Page:United States Statutes at Large Volume 100 Part 3.djvu/836

 100 STAT. 2644

PUBLIC LAW 99-514—OCT. 22, 1986

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"(i) any gain or loss on the disposition of a nonpurpose investment shall be taken into account, and "(ii) unless the issuer otherwise elects, any amount earned on a bona fide debt service fund shall not be taken into account if the gross earnings on such fund for the bond year is less than $100,000. "(B) TEMPORARY INVESTMENTS.—Under regulations prescribed by the Secretary— "(i) IN GENERAL.—An issue shall, for purposes of this ~ subsection, be treated as meeting the requirements of paragraph (2) if the gross proceeds of such issue are expended for the governmental purpose for which the issue was issued by no later than the day which is 6 months after the date of issuance of such issue. Gross proceeds which are held in a bona fide debt service fund shall not be considered gross proceeds, for purposes of this subparagraph only, "(ii) ADDITIONAL PERIOD FOR CERTAIN BONDS.-^

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"(II) ISSUES TO WHICH SUBCLAUSE (1) APPLIES.—



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"(I) IN GENERAL.—In the case of an issue described in subclause (II), clause (i) shall be applied by substituting '1 year' for '6 months' with respect to the portion of the proceeds of the issue which are not expended in accordance with clause (i) if such portion does not exceed the lesser of 5 percent of the proceeds of the issue or $100,000. An issue is described in this subclause if no bond which is part of such issue is a private activity bond (other than a qualified 501(c)(3) bond) or a tax or revenue anticipation bond.

"(iii) S A F E HARBOR FOR DETERMINING WHEN PROCEEDS OF TAX A N D REVENUE ANTICIPATION BONDS ARE EXPENDED.— "(I) IN GENERAL.—For purposes of clause (i), in the case of a n issue of tax or revenue anticipation .; bonds, the n e t proceeds of such issue (including e a r n i n g s thereon) shall be treated a s expended for ., the government a l purpose of the issue on the 1st

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day after the date of issuance that the cumulative cash flow deficit to be financed by such issue exceeds 90 percent of the aggregate face amount of such issue. "(II) CUMULATIVE CASH FLOW DEFICIT.—For purposes of subclause (I), the term 'cumulative cash flow deficit' means, as of the date of computation, the excess of the expenses paid during the period described in subclause (III) which would ordinarily be paid out of or financed by anticipated tax or other revenues over the aggregate amount available (other than from the proceeds of the issue) during such period for the payment of such expenses. "(Ill)

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PERIOD

INVOLVED.—For

purposes

of

subclause (II), the period described in this subclause is the period beginning on the date of issuance of the issue and ending on the earliest of

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