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received if the issuer subsequently used the proceeds for arbitrage
revenue. At a congressional hearing in 1978, Assistant Secretary
Lubick was asked whether the Commissioner could change his mind
about the nonarbitrage status of a bond after it was issued. Mr.
Lubick replied: "That is a determination which is made as of the
issuance date. The fact that the [issuer] goes on and does
something different from what it proposed originally does not
change the status of the bond. This determination is made ab
initio." Revenue Act of 1978: Hearings on H.R. 13511 before the
Senate Comm. on Finance, 95th Cong., 2d Sess. 958-959 (1978).
In 1984, Congress reviewed the various remaining provisions
that permitted States to collect arbitrage and noted: "Present
rules permit issuers to retain any arbitrage earned under these
rules". H. Conf. Rept. 98-861, at 1205 (1984), 1984-3 C.B. (Vol.
2) 1, 459 (emphasis supplied). Congress therefore made the rebate
provisions applicable to certain industrial development bonds and
to certain student loan bonds. Sec. 103(c)(6), as added by Deficit
Reduction Act of 1984, Pub. L. 98-369, sec. 624(a), 98 Stat. 922.
In the Tax Reform Act of 1986, Congress decided to extend the
rebate requirements to additional classes of tax-exempt bonds,
including those issued to provide multifamily residential housing.5
See Tax Reform Act of 1986 (TRA), Pub. L. 99-514, sec. 1314(d), 100
Stat. 2664. With this change came new rules relating to the
5 I agree with the majority's conclusion that the date of
issuance of the Bonds was not Dec. 31, 1985, but rather Feb. 20,
1986.
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