To clarify the treatment of certain obligations under the provisions providing for a pro rata allocation of interest expense of financial institutions to tax-exempt interest.

Sets forth the tax treatment of any waiver of an interest adjustment clause under obligations issued to tax-exempt organizations with respect to the pro rata allocation of the interest expense of financial institutions to tax-exempt interest.

 
HR 3711 IH
101st CONGRESS
1st Session
 H. R. 3711
To clarify the treatment of certain obligations under the provisions providing
for a pro rata allocation of interest expense of financial institutions to
tax-exempt interest.
IN THE HOUSE OF REPRESENTATIVES
November 17, 1989
Mr. MCGRATH (for himself and Mr. JACOBS) introduced the following bill;
which was referred to the Committee on Ways and Means
A BILL
To clarify the treatment of certain obligations under the provisions providing
for a pro rata allocation of interest expense of financial institutions to
tax-exempt interest.
  Be it enacted by the Senate and House of Representatives of the United
  States of America in Congress assembled,
SECTION 1. TREATMENT OF CERTAIN OBLIGATIONS UNDER SECTION 265(b) OF THE
INTERNAL REVENUE CODE OF 1986.
  (a) GENERAL RULE- If--
  (1) any obligation was issued on or before August 7, 1986, with respect
  to one or more headquarters projects for any organization described in
  section 501(c)(3) of the Internal Revenue Code of 1986 and exempt from
  tax under section 501(a) of such Code, and
  (2) the terms of such obligation included an interest adjustment clause
  triggered by a reduction in the maximum Federal marginal corporate income
  tax rate,
for purposes of section 265(b) of the Internal Revenue Code of 1986,
any waiver of such interest adjustment clause (or agreement to accept an
interest rate lower than that required by such clause) by the first financial
institution acquiring such obligation shall not be treated as an exchange
of such obligation for a newly issued obligation.
  (b) EFFECTIVE DATE- The provisions of subsection (a) shall apply to taxable
  years ending after December 31, 1986.