Page:United States Statutes at Large Volume 102 Part 4.djvu/706

 102 STAT. 3676 Reports.

PUBLIC LAW 100-647—NOV. 10, 1988

completion method of accounting for such contracts. Not later than the date 6 months after the date of the enactment of this Act, the Secretary shall submit a report on such study to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate.

Subtitle F—Tax-Exempt Bond Provisions SEC. 5051. TREATMENT OF CERTAIN POOLED FINANCING BONDS.

(a) IN GENERAL.—Section 149 of the 1986 Code is amended by adding at the end thereof the following new subsection: "(f) TREATMENT OF CERTAIN POOLED FINANCING BONDS.—

"(1) IN GENERAL.—Section 103(a) shall not apply to any pooled financing bond unless, with respect to the issue of which such bond is a part, the requirements of paragraphs (2) and (3) are met. "(2) REASONABLE EXPECTATION REQUIREMENT.—

"(A) IN GENERAL.—The requirements of this paragraph are met with respect to an issue if the issuer reasonably expects that as of the close of the 3-year period beginning on the date of issuance of the issue, at least 95 percent of the net proceeds of the issue (as of the close of such period) will have been used directly or indirectly to make or finance loans to ultimate borrowers. "(B) CERTAIN FACTORS MAY NOT BE TAKEN INTO ACCOUNT

IN DETERMINING EXPECTATIONS.—Expectations as to changes

in interest rates or in the provisions of this title (or in the regulations or rulings thereunder) may not be taken into account in determining whether expectetions are resisonable for purposes of this paragraph. "(C) NET PROCEEDS.—For purposes of subparagraph (A), the term 'net proceeds' has the meaning given such term by section 150 but shall not include proceeds used to finance issuance costs and shall not include proceeds necessary to pay interest (during such period) on the bonds which are part of the issue. "(D) REFUNDING BONDS.—For purposes of subparagraph (A), in the case of a refunding bond, the date of issuance taken into account is the date of issuance of the original bond. "(3) COST OF ISSUANCE PAYMENT REQUIREMENTS.—The require-

ments of this paragraph are met with respect to an issue if— "(A) the payment of legal and underwriting costs associated with the issuance of the issue is not contingent, and "(B) at least 95 percent of the reasonably expected legal and underwriting costs Eissociated with the issuance of the issue are paid not later than the 180th day after the date of the issuance of the issue. "(4) POOLED FINANCING BOND.—For purposes of this subsection— "(A) IN GENERAL.—The term 'pooled financing bond' means any bond issued as part of an issue more than $5,000,000 of the proceeds of which are reasonably expected (at the time of the issuance of the bonds) to be used (or are intentionally used) directly or indirectly to make or finance loans to 2 or more ultimate borrowers.

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