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legal entitlement of Company, a nongovernmental person,
causes City Project to be privately used in the trade
or business of Company. Because more than 10% of the
Bond proceeds will be used by a nongovernmental person
in its trade or business, the private business use test
of � 141(b)(1) will be met if the Bond proceeds are
used as proposed.
Section 141(b)(1), the regulations thereunder, and the
legislative history indicate that only private business use,
alone or in the aggregate, which exceeds 10 percent of the
proceeds of the bond issue causes the private business use test
to be met. It is clear that section 141(b)(1) requires a
quantification or a valuation of the private business use(s) for
purposes of determining whether such use exceeds this threshold.
The regulations provide a methodology for measuring private
business use of financed property. The amount of private
business use is determined according to the average percentage of
private business use of financed property during the measurement
period. Sec. 1.141-3(g)(1), Income Tax Regs. In general, the
measurement period begins on the later of the issue date of the
bond issue or the date the property is placed in service and ends
on the earlier of the last date of the reasonably expected
economic life of the property or the latest maturity date of any
bond of the issue financing the property. Sec. 1.141-3(g)(2)(i),
Income Tax Regs. The average percentage of private business use
is the average of the percentage of private business use during
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