Page:United States Statutes at Large Volume 100 Part 3.djvu/837

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2645

the maturity date of the issue, the date 6 months after such date of issuance, or the date of the computation of cumulative cash flow deficit. "(C) EXCEPTION FOR SMALL GOVERNMENTAL UNITS.—An

issue shall, for purposes of this subsection, be treated as meeting the requirements of paragraphs (2) and (3) if— "(i) the issue is issued by a governmental unit with general taxing powers, "(ii) no bond which is part of such issue is a private activity bond, ilsS "(iii) 95 percent or more of the net proceeds of such issue are to be used for local governmental activities of the issuer (or of a governmental unit the jurisdiction of which is entirely within the jurisdiction of the issuer), and "(iv) the aggregate face amount of all tax-exempt bonds (other than private activity bonds) issued by such ' • unit (and all subordinate entities thereof) during the calendar year in which such issue is issued is not reasonably expected to exceed $5,000,000. Clause (iv) shall not take into account any bond which is not outstanding at the time of a later issue or which is redeemed (other than in an advance refunding) from the i^ ' net proceeds of the later issue. "(D) EXCEPTION FOR CERTAIN QUALIFIED STUDENT LOAN i

BONDS.—

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"(i) IN GENERAL.—In determining the aggregate amount earned on nonpurpose investments acquired with gross proceeds of an issue of bonds described in section 144(b)(1)(A), the amount earned from investment of net proceeds of such issue during the initial temporary period under subsection (c) shall not be taken into account to the extent that the amount so earned is used to pay the reasonable— "(I) administrative costs of such a program attributable to such issue and the costs of carrying such issue, and "(II) costs of issuing such issue, but only to the extent such costs were financed with proceeds of such issue and for which the issuer was not reimbursed. "(ii) ONLY ARBITRAGE ON AMOUNTS LOANED DURING

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TEMPORARY PERIOD TAKEN INTO ACCOUNT FOR ADMINISTRATIVE COSTS, ETC.—The amount earned from investment of net proceeds of an issue during the initial temporary period under subsection (c) shall be taken into account under clause (i)(I) only to the extent attributable to proceeds which were used to make or finance (not later than the close of such period) student loans under a program described in section 144(b)(1)(A). "(iii) ELECTION.—This subparagraph shall not apply to any issue if the issuer elects not to have this subparagraph apply to such issue. "(iv) TERMINATION.—This subparagraph shall not apply to any bond issued after December 31, 1988.

"(5) EXEMPTION FROM GROSS INCOME OF SUM REBATED.—Gross

income shall not include the sum described in paragraph (2).

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