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inapplicable to any arbitrage bond within the meaning of section
148. Sec. 103(b).
An arbitrage bond is defined in section 148(a) as follows:
(a) Arbitrage Bond Defined.--For purposes of
section 103, the term "arbitrage bond" means any bond
issued as part of an issue any portion of the proceeds
of which are reasonably expected (at the time of
issuance of the bond) to be used directly or
indirectly--
(1) to acquire higher yielding investments * * *
For purposes of this subsection, a bond shall be
treated as an arbitrage bond if the issuer
intentionally uses any portion of the proceeds of the
issue of which such bond is a part in a manner
described in paragraph (1) * * *.
A higher yielding investment is "any investment property
which produces a yield over the term of the issue which is
materially higher than the yield on the issue." Sec. 148(b)(1).
Section 148(b)(2) provides in pertinent part:
(2) Investment property.--The term "investment
property" means--
(A) any security (within the meaning of
section 165(g)(2)(A) or (B)),
(B) any obligation,
(C) any annuity contract,
(D) any investment-type property * * *
The legislative purpose in enacting these provisions is
reflected in the following statement in the report of the House
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Last modified: May 25, 2011