Page:United States Statutes at Large Volume 100 Part 3.djvu/845

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2653

scribed in subparagraph (A)(i) and ending on the date such facility is not so used. "(4) CERTAIN EXEMPT FACILITY BONDS.—

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"(A) IN GENERAL.—In the case of any facility with respect to which financing is provided from the proceeds of any private activity bond to which this paragraph applies, if such facility is not used for a purpose for which a taxexempt bond could be issued on the date of such issue, no deduction shall be allowed under this chapter for interest on such financing which accrues during the period beginning on the date such facility is not so used and ending on the date such facility is so used. "(B) BONDS TO WHICH PARAGRAPH APPLIES.—This paragraph applies to any private activity bond which, when issued, purported to be a tax-exempt exempt facility bond described in a paragraph (other than paragraph (7)) of section 142(a).

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"(5) FACILITIES REQUIRED TO BE OWNED BY GOVERNMENTAL UNITS OR 501(C)(3) ORGANIZATIONS.—If—

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"(A) financing is provided with respect to any facility from the proceeds of any private activity bond which, when issued, purported to be a tax-exempt bond, "(B) such facility is required to be owned by a governmental unit or a 501(c)(3) organization as a condition of such tax exemption, and "(C) such facility is not so owned, then no deduction shall be allowed under this chapter for interest on such financing which accrues during the period beginning on the date such facility is not so owned and ending on the date such facility is so owned.

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"(c) EXCEPTION AND SPECIAL RULES FOR PURPOSES OF SUBSECTION

(b).—For purposes of subsection (b)— "(1) EXCEPTION.—Any use with respect to facilities financed with proceeds of an issue which are not required to be used for ' the exempt purpose of such issue shall not be taken into account. "(2) TREATMENT OF AMOUNTS OTHER THAN INTEREST.—If

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amounts payable for the use of a facility are not interest, subsection (b) shall apply to such amounts as if they were interest but only to the extent such amounts for any period do not exceed the amount of interest accrued on the bond financing for such period. "(3) USE OF PORTION OF FACILITY.—In the case of any person which uses only a portion of the facility, only the interest accruing on the financing allocable to such portion shall be taken into account by such person. "(4) CESSATION WITH RESPECT TO PORTION OF FACILITY.—In the

case of any facility where part but not all of the facility is not , used for an exempt purpose, only the interest accruing on the financing allocable to such part shall be taken into account. "(5) REGULATIONS.—The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this subsection and subsection (b). "(d) QUALIFIED SCHOLARSHIP FUNDING BOND.—For purposes of this part and section 103— "(1) TREATMENT AS STATE OR LOCAL BOND.—A qualified scholarship funding bond shall be treated as a State or local bond.

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