Series 50: Exercise

Exercise

Match the definitions with the correct percentages Some percentages may be used twice

1. A. 2%
2. B. 3.5%
3. C. 5%
4. D. 10%
5. E. 95%
6. 1. Private business use test: greater than _____ of bond proceeds used to fund a non-governmental entity
7. 2. Private security or payment test: greater than _____ of debt service for the bond is paid for or secured by a property used by a private business
8. 3. Private loan financing test: the lesser of $5 million or _____ of bond proceeds is used to provide a loan to a private business
9. 4. Qualified private activity bonds: at least _____ of net proceeds are used for designated public purposes
10. 5. Costs of issuance: up to _____ of proceeds may be used to cover costs of issuance
11. 6. Qualified mortgage revenue bonds: _____ of proceeds may be used to cover costs of issuance

Answer the following questions

1. 7. Cloud Valley has a debt limit of $50,000,000. The city currently has $20,000,000 in outstanding debt and would like to issue $25,000,000 in private activity bonds. They plan to use $750,000 of the proceeds for non-public purposes. What is the maximum amount of bond proceeds the city could spend on costs of issuance if it wanted the bonds to be qualified private activity bonds?
2. A. $250,000
3. B. $500,000
4. C. $750,000
5. D. There is no way the bonds could be qualified private activity bonds.
6. 8. Which of the following are not true of the alternative minimum tax:
7. I. Eliminates many tax deductions provided under the standard tax law
8. II. Eliminates many tax credits provided under the standard tax law
9. III. Potentially decreases the tax liability for an individual who would otherwise pay more in tax
10. IV. Deducts interest from qualified private activity bonds
11. A. I and II
12. B. I and IV
13. C. II and III