100 STAT. 2650
PUBLIC LAW 99-514—OCT. 22, 1986 . ' !' •^ '"
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refunded bond invested in higher yielding investments (as defined in section 148(b)) which are nonpurpose investments (as defined in section 148(0(6)(A)) does not exceed— "(I) the amount so invested as part of a reasonably required reserve or replacement fund or during an allowable temporary period, and "(II) the amount which is equal to the lesser of 5 percent of the proceeds of the issue of which the refunded bond is a part or $100,000 (to the extent such amount is allocable to the refunded bond). "(B) SPECIAL RULES FOR REDEMPTIONS.— "(i) ISSUER MUST REDEEM ONLY IF DEBT SERVICE SAV-
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iNGS.—Clause (ii) and (iii) of subparagraph (A) shall apply only if the issuer may realize present value debt service savings (determined without regard to administrative expenses) in connection with the issue of which the refunding bond is a part. "(ii) REDEMPTIONS NOT REQUIRED BEFORE 90TH DAY.—
For purposes of clauses (ii) and (iii) of subparagraph (A), the earliest date referred to in such clauses shall not be
earlier than the 90th day after the date of issuance of the refunding bond. "(4) ABUSIVE TRANSACTIONS PROHIBITED.—An issue is described ! in this paragraph if any bond (issued as part of such issue) is ^ issued to advance refund another bond and a device is employed in connection with the issuance of such issue to obtain a material financial advantage (based on arbitrage) apart from savings attributable to lower interest rates. "(5) ADVANCE REFUNDING.—For purposes of this part, a bond shall be treated as issued to advance refund another bond if it is issued more than 90 days before the redemption of the refunded bond. i
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SPECIAL RULES FOR PURPOSES OF PARAGRAPH O).—For
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purposes of paragraph (3), bonds issued before the date of the enactment of this subsection shall be taken into account under subparagraph (A)(i) thereof except— "(A) a refunding which occurred before 1986 shall be treated as an advance refunding only if the refunding bond ' was issued more than 180 days before the redemption of the i;, refunded bond, and "(B) a bond issued before 1986, shall be treated as advance refunded no more than once before March 15, 1986. "(7) REGULATIONS.—The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this subsection. "(e) INFORMATION REPORTING.—
"(1) IN GENERAL.—Nothing in section 103(a) or any other provision of law shall be construed to provide an exemption from Federal income tax for interest on any bond unless such bond satisfies the requirements of paragraph (2). "(2) INFORMATION REPORTING REQUIREMENTS.—A bond satisfies the requirements of this paragraph if the issuer submits to the Secretary, not later than the 15th day of the 2d calendar month after the close of the calendar quarter in which the bond is issued (or such later time as the Secretary may prescribe with
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