tax-exempt bond

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Tax-exempt bond

A bond usually issued by municipal, county, or state governments whose interest payments are not subject to federal and, in some cases, state and local income tax.

Tax-Exempt Bond

A bond issued by a local or state government. Municipal bonds are usually used to raise capital for improvements in infrastructure or other aspects of the municipality. For example, a city or school district may issue a tax-exempt bond to build a new school or a new playground. They are called tax-exempt bonds because they are exempt from federal income taxes and sometimes from state and local taxes as well. Tax-exempt bonds usually pay lower coupons than corporate bonds, but because the yield is tax-free, the after-tax basis may be higher for the tax-exempt bond. Risk varies according to the municipality and the particular type of bond.

tax-exempt bond

References in periodicals archive ?
The Tax Exempt Bond Division administers VCAP to help governmental issuers resolve violations of the federal tax laws applicable to their tax-exempt bonds, tax credit bonds, or direct pay bonds.
The fund, which will acquire newly-issued tax-exempt bonds used to finance the acquisition and rehabilitation of affordable multifamily housing, will also acquire and restructure existing tax-exempt bonds on stabilized properties.
It also comes at a time when interest rates on tax-exempt bonds are at historic lows.
The New York City Housing Development Corporation ("HDC") financed the rehabilitation work by issuing $24 million in tax-exempt bonds under the Corporation's Low-Income Affordable Marketplace Pro gram ("LAMP").
NABL and other groups, including members of the recycling community, have sought clarification of the no-value test since the mid- 1990s, when the IRS performed a number of audits of borrowers that used tax-exempt bonds to finance recycling facilities.
Audits of tax-exempt bonds can create substantial financial exposure to companies.
CPAs with clients that are religious education institutions could advise them to seek out tax-exempt bonds to finance only expenditures that would give some type of economic benefit to the community, such as construction expenditures.
SANTA CLARITA - The Master's College will issue $16 million in tax-exempt bonds to refinance its debt, build a new dormitory and improve facilities.
The earnings from the sale were invested in tax-exempt bonds and a municipal bond fund worth over $7 million.
If you are a not-for-profit organization, it is possible to obtain 100 percent financing using tax-exempt bonds.
The property is financed with $10 million of tax-exempt bonds that bear interest at an adjustable one-year rate, which is currently 3.
Most not-for-profits don't have the 30% cash, so they opt for the tax-exempt route, which allows them to finance about 95% of a project using tax-exempt bonds.