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Public-Purpose Bond
(redirected from Public Purpose Bond)

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Public-purpose bond
A specific type of municipal bond used to finance public projects such as roads or government buildings. Interest on municipal bonds is federal income tax-free.

Public-Purpose Bond
A municipal bond that is issued in order to finance public works. For example, a city may issue a public purpose bond to build a road or school, which improves the city but does not directly attract private investment. The federal government does not tax the interest on a public-purpose bond. This exemption occurs automatically, unlike a private purpose bond, which must prove that it benefits the public in some way to qualify for the tax exemption.


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The most recent data are for Tax Year 2005 public purpose bonds and private activity bonds.
The Clearwater Housing Authority issue is a perfect example of the essential public purpose bond issues that ACA targets.
Under the Tax Reform Act of 1986, Congress permitted tax-exempt municipal financing for stadiums and other sports facilities as public purpose bonds, but only where they met the new definitions in the law crafted by Congress and the Reagan administration.
 
 
 
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