IRS: Texas Development Corpus $171M of Debt May Be Taxable

Newman, Emily
January 2005
Bond Buyer;1/12/2005, Vol. 351 Issue 32048, p5
Trade Publication
The article reports that the U.S. Internal Revenue Service (IRS) has told Retama Development Corp. that its outstanding debt, totaling US$170.6 million, could be taxable due to an alleged arbitrage play in which some risky, speculative bonds have defaulted within three years of issuance and were then backed by an escrow of treasuries and resold as triple-A rated securities. The IRS concluded that Retama's Series 1993 bonds and notes totaling US$76.7 million and its subsequent US$93.9 million of 1997 refunding bonds may have involved improper defeasance and refunding measures.


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