[Code of Federal Regulations]
[Title 26, Volume 2]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.145-2]

[Page 674]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.145-2  Application of private activity bond regulations.

    (a) In general. Except as provided in this section, Sec. Sec. 1.141-
0 through 1.141-15 apply to section 145(a). For example, under this 
section, Sec. 1.141-1, and Sec. 1.141-2, an issue ceases to be an issue 
of qualified 501(c)(3) bonds if the issuer or a conduit borrower 
501(c)(3) organization takes a deliberate action, subsequent to the 
issue date, that causes the issue to fail to comply with the 
requirements of sections 141(e) and 145 (such as an action that results 
in revocation of exempt status of the 501(c)(3) organization).
    (b) Modification of private business tests. In applying 
Sec. Sec. 1.141-0 through 1.141-15 to section 145(a)--
    (1) References to governmental persons include 501(c)(3) 
organizations with respect to their activities that do not constitute 
unrelated trades or businesses under section 513(a);
    (2) References to ``10 percent'' and ``proceeds'' in the context of 
the private business use test and the private security or payment test 
mean ``5 percent'' and ``net proceeds''; and
    (3) References to the private business use test in Sec. Sec. 1.141-2 
and 1.141-12 include the ownership test of section 145(a)(1).
    (c) Exceptions--(1) Certain provisions relating to governmental 
programs. The following provisions do not apply to section 145: 
Sec. 1.141-2(d)(4) (relating to the special rule for dispositions of 
personal property in the ordinary course of an established governmental 
program) and Sec. 1.141-2(d)(5) (relating to the special rule for 
general obligation bond programs that finance a large number of separate 
purposes).
    (2) Costs of issuance. Section 1.141-3(g)(6) does not apply to 
section 145(a)(2) to the extent that it provides that costs of issuance 
are allocated ratably among the other purposes for which the proceeds 
are used. For purposes of section 145(a)(2), costs of issuance are 
treated as private business use.

[T.D. 8712, 62 FR 2303, Jan. 16, 1997]