small-issue bond

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Small-Issue Bond

Part of a small municipal bond that is used for private purposes. As a municipal bond, the interest is tax-deductible; however, there is a limit on the amount of debt and number of issues a municipality is allowed to use for private purposes and still qualify for the deduction.

small-issue bond

A bond that is part of a small-sized municipal bond issue for private purposes such that interest on the bond qualifies for federal tax exemption. Municipalities are limited as to the size of such an issue and the total number of issues if the bonds are to pay tax-exempt interest.
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Moreover, the IRS plans to publish educational materials on arbitrage requirements, filing 8038 forms, and the qualifications of small-issue bonds to help city officials understand their obligations under the tax code.