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.


Aerial View of Chicago Lake Shore Dr at sunrise in Autumn – October 2019
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The Workshop 2023: Session Bundle

All recorded sessions from our 2023 annual conference held in Chicago, IL from October 18 – 22. [[Purchase or Registration Required]]

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Private Activity Bond Tests: Real World Challenges

Panel that addresses complex issues encountered from time to time in the identification and allocation of private business use of bond-financed property.

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Health Care Facilities — Hot Topics (Non-Tax Matters)

Examination of non-tax issues for financings of 501(c)(3) healthcare providers and analysis of other hot topics in healthcare finance.

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Tax Issues for 501(c)(3) Financings

Exploration of issues that arise for tax-exempt qualified 501(c)(3) bonds.

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Current Topics in Energy Finance

Review of current trends in energy finance, including a discussion by panelists of some of the priorities, objectives, and goals that are impacting the development and financing of energy and…

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Tax Hot Topics

This panel will discuss current federal tax issues, including any recently released notices, rulings, regulations and/or other guidance.

Hudson Yards Rail Yards

Start with the Bond Basics

Net Proceeds

Proceeds of the bonds minus amounts used to fund a reasonably required reserve or replacement fund.