Series 50: Rebate Rule

Taken from our Series 50 Online Guide

Rebate Rule

IRC Section 148(f) describes the arbitrage rebate rule. Even if an issuer of bonds follows all of the yield restriction rules, the bonds may still be arbitrage bonds if excess profits are not returned to the Treasury. For an issue to be tax-exempt, even permitted arbitrage profits must be paid to the U.S. in five-year installments.

The IRC requires that earnin

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