)(3) organizations created by or “backed” by developers or other private parties to accomplish tax-exempt bond financing, with discussion of the issues that arise under…

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This panel examines non-tax issues for financings of 501(c)(3) health care providers, with the panel addressing hot topics in health care finance. The primary focuses are expected to be considerations…

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  • CLE Eligible

Qualified 501(c)(3) Bonds [Essentials 2022]

The session is an introduction to the tax requirements applicable to the issuance of 501(c)(3) bonds, including ownership and use requirements and issues specific to hospital, residential housing, and school…

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Issuer Group Letter Requesting Permanent Telephonic TEFRA Hearings

Letter from issuer representative groups to the Internal Revenue Service (IRS) and U.S. Department of Treasury’s Office of Tax Policy (OTP) requesting that guidance allowing for TEFRA hearings to be…

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Term of the Week

Securities Act of 1933

Law designed to ensure that investors are provided with material information about new issues of securities offered for sale to the public.