26 U.S.C. § 147 — Other requirements applicable to certain

Page 691 TITLE 26—INTERNAL REVENUE CODE § 147 Subsec. (i)(2)(A). Pub. L. 100–647, § 1013(a)(28)(A), amended subpar. (A) generally. Prior to amendment, subpar. (A) read as follows: ‘‘the maturity date of the bond to be refunded, or’’. Subsec. (i)(3)(A). Pub. L. 100–647, § 1013(a)(28)(B), amended subpar. (A) generally. Prior to amendment, subpar. (A) read as follows: ‘‘the maturity date of the bond to be refunded, or’’. Subsec. (i)(4), (5). Pub. L. 100–647, § 1013(a)(28)(C), added par. (4) and redesignated former par. (4) as (5). Subsec. (k)(1). Pub. L. 100–647, § 1013(a)(10)(A), sub- stituted ‘‘paragraphs (2) and (3)’’ for ‘‘paragraph (2)’’. Subsec. (k)(3). Pub. L. 100–647, § 1013(a)(10)(B), added par. (3). 1987—Subsec. (f)(5)(A). Pub. L. 100–203 amended sub- par. (A) generally, as amended by Pub. L. 100–647, § 1013(a)(9), restating it without change. See 1988 Amendment note above. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2021 AMENDMENT Amendment by section 80401(c) of Pub. L. 117–58 appli- cable to obligations issued in calendar years beginning after Nov. 15, 2021, see section 80401(d) of Pub. L. 117–58, set out as a note under section 142 of this title. Amendment by section 80402(c) of Pub. L. 117–58 appli- cable to obligations issued after Dec. 31, 2021, see sec- tion 80402(f) of Pub. L. 117–58, set out as a note under section 45Q of this title. EFFECTIVE DATE OF 2017 AMENDMENT Amendment by Pub. L. 115–97 applicable to taxable years beginning after Dec. 31, 2017, see section 11002(e) of Pub. L. 115–97, set out as a note under section 1 of this title. EFFECTIVE DATE OF 2008 AMENDMENT Amendment by section 3007(a) of Pub. L. 110–289 ap- plicable to repayments of loans received after July 30, 2008, see section 3007(c) of Pub. L. 110–289, set out as a note under section 42 of this title. Amendment by section 3021(a) of Pub. L. 110–289 ap- plicable to bonds issued after July 30, 2008, see section 3021(c) of Pub. L. 110–289, set out as a note under section 143 of this title. EFFECTIVE DATE OF 2005 AMENDMENT Amendment by Pub. L. 109–59 applicable to bonds issued after Aug. 10, 2005, see section 11143(d) of Pub. L. 109–59, set out as a note under section 142 of this title. EFFECTIVE DATE OF 2004 AMENDMENT Amendment by Pub. L. 108–357 applicable to bonds issued after Dec. 31, 2004, see section 701(e) of Pub. L. 108–357, set out as a note under section 142 of this title. EFFECTIVE DATE OF 2001 AMENDMENT Amendment by Pub. L. 107–16 applicable to bonds issued after Dec. 31, 2001, see section 422(f) of Pub. L. 107–16, set out as a note under section 142 of this title. EFFECTIVE DATE OF 2000 AMENDMENT Pub. L. 106–554, § 1(a)(7) [title I, § 161(b)], Dec. 21, 2000, 114 Stat. 2763, 2763A–624, provided that: ‘‘The amend- ment made by this section [amending this section] shall apply to calendar years after 2000.’’ EFFECTIVE DATE OF 1998 AMENDMENT Pub. L. 105–277, div. J, title II, § 2021(b), Oct. 21, 1998, 112 Stat. 2681–903, provided that: ‘‘The amendment made by this section [amending this section] shall apply to calendar years after 1998.’’ EFFECTIVE DATE OF 1993 AMENDMENT Pub. L. 103–66, title XIII, § 13121(b), Aug. 10, 1993, 107 Stat. 432, provided that: ‘‘The amendment made by sub- section (a) [amending this section] shall apply to bonds issued after December 31, 1993.’’ EFFECTIVE DATE OF 1992 AMENDMENT Amendment by Pub. L. 102–486 applicable to bonds issued after Oct. 24, 1992, see section 1921(c) of Pub. L. 102–486, set out as a note under section 142 of this title. EFFECTIVE DATE OF 1989 AMENDMENT Amendment by Pub. L. 101–239 effective, except as otherwise provided, as if included in the provision of the Technical and Miscellaneous Revenue Act of 1988, Pub. L. 100–647, to which such amendment relates, see section 7817 of Pub. L. 101–239, set out as a note under section 1 of this title. EFFECTIVE DATE OF 1988 AMENDMENT Amendment by section 1013(a)(9), (10), (28), (40) of Pub. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment re- lates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title. Amendment by section 6180(b)(3) of Pub. L. 100–647 ap- plicable to bonds issued after Nov. 10, 1988, see section 6180(c) of Pub. L. 100–647, set out as a note under section 142 of this title. EFFECTIVE DATE OF 1987 AMENDMENT Amendment by Pub. L. 100–203 applicable, with cer- tain exceptions, to bonds issued after Oct. 13, 1987 (other than bonds issued to refund bonds issued on or before such date), see section 10631(c) of Pub. L. 100–203, set out as a note under section 141 of this title. § 147. Other requirements applicable to certain private activity bonds (a) Substantial user requirement (1) In general Except as provided in subsection (h), a pri- vate activity bond shall not be a qualified bond for any period during which it is held by a person who is a substantial user of the facili- ties or by a related person of such a substan- tial user. (2) Related person For purposes of paragraph (1), the following shall be treated as related persons— (A) 2 or more persons if the relationship between such persons would result in a dis- allowance of losses under section 267 or 707(b), (B) 2 or more persons which are members of the same controlled group of corporations (as defined in section 1563(a), except that ‘‘more than 50 percent’’ shall be substituted for ‘‘at least 80 percent’’ each place it ap- pears therein), (C) a partnership and each of its partners (and their spouses and minor children), and (D) an S corporation and each of its share- holders (and their spouses and minor chil- dren). (b) Maturity may not exceed 120 percent of eco- nomic life (1) General rule Except as provided in subsection (h), a pri- vate activity bond shall not be a qualified bond if it is issued as part of an issue and— (A) the average maturity of the bonds issued as part of such issue, exceeds Page 692 TITLE 26—INTERNAL REVENUE CODE § 147 (B) 120 percent of the average reasonably expected economic life of the facilities being financed with the net proceeds of such issue. (2) Determination of averages For purposes of paragraph (1)— (A) the average maturity of any issue shall be determined by taking into account the re- spective issue prices of the bonds issued as part of such issue, and (B) the average reasonably expected eco- nomic life of the facilities being financed with any issue shall be determined by taking into account the respective cost of such fa- cilities. (3) Special rules (A) Determination of economic life For purposes of this subsection, the rea- sonably expected economic life of any facil- ity shall be determined as of the later of— (i) the date on which the bonds are issued, or (ii) the date on which the facility is placed in service (or expected to be placed in service). (B) Treatment of land (i) Land not taken into account Except as provided in clause (ii), land shall not be taken into account under paragraph (1)(B). (ii) Issues where 25 percent or more of pro- ceeds used to finance land If 25 percent or more of the net proceeds of any issue is to be used to finance land, such land shall be taken into account under paragraph (1)(B) and shall be treated as having an economic life of 30 years. (4) Special rule for pooled financing of 501(c)(3) organization (A) In general At the election of the issuer, a qualified 501(c)(3) bond shall be treated as meeting the requirements of paragraph (1) if such bond meets the requirements of subparagraph (B). (B) Requirements A qualified 501(c)(3) bond meets the re- quirements of this subparagraph if— (i) 95 percent or more of the net proceeds of the issue of which such bond is a part are to be used to make or finance loans to 2 or more 501(c)(3) organizations or govern- mental units for acquisition of property to be used by such organizations, (ii) each loan described in clause (i) sat- isfies the requirements of paragraph (1) (determined by treating each loan as a sep- arate issue), (iii) before such bond is issued, a demand survey was conducted which shows a de- mand for financing greater than an amount equal to 120 percent of the lendable proceeds of such issue, and (iv) 95 percent or more of the net pro- ceeds of such issue are to be loaned to 501(c)(3) organizations or governmental units within 1 year of issuance and, to the extent there are any unspent proceeds after such 1-year period, bonds issued as part of such issue are to be redeemed as soon as possible thereafter (and in no event later than 18 months after issuance). A bond shall not meet the requirements of this subparagraph if the maturity date of any bond issued as part of such issue is more than 30 years after the date on which the bond was issued (or, in the case of a refund- ing or series of refundings, the date on which the original bond was issued). (5) Special rule for certain FHA insured loans Paragraph (1) shall not apply to any bond issued as part of an issue 95 percent or more of the net proceeds of which are to be used to fi- nance mortgage loans insured under FHA 242 or under a similar Federal Housing Adminis- tration program (as in effect on the date of the enactment of the Tax Reform Act of 1986) where the loan term approved by such Admin- istration plus the maximum maturity of de- bentures which could be issued by such Admin- istration in satisfaction of its obligations ex- ceeds the term permitted under paragraph (1). (c) Limitation on use for land acquisition (1) In general Except as provided in subsection (h), a pri- vate activity bond shall not be a qualified bond if— (A) it is issued as part of an issue and 25 percent or more of the net proceeds of such issue are to be used (directly or indirectly) for the acquisition of land (or an interest therein), or (B) any portion of the proceeds of such issue is to be used (directly or indirectly) for the acquisition of land (or an interest there- in) to be used for farming purposes. (2) Exception for first-time farmers (A) In general If the requirements of subparagraph (B) are met with respect to any land, paragraph (1) shall not apply to such land, and sub- section (d) shall not apply to property to be used thereon for farming purposes, but only to the extent of expenditures (financed with the proceeds of the issue) not in excess of $450,000. (B) Acquisition by first-time farmers The requirements of this subparagraph are met with respect to any land if— (i) such land is to be used for farming purposes, and (ii) such land is to be acquired by an in- dividual who is a first-time farmer, who will be the principal user of such land, and who will materially and substantially par- ticipate on the farm of which such land is a part in the operation of such farm. (C) First-time farmer For purposes of this paragraph— (i) In general The term ‘‘first-time farmer’’ means any individual if such individual— (I) has not at any time had any direct or indirect ownership interest in sub- Page 693 TITLE 26—INTERNAL REVENUE CODE § 147 stantial farmland in the operation of which such individual materially partici- pated, and (II) has not received financing under this paragraph in an amount which, when added to the financing to be pro- vided under this paragraph, exceeds the amount in effect under subparagraph (A). (ii) Aggregation rules Any ownership or material participation, or financing received, by an individual’s spouse or minor child shall be treated as ownership and material participation, or financing received, by the individual. (iii) Insolvent farmer For purposes of clause (i), farmland which was previously owned by the indi- vidual and was disposed of while such indi- vidual was insolvent shall be disregarded if section 108 applied to indebtedness with re- spect to such farmland. (D) Farm For purposes of this paragraph, the term ‘‘farm’’ has the meaning given such term by section 6420(c)(2). (E) Substantial farmland For purposes of this paragraph, the term ‘‘substantial farmland’’ means any parcel of land unless such parcel is smaller than 30 percent of the median size of a farm in the county in which such parcel is located. (F) Used equipment limitation For purposes of this paragraph, in no event may the amount of financing provided by reason of this paragraph to a first-time farmer for personal property— (i) of a character subject to the allow- ance for depreciation, (ii) the original use of which does not begin with such farmer, and (iii) which is to be used for farming pur- poses, exceed $62,500. A rule similar to the rule of subparagraph (C)(ii) shall apply for purposes of the preceding sentence. (G) Acquisition from related person For purposes of this paragraph and section 144(a), the acquisition by a first-time farmer of land or personal property from a related person (within the meaning of section 144(a)(3)) shall not be treated as an acquisi- tion from a related person, if— (i) the acquisition price is for the fair market value of such land or property, and (ii) subsequent to such acquisition, the related person does not have a financial in- terest in the farming operation with re- spect to which the bond proceeds are to be used. (H) Adjustments for inflation In the case of any calendar year after 2008, the dollar amount in subparagraph (A) shall be increased by an amount equal to— (i) such dollar amount, multiplied by (ii) the cost-of-living adjustment deter- mined under section 1(f)(3) for the calendar year, determined by substituting ‘‘cal- endar year 2007’’ for ‘‘calendar year 2016’’ in subparagraph (A)(ii) thereof. If any amount as increased under the pre- ceding sentence is not a multiple of $100, such amount shall be rounded to the nearest multiple of $100. (3) Exception for certain land acquired for en- vironmental purposes, etc. Any land acquired by a governmental unit (or issuing authority) in connection with an airport, mass commuting facility, high-speed intercity rail facility, dock, or wharf shall not be taken into account under paragraph (1) if— (A) such land is acquired for noise abate- ment or wetland preservation, or for future use as an airport, mass commuting facility, high-speed intercity rail facility, dock, or wharf, and (B) there is not other significant use of such land. (d) Acquisition of existing property not per- mitted (1) In general Except as provided in subsection (h), a pri- vate activity bond shall not be a qualified bond if issued as part of an issue and any por- tion of the net proceeds of such issue is to be used for the acquisition of any property (or an interest therein) unless the 1st use of such property is pursuant to such acquisition. (2) Exception for certain rehabilitations Paragraph (1) shall not apply with respect to any building (and the equipment therefor) if— (A) the rehabilitation expenditures with respect to such building, equal or exceed (B) 15 percent of the portion of the cost of acquiring such building (and equipment) fi- nanced with the net proceeds of the issue. A rule similar to the rule of the preceding sen- tence shall apply in the case of structures other than a building except that subpara- graph (B) shall be applied by substituting ‘‘100 percent’’ for ‘‘15 percent’’. (3) Rehabilitation expenditures For purposes of this subsection— (A) In general Except as provided in this paragraph, the term ‘‘rehabilitation expenditures’’ means any amount properly chargeable to capital account which is incurred by the person ac- quiring the building for property (or addi- tions or improvements to property) in con- nection with the rehabilitation of a building. In the case of an integrated operation con- tained in a building before its acquisition, such term includes rehabilitating existing equipment in such building or replacing it with equipment having substantially the same function. For purposes of this subpara- graph, any amount incurred by a successor to the person acquiring the building or by the seller under a sales contract with such person shall be treated as incurred by such person. Page 694 TITLE 26—INTERNAL REVENUE CODE § 147 (B) Certain expenditures not included The term ‘‘rehabilitation expenditures’’ does not include any expenditure described in section 47(c)(2)(B). (C) Period during which expenditures must be incurred The term ‘‘rehabilitation expenditures’’ shall not include any amount which is in- curred after the date 2 years after the later of— (i) the date on which the building was ac- quired, or (ii) the date on which the bond was issued. (4) Special rule for certain projects In the case of a project involving 2 or more buildings, this subsection shall be applied on a project basis. (e) No portion of bonds may be issued for skyboxes, airplanes, gambling establish- ments, etc. A private activity bond shall not be a qualified bond if issued as part of an issue and any portion of the proceeds of such issue is to be used to pro- vide any airplane, skybox or other private lux- ury box, health club facility, facility primarily used for gambling, or store the principal busi- ness of which is the sale of alcoholic beverages for consumption off premises. The preceding sentence shall not apply to any fixed-wing air- craft equipped for, and exclusively dedicated to providing, acute care emergency medical serv- ices (within the meaning of section 4261(g)(2)). (f) Public approval required for private activity bonds (1) In general A private activity bond shall not be a quali- fied bond unless such bond satisfies the re- quirements of paragraph (2). (2) Public approval requirement (A) In general A bond shall satisfy the requirements of this paragraph if such bond is issued as a part of an issue which has been approved by— (i) the governmental unit— (I) which issued such bond, or (II) on behalf of which such bond was issued, and (ii) each governmental unit having juris- diction over the area in which any facility, with respect to which financing is to be provided from the net proceeds of such issue, is located (except that if more than 1 governmental unit within a State has ju- risdiction over the entire area within such State in which such facility is located, only 1 such unit need approve such issue). (B) Approval by a governmental unit For purposes of subparagraph (A), an issue shall be treated as having been approved by any governmental unit if such issue is ap- proved— (i) by the applicable elected representa- tive of such governmental unit after a pub- lic hearing following reasonable public no- tice, or (ii) by voter referendum of such govern- mental unit. (C) Special rules for approval of facility If there has been public approval under subparagraph (A) of the plan for financing a facility, such approval shall constitute ap- proval under subparagraph (A) for any issue— (i) which is issued pursuant to such plan within 3 years after the date of the 1st issue pursuant to the approval, and (ii) all or substantially all of the pro- ceeds of which are to be used to finance such facility or to refund previous financ- ing under such plan. (D) Refunding bonds No approval under subparagraph (A) shall be necessary with respect to any bond which is issued to refund (other than to advance re- fund) a bond approved under subparagraph (A) (or treated as approved under subpara- graph (C)) unless the average maturity date of the issue of which the refunding bond is a part is later than the average maturity date of the bonds to be refunded by such issue. For purposes of the preceding sentence, av- erage maturity shall be determined in ac- cordance with subsection (b)(2)(A). (E) Applicable elected representative For purposes of this paragraph— (i) In general The term ‘‘applicable elected representa- tive’’ means with respect to any govern- mental unit— (I) an elected legislative body of such unit, or (II) the chief elected executive officer, the chief elected State legal officer of the executive branch, or any other elect- ed official of such unit designated for purposes of this paragraph by such chief elected executive officer or by State law. If the office of any elected official de- scribed in subclause (II) is vacated and an individual is appointed by the chief elected executive officer of the governmental unit and confirmed by the elected legislative body of such unit (if any) to serve the re- maining term of the elected official, the individual so appointed shall be treated as the elected official for such remaining term. (ii) No applicable elected representative If (but for this clause) a governmental unit has no applicable elected representa- tive, the applicable elected representative for purposes of clause (i) shall be the appli- cable elected representative of the govern- mental unit— (I) which is the next higher govern- mental unit with such a representative, and (II) from which the authority of the governmental unit with no such rep- resentative is derived. (3) Special rule for approval of airports or high-speed intercity rail facilities If— Page 695 TITLE 26—INTERNAL REVENUE CODE § 147 (A) the proceeds of an issue are to be used to finance a facility or facilities located at an airport or high-speed intercity rail facili- ties, and (B) the governmental unit issuing such bonds is the owner or operator of such air- port or high-speed intercity rail facilities, such governmental unit shall be deemed to be the only governmental unit having jurisdic- tion over such airport or high-speed intercity rail facilities for purposes of this subsection. (4) Special rules for scholarship funding bond issues and volunteer fire department bond issues (A) Scholarship funding bonds In the case of a qualified scholarship fund- ing bond, any governmental unit which made a request described in section 150(d)(2)(B) with respect to the issuer of such bond shall be treated for purposes of para- graph (2) of this subsection as the govern- mental unit on behalf of which such bond was issued. Where more than one govern- mental unit within a State has made a re- quest described in section 150(d)(2)(B), the State may also be treated for purposes of paragraph (2) of this subsection as the gov- ernmental unit on behalf of which such bond was issued. (B) Volunteer fire department bonds In the case of a bond of a volunteer fire de- partment which meets the requirements of section 150(e), the political subdivision de- scribed in section 150(e)(2)(B) with respect to such department shall be treated for pur- poses of paragraph (2) of this subsection as the governmental unit on behalf of which such bond was issued. (g) Restriction on issuance costs financed by issue (1) In general A private activity bond shall not be a quali- fied bond if the issuance costs financed by the issue (of which such bond is a part) exceed 2 percent of the proceeds of the issue. (2) Special rule for small mortgage revenue bond issues In the case of an issue of qualified mortgage bonds or qualified veterans’ mortgage bonds, paragraph (1) shall be applied by substituting ‘‘3.5 percent’’ for ‘‘2 percent’’ if the proceeds of the issue do not exceed $20,000,000. (h) Certain rules not to apply to certain bonds (1) Mortgage revenue bonds and qualified stu- dent loan bonds Subsections (a), (b), (c), and (d) shall not apply to any qualified mortgage bond, quali- fied veterans’ mortgage bond, or qualified stu- dent loan bond. (2) Qualified 501(c)(3) bonds Subsections (a), (c), and (d) shall not apply to any qualified 501(c)(3) bond and subsection (e) shall be applied as if it did not contain ‘‘health club facility’’ with respect to such a bond. (3) Exempt facility bonds for qualified public- private schools Subsection (c) shall not apply to any exempt facility bond issued as part of an issue de- scribed in section 142(a)(13) (relating to quali- fied public educational facilities). (Added Pub. L. 99–514, title XIII, § 1301(b), Oct. 22, 1986, 100 Stat. 2635; amended Pub. L. 100–647, title I, § 1013(a)(11)–(13)(B), (29), (36), title VI, § 6180(b)(4), (5), Nov. 10, 1988, 102 Stat. 3539, 3543, 3544, 3728; Pub. L. 101–239, title VII, § 7816(s)(3), Dec. 19, 1989, 103 Stat. 2423; Pub. L. 101–508, title XI, § 11813(b)(8), Nov. 5, 1990, 104 Stat. 1388–552; Pub. L. 104–188, title I, § 1117(a), (b), Aug. 20, 1996, 110 Stat. 1764; Pub. L. 107–16, title IV, § 422(d), (e), June 7, 2001, 115 Stat. 66; Pub. L. 110–234, title XV, § 15341(a)–(d), May 22, 2008, 122 Stat. 1517; Pub. L. 110–246, § 4(a), title XV, § 15341(a)–(d), June 18, 2008, 122 Stat. 1664, 2279; Pub. L. 112–95, title XI, § 1105(a), Feb. 14, 2012, 126 Stat. 152; Pub. L. 115–97, title I, § 11002(d)(1)(P), Dec. 22, 2017, 131 Stat. 2060.) INFLATION ADJUSTED ITEMS FOR CERTAIN YEARS For inflation adjustment of certain items in this section, see Revenue Procedures listed in a table under section 1 of this title. Editorial Notes REFERENCES IN TEXT The date of the enactment of the Tax Reform Act of 1986, referred to in subsec. (b)(5), is the date of enact- ment of Pub. L. 99–514, which was approved Oct. 22, 1986. CODIFICATION Pub. L. 110–234 and Pub. L. 110–246 made identical amendments to this section. The amendments by Pub. L. 110–234 were repealed by section 4(a) of Pub. L. 110–246. AMENDMENTS 2017—Subsec. (c)(2)(H)(ii). Pub. L. 115–97 substituted ‘‘for ‘calendar year 2016’ in subparagraph (A)(ii)’’ for ‘‘for ‘calendar year 1992’ in subparagraph (B)’’. 2012—Subsec. (e). Pub. L. 112–95 inserted at end: ‘‘The preceding sentence shall not apply to any fixed-wing aircraft equipped for, and exclusively dedicated to pro- viding, acute care emergency medical services (within the meaning of section 4261(g)(2)).’’ 2008—Subsec. (c)(2)(A). Pub. L. 110–246, § 15341(a), sub- stituted ‘‘$450,000’’ for ‘‘$250,000’’. Subsec. (c)(2)(C)(i)(II). Pub. L. 110–246, § 15341(d), sub- stituted ‘‘the amount in effect under subparagraph (A)’’ for ‘‘$250,000’’. Subsec. (c)(2)(E). Pub. L. 110–246, § 15341(c), sub- stituted ‘‘unless such parcel is smaller than 30 percent of the median size of a farm in the county in which such parcel is located.’’ for ‘‘unless— ‘‘(i) such parcel is smaller than 30 percent of the median size of a farm in the county in which such parcel is located, and ‘‘(ii) the fair market value of the land does not at any time while held by the individual exceed $125,000.’’ Subsec. (c)(2)(H). Pub. L. 110–246, § 15341(b), added sub- par. (H). 2001—Subsec. (h). Pub. L. 107–16, § 422(e), substituted ‘‘certain bonds’’ for ‘‘mortgage revenue bonds, qualified student loan bonds, and qualified 501(c)(3) bonds’’ in heading. Subsec. (h)(3). Pub. L. 107–16, § 422(d), added par. (3). 1996—Subsec. (c)(2)(E)(i). Pub. L. 104–188, § 1117(b), sub- stituted ‘‘30 percent’’ for ‘‘15 percent’’. Subsec. (c)(2)(G). Pub. L. 104–188, § 1117(a), added sub- par. (G). Page 696 TITLE 26—INTERNAL REVENUE CODE § 148 1990—Subsec. (d)(3)(B). Pub. L. 101–508 substituted ‘‘section 47(c)(2)(B)’’ for ‘‘section 48(g)(2)(B)’’. 1989—Subsec. (c)(3). Pub. L. 101–239 inserted a comma after ‘‘mass commuting facility’’ in introductory provi- sions and in subpar. (A). 1988—Subsec. (c)(3). Pub. L. 100–647, § 6180(b)(4), in- serted ‘‘high-speed intercity rail facility’’ after ‘‘mass commuting facility’’ in introductory text and in sub- par. (A). Subsec. (e). Pub. L. 100–647, § 1013(a)(11), struck out ‘‘treated as’’ after ‘‘shall not be’’. Subsec. (f)(2)(D). Pub. L. 100–647, § 1013(a)(29), sub- stituted ‘‘the average maturity date of the issue of which the refunding bond is a part is later than the av- erage maturity date of the bonds to be refunded by such issue. For purposes of the preceding sentence, av- erage maturity shall be determined in accordance with subsection (b)(2)(A)’’ for ‘‘the maturity date of such bond is later than the maturity date of the bond to be refunded’’. Subsec. (f)(2)(E)(i). Pub. L. 100–647, § 1013(a)(36), in- serted sentence at end relating to treatment of an indi- vidual appointed to fill a vacancy in the office of an elected official. Subsec. (f)(3). Pub. L. 100–647, § 6180(b)(5), inserted ‘‘or high-speed intercity rail facilities’’ after ‘‘airports’’ in heading and after ‘‘airport’’ in subpars. (A) and (B) and in last sentence. Subsec. (f)(4). Pub. L. 100–647, § 1013(a)(12), added par. (4). Subsec. (g)(1). Pub. L. 100–647, § 1013(a)(13)(A), sub- stituted ‘‘proceeds’’ for ‘‘aggregate face amount’’. Subsec. (g)(2). Pub. L. 100–647, § 1013(a)(13)(B), sub- stituted ‘‘proceeds’’ for ‘‘aggregate authorized face amount’’ and ‘‘do’’ for ‘‘does’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2017 AMENDMENT Amendment by Pub. L. 115–97 applicable to taxable years beginning after Dec. 31, 2017, see section 11002(e) of Pub. L. 115–97, set out as a note under section 1 of this title. EFFECTIVE DATE OF 2012 AMENDMENT Pub. L. 112–95, title XI, § 1105(b), Feb. 14, 2012, 126 Stat. 152, provided that: ‘‘The amendment made by this sec- tion [amending this section] shall apply to obligations issued after the date of the enactment of this Act [Feb. 14, 2012].’’ EFFECTIVE DATE OF 2008 AMENDMENT Amendment of this section and repeal of Pub. L. 110–234 by Pub. L. 110–246 effective May 22, 2008, the date of enactment of Pub. L. 110–234, except as other- wise provided, see section 4 of Pub. L. 110–246, set out as an Effective Date note under section 8701 of Title 7, Agriculture. Pub. L. 110–234, title XV, § 15341(e), May 22, 2008, 122 Stat. 1517, and Pub. L. 110–246, § 4(a), title XV, § 15341(e), June 18, 2008, 122 Stat. 1664, 2279, provided that: ‘‘The amendments made by this section [amending this sec- tion] shall apply to bonds issued after the date of the enactment of this Act [June 18, 2008].’’ [Pub. L. 110–234 and Pub. L. 110–246 enacted identical provisions. Pub. L. 110–234 was repealed by section 4(a) of Pub. L. 110–246, set out as a note under section 8701 of Title 7, Agriculture.] EFFECTIVE DATE OF 2001 AMENDMENT Amendment by Pub. L. 107–16 applicable to bonds issued after Dec. 31, 2001, see section 422(f) of Pub. L. 107–16, set out as a note under section 142 of this title. EFFECTIVE DATE OF 1996 AMENDMENT Pub. L. 104–188, title I, § 1117(c), Aug. 20, 1996, 110 Stat. 1764, provided that: ‘‘The amendments made by this section [amending this section] shall apply to bonds issued after the date of the enactment of this Act [Aug. 20, 1996].’’ EFFECTIVE DATE OF 1990 AMENDMENT Amendment by Pub. L. 101–508 applicable to property placed in service after Dec. 31, 1990, but not applicable to any transition property (as defined in section 49(e) of this title), any property with respect to which qualified progress expenditures were previously taken into ac- count under section 46(d) of this title, and any property described in section 46(b)(2)(C) of this title, as such sec- tions were in effect on Nov. 4, 1990, see section 11813(c) of Pub. L. 101–508, set out as a note under section 45K of this title. EFFECTIVE DATE OF 1989 AMENDMENT Amendment by Pub. L. 101–239 effective, except as otherwise provided, as if included in the provision of the Technical and Miscellaneous Revenue Act of 1988, Pub. L. 100–647, to which such amendment relates, see section 7817 of Pub. L. 101–239, set out as a note under section 1 of this title. EFFECTIVE DATE OF 1988 AMENDMENT Pub. L. 100–647, title I, § 1013(a)(13)(C), Nov. 10, 1988, 102 Stat. 3539, provided that: ‘‘The amendments made by this paragraph [amending this section] shall apply to bonds issued after June 30, 1987.’’ Amendment by section 1013(a)(11), (12), (29), (36) of Pub. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment re- lates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title. Amendment by section 6180(b)(4), (5) of Pub. L. 100–647 applicable to bonds issued after Nov. 10, 1988, see sec- tion 6180(c) of Pub. L. 100–647, set out as a note under section 142 of this title. EFFECTIVE DATE Subsec. (f) applicable to bonds issued after Dec. 31, 1986, see section 1311(d) of Pub. L. 99–514, as amended, set out as an Effective Date; Transitional Rules note under section 141 of this title. SAVINGS PROVISION For provisions that nothing in amendment by Pub. L. 101–508 be construed to affect treatment of certain transactions occurring, property acquired, or items of income, loss, deduction, or credit taken into account prior to Nov. 5, 1990, for purposes of determining liabil- ity for tax for periods ending after Nov. 5, 1990, see sec- tion 11821(b) of Pub. L. 101–508, set out as a note under section 45K of this title. SUBPART B—REQUIREMENTS APPLICABLE TO ALL STATE AND LOCAL BONDS Sec. 148. Arbitrage. 149. Bonds must be registered to be tax exempt; other requirements. § 148. Arbitrage (a) Arbitrage bond defined For purposes of section 103, the term ‘‘arbi- trage bond’’ means any bond issued as part of an issue any portion of the proceeds of which are reasonably expected (at the time of issuance of the bond) to be used directly or indirectly— (1) to acquire higher yielding investments, or (2) to replace funds which were used directly or indirectly to acquire higher yielding invest- ments. For purposes of this subsection, a bond shall be treated as an arbitrage bond if the issuer inten-