Commission
A form of remuneration received by a broker, dealer or dealer bank purchasing or selling bonds when acting as agent for a customer.
bond-basics
Cost of Issuance
A defined term under the tax rules, meaning items of expense paid by or on behalf of the Issuer or a Conduit Borrower which are directly related to the issuance and sale of the Bonds (e.g., fees of Bond Counsel, Issuer’s Counsel, Borrower’s Counsel, Disclosure Counsel, Underwriter’s Counsel, Lender’s Counsel, Trustee, Municipal Advisor, Underwriter, and Rating Agency and Printing Costs).
Tax Consideration
Costs of issuance are subject to limits in Private Activity Bond transactions. Under Section 147(g) of the Code, Costs of Issuance that can be financed with proceeds of a qualified Private Activity Bond are generally limited to 2% of the proceeds of the Bond Issue (with certain exceptions for qualified mortgage Bonds or qualified veterans’ mortgage Bonds). These costs are treated as “bad” costs for purposes of determining compliance with the 95% test for exempt facility Bonds and are treated as private business use when determining compliance with the Private Business Tests for Qualified 501(c)(3) Bonds.
See Also
Start with the Bond Basics
Hundreds of Terms and Concepts
Acceleration
A remedy sometimes available under an Indenture, Bond Resolution or other financing document which permits the Trustee or bondholder to declare all future payments of Principal immediately due and payable after the occurrence of certain specified Events of Default.