[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: 26CFR1.148-1A] [Page 753] TITLE 26--INTERNAL REVENUE CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY (CONTINUED) PART 1_INCOME TAXES--Table of Contents Sec. 1.148-1A Definitions and elections. (a) [Reserved]. For guidance see Sec. 1.148-1. (b) Certain definitions. Investment-type property. See Sec. 1.148-1(b). Investment-type property also includes a contract that would be a hedge (within the meaning of Sec. 1.148-4(h)) except that it contains a significant investment element. (c) through (c)(4)(i) [Reserved]. For guidance see Sec. 1.148-1. (c)(4)(ii) Bonds financing a working capital reserve--(A) In general. Except as otherwise provided in Sec. 1.148-1(c)(4)(ii)(B), replacement proceeds arise to the extent a working capital reserve is, directly or indirectly, financed with the proceeds of the issue (regardless of the expenditure of proceeds of the issue). Thus, for example, if an issuer that does not maintain a working capital reserve borrows to fund such a reserve, the issuer will have replacement proceeds. To determine the amount of a working capital reserve maintained, an issuer may use the average amount maintained as a working capital reserve during annual periods of at least one year, the last of which ends within a year before the issue date. For example, the amount of a working capital reserve may be computed using the average of the beginning or ending monthly balances of the amount maintained as a reserve (net of unexpended gross proceeds) during the one year period preceding the issue date. [T.D. 8538, 59 FR 24041, May 10, 1994. Redesignated by T.D. 8718, 62 FR 25507, May 9, 1997] [[Page 754]]