A bond, the interest on which is excludable from gross income for federal income tax purposes.
An event that occurs after the Closing of Tax-Exempt Bonds may cause the Tax-Exempt Bonds to be treated as Taxable Bonds unless a remedial action is taken by the Issuer in accordance with Treasury Regulations Sections 1.142-2, 1.141-12 and 1.144-2. In most cases, sale or lease of property financed by Governmental Bonds or Qualified 501(c)(3) Bonds to a private entity can result in the need to take Remedial Action. Allowable remedial actions generally include Redemption or Defeasance of non-qualified Bonds, timely use of disposition proceeds in an alternative qualifying manner or alternative qualifying use of the facility.
Dive Deeper on Tax Issues
Learn more about how various aspects of tax law intersect with municipal securities.