Page:United States Statutes at Large Volume 100 Part 3.djvu/844

 100 STAT. 2652 •in

PUBLIC LAW 99-514—OCT. 22, 1986 "(5) OWNERSHIP OF PROPERTY.—Property shall be treated as owned by a governmental unit if it is owned on behalf of such unit. "(6) TAX-EXEMPT BOND.—The term 'tax-exempt' means, with respect to any bond (or issue), that the interest on such bond (or on the bonds issued as part of such issue) is excluded from gross income.

''(b) CHANGE IN USE OF FACILITIES FINANCED WITH TAX-EXEMPT PRIVATE ACTIVITY BONDS.— "(1) MORTGAGE REVENUE BONDS.—

"(A) IN GENERAL.—In the case of any residence with respect to which financing is provided from the proceeds of j„f; ^^ a qualified mortgage bond or qualified veterans' mortgage bond, if there is a continuous period of at least 1 year during which such residence is not the principal residence of at least 1 of the mortgagors who received such financing, then no deduction shall be allowed under this chapter for interest on such financing which accrues on or after the date such period began. ••' "(B) EXCEPTION.—Subparagraph (A) shall not apply to the extent the Secretary determines that its application would '^' " result in undue hardship and that the failure to meet the requirements of subparagraph (A) resulted from circumstances beyond the mortgagor's control. "(2) QUALIFIED RESIDENTIAL RENTAL PROJECTS.—In the case of any project for residential rental property— "(A) with respect to which financing is provided from the v T, proceeds of any private activity bond which, when issued, purported to be a tax-exempt bond described paragraph (7) ' L ' of section 142(a), and "(B) which does not meet the requirements of section 142(d), no deduction shall be allowed under this chapter for interest on such financing which accrues during the period beginning on the 1st day of the taxable year in which such project fails to meet such requirements and ending on the date such project meets such requirements. ,;,

"(3) QUALIFIED 50i(c)(3) BONDS.—

' (A) IN GENERAL.—In the case of any facility with respect to which financing is provided from the proceeds of any private activity bond which, when issued, purported to be a tax-exempt qualified 501(c)(3) bond, if any portion of such facility— "(i) is used in a trade or business of any person other than a 501(c)(3) organization or a governmental unit, but "(ii) continues to be owned by a 501(c)(3) organization, then the owner of such portion shall be treated for purposes of this title as engaged in an unrelated trade or business (as -'* defined in section 513) with respect to such portion. The amount of gross income attributable to such portion for any period shall not be less than the fair rental value of such portion for such period. "(B) DENIAL OF DEDUCTION FOR INTEREST.—No deduction

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shall be allowed under this chapter for interest on financing described in subparagraph (A) which accrues during the period beginning on the date such facility is used as de-

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