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To retire existing bond issues through the sale of a new bond issue, usually to reduce the interest rate being paid.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.


1. See: Tax refund.

2. The sale price of an asset that the seller may give back to the buyer if the buyer returns the asset.

3. See: Redeem.

4. See: Refunding.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved


To retire securities with the funds that have been raised through the sale of a new security issue. Refunding usually occurs after a period of falling interest rates when firms issue new debt in order to retire existing debt having high coupon rates of interest. Refunding works to the disadvantage of existing bondholders, who must sell their securities before maturity (usually at a slight premium over face value) when proceeds can only be reinvested at a reduced yield. Also called refinance. See also call provision, nonrefundable, prerefunded bond.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
References in periodicals archive ?
An advance refunding occurs when the refunded bonds are retired more than 90 days after the refunding bonds are sold.
In a "low to high" advance refunding, the "minor portion," which could equal up to 15 percent of the original refunded issue, could be invested in the escrow account at an unrestricted yield.
In a "high to low" advance refunding, the refunded issue is escrowed to the call date, rather than to the maturity date.
The act imposed restrictions on interest earnings, limited the number of times that an issue can be advance refunded, prescribed rules for calling bonds prior to maturity, prohibited issuers from advance refunding private activity bonds, and stiffened the transferred proceeds penalty (described later in this article).
The act permits bonds issued after 1985 to be advance refunded only once.
In light of the foregoing, the retired check's date reasonably seems to determine whether a tax overpayment has been refunded within 45 days, in spite of the absence of any reported court cases to that effect.
because current law does not provide the authority to apply a previously refunded overpayment as a credit against a deficiency, or an overpayment as a credit against a previously paid deficiency."
Section 6611(e) further provides that no interest is allowed on an overpayment of income tax if such overpayment is refunded within 45 days after the date prescribed for filing the return of such tax (determined without regard to any extension of time for filing the return) or is refunded within 45 days after the return is filed where the return is filed after such last date.
Furthermore, in the case of a net operating loss carryback, a capital loss carryback, or one of the credit carrybacks discussed in the preceding paragraph, a variation of the 45-day rule under section 6611(e) applies, so that no interest is payable if the overpayment attributable to such a carryback is refunded within 45 days of the date when the claim for such overpayment is filed.
(25) For example, if a corporate income tax return for a calendar year is filed on March 15 of the following year and any overpayment shown on such return is refunded by April 29, no interest is allowed on such overpayment.
However, A was not underpaid as to the $20 until that amount was refunded to A on Sept.
The court was unmoved by the resulting disparity of treatment between taxpayers who properly refrained from taking the deduction (and were prohibited by the statute from receiving interest on their subsequently refunded overpayments) and those who improperly took the deduction (and could recover interest on the deficiency assessed by the IRS).