New Mexico Issuer Reaches Deal With IRS

Newman, Emily
January 2005
Bond Buyer;1/28/2005, Vol. 351 Issue 32059, p5
Trade Publication
The article reports that the New Mexico Hospital Equipment Loan Council has reached a settlement with the Internal Revenue Service (IRS) to protect the tax-exempt status of an $85 million pooled variable-rate bond deal. The deal was alleged to have violated the arbitrage rules of the tax code, partly because of yield burning that occurred in conjunction with a guaranteed investment contract used to invest the proceeds of the issue. The IRS has alleged, among other things, that there was an above market interest rate conversion feature in the bid specification form.


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